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 24, 2002
Daisytek International Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25400 75-2421746
- --------------- ----------- -----------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1025 Central Expressway South, Suite 200
Allen, Texas 75013
(Address of Principal Executive Offices, including zip code)
(972) 881-4700
(Registrant's Telephone Number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS
On October 24, 2002, Daisytek International Corporation issued a press
release filed herewith as Exhibit 99.1, regarding expected goodwill and other
charges and lower than expected earnings for the quarter ended September 30,
2002.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired
Not applicable
(b) Pro forma financial information
Not applicable
(c) Exhibits
99.1 Press Release dated October 24, 2002.
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
By: /s/ RALPH MITCHELL
--------------------------------------------
Ralph Mitchell
Chief Financial Officer,
Executive Vice President - Finance
Dated: October 25, 2002
Index to Exhibits
Exhibit
Number Description
99.1 Press Release dated October 24, 2002.
( BW)(TX-DAISYTEK-INTL)(DZTK) Daisytek Expects to Take Goodwill Charge
Related to Tape Company and Argentina Businesses
Business Editors & High Tech Writers
ALLEN, Texas--(BUSINESS WIRE)--Oct. 24, 2002--
Tape Company, Argentina and Costs Related to Office Products
Expansion Result in Lower-than-Expected Earnings for Second Quarter
Daisytek International Corporation (Nasdaq:DZTK) today announced
that it is reviewing goodwill balances related to its Tape Company and
Argentina businesses for possible impairment and write-down. The
company stated that consolidated revenue for the quarter ended Sept.
30, 2002, was approximately $450 million, an approximate 61% increase
over prior year, and is in line with expectations. However,
performance of the Tape Company and Argentina businesses plus
incremental costs related the company's U.S. office products rollout
are expected to adversely impact the second quarter results, and the
company will not meet analyst earnings estimates for the quarter.
Jim Powell, president and CEO, said, "Although The Tape Company is
still very profitable and we continue to implement new sales,
marketing, and cost-savings initiatives, industry unit price
degradation is expected at a higher rate than any savings or gains we
can hope to make. Results for the second quarter confirm that negative
industry trends such as price degradation and volume declines continue
to trouble this business."
The Tape Company represents approximately 6% of Daisytek's
consolidated revenues. Goodwill related to the subsidiary is
approximately $24 million and originated primarily from acquisitions
by prior management of Steadi-Systems in fiscal year 1998 and VTP in
fiscal year 1999. Daisytek is reviewing this amount for possible
impairment in light of current management forecasts, and is also
considering certain increases in reserve levels for the business.
"As our new warehouse network continues to expand, it is our plan
to collapse some of the existing Tape Company distribution centers
into our new regional network," Powell said. "We have already folded
much of The Tape Company's back-office administrative functions into
Daisytek. While the management team has done a great job of running
the business as cost-effectively as possible and developing new
initiatives to drive growth and profitability, the industry issues
outweigh their current efforts."
Daisytek is also reviewing the goodwill balance related to its
October 2000 acquisition of Etertin y CIA, S.A. in Argentina of
approximately $2 million for impairment in light of ongoing economic
conditions there. Goodwill charges will not affect cash flows.
"Argentina continues to experience significant economic and
political turmoil. We remain committed to our presence in this
important market and we are optimistic that conditions in Argentina
will improve. However, any recovery is likely to be longer term than
previously anticipated and our operations in Argentina are currently
at a near standstill," said Powell.
The company expects to increase certain reserve levels for its
Latin American operations, including Argentina, which will also
adversely affect second quarter results.
"Daisytek's office products initiative is on schedule for a fourth
fiscal quarter rollout. Our new 900-page Business Products 2003
catalog, containing full lines of both computer supplies and office
products, is ready for distribution in January, and it's impressive, "
Powell said.
In a major strategic milestone, Daisytek's new regional
distribution facilities in Southern California and Upstate New York
are ready to be fully operational for the January office products
launch, stretching the company's distribution network coast to coast.
These two facilities are part of a hub-and-spoke distribution model
designed to work in conjunction with the company's existing Superhub
in Memphis, Tenn. Three other regional distribution centers are
planned for next year. In addition to allowing the company to take
advantage of cost-effective ground transportation, the new
distribution centers will support the company's goal to be the
lowest-cost single-source provider of computer supplies and office
products.
"Unfortunately, costs related to our U.S. expansion into office
products, including the production of our new catalog;
higher-than-expected costs in the build-out of our new warehouses;
certain delays in converting from more expensive air delivery to
lower-cost ground; and interest costs on investment in incremental
inventory, have negatively impacted our second quarter performance,"
Powell said.
The recent acquisition of ISA in Europe, and Daisytek's other
international and domestic operations, are performing in line with
expectations. "We are very happy with the progress ISA has made since
our acquisition. Our European team continues to deliver the results we
expect and has identified areas for further significant improvement.
This positions Daisytek for significant earnings growth as ISA
continues to improve, and our European presence will play an important
part in our goal to be the largest distributor of computer and office
supplies in the world," said Powell.
Daisytek has confirmed that it expects revenue to be $1.8 billion
to $1.9 billion, as previously stated, for this fiscal year. The
company also confirmed that it is maintaining its earnings estimates
for next fiscal year of $1.40 to $1.50 per share, citing office
products expansion, growth of its drug and grocery sales channel, as
well as international expansion - specifically ISA - as major
contributors.
"Although we are disappointed that our near-term performance will
be below expectations, again for reasons related primarily to The Tape
Company, Latin America, Argentina and office products rollout costs,
it is important to note that the bulk of our business is performing as
expected. We remain committed to our long-term goals and are confident
that our strategies will result in continued earnings growth," Powell
said.
Daisytek will conduct a conference call Friday at 11 a.m. Eastern,
10 a.m. Central, 9 a.m. Mountain and 8 a.m. Pacific. To participate,
callers should dial 801-983-4013 and provide identification. Two hours
after the call, a recorded playback can be heard for 14 days at
402-220-1490. The access code for the call playback is 1018.
Participation in the replay requires both the access code and
identification. Further information and earnings guidance will be
available when Daisytek releases second quarter earnings, now
scheduled for Nov. 7.
About Daisytek
Daisytek International is a worldwide distributor of computer and
office supplies, peripherals and professional tape media. In addition,
it offers fee-based marketing, demand-generation and fulfillment
services. Daisytek sells its products and services in the United
States, Europe, Canada, Australia, Mexico and South America,
distributing more than 25,000 products from about 500 manufacturers,
including printer supplies, magnetic and data storage media, video and
motion picture film. This news release and more information about
Daisytek are available at www.daisytek.com. The company's annual
report is at www.dztkannualreport.com. These Web sites are not part of
this release. Daisytek is a registered trademark of Daisytek,
Incorporated. All rights reserved.
The matters discussed in this news release contain both historical
and forward-looking statements. All statements other than statements
of historical fact are, or may be deemed to be, forward-looking
information within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Act of 1934, as
amended. You can identify these statements by the fact that they do
not relate strictly to historical or current facts, but rather reflect
our current expectations concerning future results and events.
Forward-looking statements relating to such matters as our financial
condition and operations, including forecasted information, are based
on our management's current intent, belief or expectations regarding
our industry or us. These forward-looking statements including
forecasts are not guarantees of future performance and involve risks,
uncertainties and assumptions that are difficult to predict. In
addition, some forward-looking statements are based upon assumptions
as to future events that may not prove to be accurate. Therefore,
actual outcomes and results may differ materially from what is
expected or forecasted in such forward-looking statements. We
undertake no obligation to update publicly any forward-looking
statement for any reason, even if new information becomes available or
other events occur in the future.
Certain factors, including but not limited to, general economic
conditions, industry trends, the loss of or inability to hire skilled
personnel, the loss of key suppliers or customers, the loss or
material decline in service of strategic product shipping
relationships, customer demand, product availability, competition
(including pricing and availability), risks inherent in acquiring,
integrating and operating new businesses and investments,
concentrations of credit risk, distribution efficiencies, capacity
constraints, technological difficulties (including equipment failure
or a breach of our security measures), the volatility of our common
stock, economic and political uncertainties arising as a result of
terrorist attacks, seasonality, exchange rate fluctuations, foreign
currency devaluations and the regulatory and trade environment (both
domestic and foreign) could cause our actual results to differ
materially from the anticipated results or other expectations
expressed in our forward-looking statements. There may be additional
risks that we do not currently view as material or that are not
presently known.
Other factors that could affect Daisytek are set forth in
Daisytek's 10-K for the fiscal year ended March 31, 2002.
--30--mjr/da*
CONTACT: Daisytek International
Jim Powell, 972/881-4700
or
Michael A. Burns & Associates
Craig McDaniel, APR, 214/521-8596 or 214/616-7186 mobile
cmcdaniel@mbapr.com