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For Immediate Release
Contact: Mark C. Layton Craig McDaniel, Vice
President, Chief Executive President and AE
Officer and or Preston F. Kirk, APR
Chief Operating Officer Michael Burns & Associates
or Thomas J. Madden (214) 521-8596
Vice President - Finance and cmcdaniel@mbapr.com
Chief Financial Officer kirkpf@flash.net
Daisytek International Corporation
(972) 881-4700
mlayton@daisytek.com
tmadden@daisytek.com
Daisytek International Reports 20th Straight Quarter of Record Results
Company's Primary Growth Strategies Continue to Fuel Growth
DALLAS, TEXAS (May 5, 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
fourth quarter and fiscal year ended March 31, 1998. The results mark
Daisytek's 20th consecutive quarter of record performance compared to year-ago
quarters,and its 5th consecutive year of record performance.
"March marked the end of another highly successful quarter and
financial year for Daisytek," said Mark C. Layton, president, chief
executive officer and chief operating officer. "Our targeted
objectives of continuing to grow year-on-year revenue and net income at
a rate of 20 percent were significantly overachieved this fiscal year.
Revenue and net income for fiscal year 1998 (FY98) grew at a rate of
approximately 25 percent versus the previous year, excluding the fourth
quarter's one-time business integration expenses incurred related to
the Steadi-Systems, Ltd. ("Steadi") acquisition. Congratulations to
the entire Daisytek team on these very fine results."
Net sales for the fourth quarter of FY98 increased 25.1 percent to
$218.1 million, compared to $174.3 million for the fourth quarter of
FY97. Net income, prior to the one-time expenses, for the fourth
quarter of FY98 was $4.8 million, up 19.2 percent over FY97's fourth
quarter net income of $4.0 million. During the fourth quarter of FY98,
the company incurred approximately $0.7 million (pre-tax) in one-time
business integration expenses relating to Steadi, a leading independent
distributor of media products to the filmed entertainment and
multimedia industries which it acquired during January 1998. Diluted
earnings per share for the fourth quarter of FY98, excluding these one-
time expenses, were $0.33 per share on 14.5 million shares, versus the
prior fiscal year's fourth quarter of $0.29 per share on 13.8 million
shares. After taking into account the one-time expenses, diluted
earnings per share for the fourth quarter of FY98 were $0.30 per share.
Net sales for FY98, increased 25.4 percent to $757.0 million,
compared to $603.8 million for FY97. Net income prior to one-time
expenses for FY98 was $16.6 million, up 24.3 percent over FY97's net
income of $13.4 million. Diluted earnings per share for FY98,
excluding one-time expenses, were $1.16 per share on 14.3 million
shares, versus the prior fiscal year's earnings per share of $0.97 per
share on 13.8 million shares. After taking into account the one-time
expenses, Daisytek had diluted earnings per share of $1.13 per share
for FY98.
"We are extremely proud of Daisytek's fourth quarter operating income
as a percent of net sales of approximately 4 percent, excluding the
one-time Steadi integration expenses, which is at the top end of the
company's targeted operating income range of 3.5 to 4 percent of net
sales," Layton added. "Net income and earnings per share levels also
grew strongly, but slightly more slowly, due to increased debt levels
as a result of the Steadi acquisition, somewhat higher inventory levels
due to attractive purchase terms from some suppliers and expanded
inventory levels at Steadi."
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Daisytek Fourth Quarter and Fiscal Year 1998 Earnings....Page 2
"This quarter's financial results clearly reflect the impact of the
acquisition of Steadi," said Layton. "Daisytek's gross profit margin
and SG&A expense, excluding the one-time expenses, as a percent of net
sales were more than 50 basis points higher than FY97's fourth quarter
primarily due to the significantly higher gross profit and SG&A
percentages in Steadi's business. Our overall objective for the Steadi
acquisition, once the business integration is completed, is to offset
pressures in gross profit as a percent of sales felt throughout our
computer supplies wholesale business through maintaining Steadi's
higher gross margin percentages while reducing its SG&A percentages."
"This quarter saw significant achievements in each of Daisytek's
primary growth strategies, " Layton noted. "We continue to focus on
the growing computer consumables niche of the office supply industry,
including new customer channels where we see consumer demand potential
for our products, such as the grocery, drug and mass merchant channels.
This quarter, we added new relationships in this customer channel with
JC Penney Catalog and CVS Pharmacy."
"Some of the most exciting news for the quarter relates to our strategy
of marketing our telemarketing and distribution expertise as a product
in themselves," Layton stated. "Priority Fulfillment Services (PFS),
our subsidiary that provides outsourced logistics services to client
companies worldwide, has recently entered into 5 new service
arrangements. We are proud to welcome to the PFS family Apple
Corporation, Exabyte and Tektronix. Further, we are very excited about
two new arrangements with partners completely outside the technology
industries, American Eagle Outfitters, a growing specialty retailer of
casual clothing, and Thistle Hill, a leading manufacturer and catalog
distributor of natural health products and supplements."
"Our near-term outlook for our domestic computer supplies business,
considering the maturing of this market and the much higher revenue
base from which we operate, is for the company's domestic growth rate
to settle around 15 percent," Layton emphasized. "We continue to
target an international growth objective in the 25 to 35 percent range.
Combining the domestic and international growth objectives with our PFS
and acquisition initiatives, we continue to target year-on-year net
sales and income growth rates of 20 percent."
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Daisytek Fourth Quarter and Fiscal Year 1998 Earnings....Page 3
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
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, 1997.
- financial statements follow -
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Daisytek Fourth Quarter and Fiscal Year 1998 Earnings....Page 4
Daisytek International Corporation and Subsidiaries
Consolidated Statements of Operations
(In Thousands, Except Per Share Data)
Three Months Ended Fiscal Year Ended
March 31, (Unaudited) March 31,
------------------------------- --------------------------------
1998 1997 %Change 1998 1997 %Change
--------- --------- ------- --------- --------- -------
NET SALES $ 218,061 $ 174,343 25.1% $ 757,027 $ 603,814 25.4%
COST OF SALES 194,700 156,840 24.1% 679,726 543,848 25.0%
--------- --------- --------- ---------
Gross profit 23,361 17,503 33.5% 77,301 59,966 28.9%
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 14,541 10,552 37.8% 47,684 36,630 30.2%
--------- --------- --------- ---------
Income from operations
before one-time charges 8,820 6,951 26.9% 29,617 23,336 26.9%
ACQUISISTION INTEGRATION
COSTS 735 -- 735 --
--------- --------- --------- ---------
Income from operations 8,085 6,951 16.3% 28,882 23,336 23.8%
INTEREST EXPENSE 1,079 457 136.1% 2,698 1,677 60.9%
--------- --------- --------- ---------
Income before
income taxes 7,006 6,494 7.9% 26,184 21,659 20.9%
PROVISION FOR INCOME TAXES 2,682 2,487 7.8% 10,024 8,292 20.9%
--------- --------- --------- ---------
NET INCOME $ 4,324 $ 4,007 7.9% $ 16,160 $ 13,367 20.9%
========= ========= ========= =========
INCOME PER
COMMON SHARE:
Basic $ 0.32 $ 0.31 3.2% $ 1.19 $ 1.03 15.5%
Diluted $ 0.30 $ 0.29 3.4% $ 1.13 $ 0.97 16.5%
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 13,678 13,024 13,566 12,934
Diluted 14,513 13,798 14,343 13,826
Consolidated Balance Sheet Data
(In Thousands)
March 31, March 31,
1998 1997
--------- ---------
Trade accounts receivable, net $ 122,621 $ 90,778
Inventories, net of Priority
Fulfillment Services Division $ 78,060 $ 54,426
Inventories, Priority Fulfillment
Services Division $ 11,634 $ 10,354
Trade accounts payable $ 83,787 $ 69,321
Long-term debt, less current portion $ 12,655 $ 30,454
Shareholders' equity $ 139,370 $ 67,193
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