<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 23, 1998
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TELESPECTRUM WORLDWIDE INC.
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(Exact Name of Registrant Specified in Charter)
Delaware 0-21107 23-2845501
- --------------- ------- ----------
(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
443 South Gulph Road
King of Prussia, Pennsylvania 19406
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 878-7400
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- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits
Exhibit Number Description
- ---------------- ------------------------------------------------------------
99.1 Press Release issued by the Registrant on March 23, 1998
announcing financial results for the fourth quarter of 1997
and a writeoff of goodwill.
99.2 Press Release issued by Registrant on March 23, 1998
announcing the hiring of a new Chief Executive Officer.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TELESPECTRUM WORLDWIDE INC.
(Registrant)
By /s/ Richard C. Schwenk, Jr.
-----------------------------------------
Richard C. Schwenk, Jr.
Executive Vice President and
Chief Financial Officer
Dated: March 23, 1998
<PAGE>
EXHIBIT 99.1
NEWS
FOR IMMEDIATE RELEASE Contacts: Richard C. Schwenk, Jr., CFO
- --------------------- Ben Binswanger, VP, Corporate Communications
(610) 878-7400
TELESPECTRUM WORLDWIDE INC.
REPORTS FOURTH QUARTER, YEAR END RESULTS
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KING OF PRUSSIA, PA MARCH 23, 1998 - TeleSpectrum Worldwide Inc. (NASDAQ:TLSP)
today announced a fourth quarter net loss from continuing operations/1/ of
$149.2 million or $5.92 per share. Included in the loss is a non-cash goodwill
impairment charge of $139.1 million or $5.52 per share. Also included in the net
loss is a primarily non-cash charge related to call center closings of
approximately $7.7 million offset by an investment gain of approximately $1.8
million. Losses from continuing operations for the year ending December 31, 1997
were $161.8 million, or $6.42 per share. Revenues from continuing operations for
the fourth quarter of 1997 were $44.8 million, and for the year ended December
31, 1997, revenues from continuing operations were $178.9 million.
As a result of developments in the teleservices industry and the Company's
operating performance, management has concluded that its goodwill, arising
principally from acquisitions made in August 1996, has been permanently
impaired. As previously announced on February 17, 1998, the Company expects to
incur a loss in the first quarter of 1998.
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/1/ The Company's 1996 and 1997 results now exclude discontinued operations from
its market research and direct mail and fulfillment divisions because these
divisions have been or will be sold.
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Page 2 - TeleSpectrum Worldwide Inc.
TeleSpectrum Worldwide plans to close additional call centers in order to match
its production capacity with expected demand. Certain charges related to these
closings have been recorded in the fourth quarter of 1997. Additional charges
will be recorded in 1998. Upon completion of these closings, the Company
expects to have approximately 2,550 workstations and employ approximately 5,500
people.
The Company's 1996 and 1997 reported results now exclude the discontinued
operations of its direct mail and fulfillment division, which, as previously
announced, it expects to sell by the end of the month, as well as its market
research division, which, as previously announced, was sold in February 1998.
The proceeds from these sales will be used to repay all of the Company's
currently outstanding bank borrowings. As a result of losses reported in the
fourth quarter, TeleSpectrum Worldwide will be out of compliance with certain
loan covenants and expects to enter into a new credit facility to meet its
working capital requirements.
In a separate news release today, the Board of Directors of TeleSpectrum
Worldwide also announced that Keith Alessi has been named Chairman, President
and Chief Executive Officer of TeleSpectrum Worldwide succeeding J. Brian
O'Neill, who will continue as a Director of the Company.
THE COMPANY
Headquartered in King of Prussia, Pa., TeleSpectrum Worldwide Inc. provides
direct marketing and customer care services to Fortune 500 companies in a wide
range of industries, including financial services, telecommunications, high
tech, insurance, utilities, consumer products, health care/pharmaceutical, and
government. TeleSpectrum Worldwide is a premier provider of inbound and
outbound telemarketing, inbound customer service, interactive voice response,
customer care consulting, teleservices training, and call center management. To
learn more about TeleSpectrum Worldwide and its capabilities, please reference
the Company's web site at www.telespectrum.com.
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Page 3 - TeleSpectrum Worldwide Inc.
FORWARD-LOOKING STATEMENTS
The statements contained herein regarding TeleSpectrum Worldwide's financial
transactions, expected revenues and growth are forward-looking statements that
involve substantial risk and uncertainty. In accordance with the Private
Securities Litigation Reform Act of 1995, the following are factors that could
cause TeleSpectrum Worldwide Inc.'s actual results to differ materially from
those expressed or implied by such forward-looking statements: agreements with
its existing clients generally do not assure a specific level or duration of
revenue, revenue assumptions may not be realized, the growth and profitability
assumptions assume the addition of new clients not currently identified,
contracts may not be realized, capacity utilization rates may be adversely
affected due to competitors' actions or customers' needs, the sale of the direct
mail and fulfillment division cannot be guaranteed until the sale is concluded,
outstanding bank debt may not be reduced, additional capital financing may not
be available to the company, and cost cutting measures may have varying degrees
of success. Investors are encouraged to review TeleSpectrum Worldwide's SEC
filings for more information about the factors affecting the Company's business.
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TeleSpectrum Worldwide Inc.
Actual and Supplemental Pro Forma/1/
Results of Operations
(Thousands of dollars, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
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(unaudited) (unaudited)
----------------------------- -------------------------------
<S> <C> <C> <C> <C>
Supplemental
Actual Actual Actual Pro Forma
31-Dec-97 31-Dec-96 31-Dec-97 31-Dec-96
--------------- --------------- ---------------- ---------------
Revenues $ 44,802 $38,696 $178,922 $115,973
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Operating Expenses
Cost of Services 44,616 26,631 155,902 81,242
Selling, General & Administrative 9,394 7,331 40,737 20,107
Goodwill Amortization 140,896 1,460 146,321 5,265
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Total Operating Expenses 194,906 35,422 342,960 106,614
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Operating Income (Loss) (150,104) 3,274 (164,038) 9,359
Interest (Expense) Income, net (1,065) 121 (1,876) 447
Investment Gain 1,760 - 1,760 -
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Income (Loss) Before Taxes (149,409) 3,395 (164,154) 9,806
Income Tax (Expense) Benefit 252 (1,298) 2,310 (4,079)
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Income (Loss) from Continuing Operations (149,157) 2,097 (161,844) 5,727
Income (Loss) from Discontinued Operations,
net of income taxes (118) 598 1,369 1,408
--------------- --------------- ---------------- ---------------
Net Income (Loss) $(149,275) $ 2,695 $(160,475) $ 7,135
--------------- --------------- ---------------- ---------------
Basic and Diluted Earnings (Loss) Per Share:
Continuing Operations ($5.92) $0.08 ($6.42) $0.25
Discontinued Operations (0.00) 0.03 0.06 0.07
--------------- --------------- ---------------- ---------------
Net Income (Loss) ($5.92) $0.11 ($6.36) $0.32
--------------- --------------- ---------------- ---------------
Shares Used in Computing Net
Income (Loss) Per Share 25,213 25,395 25,213 22,644
</TABLE>
/1/ Supplemental pro forma results of operations assume that the Company
acquired the Initial Operating Businesses on January 1, 1996. The results of
operations for TARP, PR Response, and the Interactive Voice Response
Division of Voice FX Corporation are included only from their actual
acquisition dates, October 1, 1996, November 1, 1996, and March 21, 1997,
respectively.
<PAGE>
EXHIBIT 99.2
NEWS
FOR IMMEDIATE RELEASE Contacts: Richard C. Schwenk, Jr., CFO
- --------------------- Ben Binswanger, VP, Corporate Communications
(610) 878-7400
TELESPECTRUM WORLDWIDE NAMES
KEITH E. ALESSI CHAIRMAN, PRESIDENT AND CEO
_______________________
EXPERIENCED, GROWTH-ORIENTED LEADER HAD LED TURNAROUND AT JACKSON HEWITT
KING OF PRUSSIA, PA, MARCH 23, 1998 -- The Board of Directors of TeleSpectrum
Worldwide, Inc. (Nasdaq: TLSP) today announced that Keith E. Alessi has been
named Chairman, President and Chief Executive Officer of TeleSpectrum Worldwide,
succeeding J. Brian O'Neill who had previously announced his intention to step
down. O'Neill will continue as a Director.
Alessi, 43, had been Chairman, President and CEO of Jackson Hewitt, Inc., the
nation's second largest tax preparation service company. In this position, he
was responsible for the company's turnaround over the past two years before its
recent acquisition. In 1997, Jackson Hewitt was the nation's highest performing
stock on any exchange, rising from $4.50 to $68.00.
"As the architect of Jackson Hewitt's phenomenal success over the past two
years, Keith Alessi is a proven leader," said J. Brian O'Neill. "His strong
track record in customer service businesses, his leadership skills and his
financial expertise will make Keith an outstanding CEO. The Board of Directors
and I are honored and thrilled to invest in the future of TeleSpectrum with
Keith Alessi at the helm."
-more -
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Page 2 - TeleSpectrum Worldwide Inc.
"I am delighted to have the opportunity to join a company with an outstanding
work force," said Alessi. "While we have a difficult task ahead, I look forward
to focusing on the Company's fundamentals, getting cost structures in line, and
restoring profitability and growth. I am confident that with the right strategy
and hard work, we can achieve significant shareholder value in the years ahead."
Prior to Jackson Hewitt, Alessi spent 14 years in executive positions at major
corporations. Most recently he was Vice Chairman of Farm Fresh, Inc., a 70-unit
grocery chain which, at the time, had revenues exceeding $800 million and 10,000
employees. After joining Farm Fresh in 1988 as Executive Vice President and
CFO, he helped engineer the leveraged buyout of this previously public company
and went on to serve in the positions of President and Chief Operating Officer
from 1990 to 1992, and then as Chairman and CEO of a spinoff company from 1992
to 1994.
From July 1986 to July 1988, he served as Senior Vice President and CFO of
Richfood, Inc., where he orchestrated the restructuring of the company from a
cooperative association to a publicly-traded firm. This was the first time that
a cooperative food wholesaler had gone public in the United States. At the
time, Richfood was a $1.2 billion food wholesaler; the company now has revenues
in excess of $3 billion. Prior to this position, he was Executive Vice
President and CFO of Chatham Supermarkets Inc. and was Secretary, Treasurer and
CFO of Certified Grocers of Illinois.
Alessi holds an MBA from the University of Michigan and a B.S. with distinction
from Wayne State University. He currently serves as a member of the Board of
Directors at Cort Business Services and Town Sports International.
Alessi was selected following a nationwide search conducted by Heidrick &
Struggles, a leading global executive search firm specializing in CEO and
Chairman assignments.
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Page 3 - TeleSpectrum Worldwide Inc.
In a separate news release today, TeleSpectrum Worldwide reported its results
from operations for the fourth quarter of 1997 and the full year 1997.
THE COMPANY
Headquartered in King of Prussia, Pa., TeleSpectrum Worldwide Inc. provides
direct marketing and customer care services to Fortune 500 companies in a wide
range of industries, including financial services, telecommunications, high
tech, insurance, utilities, consumer products, health care/pharmaceutical, and
government. TeleSpectrum Worldwide is a premier provider of inbound and
outbound telemarketing, inbound customer service, interactive voice response,
customer care consulting, teleservices training, and call center management. To
learn more about TeleSpectrum Worldwide and its capabilities, please reference
the Company's web site at www.telespectrum.com.
--------------------
FORWARD-LOOKING STATEMENTS
The statements contained herein regarding TeleSpectrum Worldwide's business
strategy and future profitability and growth are forward-looking statements that
involve substantial risk and uncertainty. In accordance with the Private
Securities Litigation Reform Act of 1995, the following are factors that could
cause TeleSpectrum Worldwide Inc.'s actual results to differ materially from
those expressed or implied by such forward-looking statements: cost cutting
measures may have varying degrees of success, the growth and profitability
assumptions assume the addition of new clients not currently identified,
agreements with its existing clients generally do not assure a specific level or
duration of revenue, revenue assumptions may not be realized, contracts may not
be realized, and capacity utilization rates may be adversely affected due to
competitors' actions or customers' needs. Investors are encouraged to review
TeleSpectrum Worldwide's SEC filings for more information about the factors
affecting the Company's business.
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