-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QfdLM65Fe13dajL61MFUyPKBXu/j0wTvu8pxF+sUxwdBgbuldO0DmiOgaFyIVZG7 nCmN0E4MF1IHNAi7tUMwCg== 0001036050-98-001246.txt : 19980803 0001036050-98-001246.hdr.sgml : 19980803 ACCESSION NUMBER: 0001036050-98-001246 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980729 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980730 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNISOURCE WORLDWIDE INC CENTRAL INDEX KEY: 0001027282 STANDARD INDUSTRIAL CLASSIFICATION: 5110 IRS NUMBER: 135369500 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-14482 FILM NUMBER: 98673959 BUSINESS ADDRESS: STREET 1: P O BOX 3000-0935 STREET 2: 1100 CASSATT RD CITY: BERWYN STATE: PA ZIP: 19312 BUSINESS PHONE: 6102964470 MAIL ADDRESS: STREET 1: P O BOX 3000-0935 CITY: BERWYN STATE: PA ZIP: 19312 8-K 1 FORM 8-K 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) July 29, 1998 ---------------- UNISOURCE WORLDWIDE, INC. - - ------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Delaware File No. 1-14482 13-5369500 - - ------------------------------------------------------------------------------- (STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER JURISDICTION FILE NUMBER) IDENTIFICATION NO.) OF INCORPORATION) 1100 Cassatt Road, Berwyn, Pennsylvania 19312 P.O. Box 3000-0935, Berwyn, Pennsylvania 19312 ----------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 296-4470 ------------------- Not Applicable ----------------------------------------------------------------------------- (FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) Item 5. Other Events. ------------ On July 29, 1998, the Registrant issued the five press releases described in Item 7 below and attached to this report. Item 7. Financial Statements and Exhibits. --------------------------------- (c) Exhibits. -------- (99.1) Press Release dated July 29, 1998 (Unisource Reports Third Quarter Earnings). (99.2) Press Release dated July 29, 1998 (Unisource Approves Regular Quarterly Dividend, Announces Intention to Reduce Future Dividends). (99.3) Press Release dated July 29, 1998 (Unisource Names New Senior Vice President of Procurement). (99.4) Press Release dated July 29, 1998 (Unisource Announces Restructuring Details, Plan Includes Dividend Reduction and New Capital Structure). (99.5) Press Release dated July 29, 1998 (Unisource Names New Senior Vice President of Sales). 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. UNISOURCE WORLDWIDE, INC. (Registrant) By: /s/ Thomas A. Decker ------------------------------ Thomas A. Decker Senior Vice President, General Counsel and Secretary Dated: July 30, 1998 Exhibit Index ------------- (99.1) Press Release dated July 29, 1998 (Unisource Reports Third Quarter Earnings). (99.2) Press Release dated July 29, 1998 (Unisource Approves Regular Quarterly Dividend, Announces Intention to Reduce Future Dividends). (99.3) Press Release dated July 29, 1998 (Unisource Names New Senior Vice President of Procurement). (99.4) Press Release dated July 29, 1998 (Unisource Announces Restructuring Details, Plan Includes Dividend Reduction and New Capital Structure). (99.5) Press Release dated July 29, 1998 (Unisource Names New Senior Vice President of Sales). EX-99.1 2 PRESS RELEASE DATED 7/29/98 (UNISOURCE REPORTS 3RD QTR EARNINGS) EXHIBIT 99.1 NEWS RELEASE Contact Martha A. Buckley JoAnn P. Huston Director, Corporate Communications Manager, Investor Relations 610-722-3511 610-722-3513 mbuckley@unisourcelink.com jhuston@unisourcelink.com UNISOURCE REPORTS THIRD QUARTER EARNINGS BERWYN, PENNSYLVANIA JULY 29, 1998 Unisource Worldwide, Inc. (NYSE:UWW) reported today earnings of $0.11 per share for its third quarter of fiscal 1998, which ended June 30, 1998, within the range expected by security analysts. Those results do not reflect a $0.26 per share charge related to an extensive restructuring plan announced by the company today. Including the charge, the company reported a loss of $0.15 per share for the quarter. The extensive restructuring plan is designed to improve service to customers, decrease costs, increase financial flexibility and grow profitable market segments. The restructuring plan is expected to significantly improve the performance of the company in 1999 and beyond. Revenues for the third quarter of fiscal 1998 were $1.8 billion, a 3.3% increase over the third quarter of fiscal 1997. Excluding the restructuring charge, operating income declined 24.9% to $24.6 million, and net income declined 40% to $7.5 million. "While our operating results are clearly unsatisfactory, I am pleased that our financial management programs have generated significantly improved cash flow," said Ray B. Mundt, chairman and chief executive officer. Cash flow from operations for the nine months ended June 30, 1998 was $101 million, excluding $150 million related to asset securitization. This cash generation has already exceeded the company's forecasted operating cash flow for the year. - more For the nine months ended June 30, 1998, revenues increased approximately 6.7% to $5.6 billion. Operating income was $85.5 million, down 19.9% from the same period last year, while net income decreased 34.1% to $28.5 million. Both basic and diluted earnings were $0.41 per share, 35.9% below earnings for the first nine months of fiscal 1997. All nine-month comparisons exclude both the special charges of $1.68 per share, related to the company's former IT initiative and the sale of its grocery business, taken in the first quarter of fiscal 1998 and the current restructuring charge of $0.26 per share. Including those charges, the company reported a loss of $1.52 per share for the nine-month period. Unisource Worldwide, Inc. (http://www.unisourcelink.com), headquartered in Berwyn, Pennsylvania, is one of the largest distributors of paper products and supply systems in North America. Fiscal 1997 revenues exceeded $7 billion. # # # UNISOURCE WORLDWIDE, INC. FINANCIAL SUMMARY (in thousands, except earnings per share)
Three Months Ended June 30 ----------------------------------------- 1998 1997 % Change ----------- ----------- ---------- Revenues Printing and imaging $ 1,152,073 $ 1,132,829 1.7 % Supply systems 669,343 631,212 6.0 - - ------------------------------------------------------------------------------------------ 1,821,416 1,764,041 3.3 Costs and Expenses Cost of goods sold - printing and imaging 1,000,156 973,029 2.8 Cost of goods sold - supply systems 506,375 496,601 2.0 Selling and administrative 290,304 261,686 10.9 Restructuring Charge 27,600 - - - ------------------------------------------------------------------------------------------ 1,824,435 1,731,316 - - ------------------------------------------------------------------------------------------ Income from Operations (3,019) 32,725 Interest 11,155 10,541 - - ------------------------------------------------------------------------------------------ Income Before Income Taxes (14,174) 22,184 Provision for Income Taxes (3,759) 9,650 - - ------------------------------------------------------------------------------------------ Net Income $ (10,415) $ 12,534 ========== ========== Basic Earnings Per Share $ (0.15) $ 0.19 ========== ========== Diluted Earnings Per Share $ (0.15) $ 0.19 ========== ========== Basic Shares Outstanding 68,878 67,131 ========== ========== Diluted Shares Outstanding 68,878 67,533 ========== ========== Operations Analysis: Gross profit %, printing and imaging 13.2% 14.1% Gross profit %, supply systems 24.3% 21.3% Total gross profit % 17.3% 16.7% SG&A as a % of revenues 15.9%* 14.8% SG&A as a % of gross profit 92.2%* 88.9% Operating income % of revenues 1.3%* 1.9%
* Excludes Restructuring Charge.
UNISOURCE WORLDWIDE, INC. FINANCIAL SUMMARY (in thousands, except earnings per share) Nine Months Ended June 30 ------------------------------------------ 1998 1997 % Change ------------- ------------- ----------- Revenues Printing and imaging $ 3,544,985 $ 3,357,566 5.6 % Supply systems 2,013,486 1,850,916 8.8 - - ---------------------------------------------------------------------------------------------------- 5,558,471 5,208,482 6.7 Costs and Expenses Cost of goods sold - printing and imaging 3,082,782 2,874,762 7.2 Cost of goods sold - supply systems 1,524,748 1,447,226 5.4 Selling and administrative 865,442 779,726 11.0 Special charge (1) 168,000 - Restructuring charge (2) 27,600 - - - ---------------------------------------------------------------------- ---------------------------- 5,668,572 5,101,714 - - ---------------------------------------------------------------------- ---------------------------- (Loss) Income from Operations (110,101) 106,768 Interest 35,898 30,932 - - ---------------------------------------------------------------------- ---------------------------- (Loss) Income Before Income Taxes (145,999) 75,836 (Benefit) Provision for Income Taxes (3) (41,658) 32,603 - - ---------------------------------------------------------------------- ---------------------------- Net (Loss) Income $ (104,341) $ 43,233 ========== ========== Basic (Loss) Earnings Per Share (4) $ (1.52) $ 0.64 ========== ========== Diluted (Loss) Earnings Per Share (4) $ (1.52) $ 0.64 ========== ========== Basic Shares Outstanding 68,662 67,074 ========== ========== Diluted Shares Outstanding 68,662 (5) 67,735 ========== ========== Operations Analysis: Gross profit %, printing and imaging 13.0% 14.4% Gross profit %, supply systems 24.3% 21.8% Total gross profit % 17.1% 17.0% SG&A as a % of revenues 15.6%* 15.0% SG&A as a % of gross profit 91.0%* 88.0% Operating income % of revenues 1.5%* 2.0% * Excludes Special Charge and Restructuring Charge. (1) Represents write-off of capitalized development and related costs associated with NADS. (2) Represents restructuring charge associated with streamlining the Company's organizational structure. (3) Includes a $5.7 million tax charge related to non-deductible intangible assets associated with the sale of a significant portion of the Company's United States based Grocery Supply Systems business. (4) The special charge in fiscal 1998 amounted to an after-tax loss of $109 million (($1.60) per share). The tax charge associated with the sale of the Grocery Supply Systems amounted to a loss of ($0.08) per share and the restructuring charge amounted to an after-tax loss of $17.9 million ($0.26 per share). (5) Diluted shares outstanding exclude the impact of stock options due to the antidilutive effect on the loss per share.
This schedule presents the financial results of Unisource Worldwide, Inc. excluding a $27.6 million, $17.9 million net of tax ($0.26 per share) restructuring charge associated with streamlining the Company's organizational structure. UNISOURCE WORLDWIDE, INC. FINANCIAL SUMMARY (in thousands, except earnings per share)
Three Months Ended June 30 -------------------------------------------- 1998 1997 % Change ----------- ----------- ------------ Revenues Printing and imaging $ 1,152,073 $ 1,132,829 1.7 % Supply systems 669,343 631,212 6.0 - - ------------------------------------------------------------------------------------- 1,821,416 1,764,041 3.3 Costs and Expenses Cost of goods sold - printing and imaging 1,000,156 973,029 2.8 Cost of goods sold - supply systems 506,375 496,601 2.0 Selling and administrative 290,304 261,686 10.9 - - ------------------------------------------------------------------------------------- 1,796,835 1,731,316 - - ------------------------------------------------------------------------------------- Income from Operations 24,581 32,725 (24.9) Interest 11,155 10,541 - - ------------------------------------------------------------------------------------- Income Before Income Taxes 13,426 22,184 Provision for Income Taxes 5,907 9,650 - - ------------------------------------------------------------------------------------- Net Income $ 7,519 $ 12,534 (40.0) ========== ========== Basic Earnings Per Share $ 0.11 $ 0.19 (0.42) ========== ========== Diluted Earnings Per Share $ 0.11 $ 0.19 (0.42) ========== ========== Basic Shares Outstanding 68,878 67,131 ========== ========== Diluted Shares Outstanding 68,878 67,533 ========== ========== Operations Analysis: Gross profit %, printing and imaging 13.2% 14.1% Gross profit %, supply systems 24.3% 21.3% Total gross profit % 17.3% 16.7% SG&A as a % of revenues 15.9% 14.8% SG&A as a % of gross profit 92.2% 88.9% Operating income % of revenues 1.3% 1.9%
This information is provided for additional analysis and is not intended to be a presentation in accordance with generally accepted accounting principles. This schedule presents the financial results of Unisource Worldwide, Inc. excluding a special charge in fiscal 1998 of $168 million, $109 million net of tax ($1.60 per share) related to the write-off of capitalized development and related costs associated with NADS, a tax charge of $5.7 million ($0.08 loss per share) associated with the sale of a significant portion of its U.S.- based Grocery Supply Systems business and a $27.6 million, $17.9 million net of tax ($0.26 per share) charge associated with streamlining the Company's organizational structure. UNISOURCE WORLDWIDE, INC. FINANCIAL SUMMARY (in thousands, except earnings per share)
Nine Months Ended June 30 -------------------------------------------- 1998 1997 % Change ------------ ------------ --------- Revenues Printing and imaging $ 3,544,985 $ 3,357,566 5.6 % Supply systems 2,013,486 1,850,916 8.8 - - ---------------------------------------------------------------------------------------------------------- 5,558,471 5,208,482 6.7 Costs and Expenses Cost of goods sold - printing and imaging 3,082,782 2,874,762 7.2 Cost of goods sold - supply systems 1,524,748 1,447,226 5.4 Selling and administrative 865,442 779,726 11.0 - - ---------------------------------------------------------------------------------------------------------- 5,472,972 5,101,714 - - ---------------------------------------------------------------------------------------------------------- Income from Operations 85,499 106,768 (19.9) Interest 35,898 30,932 - - ---------------------------------------------------------------------------------------------------------- Income Before Income Taxes 49,601 75,836 Provision for Income Taxes 21,108 32,603 - - ---------------------------------------------------------------------------------------------------------- Net Income $ 28,493 $ 43,233 (34.1) =========== =========== Basic Earnings Per Share $ 0.41 $ 0.64 (35.9) =========== =========== Diluted Earnings Per Share $ 0.41 $ 0.64 (35.9) =========== =========== Basic Shares Outstanding 68,662 67,074 =========== =========== Diluted Shares Outstanding 68,877 67,735 =========== =========== Operations Analysis: Gross profit %, printing and imaging 13.0% 14.4% Gross profit %, supply systems 24.3% 21.8% Total gross profit % 17.1% 17.0% SG&A as a % of revenues 15.6% 15.0% SG&A as a % of gross profit 91.0% 88.0% Operating income % of revenues 1.5% 2.0%
This information is provided for additional analysis and is not intended to be a presentation in accordance with generally accepted accounting principles. UNISOURCE WORLDWIDE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PAR VALUES AND SHARES)
ASSETS JUNE 30, SEPTEMBER 30, 1998 1997 - - -------------------------------------------------------------------- -------------------- ------------------- CURRENT ASSETS CASH $ 47,884 $ 45,384 ACCOUNTS RECEIVABLE, NET 620,607 882,360 INVENTORIES 430,313 495,330 PREPAID EXPENSES AND DEFERRED TAXES 58,726 49,875 -------------------- ------------------- TOTAL CURRENT ASSETS 1,157,530 1,472,949 -------------------- ------------------- LONG-TERM RECEIVABLES 5,531 7,790 PROPERTY AND EQUIPMENT, AT COST 436,946 434,762 LESS ACCUMULATED DEPRECIATION 205,016 188,336 -------------------- ------------------- 231,930 246,426 -------------------- ------------------- GOODWILL 641,463 668,575 DEFERRED COSTS AND OTHER ASSETS 17,688 163,092 -------------------- ------------------- $2,054,142 $2,558,832 ==================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY - - ------------------------------------ CURRENT LIABILITIES CURRENT PORTION OF LONG-TERM DEBT $ 1,165 $ 638 NOTES PAYABLE 11,344 144,882 TRADE ACCOUNTS PAYABLE 426,393 498,503 ACCRUED SALARIES, WAGES AND COMMISSIONS 32,559 33,906 RESTRUCTURING COSTS 12,847 8,172 OTHER ACCRUED EXPENSES 85,891 119,431 -------------------- ------------------- TOTAL CURRENT LIABILITIES 570,199 805,532 -------------------- ------------------- LONG-TERM DEBT 586,482 661,350 OTHER LIABILITIES DEFERRED TAXES 19,578 61,082 RESTRUCTURING COSTS 7,210 8,383 OTHER LONG-TERM LIABILITIES 37,872 38,100 -------------------- ------------------- 64,660 107,565 -------------------- ------------------- STOCKHOLDERS' EQUITY COMMON STOCK, PAR VALUE $0.001, AUTHORIZED - 250,000,000 SHARES, ISSUED AND OUTSTANDING; 6/30/98 - 69,732,048 SHARES; 9/30/97 - 68,792,842 SHARES 70 69 ADDITIONAL PAID IN CAPITAL 831,757 820,213 UNEARNED COMPENSATION (8,927) (5,845) RETAINED EARNINGS 53,979 199,828 FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (43,975) (29,320) COST OF COMMON SHARES IN TREASURY; 6/30/98 - 7,493 SHARES; 9/30/97 - 32,027 SHARES (103) (560) -------------------- ------------------- 832,801 984,385 -------------------- ------------------- $2,054,142 $2,558,832 ==================== ===================
UNISOURCE WORLDWIDE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended June 30, ------------------------------------------------ 1998 1997 ------------------------------------------------ Operating Activities Net (loss) income $ (10,415) $ 12,534 Additions (deductions) to reconcile net income to net cash provided by operating activities: Depreciation 9,424 7,501 Amortization 4,955 4,278 Provision for losses on accounts receivable 4,910 3,811 Restructuring charge 27,600 - Deferred tax benefit (3,150) - Payments for restructuring and special charges 13,314 (3,067) Changes in operating assets and liabilities, net of effects from acquisitions and divestitures: Decrease (increase) in accounts receivable 35,620 (1,708) Decrease (increase) in inventories 49,006 (3,909) (Increase) decrease in prepaid expenses (6,277) 6,033 (Decrease) increase in accrued and deferred income taxes (3,120) 821 (Decrease) increase in accounts payable and accrued expenses (30,424) 18,635 Miscellaneous 1,810 948 ----------------------- ----------------- Net cash provided by operating activities 65,905 45,877 ----------------------- ----------------- Investing Activities Proceeds from the sale of property and equipment 12,856 2,009 Proceeds from divestitures 11,386 - Cost of companies acquired, net of cash acquired (2,938) (34,251) Expenditures for property and equipment (4,352) (7,967) Collection of notes receivable - 472 Deferred cost expenditures (2,303) (11,817) ------------------------ ---------------- Net cash provided by (used in) investing activities 14,649 (51,554) ------------------------ ---------------- Financing Activities Debt (repayments) proceeds (1,260) 594 Proceeds (repayments) from revolving credit facility borrowings, net (77,308) 38,490 Proceeds from IKON - (517) Payment of dividends (13,888) (13,455) Stock issuances (repurchases) 7,456 (1,198) ------------------------ ---------------- Net cash (used in) provided by financing activities (85,000) 23,914 ------------------------ ---------------- Net (decrease) increase in cash (4,446) 18,237 Cash at beginning of period 52,330 41,081 ------------------------ ---------------- Cash at end of period $ 47,884 $ 59,318 ======================= ===============
UNISOURCE WORLDWIDE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Nine Months Ended June 30, -------------------------------- 1998 1997 -------------------------------- Operating Activities Net (loss) income $(104,341) $ 43,233 Additions (deductions) to reconcile net income to net cash provided by operating activities: Depreciation 27,058 22,582 Amortization 15,906 12,474 Provision for losses on accounts receivable 10,439 13,657 Special and restructuring charges 195,600 - Deferred tax benefit (48,650) - Loss on divestiture 5,700 - Payments for special and restructuring charges (22,946) (11,498) Changes in operating assets and liabilities, net of effects from acquisitions and divestitures: Sale of accounts receivable 150,000 - Other changes in accounts receivable 83,945 27,323 Decrease in inventories 32,742 4,269 (Increase) decrease in prepaid expenses (12,341) 10,961 (Decrease) increase in accrued and deferred income taxes (16,019) 18,702 Decrease in accounts payable and accrued expenses (65,962) (21,443) Miscellaneous 40 (64) ------------ ------------ Net cash provided by operating activities 251,171 120,196 ------------ ------------ Investing Activities Proceeds from the sale of property and equipment 13,795 7,823 Proceeds from divestitures 59,512 - Cost of companies acquired, net of cash acquired (49,017) (51,017) Expenditures for property and equipment (24,019) (21,070) Collection of notes receivable - 21,577 Deferred cost expenditures (13,976) (37,462) ------------ ------------ Net cash used in investing activities (13,705) (80,149) ------------ ------------ Financing Activities Debt repayments (148,319) (38,154) Proceeds (repayments) from revolving credit facility borrowings, net (54,051) 624,600 Repayment to IKON - (553,700) Payment of dividends (41,515) (26,873) Stock issuances (repurchases) 8,919 (1,198) ------------ ------------ Net cash (used in) provided by financing activities (234,966) 4,675 ------------ ------------ Net increase in cash 2,500 44,722 Cash at beginning of year 45,384 14,596 ------------ ------------ Cash at end of period $ 47,884 $ 59,318 ============ ============
EX-99.2 3 PRESS RELEASE DATED 7/29/98 (UNISOURCE APPROVES REGULAR QUARTERLY) EXHIBIT 99.2 News Release Contact Martha A. Buckley JoAnn P. Huston Director, Corporate Communications Manager, Investor Relations 610-722-3511 610-722-3513 mbuckley@unisourcelink.com jhuston@unisourcelink.com UNISOURCE WORLDWIDE, INC. APPROVES REGULAR QUARTERLY DIVIDEND ANNOUNCES INTENTION TO REDUCE FUTURE DIVIDENDS BERWYN, PENNSYLVANIA JULY 29, 1998 The board of directors of Unisource Worldwide, Inc. (NYSE:UWW) today approved a dividend on its Common Stock of 20 cents per share payable September 10, 1998, to common shareholders of record at the close of business on August 24, 1998. In conjunction with an extensive restructuring plan announced today by Unisource, the board also announced its intention to reduce future quarterly dividends to $.05 per share, beginning with the dividend payable in December 1998. "Our board determined that the funds currently being allocated to dividends would serve shareholders better if reinvested in the future growth of our company," said Ray B. Mundt, chairman and chief executive officer. Unisource Worldwide, Inc. (http://www.unisourcelink.com), headquartered in Berwyn, Pennsylvania, is one of the largest distributors of paper products and supply systems in North America. Fiscal 1997 revenues exceeded $7 billion. # # # EX-99.3 4 PRESS RELEASE DATED 7/29/98 (UNISOURCE NAMES NEW SR. V.P.) EXHIBIT 99.3 News Release Contact Martha A. Buckley JoAnn P. Huston Director, Corporate Communications Manager, Investor Relations 610-722-3511 610-722-3513 mbuckley@unisourcelink.com jhuston@unisourcelink.com UNISOURCE NAMES NEW SENIOR VICE PRESIDENT OF PROCUREMENT BERWYN, PENNSYLVANIA - JULY 29, 1998 - Unisource Worldwide, Inc. (NYSE:UWW) announced today it has named George Timchal to the newly-created position of senior vice president of procurement. Mr. Timchal, who is currently vice president of sourcing and procurement for Sunbeam Corporation, will head the centralized purchasing function that is being created as part of the extensive restructuring plan announced today by Unisource. The new department will develop strategic positioning with suppliers to combine their product development resources with Unisource's marketing power. These supplier partnerships, coupled with an overall consolidation and rationalization of the supply base, will enable Unisource to lower its total cost of procurement and bring new and improved products through its extensive distribution network for the benefit of all the members of the supply chain. The new department will also negotiate contracts for procurement of general, administrative and controllable goods and services. "George Timchal is a strategic business leader who has demonstrated his ability to direct, implement and succeed at change," said Ray B. Mundt, chairman and chief executive officer. "He has significant experience not only in procurement and global sourcing, but also in restructuring and growth initiatives, as well as acquisition integration and information technology systems. I am extremely pleased that he has chosen to join our senior management team as we position our company for consistent, profitable growth." Mr. Timchal, who attended Philadelphia's Drexel University, began his career as a procurement manager for a wholesale distribution company in Southern New Jersey. He joined Scott Paper Company in 1986, where he held positions in manufacturing and - more - operations prior to being named Scott's Director of Procurement in 1992. He joined Sunbeam in 1996, where his responsibilities included procurement and integration of operations for the company and several of its acquisitions. Unisource Worldwide, Inc. (http://www.unisourcelink.com), headquartered in Berwyn, Pennsylvania, is one of the largest distributors of paper products and supply systems in North America. Fiscal 1997 revenues exceeded $7 billion. # # # EX-99.4 5 PRESS RELEASE DATED 7/29/98 (UNISOURCE ANNOUNCES RESTRUCTURING) EXHIBIT 99.4 NEWS RELEASE Contact Martha A. Buckley JoAnn P. Huston Director, Corporate Communications Manager, Investor Relations 610-722-3511 610-722-3513 mbuckley@unisourcelink.com jhuston@unisourcelink.com UNISOURCE ANNOUNCES RESTRUCTURING DETAILS Plan Includes Dividend Reduction and New Capital Structure BERWYN, PENNSYLVANIA - JULY 29, 1998 - Unisource Worldwide, Inc. (NYSE:UWW) announced today details of an extensive restructuring plan designed to improve service to customers, decrease costs, increase financial flexibility and grow profitable market segments. "The changes we are making to improve the company's operating and financial performance are substantial and, as the plan is implemented, will dramatically enhance the value of Unisource," commented Ray B. Mundt, chairman and chief executive officer. The restructuring plan includes a reduction of more than 1,500 employees across all business functions, or approximately 15% of the company's U.S. workforce, and approximately 20% of its U.S. warehouse space. As a result of the restructuring, the company will take a pre-tax charge of $130-$150 million in fiscal 1998 and will incur one-time implementation expenses of $50-$60 million over the following two years. When fully implemented in 2001, the plan is expected to result in annual operating income improvement of $150-$170 million, which would approximately double the total operating income reported for fiscal 1997. The company forecasts that cumulative operating income benefits over the next two years will exceed the combined restructuring and implementation costs of $180-$210 million. The plan also projects permanent cash flow improvement of $30-$50 million from reduced inventory investment. The restructuring charge will be taken over two consecutive quarters: * $28 million ($18 million after tax) in the third quarter, reflecting closures or sales of facilities initiated during that quarter - more - * $102-$122 million ($66-$79 million after tax) in the fourth quarter, reflecting severance; facility closures; inventory write-down due to closure of facilities, discontinuation of certain product lines and rationalization of vendors and SKUs; and anticipated restructuring of the company's Canadian and Mexican operations Implementation costs of $50-$60 million will cover relocation, recruitment, training, duplicate manning during the transition, and IT consolidation expenses related to the restructuring. A final determination of the amounts of the charge and implementation costs depend on work presently in process to refine the requirements for Canada and Mexico and to complete an analysis of the inventory impact. This work will be completed in the current quarter and announced prior to fiscal year-end. Major Restructuring Elements The plan announced today is comprised of six major initiatives: * Organizing into fourteen strategic market areas in the U.S. This new structure will replace the company's current regional/divisional structure, consisting of 150+ autonomous operating units, with fourteen market areas, while integrating acquired companies into its core operations. * Functionally aligning the sales and distribution responsibilities within market areas. Each of the new market areas will be managed by two vice presidents- one responsible for all sales functions, and one to oversee all warehousing and distribution activities within that same market area. Each will report to a senior vice president at the corporate level, but will share common goals and incentives to promote common objectives. The Sales and Distribution structure will be supported at the corporate level by newly-created Procurement and Marketing organizations. * Creation of an efficient "hub and spoke" distribution network that reduces the total number of locations by 40% and reduces warehouse space by nearly 20%. Facility consolidations will reduce the total number of Unisource locations from 424 to 253, and will eliminate three million square feet of warehouse space. The new structure will significantly improve warehouse productivity, while allowing Unisource to continue to offer next-day delivery to customers throughout the United States. - more - * Establishment of a new corporate marketing function to drive focused marketing initiatives throughout the organization. This new corporate department will utilize economic data, industry research and market analysis to develop strategy and detailed marketing plans for each product category and customer segment. Corporate Marketing will also manage brand strategy and provide advertising and promotional support to the sales effort in each market area. * Creation of a corporate procurement department to direct company-wide purchasing and national contracts. The new procurement function will take full advantage of the company's size and national presence to reduce its total cost of procurement. Procurement will also develop strategic positioning with suppliers to combine their product development resources with Unisource's marketing power for the benefit of all the members of the supply chain. * Expansion of the company's successful Customer Service Center concept. Unisource will integrate all of its customer service activities into 21 strategically-located customer service centers, building on the success of the customer service centers created several years ago. The 21 centers will consist of 11 existing centers, which will continue to serve customers within their market areas, along with 10 new centers, which will consolidate currently-dispersed customer service activities, primarily within recently- acquired operations. This strategy will enhance overall customer service capabilities and facilitate communications between the company's sales and customer service organizations. In conjunction with its new organizational structure, Unisource today announced two appointments to its senior management team. Kenneth F. Vuylsteke, who joined Unisource as a result of the National Sanitary Supply acquisition, was named senior vice president of sales. George Timchal, currently vice president of sourcing and procurement for Sunbeam Corp., was named senior vice president of procurement. The company is also instituting an extensive customer analysis designed to assess customer profitability and develop appropriate pricing, service and delivery levels. The goal of this process is to work with customers to ensure a fair return for the value offered. However, the analysis is likely to result in some lost sales. - more - FINANCIAL IMPACT The business impact of the anticipated changes, combined with the elimination of unprofitable business, could result in a net revenue decline of $500-$700 million in 1999. Depending on the amount of the revenue decline, additional positions could be impacted. However, upon full implementation, the plan will have a significant positive effect on the company's financial performance, resulting in an estimated annualized increase in operating income of $150-$170 million, with a return on shareholders equity approaching 14% and a return on capital of nearly 10% by the end of the year 2000. The major components of that increase are shown below. Forecasted Impact of Restructuring on Operating Income ------------------------------------------------------
(Millions) Comments ---------- -------------------------------------------- Manning Reductions $ 80 - $ 85 1,500+ people Facility Costs 25 - 25 3 million square feet Other Expenses 30 - 40 T&E, supplies, freight, telephone -------------- ------------ Total SG&A $135 - $150 Strategic Purchasing 30 - 40 1.5% savings on US warehouse purch. Business Impact (15) - (20) -------------- ------------ Operating Income Impact $150 - $170 ============== ============
The plan will enable the company to reduce its inventory investment by $30- $50 million from June 30, 1998 levels. Unisource has already made significant progress in reducing inventory, achieving an $87 million reduction since December 31, 1997. - more TIMING Mundt reported that the company will begin implementing the restructuring plan immediately and plans to complete the majority of the closures and manning reductions within the next twelve months. "We should begin to realize the financial benefits of our restructuring efforts by the second half of fiscal 1999," Mundt said. "Through a combination of increased gross trading margins and reduced expenses, we expect to achieve our goal run rate of 80% expense-to-gross profit ratio by the end of our fourth fiscal quarter of 1999," Mundt continued. DIVIDEND Separately, the Unisource board of directors declared its regular quarterly dividend of $.20 a share for the fourth quarter of fiscal 1998. The $.20 dividend will be paid on September 10 to holders of record as of August 24, 1998. Additionally, the board announced its intention to reduce future quarterly dividends to $.05 per share, beginning with the dividend payable in December 1998. "Our Board determined that the funds currently being allocated to dividends would serve shareholders better if reinvested in the future growth of our company," Mundt said. CAPITAL STRUCTURE The Board of Directors approved an amendment to the company's bank credit facility, as well as the issuance of $300 million of senior subordinated 10-year notes anticipated to be sold to institutional investors in September. The amendment will reduce the amount of the credit facility from $1 billion to $900 million and will permit more flexible financial covenants. The immediate reduction of $100 million is due to the strength of the company's cash flow and the expectation that this additional borrowing capacity will not be needed. The amount of the facility will be further reduced to $600 million when the note proceeds are received. The company's lenders have approved a covenant waiver through September 30, 1998 and the final amendment is expected to be completed in early September. Interest costs are forecast to increase in fiscal 1999 by $8 to $10 million, due to higher rates associated with the long-term financing and an expected increase in the pricing of the company's credit facility. - more SUMMARY "Our restructuring plan will reduce our costs, increase our profitability, and put us back on the path of consistent growth," Mundt said. "Our operations will be leaner and stronger and our revised capital structure will provide us with the strength and flexibility to make appropriate investments for profitable growth." Unisource Worldwide, Inc.(http://www.unisourcelink.com) headquartered in Berwyn, Pennsylvania, is one of the largest distributors of paper products and supply systems in North America. Fiscal 1997 revenues exceeded $7 billion. The senior subordinated notes that Unisource anticipates selling to institutional investors in September 1998 have not been and will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. All statements, other than statements of historical fact, made in this press release, including, without limitation, (i) statements relating to the implementation of the restructuring plan and the timing thereof (such as the planned increase of customer service centers and planned reduction of employees, number of locations, warehouse space, and inventory investment), the projected costs and expenses associated with the restructuring plan and the implementation thereof, the projected impact of, and financial results and benefits to be realized from, such restructuring (such as projected decreased procurement and operating costs, increased warehouse productivity, increased operating income, increased cash flow, increased gross trading margins, reduced expense-to-gross profit ratio, increased profitability, and improved return on shareholders equity and return on capital), and the other projected ramifications of the restructuring plan (such as the anticipated loss of customers and decrease in revenues), (ii) statements relating to the payment of future dividends not yet declared, the consummation of the amendment to the company's credit facility, the issuance of senior subordinated notes, and other proposed future actions, and (iii) statements qualified by the words "believes," "anticipates," "expects," "intends," "may," "estimates," "will," and other words similar thereto, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes these statements are based upon reasonable assumptions with respect to future events and circumstances, such statements are subject to risks and uncertainties which could cause actual results or circumstances to differ materially. Such risks and uncertainties include, without limitation, delays, difficulties, or increased costs associated with the implementation of the restructuring plan, the consummation of the proposed amendment of its credit facility, the issuance of the senior subordinated notes, leverage and debt service requirements (including sensitivity to interest rate fluctuations), operating in a competitive environment, general economic conditions, the ability to attract and retain qualified personnel, changes or volatility in pulp and paper prices, and delays or difficulties with consolidation of its information technology systems and the upgrading of such systems to be year 2000 compliant. For further detail and information concerning such risks and uncertainties, please consult Part I, Item 1, of the company's annual report on Form 10-K for the fiscal year ended September 30, 1997, which is on file with the Securities and Exchange Commission. # # # EX-99.5 6 PRESS RELEASE DATED 7/29/98 (UNISOURCE NAMES NEW SR. V.P.) EXHIBIT 99.5 News Release Contact Martha A. Buckley JoAnn P. Huston Director, Corporate Communications Manager, Investor Relations 610-722-3511 610-722-3513 mbuckley@unisourcelink.com jhuston@unisourcelink.com UNISOURCE NAMES NEW SENIOR VICE PRESIDENT OF SALES Berwyn, Pennsylvania- July 29, 1998 - Unisource Worldwide, Inc. (NYSE:UWW) announced today that it has appointed Kenneth F. Vuylsteke to the newly-created position of senior vice president of sales. In his new position, Mr. Vuylsteke will assume management responsibility for all Unisource sales and service nationwide, including customer service and national accounts as well as Unisource's specialty companies and Paper Plus stores. Mr. Vuylsteke is currently executive vice president in charge of western operations for National Sanitary Supply (NSS), a company acquired by Unisource in September, 1997. "Ken has been a key driver of the professionalism and discipline that has distinguished National Sanitary Supply in the marketplace," said Ray B. Mundt, chairman and chief executive officer of Unisource. " He has an outstanding track record of generating profitable sales, and his leadership will prove invaluable in driving a strategic approach to sales throughout Unisource." Ken joined NSS in 1989 as vice president and general manager of the company's northwest division and was promoted to executive vice president in 1992. His experience also includes senior sales and marketing positions with James River Corp. and Crown Zellerbach. He holds a combined degree in marketing and economics from Pacific Lutheran University and has served in the U. S. Marine Corps. Unisource Worldwide, Inc. (http:/www.unisourcelink.com), headquartered in Berwyn, Pennsylvania, is one of the largest distributors of paper products and supply systems in North America. Fiscal 1997 revenues exceeded $7 billion. # # # -----END PRIVACY-ENHANCED MESSAGE-----