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We are subject to market risk associated with changes in foreign currency
exchange rates. In order to manage these risks, beginning in the year ended
March 31, 1999, our risks were considered in Daisytek's corporate risk
management program, which included entering into certain forward currency
exchange contracts. We did not enter into any such contracts on our own.
Currently, our foreign currency exchange rate risk is primarily limited to
Canadian dollars. In the future, we believe our foreign currency exchange risk
will also include other currencies applicable to certain of our international
operations, including the Euro. In order to mitigate foreign currency rate risk,
we will consider entering into forward currency exchange contracts to hedge our
net investment and long-term intercompany payable balances.
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