1984 Memo From Luis Nogales

Here's a Nov. 2, 1984, memo to staff from Luis Nogales:

       ccccx to: all unipressers:
from: luis nogales

About two months ago Max McCrohon and I traveled around the United States asking for all of your support in adopting a new plan for the long-term survival and profitability of UPI. Since that time we have begun to implement that plan. We are confident we are on target. The wage and expense adjustments as well as new procedures have caused substantial changes in our business and in our personal lives. There have been many successes and there have been disappointments. Altogether, the plan is working.

During recent weeks I have met with members of several of the important constituents to UPI. The newspaper and broadcast advisory boards have expressed strong support for this company, and have offered their continued assistance. Two weeks ago I met with publishers and editors in New England, a meeting that also produced promises of support. I have met with other subscribers from the United States and abroad, and the results have been encouraging. They want us to succeed, and we will.

In the following part of this memo I will attempt to answer some of the questions I know are of concern to you. However, I understand that there is no way I can answer every question and allay every concern. What we must all do is to continue to have confidence in one another and do all we can in our jobs. Speculation and rumors, some generated by competition and detractors, will continue in the short term. Two months ago when I first visited bureaus I was asked if it was true UPI would close the following week. Then I was asked if UPI would go bankrupt the next day, or would shut down Jan. 1.

UPI is operating and it will continue to operate.

the fact is that we are making progress. Our situation is very complex and forward motion cannot always be measured day by day, or by looking at one element at a time. UPI scored a wire beat on the Gandhi assassination coverage. The general public skims the headlines, but the job of really analyzing and explaining all the historical and social factors behind the scenes is incredibly complex. Just as in news coverage, one has to grasp the total picture in looking at the turnaround of UPI. We believe in our plan, believe in each other and believe in our long-term goals.

We have all sacrificed, not just for the short-term survival of UPI, but for long-term survival and profitability. We continue to have serious discussions with several potential investors in UPI. Also, I am pleased to inform you that Messrs. Rhue and Geissler have committed to putting up to $10 million into UPI from the pending sale of their non-UPI broadcast operations.

Here is the Q & A:

(1.) Is the turnaround program working?

, it is. We have completed five weeks in the plan and UPI is generating a positive cash flow. At this point it is still projected that we will have an operational positive cash flow and profit for the fourth quarter of 1984.

(2.) Are vendors cooperating?

--Yes, in the past month we have successfully negotiated agreements with our major vendors, the ones we work with most closely. We now have payout agreements with AT&T and the companies who deliver news by satellites to our subscribers. The vendors have been very cooperative and flexible and some of them have agreed to terms very favorable to UPI once presented with our comprehensive plan.

(3.) What about other vendors?

--We are working successfully with major vendors now that there is a positive cash flow. We are dealing with other vendors on a case-by-case basis. There still are many smaller vendors. By nature, a program like this takes time to reach everyone. Each week we talk with more of them, we will continue to operate with tight cash and to aggressively make the most of it. This was fully expected when we entered the program. Progress is gradual but it is on track.

(4.) Are we getting caught up on expense and stringer checks?

first batch of checks, for more than $250,000, went out several weeks ago. This was for expense accounts and stringer payments that had been processed in Brentwood through 7-31-84. The next batch was due to go out last Friday but this was delayed. On that day we signed a critical agreement with RCA to provide service to subscribers. This agreement, to solve chronic maintenance problems, directly affects our client agreements and collections, and hence the cash that comes to UPI. Because we had to make a substantial first payment to start the program, the schedule slipped from what was earlier posted. We'll have a revised date next week for when these checks will go out.

(5.) Why is cash still tight?

surplus generated by our program is being used to get us caught up in many areas. The cash needs and the cash on hand fluctuate every month, even every week. The last two weeks, for example, required heavy cash outlays because of elections and other travel. The same period saw lighter than usual collections for clients, as it was the end of a month. The plan calls for us to deal with cash within a certain set of parameters, but within those we will continue to make the best decisions possible every day as to how we use our cash and how we stretch it. And, each week of surplus moves the program forward one notch.

(6.) How long will this situation continue?

plan anticipated tight cash although I hope it will easy considerably as we go along. It is not our intention to operate like this forever. As we proceed we will move back to a more normalized approach, including operating from a complete budget in 1985.

(7.) Our competition is spreading rumors about UPI. What should we do about this?

kind of thing has gone on for years. Our program is moving ahead. The best thing we can do is to keep our minds on our goal and not be distracted by each one that comes up. It's difficult to ignore rumors, especially when we all know the money is tight. But we help ourselves the most by sticking to what we know, and by sticking to our plan.

(8.) Are many people leaving UPI?

70 staffers have resigned since August throughout the system of nearly 2,000. Resignations still come in, although I believe this will slacken as we approach the first salary adjustment in December and the fourth quarter results. We are aggressively restaffing. We hate to see anyone leave, but the quality of the people filling vacancies has been first rate. We can cope with the present level of turnover. We still get applications all over the world.

(8.) What is the long-term outlook for UPI?

continue to have discussions with potential investors and joint venture partners, part of the effort to generate sustained growth. We have an excellent chance to be successful. We must continue to work as a team and to have the confidence that we are all doing the best we can to move UPI forward.

UPI 11-02-84 04:36 PCS