-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, IOPRna+/wlKUVPBG3JJkwbQ4qVPNvlXDEnbOZCuqi1/1eboGhpd6SL+gr7V3mxCC RTKdUVbJKrqPzUWXKoyjEQ== 0000950109-94-000790.txt : 19940516 0000950109-94-000790.hdr.sgml : 19940516 ACCESSION NUMBER: 0000950109-94-000790 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19930930 FILED AS OF DATE: 19940505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALCO STANDARD CORP CENTRAL INDEX KEY: 0000003370 STANDARD INDUSTRIAL CLASSIFICATION: 5110 IRS NUMBER: 230334400 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05964 FILM NUMBER: 94526269 BUSINESS ADDRESS: STREET 1: P O BOX 834 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 2152968000 MAIL ADDRESS: STREET 1: BOX 834 CITY: VALLEY FORGE STATE: PA ZIP: 19482 FORMER COMPANY: FORMER CONFORMED NAME: ALCO CHEMICAL CORP DATE OF NAME CHANGE: 19680218 10-K/A 1 FORM 10-K/A - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A AMENDMENT TO APPLICATION OR REPORT FILED PURSUANT TO SECTION 12, 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-5964 ALCO STANDARD CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) OHIO 23-0334400 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.) INCORPORATION OR ORGANIZATION) BOX 834, VALLEY FORGE, PENNSYLVANIA 19482 (ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE) OFFICES) Registrant's telephone number, including area code: (215) 296-8000 Securities registered pursuant to Section 12(b) of the Act: NAME OF EACH EXCHANGE ON WHICH TITLE OF CLASS REGISTERED -------------- -------------- Common Stock, no par value New York Stock Exchange Preferred Share Purchase Rights Philadelphia Stock Exchange Chicago Stock Exchange Series AA Convertible Preferred Stock (Depositary Shares) New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None THE REGISTRANT HEREBY AMENDS ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1993 IN THE MANNER SET FORTH HEREIN. DOCUMENTS INCORPORATED BY REFERENCE PART III--REGISTRANT'S PROXY STATEMENT FOR THE 1994 ANNUAL MEETING OF SHAREHOLDERS - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- PART I ITEM 1. BUSINESS. Alco Standard Corporation ("Alco") was incorporated in Ohio in 1952 and is the successor to a business incorporated under a similar name in 1928. The term "Alco" generally includes Alco Standard Corporation and its subsidiaries and divisions. The address of Alco's principal executive offices is P.O. Box 834, Valley Forge, Pennsylvania 19482 (telephone number: (215) 296-8000). Alco markets and distributes office equipment and paper. In fiscal 1993, Alco had annual revenues of $6.5 billion. The information concerning revenues, income before taxes and assets attributable to each of Alco's business segments for each of the three years in the period ended September 30, 1993 is set forth in note 8 to the consolidated financial statements included elsewhere in this report. Alco was founded and continues to operate as "The Corporate Partnership." Under this entrepreneurial principle, Alco field executives maintain a high degree of operating autonomy, which enhances the company's ability to serve and support its customers. The following describes Alco's two business segments. ALCO OFFICE PRODUCTS Alco Office Products ("AOP") sells, rents and leases photocopiers, fax machines and other automated office equipment. AOP also provides equipment service, supplies, and equipment leasing, and provides reprographic facilities management and specialized document copying services. AOP has over 550 locations throughout the United States, Canada, the United Kingdom and Germany. These companies comprise the largest network of independent copier and office equipment dealers in North America and in the United Kingdom, and represent the only independent distribution network with national scope. AOP competes against numerous competitors over a wide range of markets, competing on the basis of price, quality of service, and product performance. AOP distributes the products of numerous manufacturers, including Canon, Ricoh and Sharp, throughout 45 states, four Canadian provinces and in Europe. Customers include large and small businesses, professional firms and government agencies. During fiscal 1991, 1992 and 1993, AOP accounted for approximately 23%, 26% and 25%, respectively, of Alco's consolidated revenues, and 41%, 47% and 50%, respectively, of Alco's operating income (excluding Unisource restructuring costs). In June 1993, AOP acquired Erskine House Group, PLC ("Erskine House"), a leading U.K.-based office products company. With approximately $320 million in annual revenues, Erskine House has dealer networks in the United States, the United Kingdom, and Germany. In the first quarter, AOP also acquired a 49.9% equity interest in IMM Office Systems Holding Gmbh ("IMM"), Europe's largest independent distributor of office equipment. In addition, Alco Office Products bought 19 independent dealerships in the United States and Canada during fiscal 1993. UNISOURCE Unisource Worldwide, Inc. ("Unisource") markets and distributes papers for office and reprographic use, distributes quality printing papers, and distributes paper and plastic packaging supply items for food retailers and food processors. Unisource also distributes commercial sanitary and maintenance products and industrial packaging equipment, closure systems, and supplies. The Unisource companies were formerly known as "Paper Corporation of America," and are currently in the process of restructuring and consolidating under the single name "Unisource." Information concerning the restructuring is contained on page 2 of this report. During fiscal 1991, 1992 and 1993, Unisource accounted for approximately 77%, 74% and 75%, respectively, of Alco's consolidated revenues from continuing operations, and 59%, 53%, and 50%, respectively, of Alco's operating income (excluding restructuring costs). Unisource's products are distributed to commercial printers and publishers, and to all types of manufacturers, offices, government agencies and other institutions. Paper, printing supplies and industrial and office supply products are also sold directly to the commercial retail market through Unisource's Paper Plus (R) retail stores. Unisource sells the products of substantially all major domestic and Canadian paper manufacturers and suppliers. There has been no difficulty in obtaining products from these suppliers. Supplier relationships are good and are expected to continue. Unisource's operations constitute the largest independent network of paper distributors in the United States and Canada. Although substantial in the aggregate, these operations compete separately in many different markets against numerous competitors, including both independent distributors and those owned by major paper manufacturers. Although its business is highly competitive and its competitors numerous, Unisource believes that its competitive position is strong. Unisource competes principally on the basis of price, quality customer service and the range of products maintained in inventory. Unisource has approximately 460 warehouses, distribution centers, sales offices and other facilities located throughout the United States and Canada. In the aggregate, Unisource occupies over 17 million square feet of space. In July 1993, Unisource acquired Butler Paper Company ("Butler Paper") from Georgia-Pacific Corporation. Butler Paper has annual revenues of $1 billion and distributes printing and industrial paper throughout the United States. In 1993, Unisource also acquired Weiss Bros.-Miquon, an industrial paper distributor based in suburban Philadelphia and Mack-Pac, a specialty packaging company headquartered in Dallas. INFORMATION CONCERNING ALCO'S BUSINESS IN GENERAL RESTRUCTURING PLAN In September 1993, the Board of Directors approved a restructuring plan for Alco's paper distribution business and changed the name of such business from "Paper Corporation of America" to "Unisource Worldwide, Inc." As a result of the restructuring, a pretax charge of $175 million was recorded in the fourth quarter. The Unisource restructuring plan was adopted as a proactive response to changes in the business environment in which Unisource operates. In recent periods, mills have experienced overcapacity, resulting in depressed pricing and pressure on distributors' margins. The usage and demand for paper has shifted significantly because of consolidation in the commercial printing industry, enhancements in imaging technology and the related growth in the reprographics segment. Customers are requiring distributors to provide enhanced services and greater capabilities. Unisource is consolidating its facilities and changing its business strategies in order to respond to these evolving business conditions. The Unisource restructuring is designed to increase profitability by providing new efficiencies and improving the quality of service to the customer. Consolidation of warehouses and other facilities will lower Unisource's costs, will streamline operations and will remove redundancies currently in the system. Creation of a nationwide management information system will improve efficiencies and allow Unisource to service national accounts effectively. Adoption of the single name "Unisource" for all locations will create a unified national identity which enhances customer recognition. MANAGEMENT TRANSITION In August 1993, the Board of Directors elected John E. Stuart as President and Chief Executive Officer of Alco, and elected Kurt E. Dinkelacker as Executive Vice President and Chief Financial Officer of Alco. Most recently, Mr. Stuart served as President of Alco Office Products, and Mr. Dinkelacker served as Executive Vice President of Alco Office Products. Ray B. Mundt will continue in his capacity as Chairman of the Board. 2 EQUITY OFFERINGS In December 1992, Alco completed a $200 million offering of convertible preferred stock, and used the proceeds primarily to repay indebtedness incurred in connection with Canadian paper company acquisitions and Alco's investment in IMM. In the first quarter of fiscal 1994, Alco intends to make a public offering of 5 million common shares; the proceeds will be used to retire debt incurred in the acquisitions of Butler Paper and Erskine House. DIVESTITURES In October 1992, Alco announced its decision to sell Alco Diversified Services ("ADS"), a segment comprised primarily of aviation and industrial services companies, in order to focus corporate financial resources on its core distribution businesses. Alco has accordingly accounted for these companies as discontinued operations. On July 22, 1993, Alco completed the sale of ADS to an investor group which included its management. SUPPLIERS AND CUSTOMERS Products distributed by Alco are purchased from numerous domestic and overseas suppliers. There has been no significant difficulty in obtaining products from these suppliers. No industry segment of Alco is dependent upon a single customer, or a few customers, the loss of any one or more of which would have a material adverse effect on Alco's business taken as a whole. Backlog is not significant because virtually all of Alco's revenues during the last two fiscal years were derived from its distribution operations which fill orders shortly after receipt from customers. There is no material seasonal fluctuation in Alco's business as a whole. Many of Alco's operations are required to carry significant amounts of inventory to meet rapid delivery requirements of customers. At September 30, 1993, inventories accounted for approximately 38% of Alco's total current assets. PROPRIETARY MATTERS Alco has a number of patents, licenses and trademarks. Alco does not believe, however, that any patent, license or trademark is material to its operations as a whole. ENVIRONMENTAL REGULATION Alco's operations are subject to numerous environmental laws which to date have not had a material adverse effect upon Alco's capital expenditures, earnings or competitive position. It is not possible to estimate what expenditures may be required in order for Alco to comply with such laws in the future, but Alco does not believe that compliance will have a material adverse effect on it or its operations as a whole. EMPLOYEES At September 30, 1993, Alco had approximately 28,500 employees. FOREIGN OPERATIONS Alco's operations in Canada distribute paper, industrial supplies and packaging products, and distribute and service office equipment. Alco's European operations distribute and service office equipment. Alco also has a 49.9% equity interest in IMM, a German-based distribution network which distributes and services office equipment. Information concerning revenues, income before taxes and identifiable assets of Alco's foreign operations for each of the three years in the period ended September 30, 1993 is set forth in note 8 to the consolidated financial statements included elsewhere in this report. Revenues from exports during the last three fiscal years were not significant. There are additional risks attendant to foreign operations, such as possible currency fluctuations and unsettled political conditions. 3 ITEM 2. PROPERTIES. At September 30, 1993, Alco owned or leased numerous plants, warehouses, offices, and sales and services facilities in 49 states, nine Canadian provinces, the United Kingdom and Germany. These properties occupy a total of approximately 22 million square feet of which approximately 8 million square feet are owned and the balance are leased under lease agreements with various expiration dates. Alco believes that none of its properties is materially important to its operations as a whole, and believes that its facilities are suitable and adequate for the purposes for which they are used. ITEM 3. LEGAL PROCEEDINGS. Alco does not believe that the outcome of lawsuits or other legal proceedings to which it is a party will materially affect Alco or its operations as a whole. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. (No response to this item is required.) ---------------- EXECUTIVE OFFICERS OF ALCO The following is a list of Alco's executive officers, their ages and their positions with Alco or its subsidiaries for the last five years. ----------------
NAME AGE POSITION (AND YEAR ELECTED OR YEARS SERVED) ---- --- ------------------------------------------- Ray B. Mundt..................... 65 Chairman (1986); Chief Executive Officer (1980- 1993) John E. Stuart................... 49 Chief Executive Officer and President (1993); Vice President (1989-1993) and Group President (1985-1993) Kurt E. Dinkelacker.............. 40 Executive Vice President and Chief Financial Officer (1993); Executive Vice President, Alco Office Products (1991-1993); Vice President and Group Controller, Alco Office Products (1989- 1991); Vice President Finance and Administration, Alco Office Products (1988-1989) William F. Drake, Jr. ........... 61 Vice Chairman (1984) Hugh G. Moulton.................. 60 Executive Vice President (1992) and General Counsel (1979); Senior Vice President-- Administration (1983-1992) O. Gordon Brewer, Jr. ........... 56 Vice President--Finance (1986) Kathleen M. Burns................ 41 Treasurer (1989); Assistant Treasurer (1987-1989) J. Kenneth Croney................ 51 Vice President--Law and Secretary (1983) Raymond A. Peterson.............. 59 Vice President (1991); President--Unisource Corporation (1985-1991) James E. Head.................... 48 Vice President (1993); President, CopyRite (an Alco Office Products company) (1979-1993). Michael J. Dillon................ 40 Controller (1993); Group Controller, Alco Office Products (1991-1993); Associate Audit Director (1991); Senior Audit Manager (1987-1991) William M. Laughlin.............. 52 Vice President--Financial Operation Support (1993); Vice President--Operational Audit, Alco Office Products (1992-1993); Director--Audit (1982-1992) Stephen K. Deay.................. 47 Vice President--Tax (1993); Director--Taxes (1989-1993)
4 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The New York Stock Exchange is the principal market on which Alco's common stock is traded (ticker symbol ASN). Alco's common stock is also traded on the Philadelphia and Chicago Stock Exchanges. As of October 31, 1993, there were approximately 13,973 holders of record of Alco's common stock. The following table sets forth the high and low sales prices for Alco's common stock for each quarterly period for the last two fiscal years and the frequency and amount of dividends declared with respect to such stock during such periods:
FISCAL YEAR 1993 FISCAL YEAR 1992 --------------------------- ---------------------------- COMMON COMMON STOCK CASH STOCK CASH PRICE DIVIDENDS PRICE DIVIDENDS ----------- PER ------------ PER HIGH LOW COMMON SHARE HIGH LOW COMMON SHARE ---- --- ------------ ---- ---- ------------ First Quarter........ 38 1/2 33 1/4 $.24 $35 $30 1/4 $.23 Second Quarter....... 45 3/4 35 3/4 .24 39 7/8 33 1/8 .23 Third Quarter........ 50 5/8 44 3/4 .24 42 5/8 36 1/2 .23 Fourth Quarter....... 49 3/8 42 1/4 .24 39 5/8 33 1/2 .23
Alco currently expects to continue its policy of paying regular cash dividends, although there can be no assurance as to future dividends because they are dependent upon future operating results, capital requirements and financial condition. Certain loan agreements limit the amount of consolidated retained earnings from which Alco may pay dividends. As of September 30, 1993, consolidated retained earnings of $387 million were free of restrictions relating to the payment of dividends, repurchases of Company shares and other matters. ITEM 6. SELECTED FINANCIAL DATA. The following table, which should be read in conjunction with the related consolidated financial statements and notes included elsewhere in this report, provides a summary of selected financial information concerning Alco for the last five fiscal years:
YEAR ENDED SEPTEMBER 30, -------------------------------------------------------- 1993 1992 1991 1990 1989 ---------- ---------- ---------- ---------- ---------- (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) Revenues................ $6,444,559 $4,925,136 $4,515,977 $4,293,430 $3,783,597 Income from Continuing Operations............. 7,615* 104,217 76,642 64,300 81,106 Earnings (Loss) Per Share From Continuing Operations............. (.04)* 2.22 1.70 1.44 1.80 Cash Dividends Per Com- mon Share.............. .96 .92 .88 .84 .76 Total Assets............ 3,348,890 2,444,761 2,020,571 1,916,485 1,623,873 Long-Term Debt.......... 891,395 697,460 463,679 421,201 288,282 Serial Preferred Stock.. 254 1,639 2,899 4,870 7,352
- - -------- *Includes a pretax charge of $175 million ($112,875,000 net of taxes and $2.38 per share) for restructuring costs. 5 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The discussion of the results of operations for the three years ended September 30, 1993 reviews the continuing operations of the Company as contained in the consolidated statements of income. RESULTS OF OPERATIONS RESULTS OF OPERATIONS--1993 Revenues and income before taxes by segment for fiscal years ended September 30, 1993 and September 30, 1992 and the percentage change for 1993 versus 1992 were:
REVENUES INCOME BEFORE TAXES ---------------------- ------------------------ % % 1993 1992 CHANGE 1993 1992 CHANGE ------ ------ ------ ------ ------ ------ (IN MILLIONS) Alco Office Products.......... $1,586 $1,259 26.0% $138.8 $105.2 31.9% Unisource United States................ 4,174 3,585 16.4 118.7 118.2 .4 Canada....................... 690 83 18.3 2.3 Restructuring Costs.......... (175.0) ------ ------ ---- ------ ------ ----- Total Unisource............... 4,864 3,668 32.6 (38.0) 120.5 (55.3) ------ ------ ---- ------ ------ ----- Operating..................... 6,450 4,927 30.9 100.8 225.7 (55.3) Unconsolidated affiliate...... (2.5) Investment gain, net.......... 6.7 Eliminations and non- allocated.................... (5) (2) (73.7)* (59.9)* ------ ------ ---- ------ ------ ----- $6,445 $4,925 30.9 $ 24.6 $172.5 (85.7) ====== ====== ==== ====== ====== =====
- - -------- *Includes interest costs and net corporate expenses. FISCAL 1993 COMPARED TO FISCAL 1992 The Company increased revenues $1.6 billion to $6.5 billion in fiscal 1993 from $4.9 billion in fiscal 1992. Income before taxes from operations, which includes a restructuring charge of $175 million relating to Unisource operations, decreased from $226 million in fiscal 1992 to $101 million in fiscal 1993. Earnings per share from continuing operations decreased from $2.22 to $(.04), including the Unisource restructuring charge of $2.38. Earnings per share excluding the effect of the restructuring charge were $2.34. AOP generated $327 million in increased revenues of which $17 million relates to fiscal 1992 acquisitions and $100 million to current year acquisitions. The remaining $210 million increase reflects continued growth in all revenue areas of AOP's base companies, but particularly in its equipment, service and facilities management businesses. The $589 million increase in revenues from Unisource's U.S. operations represents $161 million from its base companies and $428 million from current and prior year acquisitions. The $607 million revenue increase in the Unisource Canadian paper businesses is primarily attributable to the prior year acquisitions and includes a decrease of $32 million relating to changes in foreign currency rates. The Company's total foreign operations including the foreign operations of AOP and Unisource Canada generated $800 million in revenues for the fiscal year 1993 compared with $169 million for the same period of the prior fiscal year. The increase is primarily the result of the Canadian paper distribution acquisitions made in September 1992 and reflects a $48 million negative impact because of foreign currency rate changes. AOP's operating income increase of $33.6 million includes $1.7 million from fiscal 1992 acquisitions and $2.7 million from current year acquisitions. The remaining $29.2 million increase from its base companies is primarily the result of higher operating contributions from the service and supply areas of AOP's businesses. Unisource's U.S. paper operations include an increase in operating income of $.5 million, reflecting $10.2 million contributed by current and prior year acquisitions, offset by a decrease in earnings of $9.7 million from base paper distribution companies caused by competitive business conditions in the paper industry. Unisource's Canadian paper operations include a $16 million increase in operating income primarily relating to fiscal 1992 acquisitions. The overall decrease in operating income for Unisource is primarily attributed to the $175 million of restructuring costs, $171.5 million relating to U.S. operations and $3.5 million relating to Canadian operations. 6 In September 1993, the Company adopted the Unisource restructuring plan as a proactive response to changes in the business environment in which Unisource operates. In recent periods, mills have experienced overcapacity, resulting in depressed pricing and pressure on distributor's margins. The usage and demand for paper has shifted significantly because of consolidation in the commercial printing industry, enhancements in imaging technology and the related growth in reprographics segment. The restructuring plan encompasses the following: adoption of the "Unisource" identity, installation of a customer-focused information system, re-engineering of warehouse and transportation management functions, regionalization of management and administrative support functions and consolidation of service center locations. In connection with certain elements of the restructuring plan, the Company recorded a charge to earnings of $175 million ($112.9 million net of taxes or $2.38 per share) in the fourth quarter of fiscal 1993. The major components of the restructuring costs relate to location consolidation ($60.7 million), severance costs ($48.0 million) and related information system redesign ($22.0 million). Included in the charge are non-cash asset writedowns relating to inventory and equipment that approximate $22.5 million, and are directly attributable to the Unisource restructuring. The restructuring charge will be funded from Unisource's cash flow. The Company's objective in adopting the restructuring plan is to increase Unisource's operating return on sales from 2.6% in the fourth quarter of fiscal 1993 to 4% by the end of fiscal 1996. Income from foreign operations was $27.3 million for the year ended September 30, 1993. This represents an increase of $13.5 million over the prior year results of $13.8 million and is primarily attributable to the Canadian paper distribution acquisitions in September, 1992. Fluctuations in the foreign currency rates reduced the increase by $1.9 million. The Company recorded a $2.5 million loss from an unconsolidated affiliate, IMM Office Systems GmbH, due to recessionary conditions and costs associated with an increase in sales force. Interest expense increased $8.5 million from the comparable period in fiscal 1992, a result of higher borrowing levels to fund acquisitions. Income before taxes from continuing operations decreased by $147.9 million, which reflects the $175 million restructuring charge in fiscal 1993. Income before taxes from continuing operations also includes the combined result of improved operations from base companies along with earnings contributed by key acquisitions made in the prior year, which were achieved despite the increase in interest cost and the $6.7 million net investment gain from the prior year. The effective income tax rate for the current period is 69.0%. The effective tax rate, excluding the restructuring costs, is 39.6%, the same as the effective rate for the year ended September 30, 1992. RESULTS OF OPERATIONS--1992 Revenues and income before taxes by segment for fiscal years ended September 30, 1992 and September 30, 1991 and the percentage change for 1992 versus 1991 were:
REVENUES INCOME BEFORE TAXES ---------------------- ------------------------ % % 1992 1991 CHANGE 1992 1991 CHANGE ------ ------ ------ ------ ------ ------ (IN MILLIONS) Alco Office Products.... $1,259 $1,047 20.3% $105.2 $ 79.6 32.2% Unisource United States.......... 3,585 3,441 4.2 118.2 113.8 3.9 Canada................. 83 36 2.3 1.9 ------ ------ ---- ------ ------ ---- Total Unisource....... 3,668 3,477 5.5 120.5 115.7 4.1 ------ ------ ---- ------ ------ ---- Operating............... 4,927 4,524 8.9 225.7 195.3 15.6 Investment gain, net.... Unusual charges (AOP)... 6.7 Eliminations and non-al- located................ (2) (8) (59.9)* (69.5)* ------ ------ ---- ------ ------ ---- $4,925 $4,516 9.1% $172.5 $125.8 37.1% ====== ====== ==== ====== ====== ====
- - -------- *Includes interest costs and net corporate expenses. 7 FISCAL 1992 COMPARED TO FISCAL 1991 AOP generated $212 million in increased revenues of which $86 million relates to the fiscal 1992 acquisitions and $27 million relates to the fiscal 1991 acquisitions. The remaining $99 million increase represents growth in equipment, service and supply revenues from its base companies. Unisource's increase in revenues consists of $85 million from Unisource's base companies and $106 million from current and prior year acquisitions, including $48 million attributable to the fine paper distribution business of Abitibi-Price, Inc. ("Abitibi"), which was acquired on September 4, 1992. Unit sales in 1992 exceeded the prior year by an estimated 10% with lower paper prices limiting revenue gains to 5.5%. AOP's operating income increase of $25.6 million includes $1.8 million from fiscal 1991 acquisitions and $4.8 million from 1992 acquisitions. AOP's percentage growth in income continues to exceed its growth in revenues as a result of improved service and supply margins, greater operational efficiencies and cost controls throughout the segment coupled with additional volume through its leasing subsidiary. Unisource's operating income increased $4.8 million overall. Income from distribution businesses increased $3.4 million, including $1.1 million from the acquisition of the distribution operations of Abitibi- Price and $500,000 contributed by prior year acquisitions. The improved earnings from Unisource's base distribution businesses resulted primarily from additional sales volume in units during 1992. Income from converting operations increased $1.4 million. The Company sold all of the debentures received in the 1989 sale of its equity interest in a former subsidiary, which resulted in a pretax gain of approximately $8 million, and also recorded nonrecurring expenses of approximately $1.4 million. The amounts are reported net of investment gain. Including interest expense related to anticipated settlement of prior IRS audit cycles, interest expense decreased by $5.7 million from the comparative fiscal year, a result of lower interest rates and average borrowing levels. The increase in income before taxes of 37.1% to $172.5 million is the combined result of the changes in the Company's business previously discussed. The effective income tax rate was 39.6% in 1992 compared with 39.1% in 1991. Weighted average shares were approximately 1.8 million shares more than the 45.1 million shares during 1991, primarily the result of two acquisitions treated as poolings-of-interests. FINANCIAL CONDITION AND LIQUIDITY Debt excluding finance subsidiaries was $794 million at September 30, 1993, an increase of $312 million over the Company's debt balance at September 30, 1992 of $482 million. This increase was primarily due to debt-financed acquisitions made during fiscal 1993. The Company had a total of $610 million in bank credit commitments as of September 30, 1993, of which $147 million were unused and available. Debt as a percentage of capitalization was 43.2% and the current ratio was 1.5 to 1 at September 30, 1993. Finance subsidiaries debt growth has been consistent with the growth in the lease portfolio. In December 1992, the Company sold approximately $201 million in Series AA convertible preferred stock and received net proceeds of $196 million. In July 1992, Alco sold Alco Diversified Services, a discontinued business, and received net proceeds of approximately $70 million. The net proceeds of these two transactions were applied to the repayment of debt incurred to finance prior acquisitions. The Company expects to sell 5 million shares of common stock in an offering in fiscal 1994 and will apply the net proceeds to the repayment of debt. At the end of fiscal 1993, the Company's commitments for capital expenditures were approximately $24 million, all of which is expected to be expended during fiscal 1994. The Company believes that its operating cash flow together with unused lines of credit will be sufficient to finance current operating requirements including capital expenditure and acquisitions. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The consolidated financial statements of Alco and its subsidiaries are submitted herewith on pages F-1 through F-20 of this report. 8 The following table, which should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations (Item 7), sets forth, by quarter, certain unaudited data concerning Alco for the last two fiscal years (in millions, except per share data).
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER TOTAL ------------- -------------- ------------- -------------- -------- 1993 Revenues................ $1,444.5 $1,490.6 $1,547.1 $1,962.4 $6,444.6 Gross Profit............ 364.2 382.1 389.2 485.6 1,621.1 Income (loss) before taxes.................. 40.9 48.5 50.8 (115.6)* 24.6* Income (loss) Continuing operations. $ 24.8 $ 29.5 $ 30.7 $ (77.4)* $ 7.6* Discontinued opera- tions**.............. 1.2 2.0 (10.7) (7.5) -------- -------- -------- -------- -------- Net income (loss)....... $ 26.0 $ 31.5 $ 30.7 $ (88.1)* $ 0.1* -------- -------- -------- -------- -------- Earnings (loss) per share Continuing operations. $ .52 $ .57 $ .58 $ (1.71) $ (0.04) Discontinued opera- tions**.............. .03 .04 (.23) (.16) 1992 Revenues................ $1,152.2 $1,188.1 $1,240.7 $1,344.1 $4,925.1 Gross Profit............ 286.1 298.2 339.5 343.3 1,267.1 Income before taxes..... 33.0 39.2 46.4 53.9 172.5 Income (loss) Continuing operations. 19.8 23.3 28.7 32.4 104.2 Discontinued opera- tions**.............. 1.9 2.5 2.2 (15.0) (8.4) -------- -------- -------- -------- -------- Net income.............. $ 21.7 $ 25.8 $ 30.9 $ 17.4 $ 95.8 ======== ======== ======== ======== ======== Earnings (loss) per share Continuing operations. $ .43 $ .52 $ .58 $ .69 $ 2.22 Discontinued opera- tions**.............. .04 .05 .05 (.32) (.18)
- - -------- *Includes a pretax charge of $175 million for restructuring costs or $2.38 per share. ** The Company recorded an additional pretax charge of $9.8 million or $.10 per share in 1993 for the loss on divestiture of ADS, in addition to the $15.3 million charge or $.33 per share recorded in the fourth quarter of 1992. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. (No response to this item is required) ---------------- PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Information regarding directors appearing in Alco's Notice of Annual Meeting of Shareholders and Proxy Statement for the February 17, 1994 annual meeting of shareholders (the "1994 Proxy Statement") is incorporated herein by reference. Information regarding executive officers is set forth in Part I of this report and is incorporated herein by reference to the 1994 Proxy Statement. 9 ITEM 11. EXECUTIVE COMPENSATION. Information appearing under "Executive Compensation" in the 1994 Proxy Statement is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information regarding security ownership of certain beneficial owners and management appearing under "Security Ownership" in the 1994 Proxy Statement is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information appearing under "Certain Transactions" in the 1994 Proxy Statement is incorporated herein by reference. ---------------- PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (a)(1) and (2) List of Financial Statements and Schedules. The response to this portion of Item 14 is submitted on page F-1 hereof as a separate section of this report. (a) (3) List of Exhibits.* The following exhibits are filed as a part of this report (listed by numbers corresponding to the Exhibit Table of Item 601 in Regulation S-K): 3.1 Amended Articles of Incorporation of Alco Standard Corporation, filed as Exhibit 3.1 to Alco's 1991 Form 10-K, are incorporated herein by reference. 3.2 Code of Regulations of Alco Standard Corporation, as amended February 9, 1982, filed as Exhibit 3(b) to Alco's 1982 Form 10-K, is incorporated herein by reference. 4.1 1993 Credit Agreement, dated as of September 30, 1993, among Alco Standard Corporation, Alco Office Products (U.K.) and various institutional lenders, filed as Exhibit 4.1 to Alco's 1993 Form 10- K, is incorporated herein by reference. 4.2 Revolving Credit and Acceptance Agreement, dated as of April 21, 1993, among Alco Standard Corporation, Unisource Canada Inc. and The Toronto Dominion Bank, filed as Exhibit 4.2 to Alco's 1993 Form 10- K, is incorporated herein by reference. 4.3 Credit Agreement dated October 15, 1992 among Alco Standard Corporation and various lending institutions, filed as Exhibit 4.3 to Alco's 1992 10-K, is incorporated herein by reference. 4.4 Receivables Purchase Agreement and Guarantee between PCA Paper Acquisition Inc., Stars Trust, Alco Standard Corporation and Bank of Montreal, filed as Exhibit 4.4 to Alco's 1992 10-K, is incorporated herein by reference. 4.5 Rights Agreement dated as of February 10, 1988 between Alco Standard Corporation and National City Bank, filed on February 11, 1988 as Exhibit 1 to Alco's Registration Statement on Form 8-A, is incorporated herein by reference. 4.6 Pursuant to Regulation S-K item 601(b)(iii), Alco Standard Corporation agrees to furnish to the Commission, upon request, a copy of other instruments defining the rights of holders of long- term debt of Alco Standard Corporation and its subsidiaries. 10.1 Note Purchase Agreement, dated as of June 15, 1986 between Alco Standard Corporation and certain Institutional Investors, filed as Exhibit 4.2 to Alco's Current Report, dated July 1, 1988, on Form 8- K, is incorporated herein by reference. 10.2 Long Term Incentive Plan, filed as Exhibit 10.2 to Alco's 1992 Form 10-K, is incorporated herein by reference.
10 10.3 1989 Directors' Stock Option Plan, filed as Exhibit 10.3 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.4 Partners' Stock Purchase Plan, filed as Exhibit 10.4 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.5 1981 Stock Option Plan, filed as Exhibit 10.5 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.6 1986 Stock Option Plan, filed as Exhibit 10.6 to Alco's 1993 Form 10-K, is incorporated herein by reference. 10.7 1993 Directors' Stock Option Plan, filed as Exhibit 10.7 to Alco's 1993 Form 10-K, is incorporated herein by reference. 10.8 1980 Deferred Compensation Plan, filed as Exhibit 10.7 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.9 1985 Deferred Compensation Plan, filed as Exhibit 10.8 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.10 1991 Deferred Compensation Plan, filed as Exhibit 10.9 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.11 Retirement Plan for Non-Employee Directors, filed as Exhibit 10.10 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.12 Indenture, dated as of April 1, 1986 between Alco Standard Corporation and the Chase Manhattan Bank, N.A., as Trustee, filed as Exhibit 4.1 to Alco Standard Corporation's Registration Statement No. 30-4829, is incorporated herein by reference. 10.13 Share Purchase and Transfer Agreement between IMM Industria Beteiligungs GmbH and Alco Standard Corporation, filed as Exhibit 10.12 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.14 Offering Document dated May 14, 1993 Entitled "Recommended Cash Offers for Erskine House Group", filed as Exhibit 10.14 to Alco's 1993 Form 10-K, is incorporated herein by reference. 10.15 Agreement re: Purchase and Sale of Assets among Alco Standard Corporation, Georgia-Pacific Corporation and Butler Paper Company, filed as Exhibit 10.15 to Alco's 1993 Form 10-K, is incorporated herein by reference. 11 Statement re: Computation of earnings per share, filed as Exhibit 11 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.1 Ratio of Earnings to Fixed Charges, filed as Exhibit 12.1 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.2 Ratio of Earnings to Fixed Charges Excluding Captive Finance Subsidiaries, filed as Exhibit 12.2 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.3 Ratio of Earnings to Fixed Charges and Preferred Stock Dividends, filed as Exhibit 12.3 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.4 Ratio of Earnings to Fixed Charges and Preferred Stock Dividends Excluding Captive Finance Subsidiaries, filed as Exhibit 12.4 to Alco's 1993 Form 10-K, is incorporated herein by reference. 21 Subsidiaries of Alco Standard Corporation, filed as Exhibit 21 to Alco's 1993 Form 10-K, is incorporated herein by reference. 23 Auditors' Consent. 24 Powers of Attorney; certified resolution re: Powers of Attorney.
- - -------- * Copies of the exhibits will be furnished to any security holder of Alco upon payment of the reasonable cost of reproduction. 11 (b) Reports on Form 8-K. On July 6, 1993, Alco filed a Current Report on Form 8-K to report the July 1, 1993 acquisition of Butler Paper Company. On September 29, 1993, Alco filed a Current Report on Form 8-K to report the restructuring and name change of its paper distribution business. (c) The response to this portion of Item 14 is submitted in response to Item 14(a)(3) above. (d) The response to this portion of Item 14 is contained on pages S-2, S-8 and S-9 of this report. 12 ALCO STANDARD CORPORATION AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-K ITEMS 14(A)(1) AND (2) AND 14(D) LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES FINANCIAL STATEMENTS: The following consolidated financial statements of Alco Standard Corporation and its subsidiaries are included in Item 8 of Part II of this report: Consolidated Statements of Income --Fiscal years ended September 30, 1993, September 30, 1992 and September 30, 1991 Consolidated Balance Sheets --September 30, 1993 and September 30, 1992 Consolidated Statements of Cash Flows --Fiscal years ended September 30, 1993, September 30, 1992 and September 30, 1991 Consolidated Statements of Changes in Shareholders' Equity --Fiscal years ended September 30, 1993, September 30, 1992 and September 30, 1991 Notes to Consolidated Financial Statements FINANCIAL STATEMENT SCHEDULES: The following consolidated financial statement schedules of Alco Standard Corporation and its subsidiaries are submitted in response to Item 14(d): Schedule II--Amounts Receivable From Related Parties and Underwriters, Promoters and Employees Other Than Related Parties. Schedule VIII--Valuation and Qualifying Accounts. Schedule IX--Short-term Borrowings. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. F-1 (ART) REPORT OF ERNST & YOUNG, INDEPENDENT AUDITORS To the Board of Directors and Shareholders Alco Standard Corporation We have audited the accompanying consolidated balance sheets of Alco Standard Corporation and subsidiaries as of September 30, 1993 and 1992, and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended September 30, 1993. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules 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 and schedules are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and schedules. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement and schedule presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Alco Standard Corporation and subsidiaries at September 30, 1993 and 1992, and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. November 1, 1993 F-2 ALCO STANDARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FISCAL YEAR ENDED SEPTEMBER 30 (IN THOUSANDS EXCEPT PER SHARE DATA)
1993 1992 1991 ---------- ---------- ---------- REVENUES Net sales................................. $6,387,078 $4,882,908 $4,481,324 Dividends, interest and other income...... 6,332 3,292 6,088 Finance subsidiaries (note 12)............ 51,149 38,936 28,565 ---------- ---------- ---------- 6,444,559 4,925,136 4,515,977 ---------- ---------- ---------- COSTS AND EXPENSES Cost of goods sold........................ 4,799,757 3,638,494 3,390,246 Selling and administrative................ 1,378,814 1,069,602 946,756 Restructuring costs (note 14)............. 175,000 Interest.................................. 40,189 31,680 37,426 Finance subsidiaries interest (note 12)... 23,662 19,523 15,747 ---------- ---------- ---------- 6,417,422 4,759,299 4,390,175 ---------- ---------- ---------- Loss from Unconsolidated Affiliate (note 3). (2,538) Investment Gain, net (note 10).............. 6,683 ---------- ---------- ---------- Income from Continuing Operations Before Taxes...................................... 24,599 172,520 125,802 Taxes on Income (note 6).................... 16,984 68,303 49,160 ---------- ---------- ---------- Income from Continuing Operations........... 7,615 104,217 76,642 Income (Loss) from Discontinued Operations, net of income taxes (note 2)............... (7,515) (8,455) 40,939 ---------- ---------- ---------- Net Income.................................. 100 95,762 117,581 Preferred Dividends (note 5)................ 9,571 ---------- ---------- ---------- Net Income (Loss) Available to Common Shareholders............................... $ (9,471) $ 95,762 $117,581 ========== ========== ========== Earnings (Loss) Per Share (note 1).......... Continuing operations..................... $ (.04) $ 2.22 $ 1.70 Discontinued operations................... (.16) (.18) .91 ---------- ---------- ---------- $ (.20) $ 2.04 $ 2.61 ========== ========== ==========
See notes to consolidated financial statements. F-3 ALCO STANDARD CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30 (DOLLARS IN THOUSANDS)
ASSETS 1993 1992 - - ------ ---------- ---------- Current Assets Cash................................................... $ 36,495 $ 24,386 Accounts receivable, less allowance for doubtful accounts: 1993--$27,528; 1992--$23,947......................... 855,666 659,223 Inventories (note 1)................................... 591,964 460,205 Prepaid expenses, deposits and deferred taxes.......... 92,600 39,722 ---------- ---------- Total current assets................................. 1,576,725 1,183,536 ---------- ---------- Investment in Unconsolidated Affiliate (note 3).......... 118,060 Other Investments and Long-Term Receivables.............. 46,813 17,479 Property and Equipment, at cost Land................................................... 23,959 28,886 Buildings and improvements............................. 226,256 178,369 Machinery and equipment................................ 346,686 337,774 ---------- ---------- 596,901 545,029 Less accumulated depreciation.......................... 260,551 250,605 ---------- ---------- 336,350 294,424 ---------- ---------- Other Assets Excess of cost of acquired companies over equity....... 694,757 506,969 Miscellaneous.......................................... 69,662 55,774 Deferred taxes......................................... 22,454 ---------- ---------- 786,873 562,743 ---------- ---------- Finance Subsidiaries Assets (note 12).................... 484,069 386,579 ---------- ---------- $3,348,890 $2,444,761 ========== ==========
See notes to consolidated financial statements. F-4 ALCO STANDARD CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30 (DOLLARS IN THOUSANDS)
LIABILITIES AND SHAREHOLDERS' EQUITY 1993 1992 - - ------------------------------------ ---------- ---------- Current Liabilities Current portion of long-term debt.................... $ 39,915 $ 8,170 Notes payable (note 4)............................... 164,249 1,565 Trade accounts payable............................... 426,971 355,667 Accrued salaries, wages and commissions.............. 80,097 72,966 Deferred revenues.................................... 116,631 94,874 Other accrued expenses............................... 192,311 154,257 ---------- ---------- Total current liabilities.......................... 1,020,174 687,499 ---------- ---------- Long-Term Debt (note 4)................................ 590,154 471,951 Deferred Taxes and Other Liabilities Income taxes......................................... 28,035 Restructuring costs (note 14)........................ 142,459 Workers' compensation and other (note 5)............. 113,069 73,200 ---------- ---------- 255,528 101,235 ---------- ---------- Finance Subsidiaries Liabilities (note 12)............. 437,418 323,713 Redeemable Preferred Stock of Subsidiary (note 13)..... 25,000 Shareholders' Equity (note 5) Series AA convertible preferred stock, no par value; 4,025,000 depositary shares issued and outstanding.. 197,900 Common stock, no par value; authorized 75,000,000 shares; issued 48,772,000 shares.................... 259,031 257,069 Retained earnings.................................... 651,373 699,015 Foreign currency translation adjustment.............. (23,640) (6,622) Cost of common shares in treasury: 1993--1,808,000 shares; 1992--2,823,000 shares.............................. (64,048) (89,099) ---------- ---------- 1,020,616 860,363 ---------- ---------- $3,348,890 $2,444,761 ========== ==========
See notes to consolidated financial statements. F-5 ALCO STANDARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FISCAL YEAR ENDED SEPTEMBER 30 (IN THOUSANDS)
1993 1992 1991 -------- -------- -------- OPERATING ACTIVITIES Net income...................................... $ 100 $ 95,762 $117,581 Additions (deductions) to reconcile net income to net cash provided by operating activities Depreciation................................... 57,272 47,510 52,048 Amortization................................... 22,137 16,628 16,501 Provision for losses on accounts receivable.... 19,702 14,636 20,078 Provision (benefit) for deferred income taxes.. (55,042) 10,243 (15,605) Change in deferred liabilities................. 15,232 1,198 10,187 Restructuring costs accrued.................... 169,939 Loss (gain) on sale of Alco Diversified Services.................... 9,841 15,294 Alco Food Systems............................ (5,669) (74,046) Investment and other......................... (6,683) Changes in operating assets and liabilities, net of effects from acquisitions and divestitures Decrease (increase) in Accounts receivable........................ (72,064) (48,870) 2,963 Inventories................................ (52,877) (28,954) 5,120 Prepaid expenses........................... (5,083) (3,225) 8,991 Increase (decrease) in accounts payable, deferred revenues, and accrued expenses..... (52,563) 44,254 (58,700) Miscellaneous.................................. (13,267) (10,880) 2,141 -------- -------- -------- Net cash provided............................... 43,327 141,244 87,259 -------- -------- -------- INVESTING ACTIVITIES Proceeds from sale (net of cash retained) of Alco Diversified Services...................... 69,836 Alco Food Systems.............................. 7,756 185,315 Investment and other........................... 15,881 Proceeds from sale of property and equipment.... 21,769 8,123 22,011 Payments received on long-term receivables...... 5,369 2,740 10,556 Cost of companies acquired, net of cash acquired....................................... (439,447) (330,635) (94,097) Expenditures for property and equipment......... (83,789) (58,076) (55,285) Purchases of miscellaneous assets............... (10,702) (26,339) (7,881) Finance subsidiaries receivables Additions...................................... (278,503) (228,951) (172,406) Collections.................................... 166,274 126,493 78,876 -------- -------- -------- Net cash used................................... (549,193) (483,008) (32,911) -------- -------- -------- FINANCING ACTIVITIES Proceeds from Issuance of long-term debt..................... 319,338 191,898 159,423 Option exercises and sale of treasury shares... 62,284 47,096 41,929 Issuance of Series AA convertible preferred stock, net.................................... 196,335 Short-term borrowings, net..................... 163,563 Proceeds (repayments) of accounts receivable sold........................................... (3,440) 52,124 Long-term debt repayments....................... (241,827) (26,148) (140,322) Finance subsidiaries debt Issuance....................................... 228,307 127,843 108,724 Repayments..................................... (124,201) (48,000) (47,642) Dividends paid.................................. (49,995) (41,582) (43,041) Purchase of treasury shares..................... (32,389) (57,200) (44,731) -------- -------- -------- Net cash provided............................... 517,975 246,031 34,340 -------- -------- -------- Net Increase (decrease) in Cash................. 12,109 (95,733) 88,688 Cash at Beginning of Year....................... 24,386 120,119 31,431 -------- -------- -------- Cash at End of Year............................. $ 36,495 $ 24,386 $120,119 ======== ======== ========
See notes to consolidated financial statements. F-6 ALCO STANDARD CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FISCAL YEAR ENDED SEPTEMBER 30 (IN THOUSANDS EXCEPT PER SHARE DATA)
1993 1993 1992 1992 1991 1991 ------ -------- ------ --------- ------ --------- SHARES AMOUNTS SHARES AMOUNTS SHARES AMOUNTS ------ -------- ------ --------- ------ --------- SERIES AA CONVERTIBLE PREFERRED STOCK Issued in public offering............... 4,025 $196,335 Dividend accretion...... 1,565 ------ -------- Balance, end of year.... 4,025 $197,900 ====== ======== COMMON STOCK Balance, beginning of year................... 48,772 $257,069 48,772 $ 249,870 52,046 $ 262,294 Mergers and acquisitions........... 5,854 (3,300) (13,668) Conversions of preferred stock.................. 26 543 Tax benefit relating to stock plans............ 1,962 1,345 701 ------ -------- ------ --------- ------ --------- Balance, end of year.... 48,772 $259,031 48,772 $ 257,069 48,772 $ 249,870 ====== ======== ====== ========= ====== ========= RETAINED EARNINGS Balance, beginning of year................... $699,015 $ 687,892 $ 701,007 Net income.............. 100 95,762 117,581 Cash dividends declared: Preferred stock: per share 1993--$2.236... (9,571) Common stock: per share 1993--$.96; 1992--$.92; 1991-- $.88 (44,858) (41,520) (37,251) Pooled companies, prior to merger...... (3,907) (5,680) Credits (charges) from issuance of treasury shares and other.................. 6,687 (39,212) (87,765) -------- --------- --------- Balance, end of year.... $651,373 $ 699,015 $ 687,892 ======== ========= ========= FOREIGN CURRENCY TRANSLATION ADJUSTMENT Balance, beginning of year................... $ (6,622) $ 2,039 $ 4,623 Translation adjustment.. (17,018) (8,661) (2,584) -------- --------- --------- Balance, end of year.... $(23,640) $ (6,622) $ 2,039 ======== ========= ========= COST OF COMMON SHARES IN TREASURY Balance, beginning of year................... 2,823 $(89,099) 4,134 $(118,606) 7,859 $(219,712) Purchases............... 756 (32,389) 1,569 (57,200) 1,396 (44,731) Reissued for Exercise of options... (405) 13,063 (297) 8,814 (314) 8,936 Sales to employee stock plans.......... (1,250) 40,564 (1,114) 33,127 (1,114) 31,599 Conversion of preferred stock...... (74) 2,407 (53) 1,551 (100) 2,833 Mergers and acquisitions......... (42) 1,406 (1,416) 43,215 (3,593) 102,469 ------ -------- ------ --------- ------ --------- Balance, end of year.... 1,808 $(64,048) 2,823 $ (89,099) 4,134 $(118,606) ====== ======== ====== ========= ====== =========
See notes to consolidated financial statements. F-7 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF ACCOUNTING POLICIES Consolidation All wholly-owned subsidiaries are consolidated and intercompany transactions have been eliminated. The investment in unconsolidated affiliate represents a 49.9% ownership interest in IMM Office Systems GmbH (IMM) accounted for by the equity method. Revenue Recognition Revenues are recorded at the time of shipment of products or performance of services. Revenues from maintenance contracts are recognized in earnings over the term of the contract. The present values of payments due under sales-type lease contracts are recorded as revenues and cost of goods sold is charged with the book value of the equipment at the time of shipment. Future interest income is deferred and recognized over the related lease term. Inventories Inventories are stated at the lower of cost or market and at September 30, 1993 consist of finished goods available for sale. At September 30, 1992, inventories included $17,723,000 of raw material and $13,087,000 of work in process of Alco Diversified Services ("ADS") which was divested in fiscal 1993 (note 2). The Company uses the LIFO method of determining cost for approximately 60% of its inventories and the FIFO method for the balance. If the FIFO method of accounting had been used for all inventories, these balances would have been $38,630,000 higher at September 30, 1993 and $45,035,000 higher at September 30, 1992. Excess of Cost of Acquired Companies Over Equity Substantially all of the excess of cost of acquired companies over equity is amortized over 40 years by the straight-line method. The recoverability of the asset is evaluated at the operating unit level by an analysis of operating results and consideration of other significant events or changes in the business environment. If an operating unit has current operating losses and based upon projections there is a likelihood that such operating losses will continue, the Company will measure impairment on the basis of undiscounted cash flow from operations before interest. Depreciation Properties and equipment are depreciated over their useful lives by the straight-line method. Earnings Per Share Earnings per share are based on 47,396,000 weighted average shares in 1993, 46,876,000 shares in 1992 and 45,054,000 shares in 1991, and include the dilutive effect of common stock equivalents, principally stock options and preferred shares. Foreign Currency Translation All assets and liabilities of foreign subsidiaries are translated into U.S. dollars at fiscal year-end exchange rates. Income and expense items are translated at average exchange rates prevailing during the fiscal year. The resulting translation adjustments are recorded as a component of shareholders' equity. F-8 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Reclassifications Certain prior year amounts have been reclassified to conform with the current year presentation. 2. DISCONTINUED OPERATIONS In September 1992, the Company decided to sell ADS. Accordingly, ADS results for all years presented are reported in the accompanying statements of income as discontinued operations. In fiscal 1992, the Company provided for an anticipated loss on the sale of ADS of $15,294,000. In July 1993, the Company completed the sale of ADS assets of approximately $102,000,000 to an investor group for $84,000,000 in cash and notes. The Company recorded an additional loss of $9,841,000, net of a LIFO layer liquidation of $3,572,000, in fiscal 1993 in connection with this sale. The 1993 tax benefit for ADS in the table below is comprised of $1,449,000 relating to ADS operations and $4,966,000 relating to the loss on the sale of ADS. The 1992 tax expense for ADS relates to its operating income. No tax benefits were recorded from the anticipated loss on disposal since it consists principally of the write-off of non-deductible cost in excess of net assets of acquired businesses. In fiscal 1990, the Company decided to sell Alco Food Systems ("AFS") and began presenting AFS as discontinued operations on the statements of income at that time. During fiscal 1991, the Company sold six of those businesses for $201,000,000 in cash and notes. Assets of the companies sold were $155,599,000. The remaining two AFS businesses with assets of $16,764,000 were sold in fiscal 1992 for cash, notes and preferred stock of $20,714,000. In 1991, "Other" loss before taxes in the table below includes an $8,000,000 pretax interest charge for prior years' tax settlements relating to AFS and other discontinued companies, together with charges related to previously discontinued businesses. In addition, the "Other" 1991 tax benefit includes a $2,700,000 settlement related to prior years. The results of discontinued operations are:
1993 1992 1991 FISCAL YEAR ENDED SEPTEMBER 30 (IN THOUSANDS) -------- -------- -------- Revenues Alco Diversified Services......................... $153,063 $222,764 $242,235 Alco Food Systems................................. 18,233 136,407 -------- -------- -------- $153,063 $240,997 $378,642 ======== ======== ======== Income (loss) before taxes Alco Diversified Services Operating....................................... $ (3,946) $ 10,158 $ 18,400 Loss on disposal................................ (9,841) (15,294) Alco Food Systems Operating....................................... (5,281) 3,332 Gain on disposals............................... 5,669 74,046 Other............................................. (477) (18,905) -------- -------- -------- (13,787) (5,225) 76,873 -------- -------- -------- Tax expense (benefit) Alco Diversified Services......................... (6,415) 3,239 7,176 Alco Food Systems................................. 153 33,272 Other............................................. 143 (162) (4,514) -------- -------- -------- (6,272) 3,230 35,934 -------- -------- -------- Net income (loss) Alco Diversified Services......................... (7,372) (8,375) 11,224 Alco Food Systems................................. 235 44,106 Other............................................. (143) (315) (14,391) -------- -------- -------- $ (7,515) $ (8,455) $ 40,939 ======== ======== ========
F-9 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 3. ACQUISITIONS In October 1992, the Company purchased a 49.9% interest in IMM, a European distributor of office products for $122,500,000 in cash, which included excess of cost over equity of $101,540,000. The IMM share purchase agreement provides the Company with the option of acquiring the remaining shares of IMM over a three year option period (call option) beginning in May 1996. Conversely, the majority shareholders of IMM may require the Company to acquire the remaining shares of IMM during the same option period (put option). The call/put options can be triggered from 1996 through 1998 but only if IMM meets certain operating criteria during this period. The minimum exercise prices for the call options are $87,616,100, $102,933,600 and $112,124,100 for exercise during 1996, 1997 and 1998, respectively. The minimum exercise prices for the put option are $75,362,100, $79,957,350 and $87,616,100 for exercise during 1996, 1997 and 1998 respectively. These amounts reflect conversion into U.S. dollars at a September 30, 1993 exchange rate. In June 1993, the Company acquired over 90% of the outstanding shares of Erskine House Group PLC (Erskine House), a United States and European distributor of office products, and the remaining outstanding shares were acquired during the fourth quarter of fiscal 1993. The purchase price was approximately $103,000,000, plus the assumption of approximately $101,000,000 of debt and redeemable preferred stock. Total assets acquired were $264,828,000, which includes excess of cost over acquired equity of $166,261,000. In July 1993, the Company acquired the paper distribution businesses of Butler Paper Company (Butler Paper) for a purchase price of $140,000,000. Total assets acquired were $284,000,000 and excess of acquired equity over cost of approximately $31,000,000 was allocated to fixed assets. During fiscal 1993, 21 other acquisitions were made for an aggregate purchase price of $47,706,000 in cash and stock. Total assets acquired were $68,878,000 including excess of cost over equity of $27,745,000. An additional $30,236,000 was paid and capitalized in 1993 relating to prior years' acquisitions. In fiscal 1992, the Company issued 1,416,311 common shares for two acquisitions accounted for as poolings-of-interests and their results of operations were included from the beginning of the fiscal year. In September 1992, the Company purchased the Paper Distribution Group of Abitibi-Price (Abitibi) for $284,000,000 in cash. Total assets acquired were $322,700,000 including excess of cost over acquired equity of $138,000,000. In September 1992, the Company entered into an agreement, which expires December 20, 1993, to sell, without recourse, up to CN$70,000,000 (US$56,000,000 at September 30, 1992) of certain eligible accounts receivable of Abitibi. At September 30, 1993, the amount of receivables outstanding under the agreement was CN$60,000,000 (US$45,000,000). As collections reduce previously sold interests, new receivables will be sold up to the amount of the CN$70,000,000. The Company made eight other acquisitions in 1992 for $38,839,000 in cash and costs relating to prior years' acquisitions of $4,768,000 were paid and capitalized. Total assets related to fiscal 1992 acquisitions, excluding Abitibi, were $79,595,000 including excess cost over acquired equity of $15,948,000. During fiscal 1991, the Company issued 3,300,001 shares of its common stock in its merger with the Hillman companies (comprised of 18 office products companies and a captive finance subsidiary). The amounts and disclosures below include the companies as previously purchased by the Hillman companies. Another merger in 1991 for 292,864 common shares was also accounted for as a pooling- of-interests and its results of operations were included from October 1990. Ten other acquisitions were made in fiscal 1991 for $84,247,000 in cash. Total assets related to these fiscal 1991 acquisitions were $117,227,000 and included excess of cost over acquired equity of $46,337,000. All acquisitions, unless otherwise noted, are included from their dates of acquisition. F-10 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Had the purchase acquisitions been made at the beginning of the year prior to their acquisition and the poolings been made on October 1, 1990, pro forma results from continuing operations would have been:
FISCAL YEAR ENDED SEPTEMBER 30 1993 1992 1991 (IN THOUSANDS EXCEPT PER SHARE DATA) ---------- ---------- ---------- Revenues..................................... $7,512,725 $7,150,600 $5,592,639 Income from continuing operations............ 7,455 108,957 82,038 Earnings (loss) per share.................... (.10) 2.08 1.77
The pro forma results are on the basis that $201,250,000 of the purchase price of 1993 and 1992 acquisitions were funded by the proceeds from issuance of the Series AA convertible preferred stock. The pro forma results for fiscal years 1993 and 1992 assuming the replacement of $237,150,000 of debt financing for current year acquisitions with the anticipated proceeds of a common stock offering (note 4) would be income from continuing operations of $11,955,000 in fiscal 1993 and $115,707,000 in fiscal 1992; earnings per share of $0.00 in fiscal 1993 and $2.01 in fiscal 1992. The dilution of earnings per share in fiscal 1993 is attributable to the acquisition of Erskine House which includes a $4,647,000 write-off of Advance Corporation Tax, which was deemed to be not recoverable in the foreseeable future. 4. SHORT AND LONG-TERM DEBT Short-term debt consisted of:
1993 1992 SEPTEMBER 30 (IN THOUSANDS) -------- ------ Notes payable to banks at average interest rate of 3.9%........ $ 73,563 Commercial paper at interest rate of 3.2%...................... 90,000 Other notes payable at average interest rate: 1993--6.9%; 1992--6.2%.................................................... 686 $1,565 -------- ------ $164,249 $1,565 ======== ======
Long-term debt consisted of:
1993 1992 SEPTEMBER 30 (IN THOUSANDS) -------- -------- Notes payable at average interest rate: 1993--3.9%; 1992-- 5.4%........................................................ $300,000 $186,276 Bond issue at interest rate of 8 7/8% due 2001............... 150,000 150,000 Private placement debt at average interest rate of 8.1% due 1994-1998................................................... 100,000 100,000 Notes payable to insurance company at interest rate of 10.7% due 2001.................................................... 35,000 Industrial revenue bonds at average interest rate: 1993-- 8.0%; 1992--7.8%; due 1994-2001................................................... 11,787 12,177 Sundry notes, bonds and mortgages at average interest rate: 1993--7.3%; 1992--7.6% due 1993-2006........................ 6,850 7,519 Present value of capital lease obligations (gross amount: 1993--$45,784; 1992--$45,450).............................................. 26,432 24,149 -------- -------- 630,069 480,121 Less current maturities...................................... 39,915 8,170 -------- -------- Long-term debt............................................... $590,154 $471,951 ======== ========
Long-term debt matures in fiscal years: 1994--$39,915,000; 1995-- $339,074,000; 1996--$22,963,000; 1997--$1,707,000; 1998--$51,286,000; 1999- 2006--$175,124,000 total. F-11 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) On December 18, 1991, the Company entered into a credit agreement with fifteen banks to borrow up to $200 million. The agreement has two parts: half is subject to termination December 18, 1995; the other half is available for 364 days subject to annual renewal for successive 364-day periods. Annual fees of 3/16% on the three-year portion and 1/8% on the 364-day portion are charged for these commitments. The agreement provides that loans may be made under either domestic or Eurodollar notes at rates computed under various formulas selected by the Company from among the domestic certificates of deposit rate, prime rate or Eurodollar rate. In October 1992, the Company entered into a credit agreement with six banks to borrow up to DM180 million, or the U.S. dollar equivalent. A facility fee of 1/8% per annum is charged for this commitment which expires on January 15, 1994. Loans under this agreement may be made under a selection of prime, DM Eurocurrency or Eurodollar rate formulas. The Company entered into a new credit agreement on April 21, 1993, with four banks allowing the Company to borrow up to $200 million or the Canadian dollar equivalent. A facility fee of 1/8% per annum is charged for the $100 million portion of the commitment expiring in April 1994, and 3/16% per annum is charged for the $100 million portion expiring in April, 1996. Loans under the agreement may be made under a selection of rate formulas including prime, the Eurodollar rate in the United States or Canada, or the Canadian Bankers Acceptance rate. On June 8, 1993, the Company entered into another revolving credit agreement with four banks allowing the Company to borrow up to $100 million or the Pounds Sterling equivalent. This credit agreement carries a facility fee of 3/16% per annum and expires in October 1995. Loans under this agreement may be made under a selection of rate formulas including prime, the Eurodollar or Eurosterling rates. The total amount outstanding under the various lines of credit at September 30, 1993 was $463,563,000 of which $300,000,000 is classified as long-term debt and is included in the 1995 maturities because the Company has the intention to repay a portion of this amount with the proceeds of a public offering of 5 million shares of its common stock and the remainder via other alternative long-term funding. At September 30, 1993, $146,753,000 of the combined lines were unused and available. The Company is in compliance with all loan agreements. The industrial revenue bonds, capital lease obligations and mortgages are secured by property and equipment that had a net book value of $23,308,000 at September 30, 1993. As of September 30, 1993, consolidated retained earnings of $386,677,000 were free of restrictions relating to the payment of dividends, repurchases of Company shares and other matters. Interest paid approximates the amounts in the statements of income for fiscal years 1993 and 1992. In fiscal 1991, interest paid was $44,500,000. 5. SHAREHOLDERS' EQUITY At September 30, 1993, the holders of redeemable serial preferred stock have the option of converting them into 11,524 shares of common stock. The redemption value of such preferred shares (1993--$254,000; 1992--$1,639,000) is included in other liabilities. The Company has 2,164,974 shares of serial preferred stock authorized at September 30, 1993. On December 22, 1992, the Company sold 4,025,000 depositary shares, each representing 1/100th of a share of Series AA preferred stock at $50.00 per depositary share totaling $201,250,000, and used the net proceeds to reduce debt. Dividends are cumulative at $2.375 per year per depositary share through January 2, 1996 and $3.25 per depositary share per year thereafter. The dividend is accrued on a straight line basis ($2.875 per depositary share) and accretion for the difference between the accrued and cash dividend amounting to $1,565,000 at September 30, 1993 has been credited to Series AA preferred stock. This series of F-12 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) preferred stock has one vote per share (equivalent to 1/100 vote per depositary share) and is convertible at rate of 1.1201 shares of the Company's common stock per depositary share at any time. The Series AA preferred stock, unless previously converted into common stock, is redeemable by issuance of common stock at the Company's option at the rate of 1.1201 shares of common stock per depositary share (with certain limitations) on or after January 9, 1996 through January 9, 2000. On or after January 9, 2000, this series of preferred stock is redeemable at the Company's option at $50.00 per depositary share. Upon liquidation, Series AA preferred stock has preference equivalent to $50.00 per depositary share plus an amount equal to accrued and unpaid dividends. At September 30, 1993, 4,508,403 shares of common stock were reserved for conversion of the Series AA preferred stock. Employee stock options are granted at the market price at dates of grant and expire in ten years. The proceeds of options exercised are credited to shareholders' equity. There are no charges or credits to income in connection with these options. A 1989 plan for the Company's directors enables participants to receive their annual directors' fees in the form of options to purchase shares of common stock at a discount. The discount is equivalent to the fee and is charged to expense. Changes in common shares under option were:
DIRECTORS EMPLOYEES --------------------------- ----------------------------- SHARES OPTION PRICE RANGE SHARES OPTION PRICE RANGE ------- ------------------ --------- ------------------ September 30, 1990... 53,321 $19.55 to $21.47 2,033,516 $ 8.69 to $35.63 Granted............ 21,865 26.34 478,070 30.75 to 35.00 Exercised.......... (4,736) 19.55 to 21.47 (309,446) 8.69 to 32.13 Cancelled.......... (39,815) 8.69 to 35.00 ------- ---------------- --------- ---------------- September 30, 1991... 70,450 19.55 to 26.34 2,162,325 9.13 to 35.63 Granted............ 18,624 28.69 432,250 31.50 to 38.25 Exercised.......... (2,391) 19.55 to 26.34 (294,908) 9.13 to 35.63 Cancelled.......... (44,070) 9.38 to 38.25 ------- ---------------- --------- ---------------- September 30, 1992... 86,683 19.55 to 28.69 2,255,597 16.13 to 38.25 Granted............ 24,669 30.19 to 40.25 567,817 35.25 to 40.25 Exercised.......... (17,224) 19.55 to 26.34 (387,916) 16.13 to 38.25 Cancelled.......... (211,717) 22.88 to 40.25 ------- ---------------- --------- ---------------- September 30, 1993... 94,128 19.55 to 40.25 2,223,781 16.13 to 40.25 ======= ================ ========= ================
At September 30, 1993, options to purchase 1,140,619 shares were exercisable (1993: employees--1,070,710; directors--69,459; 1992: employees--919,265; directors--68,059) and 1,263,572 shares were available for grant (1993: employees--782,051; directors--481,521; 1992: employees--1,245,965; directors-- 406,190). At September 30, 1993, 8,111,598 shares of common stock were reserved for sales to employee stock plans. Effective October 1, 1992 the Company issued options pursuant to the Company's 1986 Stock Option Plan to purchase 107,814 shares of common stock in accordance with the Company's Long-Term Incentive Compensation Plan. The options become exercisable only to the extent that credits are issued pursuant to the plan. The award of credits is conditional upon achieving predetermined performance objectives during the three year period ended September 30, 1995. The value of the awards are charged to expense over the plan period. One preferred share purchase right (Right) exists for each outstanding share of common stock (the Shares). The Rights become exercisable ten days after the earlier of a public announcement by another entity F-13 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) that it has acquired beneficial ownership of 20% or more of the Shares or a public announcement of another entity's intention to commence a tender offer to acquire beneficial ownership of 30% or more of the Shares. When the Rights become exercisable, each Right will entitle a holder to purchase 1/100th of a share of Series 12 Preferred Stock for an exercise price of $75. If the Company consolidates or merges with another entity, or sells assets that aggregate 50% of its consolidated assets or generates more than 50% of its consolidated operating income or cash flow, then each Right holder will have the right to purchase, for the exercise price, a number of shares of the other entity having a then-current market value equal to twice the exercise price. If another entity owning 20% or more of the Shares (a) engages in certain transactions with the Company, or (b) causes the Company to forego or reduce quarterly dividends or take an action that would result in a more than 2% increase in the other entity's proportionate share of the outstanding shares; or if another entity becomes the beneficial owner of 30% or more of the outstanding shares; then each Right holder (other than the other entity) will have the right to purchase, for the exercise price, a number of shares of the Company having a then-current market value equal to twice the exercise price. The Rights are redeemable by the Company prior to becoming exercisable at $.05 per Right and expire on February 10, 1998. 6. TAXES ON INCOME--CONTINUING OPERATIONS Provision for income taxes:
FISCAL YEAR ENDED 1993 1993 1992 1992 1991 1991 SEPTEMBER 30 (IN CURRENT DEFERRED CURRENT DEFERRED CURRENT DEFERRED THOUSANDS) ------- -------- ------- -------- ------- -------- Federal................... $57,200 $(48,149) $45,872 $10,503 $42,218 $(5,560) Foreign................... 6,602 (948) 5,239 6,501 State..................... 3,706 (1,427) 6,254 435 6,157 (156) ------- -------- ------- ------- ------- ------- Taxes on income........... $67,508 $(50,524) $57,365 $10,938 $54,876 $(5,716) ======= ======== ======= ======= ======= =======
Deferred taxes resulting from temporary differences between financial and tax accounting:
1993 1992 1991 FISCAL YEAR ENDED SEPTEMBER 30 (IN THOUSANDS) -------- -------- -------- Depreciation..................................... $ 4,741 $ (1,658) $ 4,656 Lease income recognition......................... 11,993 13,648 6,645 Nondeductible reserves........................... (67,115) (5,568) (12,741) Other............................................ (143) 4,516 (4,276) -------- -------- -------- Deferred taxes................................... $(50,524) $ 10,938 $ (5,716) ======== ======== ========
The principal differences comprising the Company's deferred tax liability at September 30, 1993 are accumulated depreciation, sales-type leasing transactions and nondeductible reserves. Components of the effective income tax rate:
1993 1992 1991 FISCAL YEAR ENDED SEPTEMBER 30 ---- ---- ---- Federal....................................................... 34.8% 34.0% 34.0% State......................................................... 6.1 2.6 3.1 Goodwill...................................................... 16.1 2.0 2.4 Foreign....................................................... 8.2 1.2 1.1 Other......................................................... 3.8 (.2) (1.5) ---- ---- ---- Effective income tax rate..................................... 69.0% 39.6% 39.1% ==== ==== ====
F-14 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The effective tax rate for 1993, excluding the restructuring costs, is 39.6%, the same as the effective rate for the year ended September 30, 1992. The Company adopted the liability method of accounting for income taxes under SFAS No. 96 for the fiscal year ended September 30, 1988. In February 1992, the Financial Accounting Standards Board issued SFAS No. 109, "Accounting for Income Taxes". As required, the Company will adopt SFAS No. 109 in the first quarter of fiscal 1994. Adoption of this statement will not have a material effect upon the Company's consolidated financial statements. Net income tax payments for all operations amounted to $77,487,000 in 1993, $57,861,000 in 1992 and $92,584,000 in 1991. 7. PENSION, POSTRETIREMENT, AND STOCK PURCHASE PLANS The Company sponsors defined benefit pension plans for the majority of its employees. The benefits generally are based on years of service and compensation. The Company funds at least the minimum amount required by government regulations. The cost of these plans, together with contributions to multi-employer and defined contribution pension plans ($5,134,000 in 1993, $2,642,000 in 1992 and $3,502,000 in 1991), charged to continuing operations amounted to $12,684,000 for 1993, $7,116,000 for 1992 and $6,687,000 for 1991. The components of net periodic pension cost for the company-sponsored defined benefit pension plans are:
1993 1992 1991 FISCAL YEAR ENDED SEPTEMBER 30 (IN THOUSANDS) -------- -------- ------- Service cost....................................... $ 11,123 $ 8,131 $ 7,519 Interest cost on projected benefit obligation...... 13,416 11,644 10,003 Actual return on plan assets....................... (34,238) (22,732) (8,031) Net amortization and deferral...................... 17,249 6,520 (6,306) -------- -------- ------- Net pension cost................................... $ 7,550 $ 3,563 $ 3,185 ======== ======== =======
Assumptions used in accounting for the company-sponsored defined benefit pension plans were:
1993 1992 1991 ----- ----- ----- Weighted average discount rates............................ 7.25% 7.75% 8.25% Rates of increase in compensation levels................... 5.75% 6.25% 6.75% Expected long-term rate of return on assets................ 10.00% 10.00% 10.00%
The funded status and amounts recognized in the consolidated balance sheets for the company-sponsored defined benefit pension plans are:
1993 1992 SEPTEMBER 30 (IN THOUSANDS) -------- -------- Actuarial present value of benefit obligations Vested.................................................... $216,926 $143,014 -------- -------- Accumulated............................................... $224,431 $145,134 -------- -------- Projected................................................. $258,136 $170,883 Plan assets at fair value................................... 254,083 176,547 -------- -------- Plan assets (less than) in excess of projected benefits..... (4,053) 5,664 Items not yet recognized Net gain.................................................. (7,445) (5,774) Prior service cost........................................ 7,737 7,054 Net asset existing at transition date..................... (18,260) (20,101) Adjustment required to recognize minimum liability.......... (4,902) (3,890) -------- -------- Net pension liability....................................... $(26,923) $(17,047) ======== ========
F-15 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Substantially all of the plan assets at September 30, 1993 are invested in listed stocks, bonds and government securities including common stock of the Company of $39,578,000. In July 1993, the Company acquired Butler Paper and its related defined benefit pension plans which had a combined projected benefit obligation of $47,758,000 and combined fair value of plan assets of $41,980,000 as of September 30, 1993. In December 1990, the Financial Accounting Standards Board issued SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions." As required, the Company will adopt SFAS No. 106 in the first quarter of fiscal 1994. This statement requires the accrual of the accumulated postretirement benefit obligation. Upon adoption, the Company intends to elect immediate recognition of the transition obligation which will result in a net of tax charge of $1,560,000, or $.03 per share. The majority of the Company's employees are also eligible to participate in the Company's Stock Participation Plan. They may invest 2% to 6% of regular compensation before taxes. The Company contributes an amount equal to two- thirds of the employees' investments and all amounts are invested in the Company's common shares. Employees vest in the Company's contributions upon the completion of five years of service. There is a similar plan for eligible management employees. The cost of these plans charged to continuing operations amounted to $16,174,000 in 1993, $12,797,000 in 1992 and $9,306,000 in 1991. 8. SEGMENT REPORTING The Company is organized into two operating segments. Alco Office Products sells, leases, and rents photocopiers, facsimile equipment, micrographic equipment and other automated office equipment and provides equipment service and supplies, copying service and customer financing (through a captive leasing company). Unisource is a distributor of printing and communications paper, industrial paper and plastic products, and produces and distributes other products, including carton sealing tapes, tape dispensing equipment, envelopes and food service disposables. Amounts for 1993, 1992 and 1991 relative to continuing operations for each segment are presented below (in millions).
DEPRECIATION INCOME CAPITAL AND REVENUES BEFORE TAXES ASSETS EXPENDITURES AMORTIZATION -------- ------------ -------- ------------ ------------ 1993 Alco Office Products.... $1,585.6 $ 138.8 $1,450.0 $55.9 $45.4 Unisource............... United States......... 4,173.7 118.7 1,319.6 18.8 22.3 Canada................ 690.4 18.3 314.3 2.9 6.9 Restructuring costs... (175.0) -------- ------- -------- ----- ----- Total Unisource......... 4,864.1 (38.0) 1,633.9 21.7 29.2 -------- ------- -------- ----- ----- Operating............... 6,449.7 100.8 3,083.9 77.6 74.6 Unconsolidated affiliate.............. (2.5) 118.1 Eliminations and non- allocated.............. (5.1) (73.7)* 146.9 1.2 1.5 -------- ------- -------- ----- ----- $6,444.6 $ 24.6 $3,348.9 $78.8 $76.1 ======== ======= ======== ===== =====
- - -------- *Includes interest costs and net corporate expenses. F-16 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DEPRECIATION INCOME CAPITAL AND REVENUES BEFORE TAXES ASSETS EXPENDITURES AMORTIZATION -------- ------------ -------- ------------ ------------ 1992 Alco Office Products.... $1,259.2 $105.2 $ 967.5 $33.8 $37.0 Unisource............... United States......... 3,585.1 118.2 988.7 19.1 20.0 Canada................ 82.8 2.3 295.8 1.1 .6 -------- ------ -------- ----- ----- Total Unisource......... 3,667.9 120.5 1,284.5 20.2 20.6 -------- ------ -------- ----- ----- Operating............... 4,927.1 225.7 2,252.0 54.0 57.6 Investment gain, net.... 6.7 Eliminations and non- allocated.............. (2.0) (59.9)* 69.2 .8 1.7 -------- ------ -------- ----- ----- $4,925.1 $172.5 $2,321.2 $54.8 $59.3 ======== ====== ======== ===== ===== 1991 Alco Office Products.... $1,047.1 $ 79.6 $ 781.3 $28.6 $36.3 Unisource............... United States......... 3,441.1 113.8 897.3 16.1 18.4 Canada................ 35.8 1.9 8.2 .2 .4 -------- ------ -------- ----- ----- Total Unisource......... 3,476.9 115.7 905.5 16.3 18.8 -------- ------ -------- ----- ----- Operating............... 4,524.0 195.3 1,686.8 44.9 55.1 Eliminations and non- allocated.............. (8.0) (69.5)* 177.8 2.5 3.1 -------- ------ -------- ----- ----- $4,516.0 $125.8 $1,864.6 $47.4 $58.2 ======== ====== ======== ===== =====
- - -------- *Includes interest costs and net corporate expenses. Revenues, income before taxes and identifiable assets by geographic area from continuing operations for the fiscal years ended September 30 are as follows:
INCOME REVENUES BEFORE TAXES ASSETS (IN MILLIONS) ------------------ --------------- ----------------- 1993 1992 1993 1992 1993 1992 -------- -------- ------ ------ -------- -------- Domestic................ $5,649.8 $4,758.3 $ 73.5 $211.9 $2,547.5 $1,838.3 Foreign................. 799.9 168.8 27.3 13.8 536.4 413.7 -------- -------- ------ ------ -------- -------- Operating............... 6,449.7 4,927.1 100.8 225.7 3,083.9 2,252.0 Unconsolidated affiliate.............. (2.5) 118.1 Investment gain, net.... 6.7 Elimination and non- allocated.............. (5.1) (2.0) (73.7)* (59.9)* 146.9 69.2 -------- -------- ------ ------ -------- -------- Total............... $6,444.6 $4,925.1 $ 24.6 $172.5 $3,348.9 $2,321.2 ======== ======== ====== ====== ======== ========
- - -------- *Includes interest costs and net corporate expenses. Included in income before taxes for fiscal 1993 are restructuring costs of $171,500,000 for domestic operations and $3,500,000 for foreign operations. The revenue and identifiable assets of the Company's foreign businesses were less than 5% of the consolidated amounts in fiscal year 1991. These operations accounted for 9.3% of income before taxes from continuing operations in fiscal year 1991. F-17 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 9. LEASES--CONTINUING OPERATIONS Equipment acquired under capital leases is included in property and equipment in the amount of $34,583,000 in 1993 and $30,722,000 in 1992 and the related amounts of accumulated depreciation are $15,735,000 in 1993 and $14,232,000 in 1992. Related obligations are in long-term debt and related amortization is included in depreciation. At September 30, 1993, future minimum payments under noncancelable operating leases with remaining terms of more than one year were: 1994--$74,754,000; 1995--$61,821,000; 1996--$49,377,000; 1997--$39,767,000; 1998--$32,123,000; thereafter--$91,450,000. Total rental expense was $68,293,000 in 1993, $56,894,000 in 1992 and $46,724,000 in 1991. 10. INVESTMENT GAIN In fiscal 1992, the Company sold debentures received in the 1989 sale of its equity interest in a former subsidiary which resulted in a pre tax gain of approximately $8,100,000 and also recorded nonrecurring expenses of approximately $1,400,000. 11. CONTINGENCIES There were contingent liabilities for taxes, guarantees, lawsuits, and environmental and various other matters occurring in the ordinary course of business. On the basis of information furnished by counsel and others, management believes that none of these contingencies will materially affect the Company. The Company has been advised that a former subsidiary may assert that the Company is liable to it for certain liabilities arising under the "Coal Industry Health Benefit Act of 1992". Based on consultations with counsel, the Company believes that any such claim would be without merit. 12. FINANCE SUBSIDIARIES The Company's wholly-owned finance subsidiaries are engaged in purchasing office equipment from Company dealers and leasing the equipment to customers under direct financing leases. Summarized financial information of the finance subsidiaries is as follows:
1993 1992 SEPTEMBER 30 (IN THOUSANDS) -------- -------- Future minimum lease payments receivable.................... $555,020 $427,441 Less: Unearned income....................................... (82,102) (63,975) -------- -------- Lease receivables........................................... 472,918 363,466 Accounts receivable and other assets........................ 11,151 23,113 -------- -------- Finance subsidiaries assets................................. $484,069 $386,579 ======== ======== Debt at average interest rate: 1993--6%; 1992--7.4% due 1994-1996.......................... $413,092 $300,509 Other liabilities........................................... 24,326 23,204 -------- -------- Finance subsidiary liabilities.............................. $437,418 $323,713 ======== ========
The finance subsidiaries results of operations included in the Company's consolidated net income were net income of $8,180,000 in 1993, $6,055,000 in 1992 and $3,591,000 in 1991. At September 30, 1993, future minimum payments to be received under direct financing leases were: 1994--$218,418,000; 1995--$171,968,000; 1996-- $106,541,000; 1997--$46,135,000; 1998--$11,958,000. F-18 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) 13. FINANCIAL INSTRUMENTS The Company uses financial instruments in the normal course of its business. These financial instruments include debt, commitments to extend credit and interest rate swap agreements. The notional or contractual amounts of these commitments and other financial instruments are shown in the table on page F- 20. Concentration of Credit Risk The Company is subject to credit risk through trade receivables and short- term cash investments. Credit risk with respect to trade receivables is minimized because of a large customer base and its geographic dispersion. Short-term cash investments are placed with high credit quality financial institutions and in short duration corporate and government debt securities funds. By policy, the Company limits the amount of credit exposure in any one type of investment instrument. Interest Rate Swap Agreements The Company has entered into interest rate swap agreements to eliminate the impact of changes in interest rates on its finance subsidiary variable rate notes payable. At September 30, 1993, the Company had outstanding interest rate swap agreements with commercial banks, having a total notional principal amount of $92,000,000. Those agreements effectively change the Company's interest rate exposure on $92,000,000 of variable rate notes due in 1994 through 1996 from variable to fixed rates (ranging from 4.7% to 8.4%). The interest rate swap agreements mature at the time the related notes mature. The Company is exposed to credit loss in the event of nonperformance by the other parties to the interest rate swap agreements. However, the Company does not anticipate nonperformance by the counterparties. Redeemable Preferred Stock of Subsidiary In connection with the acquisition of Erskine House, the Company assumed $25,000,000 of preferred stock which contains mandatory redemption provisions from March 30, 2000 to March 30, 2005. Dividends are payable at an annual rate of 9.14%. The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: Cash, Short-Term Debt and Long Term Receivables The carrying amount reported in the balance sheet approximates fair value. Debt and Redeemable Preferred Stock of Subsidiary The fair value of these instruments is estimated using a discounted cash flow analysis. Off-Balance-Sheet Instruments Fair values for the Company's off-balance-sheet instruments (interest rate swaps) are based on the estimated costs to terminate the agreements. F-19 ALCO STANDARD CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED) The carrying amounts and fair values of the Company's financial instruments at September 30, 1993 are as follows:
FAIR CARRYING AMOUNT VALUE (IN THOUSANDS) --------------- -------- Long-term debt: Notes payable to banks............................... $300,000 $300,000 Bond issue at interest rate of 8 7/8% due 2001....... 150,000 176,780 Private placement debt due 1994-1998................. 100,000 106,450 Notes payable to insurance company................... 35,000 45,215 Industrial revenue bonds due 1994-1998............... 11,787 13,638 Sundry notes, bonds and mortgages due 1993-2006...... 6,850 7,081 Finance subsidiaries debt.............................. 413,092 418,101 Redeemable preferred stock of subsidiary............... 25,000 30,313 Interest rate swaps.................................... 1,241
14. RESTRUCTURING COSTS On September 29, 1993 the Company adopted a plan to restructure its paper distribution business including the following: installation of a customer- focused information system, re-designing of warehouse and transportation management functions, rationalization of management and administrative support functions and consolidation of service center locations. In connection with certain elements of the restructuring plan, the Company recorded a charge to earnings of $175,000,000 ($112,875,000 net of taxes or $2.38 per share) in the fourth quarter of fiscal 1993. The charge will provide for facility consolidation ($60.7 million), severance costs ($48.0 million) and other costs associated with the restructuring plan. F-20 ALCO STANDARD CORPORATION VALLEY FORGE, PENNSYLVANIA 19482-0834 (215) 296-8000 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS FORM 10-K/A FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1993 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. Alco Standard Corporation Date: May 5, 1994 /s/ Michael J. Dillon By____________________________________ (MICHAEL J. DILLON) CONTROLLER (PRINCIPAL ACCOUNTING OFFICER) PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS FORM 10-K/A HAS BEEN SIGNED BELOW ON MAY 5, 1994 BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES INDICATED. SIGNATURES TITLE *Ray B. Mundt Chairman and Director - - ------------------------------------ (RAY B. MUNDT) *John E. Stuart Chief Executive Officer and - - ------------------------------------ Director (Principal Executive (JOHN E. STUART) Officer) /s/ Kurt E. Dinkelacker Chief Financial Officer (Principal - - ------------------------------------ Financial Officer) (KURT E. DINKELACKER) /s/ Michael J. Dillon Controller (Principal Accounting - - ------------------------------------ Officer) (MICHAEL J. DILLON) *J. Mahlon Buck, Jr. Director - - ------------------------------------ (J. MAHLON BUCK, JR.) *Paul J. Darling Director - - ------------------------------------ (PAUL J. DARLING) *William F. Drake, Jr. Director - - ------------------------------------ (WILLIAM F. DRAKE, JR.) *James J. Forese Director - - ------------------------------------ (JAMES J. FORESE) *Frederick S. Hammer Director - - ------------------------------------ (FREDERICK S. HAMMER) *Barbara Barnes Hauptfuhrer Director - - ------------------------------------ (BARBARA BARNES HAUPTFUHRER) *Dana G. Mead Director - - ------------------------------------ (DANA G. MEAD) *Paul C. O'Neill Director - - ------------------------------------ (PAUL C. O'NEILL) *Rogelio G. Sada Director - - ------------------------------------ (ROGELIO G. SADA) *James W. Stratton Director - - ------------------------------------ (JAMES W. STRATTON) *By his signature set forth below, Hugh G. Moulton, pursuant to duly executed Powers of Attorney duly filed with the Securities and Exchange Commission, has signed this Form 10-K/A on behalf of the persons whose signatures are printed above, in the capacities set forth opposite their respective names. /s/ Hugh G. Moulton - - ------------------------------------ May 5, 1994 (HUGH G. MOULTON) ALCO STANDARD CORPORATION AND SUBSIDIARIES SCHEDULE II--AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
COL. A COL. B COL. C COL. D COL. E ------ ------ ------ --------------------- -------------------------- DEDUCTIONS BALANCE AT END OF PERIOD ---------- ------------------------ BALANCE AT BEGINNING AMOUNTS AMOUNTS NAME OF DEBTOR(1) OF PERIOD ADDITIONS COLLECTED WRITTEN OFF CURRENT NOT CURRENT ----------------- --------- --------- --------- ----------- ---------- -------------- YEAR ENDED SEPTEMBER 30, 1993 - - ------------------------ Hugh G. Moulton......... $247,000 $247,000 O. Gordon Brewer, Jr.... 165,000 $115,000 50,000 Hallie H. Gibbs......... 150,000 150,000 William F. Drake, Jr.... 121,000 121,000 J. Kenneth Croney....... 115,000 115,000 Raymond A. Peterson..... 111,000 111,000 Peter Shoemaker......... $150,000 150,000 YEAR ENDED SEPTEMBER 30, 1992 - - ------------------------ Hugh G. Moulton......... $247,000 $247,000 O. Gordon Brewer, Jr.... 165,000 165,000 Hallie H. Gibbs......... 150,000 150,000 William F. Drake, Jr.... 121,000 121,000 J. Kenneth Croney....... 115,000 115,000 Raymond A. Peterson..... 111,000 111,000 YEAR ENDED SEPTEMBER 30, 1991 - - ------------------------ Hugh G. Moulton......... $247,000 $247,000 O. Gordon Brewer, Jr.... 165,000 165,000 Hallie H. Gibbs......... 150,000 150,000 William F. Drake, Jr.... 121,000 121,000 J. Kenneth Croney....... 115,000 115,000 Raymond A. Peterson..... 111,000 111,000 James J. Swearingen..... $150,000 $150,000
- - -------- (1) The notes receivable are secured by the debtors' pledge of Alco stock, bear interest at 6% and are due upon demand. S-2 ALCO STANDARD CORPORATION AND SUBSIDIARIES SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
COL. A COL. B COL. C COL. D COL. E ------ ------ ------ -------------- ----------- ADDITIONS ------------------------- CHARGED TO BALANCE AT CHARGED TO OTHER BALANCE AT BEGINNING COSTS AND ACCOUNTS DEDUCTIONS-- END OF DESCRIPTION OF PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD ----------- ----------- ----------- ------------- -------------- ----------- YEAR ENDED SEPTEMBER 30, 1993 - - ------------------------ Allowance for doubtful accounts............... $23,947,000 $19,702,000 $4,768,000(1) $20,889,000(2) $27,528,000 =========== =========== ============= ============== =========== YEAR ENDED SEPTEMBER 30, 1992 - - ------------------------ Allowance for doubtful accounts............... $20,493,000 $14,636,000 $6,414,000(1) $17,596,000(2) $23,947,000 =========== =========== ============= ============== =========== YEAR ENDED SEPTEMBER 30, 1991 - - ------------------------ Allowance for doubtful accounts............... $15,953,000 $20,078,000 $533,000(1) $16,071,000(2) $20,493,000 =========== =========== ============= ============== ===========
- - -------- (1) Represents beginning balances of acquired companies. (2) Accounts written off during year, net of recoveries. S-8 ALCO STANDARD CORPORATION AND SUBSIDARIES SCHEDULE IX--SHORT-TERM BORROWINGS
COL. A COL. B COL. C COL. D COL. E(3) COL. F(4) ------ ------ ------ ------ --------- --------- MAXIMUM AMOUNT WEIGHTED AVERAGE WEIGHTED OUTSTANDING AVERAGE AMOUNT INTEREST RATE CATEGORY OF AGGREGATE BALANCE AT AVERAGE DURING THE OUTSTANDING DURING THE SHORT-TERM BORROWINGS END OF PERIOD INTEREST RATE PERIOD DURING THE PERIOD PERIOD --------------------- ------------- ------------- -------------- ----------------- ---------------- YEAR ENDED SEPTEMBER 30, 1993 - - ------------------------ Notes payable to banks-- domestic(1)............ $ 1,166,000 3.3% $164,000,000 $123,999,000 3.3% Notes payable--foreign.. 72,639,000 5.6 72,639,000 18,056,000 5.3 Notes payable--other.... 444,000 6.8 1,755,000 968,000 4.5 Commercial paper(2)..... 90,000,000 3.2 100,000,000 33,445,000 3.3 YEAR ENDED SEPTEMBER 30, 1992 - - ------------------------ Notes payable to banks-- domestic(1)............ $ 39,000,000 $ 23,099,000 3.9% Notes payable--foreign.. $ 241,000 6.3% 835,000 187,000 9.1 Notes payable--other.... 1,324,000 4.3 4,752,000 1,377,000 7.5 YEAR ENDED SEPTEMBER 30, 1991 - - ------------------------ Notes payable to banks-- domestic(1)............ $212,124,000 $ 95,927,000 7.2% Notes payable--foreign.. $ 528,000 9.5% 1,296,000 242,000 10.3 Notes payable--other.... 896,000 7.7 1,935,000 1,196,000 9.0
- - -------- (1) Notes payable to banks represent borrowings under uncommitted but confirmed lines of credit that are supported by bank credit agreements (See note 4 to the consolidated financial statements). (2) Commercial paper matures generally 30 days from date of issue. (3) The average amount outstanding during the period was computed by dividing the sum of the daily principal balances by 365. (4) The weighted average interest rate during the period was computed by dividing the actual interest expense by the average short-term debt outstanding. S-9 INDEX TO EXHIBITS 3.1 Amended Articles of Incorporation of Alco Standard Corporation, filed as Exhibit 3.1 to Alco's 1991 Form 10-K, are incorporated herein by reference. 3.2 Code of Regulations of Alco Standard Corporation, as amended February 9, 1982, filed as Exhibit 3(b) to Alco's 1982 Form 10-K, is incorporated herein by reference. 4.1 1993 Credit Agreement, dated as of September 30, 1993, among Alco Standard Corporation, Alco Office Products (U.K.) and various institutional lenders, filed as Exhibit 4.1 to Alco's 1993 Form 10- K, is incorporated herein by reference. 4.2 Revolving Credit and Acceptance Agreement, dated as of April 21, 1993, among Alco Standard Corporation, Unisource Canada Inc. and The Toronto Dominion Bank, filed as Exhibit 4.2 to Alco's 1993 Form 10- K, is incorporated herein by reference. 4.3 Credit Agreement dated October 15, 1992 among Alco Standard Corporation and various lending institutions, filed as Exhibit 4.3 to Alco's 1992 10-K, is incorporated herein by reference. 4.4 Receivables Purchase Agreement and Guarantee between PCA Paper Acquisition Inc., Stars Trust, Alco Standard Corporation and Bank of Montreal, filed as Exhibit 4.4 to Alco's 1992 10-K, is incorporated herein by reference. 4.5 Rights Agreement dated as of February 10, 1988 between Alco Standard Corporation and National City Bank, filed on February 11, 1988 as Exhibit 1 to Alco's Registration Statement on Form 8-A, is incorporated herein by reference. 4.6 Pursuant to Regulation S-K item 601(b)(iii), Alco Standard Corporation agrees to furnish to the Commission, upon request, a copy of other instruments defining the rights of holders of long- term debt of Alco Standard Corporation and its subsidiaries. 10.1 Note Purchase Agreement, dated as of June 15, 1986 between Alco Standard Corporation and certain Institutional Investors, filed as Exhibit 4.2 to Alco's Current Report, dated July 1, 1988, on Form 8- K, is incorporated herein by reference. 10.2 Long Term Incentive Plan, filed as Exhibit 10.2 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.3 1989 Directors' Stock Option Plan, filed as Exhibit 10.3 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.4 Partners' Stock Purchase Plan, filed as Exhibit 10.4 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.5 1981 Stock Option Plan, filed as Exhibit 10.5 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.6 1986 Stock Option Plan, filed as Exhibit 10.6 to Alco's 1993 Form 10-K, is incorporated herein by reference. 10.7 1993 Directors' Stock Option Plan, filed as Exhibit 10.7 to Alco's 1993 Form 10-K, is incorporated herein by reference. 10.8 1980 Deferred Compensation Plan, filed as Exhibit 10.7 to Alco's 1992 Form 10-K, is incorporated herein by reference.
10.9 1985 Deferred Compensation Plan, filed as Exhibit 10.8 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.10 1991 Deferred Compensation Plan, filed as Exhibit 10.9 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.11 Retirement Plan for Non-Employee Directors, filed as Exhibit 10.10 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.12 Indenture, dated as of April 1, 1986 between Alco Standard Corporation and the Chase Manhattan Bank, N.A., as Trustee, filed as Exhibit 4.1 to Alco Standard Corporation's Registration Statement No. 30-4829, is incorporated herein by reference. 10.13 Share Purchase and Transfer Agreement between IMM Industria Beteiligungs GmbH and Alco Standard Corporation, filed as Exhibit 10.12 to Alco's 1992 Form 10-K, is incorporated herein by reference. 10.14 Offering Document dated May 14, 1993 Entitled "Recommended Cash Offers for Erskine House Group", filed as Exhibit 10.14 to Alco's 1993 Form 10-K, is incorporated herein by reference. 10.15 Agreement re: Purchase and Sale of Assets among Alco Standard Corporation, Georgia-Pacific Corporation and Butler Paper Company, filed as Exhibit 10.15 to Alco's 1993 Form 10-K, is incorporated herein by reference. 11 Statement re: Computation of earnings per share, filed as Exhibit 11 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.1 Ratio of Earnings to Fixed Charges, filed as Exhibit 12.1 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.2 Ratio of Earnings to Fixed Charges Excluding Captive Finance Subsidiaries, filed as Exhibit 12.2 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.3 Ratio of Earnings to Fixed Charges and Preferred Stock Dividends, filed as Exhibit 12.3 to Alco's 1993 Form 10-K, is incorporated herein by reference. 12.4 Ratio of Earnings to Fixed Charges and Preferred Stock Dividends Excluding Captive Finance Subsidiaries, filed as Exhibit 12.4 to Alco's 1993 Form 10-K, is incorporated herein by reference. 21 Subsidiaries of Alco Standard Corporation, filed as Exhibit 21 to Alco's 1993 Form 10-K, is incorporated herein by reference. 23 Auditors' Consent. 24 Powers of Attorney; certified resolution re: Powers of Attorney.
EX-23 2 AUDITORS' CONSENT Alco Standard Corporation Form 10-K/A--Fiscal Year Ended September 30, 1993 EXHIBIT 23 CONSENT OF ERNST & YOUNG, INDEPENDENT AUDITORS We consent to the incorporation by reference in the following Registration Statements on Form S-8 and Form S-3 and related prospectuses of our report dated November 1, 1993, with respect to the consolidated financial statements and schedules included in the Annual Report (as amended on Form 10-K/A) of Alco Standard Corporation for the fiscal year ended September 30, 1993.
Registration Number Filing Date Description - - ------------------------------------------------------------------------------------------------ 2-66880 March 10, 1990 Alco Standard Corporation 1980 Deferred Compensation Plan 2-75296 December 11, 1982 Alco Standard Corporation 1982 Deferred Compensation Plan 2-70630 December 30, 1982 Alco Standard Corporation 1981 Stock Option Plan 33-00120 September 6, 1985 Also Standard Corporation 1985 Deferred Compensation Plan 33-4829 April 15, 1986 Alco Standard Corporation $150,000,000 Debt Securities 33-3046 February 10, 1987 Alco Standard Corporation 1986 Stock Option Plan 33-20479 March 4, 1988 Alco Standard Corporation Stock Participation Plan 33-22948 July 7, 1988 Alco Standard Corporation Partners' Stock Purchase Plan 33-26732 January 27, 1989 Alco Standard Corporation 1989 Directors' Stock Option Plan 33-28763 May 17, 1989 Alco Standard Corporation Unijax Inc. Capital Accumulation Plan
Registration Number Filing Date Description - - ------------------------------------------------------------------------------------------ 33-30497 August 14, 1989 Alco Standard Corporation Canadian Group Registered Retirement Savings Plan 33-35057 May 23, 1990 Alco Standard Corporation Defined Contribution Plan 33-36745 September 10, 1990 Alco Standard Corporation 1991 Deferred Compensation Plan 33-38192 December 10, 1990 Alco Standard Corporation Partners' Stock Purchase Plan 33-38193 December 10, 1990 Alco Standard Corporation 1986 Stock Option Plan 33-38519 January 14, 1991 Alco Standard Corporation $150,000,000 Debt Securities, Preferred Stock or Common Stock 33-41689 July 12, 1991 Alco Standard Corporation 292,864 Shares of Common Stock 33-41690 July 12, 1991 Alco Standard Corporation 3,300,001 Shares of Common Stock 33-84376 June 4, 1992 Alco Standard Corporation Stock Award Plan 33-50974 August 17, 1992 Alco Standard Corporation 1,034,061 Shares of Common Stock 33-50976 August 17, 1992 Alco Standard Corporation 382,250 Shares of Common Stock 33-55004 November 24, 1992 Alco Standard Corporation Stock Participation Plan 33-55096 November 24, 1992 Alco Standard Corporation 1993 Directors' Stock Option Plan 33-54742 December 15, 1992 Alco Standard Corporation 3,500,000 Depositary Shares Convertible Preferred Stock
Registration Number Filing Date Description - - ------------------------------------------------------------------------------------------------ 33-62460 June 1, 1993 Alco Standard Corporation $400,000,000 Debt Securities, Preferred Stock or Common Stock ($1,500,000 of which was previously registered under Registration Statement No. 33-38519) 33-49863 July 30, 1993 Alco Standard Corporation 42,200 Shares of Common Stock 33-51183 November 24, 1993 Alco Standard Corporation Partners' Stock Purchase Plan 33-52285 February 15, 1994 Alco Standard Corporation $300,000,000 Debt Securities, Preferred Stock or Common Stock ($96,700,000 of which was previously registered under Registration Statement No. 33-62460)
Philadelphia, Pennsylvania May 4, 1994 EX-24 3 POWERS OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ RAY B. MUNDT ----------------------- POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ J. MAHLON BUCK, JR. ---------------------------- POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ WILLIAM F. DRAKE, JR. ------------------------------ POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ FREDERICK S. HAMMER ---------------------------- POWER OF ATTORNEY ----------------- The undersigned certifies that she is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as her attorneys-in-fact, each with the power of substitution, to execute, on her behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ BARBARA BARNES HAUPTFUHRER ----------------------------------- POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ PAUL C. O'NEILL ------------------------ POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ PAUL J. DARLING ------------------------ POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ ROGELIO G. SADA ------------------------ POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ JAMES J. FORESE ----------------------------------- POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ JAMES W. STRATTON -------------------------- POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ JOHN E. STUART --------------------- POWER OF ATTORNEY ----------------- The undersigned certifies that he is a Director of Alco Standard Corporation ("Alco"). The undersigned hereby appoints each of Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his attorneys-in-fact, each with the power of substitution, to execute, on his behalf the foregoing Report on Form 10-K/A for filing with the Securities and Exchange Commission ("SEC"), and to do all such other acts and execute all such other documents which said attorney may deem necessary or desirable. Dated this 5th day of May, 1994. SIGNED: /s/ DANA G. MEAD --------------------- CERTIFICATION I, J. Kenneth Croney, Secretary of Alco Standard Corporation do hereby certify that the following resolutions were duly passed by the Board of Directors of the Corporation on November 12, 1993, and that such resolutions are, as of the date hereof, in full force and effect: FURTHER RESOLVED, that each of the officers and directors of the corporation is hereby authorized to appoint Ray B. Mundt, Hugh G. Moulton and J. Kenneth Croney as his or her attorneys-in-fact on behalf of each of them each attorney-in-fact with the power of substitution, to execute on such officer's or director's behalf, one or more registration statements and annual reports of the corporation for filing with the Securities and Exchange Commission ("SEC"), and any and all amendments to said documents which said attorney may deem necessary or desirable to enable the corporation to register the offering of (i) serial preferred stock; (ii) common stock; (iii) debt securities; and/or (iv) participation interests in employee benefit plans under the Federal securities law, and to further enable the corporation to file such reports as are necessary under Section 13 or 15(d) of the Securities Exchange Act of 1934 and such other documents as are necessary to comply with all rules, regulations or requirements of the SEC in respect thereto; and FURTHER RESOLVED, that any officer of the corporation is hereby authorized to do and perform, or cause to be done or performed, any and all things and to execute and deliver any and all agreements, certificates, undertakings, documents or instruments necessary or appropriate in order to carry out the purpose and intent of the foregoing resolutions. IN WITNESS WHEREOF, the undersigned has set his hand this 5th day of May, 1994. /s/ J. Kenneth Croney -------------------------- J. Kenneth Croney -----END PRIVACY-ENHANCED MESSAGE-----