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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 Act of 1934
Date of Report (Date of earliest event reported): December 16, 1997
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DANKA BUSINESS SYSTEMS PLC
(Exact name of registrant as specified in its charter)
UNITED KINGDOM 0-20828 98-0052869
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
11201 DANKA CIRCLE NORTH
ST. PETERSBURG, FLORIDA 33716
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 813-576-6003
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ITEM 5. OTHER EVENTS.
On December 16, 1997, Danka Business Systems, PLC (the "Company")
issued the Press Release, attached hereto as Exhibit "99," announcing that its
previously reported global integration project is progressing slower than
anticipated and that as a result, based on preliminary information through
November of this year, the Company expects that revenue for its third quarter
ending December 31, 1997 will range between $815.0 million and $825.0 million,
and net earnings between $11.7 million and $13.6 million, or $0.21 to $0.24 per
American Depositary Share ("ADS") on a diluted basis. The Company's revenue
and net earnings for fiscal year ending March 31, 1998 are also expected to be
impacted by the slower progress of its integration, with revenue expected to
range between $3.275 billion and $3.325 billion and net earnings expected to
range from $63.5 million to $66.7 million, or $1.11 to $1.16 per ADS on a
diluted basis.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
EXHIBIT
NUMBER EXHIBIT
99 Press Release of the Company dated December 16, 1997,
announcing Estimated Third Quarter Results.
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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.
DANKA BUSINESS SYSTEMS PLC
By: /S/ DAVID C. SNELL
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David C. Snell
Its: Chief Operating Officer
Dated: December 17, 1997
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INDEX TO EXHIBITS
EXHIBIT
NUMBER EXHIBIT
99 Press Release of the Company dated December 16, 1997,
announcing Estimated Third Quarter Results.
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Exhibit 99
DANKA PRESS RELEASE
FOR IMMEDIATE RELEASE DAVID C. SNELL
813-576-6003
DECEMBER 16, 1997 PAUL G. DUMOND
011-44171-399-3000
DANKA ANNOUNCES ESTIMATED THIRD QUARTER RESULTS
INTEGRATION OF GLOBAL OPERATIONS PROGRESSING SLOWER THAN ANTICIPATED
Danka Business Systems PLC (NASDAQ: DANKY) today announced that its previously
reported global integration project (the "Uniting Danka Project") is
progressing slower than anticipated and that as a result, based on preliminary
information through November of this year, the Company expects that revenue for
its third quarter ending December 31, 1997 will range between $815.0 million
and $825.0 million, and net earnings between $11.7 million and $13.6 million,
or $0.21 to $0.24 per American Depositary Share ("ADS") on a diluted basis.
The Company's revenue and net earnings for fiscal year ending March 31, 1998
are also expected to be impacted by the slower progress of its integration,
with revenue expected to range between $3.275 billion and $3.325 billion and
net earnings expected to range from $63.5 million to $66.7 million, or $1.11 to
$1.16 per ADS on a diluted basis.
Revenue for the third quarter is expected to be $50.0 million short of
projections, which is directly associated with the complexities of the Uniting
Danka Project. The impact on net earnings from this shortfall in revenue is
expected to be $12.0 million.
The Company also expects to recognize an additional charge in the third quarter
of approximately $21.0 million related to the continued integration of the OI
business. The charge will consist of approximately $11.0 million of severance
and related termination benefits, and approximately $10.0 million for the
anticipated shortfall under the Kodak supply agreements.
Daniel M. Doyle, Danka's chief executive commented, "I am extremely
disappointed in the gap in our expected third quarter results, which have been
impacted by our efforts to unite the Office Imaging business and Danka Office
Products. Management is taking steps to rectify the weak performance. The
Company also continues to complete the workforce reductions as well as realize
benefits from the consolidation of real estate. We continue to be committed to
the Uniting Danka Project which is essential to the future success of the
Company. However, we underestimated the complexity of the task and
overestimated how quickly we would realize the benefits. While the positive
results we envision have not yet been totally achieved, we remain confident
that we can successfully meet the challenges before us."
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In September of this year, the Company announced its plan to unify the Danka
Office Products business and the Office Imaging unit purchased from Eastman
Kodak Company a year ago. The decision to immediately unify the two
organizations into a united Danka was the result of overwhelming demand by
customers, investors and employees. Management and outside consultants
determined that a rapid unification was in the long-term best interest of the
Company.
Danka Business Systems PLC, headquartered in London, England and St.
Petersburg, Florida, is one of the world's largest independent suppliers of
office equipment and related services, parts and supplies. Danka employs over
20,000 people and provides office products and services from over 700 offices
in more than 30 countries around the world.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release including statements related
to the Company's estimated range of revenue and net earnings for the third
quarter and fiscal year are forward-looking, and contain information relating
to the Company that is based on the beliefs of management as well as
assumptions, made by, and information currently available to, management. The
words "goal", "expect", "believe" and similar expressions as they relate to the
Company or the Company's management, are intended to identify forward-looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions that could cause actual results to differ materially from those
reflected in the forward-looking statements. Factors that might cause such
differences include, but are not limited to (i) the demands that the Office
Imaging acquisition (the "Acquisition") and the unification thereof with Danka
Office Products ("OP") will place on the Company's resources, infrastructure,
current operations and employees (ii) the Company's inability to achieve
substantial operating cost reductions and efficiencies in productivity from the
Acquisition, the revised information technology system, the revised management
structure or other similar Company wide initiatives associated with the
unification, (iii) the potential for unanticipated increases in expenditures
for labor, equipment, materials and supplies required to manage the increased
size of the Company as a result of the Acquisition, (iv) the Company's
inability to effectively manage the increased number of employees and retain
current key management personnel and other key employees added as a result of
the Acquisition, who are accustomed to a different corporate culture,
compensation arrangements and benefits programs, while the Company
simultaneously reduces the overall size of its worldwide workforce, (v) the
potential increased costs resulting from technological developments, revisions
to existing information technology systems and the integration of information
technologies between OI and OP, (vi) increased competition resulting from other
high volume copier distributors and the discounting of such copiers by
competitors, (vii) the Company's ability to manage and reduce its outstanding
debt, (viii) the inability of the Company to continue to gain access to and
successfully distribute new and current products brought to the marketplace at
competitive costs and prices, (ix) the ultimate amount of additional costs
associated with the rapid unification and ultimate integration and the amount
and timing of the realization of the anticipated benefits from such unification
and complete integration, (x) the inability of the Company to effectively
manage the increased size of its inventory and product line, (xi) the Company's
inability to comply with the purchasing requirements under its supply
agreements with its vendors, including Kodak, and the impact thereof and (xii)
other risks including those risks identified in the Company's filings
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with the Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. The Company undertakes no
obligation and does not intend to update these forward-looking statements to
reflect events or circumstances that arise after the date hereof.
11201 Danka Circle North 33 Cavendish Square
St. Petersburg, FL 33716 London W1M 0DE
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