-----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, EnjZvtIysIPQajINedJunyPhGJYrtEPbCV63LnvSnHKYubgD9dQ2adlodol5adQO x0PvwU0aEnNwZk6eiuzaVQ== 0001036050-99-001409.txt : 19990702 0001036050-99-001409.hdr.sgml : 19990702 ACCESSION NUMBER: 0001036050-99-001409 CONFORMED SUBMISSION TYPE: 11-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNISOURCE WORLDWIDE INC CENTRAL INDEX KEY: 0001027282 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 135369500 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 11-K/A SEC ACT: SEC FILE NUMBER: 001-14482 FILM NUMBER: 99658109 BUSINESS ADDRESS: STREET 1: 1100 CASSATT ROAD CITY: BERWYN STATE: PA ZIP: 19312 BUSINESS PHONE: 6102964470 MAIL ADDRESS: STREET 1: P O BOX 3000-0935 CITY: BERWYN STATE: PA ZIP: 19312 11-K/A 1 FORM 11-K/A United States Securities and Exchange Commission Washington, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal year ended December 31, 1998 ------------------ - OR - [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ________________ Commission file number _____________ A. Full title of the plan and the address of the plan, if different from that of the issuer named below: UNISOURCE WORLDWIDE, INC. RETIREMENT SAVINGS PLAN. B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: UNISOURCE WORLDWIDE, INC., 1100 CASSATT ROAD, BERWYN, PENNSYLVANIA, 19312. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Date: June 29, 1999 UNISOURCE WORLDWIDE, INC. RETIREMENT SAVINGS PLAN (Name of Plan) By: /s/ Allister H. McCree, Jr. ----------------------------- Allister H. McCree, Jr. Plan Administrator Financial Statements and Supplemental Schedules Unisource Worldwide, Inc. Retirement Savings Plan Years ended December 31, 1998 and 1997 with Report of Independent Auditors Unisource Worldwide, Inc. Retirement Savings Plan Financial Statements and Supplemental Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors............................................... 1 Audited Financial Statements Statements of Net Assets Available for Benefits.............................. 2 Statements of Changes in Net Assets Available for Benefits................... 3 Notes to Financial Statements................................................ 4 Supplemental Schedules Line 27a - Schedule of Assets Held for Investment Purposes................... 15 Line 27d - Schedule of Reportable Transactions............................... 16 Report of Independent Auditors The Trustee Unisource Worldwide, Inc. Retirement Savings Plan We have audited the accompanying statements of net assets available for benefits of the Unisource Worldwide, Inc. Retirement Savings Plan as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Unisource Worldwide, Inc. Retirement Savings Plan at December 31, 1998 and 1997, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. /s/ Ernst & Young LLP Philadelphia, PA June 24, 1999 Unisource Worldwide, Inc. Retirement Savings Plan Statements of Net Assets Available for Benefits
December 31 1998 1997 ----------------------------------- Assets Investments: Cash and cash equivalents $ 49,719,672 $ 19,125,121 IKON Office Solutions, Inc. common stock 30,028,188 119,959,252 Unisource Worldwide, Inc. common stock 48,772,236 52,427,043 Investment funds 157,626,753 115,210,379 Participant loans 9,585,393 10,612,827 ----------------------------------- 295,732,242 317,334,622 Transfers receivable from merged plans 69,467 2,250,768 Investment income receivable 844,718 734,020 Contributions and other receivables 135,558 573,937 ----------------------------------- 296,781,985 320,893,347 Liabilities Cash overdraft 486,637 - Pending security transactions 879,007 - Accrued administrative expenses 1,046,535 160,252 ----------------------------------- Net assets available for benefits $ 294,369,806 $ 320,733,095 ===================================
See accompanying notes. Unisource Worldwide, Inc. Retirement Savings Plan Statements of Changes in Net Assets Available for Benefits
Year ended December 31 1998 1997 ----------------------------------- Additions: Transfer of assets from IKON Office Solutions, Inc. Retirement Savings Plan $ - $ 361,438,780 Employee contributions 24,092,971 23,697,437 Employer contributions 12,652,297 11,447,955 Assets transferred or receivable from merged plans 53,469,506 16,365,244 Dividend income 5,156,303 4,455,867 Interest income 5,542,673 4,150,020 ----------------------------------- Total additions 100,913,750 421,555,303 Deductions: Benefits paid to participants 33,623,214 30,300,381 Administrative expenses 2,133,260 1,045,997 ----------------------------------- Total deductions 35,756,474 31,346,378 Realized and unrealized loss on investments (91,520,565) (69,475,830) ----------------------------------- Net (decrease) increase (26,363,289) 320,733,095 Net assets available for benefits at beginning of period 320,733,095 - ----------------------------------- Net assets available for benefits at end of period $ 294,369,806 $ 320,733,095 ===================================
See accompanying notes. Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements December 31, 1998 1. Significant Accounting Policies Employee contributions and related employer required matching contributions are recognized when employee contribution amounts are withheld from the employees' pay. The market values of the IKON Office Solutions, Inc. ("IKON") and Unisource Worldwide, Inc. ("Unisource") common stock are determined by use of the last reported sales price on the last business day of the year, as reported on a national securities exchange. Cash equivalents are valued at cost, which is equal to market value. All highly liquid investments with maturities of three months or less when purchased are considered to be cash equivalents. Investment funds consist of the Stable Value Fund, Vanguard Institutional Index Fund, Balanced Fund, PBHG Growth Fund, American Funds' EuroPacific Growth Fund, Vanguard Windsor II Fund, PIMCO Mid-Cap Growth Fund, and BlackRock Small-Cap Value Fund. The guaranteed investment contracts, held in the Stable Value Fund, are valued at contract value, which approximates fair value, as established by the issuing financial institution. Contract value represents contributions made under the contract, plus interest at the contract rate, less funds used for withdrawals. Contract interest rates ranged from 5.4% to 6.7% and 5.5% to 6.7% for the years ended December 31, 1998 and 1997, respectively. Investments in the Vanguard Institutional Index Fund, Balanced Fund, PBHG Growth Fund, American Funds' EuroPacific Growth Fund, Vanguard Windsor II Fund, PIMCO Mid-Cap Growth Fund, and BlackRock Small-Cap Value Fund are stated at fair market value, which is determined on the last day of the plan year based on the portfolio of investments owned by the particular funds on that date. Participant loans are valued at their outstanding balances, which approximate fair value. Realized and unrealized gain or loss on investments represents the difference between the proceeds received and the cost of investments sold and the change in the difference between December 31 market value and cost of investments. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions. Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 2. Description of the Plan On June 19, 1996, Alco Standard Corporation announced that it would separate Unisource Worldwide, Inc. (the "Company"), its printing and imaging and supply systems distribution business, from IKON, its office solutions business, with each business operating as a stand-alone, publicly traded company. Following the spin-off of the Company, which was completed on December 31, 1996, the Plan, covering eligible employees of the Company, was established effective January 1, 1997. Net assets of the Plan of $361,438,780, equal to the aggregate account balances of active employees of the Company on January 2, 1997, were transferred to the Plan in January 1997. The Plan is a defined contribution plan. Participation is limited to full-time and part-time non-union employees of Unisource. The Plan allows participants to contribute 1% to 16% of annual salaries or wages. Contributions are limited by the maximum amount allowable under the Internal Revenue Code. Participants are immediately vested in their contributions. The Company (the employer) contributes an amount equal to two-thirds of the first 6% of annual regular salaries or wages that a participant contributes to the Plan. The employer's contribution vests with the participant at 25% per year beginning with the participant's second year of service so that full vesting occurs after five years of service. The participant is also fully vested in the employer's contributions upon retirement, position termination due to permanent shutdown of plant or department, total and permanent disability, or death. The Plan allows participant contributions (and any investment income earned thereon) to be allocated between investments in Unisource common stock or any of the available investment funds. Participants may change investment allocations at any time. Employer matching contributions are made in Unisource common stock and may not be redirected to any of the other available investment options until the participant attains age 55. Additional investments in IKON common stock (which were transferred into the Plan in January 1997, as described above, from the accounts of employees who formerly worked for IKON) are not permitted. Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 2. Description of the Plan (continued) The following is a brief description of the investment funds in which participants may direct their contributions. Stable Value Fund - Funds are invested in fixed income investments. The fund is managed by The Vanguard Group. Vanguard Institutional Index Fund - Funds are invested solely in the 500 publicly traded stocks in the Standard & Poor's Composite Stock Price Index. The fund is managed by The Vanguard Group. Balanced Fund - Funds are invested equally in the Stable Value Fund and Vanguard Institutional Index Fund. PBHG Growth Fund - Funds are invested primarily in the common stocks of companies with small capitalization and a potential for strong earnings' growth. The fund is managed by Pilgrim Baxter & Associates. American Funds' EuroPacific Growth Fund - Funds are invested in companies located primarily in Europe and the Pacific Basin. The objective of the fund, which is managed by Capital Research and Management Company, is long- term growth of capital. Vanguard Windsor II Fund - Funds are invested in a diversified group of over 200 undervalued or out-of-favor stocks of large companies. The Fund's primary objective is long-term capital appreciation. The Fund is managed by the Vanguard Group. PIMCO Mid-Cap Growth Fund - Funds are invested in the stock of about 60 to 100 mid-sized companies that exhibit strong growth and are reasonably valued compared to the market. The Fund seeks long-term growth of capital. The fund is managed by PIMCO. BlackRock Small-Cap Value Fund - Funds are invested in stocks of small capitalization U.S. Companies and is designed for investors aggressively seeking long-term capital appreciation. The BlackRock Small-Cap Value Fund is managed by PFPC. Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 2. Description of the Plan (continued) Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum of $50,000 or 50% of their vested account balance, whichever is less. Loan terms range from 1-5 years or up to 15 years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a rate equal to the prime lending rate plus one, at the date of origination of the loan. The Company has the right to amend or terminate the Plan at any time. In the event of Plan termination, the rights of affected participants shall be 100% vested. On July 29, 1998, the Board of Directors of the Company approved the details of an extensive restructuring plan which includes a net reduction of more than 1,500 employees across all business functions, or approximately 15% of the Company's U.S. workforce. Administrative expenses of the Plan are paid by the Plan. The following plans were merged into the Plan during the year ended December 31, 1998: Tedisco, Inc. 401(k) Profit Sharing Plan, Turnquist, Inc. 401(k) Profit Sharing Plan, and National Sanitary Supply Company Employee Thrift & Profit Sharing Plan (including accounts of non-union Paul Koss Supply Company Profit Sharing Plan). In addition, assets under the Chemed Employee Savings and Investment Plan were transferred into the Plan during the year ended December 31, 1998. The following plans were merged into the Plan during the year ended December 31, 1997: Conifer Paper Products, Inc. Stock Bonus Plan, Peerless Products Company 401(k) Profit Sharing Plan, Darter, Inc. 401(k) Profit Sharing Plan, Norel Employees 401(k) Savings Plan, Roberts Maintenance Supply, Inc. Retirement Plan, Janco United, Inc. 401(k) Profit Sharing Plan, Spiro-Wallach Company, Inc. 401(k) Profit Sharing Plan, Santa Rosa Paper Company Employee Savings & Retirement Plan, and Sunland Sanitary Supply, Inc. Profit Sharing Plan. The above mergers resulted in transfers of net assets to the Plan of $53,469,506 and $16,365,244 for the plan years ended December 31, 1998 and 1997, respectively. Information about the Plan, including vesting, withdrawal provisions and special provisions related to the merged plans, is contained in the Summary Plan Description, which is available from the Plan Administrator. Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 3. Income Tax Status In June 1998, the Plan applied for but has not yet received a determination letter from the Internal Revenue Service stating that the Plan is qualified under section 401(a) of the Internal Revenue Code. However, the Plan Administrator believes that the Plan is qualified and, therefore, the related trust is exempt from taxation. 4. Investments Individual investments that represent 5% or more of the fair value of net assets available for benefits are as follows:
Shares or Identity of Investments Par Value Cost Market Value - -------------------------------------------------------------------------------- December 31, 1998: IKON Office Solutions, Inc. Common Stock 3,506,942 $ 142,664,081 $ 30,028,188 Unisource Worldwide, Inc. Common Stock 6,727,205 96,027,129 48,772,236 Vanguard Institutional Index Fund 721,398 62,173,899 81,410,178 PBHG Growth Fund 862,006 22,664,315 22,008,119 Vanguard Stable Value Short Term Investment Fund 47,718,490 47,718,490 47,718,490 Deutsche Bank Guaranteed Investment Contract 15,162,069 15,162,069 15,162,069 December 31, 1997: IKON Office Solutions, Inc. Common Stock 4,265,218 176,347,568 119,959,252 Unisource Worldwide, Inc. Common Stock 3,679,091 69,350,510 52,427,043 Vanguard Institutional Index Fund 538,661 39,841,416 48,242,466 PBHG Growth Fund 790,882 20,549,713 20,080,496
Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 4. Investments (continued) Information about the net assets available for benefits by separate investment programs at December 31, 1998 follows:
American IKON Unisource Stable Vanguard PBHG Funds' Common Common Value Institutional Balanced Growth EuroPacific Stock Stock Fund Index Fund Fund Fund Growth Fund - ------------------------------------------------------------------------------------------------------------------------------------ 1998 Assets Investments: Cash and cash equivalents $ 602,277 $ 1,395,987 $41,944,352 $ - $ 5,774,138 $ - $ - IKON Office Solutions, Inc. common stock 29,942,263 - - - - - - Unisource Worldwide, Inc. common stock - 48,735,863 - - - - - Investment funds - - 29,344,627 70,853,267 14,596,559 22,008,119 12,364,433 Participant loans - - - - - - - Transfer receivable from merged plans - - - - - - - Investment income receivable - - - 730,158 104,328 - - Contributions and other receivables - - - - - - - ------------------------------------------------------------------------------------------------- Total assets 30,544,540 50,131,850 71,288,979 71,583,425 20,475,025 22,008,119 12,364,433 Liabilities Cash overdraft - - - - - - - Pending security transactions - - - 756,343 111,970 - - Accrued administrative expenses - - - - - - - ------------------------------------------------------------------------------------------------- Net assets available for benefits $30,544,540 $50,131,850 $71,288,979 $70,827,082 $20,363,055 $22,008,119 $12,364,433 ================================================================================================= Vanguard PIMCO BlackRock Other Assets Windsor Mid-Cap Small-Cap Participant and Fund Growth Fund Value Fund Loan Fund Liabilities Total - ------------------------------------------------------------------------------------------------------------------------------------ 1998 Assets Investments: Cash and cash equivalents $ 278 $ - $ - $ 2,640 $ - $ 49,719,672 IKON Office Solutions, Inc. common stock - - - - 85,925 30,028,188 Unisource Worldwide, Inc. common stock - - - - 36,373 48,772,236 Investment funds 5,543,901 1,861,262 1,054,585 - - 157,626,753 Participant loans - - - 9,585,393 - 9,585,393 Transfer receivable from merged plans - - - - 69,467 69,467 Investment income receivable - - 10,216 - 16 844,718 Contributions and other receivables - - - - 135,558 135,558 ------------------------------------------------------------------------------------------------- Total assets 5,544,179 1,861,262 1,064,801 9,588,033 327,339 296,781,985 Liabilities Cash overdraft - - - - 486,637 486,637 Pending security transactions - - 10,694 - - 879,007 Accrued administrative expenses - - - - 1,046,535 1,046,535 ------------------------------------------------------------------------------------------------- Net assets available for benefits $ 5,544,179 $ 1,861,262 $ 1,054,107 $ 9,588,033 $(1,205,833) $294,369,806 =================================================================================================
Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 4. Investments (continued) Information about the net assets available for benefits by separate investment programs at December 31, 1997 follows:
IKON Unisource Vanguard Common Common Stable Value Institutional Balanced Stock Stock Fund Index Fund Fund --------------------------------------------------------------------------------------- 1997 Assets Investments: Cash and cash equivalents $ 2,613,858 $ 2,239,321 $12,005,109 $ - $ 1,602,111 IKON Office Solutions, Inc. common stock 119,670,831 - - - - Unisource Worldwide, Inc. common stock - 52,354,681 - - - Investment funds - - 31,624,695 41,689,592 10,749,834 Participant loans - - - - - Transfer receivable from merged plans - - - - - Investment income receivable 12,939 7,420 67,034 554,915 89,357 Contributions and other receivables - - - - - --------------------------------------------------------------------------------------- Total assets 122,297,628 54,601,422 43,696,838 42,244,507 12,441,302 Liabilities Accrued administrative expenses - - - - - --------------------------------------------------------------------------------------- Net assets available for benefits $122,297,628 $54,601,422 $43,696,838 $42,244,507 $12,441,302 ======================================================================================= American PBHG Funds/1/ Growth EuroPacific Participant Fund Growth Fund Loan Fund Other Assets Total --------------------------------------------------------------------------------------- 1997 Assets Investments: Cash and cash equivalents $ - $ - $ - $ 664,722 $ 19,125,121 IKON Office Solutions, Inc. common stock - - - 288,421 119,959,252 Unisource Worldwide, Inc. common stock - - - 72,362 52,427,043 Investment funds 20,080,496 11,065,762 - - 115,210,379 Participant loans - - 10,612,827 - 10,612,827 Transfer receivable from merged plans - - - 2,250,768 2,250,768 Investment income receivable - - - 2,355 734,020 Contributions and other receivables - - - 573,937 573,937 --------------------------------------------------------------------------------------- Total assets 20,080,496 11,065,762 10,612,827 3,852,565 320,893,347 Liabilities Accrued administrative expenses - - - 160,252 160,252 --------------------------------------------------------------------------------------- Net assets available for benefits $ 20,080,496 $11,065,762 $10,612,827 $ 3,692,313 $320,733,095 =======================================================================================
Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 4. Investments (continued) The changes in net assets available for benefits by separate investment programs for the year ended December 31, 1998 follows:
American IKON Unisource Vanguard PBHG Funds' Common Common Stable Value Institutional Balanced Growth EuroPacific Stock Stock Fund Index Fund Fund Fund Growth Fund - ------------------------------------------------------------------------------------------------------------------------------------ Net assets available for benefits at December 31, 1997 $122,297,628 $ 54,601,422 $ 43,696,838 $42,244,507 $12,441,302 $20,080,496 $11,065,762 Employee contributions - 9,869,250 1,987,067 5,342,503 1,697,374 3,370,442 1,440,339 Employer contributions - 12,022,396 80,298 226,065 96,005 87,709 52,659 Investment income 684,655 3,014,370 3,827,934 1,003,943 664,908 - 166,985 Assets transferred or receivable from merged plans 62,008 88,283 52,183,746 310,079 570,920 179,115 53,544 Benefit payments (6,008,311) (4,357,491) (11,542,842) (5,753,064) (1,577,714) (2,180,759) (1,107,905) Administrative expenses - - - - - - - Realized and unrealized gain (loss) on investments (74,670,474) (32,088,256) - 12,834,184 1,987,350 (777,042) 1,403,053 Interfund transfers (11,820,966) 6,981,876 (18,944,062) 14,618,865 4,482,910 1,248,158 (710,004) ------------------------------------------------------------------------------------------------ Net assets available for benefits at December 31, 1998 $ 30,544,540 $ 50,131,850 $ 71,288,979 $70,827,082 $20,363,055 $22,008,119 $12,364,433 ================================================================================================ Vanguard PIMCO BlackRock Other Assets Windsor Mid-Cap Small-Cap Participant and Fund Growth Fund Value Fund Loan Fund Liabilities Total - ------------------------------------------------------------------------------------------------------------------------------------ Net assets available for benefits at December 31, 1997 $ - $ - $ - $ 10,612,827 $ 3,692,313 $320,733,095 Employee contributions 277,104 106,041 2,851 - - 24,092,971 Employer contributions 15,737 4,629 66,799 - - 12,652,297 Investment income 73,724 82,520 64,975 907,115 207,847 10,698,976 Assets transferred or receivable from merged plans 5,964 7,896 7,951 - - 53,469,506 Benefit payments (86,999) (31,810) (8,671) (967,648) - (33,623,214) Administrative expenses - - - - (2,133,260) (2,133,260) Realized and unrealized gain (loss) on investments 106,177 (19,212) (65,738) - (230,607) (91,520,565) Interfund transfers 5,152,472 1,711,198 985,940 (964,261) (2,742,126) - ------------------------------------------------------------------------------------------------ Net assets available for benefits at December 31, 1998 $ 5,544,179 $ 1,861,262 $1,054,107 $ 9,588,033 $ (1,205,833) $294,369,806 ================================================================================================
Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 4. Investments (continued) The changes in net assets available for benefits by separate investment programs for the year ended December 31, 1997 follows:
IKON Unisource Vanguard Common Common Stable Value Institutional Balanced Stock Stock Fund Index Fund Fund ---------------------------------------------------------------------------------------------------- Net assets transferred from IKON Retirement Savings Plan $205,866,086 $ 49,795,701 $ 40,026,607 $ 23,224,595 $ 7,763,161 Employee contributions - 12,586,944 3,917,389 2,508,365 963,599 Employer contributions - 11,194,371 44,932 80,194 51,066 Investment income 864,940 2,490,508 2,803,747 889,109 445,908 Assets transferred or receivable from merged plans 1,538,370 827,461 10,819,130 388,658 48,396 Benefit payments (8,188,776) (4,165,658) (12,687,877) (1,796,790) (679,024) Administrative expenses - - - - - Realized and unrealized gain (loss) on investments (61,557,392) (17,528,648) - 8,619,615 1,433,886 Interfund transfers (16,225,600) (599,257) (1,227,090) 8,330,761 2,414,310 ---------------------------------------------------------------------------------------------------- Net assets available for benefits at December 31, 1997 $122,297,628 $ 54,601,422 $ 43,696,838 $ 42,244,507 $ 12,441,302 ==================================================================================================== American PBHG Funds, Growth EuroPacific Participant Other Fund Growth Fund Loan Fund Assets Total ---------------------------------------------------------------------------------------------------- Net assets transferred from IKON Retirement Savings Plan $ 18,340,456 $ 7,589,586 $ 8,832,588 $ - $361,438,780 Employee contributions 2,572,779 1,148,361 - - 23,697,437 Employer contributions 41,223 36,169 - - 11,447,955 Investment income - 171,885 871,255 68,535 8,605,887 Assets transferred or receivable from merged plans 449,979 18,782 51,374 2,223,094 16,365,244 Benefit payments (1,385,382) (1,140,616) (256,258) - (30,300,381) Administrative expenses - - - (1,045,997) (1,045,997) Realized and unrealized gain (loss) on investments (925,394) 646,990 - (164,887) (69,475,830) Interfund transfers 986,835 2,594,605 1,113,868 2,611,568 - ---------------------------------------------------------------------------------------------------- Net assets available for benefits at December 31, 1997 $ 20,080,496 $ 11,065,762 $ 10,612,827 $ 3,692,313 $320,733,095 ====================================================================================================
Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 5. Transactions with Parties-in-Interest At December 31, 1998 and 1997, the Plan held 2,001,182 and 5,517,901 units, respectively, of Northern Trust Company's Collective Short-Term Investment Fund. Northern Trust Company is the Trustee for the Plan. 6. Differences Between Financial Statements and Form 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
December 31 1998 1997 --------------------------- Net assets available for benefits per the financial statements $294,369,806 $320,733,095 Amounts allocated to withdrawn participants (201,868) (942,560) --------------------------- Net assets available for benefits per the Form 5500 $294,167,938 $319,790,535 ===========================
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year ended December 31 1998 1997 --------------------------- Benefits paid to participants per the financial statements $33,623,214 $ 30,300,381 Add: amounts allocated to withdrawn participants at year end 201,868 942,560 Less: amounts allocated to withdrawn participants at beginning of the year (942,560) - --------------------------- Benefits paid to participants per the Form 5500 $32,882,522 $ 31,242,941 ===========================
Amounts allocated to withdrawn participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to year end but not yet paid. Unisource Worldwide, Inc. Retirement Savings Plan Notes to Financial Statements (continued) 7. Year 2000 Readiness (Unaudited) The Plan Administrator has determined that it will be necessary to take certain steps in order to ensure that the Plan's information systems are prepared to handle year 2000 dates. The Plan's information systems are covered by the Company's four-phase year 2000 initiative which consists of preparing an inventory of equipment and systems, remediation of equipment and systems, and implementation and testing of the remediated systems and equipment. The Company anticipates completing all phases of this project by September 30, 1999. Costs associated with modifying software and equipment affecting the Plan will be paid by the Company. The Company has established formal communications with its third-party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third-party service providers have indicated that they will be year 2000 compliant by September 30, 1999. If modification of data processing systems of either the Plan, the Company, or its service providers is not completed timely, the year 2000 problem could have a material impact on the operations of the Plan. The Company has developed contingency plans for possible year 2000 issues and is in the process of expanding those plans to address additional issues that may result from year 2000 noncompliance 8. Subsequent Events The Company and Georgia-Pacific Corp. (GP) announced on May 25, 1999 that each of their boards of directors has approved a definitive merger agreement under which GP will acquire all outstanding shares of the Company for $12 per share in cash. After the merger, the Company will conduct business under its existing name as a separate distribution subsidiary of Georgia-Pacific Group, the pulp, paper and building products business of GP. The effect of the merger with GP on the Plan, its administration, and net assets available for benefits cannot presently be determined. Effective June 17, 1999 the Plan was amended to provide that employer matching contributions will no longer be made in Unisource common stock. Participants will be permitted to direct the investment of the matching contribution to any of the current fund options other than the Unisource and IKON common stock funds. Absent a specific investment election by participants, employer matching contributions will be invested in the Stable Value Fund. The last trading price on June 24, 1999 of the IKON Office Solutions, Inc. Common Stock Fund was $15.00 per share. Unisource Worldwide, Inc. Retirement Savings Plan Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Description of Investment, Identity of Issue, Borrower, Including Maturity Date, Rate of Lessor, or Similar Party Interest, Par or Maturity Value Cost Current Value - ----------------------------------------------------------------------------------------------------- Collective Short-Term Investment Short-term fixed income Fund of the Northern Trust investments - 2,001,182 units Company* $ 2,001,182 $ 2,001,182 Vanguard Stable Value Short Short-term fixed income Term Investment Fund investments - 47,718,490 units 47,718,490 47,718,490 ---------------------------- 49,719,672 49,719,672 IKON Office Solutions, Inc. Common stock - 3,506,942 shares 142,664,081 30,028,188 Unisource Worldwide, Inc.* Common stock - 6,727,205 shares 96,027,129 48,772,236 Vanguard Institutional Index Equity investments - 721,398 units Fund 62,173,899 81,410,178 PBHG Growth Fund Equity investments - 862,006 units 22,664,315 22,008,119 American Funds' EuroPacific Equity investments - 435,367 units Growth Fund 12,516,293 12,364,433 Vanguard Windsor Fund, Inc. Equity investments - 185,726 units 5,825,276 5,543,901 PIMCO Funds Multi Manager Equity investments - 80,855 units Series 1,845,467 1,861,262 BlackRock Funds BlackRock Funds Small Cap - 65,502 units 1,040,763 1,054,585 Deutsche Bank Guaranteed investment contracts - 15,162,069 units 15,162,069 15,162,069 United Bank of Switzerland Guaranteed investment contracts - 5,939,305 units 5,939,305 5,939,305 Principal Mutual Guaranteed investment contracts - 3,905,321 units 3,905,321 3,905,321 Bayerische Landesbank Guaranteed investment contracts - 5,297,640 units 5,297,640 5,297,640 Caisse des Depots et Guaranteed investment contracts - Consignations 3,079,940 units 3,079,940 3,079,940 Participant loans Participant loans, at various interest rates ranging between 6% and 11.5% - 9,585,393 ---------------------------- $427,861,170 $295,732,242 ============================
*Party-in-interest Unisource Worldwide, Inc. Retirement Savings Plan Line 27d - Schedule of Reportable Transactions Year ended December 31, 1998
Selling Price Purchase or Maturity Net Gain Identity of Party Involved Description of Assets Price Value Cost or (Loss) - ----------------------------------------------------------------------------------------------------------------------------------- Category III-A series of transactions in a security issue aggregating 5% of plan assets - --------------------------------------------------------------------------------------- IKON Office Solutions, Inc. Common stock - purchased 94,104 shares and sold 852,380 shares in multiple transactions $ 1,577,268 $ 16,934,100 $ 35,260,755 $(18,326,655) Unisource Worldwide, Inc.* Common stock - purchased 3,357,007 shares and sold 308,893 shares in multiple transactions 31,890,157 3,422,700 5,213,538 (1,790,838) Vanguard Institutional Index Fund Equity investments - purchased 355,258 shares and sold 172,52 shares in multiple transactions 35,778,011 16,979,965 13,445,528 3,534,437 American Euro-Pacific Growth Fund Equity investments - purchased 668,932 shares and sold 658,915 shares in multiple transactions 18,845,303 18,376,796 18,129,659 247,137 Collective Short-Term Investment Short-term fixed income investments Fund of The Northern Trust - purchased 318,838,666 units and Company* sold 323,234,392 units 318,838,666 323,234,392 323,234,392 -
Pursuant to Department of Labor Regulation Section 2520.103-6, there were no Category I, II, or IV reportable transactions during the year ended December 31, 1998. *Party-in-interest Unisource Worldwide, Inc. Retirement Savings Plan Exhibit Index Exhibit Number Description 23 Consent of Independent Auditors EX-23 2 CONSENT OF INDEPENDENT AUDITORS Exhibit 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-72951) pertaining to the Unisource Worldwide, Inc. Retirement Savings Plan and in the related Prospectus of our report dated June 24, 1999, with respect to the financial statements and schedules of the Unisource Worldwide, Inc. Retirement Savings Plan included in this Annual Report (Form 11- K) for the year ended December 31, 1998. /s/ Ernst & Young LLP _____________________ Philadelphia, Pennsylvania June 24, 1999 -----END PRIVACY-ENHANCED MESSAGE-----