S-3/A 1 form-s3a.txt AMENDMENT NO. 3 As filed with the Securities and Exchange Commission on December 20, 2002 Registration No. 333-97475 ============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 PRE-EFFECTIVE AMENDMENT NO. 3 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 IKON OFFICE SOLUTIONS, INC. --------------------------------------- (Exact name of registrant as specified in its charter) Ohio 23-0334400 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) P.O. BOX 834 VALLEY FORGE, PENNSYLVANIA 19482 610.296.8000 (Name, address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------------- DON H. LIU, ESQ. IKON OFFICE SOLUTIONS, INC. SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY P.O. BOX 834 VALLEY FORGE, PENNSYLVANIA 19482 610.296.8000 (Name, address, including zip code, and telephone number, including area code, of agent for service) WITH COPIES OF NOTICES TO: ROBERT ROSENMAN, ESQ. CRAVATH, SWAINE & MOORE WORLDWIDE PLAZA 825 EIGHTH AVENUE NEW YORK, NEW YORK 10019 Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. |X| If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. |X| THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ============================================================================== --------------------------- IKON OFFICE SOLUTIONS, INC. COMMON STOCK 19,960,079 SHARES ISSUABLE UPON CONVERSION OF THE IOS CAPITAL, LLC 5% CONVERTIBLE SUBORDINATED NOTES DUE 2007 This prospectus relates to the resale by the selling holders named in this prospectus of up to 19,960,079 shares of common stock of IKON Office Solutions, Inc. (the "Company") issuable upon the conversion of the IOS Capital, LLC 5% Convertible Subordinated Notes due 2007 (the "Notes"). We will not receive any proceeds from the sale of these shares. You should read this prospectus together with the documents incorporated by reference in this prospectus. Our common stock is listed on the New York Stock Exchange under the trading symbol "IKN." On December 4, 2002 the last reported sale price of our common stock on the New York Stock Exchange was $7.82. Holders of the Notes may convert their notes into shares of our common stock at a conversion price of $15.03 per share (subject to adjustment in certain events) at any time following issuance of the Notes, unless we have previously redeemed or repurchased the Notes or unless the Notes have matured. The shares covered by this Prospectus may be offered for sale from time to time on the New York Stock Exchange or otherwise, at prices then obtainable. The selling stockholders listed in this Prospectus may sell any, all or none of the shares offered by this prospectus. See "Plan of Distribution" beginning on page 13 for a discussion of these and other distribution matters. INVESTING IN THESE SECURITIES INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF THE RISKS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES. ------------------------------------------------------------------------------ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------------------------------------------------------------ The date of this prospectus is December 20, 2002. TABLE OF CONTENTS PAGE ---- The Company..................................................................2 Risk Factors.................................................................2 Forward-Looking Statements...................................................5 Selling Stockholders.........................................................6 Description of Notes........................................................10 Plan of Distribution........................................................13 Legal Matters...............................................................16 Experts.....................................................................16 About This Prospectus.......................................................16 Available Information.......................................................16 Incorporation by Reference..................................................17 THE COMPANY IKON is one of the world's leading providers of products and services that help businesses communicate. IKON provides customers with total business solutions for every office, production and outsourcing need, including copiers and printers, color solutions, distributed printing, facilities management, imaging and legal document solutions, as well as network design and consulting and e-business development. IKON has locations worldwide, including locations in the United States, Canada, Mexico, the United Kingdom, France, Germany, Ireland and Denmark. IKON believes that its locations in the United States, Canada and Mexico comprise the largest independent distribution network of office equipment in North America. IKON distributes the products of numerous manufacturers, including Canon, Ricoh and Hewlett-Packard. Customers include large and small businesses, professional firms and government agencies. IKON's vision is to be a leader in providing innovative solutions and services that enable its customers to communicate business information more effectively. IKON seeks to grow its business by increasing its market share, expanding market opportunities and strengthening operating margins by improving productivity and lowering fixed costs. IKON's principal executive offices are located at P.O. Box 834, Valley Forge, Pennsylvania 19482, (610) 296-8000. RISK FACTORS An investment in the common stock of IKON involves a high degree of risk. Before you decide to purchase the common stock of IKON, you should carefully consider these risk factors together with all of the other information included in this prospectus. RISKS RELATED TO IKON'S BUSINESS IF IOS CAPITAL, LLC IS UNABLE TO ACCESS CAPITAL TO FINANCE LEASES AT COMPETITIVE RATES, IKON MAY LOSE CUSTOMERS TO COMPETITORS OFFERING MORE FAVORABLE LEASING TERMS. For the nine-month period ended June 30, 2002, 79% of new equipment sold by IKON was financed through IOS Capital, LLC ("IOSC"), IKON's captive leasing subsidiary, and total finance income constituted 7.7% of our total consolidated revenue. IOSC accesses capital using asset securitization transactions, public and private offerings of its debt securities, borrowings from commercial lenders and loans from IKON. IOSC relies primarily on asset securitization transactions to finance its lease receivables. We cannot assure you that we will continue to have access to our current funding sources, or that IKON will be able to provide IOSC with additional funding, on terms that allow us to provide leases on competitive terms. If IKON is unable to continue to have access to its funding sources on terms that allow it to provide leases on competitive terms, IKON's business will be adversely affected, as IKON's customers will seek to lease equipment from competitors of IKON offering more favorable leasing terms. 2 IKON'S PRINCIPAL VENDORS ARE ALSO ITS COMPETITORS IN THE SALE, LEASING AND SERVICING OF OFFICE EQUIPMENT AND OTHER PRODUCTS, AND THESE AND OUR OTHER COMPETITORS MAY BE POSITIONED TO OFFER MORE FAVORABLE PRODUCT AND SERVICE TERMS TO THE MARKETPLACE, RESULTING IN REDUCED PROFITABILITY AND LOSS OF MARKET SHARE FOR IKON. IKON operates in a highly competitive environment and is substantially smaller than its most significant competitors. A number of companies worldwide with significant financial resources compete with IKON to provide similar products and services, such as Canon, Ricoh, Danka and Xerox. Some of these companies are also suppliers to IKON of the products IKON sells and leases. Competition is based largely upon technology, performance, pricing, quality, reliability, distribution, customer service and support. Financial pressures faced by our competitors may cause them to engage in uneconomic pricing practices, which could cause the prices that IKON is able to charge in the future for its products and services to be less than it has historically charged. These risks could lead to a loss of market share for IKON, resulting in a negative impact on its results of operations. BECAUSE IKON DERIVES MOST OF ITS REVENUES BY DISTRIBUTING AND SERVICING PRODUCTS DESIGNED AND MANUFACTURED BY THIRD PARTIES, IKON MAY BE UNABLE TO ANTICIPATE CHANGES IN THE MARKETPLACE AND, AS A RESULT, COULD LOSE MARKET SHARE. Our business is driven primarily by customers' needs and demands and by the products developed and manufactured by third parties. Because IKON distributes products developed and manufactured by third parties, IKON's business would be adversely affected if its suppliers fail to anticipate which products or technologies will gain market acceptance or IKON cannot sell these products at competitive prices. IKON cannot be certain that its suppliers will permit IKON to distribute their newly developed products, or that such products will meet our customers' needs and demands. Additionally, because some of our principal competitors design and manufacture new technology, those competitors may have a competitive advantage over IKON. To successfully compete, IKON must maintain an efficient cost structure, an effective sales and marketing team and offer additional services that distinguish IKON from its competitors. Failure to execute these strategies successfully could result in reduced market share for IKON or could have an adverse impact on its results of operations. BECAUSE IKON HAS A LIMITED NUMBER OF PRODUCT VENDOR RELATIONSHIPS, IF IKON'S RELATIONSHIP WITH ANY OF ITS VENDORS OR THE FINANCIAL CONDITION OF THESE VENDORS DETERIORATES, IKON MAY LOSE CUSTOMERS AND ITS RESULTS OF OPERATION COULD SUFFER SIGNIFICANTLY. IKON's access to equipment depends upon its relationships with, and its ability to purchase equipment on competitive terms from, its principal vendors, Canon, Ricoh and Hewlett-Packard. IKON has not and does not currently enter into long-term supply contracts with these vendors, and it has no current plans to do so in the future. These vendors are not required to use IKON to distribute their equipment and are free to change the prices and other terms at which they sell to IKON. In addition, IKON competes with the direct selling efforts of these vendors. Any deterioration in relationships with, or in the financial condition of, these significant vendors could have an adverse impact on IKON's ability to originate new equipment leases as well as its ability to provide effective customer and technical support. If IKON lost one of these vendors, or 3 if one of the vendors ceased operations, IKON would be forced to expand its relationship with the other vendor, seek out new relationships with other vendors or risk a loss in market share due to diminished product offerings and availability. FAILURE TO IMPLEMENT IKON'S PRODUCTIVITY INITIATIVES COULD RESULT IN A LOSS OF PROFITS AND AN ADVERSE EFFECT ON IKON'S RESULTS OF OPERATIONS. IKON's ability to improve its profit margins is largely dependent on the success of its productivity initiatives to streamline its infrastructure. Such initiatives are aimed at making IKON more profitable and competitive in the long-term and include initiatives such as centralized credit and purchasing, shared services and the implementation of the Oracle e- business suite, a comprehensive, multi-year initiative designed to web-enable IKON's information technology infrastructure. IKON's ability to improve its profit margins through the implementation of these productivity initiatives is dependent upon factors outside the control of IKON. We cannot assure you that we will be successful in implementing our productivity initiatives or that our initiatives will result in improved margins, nor can we predict or estimate the extent to which a failure to implement these initiatives would adversely affect our results of operations. IKON OPERATES IN SEVERAL COUNTRIES OUTSIDE OF THE UNITED STATES, AND VARIOUS FACTORS RELATING TO THESE INTERNATIONAL OPERATIONS COULD MATERIALLY AFFECT IKON'S RESULTS OF OPERATIONS. IKON operates in 7 countries outside of the United States. Approximately 13% of our revenues are derived from our international operations, and approximately 75% of those revenues are derived from Canada and the United Kingdom. Political or economic instability in Canada or the United Kingdom could have a material adverse impact on our results of operations due to diminished revenues in these countries. IKON's future revenues, costs of operations and profit results could be affected by a number of factors related to its international operations, including changes in foreign currency exchange rates, changes in economic conditions from country to country, changes in a country's political condition, trade protection measures, licensing and other legal requirements and local tax issues. Unanticipated currency fluctuations in the Canadian Dollar, British Pound or Euro vis-a-vis the U.S. Dollar could lead to lower reported consolidated revenues due to the translation of these currencies when we consolidate our revenues. RISKS RELATED TO IKON COMMON STOCK THE PRICE OF IKON COMMON STOCK HAS FLUCTUATED WIDELY DURING THE PAST SEVERAL YEARS AND MAY FLUCTUATE WIDELY IN THE FUTURE, WHICH MAY MAKE IT DIFFICULT FOR YOU TO RESELL THE IKON COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES WHEN YOU WANT AND AT PRICES YOU FIND ATTRACTIVE. IKON common stock is traded on the New York Stock Exchange and has experienced and may continue to experience significant price and volume fluctuations that could adversely affect the market price of IKON common stock without regard to IKON's operating performance. In addition, we believe that factors such as quarterly fluctuations in financial results, earnings below analysts' estimates and financial performance and other activities of other publicly traded companies in the 4 office equipment and equipment leasing industries could cause the price of IKON common stock to fluctuate substantially. Any similar fluctuations in the future could adversely affect the market price of IKON common stock. FORWARD LOOKING STATEMENTS IKON has provided information in this prospectus, including certain statements incorporated by reference herein, which constitute "forward-looking statements." These forward-looking statements include, but are not limited to: o statements regarding the following: growth opportunities and increasing market share, productivity and infrastructure initiatives; o earnings, revenue, cash flow, margin and cost-savings projects; o the effect of competitive pressures on equipment sales; o developing and expanding strategic alliances and partnerships; o anticipated growth rates in the digital and color equipment and outsourcing industries; o the effect of foreign currency exchange risk; o the reorganization of IKON's business segments and the anticipated benefits of operational synergies related thereto; and o IKON's ability to finance current operations and growth initiatives. Although IKON believes the expectations contained in such forward-looking statements are reasonable, you cannot be assured that such expectations will prove correct. The words "anticipate," "believe," "estimate," "expect," "intend," "will" and similar expressions, as they relate to IKON, are intended to identify forward-looking statements. Such statements reflect IKON's current views with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those described herein as anticipated, believed, estimated, expected or intended. You should read carefully the section of this prospectus under the heading "Risk Factors" beginning on page 2. For these statements, IKON claims protection under the safe harbor for forward-looking statements contained in Section 27A of the Securities Act. 5 SELLING STOCKHOLDERS The number of shares of common stock provided in the table below is based on information provided to us by each of the selling stockholders as of December 19, 2002, and the percentages are based on the total number of shares of IKON common stock outstanding and the shares issuable upon conversion of the Notes. The number of shares of common stock that may be sold is calculated based on the current conversion price of $15.03 per share and is subject to adjustment as described under "Description of Notes--Conversion Rights." Each of the selling stockholders listed herein may offer shares using this prospectus. This information may have changed as of the date hereof or may change from time to time in the future. The selling stockholders listed in the table may have sold or transferred, in transactions exempt from the registration requirements of the Securities Act, some or all of their notes since the date on which the information in the table is presented. Accordingly, this information about the selling stockholders may be revised or updated over time. Based upon information provided to us by the selling stockholders, no selling stockholder currently owns shares of our common stock. Any such change in this information will be set forth in prospectus supplements, if required. Because the selling stockholders may, pursuant to this prospectus, offer all or some portion of the common stock issuable upon conversion of the Notes, no estimate can be given as to the amount of the common stock issuable upon conversion of the Notes that will be held by the selling stockholders upon termination of any such sales. In addition, the selling stockholders identified may have sold, transferred or otherwise disposed of all or a portion of their notes, since the date on which they provided the information regarding their notes, in transactions exempt from the registration requirements of the Securities Act. See "Plan of Distribution." Only selling stockholders identified as beneficially owning the Notes set forth opposite each such selling stockholder's name in the table on the effective date of the registration statement, of which this prospectus forms a part, may sell such securities pursuant to the registration statement. Prior to any use of this prospectus in connection with an offering of the common stock issuable upon conversion of Notes by any holder not identified below, the registration statement of which this prospectus forms a part will be amended by a post-effective amendment to set forth the name and number of shares of common stock to be offered. The prospectus, which will be a part of such a post-effective amendment, will also disclose whether any selling stockholder selling in connection with such prospectus has held any position or office with, has been employed by or otherwise has had a material relationship with IKON or any of their predecessors or affiliates during the three years prior to the date of the prospectus if such information has not been disclosed herein. None of the selling stockholders or any of its affiliates, officers, directors or principal equity holders has held any position or office or has had any material relationship with us or our affiliates within the past three years. To the extent that any of the listed selling security holders are broker-dealers, they are deemed by the Securities and Exchange Commission to be, "underwriters" within the meaning of the Securities Act. With respect to selling securityholders that are affiliates of broker-dealers, 6 IKON believes that such entities acquired their notes in the ordinary course of business and at the time of the purchase of Notes such selling securityholders had no agreements or understandings, directly or indirectly, with any person to distribute those securities. To the extent that IKON determines that such entities did not acquire Notes in the ordinary course of business or did have such an agreement or understanding, IKON will file a post-effective amendment to the registration statement of which this prospectus is a part to designate such affiliate as an "underwriter" within the meaning of the Securities Act. IKON has also been advised that only one affiliate of an Initial Purchaser purchased securities in the original offering of Notes. DeAm Convertible Arbitrage Fund, an affiliate of Deutsche Bank Securities Inc., purchased Notes in the ordinary course of business for investment purposes in the 144A offering. DeAm Convertible Arbitrage Fund received no compensation for investment banking services, or for other services, and IKON believes that DeAm Convertible Arbitrage Fund had no plans to dispose of its securities when it acquired them. 7
Selling Stockholder Number of shares of Percentage of ------------------- common stock that may be shares of common sold by this Prospectus(1) stock outstanding(2) ------------------------- ------------------- Alta Partners Holdings, LDC**........................... 1,297,405 * Wachovia Securities, Inc.** ............................ 1,212,841 * Wachovia Securities International Ltd.** ............... 1,064,480 * Fidelity Dividend Growth Fund**......................... 759,148 * Teachers Insurance and Annuity Association*** .......... 713,972 * Fidelity Convertible Securities Fund**.................. 538,922 * Double Black Diamond Offshore LDC**..................... 321,556 * Fidelity Charles Street Trust: Fidelity Asset Manager**. 280,771 * Forest Global Convertible Fund Series A-5** ............ 271,309 * DeAm Convertible Arbitrage Fund (3)**................... 252,827 * BTPO Growth vs. Value**................................. 266,134 * Clinton Multistrategy Master Fund, Ltd.** .............. 236,447 * Arkansas Teachers Retirement System*** ................. 201,585 * WPG Convertible Arbitrage Overseas Master Fund LP**..... 199,590 * Relative Value International Holdings, LLC (4).......... 166,325 * Fidelity Advisor Dividend Growth Fund**................. 157,019 * Black Diamond Convertible Offshore LDC**................ 128,742 * Sunrise Partners Limited Partnership**.................. 133,067 * Fidelity Charles Street Trust: Fidelity Asset Manager: Growth**............................................. 131,736 * San Diego County Convertible*** ........................ 93,142 * Nicholas Applegate Convertible Fund** .................. 86,156 * Ellsworth Convertible Growth and Income Fund, Inc.** ... 83,167 * Bancroft Convertible Fund, Inc.** ...................... 83,167 * UBS Global Equity Convertible Arbitrage Master Ltd.**... 83,167 * Variable Insurance Products Fund II: Asset Manager Portfolio**.......................................... 78,509 * Lyxor Master Fund** .................................... 72,983 * Forest Fulcrum Fund LLP** .............................. 67,128 * Black Diamond Offshore Ltd.**........................... 64,670 * San Diego County Retirement***.......................... 61,872 * Lancer Securities Cayman Ltd.** ........................ 49,897 * 8
Selling Stockholder Number of shares of Percentage of ------------------- common stock that may be shares of common sold by this Prospectus(1) stock outstanding(2) ------------------------- ------------------- Clinton Convertible Managed Trading Account I Limited**............................................ 45,573 * Zurich Master Hedge Fund** ............................. 34,063 * WPG MSA Convertible Arbitrage Fund**.................... 33,266 * Motion Pictures Industry*** ............................ 31,269 * Baptist Health of South Florida*** ..................... 30,936 * Innovest Finanzdienstleistungs AG**..................... 29,938 * Wake Forest University***............................... 29,938 * Screen Actors Guild Pension Convertible***.............. 28,607 * Lumberman's Mutual Casualty**........................... 28,275 * Wake Forest University Convertible Arbitrage***......... 24,948 * Sylvan (I.M.A.) Ltd.** ................................. 23,418 * Palladin Securities LLP** ............................. 19,959 * B.G.I. Global Investors** .............................. 19,160 * LLT Limited** .......................................... 19,160 * Engineers Joint Pension Fund***......................... 18,961 * Worldwide Transactions Ltd.**........................... 17,298 * Writers Guild Industry Health Fund***................... 16,965 * O'Connor Global Convertible Portfolio**................. 16,633 * Variable Insurance Products Fund II: Asset Manager Growth 11,643 * Portfolio**.......................................... RBC Capital Services Inc.** ............................ 10,644 * Physicians Life*** ..................................... 10,312 * Relay 11 Holdings** .................................... 9,580 * Forest Alternative Strategies II** ..................... 4,790 * Nicholas Applegate Global Holdings LP** ................ 2,328 * All other beneficial owners(5),(6)...................... 10,284,679 _ Total 19,960,079(7) 12.16%(8) ========== ====== ------------------------------------------- * Less than one percent ** IKON has been informed that this entity is subject to the reporting obligations of the Exchange Act, or a majority-owned or controlled subsidiary of a reporting company under the Exchange Act, or a registered investment entity under the 1940 Act. *** Investment decisions and authority with respect to securities held by this beneficial owner are delegated among a large group of individuals, and no single natural person or small group of natural persons can be designated as having control over these securities.
9 1 Assumes conversion of all of the Notes at a conversion rate of 66.53 shares of common stock per $1,000 principal amount at maturity of the Notes. This conversion rate is subject to adjustment, however, in certain circumstances. As a result, the number of shares of common stock issuable upon conversion of the Notes may increase of decrease in the future. 2 Calculated based on Rule 13d-3(d)(1)(i) of the Exchange Act, using 144,209,250 shares of common stock outstanding as of December 4, 2002. In calculating this amount for each holder, we treated as outstanding the number of shares of common stock issuable upon conversion of all that holder's notes, but we did not assume conversion of any other holder's notes. 3 DeAm Convertible Arbitrage Fund is an affiliate of Deutsche Bank Securities, Inc. 4 Relative Value International Holdings, LLC is a hedge fund managed by Raymond Guan. Mr. Guan may be deemed to have voting and investment power with respect to the fund, but disclaims beneficial ownership of the listed securities. 5 No such beneficial owner may offer or sell common stock issuable upon conversion of the Notes until such beneficial owner is included as a selling stockholder in a post-effective amendment to the registration statement, of which this prospectus is a part. 6 Assumes that any other holders of the Notes or any future pledgees, donees, assignees, transferees or successors of or from such other holders of the Notes do not beneficially own any shares of common stock other than the common stock issuable upon conversion of the Notes at the initial conversion rate described in footnote 1 above. 7 Represents the number of shares of common stock into which $300,000,000 of notes would be convertible at the initial conversion rate described in footnote 1 above. 8 Represents the number of shares of common stock issuable upon conversion at the initial conversion rate, divided by the sum of 144,209,250 shares of common stock outstanding as of December 4, 2002 and the number of shares of common stock into which $300,000,000 of notes would be convertible at the initial conversion rate described in footnote 1 above. DESCRIPTION OF NOTES The Notes are unsecured unsubordinated obligations of IOSC and are limited to $300,000,000 aggregate principal amount at maturity and will mature on May 1, 2007. Payment in full of the principal amount of the Notes is due on May 1, 2007. The Notes bear interest at the rate of 5% per annum from November 1, 2002, payable semiannually on May 1 and November 1 of each year. The Notes are convertible into shares of IKON common stock, initially at the conversion price stated on the cover page of this prospectus, subject to adjustment upon the occurrence of certain events described under "--Conversion Rights," at any time prior to the close of business on the maturity date, unless previously redeemed or repurchased. CONVERSION RIGHTS A holder may, at any time before the Notes mature, unless earlier redeemed or repurchased, convert a Note or any portion of a Note, if the portions are $1,000 or whole multiples of $1,000, into shares of IKON common stock initially at the conversion price stated on the cover page of this prospectus. The right to convert a Note called for redemption will terminate at the close of business on the redemption date for the Note, unless we default in making the payment due on the redemption date. If a holder of a Note has delivered notice of its election to have the Note repurchased as a result of a Change in Control of IKON, the Note may be converted only if the notice of election is withdrawn. Any Note surrendered for conversion during the period from the close of business on a record date to the open of business on the next interest payment date, must be accompanied by funds equal to the interest payable on that interest payment date on the principal amount, unless that Note has been called for redemption on a redemption date or repurchase on a repurchase date 10 that occurs during such period (in which case we will not be required to pay interest on such interest payment date with respect to such Note). Provided, however, that no such payment need be made to the extent interest will be deemed to be canceled, extinguished and forfeited upon conversion. IKON will not issue fractional shares of common stock upon conversion of the Notes. Instead, IKON will pay a cash adjustment (calculated to the nearest 1/100 of a share) equal to the closing price of the common stock on the conversion date, or, alternatively, at IKON's option, IKON shall round up the conversion transaction to the next higher whole share. We will not adjust the conversion rate to account for accrued interest. IKON will adjust the conversion price if any of the following events occur: (1) IKON issues common stock as a dividend or distribution on its common stock; (2) IKON issues to all holders of its common stock rights or warrants to purchase its common stock at a price per share less than the then current market price per share; (3) IKON subdivides or combines its outstanding common stock; (4) IKON distributes to all holders of its common stock, capital stock, evidences of indebtedness or assets, including securities but excluding: o right or warrants listed in (2) above; o dividends or distributions listed in (1) above; and o cash distributions; (5) IKON distributes to all holders of its common stock, cash, excluding any dividend or distribution in connection with the liquidation, dissolution or winding up of IKON and excluding any quarterly cash dividend on its common stock to the extent that the aggregate cash dividend per share of common stock in any quarter does not exceed the greater of: o the amount per share of common stock of the next preceding quarterly cash dividend on the common stock to the extent that the preceding quarterly dividend did not require an adjustment of the conversion price pursuant to this clause (5), as adjusted to reflect subdivisions or combinations of the common stock; or o 3.75% of the average of the last reported sale price of the common stock during the ten trading days immediately prior to the declaration date of the dividend. If an adjustment is required to be made under this clause (5) as a result of a distribution that is a quarterly dividend, the adjustment would be based upon the amount by which the distribution exceeds the amount of the quarterly cash dividend permitted to be excluded pursuant to this clause (5). If an adjustment is required to be made under this clause (5) as a result of a distribution that is not a quarterly dividend, the adjustment would be based upon the full amount of the distribution; 11 (6) IKON or one of its subsidiaries makes a payment in respect of a tender offer or exchange offer for IKON common stock to the extent that the cash and value of any other consideration included in the payment per share of common stock exceeds the current market price per share of common stock on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer; or (7) someone other than IKON or one of its subsidiaries makes a payment in respect of a tender offer or exchange offer in which, as of the closing date of the offer, IKON's board of directors is not recommending rejection of the offer. The adjustment referred to in this clause (7) will only be made if: o the tender offer or exchange offer is for an amount that increases the offeror's ownership of common stock to more than 25% of the total shares of IKON common stock outstanding; and o the cash and value of any other consideration included in the payment per share of common stock exceeds the current market price per share of common stock on the business day next succeeding the last date on which tenders or exchanges may be made pursuant to the tender or exchange offer. 12 PLAN OF DISTRIBUTION The selling stockholders, or their pledgees, donees, transferees, or any of their successors in interest selling shares received from a named selling stockholder as a gift, partnership distribution or other non-sale-related transfer after the date of this prospectus (all of whom may be selling stockholders), may sell the shares of common stock from time to time after the date of this prospectus on any stock exchange or automated interdealer quotation system on which the common stock is listed, in the over-the-counter market, in privately negotiated transactions or otherwise, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at prices otherwise negotiated. The selling stockholders may sell the shares of common stock by one or more of the following methods, without limitation: (a) ordinary brokerage transactions (including block trades) and transactions in which the broker solicits purchases; (b) private sales or private transactions; (c) one or more underwritten offerings on a firm commitment or best efforts basis; and (d) a combination of any of these methods of sale or any other legally available means, whether or not described in this prospectus. At the time a particular offering of shares is made hereunder, to the extent required by Rule 424 under the Securities Act of 1933, we will file a prospectus supplement setting forth: (a) the number of shares involved; (b) the names of any underwriters, dealers or agents; (c) the price at which the shares are being offered or purchased; (d) any commissions or discounts or concessions allowed to broker-dealers; (e) any discounts, commissions or other items constituting compensation from the selling shareholder; and (f) any other facts material to the transaction. In connection with sales of the shares of common stock the selling stockholders may enter into hedging transactions with broker-dealers only to the extent permitted by the Securities Act and any applicable securities laws of any state of the United States. These broker-dealers may in turn engage in short sales of the shares of common stock and deliver shares of common stock to close out such short positions, or loan or pledge shares of common stock to broker-dealers that may in turn sell such securities. The selling stockholders may pledge or grant a security interest in some or all of the shares of common stock that it owns and, if it defaults in the performance of 13 its secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time pursuant to this prospectus. The selling stockholders may also transfer and donate shares of common stock in other circumstances, in which case the transferees, donees, pledgees or other successors in interest will be selling stockholders for the purposes of this prospectus. To our knowledge, there are currently no plans, arrangements or understanding between any selling stockholders and any underwriters, broker-dealer or agent regarding the sale of the shares of common stock by the selling stockholders. The shares of IKON common stock registered hereby are issuable upon the conversion of 5% Convertible Subordinated Notes due 2007 of IOS Capital, LLC, our wholly owned lease finance subsidiary. The Notes are convertible into shares of common stock at a conversion price of $15.03 per share (subject to adjustment in certain circumstances) at any time before the Notes mature, unless earlier redeemed or repurchased. The Notes were issued and sold on May 9, 2002 in transactions exempt from the registration requirements of the Securities Act pursuant to Rule 144A under the Securities Act or in offshore transactions pursuant to Regulation S under the Securities Act. We agreed to register the shares under the Securities Act and to keep the registration statement of which this prospectus is a part effective until the earlier of the date on which the selling stockholders have sold all of the shares, the shares covered hereby are no longer outstanding or the holders are entitled to sell their shares under Rule 144 under the Securities Act. Pursuant to the registration rights agreement, we have agreed to indemnify in certain circumstances the selling stockholders and any brokers, dealers and agents who may be deemed to be underwriters, if any, of the shares covered by the registration statement, against certain liabilities, including liabilities under the Securities Act. The selling stockholders have agreed to indemnify us in certain circumstances against certain liabilities, including liabilities under the Securities Act. We have also agreed to pay certain expenses in connection with this offering, including, in certain circumstances, the fees and expenses of counsel to the selling stockholders, but not including underwriting discounts, concessions, commissions or fees of the selling stockholders. The selling stockholders and any other person participating in such distribution will be subject to the Exchange Act rules, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholders and any such other person. In addition, Regulation M of the Exchange Act may restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock being distributed for a period of up to five business days prior to the commencement of distribution. This may affect the marketability of the shares of common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of common stock. IKON will not receive any proceeds from sales of any shares by the selling stockholders. Because IKON can not assure you that the selling stockholders will sell all or any portion of the shares offered hereby, we cannot estimate how many shares of common stock that the selling 14 stockholders will hold upon consummation of any sale. We may suspend the use of this prospectus by the selling stockholder under certain circumstances. Any common stock sold by a selling stockholder pursuant to a prospectus supplement will be listed on the New York Stock Exchange, subject to official notice of issuance. 15 LEGAL MATTERS The validity of the issuance of Shares offered hereby has been passed upon for IKON by Don H. Liu, Senior Vice President, General Counsel and Secretary to IKON. EXPERTS The consolidated financial statements for the year ended September 30, 2001 incorporated in this Prospectus by reference to IKON's Current Report on Form 8-K, dated July 31, 2002, have been incorporated in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The consolidated financial statements incorporated in this Prospectus by reference to IKON's Annual Report on Form 10-K, as amended by Form 10-K/A for the year ended September 30, 1999, have been incorporated in reliance on the report of Ernst & Young LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. ABOUT THIS PROSPECTUS This prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, which we refer to in this prospectus as the "SEC," utilizing a "shelf" registration process or continuous offering process. Under this shelf registration process, the selling stockholders may, from time to time, sell the securities described in this prospectus in one or more offerings. Each time a selling stockholder sells securities, the selling stockholder is required to provide you with a prospectus containing specific information about the selling stockholder and the terms of the securities. As used in this prospectus, unless the context otherwise requires, "IKON", "us" or "we" refers to IKON Office Solutions, Inc. and its subsidiaries. AVAILABLE INFORMATION IKON files annual, quarterly and current reports and other information with the SEC. You may read and copy any materials that IKON files with the SEC at the SEC's public reference room at Room 1024, 450 fifth Street, N.W., Washington, D.C. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1- 800-SEC-0330 for more information about the operation of the public reference rooms. SEC filings by IKON are also available at the SEC's Internet website at "http://www.sec.gov." In addition, you can read and copy the SEC filings of IKON at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. The prospectus is part of a registration statement on Form S-3 under the Securities Act covering shares of our common stock issuable upon conversion of the Notes, offered by this prospectus. This prospectus does not contain all of the information in the registration statement. Certain information in the registration statement has been omitted from the prospectus in accordance with the rules of the SEC. Any statements made in this prospectus concerning the 16 provisions of legal documents are not necessarily complete and you should read the documents which are filed as exhibits to the registration statement or otherwise filed with the SEC. INCORPORATION BY REFERENCE IKON discloses important information to you by referring you to documents that IKON has previously filed with the SEC or documents that IKON may file with the SEC in the future. o IKON's Annual Report on Form 10-K, as amended by Form 10-K 405/A, for the fiscal year ended September 30, 2001; o IKON's Quarterly Report on Form 10-Q for the quarter ended December 31, 2001, the quarter ended March 31, 2002 and the quarter ended June 30, 2002; and o IKON's current reports on Form 8-K, as filed with the SEC on October 5, 2001, October 31, 2001, December 17, 2001, January 30, 2002, March 15, 2002, April 29, 2002, May 7, 2002, May 29, 2002, July 31, 2002, August 1, 2002, August 13, 2002, August 30, 2002, September 30, 2002, November 5, 2002, November 7, 2002 and November 8, 2002. All documents filed by IKON pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Securities shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. This Prospectus does not contain all information set forth in the Registration Statement and Exhibits thereto and other documents which IKON has filed with the Commission and to which reference is made hereby. IKON will provide without charge to each person, including any beneficial owner, to whom a copy of this Prospectus is delivered, on the written or oral request of any such person, a copy of any or all of the documents referred to above which have been incorporated in this Prospectus by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference in such documents). You may request a copy of these filings, at no cost, either orally or by writing to IKON at the following address: IKON Office Solutions, Inc. Investor Relations Department 70 Valley Stream Parkway Malvern, Pennsylvania 19355 (telephone number: (610) 296-8000) 17 PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION* S.E.C. registration fee .......................... $14,305.00 Legal fees and expenses of IKON................... 65,000.00 Accounting fees .................................. 40,000.00 Miscellaneous .................................... 45,000.00 ---------- Total .......................................... $164,305.00 ========== * All of the amounts, except for the S.E.C. registration fee, have been estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS The Ohio General Corporation Law provides that a corporation shall indemnify persons who incur certain liabilities or expenses in the successful defense of a suit or a proceeding brought by reason of the fact that such persons are or were directors or officers of the corporation. Pursuant to Ohio law, IKON has adopted, as part of its Code of Regulations, provisions whereby IKON shall indemnify such persons against expenses (including attorneys' fees) reasonably incurred in connection with the successful defense of such actions. If unsuccessful in defense of a third-party civil suit or a criminal suit, or if such a suit is settled, such a person shall be indemnified under the Code of Regulations against both (1) expenses (including attorneys' fees) and (2) judgments, fines and amounts paid in settlement if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of IKON, and with respect to any criminal action, had no reasonable cause to believe his conduct was unlawful. If unsuccessful in defense of a suit brought by or in the right of IKON, or if such suit is settled, such a person shall be indemnified under such law only against expenses (including attorneys' fees) incurred in the defense or settlement of such suit if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of IKON except that if such a person is adjudged to be liable in such a suit for negligence or misconduct in the performance of his duty to IKON, he cannot be indemnified unless specific court approval is obtained. IKON has purchased liability insurance policies covering its directors and officers to provide protection where IKON cannot legally indemnify a director or officer and where a claim arises under the Employee Retirement Income Security Act of 1974 against a director or officer based upon an alleged breach of fiduciary duty or other wrongful act. 18 ITEM 16. EXHIBITS EXHIBIT NUMBER DESCRIPTION OF EXHIBITS ------ ----------------------- (4.1) -- Form of Certificate for Shares of Common Stock of IKON Office Solutions, Inc., filed as exhibit 4.2 to IKON's Registration Statement No. 333-47803 incorporated herein by reference* (5) -- Opinion of Don H. Liu, General Counsel to the registrant, as to the validity of the Securities* (23.1) -- Consent of PricewaterhouseCoopers LLP (23.2) -- Consent of Ernst & Young LLP* (23.3) -- Consent of Don H. Liu, General Counsel to the registrant (contained in the opinion filed as Exhibit (5) to this Registration Statement)* (24) -- Power of Attorney (Signature pages of this Registration Statement)* --------------------------------------- * Previously filed in connection with this Registration Statement. ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are bring made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post- effective amendments thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new 19 registration statement relating to the securities offered therein, and the offering of those securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. 20 SIGNATURES Pursuant to the requirements of the securities act of 1933, IKON Office Solutions, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Malvern, Commonwealth of Pennsylvania, on the 19th day of December, 2002. IKON Office Solutions, Inc. By: /s/ William S. Urkiel -------------------------------- (William S. Urkiel) Senior Vice President and Chief Financial Officer 21