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EXHIBIT 99
DAISYTEK INTERNATIONAL CORPORATION
500 NORTH CENTRAL EXPRESSWAY
PLANO, TEXAS 75074
June 20, 2000
Dear Daisytek Stockholder:
We are pleased to send you this Information Statement about the
spin-off of PFSweb, our e-commerce logistics subsidiary. The Information
Statement provides you with important information concerning:
o the U.S. federal income tax treatment of the PFSweb shares you will
receive,
o how we determined the number of shares you will receive,
o how fractional shares will be treated,
o a brief description of the background and business of PFSweb, and
o how you can obtain additional information about these matters.
We are confident that the spin-off will benefit Daisytek, PFSweb and
you, our stockholders. We believe that both companies - Daisytek and PFSweb -
will become stronger and more competitive as a result of the separation.
This is an exciting and historic time for Daisytek and for PFSweb. I
hope you share our enthusiasm. Thank you for your investment in Daisytek, and I
trust that you will find your investment in PFSweb to be very rewarding.
Sincerely,
/s/ MARK C. LAYTON /s/ JAMES R. POWELL
Mark C. Layton James R. Powell
Chairman of the Board Chief Executive Officer
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INFORMATION STATEMENT
----------
SPIN-OFF
OF
PFSWEB, INC.
THROUGH THE DISTRIBUTION
BY
DAISYTEK INTERNATIONAL CORPORATION
OF 14,305,000 SHARES OF
PFSWEB COMMON STOCK
TO
DAISYTEK COMMON STOCKHOLDERS
----------
We are sending you this Information Statement because we are spinning off
our PFSweb subsidiary to the holders of our common stock. We are effecting this
spin-off by distributing 0.81 of a share of PFSweb common stock as a dividend
for each outstanding share of Daisytek common stock, amounting to 14,305,000
shares of PFSweb common stock in total. The dividend will be payable at the
close of business on July 6, 2000 to holders of record of Daisytek common stock
at the close of business on June 19, 2000.
PFSweb is a leading international provider of transaction management
services for both traditional and e-commerce companies. PFSweb's comprehensive
suite of services include order management, customer care services, billing
services, information management and distribution services. PFSweb has
operations in the United States, Canada and Europe. Last September, the Daisytek
board of directors determined that it would be in the best interests of Daisytek
and its stockholders to separate PFSweb from Daisytek. In December 1999, PFSweb
completed an initial public offering of 3,565,000 shares of its common stock
(representing approximately 19.9% of its outstanding shares), while Daisytek
retained the remaining 14,305,000 shares (or approximately 80.1 % of the PFSweb
outstanding common stock). Following this spin-off, we will no longer own any
shares of PFSweb, and PFSweb will no longer be a subsidiary of Daisytek.
NO VOTE OF DAISYTEK STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THE PFSWEB
SPIN-OFF. THEREFORE, YOU ARE NOT REQUIRED TO TAKE ANY ACTION.
We are sending you this Information Statement, which contains additional
information about PFSweb and the terms of the spin-off for your information
only. If you would like more information, please call our information agent,
Corporate Investor Communications, toll-free at (888) 568-9280.
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the PFSweb common stock to be issued to you pursuant to
this spin-off or determined if this Information Statement is accurate or
adequate. Any representation to the contrary is a criminal offense.
The date of this Information Statement is June 20, 2000.
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INFORMATION ABOUT THE SPIN-OFF
THE SPIN-OFF
On June 8, 2000, the Daisytek board of directors approved the spin-off of
PFSweb to holders of Daisytek's common stock. In order to effect this spin-off,
the Daisytek board declared a dividend on Daisytek common stock consisting of a
total of 14,305,000 shares of PFSweb common stock owned by Daisytek,
representing about 80.1% of the outstanding PFSweb common stock. The dividend
will be paid at the close of business on July 6, 2000 to the holders of record
of Daisytek common stock as of the close of business on June 19, 2000, in the
amount of 0.81 of a share of PFSweb common stock for each share of outstanding
Daisytek common stock, as described below.
You will not be required to pay any cash or other consideration for the
shares of PFSweb common stock distributed to you or to surrender or exchange
your shares of Daisytek common stock in order to receive the dividend of PFSweb
common stock.
THE NUMBER OF SHARES YOU WILL RECEIVE
The actual number of shares of PFSweb common stock that will be distributed
to you for each share of Daisytek common stock that you own at 5:00 p.m.,
Eastern time, on the June 19, 2000 record date is calculated as follows:
14,305,000
(which is the total number of shares of
PFSweb common stock to be distributed in the spin-off)
divided by
17,643,711
(which is the total number of shares of Daisytek
common stock outstanding at 5:00 p.m., Eastern time, on June 19, 2000)
multiplied by
the number of shares of Daisytek
common stock that you own at 5:00 p.m., Eastern time, on June 19, 2000.
Based on the number of shares of Daisytek common stock outstanding as of
June 19, 2000, you will receive 0.81 of a share of PFSweb common stock for each
share of Daisytek common stock that you own at 5:00 p.m., Eastern time, on June
19, 2000.
WHEN AND HOW YOU WILL RECEIVE THE DIVIDEND
We will pay the dividend at the close of business on July 6, 2000 by
releasing our shares of PFSweb common stock to be distributed in the spin-off to
ChaseMellon Shareholder Services, LLC, the distribution agent. As of 5:00 p.m.,
Eastern time, on July 6, 2000, the distribution agent will cause the shares of
PFSweb common stock to which you
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are entitled as a result of the spin-off to be registered in your name. As of
that time, you will become the record holder of that number of shares of PFSweb
common stock.
The distribution agent is not authorized to deliver any fractional shares
of PFSweb common stock as part of the spin-off. Instead, the distribution agent
has been instructed to aggregate all of the fractional shares into whole shares
and sell them in an open market transaction. Holders who otherwise would be
entitled to receive a fractional share will then receive a cash payment in the
amount of their pro rata share of the total net proceeds of that sale.
Certificates for PFSweb common stock will be mailed to requesting record
stockholders following the July 6, 2000 distribution date. Your check for any
cash that you may be entitled to receive instead of fractional shares of PFSweb
common stock will be mailed separately. If you hold your shares of Daisytek
common stock in one or more brokerage or "street name" accounts, you should
expect to receive an account statement from your brokerage firm reflecting the
number of shares of PFSweb common stock received by you in the spin-off.
TRADING MARKET FOR DAISYTEK COMMON STOCK
The shares of Daisytek common stock are listed for trading on the Nasdaq
National Market under the symbol "DZTK." On June 19, 2000, the closing price for
the Daisytek common stock on the Nasdaq National Market was $12.375.
In general, shares of Daisytek common stock which are traded on the Nasdaq
National Market between the record date and the distribution date will trade
"regular way" under the ticker symbol DZTK with due bills attached. This means
that if you are a record holder of Daisytek common stock on the record date, and
you sell your shares between the record date and the distribution date, you will
be required to deliver to the buyer the shares of PFSweb common stock to be
issued to you in the spin-off as well as the underlying shares of Daisytek
common stock. Similarly, someone who buys shares of Daisytek common stock
between the record date and the distribution date will be entitled to receive
from the seller the shares of PFSweb common stock to be issued to the seller in
the spin-off as well as the underlying shares of Daisytek common stock.
In addition to the "regular way" market, and depending upon market factors,
there may be an "ex-distribution" market in the Daisytek common stock between
the record date and the distribution date. The ex-distribution market, if and
when it exists, will trade Daisytek stock under the ticker symbol DZTK V and
will not include an entitlement to receive shares of PFSweb.
The ex-distribution market, if it arises, will end at market close on July
6, 2000. At that time, the DZTK V ticker and market for this stock will
disappear and Daisytek will only be traded under the ticker symbol DZTK without
the entitlement to receive PFSweb shares.
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TRADING MARKET FOR PFSWEB COMMON STOCK
The shares of PFSweb common stock are listed for trading on the Nasdaq
National Market under the symbol "PFSW." On June 19, 2000, the closing price for
the PFSweb common stock on the Nasdaq National Market was $7.50.
In addition to the "regular way" market in the PFSweb common stock which
presently exists (and will continue to exist between the record date and the
distribution date), and depending upon the market factors, there may exist a
"when-issued" market in the PFSweb common stock between the record date and the
distribution date. The when-issued market, if and when it exists, will trade the
shares of PFSweb common stock that a Daisytek shareholder of record is due to
receive on the distribution date under the ticker symbol PFSW V, and those that
purchase these PFSW V shares will not receive shares until after the
distribution occurs on July 6, 2000.
There should not be any material difference between PFSW and PFSW V stock
prices. The when-issued market, if it arises, will end at market close on July
6, 2000. At that time, PFSweb common stock will only be traded under the ticker
symbol, PFSW.
Shares of PFSweb common stock distributed to the Daisytek stockholders in
the spin-off will be freely transferable, except for shares received by persons
who may be deemed "affiliates" of PFSweb under the Securities Act, and the rules
and regulations promulgated thereunder. Persons who may be deemed to be
affiliates of PFSweb after the spin-off generally include individuals or
entities that control, are controlled by, or are under common control with
PFSweb, and may include certain officers and directors of PFSweb as well as its
principal stockholders. Persons who are affiliates of PFSweb will be permitted
to sell their shares of PFSweb common stock only pursuant to an effective
registration statement under the Securities Act or an exemption therefrom, such
as the exemption provided in Rule 144 under the Securities Act.
All of the shares of PFSweb common stock distributed to the Daisytek
stockholders will be fully paid and nonassessable and there are no preemptive
rights.
U.S. FEDERAL INCOME TAX CONSEQUENCES
Tax-Free Status of the Spin-Off. We have received a private letter ruling
from the IRS to the effect that our distribution of PFSweb common stock to our
common stockholders in the spin-off will be tax-free to us and to the holders of
our common stock for U.S. federal income tax purposes. This means that, for U.S.
federal income tax purposes:
o Daisytek common stockholders will not recognize gain or loss by reason
of the receipt of whole shares of PFSweb common stock as a result of
the spin-off; and
o Daisytek will not recognize gain or loss by reason of the spin-off.
Although private letter rulings are generally binding on the IRS, we will
not be able to rely on the ruling if any of the material factual representations
or assumptions we made to obtain the ruling are incorrect or untrue in any
material respect. We are not currently aware
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of any facts or circumstances that would cause any of these material
representations or assumptions to be incorrect or untrue in any material
respect. We and PFSweb have agreed to certain restrictions on our respective
future actions to provide further assurances that the spin-off will qualify as
tax free. We do not intend to effect the spin-off if, prior to the distribution
date, we become aware of circumstances that would result in the spin-off being a
taxable transaction. Nevertheless, if the spin-off were subsequently held to be
taxable, the above consequences would not apply and both Daisytek and the
holders of our common stock could be subject to tax.
Subsequent Sale of Stock. If you sell your shares of PFSweb common stock or
Daisytek common stock after the spin-off, you will recognize gain or loss on the
sale based on the difference between the proceeds you receive from the sale and
the tax basis allocated to the shares you sold as described below under
"Allocation of Tax Basis." This gain or loss will be a capital gain or loss,
assuming that you held such shares as a capital asset, and will be a long-term
or short-term gain or loss based on your holding period for such shares as
described below under "Holding Period."
Allocation of Tax Basis. Your tax basis for the PFSweb common stock
received in the spin-off will be determined based on your tax basis in the
Daisytek common stock with respect to which your distribution of PFSweb common
stock was made. Following the spin-off, your aggregate tax basis in your shares
of Daisytek common stock and PFSweb common stock, including any fractional
shares sold for cash as described above, will be the same as your tax basis in
your shares of Daisytek common stock immediately prior to the spin-off. The
aggregate tax basis in your shares of Daisytek common stock immediately prior to
the spin-off will be allocated between your PFSweb common stock and Daisytek
common stock in proportion to the fair market value of your shares of Daisytek
common stock and PFSweb common stock at the close of business on the July 6,
2000 distribution date.
Holding Period. The holding period of the shares of PFSweb common stock
that you receive as a result of the spin-off will include the holding period for
your shares of Daisytek common stock with respect to which your distribution of
PFSweb common stock was made, provided that your shares of Daisytek common stock
are held as a capital asset on the distribution date.
Treatment of Fractional Shares. If you receive cash in lieu of a fractional
share of PFSweb common stock as part of the spin-off, such cash will be treated
for U.S. federal income tax purposes as paid in exchange for such fractional
share of stock. You will realize a capital gain or loss, provided that the
fractional share is considered to be held as a capital asset, measured by the
difference between the cash you receive for such fractional share and your tax
basis in that fractional share as described above. This capital gain or loss
will be treated as a long-term or short-term gain or loss based on your holding
period for the Daisytek common stock on which you received your distribution of
PFSweb common stock.
State, Local and Foreign Tax Consequences. You should consult your own tax
advisor regarding the state, local and foreign tax consequences of your receipt
of shares of PFSweb common stock and any payment for fractional shares.
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Additional Information To Help You Calculate Your New Tax Basis. Additional
information will be made available to you following the distribution date
concerning the allocation of your old tax basis in your Daisytek common stock
between your shares of Daisytek common stock and PFSweb common stock, including
fractional shares.
Tax Return Statement. U.S. Treasury regulations require you to attach to
your U.S. federal income tax return for the year in which the spin-off occurs a
detailed statement setting forth certain information regarding the nature of the
spin-off. Within a reasonable time after completion of the spin-off, we will
provide you with the information necessary to comply with that requirement. You
should retain this statement so it can be completed and attached to your tax
return.
The summary of U.S. federal income tax consequences set forth above is for
general information purposes only and may not be applicable to stockholders who
are not citizens or residents of the United States or who are otherwise subject
to special treatment under the Internal Revenue Code. All stockholders should
consult their own tax advisors as to the particular tax consequences to them of
the spin-off, including the state, local and (if applicable) foreign tax
consequences.
INFORMATION ABOUT PFSWEB
BUSINESS
PFSweb is an international provider of business infrastructure solutions
for both traditional commerce and electronic commerce, or e-commerce, companies.
It provides a broad range of solutions, including order management, web-enabled
customer care services, billing services, information management, international
distribution services, and professional services. Its international distribution
services, which include picking, packing and shipping its clients' customers
orders, are conducted at approximately 1.3 million square feet of distribution
facilities located in Memphis, Tennessee, and additional distribution facilities
in Canada and Belgium. PFSweb offers its services as an integrated solution,
which enables its clients to outsource their transaction management needs to a
single source and to focus on their core competencies. PFSweb currently provides
transaction management services to over 30 clients, including Daisytek, IBM,
Hewlett-Packard, Thomson Consumer Electronics, Nokia, American Eagle Outfitters,
adidas, and ISA International plc. PFSweb's clients operate in a range of
markets, including computer products, printers, apparel, sporting goods and
consumer electronics, among others.
In a recent Forrester study, more than 90% of firms expressed plans to buy
and sell goods on the Internet over the next two years. This figure highlights
the growing business to business e-commerce marketplace. In fact, Forrester
predicts that by the year 2004 business to business e-commerce will hit $2.7
trillion. Of that $2.7 trillion, e-marketplaces are expected to represent 53% of
the total online business trade. In order for companies to keep pace with the
industry they will need to look at outsourcing as a viable option to building
internal operations.
To succeed on-line, a merchant must attract customers to its Web site and
provide an appealing and easy to use environment that encourages customers to
place an order. Once
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the customer places an order, the merchant must then process the order by
executing numerous transactions, such as confirming product availability,
authorizing a credit card purchase, calculating sales tax, fulfilling the order
and, when necessary, processing returns. These "behind the scenes" activities
are critical to complete the entire transaction.
While early adopters of e-commerce business models often developed in-house
business infrastructure systems, today many e-businesses seek to outsource their
business infrastructure needs to third parties. Our business model is built to
scale with our client's business, utilizing proven infrastructure and technology
to deliver a superior solution.
PFSweb offers a comprehensive and integrated set of e-business
infrastructure solutions, built around core services that include:
o order management services, including solutions for e-marketplace,
e-procurement, and supply chain management, handling the complete
shopping cart process, and on-line order management;
o web-enabled customer care services, including customer care centers
utilizing voice, e-mail, and Internet chat communications that are
fully integrated with real time systems and historical data archives
to provide complete Customer Lifecycle Management (CLM);
o billing services, including secure on-line credit card processing,
invoicing, credit management and collection;
o information management, including real-time data interfaces, data
exchange services and data mining;
o international distribution services, including inventory management,
product warehousing, order picking and packing, transportation
management and product return administration; and
o professional services, including a consultative management staff that
tailors solutions to each client and consistently seeks out ways to
increase efficiencies and produce benefits for the client.
Our integrated solutions enable our clients to introduce new products,
business programs and focus on their core business, products and services
instead of making substantial investments in fixed assets systems, facilities
and ongoing personnel. We offer our clients a complete tailored infrastructure
solution based around a core infrastructure which is seamlessly integrated with
our clients' systems and transparent to our clients' customers. Our services
enable our clients to quickly capitalize on new business opportunities, provide
an enhanced experience for their customers, improve operating efficiencies and
cash flows and access sophisticated technology. We are able to extend value to
clients by our ability to integrate a broad range of services providing a faster
time to market for their e-commerce business.
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PFSweb's objective is to grow rapidly by being an international provider of
business-to-business and business-to-consumer transaction management services
for both traditional commerce and e-commerce businesses. The key elements of its
business strategy are to:
o target brand name manufacturers;
o expand existing client relationships;
o promote the PFSweb brand;
o seek strategic alliances and acquisitions; and
o expand its international presence.
In order to execute this strategy, PFSweb must, among other things,
continue to incur significant operating and marketing expenses, invest in
additional technology infrastructure and maintain sufficient capacity. No
assurance can be given that it will be successful in executing its strategy. For
a more complete discussion of these and other risk factors, please see PFSweb's
prospectus dated December 2, 1999.
HISTORY OF THE SPIN-OFF OF PFSWEB FROM DAISYTEK
The PFSweb business unit was formed in 1991 as a subsidiary of Daisytek
named "Working Capital of America" whose purpose was to provide inventory
management, direct shipping to end users, and accounts receivable collections
for Daisytek customers and other third parties. Until 1996, this business unit
was comprised of operations both at Working Capital of America and at Daisytek.
As the business gradually developed, this business unit recognized an
opportunity to expand its business and capitalize on Daisytek's strengths in
customer service, order management, product fulfillment and distribution, and
provide these services on an outsourcing basis. Since 1996, the operations of
this business unit have been primarily focused in a Daisytek subsidiary,
Priority Fulfillment Services, Inc. (or PFS). PFSweb was formed in 1999 to be a
holding company for PFS and to facilitate the initial public offering and
spin-off from Daisytek. In December 1999, PFSweb completed an initial public
offering of 3,565,000 shares of common stock and entered into various agreements
with Daisytek relating to the spin-off. Under these agreements, the spin-off was
conditioned upon, among other things, the receipt of a ruling by the Internal
Revenue Service that, among certain other tax consequences of the transaction,
the spin-off will qualify as a tax-free distribution for U.S. federal income tax
purposes and will not result in the recognition of taxable gain or loss for U.S.
federal income tax purposes to Daisytek or its shareholders. On June 8, 2000,
Daisytek received a favorable ruling from the IRS. Promptly thereafter, the
Daisytek board of directors approved the spin-off and authorized the
distribution of 14,305,000 shares of PFSweb common stock to the holders of
Daisytek common stock by means of a dividend as described in this Information
Statement.
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PFSWEB'S ONGOING RELATIONSHIP WITH DAISYTEK
PFSweb and Daisytek will continue to have significant ongoing relationships
following the spin-off. PFSweb and Daisytek are parties to various agreements
providing for the separation of their respective business operations. These
agreements govern various interim and ongoing relationships between the
companies, including the transaction management services that PFSweb provides
for Daisytek, the transitional services that Daisytek provides to PFSweb and a
tax indemnification and allocation agreement which governs the allocation of tax
liabilities and sets forth provisions with respect to certain other tax matters.
All of the agreements between PFSweb and Daisytek were made in the context
of a parent-subsidiary relationship and were negotiated in the overall context
of the spin-off. Although we generally believe that the terms of these
agreements are consistent with fair market values, there can be no assurance
that the prices charged to or by each company under these agreements are not
higher or lower than the prices that may be charged by, or to, unaffiliated
third parties for similar services.
The full text of these agreements have been filed with the SEC as exhibits
to our current and quarterly reports and you are encouraged to review these
documents. See "Additional Information."
SUBSTITUTE STOCK OPTIONS
In connection with the completion of the spin-off, all outstanding Daisytek
stock options will be adjusted and replaced with substitute stock options as
follows:
Options held by Daisytek employees who transfer to PFSweb will be replaced
(at the option holder's election) with either options to acquire shares of
PFSweb common stock or options to purchase shares of both Daisytek common stock
and PFSweb common stock (which may be exercised separately) (the "Unstapled
Options"). Options held by Daisytek employees who remain with Daisytek will be
replaced (at the option holder's election) with either options to acquire shares
of Daisytek common stock or Unstapled Options.
In general, the adjustments to the outstanding Daisytek options will be
established pursuant to a formula designed to ensure that: (1) the aggregate
"intrinsic value" (i.e. the difference between the exercise price of the option
and the market price of the common stock underlying the option) of the
substitute options will not exceed the intrinsic value of the outstanding
Daisytek stock option which is replaced by such substitute option immediately
prior to the spin-off, and (2) the ratio of the exercise price of each option to
the market value of the underlying stock immediately before and after the
spin-off is preserved.
Substantially all of the other terms and conditions of each adjusted
substitute stock option, including the time or times when, and the manner in
which, each option will be exercisable, the duration of the exercise period, the
permitted method of exercise, settlement and payment, the rules that will apply
in the event of the termination of employment of the employee, the events, if
any, that may give rise to an employee's right to accelerate the vesting or the
time or exercise thereof and the vesting provisions, will be the same as those
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of the replaced Daisytek stock option, except that option holders who are
employed by one company will be permitted to exercise, and will be subject to
all of the terms and provisions of, options to acquire shares in the other
company as if such holder was an employee of such other company.
Although it is not possible at this time to specify how many shares of
Daisytek common stock or PFSweb common stock will be subject to adjusted
substitute stock options in replacement of Daisytek stock options, it is
possible that Daisytek and PFSweb stockholders may experience some dilutive
impact from the above-described adjustments.
No adjustment or replacement will be made in or to outstanding PFSweb stock
options as the result of the spin-off.
BOARD OF DIRECTORS
Although Daisytek and PFSweb presently share a common board of directors,
both companies are seeking additional independent directors.
PFSWEB STOCKHOLDER RIGHTS PLAN
PFSweb has a stockholders rights plan. Accordingly, one preferred share
purchase right is attached to each share of PFSweb common stock to be
distributed in the spin-off. These rights would cause substantial dilution to
any person or group who attempts to acquire a significant interest in PFSweb
without advance approval from PFSweb's board of directors and thus could make an
acquisition of control of PFSweb more difficult, even if such acquisition may be
in the best interests of PFSweb and its stockholders.
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ADDITIONAL INFORMATION
PFSweb's common stock is registered under the Securities Exchange Act.
Daisytek and PFSweb are each subject to the reporting requirements of the
Securities Exchange Act and have filed registration statements, reports and
other information with the Securities and Exchange Commission. For further
information pertaining to PFSweb (including financial statements and other
financial information), the PFSweb common stock and related matters, you are
urged to read PFSweb's SEC reports, including the following:
(1) PFSweb's Prospectus dated December 2, 1999 relating to its initial
public offering;
(2) The description of the PFSweb common stock contained in PFSweb's
Registration Statement on Form 8-A dated November 24, 1999; and
(3) PFSweb's Quarterly Report on Form 10-Q for the quarter ended December
31,1999.
Stockholders are also urged to review any amendments to the foregoing
reports and all other SEC reports now or hereafter filed by PFSweb and Daisytek
under the Exchange Act. The SEC reports can be obtained from the SEC at its
principal office in Washington, D.C. upon the payment of the prescribed fees, or
may be examined, without charge, at public reference facilities maintained by
the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, or at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New York
10048. The SEC maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
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DAISYTEK INTERNATIONAL CORPORATION
SPIN-OFF OF PFSWEB, INC. COMMON STOCK
QUESTION AND ANSWER SUMMARY OF THE SPIN-OFF
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The following summary answers certain questions you may have with respect
to Daisytek's distribution of PFSweb common stock and highlights certain basic
information from the accompanying Information Statement that may be important
for you. This summary does not contain all of the important information relating
to the spin-off, and we therefore encourage you to read the entire Information
Statement.
<TABLE>
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Q. What will happen in the spin-off? A. In the spin-off, Daisytek will distribute to its
stockholders all of its approximately 80.1%
interest in PFSweb by distributing approximately
0.81 shares of PFSweb common stock for each share
of Daisytek common stock owned by its
stockholders. After the spin-off, PFSweb will be a
separate company, and will no longer be a
subsidiary of Daisytek.
Q. Why is Daisytek undertaking the spin-off? A. We believe that the spin-off will allow both
Daisytek and PFSweb to enhance their ability to
implement their own growth and operating
strategies and will permit and incentivize
management and other personnel to concentrate and
focus on their respective businesses.
Q. What will I receive in the spin-off? A. You will receive approximately 0.81 shares of
PFSweb common stock for every one share of
Daisytek common stock you own as of the close of
business on the June 19, 2000 record date, except
that you will not receive any fractional shares.
All fractional share interests of PFSweb common
stock will be aggregated into whole shares and
sold in the open market and, instead of receiving
fractional shares, you will receive a check
representing your pro rata share of the net
proceeds received in such sale.
</TABLE>
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<TABLE>
<S> <C>
Q. What is the record date? A. Only holders of Daisytek common stock as of the
close of business on June 19, 2000 (the "record
date") are eligible to receive PFSweb stock in the
spin-off.
Q. What is the distribution date? A. The distribution date is the date on which the
shares of PFSweb common stock owned by Daisytek
are distributed to Daisytek's stockholders of
record on the record date. The distribution date
is as of the close of business on July 6, 2000.
Q. When will certificates be mailed? A. Certificates will be mailed to requesting record
stockholders following the July 6, 2000
distribution date.
Q. What happens if I sell my shares of Daisytek A. If you sell your shares of Daisytek common stock
common stock between the record date and the in the "regular way" between the record date and
distribution date? the distribution date, the buyer also receives a
"due bill" entitling the buyer to receive from you
the distribution of the PFSweb common stock.
Settlement should be conducted through the buyer's
broker.
Q. Is the distribution ratio final? A. Yes. The final distribution ratio is 0.81, which
was calculated as of the close of business on the
record date of June 19, 2000.
Q. How does the distribution affect the shares of A. The distribution itself has no effect on the
Daisytek common stock I currently hold? number of shares of Daisytek common stock
currently held by you. Daisytek and PFSweb are
separate companies and, other than the
distribution, the Daisytek common stock and the
PFSweb common stock are not related.
Q. When will Daisytek common stock trade at the A. We expect that the Daisytek common stock will
post-distribution price? trade on a post-distribution ("ex-dividend") basis
on July 7, 2000. The stock market will determine
the price of Daisytek common stock following the
distribution.
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Q. Will I have to turn in my Daisytek stock A. No, you will not have to turn in your Daisytek
certificates? stock certificates.
Q. When will I receive the proceeds relating to A. The sale of fractional share interests will occur
any fractional share interests I may be in the few days following the distribution date,
entitled to? and you should receive a check representing your
pro rata share of the proceeds shortly thereafter.
Q. What happens with Daisytek shares held in a A. Generally, shares held in a brokerage account are
brokerage account? listed under the broker's name. Following the
distribution, the broker will receive the shares
of PFSweb common stock for the account. It will be
up to the broker to allocate the shares as
appropriate. Your next broker's statement
following the distribution date should reflect
your shares of PFSweb common stock. Be sure to
carefully check this statement upon receipt to
make sure all shares were accurately credited. If
you have any questions regarding your statement,
contact your broker.
Q. What are the U.S. federal income tax A. Generally, for U.S. federal income tax purposes,
consequences of the distribution to me as a based on the private letter ruling we have
Daisytek stockholder? received from the IRS, no gain or loss will be
recognized to (and no amount will be included in
the income of) holders of Daisytek common stock
upon the receipt of the PFSweb common stock
distributed to them. However, you will recognize
gain or loss on the receipt of cash in lieu of
fractional shares of PFSweb common stock.
Following the distribution date, additional
information will be made available to you
concerning the calculation of the new tax basis in
your shares of Daisytek common stock and PFSweb
common stock, the tax treatment of cash received
in lieu of fractional shares and certain
statements which are required to be attached to
your applicable U.S. federal income tax returns.
You should consult your own tax advisor as to the
effects of the spin-off given your particular
circumstances.
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Q. Are the shares of PFSweb common stock freely A. Generally yes. PFSweb common stock is traded on
tradable? the Nasdaq National Market under the symbol
"PFSW." However, any person or entity who is
deemed to be an "affiliate" of PFSweb is subject
to certain restrictions on trading the PFSweb
common stock, including the requirements of Rule
144 under the Securities Act.
Q. How much PFSweb common stock will Daisytek A. Daisytek will not retain any ownership of PFSweb
retain? common stock.
Q. What number should I call for more information A. You may contact our information agent, Corporate
on the spin-off? Investor Communications, toll-free at
888-568-9280.
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