<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) April 28, 1998
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UNISOURCE WORLDWIDE, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE File No. 1-14482 13-5369500
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(State or other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
1100 Cassatt Road, Berwyn, Pennsylvania 19312
P.O. Box 3000-0935, Berwyn, Pennsylvania 19312
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (610) 296-4470
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Not Applicable
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(FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
<PAGE>
Item 5. Other Events.
------------
On April 28, 1998, the Registrant issued the attached press release.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits.
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(99) Press Release dated April 28, 1998.
<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.
UNISOURCE WORLDWIDE,INC.
(Registrant)
By: /s/ Thomas A. Decker
--------------------
Thomas A. Decker
Senior Vice President,
General Counsel and Secretary
Dated: April 28, 1998
<PAGE>
Exhibit Index
-------------
(99) Press Release dated April 28, 1998.
<PAGE>
EXHIBIT 99
NEWS RELEASE
Contact
Martha A. Buckley JoAnn P. Huston
Director, Corporate Communications Manager, Investor Relations
610-722-3511 610-722-3513
UNISOURCE REPORTS SECOND QUARTER RESULTS
BERWYN, PENNSYLVANIA APRIL 28, 1998 -- Unisource Worldwide, Inc.
(NYSE:UWW) reported today earnings per share of $.10 for its second fiscal
quarter, which ended March 31, 1998. As anticipated, this performance was
substantially below EPS of $.16 for the second quarter of fiscal 1997.
Revenues for the quarter grew 8.9 percent to $1.9 billion, while operating
income declined by 16.5 percent to $24.2 million. Net income was $6.7 million,
a 36.6 percent decrease from the same quarter last year.
"Revenues grew through a combination of pricing, volume and contributions
from acquired companies," commented Ray B. Mundt, chairman and chief executive
officer. "However, our bottom-line performance affirms our decision to
significantly restructure this organization. Expenses excluding acquisitions
remain stable, but declining gross trading margins continue to impact earnings.
The restructuring we are planning will bring our expense to gross profit ratio
into appropriate balance by the fourth quarter of fiscal 1999, through a
combination of increased gross trading margins and decreased expenses," Mundt
noted.
-more-
<PAGE>
For the six months ended March 31, 1998, revenues increased approximately
8.5 percent to $3.7 billion. Operating income was $60.9 million, down 17.7
percent from the same period last year, while net income decreased 31.7 percent
to $21 million. Basic earnings were $.31 per share and diluted earnings were
$.30 per share, 32.6 and 33.3 percent, respectively, below earnings for the
first six months of fiscal 1997. All six-month comparisons exclude special
charges of $1.68 per share, related to the company's former IT initiative and
the sale of its grocery business, taken in the first quarter of fiscal 1998.
Including those charges, the company reported a loss of $1.37 per share for the
six-month period.
"The planning stage of our restructuring program continues to move
forward," Mundt said. "We are already taking action on some of our closures and
consolidations, although many of the larger facility decisions will depend on
the findings of the Coopers & Lybrand study." The study referred to by Mundt is
due to the company by the end of June. "We will have our restructuring plan in
place by the end of July and will take the related charge in the second half of
our fiscal year," Mundt noted.
"We expect to begin to realize the benefits of our restructuring by the
middle of fiscal 1999," Mundt stated, "and we remain committed to our $.20 per
share quarterly dividend to shareholders."
Unisource Worldwide, Inc. (http://www.unisourcelink.com), headquartered in
Berwyn, Pennsylvania, is the largest marketer and distributor of paper products
and supply systems in North America, with annual revenues in excess of $7
billion.
Statements made in this press release with respect to the increase in gross
trading margins, reduction of expenses, the development and implementation of
the company's restructuring plan, the benefits realized from such restructuring,
and the company's future performance are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements represent the company's
-more-
<PAGE>
reasonable judgment with respect to future events and
are subject to risks and uncertainties which could cause actual results or
circumstances to differ materially. Such risks and uncertainties include delays
or difficulties in developing and implementing the plan of restructuring and the
effect of such plan on the company's future performance, as well as changes in
pulp and paper prices and market conditions within the company's businesses. For
further detail and information concerning such risks and uncertainties, please
consult Part I, Item 1 of the company's annual report on Form 10-K for the
fiscal year ended September 30, 1997, which is on file with the Securities and
Exchange Commission.
# # #
<PAGE>
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
Three Months Ended March 31
1998 1997 % Change
Revenues
Printing and imaging $ 1,220,247 $ 1,127,175 8.3 %
Supply systems 647,673 588,733 10.0
1,867,920 1,715,908 8.9
Costs and Expenses
Cost of goods sold -
printing and imaging 1,063,979 965,905 10.2
Cost of goods sold -
supply systems 490,887 458,024 7.2
Selling and administrative 288,880 263,040 9.8
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1,843,746 1,686,969
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Income from Operations 24,174 28,939 (16.5)
Interest 12,620 10,030
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Income Before Income Taxes 11,554 18,909 (38.9)
Provision for Income Taxes 4,867 8,361
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Net Income $ 6,687 $ 10,548 (36.6)
========= =========
Basic Earnings Per Share $ 0.10 $ 0.16 (37.5)
========= =========
Diluted Earnings Per Share $ 0.10 $ 0.16 (37.5)
========= =========
Basic Shares Outstanding 68,611 67,051
========= =========
Diluted Shares Outstanding 68,758 67,957
========= =========
Operations Analysis:
Gross profit %, printing and 12.8% 14.3%
Gross profit %, supply system 24.2% 22.2%
Total gross profit % 16.8% 17.0%
SG&A as a % of revenues 15.5% 15.3%
SG&A as a % of gross profit 92.3% 90.1%
Operating income % of revenue 1.3% 1.7%
<PAGE>
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
Six Months Ended March 31
1998 1997 % Change
Revenues
Printing and imaging $ 2,392,912 $ 2,224,737 7.6 %
Supply systems 1,344,143 1,219,704 10.2
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3,737,055 3,444,441 8.5
Costs and Expenses
Cost of goods sold - printing and imaging 2,082,626 1,901,733 9.5
Cost of goods sold - supply systems 1,018,373 950,625 7.1
Selling and administrative 575,138 518,040 11.0
Special charge (1) 168,000 -
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3,844,137 3,370,398
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(Loss) Income from Operations (107,082) 74,043
Interest 24,743 20,391
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(Loss) Income Before Income Taxes (131,825) 53,652
(Benefit) Provision for Income Taxes (2) (37,899) 22,953
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Net (Loss) Income $ (93,926) $ 30,699
========= =========
Basic (Loss) Earnings Per Share (3) $ (1.37) $ 0.46
========= =========
Diluted (Loss) Earnings Per Share (3) $ (1.37) $ 0.45
========= =========
Basic Shares Outstanding 68,578 67,022
========= =========
Diluted Shares Outstanding 68,578 (4) 67,813
========= =========
Operations Analysis:
Gross profit %, printing and imaging 13.0% 14.5%
Gross profit %, supply systems 24.2% 22.1%
Total gross profit % 17.0% 17.2%
SG&A as a % of revenues 15.4%* 15.0%
SG&A as a % of gross profit 90.4%* 87.5%
Operating income % of revenues 1.6%* 2.1%
* Excludes Special Charge.
(1) Represents write-off of capitalized development and related costs associated
with NADS.
(2) Includes a $5.7 million tax charge related to non-deductible intangible
assets associated with the sale of a significant portion of the Company's
United States based Grocery Supply Systems business.
(3) The special charge in fiscal 1998 amounted to an after-tax loss of $109
million (($1.60) per share). The tax charge associated with the sale of the
Grocery Supply Systems amounted to a loss of ($0.08) per share.
(4) Diluted shares outstanding are not adjusted for stock options due to the
antidilutive effect on the loss per share.
<PAGE>
This schedule presents the financial results of Unisource Worldwide, Inc.
excluding a special charge in fiscal 1998 of $168 million, $109 million net of
tax ($1.60 loss per share) related to the write-off of capitalized development
and related costs associated with NADS and a tax charge of $5.7 million ($0.08
loss per share) associated with the sale of a significant portion of its U.S.-
based Grocery Supply Systems business.
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
<TABLE>
<CAPTION>
Six Months Ended March 31
------------------------------------------
1998 1997 % Change
------------- ------------ ----------
<S> <C> <C> <C>
Revenues
Printing and imaging $ 2,392,912 $ 2,224,737 7.6 %
Supply systems 1,344,143 1,219,704 10.2
- ---------------------------------------------------------------------
3,737,055 3,444,441 8.5
Costs and Expenses
Cost of goods sold - printing and
imaging 2,082,626 1,901,733 9.5
Cost of goods sold - supply systems 1,018,373 950,625 7.1
Selling and administrative 575,138 518,040 11.0
- ---------------------------------------------------------------------
3,676,137 3,370,398
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Income from Operations 60,918 74,043 (17.7)
Interest 24,743 20,391
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Income Before Income Taxes 36,175 53,652
Provision for Income Taxes 15,194 22,953
- ---------------------------------------------------------------------
Net Income $ 20,981 $ 30,699 (31.7)
=========== ===========
Basic Earnings Per Share $ 0.31 $ 0.46 (32.6)
=========== ===========
Diluted Earnings Per Share $ 0.30 $ 0.45 (33.3)
=========== ===========
Basic Shares Outstanding 68,578 67,022
=========== ===========
Diluted Shares Outstanding 68,901 67,813
=========== ===========
Operations Analysis:
Gross profit %, printing and imaging 13.0% 14.5%
Gross profit %, supply systems 24.2% 22.1%
Total gross profit % 17.0% 17.2%
SG&A as a % of revenues 15.4% 15.0%
SG&A as a % of gross profit 90.4% 87.5%
Operating income % of revenues 1.6% 2.1%
</TABLE>
This information is provided for additional analysis and is not intended to be a
presentation in accordance with generally accepted accounting principles.
7
<PAGE>
UNISOURCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par values and shares)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
ASSETS 1998 1997
- ------ --------- -------------
<S> <C> <C>
CURRENT ASSETS
CASH $ 52,330 $ 45,384
ACCOUNTS RECEIVABLE, NET 663,313 882,360
INVENTORIES 483,962 495,330
PREPAID EXPENSES AND DEFERRED TAXES 54,751 49,875
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TOTAL CURRENT ASSETS 1,254,356 1,472,949
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LONG-TERM RECEIVABLES 6,004 7,790
PROPERTY AND EQUIPMENT, AT COST 442,625 434,762
LESS ACCUMULATED DEPRECIATION 200,658 188,336
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241,967 246,426
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GOODWILL 661,489 668,575
DEFERRED COSTS AND OTHER ASSETS 30,012 163,092
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$2,193,828 $2,558,832
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
CURRENT PORTION OF LONG-TERM DEBT $ 1,128 $ 638
NOTES PAYABLE 19,749 144,882
TRADE ACCOUNTS PAYABLE 466,180 498,503
ACCRUED SALARIES, WAGES AND COMMISSIONS 27,328 33,906
RESTRUCTURING COSTS 5,884 8,172
OTHER ACCRUED EXPENSES 97,254 119,431
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TOTAL CURRENT LIABILITIES 617,523 805,532
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LONG-TERM DEBT OTHER LIABILITIES 656,682 661,350
DEFERRED TAXES 16,016 61,082
RESTRUCTURING COSTS 7,533 8,383
OTHER LONG-TERM LIABILITIES 39,165 38,100
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62,714 107,565
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SHAREHOLDERS' EQUITY
COMMON STOCK, PAR VALUE $.001,
AUTHORIZED - 250,000,000
SHARES, ISSUED AND OUTSTANDING;
3/31/98 - 69,132,689 SHARES;
9/30/97 - 68,792,842 SHARES 69 69
ADDITIONAL PAID IN CAPITAL 824,202 820,213
UNEARNED COMPENSATION (8,927) (5,845)
RETAINED EARNINGS 78,275 199,828
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (36,706) (29,320)
COST OF COMMON SHARES IN TREASURY;
3/31/98 - 268 SHARES;
9/30/97 - 32,027 SHARES (4) (560)
---------- ----------
856,909 984,385
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$2,193,828 $2,558,832
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
UNISOURCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended March 31,
-------------------------------
1998 1997
-------------------------------
<S> <C> <C>
Operating Activities
Net income $ 6,687 $ 10,548
Additions (deductions) to reconcile net income
to net cash provided by operating activities:
Depreciation 9,024 7,741
Amortization 5,436 3,795
Provision for losses on accounts receivable 3,390 5,821
Payments related to restructuring costs and special charge (7,914) (2,578)
Changes in operating assets and liabilities, net
of effects from acquisitions:
Increase in accounts receivable (3,398) (14,538)
Decrease in inventories 38,103 34,932
(Increase) decrease in prepaid expenses (2,695) 2,968
Increase in accounts payable and
accrued expenses 16,655 2,718
Miscellaneous 3,558 (1,264)
----------- --------------
Net cash provided by operating activities 68,846 50,143
----------- --------------
Investing Activities
Proceeds from the sale of property and equipment 347 2,184
Cost of companies acquired, net of cash acquired (10,981) (13,511)
Expenditures for property and equipment (11,113) (5,425)
Collection of notes receivable - 1,855
Deferred cost expenditures (510) (7,975)
----------- --------------
Net cash used in investing activities (22,257) (22,872)
----------- --------------
Financing Activities
Debt repayments (30,805) (17,109)
Proceeds (repayments) from credit facility borrowings, net 6,484 (2,890)
Proceeds from IKON - 296
Payment of dividends (13,822) (13,418)
Other 1,643 -
----------- --------------
Net cash used in financing activities (36,500) (33,121)
----------- --------------
Net increase (decrease) in cash 10,089 (5,850)
Cash at beginning of period 42,241 14,596
----------- --------------
Cash at end of period $ 52,330 $ 8,746
========== =============
</TABLE>
<PAGE>
UNISOURCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------
1998 1997
--------------------------
<S> <C> <C>
OPERATING ACTIVITIES
NET (LOSS) INCOME $ (93,926) $ 30,699
ADDITIONS (DEDUCTIONS) TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION 17,634 15,081
AMORTIZATION 10,951 8,196
PROVISION FOR LOSSES ON ACCOUNTS RECEIVABLE 6,249 9,846
SPECIAL CHARGE 168,000 -
DEFERRED TAX BENEFIT (45,500) -
LOSS ON DIVESTITURE 5,700 -
PAYMENTS RELATED TO RESTRUCTURING
COSTS AND SPECIAL CHARGE (9,632) (8,431)
CHANGES IN OPERATING ASSETS AND LIABILITIES, NET OF
EFFECTS FROM ACQUISITIONS AND DIVESTITURES:
SALE OF ACCOUNTS RECEIVABLE 150,000 -
OTHER CHANGES IN ACCOUNTS RECEIVABLE 48,325 29,031
(INCREASE) DECREASE IN INVENTORIES (16,264) 8,178
(INCREASE) DECREASE IN PREPAID EXPENSES (6,064) 4,928
DECREASE IN ACCOUNTS PAYABLE AND
ACCRUED EXPENSES (48,437) (22,197)
MISCELLANEOUS (1,770) (1,012)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 185,266 74,319
-------- --------
INVESTING ACTIVITIES
COST OF COMPANIES ACQUIRED, NET OF CASH ACQUIRED (46,079) (16,766)
PROCEEDS FROM DIVESTITURE 48,126 -
PROCEEDS FROM THE SALE OF PROPERTY AND EQUIPMENT 939 5,814
COLLECTION OF NOTES RECEIVABLE - 21,105
EXPENDITURES FOR PROPERTY AND EQUIPMENT (19,667) (13,103)
DEFERRED COST EXPENDITURES (11,673) (25,645)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (28,354) (28,595)
-------- --------
FINANCING ACTIVITIES
PROCEEDS FROM BORROWING UNDER CREDIT FACILITY, NET 23,257 586,110
DEBT REPAYMENTS (147,059) (38,748)
REPAYMENTS TO IKON - (553,183)
PAYMENT OF DIVIDENDS (27,627) (13,418)
OTHER 1,463 -
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (149,966) (19,239)
-------- --------
NET INCREASE IN CASH 6,946 26,485
CASH AT BEGINNING OF YEAR 45,384 14,596
-------- --------
CASH AT END OF PERIOD $ 52,330 $ 41,081
======== ========
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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