<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 27, 1999
------------------------------
UNISOURCE WORLDWIDE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE File No. 1-14482 13-5369500
- -------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
1100 Cassatt Road, Berwyn, Pennsylvania 19312
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 296-4470
---------------------------
Not Applicable
- -------------------------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed since last
report)
<PAGE>
Item 5. Other Events.
------------
On April 27, 1999, the Registrant issued the attached press release.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits.
---------
(99) Press Release dated April 27, 1999.
<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 27, 1999
<PAGE>
Exhibit Index
-------------
(99) Press Release dated April 27, 1999.
<PAGE>
EXHIBIT 99
News Release
Contact
Martha A. Buckley JoAnn P. Huston
Vice President, Corporate Communications Director, Investor Relations
610-722-3511 610-722-3513
[email protected] [email protected]
-------------------------- -------------------------
UNISOURCE REPORTS SECOND QUARTER RESULTS
BERWYN, PENNSYLVANIA - APRIL 27, 1999 -- Unisource Worldwide, Inc. (NYSE:UWW)
announced today underlying earnings per share of $.08 for its second fiscal
quarter, which ended March 31, 1999. Comparable earnings for the prior year
were $.10 per share.
"This performance was consistent with our business plan and within the consensus
range expected by securities analysts," noted Ray B. Mundt, chairman and chief
executive officer. "More importantly," he continued, "we are seeing positive
trends in almost all areas of our restructuring, and we continue to generate
cash and reduce our overall debt."
Revenues for the quarter were $1.61 billion, a decline of 14% from the second
quarter of fiscal 1998. Underlying operating income was $20.3 million, a
decrease of 16% from the same quarter last year. Underlying earnings
performance for the current-year quarter excludes one-time restructuring
implementation costs of $3.8 million pre-tax, $2.2 million after-tax ($.03 per
share).
Reported operating income for the current-year quarter was $16.5 million and
reported earnings were $.05 per share.
Overall pricing declines averaged 7.5%, accounting for approximately half of the
revenue decrease in the period. Reduced business levels at Websource, the
company's New York-based paper brokerage business, accounted for 3% of the
volume decrease, and a forecasted reduction in base operations related to the
restructuring accounted for an additional 3%.
Gross profit of $300 million was 4% lower than the $313 million reported in the
same quarter last year. Gross profit margins, however, increased from 16.8% in
last year's second quarter to 18.7% this year. "Gross trading margins generally
increase in a period of declining paper prices," Mundt commented. "However, we
believe that the programs we have put in place to improve margins are also
having a very positive impact."
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<PAGE>
Restructuring Benefits
"During the quarter, we closed an additional twenty facilities, reduced
warehouse space by more than 600,000 square feet, and reduced our U.S. workforce
by 150 employees," Mundt said. These and other restructuring-related
initiatives resulted in a 3% reduction in underlying selling and administrative
expense, from $289 million in the second quarter of fiscal 1998 to $280 million
for the second quarter of this year.
"We expect our restructuring benefits to accelerate as we go through the year,"
Mundt noted. "We will complete several major facility consolidations in our
second half, and we have accelerated planned personnel reductions." Since the
end of the quarter, Unisource has reduced its work force by an additional 130
people.
Year-to-date Performance
For the six months ended March 31, 1999, revenues declined 12% to $3.29 billion.
Underlying operating income decreased 28% to $43.6 million, and underlying
earnings were $.18 per share, a decrease of 40% from comparable performance in
the prior year.
Underlying performance for the six-month period of fiscal 1999 excludes one-time
restructuring implementation costs of $6.8 million pre-tax, $3.9 million after-
tax ($.06 per share). For the prior-year period, underlying performance excludes
a special charge of $168 million pre-tax, $109.2 million after-tax ($1.60 per
share) related to the write-off of the company's SAP-based IT system and a tax
charge of $5.7 million ($.08 per share) related to the October 1997 sale of the
company's U.S.-based grocery supply business.
Reported operating income for the six-month period of fiscal 1999 was $36.8
million, compared with a loss of $107.1 million for the comparable period of
fiscal 1998. Reported earnings for the period were $.12 per share in fiscal
1999 compared with a loss of $1.37 in fiscal 1998.
Strong Cash Flow
"We generated significant cash during the quarter," Mundt said. "As a result,
we reduced debt by an additional $64 million, and lowered interest expense from
$12.6 million in the second quarter of fiscal 1998 to $10.6 million in the same
quarter this year.
For the six months ended March 31, 1999 Unisource generated a total of $73
million in cash from operations and reduced debt by $69 million. Free cash flow
for the six months was $66 million.
Outlook Positive
"Our expense reduction benefits are beginning to flow through to the bottom
line, and we expect that trend to accelerate in the second half of our fiscal
year," Mundt said. "In addition, pricing in both businesses appears to be
improving, and gross trading margins have increased, at least in part because of
our margin improvement programs. If these trends continue, we are confident we
will meet earnings expectations for the year. "
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<PAGE>
Commenting on the company's plans to merge with UGI Corporation, Mundt said, "We
have been working closely with UGI to ensure that the merger proceeds smoothly.
Subject to shareholder approval, we expect to complete the merger by June 30,
1999 and to begin to move forward together to grow value for our combined
shareholders."
Unisource Worldwide, Inc. (http://www.unisourcelink.com), headquartered in
Berwyn, Pennsylvania, is one of the largest distributors of paper products,
packaging materials and maintenance supplies in North America.
All statements, other than statements of historical fact, made in this press
release, including, without limitation, (i) statements relating to the Company's
restructuring program, the timing thereof, and the financial results and
benefits to be derived therefrom (including the Company's plans with respect to
consolidation of its facilities, reduction of its warehouse space, reduction of
its workforce and customer profitability programs), (ii) statements relating to
future earnings per share or other future financial performance, (iii)
statements relating to anticipated future pricing levels and the effect thereof
upon the Company's earnings, (iv) statements relating to future cash generation,
debt reduction and increased gross trading margins, (v) statements relating to
the pending merger with UGI Corporation, and (vi) statements qualified by the
words "believes," "anticipates," "expects," "intends," "may," "estimates,"
"will," and other words or expressions similar thereto, are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Although the Company
believes these statements are based upon reasonable assumptions with respect to
future events and circumstances, such statements are subject to risks and
uncertainties which could cause actual results or circumstances to differ
materially. Such risks and uncertainties include, without limitation, delays,
difficulties, or increased costs associated with the implementation of the
restructuring plan, leverage and debt service requirements (including
sensitivity to interest rate fluctuations), operating in a competitive
environment, general economic conditions, the ability to attract and retain
qualified personnel, changes or volatility in pulp and paper prices, delays or
difficulties with consolidation of its information technology systems and the
upgrading of such systems to be year 2000 compliant, and stockholder approval of
the merger. 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, 1998, which is on file with
the Securities and Exchange Commission.
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<PAGE>
UNISOURCE WORLDWIDE, INC.
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands, except par value per share)
<TABLE>
<CAPTION>
March 31, September 30,
ASSETS 1999 1998
------------- -------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 37,541 $ 49,960
Accounts receivable, less allowance for doubtful accounts:
3/31/99 - $25,623; 9/30/98 - $22,713 561,367 640,443
Inventories 352,416 353,270
Prepaid expenses and deferred taxes 83,264 87,746
------------- -------------
Total current assets 1,034,588 1,131,419
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Long-Term Receivables 3,310 5,723
Property and Equipment, at cost 429,700 428,884
Less: accumulated depreciation 214,835 201,599
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214,865 227,285
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Goodwill 578,880 580,932
Deferred Costs and Other Assets 24,985 21,292
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$1,856,628 $1,966,651
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 1,123 $ 1,155
Notes payable 3,836 3,651
Trade accounts payable 421,743 451,123
Accrued salaries, wages and commissions 34,124 40,520
Restructuring costs 46,939 61,588
Other accrued expenses 115,273 107,356
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Total current liabilities 623,038 665,393
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Long - Term Debt 435,684 505,199
Deferred Taxes and Other Liabilities
Deferred taxes 14,740 11,770
Restructuring costs 28,568 30,414
Other long-term liabilities 51,440 55,517
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Total deferred taxes and other liabilities 94,748 97,701
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Stockholders' Equity
Preferred stock, 3/31/99 and 9/30/98 - par value $0.001,
authorized - 10,000,000 shares, no shares issued
and outstanding - -
Common stock, par value $0.001, authorized - 250,000,000
shares, issued 3/31/99 - 70,227,582 and 9/30/98 -
70,245,536 shares 70 70
Additional paid in capital 832,254 832,268
Unearned compensation (2,437) (2,727)
Retained deficit (86,129) (87,533)
Foreign currency translation adjustment (40,575) (43,711)
Cost of common shares in treasury, 3/31/99 - 3,052 and
9/30/98 - 1,205 shares (25) (9)
------------- -------------
703,158 698,358
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$1,856,628 $1,966,651
============= =============
</TABLE>
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<PAGE>
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY - UNAUDITED
(in thousands, except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------
1999 1998 % Change
----------- ----------- --------
<S> <C> <C> <C>
Revenues
Printing & Imaging $ 1,008,204 $ 1,220,247 (17.4)%
Supply Systems 598,951 647,673 (7.5)
- ------------------------------------------------------------------------
Total Revenues 1,607,155 1,867,920 (14.0)
- ------------------------------------------------------------------------
Cost of Goods Sold
Cost of goods sold - Printing & Imaging 858,666 1,063,979 (19.3)
Cost of goods sold - Supply Systems 448,442 490,887 (8.6)
- ------------------------------------------------------------------------
Total Cost of Goods Sold 1,307,108 1,554,866 (15.9)
- ------------------------------------------------------------------------
Gross Profit 300,047 313,054 (4.2)
Selling and Administrative Expense 279,723 288,880 (3.2)
Restructuring implementation costs (1) 3,841 -
- ------------------------------------------------------------------------
Income from Operations 16,483 24,174
Interest 10,588 12,620
- ------------------------------------------------------------------------
Income Before Income Taxes 5,895 11,554
Provision for Income Taxes 2,535 4,867
- ------------------------------------------------------------------------
Net Income $ 3,360 $ 6,687
========== ==========
Basic Earnings Per Share $ 0.05 $ 0.10
========== ==========
Diluted Earnings Per Share $ 0.05 $ 0.10
========== ==========
Basic Shares Outstanding 69,835 68,611
========== ==========
Diluted Shares Outstanding 69,958 68,758
========== ==========
Operations Analysis:
Gross profit %, Printing & Imaging 14.8% 12.8%
Gross profit %, Supply Systems 25.1% 24.2%
Total gross profit % 18.7% 16.8%
SG&A as a % of revenues 17.4%* 15.5%
SG&A as a % of gross profit 93.2%* 92.3%
Operating income % of revenues 1.3%* 1.3%
</TABLE>
* Excludes restructuring implementation costs.
(1) Represents restructuring implementation costs associated with streamlining
the Company's organizational structure ($2.2 million after tax, $0.03 loss
per share).
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<PAGE>
The following schedule presents the underlying financial results of Unisource
Worldwide, Inc. excluding restructuring implementation charges incurred in
Fiscal 1999 (see table at bottom of page).
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY - UNAUDITED
(in thousands, except earnings per share)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------------------------
1999 1998 % Change
-------------- -------------- ------------
<S> <C> <C> <C>
Revenues
Printing & Imaging $ 1,008,204 $ 1,220,247 (17.4)%
Supply Systems 598,951 647,673 (7.5)
- --------------------------------------------------------------------------
Total Revenues 1,607,155 1,867,920 (14.0)
- --------------------------------------------------------------------------
Cost of Goods Sold
Cost of goods sold - Printing & Imaging 858,666 1,063,979 (19.3)
Cost of goods sold - Supply Systems 448,442 490,887 (8.6)
- --------------------------------------------------------------------------
Total Cost of Goods Sold 1,307,108 1,554,866 (15.9)
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Gross Profit 300,047 313,054 (4.2)
Selling and Administrative Expense 279,723 288,880 (3.2)
- --------------------------------------------------------------------------
Income from Operations 20,324 24,174 (15.9)
Interest 10,588 12,620 (16.1)
- --------------------------------------------------------------------------
Income Before Income Taxes 9,736 11,554
Provision for Income Taxes 4,186 4,867
- --------------------------------------------------------------------------
Net Income $ 5,550 $ 6,687 (17.0)
========== ==========
Basic Earnings Per Share $ 0.08 $ 0.10
========== ==========
Diluted Earnings Per Share $ 0.08 $ 0.10
========== ==========
Basic Shares Outstanding 69,835 68,611
========== ==========
Diluted Shares Outstanding 69,958 68,758
========== ==========
Operations Analysis:
Gross profit %, Printing & Imaging 14.8% 12.8%
Gross profit %, Supply Systems 25.1% 24.2%
Total gross profit % 18.7% 16.8%
SG&A as a % of revenues 17.4% 15.5%
SG&A as a % of gross profit 93.2% 92.3%
Operating income % of revenues 1.3% 1.3%
</TABLE>
The table below reflects the financial statement impact of the restructuring
implementation charges incurred in Fiscal 1999. Such charges have been excluded
from the financial results presented above.
<TABLE>
<CAPTION>
Pre - Tax After - Tax Loss
Charge Charge Per Share
----------- ----------- -----------
<S> <C> <C> <C>
Fiscal 1999:
Implementation costs related to streamlining
the Company's organizational structure:
Relocation, recruiting, training and other $ 3,841 $ 2,189 ($0.03)
========== ========== ==========
</TABLE>
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<PAGE>
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY - UNAUDITED
(in thousands, except earnings (loss) per share)
<TABLE>
<CAPTION>
Six Months Ended March 31,
-----------------------------------------------------
1999 1998 % Change
----------- ----------- ----------
<S> <C> <C> <C>
Revenues
Printing & Imaging $ 2,052,938 $ 2,392,912 (14.2)%
Supply Systems 1,234,748 1,344,143 (8.1)
- -------------------------------------------------------------------------------------
Total Revenues 3,287,686 3,737,055 (12.0)
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Cost of Goods Sold
Cost of goods sold - Printing & Imaging 1,754,591 2,082,626 (15.8)
Cost of goods sold - Supply Systems 928,659 1,018,373 (8.8)
- -------------------------------------------------------------------------------------
Total Cost of Goods Sold 2,683,250 3,100,999 (13.5)
- -------------------------------------------------------------------------------------
Gross Profit 604,436 636,056 (5.0)
Selling and Administrative Expense 560,795 575,138 (2.5)
Restructuring implementation costs (1) 6,813 -
Special charge (2) - 168,000
- -------------------------------------------------------------------------------------
Income (Loss) from Operations 36,828 (107,082)
Interest 22,052 24,743
- -------------------------------------------------------------------------------------
Income (Loss) Before Income Taxes 14,776 (131,825)
Provision (Benefit) for Income Taxes (3) 6,354 (37,899)
- -------------------------------------------------------------------------------------
Net Income (Loss) $ 8,422 $ (93,926)
========== ==========
Basic Earnings (Loss) Per Share $ 0.12 $ (1.37)
========== ==========
Diluted Earnings (Loss) Per Share $ 0.12 $ (1.37)
========== ==========
Basic Shares Outstanding 69,849 68,578
========== ==========
Diluted Shares Outstanding 69,962 68,578 (4)
========== ==========
Operations Analysis:
Gross profit %, Printing & Imaging 14.5% 13.0%
Gross profit %, Supply Systems 24.8% 24.2%
Total gross profit % 18.4% 17.0%
SG&A as a % of revenues 17.1%* 15.4%**
SG&A as a % of gross profit 92.8%* 90.4%**
Operating income % of revenues 1.3%* 1.6%**
</TABLE>
* Excludes restructuring implementation costs.
** Excludes special charge.
(1) Represents restructuring implementation costs associated with streamlining
the Company's organizational structure ($3.9 million after tax, $0.06 loss
per share).
(2) Represents write-off of capitalized Information Technology development and
related costs associated with NADS ($109.2 million net of tax, $1.60 loss
per share).
(3) Six months ended March 31, 1998 includes a $5.7 million tax charge ($0.08
loss per share) related to non-deductible intangible assets associated with
the sale of a significant portion of the Company's United States-based
Grocery Supply Systems business.
(4) Diluted shares outstanding are not adjusted for stock options due to the
antidilutive effect on the loss per share.
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<PAGE>
The following schedule presents the underlying financial results of Unisource
Worldwide, Inc. excluding restructuring implementation and special charges in
Fiscal 1999 and 1998 (see table at bottom of page).
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY - UNAUDITED
(in thousands, except earnings per share)
<TABLE>
<CAPTION>
Six Months Ended March 31,
------------------------------------------------
1999 1998 % Change
------------- ----------- ---------
<S> <C> <C> <C>
Revenues
Printing & Imaging $ 2,052,938 $ 2,392,912 (14.2)%
Supply Systems 1,234,748 1,344,143 (8.1)
- ----------------------------------------------------------------------------------
Total Revenues 3,287,686 3,737,055 (12.0)
- ----------------------------------------------------------------------------------
Cost of Goods Sold
Cost of goods sold - Printing & Imaging 1,754,591 2,082,626 (15.8)
Cost of goods sold - Supply Systems 928,659 1,018,373 (8.8)
- ----------------------------------------------------------------------------------
Total Cost of Goods Sold 2,683,250 3,100,999 (13.5)
- ----------------------------------------------------------------------------------
Gross Profit 604,436 636,056 (5.0)
Selling and Administrative Expense 560,795 575,138 (2.5)
- ----------------------------------------------------------------------------------
Income from Operations 43,641 60,918 (28.4)
Interest 22,052 24,743 (10.9)
- ----------------------------------------------------------------------------------
Income Before Income Taxes 21,589 36,175
Provision for Income Taxes 9,283 15,194
- ----------------------------------------------------------------------------------
Net Income $ 12,306 $ 20,981 (41.3)
========== ==========
Basic Earnings Per Share $ 0.18 $ 0.31
========== ==========
Diluted Earnings Per Share $ 0.18 $ 0.30
========== ==========
Basic Shares Outstanding 69,849 68,578
========== ==========
Diluted Shares Outstanding 69,962 68,901
========== ==========
Operations Analysis:
Gross profit %, Printing & Imaging 14.5% 13.0%
Gross profit %, Supply Systems 24.8% 24.2%
Total gross profit % 18.4% 17.0%
SG&A as a % of revenues 17.1% 15.4%
SG&A as a % of gross profit 92.8% 90.4%
Operating income % of revenues 1.3% 1.6%
</TABLE>
The table below reflects the financial statement impact of the restructuring
implementation and special charges incurred in Fiscal 1999 and 1998. Such
charges have been excluded from the financial results presented above.
<TABLE>
<CAPTION>
Pre - Tax After - Tax Loss
Charge Charge Per Share
----------- ----------- ---------
<S> <C> <C> <C>
Fiscal 1999:
Implementation costs related to streamlining
the Company's organizational structure:
Relocation, recruiting, training and other $ 6,813 $ 3,883 ($0.06)
========== ========== ========
Fiscal 1998:
Write-off of capitalized Information Technology
development and related costs associated
with NADS $ 168,000 $ 109,200 ($1.60)
Tax charge associated with the sale of a
significant portion of its US-based
Grocery Supply Systems business $ - $ 5,700 ($0.08)
---------- ---------- --------
$ 168,000 $ 114,900 ($1.68)
========== ========== ========
</TABLE>
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UNISOURCE WORLDWIDE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended March 31
- ---------------------------------------------------------------------------------------------------------
1999 1998
-------------------------------------------
<S> <C> <C>
Operating Activities
Net income (loss) $ 8,422 $ (93,926)
Additions (deductions) to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation 17,129 17,634
Amortization 10,101 10,951
Provision for losses on accounts receivable 5,752 6,249
Special charges, net of deferred taxes - 128,200
Payments for restructuring and special charges (17,728) (9,632)
Changes in operating assets and liabilities, net
of effects from acquisitions and divestitures:
Sale of accounts receivable - 150,000
Other changes in accounts receivable 73,324 48,325
Decrease (Increase) in inventories 854 (16,264)
Decrease (Increase) in prepaid expenses 1,625 (6,064)
Decrease in accounts payable and
accrued expenses (25,827) (48,437)
Miscellaneous (353) (1,770)
-------------------------------------------
Net cash provided by operating activities 73,299 185,266
-------------------------------------------
Investing Activities
Proceeds from the sale of property and equipment 1,128 939
Proceeds from divestitures - 48,126
Cost of companies acquired, net of cash acquired (1,789) (46,079)
Expenditures for property and equipment (6,314) (19,667)
Collection of notes receivable 2,413 -
Deferred cost expenditures (5,036) (11,673)
-------------------------------------------
Net cash used in investing activities (9,598) (28,354)
-------------------------------------------
Financing Activities
Debt repayments (69,362) (123,802)
Payment of dividends (7,018) (27,627)
Other 260 1,463
-------------------------------------------
Net cash used in financing activities (76,120) (149,966)
-------------------------------------------
Net (decrease) increase in cash (12,419) 6,946
Cash and cash equivalents at beginning of year 49,960 45,384
-------------------------------------------
Cash and cash equivalents at end of period $ 37,541 $ 52,330
===========================================
</TABLE>
