EXHIBIT 99.1
NEWS RELEASE
Contact
Martha A. Buckley JoAnn P. Huston
Director, Corporate Communications Manager, Investor Relations
610-722-3511 610-722-3513
mbuckley@unisourcelink.com jhuston@unisourcelink.com
UNISOURCE REPORTS THIRD QUARTER EARNINGS
BERWYN, PENNSYLVANIA JULY 29, 1998 Unisource Worldwide, Inc. (NYSE:UWW)
reported today earnings of $0.11 per share for its third quarter of fiscal 1998,
which ended June 30, 1998, within the range expected by security analysts.
Those results do not reflect a $0.26 per share charge related to an extensive
restructuring plan announced by the company today. Including the charge, the
company reported a loss of $0.15 per share for the quarter.
The extensive restructuring plan is designed to improve service to
customers, decrease costs, increase financial flexibility and grow profitable
market segments. The restructuring plan is expected to significantly improve
the performance of the company in 1999 and beyond.
Revenues for the third quarter of fiscal 1998 were $1.8 billion, a 3.3%
increase over the third quarter of fiscal 1997. Excluding the restructuring
charge, operating income declined 24.9% to $24.6 million, and net income
declined 40% to $7.5 million.
"While our operating results are clearly unsatisfactory, I am pleased that
our financial management programs have generated significantly improved cash
flow," said Ray B. Mundt, chairman and chief executive officer. Cash flow from
operations for the nine months ended June 30, 1998 was $101 million, excluding
$150 million related to asset securitization. This cash generation has already
exceeded the company's forecasted operating cash flow for the year.
- more
For the nine months ended June 30, 1998, revenues increased approximately
6.7% to $5.6 billion. Operating income was $85.5 million, down 19.9% from the
same period last year, while net income decreased 34.1% to $28.5 million. Both
basic and diluted earnings were $0.41 per share, 35.9% below earnings for the
first nine months of fiscal 1997. All nine-month comparisons exclude both the
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 and the current restructuring charge of $0.26 per share. Including
those charges, the company reported a loss of $1.52 per share for the nine-month
period.
Unisource Worldwide, Inc. (http://www.unisourcelink.com), headquartered in
Berwyn, Pennsylvania, is one of the largest distributors of paper products and
supply systems in North America. Fiscal 1997 revenues exceeded $7 billion.
# # #
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
Three Months Ended June 30
-----------------------------------------
1998 1997 % Change
----------- ----------- ----------
Revenues
Printing and imaging $ 1,152,073 $ 1,132,829 1.7 %
Supply systems 669,343 631,212 6.0
- - ------------------------------------------------------------------------------------------
1,821,416 1,764,041 3.3
Costs and Expenses
Cost of goods sold - printing and imaging 1,000,156 973,029 2.8
Cost of goods sold - supply systems 506,375 496,601 2.0
Selling and administrative 290,304 261,686 10.9
Restructuring Charge 27,600 -
- - ------------------------------------------------------------------------------------------
1,824,435 1,731,316
- - ------------------------------------------------------------------------------------------
Income from Operations (3,019) 32,725
Interest 11,155 10,541
- - ------------------------------------------------------------------------------------------
Income Before Income Taxes (14,174) 22,184
Provision for Income Taxes (3,759) 9,650
- - ------------------------------------------------------------------------------------------
Net Income $ (10,415) $ 12,534
========== ==========
Basic Earnings Per Share $ (0.15) $ 0.19
========== ==========
Diluted Earnings Per Share $ (0.15) $ 0.19
========== ==========
Basic Shares Outstanding 68,878 67,131
========== ==========
Diluted Shares Outstanding 68,878 67,533
========== ==========
Operations Analysis:
Gross profit %, printing and imaging 13.2% 14.1%
Gross profit %, supply systems 24.3% 21.3%
Total gross profit % 17.3% 16.7%
SG&A as a % of revenues 15.9%* 14.8%
SG&A as a % of gross profit 92.2%* 88.9%
Operating income % of revenues 1.3%* 1.9%
* Excludes Restructuring Charge.
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
Nine Months Ended June 30
------------------------------------------
1998 1997 % Change
------------- ------------- -----------
Revenues
Printing and imaging $ 3,544,985 $ 3,357,566 5.6 %
Supply systems 2,013,486 1,850,916 8.8
- - ----------------------------------------------------------------------------------------------------
5,558,471 5,208,482 6.7
Costs and Expenses
Cost of goods sold - printing and imaging 3,082,782 2,874,762 7.2
Cost of goods sold - supply systems 1,524,748 1,447,226 5.4
Selling and administrative 865,442 779,726 11.0
Special charge (1) 168,000 -
Restructuring charge (2) 27,600 -
- - ---------------------------------------------------------------------- ----------------------------
5,668,572 5,101,714
- - ---------------------------------------------------------------------- ----------------------------
(Loss) Income from Operations (110,101) 106,768
Interest 35,898 30,932
- - ---------------------------------------------------------------------- ----------------------------
(Loss) Income Before Income Taxes (145,999) 75,836
(Benefit) Provision for Income Taxes (3) (41,658) 32,603
- - ---------------------------------------------------------------------- ----------------------------
Net (Loss) Income $ (104,341) $ 43,233
========== ==========
Basic (Loss) Earnings Per Share (4) $ (1.52) $ 0.64
========== ==========
Diluted (Loss) Earnings Per Share (4) $ (1.52) $ 0.64
========== ==========
Basic Shares Outstanding 68,662 67,074
========== ==========
Diluted Shares Outstanding 68,662 (5) 67,735
========== ==========
Operations Analysis:
Gross profit %, printing and imaging 13.0% 14.4%
Gross profit %, supply systems 24.3% 21.8%
Total gross profit % 17.1% 17.0%
SG&A as a % of revenues 15.6%* 15.0%
SG&A as a % of gross profit 91.0%* 88.0%
Operating income % of revenues 1.5%* 2.0%
* Excludes Special Charge and Restructuring Charge.
(1) Represents write-off of capitalized development and related costs associated with NADS.
(2) Represents restructuring charge associated with streamlining the Company's organizational
structure.
(3) 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.
(4) 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 and the restructuring charge amounted to
an after-tax loss of $17.9 million ($0.26 per share).
(5) Diluted shares outstanding exclude the impact of stock options due to the antidilutive
effect on the loss per share.
This schedule presents the financial results of Unisource Worldwide, Inc.
excluding a $27.6 million, $17.9 million net of tax ($0.26 per share)
restructuring charge associated with streamlining the Company's organizational
structure.
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
Three Months Ended June 30
--------------------------------------------
1998 1997 % Change
----------- ----------- ------------
Revenues
Printing and imaging $ 1,152,073 $ 1,132,829 1.7 %
Supply systems 669,343 631,212 6.0
- - -------------------------------------------------------------------------------------
1,821,416 1,764,041 3.3
Costs and Expenses
Cost of goods sold - printing and imaging 1,000,156 973,029 2.8
Cost of goods sold - supply systems 506,375 496,601 2.0
Selling and administrative 290,304 261,686 10.9
- - -------------------------------------------------------------------------------------
1,796,835 1,731,316
- - -------------------------------------------------------------------------------------
Income from Operations 24,581 32,725 (24.9)
Interest 11,155 10,541
- - -------------------------------------------------------------------------------------
Income Before Income Taxes 13,426 22,184
Provision for Income Taxes 5,907 9,650
- - -------------------------------------------------------------------------------------
Net Income $ 7,519 $ 12,534 (40.0)
========== ==========
Basic Earnings Per Share $ 0.11 $ 0.19 (0.42)
========== ==========
Diluted Earnings Per Share $ 0.11 $ 0.19 (0.42)
========== ==========
Basic Shares Outstanding 68,878 67,131
========== ==========
Diluted Shares Outstanding 68,878 67,533
========== ==========
Operations Analysis:
Gross profit %, printing and imaging 13.2% 14.1%
Gross profit %, supply systems 24.3% 21.3%
Total gross profit % 17.3% 16.7%
SG&A as a % of revenues 15.9% 14.8%
SG&A as a % of gross profit 92.2% 88.9%
Operating income % of revenues 1.3% 1.9%
This information is provided for additional analysis and is not intended to be
a presentation in accordance with generally accepted accounting principles.
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 per share) related to the write-off of capitalized development and
related costs associated with NADS, 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 and a $27.6 million, $17.9 million net of tax
($0.26 per share) charge associated with streamlining the Company's
organizational structure.
UNISOURCE WORLDWIDE, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
Nine Months Ended June 30
--------------------------------------------
1998 1997 % Change
------------ ------------ ---------
Revenues
Printing and imaging $ 3,544,985 $ 3,357,566 5.6 %
Supply systems 2,013,486 1,850,916 8.8
- - ----------------------------------------------------------------------------------------------------------
5,558,471 5,208,482 6.7
Costs and Expenses
Cost of goods sold - printing and imaging 3,082,782 2,874,762 7.2
Cost of goods sold - supply systems 1,524,748 1,447,226 5.4
Selling and administrative 865,442 779,726 11.0
- - ----------------------------------------------------------------------------------------------------------
5,472,972 5,101,714
- - ----------------------------------------------------------------------------------------------------------
Income from Operations 85,499 106,768 (19.9)
Interest 35,898 30,932
- - ----------------------------------------------------------------------------------------------------------
Income Before Income Taxes 49,601 75,836
Provision for Income Taxes 21,108 32,603
- - ----------------------------------------------------------------------------------------------------------
Net Income $ 28,493 $ 43,233 (34.1)
=========== ===========
Basic Earnings Per Share $ 0.41 $ 0.64 (35.9)
=========== ===========
Diluted Earnings Per Share $ 0.41 $ 0.64 (35.9)
=========== ===========
Basic Shares Outstanding 68,662 67,074
=========== ===========
Diluted Shares Outstanding 68,877 67,735
=========== ===========
Operations Analysis:
Gross profit %, printing and imaging 13.0% 14.4%
Gross profit %, supply systems 24.3% 21.8%
Total gross profit % 17.1% 17.0%
SG&A as a % of revenues 15.6% 15.0%
SG&A as a % of gross profit 91.0% 88.0%
Operating income % of revenues 1.5% 2.0%
This information is provided for additional analysis and is not intended to be a
presentation in accordance with generally accepted accounting principles.
UNISOURCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUES AND SHARES)
ASSETS JUNE 30, SEPTEMBER 30,
1998 1997
- - -------------------------------------------------------------------- -------------------- -------------------
CURRENT ASSETS
CASH $ 47,884 $ 45,384
ACCOUNTS RECEIVABLE, NET 620,607 882,360
INVENTORIES 430,313 495,330
PREPAID EXPENSES AND DEFERRED TAXES 58,726 49,875
-------------------- -------------------
TOTAL CURRENT ASSETS 1,157,530 1,472,949
-------------------- -------------------
LONG-TERM RECEIVABLES 5,531 7,790
PROPERTY AND EQUIPMENT, AT COST 436,946 434,762
LESS ACCUMULATED DEPRECIATION 205,016 188,336
-------------------- -------------------
231,930 246,426
-------------------- -------------------
GOODWILL 641,463 668,575
DEFERRED COSTS AND OTHER ASSETS 17,688 163,092
-------------------- -------------------
$2,054,142 $2,558,832
==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
CURRENT PORTION OF LONG-TERM DEBT $ 1,165 $ 638
NOTES PAYABLE 11,344 144,882
TRADE ACCOUNTS PAYABLE 426,393 498,503
ACCRUED SALARIES, WAGES AND COMMISSIONS 32,559 33,906
RESTRUCTURING COSTS 12,847 8,172
OTHER ACCRUED EXPENSES 85,891 119,431
-------------------- -------------------
TOTAL CURRENT LIABILITIES 570,199 805,532
-------------------- -------------------
LONG-TERM DEBT 586,482 661,350
OTHER LIABILITIES
DEFERRED TAXES 19,578 61,082
RESTRUCTURING COSTS 7,210 8,383
OTHER LONG-TERM LIABILITIES 37,872 38,100
-------------------- -------------------
64,660 107,565
-------------------- -------------------
STOCKHOLDERS' EQUITY
COMMON STOCK, PAR VALUE $0.001, AUTHORIZED -
250,000,000 SHARES, ISSUED AND OUTSTANDING; 6/30/98 -
69,732,048 SHARES; 9/30/97 - 68,792,842 SHARES 70 69
ADDITIONAL PAID IN CAPITAL 831,757 820,213
UNEARNED COMPENSATION (8,927) (5,845)
RETAINED EARNINGS 53,979 199,828
FOREIGN CURRENCY TRANSLATION ADJUSTMENTS (43,975) (29,320)
COST OF COMMON SHARES IN TREASURY; 6/30/98 - 7,493 SHARES;
9/30/97 - 32,027 SHARES (103) (560)
-------------------- -------------------
832,801 984,385
-------------------- -------------------
$2,054,142 $2,558,832
==================== ===================
UNISOURCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended June 30,
------------------------------------------------
1998 1997
------------------------------------------------
Operating Activities
Net (loss) income $ (10,415) $ 12,534
Additions (deductions) to reconcile net income
to net cash provided by operating activities:
Depreciation 9,424 7,501
Amortization 4,955 4,278
Provision for losses on accounts receivable 4,910 3,811
Restructuring charge 27,600 -
Deferred tax benefit (3,150) -
Payments for restructuring and special charges 13,314 (3,067)
Changes in operating assets and liabilities, net
of effects from acquisitions and divestitures:
Decrease (increase) in accounts receivable 35,620 (1,708)
Decrease (increase) in inventories 49,006 (3,909)
(Increase) decrease in prepaid expenses (6,277) 6,033
(Decrease) increase in accrued and deferred
income taxes (3,120) 821
(Decrease) increase in accounts payable and
accrued expenses (30,424) 18,635
Miscellaneous 1,810 948
----------------------- -----------------
Net cash provided by operating activities 65,905 45,877
----------------------- -----------------
Investing Activities
Proceeds from the sale of property and equipment 12,856 2,009
Proceeds from divestitures 11,386 -
Cost of companies acquired, net of cash acquired (2,938) (34,251)
Expenditures for property and equipment (4,352) (7,967)
Collection of notes receivable - 472
Deferred cost expenditures (2,303) (11,817)
------------------------ ----------------
Net cash provided by (used in) investing activities 14,649 (51,554)
------------------------ ----------------
Financing Activities
Debt (repayments) proceeds (1,260) 594
Proceeds (repayments) from revolving credit facility
borrowings, net (77,308) 38,490
Proceeds from IKON - (517)
Payment of dividends (13,888) (13,455)
Stock issuances (repurchases) 7,456 (1,198)
------------------------ ----------------
Net cash (used in) provided by financing activities (85,000) 23,914
------------------------ ----------------
Net (decrease) increase in cash (4,446) 18,237
Cash at beginning of period 52,330 41,081
------------------------ ----------------
Cash at end of period $ 47,884 $ 59,318
======================= ===============
UNISOURCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended June 30,
--------------------------------
1998 1997
--------------------------------
Operating Activities
Net (loss) income $(104,341) $ 43,233
Additions (deductions) to reconcile net income
to net cash provided by operating activities:
Depreciation 27,058 22,582
Amortization 15,906 12,474
Provision for losses on accounts receivable 10,439 13,657
Special and restructuring charges 195,600 -
Deferred tax benefit (48,650) -
Loss on divestiture 5,700 -
Payments for special and restructuring charges (22,946) (11,498)
Changes in operating assets and liabilities, net
of effects from acquisitions and divestitures:
Sale of accounts receivable 150,000 -
Other changes in accounts receivable 83,945 27,323
Decrease in inventories 32,742 4,269
(Increase) decrease in prepaid expenses (12,341) 10,961
(Decrease) increase in accrued and deferred
income taxes (16,019) 18,702
Decrease in accounts payable and
accrued expenses (65,962) (21,443)
Miscellaneous 40 (64)
------------ ------------
Net cash provided by operating activities 251,171 120,196
------------ ------------
Investing Activities
Proceeds from the sale of property and equipment 13,795 7,823
Proceeds from divestitures 59,512 -
Cost of companies acquired, net of cash acquired (49,017) (51,017)
Expenditures for property and equipment (24,019) (21,070)
Collection of notes receivable - 21,577
Deferred cost expenditures (13,976) (37,462)
------------ ------------
Net cash used in investing activities (13,705) (80,149)
------------ ------------
Financing Activities
Debt repayments (148,319) (38,154)
Proceeds (repayments) from revolving credit facility
borrowings, net (54,051) 624,600
Repayment to IKON - (553,700)
Payment of dividends (41,515) (26,873)
Stock issuances (repurchases) 8,919 (1,198)
------------ ------------
Net cash (used in) provided by financing activities (234,966) 4,675
------------ ------------
Net increase in cash 2,500 44,722
Cash at beginning of year 45,384 14,596
------------ ------------
Cash at end of period $ 47,884 $ 59,318
============ ============