SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): January 30, 2001
WESCO International, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 333-43225 25-1723345
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Commerce Court
Four Station Square, Suite 700
Pittsburgh, Pennsylvania 15219
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(Address of principal executive offices)
Registrant's telephone number, including area code: (412) 454-2254
Item 5. Other Events.
On January 30, 2001, WESCO International, Inc. announced initiatives to
streamline operations, certain non-recurring charges, its outlook for the fourth
quarter of 2000 and expectations for the year 2001. A copy of the press release
making such announcement is filed herewith as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(c) Exhibits
99.1 Press Release dated January 30, 2001
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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.
WESCO INTERNATIONAL, INC.
By: /s/ Stephen A. Van Oss
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Stephen A. Van Oss
Chief Financial Officer
Dated: January 30, 2001
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EXHIBIT INDEX
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99.1 Press Release dated January 30, 2001
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EXHIBIT 99.1
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WESCO INTERNATIONAL ANNOUNCES STREAMLINING INITIATIVES,
NON-RECURRING CHARGES, FOURTH QUARTER OUTLOOK
AND 2001 EXPECTATIONS
CONTACT: STEPHEN A. VAN OSS, CHIEF FINANCIAL OFFICER
WESCO INTERNATIONAL, INC. (412) 454-2271, FAX: (412) 454-2477
HTTP://WWW.WESCODIST.COM
Pittsburgh, PA, January 30, 2001 -- WESCO International, Inc. [NYSE:WCC], a
leading provider of MRO products, construction materials, and advanced
integrated supply procurement outsourcing services, announced today initiatives
to streamline operations, non-recurring charges, its outlook for the fourth
quarter of 2000 and expectations for the year 2001.
STREAMLINING INITIATIVES AND NON-RECURRING CHARGES
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The Company reported today that it expects to incur net-after-tax restructuring
and other one-time special charges of $15.0 to $16.0 million or $0.33 to $0.35
per share.
According to Stephen A. Van Oss, WESCO's Chief Financial Officer, "The special
charges we reported today can be grouped into three broad categories. First,
there is the cost of closing or consolidating fourteen unprofitable branch
operations and certain administrative support offices and the write-off of an
equity investment, totaling approximately $7.0 million net-after tax. These
actions, plus a consolidation of several data center operations, are expected to
generate $3.0 to $3.5 million of annual pre-tax cost savings. Second, the
tightening credit markets and increased bankruptcy filings, most notably in the
steel industry, required an after-tax charge of approximately $5.0 million to
reflect bad debt write-offs for accounts receivable. The charges against
accounts receivable represent approximately 1% of the Company's accounts
receivable that total $650 million. Lastly, the Company initiated a program
during the fourth quarter to more closely align its inventories with current
market conditions resulting in inventory returns and write downs amounting to a
$3.0 million after-tax charge. With the exception of the $7.0 million
restructuring charge for closing operations and the write-off of the equity
investment, all other charges will flow through the income statement adversely
affecting margins and expenses, thus making comparisons with prior periods
difficult."
Roy W. Haley, WESCO's Chairman and CEO, said, "The restructuring program
reflects positive actions taken by management to improve our cost structure and
lower administrative costs. We've been able to maintain our sales momentum while
closing or consolidating a number of locations. Staffing levels have been
adjusted, and productivity has clearly been increased.
Sales per employee now exceed $640 thousand, 9% above last year."
Commenting on the Company's accounts receivable position, Van Oss said, "The
receivable situation is an anomaly. WESCO has had a good collections track
record, with bad debt expense typically running less than 0.15% of sales. The
charges taken this year reflect an expense rate of 0.3%, still a low rate by
most standards. Nevertheless, we're adding emphasis and resources to our credit
and collection activities. In addition, we are adjusting credit limits in line
with industry exposure, and we're closely monitoring payment trends.
OUTLOOK FOR THE FOURTH QUARTER
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Activity levels during the fourth quarter met the Company's expectations, with
sales of approximately $990 million and year-end backlog standing 14% higher
than last year-end. Comparable branch sales growth for the quarter, adjusted for
equivalent workdays, was in the range of 10 to 11%. Margin was below
expectations, however, as the Company incurred a fourth quarter shift in sales
mix to lower gross margin direct ship project and integrated supply sales.
As a result of the restructuring and special one-time charges described above,
the Company expects to report a net loss for the fourth quarter in the range of
$3.0 to $4.0 million or $0.06 to $0.08 per share. Excluding these charges and
taking into consideration a change in effective tax rate for the quarter, net
income for the quarter would have been in the range of $10.0 to $11.0 million or
$0.21 to $0.23 per share. For the full year, the Company expects to report
earnings, including the restructuring and one-time charges, in the range of
$33.0 to $34.0 million or $0.67 to $0.71 per share. Excluding these charges, net
income for the year would have been in the range of $45.0 to $46.0 million or
$0.94 to $0.98 per share. WESCO's reported fourth quarter and year-end net
income for 1999 was $6.9 million or $0.14 per share and $35.1 million or $0.75
per share respectively.
2001 EXPECTATIONS
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"The branch closures and consolidations have reduced our exposure to potential
losses in weaker, non-strategic markets. We are continuing our program of
productivity improvement and cost containment, which began approximately one
year ago. In addition, advances in our information system capabilities made it
possible for us to consolidate certain administrative and procurement functions.
I expect to see systematic improvement in our gross profit margins primarily
through the use of new pricing systems and improved controls over margin
exceptions. We will have the majority of our branches on these new systems by
the end of the first quarter," Haley commented.
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"As we look forward to 2001, we will face the challenge of a weakening economy
and tough quarter over quarter comparisons to very strong sales levels during
the first half of 2000. Based on new business that has been developed and the
information we have today, we are optimistic for continued top-line growth in
line with internal historical growth rates in the range of 6 to 8%. Our
integrated supply and national accounts sales programs have continued to
generate excellent growth and new customer commitments, which more than offset
declines in certain weaker market segments. We continue to invest in and expand
our marketing and sales initiatives in these important areas. Notwithstanding
the demise of numerous "dot.com" firms that have targeted mro or
construction-oriented business, we are increasingly confident in the future
potential of our e-Commerce initiatives. Continued emphasis on margin expansion
and operating cost containment programs will improve earnings pull through to
the bottom line," stated Van Oss. "At this time, we are comfortable with the
analyst projections for the year with a consensus estimate of $1.18 per share
and intend to update the investment community on a quarterly basis as our
visibility on sales and earnings improve throughout the year."
TELECONFERENCE
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Wesco will conduct a teleconference to discuss this news release Wednesday,
January 31, 2001, at 11:00 a.m. E.S.T. The conference call will be broadcast
live over the internet and can be accessed at
http://www.shareholder.com/wesco/medialist.com or from the company's home page
at http://www.wescodist.com. The conference call will be archived on this
internet site for 14 days.
# # #
WESCO International, Inc. [NYSE: WCC] is a publicly traded Fortune 500 holding
company, headquartered in Pittsburgh, Pennsylvania, whose primary operating
entity is WESCO Distribution, Inc. WESCO Distribution is a leading distributor
of MRO (maintenance, repair, and operating) products, construction materials,
and advanced integrated supply procurement outsourcing services. It operates
over 340 full service branches throughout North America. WESCO's 5,800 employees
were responsible for generating and supporting 1999 annual product sales of
approximately $3.4 billion. These sales represent more than 100,000 of the most
recognized and commonly
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used industrial and construction products. Major markets served by WESCO include
commercial and industrial construction, industrial process and discrete
manufacturers, large industrial OEMs (original equipment manufacturers), data
communications and electrical utilities.
# # #
The matters discussed herein may contain forward-looking statements that are
subject to certain risks and uncertainties that could cause actual results to
differ materially from expectations. Certain of these risks are set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1999, as well as the Company's other reports filed with the Securities and
Exchange Commission. WESCO's Internet address is: HTTP://WWW.WESCODIST.COM.
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