For Immediate Release
Contact: Craig McDaniel, APR Michelle Smith
Michael A. Burns & Associates Ketchum
(214) 521-8596 or (214) 259-3427 or
(214) 616-7186 mobile (214) 549-3122 mobile
Daisytek and PFSweb Announce Timing for Spin-Off
Favorable IRS Tax-Free Ruling Received
Plano, Texas (June 8, 2000) - Daisytek International Corporation (Nasdaq: DZTK)
and PFSweb, Inc. (Nasdaq: PFSW) today announced that the Daisytek Board of
Directors has approved the separation of PFSweb from Daisytek by means of a
tax-free dividend of DZTK's remaining 80.1 percent ownership of PFSweb.
Recently, Daisytek received a favorable ruling from the Internal Revenue Service
to the effect that the distribution by Daisytek of its shares of PFSweb stock
will be tax-free to Daisytek and to Daisytek stockholders for U.S. federal
income tax purposes.
PFSweb, a subsidiary of Daisytek, successfully completed an initial
public offering in December 1999. PFSweb has continued to be owned 80.1 percent
by Daisytek. Daisytek previously announced its plan to complete the spin-off of
its remaining ownership of PFSweb to Daisytek shareholders upon receiving the
"PFSweb's complete separation from Daisytek will provide PFSweb the
opportunity to forge its own strategic direction," said Mark C. Layton, chairman
of PFSweb and Daisytek. "The spin-off completes our vision of creating two
leading world-class companies and we believe will enhance shareholder value."
Daisytek has declared a distribution to its stockholders of all of its
14,305,000 PFSweb shares. The distribution is payable at the close of business
on July 6, 2000 (the "Distribution Date"), to Daisytek stockholders of record as
of June 19, 2000 (the "Record Date"). The NASDAQ has advised Daisytek that the
ex-dividend date for Daisytek will be July 7, 2000. Daisytek shareholders as of
the Record Date will receive a pro rata distribution of PFSweb shares owned by
Daisytek. Daisytek shareholders contemplating a sale of Daisytek stock between
the Record Date and the Distribution Date are advised to consult with their
broker as to their entitlement to the distribution of PFSweb shares. Based on
the current shares outstanding at each company, Daisytek shareholders will
receive approximately 0.81 shares of PFSweb stock for each share of Daisytek
stock they own on the Record Date. The exact ratio will not be determined until
the Record Date, but will be calculated as the number of shares of PFSweb owned
by Daisytek (14,305,000) divided by the number of shares of Daisytek outstanding
on the Record Date.
"We have great confidence in PFSweb's ability to be our long-term
business partner and to handle our U.S. computer supplies business
infrastructure," said Jim Powell, president and
CEO of Daisytek. "The Daisytek management team is extremely excited about our
opportunity to focus on client satisfaction, growth initiatives and shareholder
In addition, PFSweb today announced that its board of directors has
adopted a shareholders rights plan designed to protect the long-term value of
PFSweb for its shareholders.
Layton stated, "The rights plan is intended to enable all PFSweb
shareholders to realize the value of their investment in PFSweb."
In connection with the rights plan, the board declared a dividend of
one preferred share purchase right (a "Right") for each share of PFSweb's common
shares outstanding at the close of business on July 6, 2000 (after giving effect
to the spin-off). The Rights will expire on July 6, 2010.
The Rights will be exercisable only if a person or group acquires 15
percent or more of PFSweb's common shares or announces a tender offer, the
consummation of which would result in ownership by a person or group of 15
percent or more of PFSweb's common shares. Each Right will entitle the
shareholders to buy one one-thousandth of a share of a new series of preferred
shares at an exercise price of $67.
If PFSweb is acquired in a merger or other business combination
transaction after a person has acquired 15 percent or more of PFSweb's
outstanding common shares, each Right will entitle its holder to purchase, at
the Right's then-current exercise price, a number of the acquiring company's
common shares having a market value of twice such exercise price. In addition,
if a person or group acquires 15 percent or more of PFSweb's outstanding common
shares, each Right will entitle its holder (other than such person or member of
such group) to purchase, at the Right's then-current exercise price, a number of
PFSweb's common shares having a market value of twice such exercise price.
Under certain circumstances, the board of directors may exchange the
Rights, in whole or in part, at an exchange ratio of one share of common share
(or one-thousandth of a share of the new series of preferred shares) per Right.
Prior to the acquisition by a person or group of beneficial ownership
of 15 percent or more of PFSweb's common shares, the Rights are redeemable for
$.001 per Right at the option of the board of directors. Prior to such time, the
terms of the Rights may be amended by the board.
Daisytek is a leading distributor of computer supplies, office products, and
film and tape media. Serving customers in more than 50 countries, Daisytek
distributes almost 20,000 products from more than 150 manufacturers. Daisytek is
headquartered in Plano, Texas, and maintains sales and distribution centers in
the United States, Australia, Canada and Mexico.
About PFSweb, Inc.
When the world's brand names need proven, fast, and secure business
infrastructure to enable traditional and e-commerce strategies, they choose
PFSweb for comprehensive outsourcing solutions. Its team of experts design
diverse solutions for clients around a flexible core business
infrastructure. PFSweb provides solutions that include: e-marketplace order
management, Web enabled customer service centers, customer lifecycle management,
international distribution centers, billing and collection services, and ERP
PFSweb, Inc., a subsidiary of Daisytek International Corporation (Nasdaq: DZTK),
completed an IPO in December 1999. PFSweb continues to be owned 80 percent by
Daisytek. Daisytek has announced that it plans to complete a spin-off of its
remaining ownership of PFSweb.
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), our reliance on
the fees generated by the transaction volume or product sales of our clients;
the impact of strategic alliances; trends in the market for our services; trends
in e-commerce; whether we can continue and manage growth; changes in the trend
toward outsourcing; increased competition; effects of changes in profit margins;
the unknown effects of possible system failures and rapid changes in technology;
and trends in government regulation. This news release also contains other
forward looking statements, including those related to the spin-off of PFSweb,
Inc. Consummation of the transactions is uncertain and realization of the
anticipated results could take longer than expected and implementation
difficulties and market factors could alter anticipated results. A description
of these factors, as well as other factors which could affect the Daisytek and
PFSweb businesses, is set forth in Daisytek's Prospectus dated March 26, 1998,
Daisytek's 10-K for the fiscal year ended March 31, 1999, Daisytek's 10-Q for
the period ended December 31, 1999, PFSweb's Prospectus dated December 2, 1999
and PFSweb's 10-Q for the period ended December 31, 1999.
This news release and more information about PFSweb and Daisytek are available
at www.pfsweb.com and at www.daisytek.com. PFSweb is a registered trademark.
Daisytek is a registered trademark of Daisytek, Incorporated. All rights