-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pn+5vMcMJ3AVHI23jZRPDEUGbVFQZXSCEKIGC+Z6XyFkzGdQ78R+FL7RqEUVh2Qx OGG4wBGiGIy+3zTXxZPnEg== 0000950159-02-000661.txt : 20021108 0000950159-02-000661.hdr.sgml : 20021108 20021107173918 ACCESSION NUMBER: 0000950159-02-000661 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021024 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IKON OFFICE SOLUTIONS INC CENTRAL INDEX KEY: 0000003370 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 230334400 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05964 FILM NUMBER: 02813124 BUSINESS ADDRESS: STREET 1: PO BOX 834 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6102968000 MAIL ADDRESS: STREET 1: PO BOX 834 CITY: VALLEY FORGE STATE: PA ZIP: 19482 FORMER COMPANY: FORMER CONFORMED NAME: ALCO CHEMICAL CORP DATE OF NAME CHANGE: 19680218 FORMER COMPANY: FORMER CONFORMED NAME: ALCO STANDARD CORP DATE OF NAME CHANGE: 19920703 8-K 1 ikon8k11-7.txt 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) October 24, 2002 IKON Office Solutions, Inc. (Exact name of registrant as specified in its charter) ----------------------------------------- OHIO File No. 1-5964 23-0334400 --------------- ---------------- ------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification incorporation) Number) P.O. Box 834, Valley Forge, Pennsylvania 19482 ---------------------------------------- ----- Registrant's telephone number, including area code: (610) 296-8000 -------------- Not Applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events. ------------- On October 24, 2002, IKON Office Solutions, Inc. (the "Company" or "IKON") announced results for the fourth quarter of fiscal year 2002. The Company's press release dated October 24, 2002 containing further details is attached. This news release includes information which may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements relating to the Company's outlook for fiscal year 2003, the benefits of our long-term investments, and the execution and impact of the Company's strategies. Although IKON believes the expectations contained in such forward-looking statements are reasonable, it can give no assurances that such expectations will prove correct. Such forward-looking statements are based upon management's current plans or expectations and are subject to a number of risks and uncertainties, including, but not limited to: risks and uncertainties relating to conducting operations in a competitive environment and a changing industry; delays, difficulties, management transitions and employment issues associated with consolidation of, and/or changes in business operations; managing the integration of existing and acquired companies; risks and uncertainties associated with existing or future vendor relationships; and general economic conditions. Certain additional risks and uncertainties are set forth in IKON's 2001 Annual Report on Form 10-K/A filed with the Securities and Exchange Commission. As a consequence of these and other risks and uncertainties, IKON's current plans, anticipated actions and future financial condition and results may differ materially from those expressed in any forward-looking statements. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------- c. The following exhibits are furnished in accordance with the provisions of Item 601 of Regulation S-K: (99) Press Release dated October 24, 2002. 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 thereunto duly authorized. IKON OFFICE SOLUTIONS, INC. By: /s/ WILLIAM S. URKIEL ------------------------------ William S. Urkiel Senior Vice President and Chief Financial Officer Dated: November 7, 2002 EX-99 3 ex99.txt Exhibit 99 IKON OFFICE SOLUTIONS ANNOUNCES FISCAL YEAR AND FOURTH QUARTER RESULTS Finishes Strong Quarter and Year of Operational Improvements and Earnings Growth Free Cash Flow Exceeds Target for the Year Valley Forge, Pennsylvania - October 24, 2002 - IKON Office Solutions (NYSE:IKN), a leading provider of business communications solutions, today reported results for its fiscal year and fourth quarter ended September 30, 2002. Fiscal 2002 Results For Fiscal 2002, net income was $150.3 million or $.99 per diluted share, which includes a $.04 benefit related to the reversal of Fiscal 2001 restructuring charges. Excluding the benefit of the restructuring reversal, net income for Fiscal 2002 was $143.5 million or $.95 per diluted share, a 17% increase over $.81 per diluted share for the prior year. For comparative purposes, $.81 for Fiscal 2001 excludes a loss of $.43 for special charges, excludes a $.01 gain from discontinued operations, and includes a $.28 impact related to not amortizing goodwill in accordance with SFAS 142. For Fiscal 2001, the Company reported earnings of $.11 per diluted share. Revenues for Fiscal 2002 totaled $4.83 billion, a decline of $446 million or 8.5% from the prior year. The Company has been aggressively divesting or downsizing several business lines over the course of the year to improve its long-term business mix and operational performance. The decline in these revenues accounted for $265 million or 60% of the revenue decline, with all other revenues combined down 3.6% from Fiscal 2001. Delays in customer spending decisions and a generally soft economic environment continued to pressure revenues; however, the Company continued to see growth in facilities management, its largest outsourcing offering, as well as continued strong growth in sales of high-end, segment 5 & 6 copier/printer equipment - two of the Company's key growth priorities for Fiscal 2002. Free cash flow for Fiscal 2002, defined as cash from operations less net capital expenditures, was $339 million, surpassing the Company's expectations and prior year results. Commenting on the Company's Fiscal 2002 performance, IKON's newly appointed President and CEO, Matthew J. Espe, said, "Despite the tough economic climate, the IKON team delivered significant improvements in earnings through a consistent, well-defined and realistic approach to strengthening the fundamentals of our business on all fronts. We have enhanced our business mix and built qualitative improvements into our infrastructure through centralization and longerterm investments. Despite lower revenues, we continued to leverage our strong sales, distribution, and service capabilities to expand the customer base and grow share in important market segments, while capturing significant operational benefits that impact favorably on operating margins and earnings per share. In addition, we have taken important steps to strengthen the Company's finances so that our debt-to-capital ratio at year's end, excluding finance subsidiaries, is 28.5%." Mr. Espe concluded, "By improving our business mix, we now have a stronger focus in terms of our market opportunities and an improved infrastructure to support those opportunities. In addition, our team has done an enormous amount of work implementing an important ongoing initiative - our e-IKON investment backed by the Oracle e-Business Suite, that we believe will give IKON a clear competitive edge in the future. As the economic climate improves, we believe we are well positioned to create long-term value." Fourth Quarter Results Net income for the fourth quarter ended September 30, 2002 was $39.3 million or $.25 per diluted share, including a $.04 benefit related to the $10.5 million reversal of Fiscal 2001 restructuring charges. Excluding the benefit of the restructuring charge reversal, diluted earnings per share for the fourth quarter were $.21 - in line with the Company's expectations for the quarter. The $.21 in diluted earnings per share for the quarter reflects a 10.5% increase from $.19 per diluted share in the fourth quarter of Fiscal 2001. For comparative purposes, $.19 for the fourth quarter of Fiscal 2001 excludes a loss of $.44 for special charges, and includes a $.07 impact related to not amortizing goodwill in accordance with SFAS 142. For the fourth quarter of Fiscal 2001, the Company reported a loss of $.32 per diluted share. Revenues for the fourth quarter of Fiscal 2002 were $1.18 billion, compared to $1.28 billion for the same period in the prior year. The impact of certain downsizing and divestiture actions the Company employed during the year accounted for approximately 62% of the decline. Excluding these actions, revenues declined by approximately 3.3% in the fourth quarter compared to the same period a year ago. Net Sales, which includes the sale of copier/printer equipment, supplies, and technology hardware, declined 9.5% from the fourth quarter of Fiscal 2001. A weak economy was a contributing factor to declines in all categories; however, over 40% of the decline resulted from the decrease in sales of technology hardware, as the Company continues to de-emphasize certain lower-margin revenue streams. Offsetting an overall decline in copier/printer equipment sales was strong performance in the sale of color and high-end, segment 5 & 6 equipment. Gross profit margin on Net Sales declined to 34.5% in the fourth quarter of Fiscal 2002, due primarily to lower supply revenues and margins. Services, which include revenues from the servicing of copier/printer equipment, and outsourcing and other services, declined 8.5% from the fourth quarter of Fiscal 2001, primarily due to the downsizing or sale of non-strategic outsourcing and other service businesses. Excluding these factors, Services declined approximately 1% from the fourth quarter of Fiscal 2001. Gross profit margin on Services improved to 40.2%, largely due to improved productivity in the servicing of copier/printer equipment. Finance Income grew 2.8% from the fourth quarter of Fiscal 2001 due to continued growth in the lease portfolio and the increased percentage of equipment sales leased through IOS Capital, IKON's captive leasing subsidiary in North America. Approximately 79% of IKON's customers in North America now lease through IOS Capital, compared to 75% a year ago. Gross profit from finance subsidiaries increased to 57.4%, from 51.4% in the fourth quarter of Fiscal 2001, largely due to lower average borrowing costs. Selling and Administrative Costs declined $54.4 million compared to the fourth quarter of Fiscal 2001 excluding special charges, due to restructuring benefits, productivity improvements, infrastructure investments, and cost control disciplines. Fourth quarter execution delivered total reductions of over $214 million in Selling and Administrative costs for Fiscal 2002, exceeding the Company's goal of removing $190 million in costs for the year compared to Fiscal 2001 levels. Fiscal 2003 Outlook "We have already made many positive changes in our business structure and market positioning," said Mr. Espe. "As we go forward, we need to leverage these accomplishments, and work aggressively to build market share and expand our market reach, focusing on services and solutions that customers require to remain productive in the workplace. We also must stay focused on our long-term operational investments, particularly as we prepare for the e-IKON implementation throughout North America. "Looking ahead, we are mindful of the challenges posed by changing economic and industry conditions, as well as evolving customer needs. We believe keeping a conservative view of top line performance is prudent in this environment, to ensure we continue to improve our operational performance as we drive toward our goal of 8% to 10% operating margins longterm. In Fiscal 2003, we expect additional share gains through various offerings, and we will continue to improve our business mix as we outsource a significant portion of technology hardware revenues to a third party in Fiscal 2003. As a result, overall revenues for Fiscal 2003 are expected to decline 2% to 4%. Operating margins should reflect modest gains, as we build on our Fiscal 2002 execution. The momentum from these improvements will be partially offset by increases in the cost of pension and health benefits and the balancing of resources required for a successful e-IKON implementation. While operating margins are expected to improve from Fiscal 2002, diluted earnings per share will be negatively impacted by an additional $.05 dilution from the May 2002 convertible offering. Therefore, diluted earnings per share for Fiscal 2003 are expected to be in the range of $.94 to $.98. For the first quarter, we expect revenues to decline in the range of 4% to 6% from the prior year, with earnings per share in the range of $.19 to $.21," Mr. Espe concluded. IKON Office Solutions (www.ikon.com) 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. IOS Capital, LLC, a wholly-owned subsidiary of IKON, provides lease financing to customers and is one of the largest captive finance companies in North America. With Fiscal 2002 revenues of $4.8 billion, IKON has approximately 600 locations worldwide including the United States, Canada, Mexico, the United Kingdom, France, Germany, Ireland and Denmark. INVESTOR CONFERENCE: On Thursday, November 7, 2002, IKON will host an Investor Conference in New York City. If you would like to attend the conference, please e-mail Veronica Rosa, Director of Investor Relations at vrosa@ikon.com. A live webcast of this event, along with presentation materials, will be available through the Company's website. Please go to www.ikon.com, click on Invest in IKON and select the Presentation section. The audio portion of the live webcast will begin at 8:00 a.m. EST on November 7, 2002. QUARTERLY EARNINGS CONFERENCE CALL: Additional information regarding the fourth quarter and fiscal year results and the Company's outlook for the next fiscal year will be discussed on a conference call hosted by IKON at 10:00 a.m. EST on Thursday, October 24, 2002. Please call (719) 867-0680 to participate. A complete replay of the conference call will be available over the Internet on IKON's Investor Relations homepage approximately two hours after the call ends. To listen, please go to www.ikon.com and click on Invest in IKON. Beginning at 1:00 p.m. EST on October 24, 2002 and ending at midnight EST on October 28, 2002, a complete replay of the conference call can also be accessed via telephone by calling (719) 457-0820 and using the access code 156886. This news release includes information which may constitute forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, but are not limited to, statements relating to the Company's outlook for fiscal year 2003, the benefits of our long-term investments, and the execution and impact of the Company's strategies. Although IKON believes the expectations contained in such forward-looking statements are reasonable, it can give no assurances that such expectations will prove correct. Such forward-looking statements are based upon management's current plans or expectations and are subject to a number of risks and uncertainties, including, but not limited to: risks and uncertainties relating to conducting operations in a competitive environment and a changing industry; delays, difficulties, management transitions and employment issues associated with consolidation of, and/or changes in business operations; managing the integration of existing and acquired companies; risks and uncertainties associated with existing or future vendor relationships; and general economic conditions. Certain additional risks and uncertainties are set forth in IKON's 2001 Annual Report on Form 10-K/A filed with the Securities and Exchange Commission. As a consequence of these and other risks and uncertainties, IKON's current plans, anticipated actions and future financial condition and results may differ materially from those expressed in any forward-looking statements. # # #
IKON Office Solutions, Inc. Consolidated Balance Sheets September 30, 2002 September 30, (in millions) (unaudited) 2001 - ----------------------------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 271.8 $ 80.3 Restricted cash 116.1 128.4 Accounts receivable, less allowances of: 2002 - $14.3; 2001 - $23.5 568.6 641.0 Finance receivables, less allowances of: 2002 - $20.3; 2001 - $24.4 1,203.5 1,171.0 Inventories 318.2 299.8 Prepaid expenses and other current assets 82.9 95.4 Deferred taxes 65.3 98.7 - ----------------------------------------------------------------------------------------------------------------------- Total current assets 2,626.4 2,514.6 - ----------------------------------------------------------------------------------------------------------------------- Long-term finance receivables, less allowances of: 2002 - $37.8; 2001 - $45.4 2,241.1 2,176.2 Equipment on operating leases, net of accumulated depreciation of: 2002 - $92.7; 2001 - $91.4 99.6 71.2 Property and equipment, net 202.9 207.8 Goodwill, net 1,235.4 1,258.1 Other assets 67.2 63.1 - ----------------------------------------------------------------------------------------------------------------------- Total Assets $ 6,472.6 $ 6,291.0 - ----------------------------------------------------------------------------------------------------------------------- Liabilities and Shareholders' Equity Current portion of long-term debt $ 11.5 $ 17.6 Current portion of long-term debt, finance subsidiaries 1,312.0 1,229.6 Notes payable 7.2 183.7 Trade accounts payable 232.1 223.0 Accrued salaries, wages and commissions 127.7 126.3 Deferred revenues 176.3 185.3 Other accrued expenses 300.9 299.6 - ----------------------------------------------------------------------------------------------------------------------- Total current liabilities 2,167.7 2,265.1 - ----------------------------------------------------------------------------------------------------------------------- Long-term debt 594.4 599.6 Long-term debt, finance subsidiaries 1,495.8 1,366.1 Deferred taxes 479.4 446.1 Other long-term liabilities 200.4 218.5 Commitments and contingencies Shareholders' Equity Common stock, no par value: authorized 300.0 shares; issued: 2002 - 150.0 shares; 2001 -150.1 shares; outstanding: 2002 - 144.0 shares; 2001 - 141.8 shares 1,015.2 1,012.3 Series 12 preferred stock, no par value: authorized 0.5 shares; none issued or outstanding Unearned compensation (2.0) (3.7) Retained earnings 595.7 463.1 Accumulated other comprehensive loss (50.8) (43.5) Cost of common shares in treasury: 2002 - 5.3 shares; 2001 - 7.5 shares (23.2) (32.6) - ----------------------------------------------------------------------------------------------------------------------- Total Shareholders' Equity 1,534.9 1,395.6 - ----------------------------------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $ 6,472.6 $ 6,291.0 - -----------------------------------------------------------------------------------------------------------------------
IKON Office Solutions, Inc. - --------------------------- FINANCIAL SUMMARY (in thousands, except earnings per share) Fourth Quarter Fiscal ------------------------------------ 2002 2001 - ------------------------------------------------------------------------------------------------ Revenues Net sales $ 572,613 $ 632,844 Services 510,221 557,332 Finance income 95,429 92,869 - ------------------------------------------------------------------------------------------------ 1,178,263 1,283,045 - ------------------------------------------------------------------------------------------------ Costs and Expenses Cost of goods sold 375,302 408,966 Services costs 305,056 336,688 Finance interest expense 40,628 45,169 Selling and administrative 392,646 450,891 Restructuring (reversal) charges (10,497) 34,500 Asset impairment 29,082 - ------------------------------------------------------------------------------------------------ 1,103,135 1,305,296 - ------------------------------------------------------------------------------------------------ Operating income (loss) 75,128 (22,251) Interest expense 12,838 15,151 - ------------------------------------------------------------------------------------------------ Income (loss) before income taxes 62,290 (37,402) Income taxes 22,967 7,504 - ------------------------------------------------------------------------------------------------ Net income (loss) $ 39,323 $ (44,906) - ------------------------------------------------------------------------------------------------ Basic Earnings (Loss) Per Common Share $ 0.27 ($ 0.32) =========== =========== Diluted Earnings (Loss) Per Common Share $0.25 (a) ($ 0.32) =========== =========== Weighted Average Common Shares Outstanding, Basic 144,000 141,827 =========== =========== Weighted Average Common Shares Outstanding, Diluted 167,441 141,827 =========== =========== Operations Analysis: Gross profit %, net sales 34.5% 35.4% Gross profit %, services 40.2% 39.6% Gross profit %, finance subsidiaries 57.4% 51.4% Total gross profit % 38.8% 38.4% Selling and administrative as a % of revenue 33.3% 35.1% Operating income (loss) as a % of revenue 6.4% -1.7% (a) The calculation of diluted earnings per common share for the fourth quarter of fiscal 2002 assumes the conversion of convertible notes issued in May 2002 by IOS Capital, LLC resulting in 19,960 shares. For purposes of diluted earnings per common share, net income for the fourth quarter of fiscal 2002 includes the add-back of $2,372 representing interest expense, net of taxes, associated with such convertible notes.
IKON Office Solutions, Inc. - --------------------------- FINANCIAL SUMMARY (in thousands, except earnings per share) Excluding Special Items Fourth Quarter Fiscal ---------------------------------- 2002 (b) 2001 (c) ------------- -------------- Revenues Net sales $ 572,613 $ 632,844 Services 510,221 557,332 Finance income 95,429 92,869 - ---------------------------------------------------------------------------------------------- 1,178,263 1,283,045 - ---------------------------------------------------------------------------------------------- Costs and Expenses Cost of goods sold 375,302 407,466 Services costs 305,056 336,688 Finance interest expense 40,628 45,169 Selling and administrative 392,646 447,091 - ---------------------------------------------------------------------------------------------- 1,113,632 1,236,414 - ---------------------------------------------------------------------------------------------- Operating income 64,631 46,631 Interest expense 12,838 15,151 - ---------------------------------------------------------------------------------------------- Income before income taxes 51,793 31,480 Income taxes 19,293 13,851 - ---------------------------------------------------------------------------------------------- Net income $ 32,500 $ 17,629 - ---------------------------------------------------------------------------------------------- Basic Earnings Per Common Share $ 0.23 $ 0.12 ========== ========== Diluted Earnings Per Common Share $ 0.21 (a) $ 0.12 ========== ========== Weighted Average Common Shares Outstanding, Basic 144,000 141,827 ========== ========== Weighted Average Common Shares Outstanding, Diluted 167,441 146,067 ========== ========== Operations Analysis: Gross profit %, net sales 34.5% 35.6% Gross profit %, services 40.2% 39.6% Gross profit %, finance subsidiaries 57.4% 51.4% Total gross profit % 38.8% 38.5% Selling and administrative as a % of revenue 33.3% 34.8% Operating income as a % of revenue 5.5% 3.6% (a) The calculation of diluted earnings per common share for the fourth quarter of fiscal 2002 assumes the conversion of convertible notes issued in May 2002 by IOS Capital, LLC resulting in 19,960 shares. For purposes of diluted earnings per common share, net income for the fourth quarter of fiscal 2002 includes the add-back of $2,372 representing interest expense, net of taxes, associated with such convertible notes. (b) Fourth quarter fiscal 2002 excludes a reversal of restructuring charges of $10,497. (c) Fourth quarter fiscal 2001 excludes a restructuring charge of $34,500, asset impairment charges of $29,082, reserve adjustments primarily related to the exit of the Company's telephony operations of $5,300 and a tax reserve adjustment related to a leveraged corporate owned life insurance program of $10,000.
This information is provided for additional analysis and is not intended to be a presentation in accordance with generally accepted accounting principles.
IKON Office Solutions, Inc. - --------------------------- FINANCIAL SUMMARY (in thousands, except earnings per share) Year Ended September 30, ---------------------------------- 2002 2001 ----------- ------------ Revenues Net sales $ 2,331,749 $ 2,634,492 Services 2,120,832 2,279,266 Finance income 374,921 359,721 - --------------------------------------------------------------------------------------------------- 4,827,502 5,273,479 - --------------------------------------------------------------------------------------------------- Costs and Expenses Cost of goods sold 1,531,086 1,714,439 Services costs 1,260,225 1,367,301 Finance interest expense 157,891 177,519 Selling and administrative 1,595,208 1,813,469 Restructuring (reversal) charges (10,497) 34,500 Asset impairment 29,082 - --------------------------------------------------------------------------------------------------- 4,533,913 5,136,310 - --------------------------------------------------------------------------------------------------- Operating income 293,589 137,169 Interest expense 54,389 69,373 - --------------------------------------------------------------------------------------------------- Income from continuing operations before income taxes 239,200 67,796 Income taxes 88,866 53,791 - --------------------------------------------------------------------------------------------------- Income from continuing operations 150,334 14,005 Discontinued operations, net of income taxes of $942 1,200 - --------------------------------------------------------------------------------------------------- Net income $ 150,334 $ 15,205 - --------------------------------------------------------------------------------------------------- Basic Earnings Per Common Share Continuing operations $ 1.05 $ 0.10 Discontinued operations $ 0.01 ----------- ----------- Net income $ 1.05 $ 0.11 =========== =========== Diluted Earnings Per Common Share Continuing operations $ 0.99 $ 0.10 Discontinued operations $ 0.01 ----------- ----------- Net income $ 0.99 (a) $ 0.11 =========== =========== Weighted Average Common Shares Outstanding, Basic 143,178 141,888 =========== =========== Weighted Average Common Shares Outstanding, Diluted 155,084 144,408 =========== =========== Operations Analysis: Gross profit %, net sales 34.3% 34.9% Gross profit %, services 40.6% 40.0% Gross profit %, finance subsidiaries 57.9% 50.7% Total gross profit % 38.9% 38.2% Selling and administrative as a % of revenue 33.0% 34.4% Operating income as a % of revenue 6.1% 2.6% (a) The calculation of diluted earnings per common share for fiscal 2002 assumes the conversion of convertible notes issued in May 2002 by IOS Capital, LLC, weighted for days outstanding in the fiscal year resulting in 7,711 shares. For purposes of diluted earnings per common share, net income in fiscal 2002 includes the add-back of $3,636 representing interest expense, net of taxes, associated with such convertible notes. IKON Office Solutions, Inc.
IKON Office Solutions, Inc. - --------------------------- FINANCIAL SUMMARY (in thousands, except earnings per share) Excluding Special Items Year to Date Fiscal -------------------------------- 2002 (b) 2001 (c) ----------- ------------ Revenues Net sales $2,331,749 $2,634,492 Services 2,120,832 2,279,266 Finance income 374,921 359,721 - ---------------------------------------------------------------------------------------------- 4,827,502 5,273,479 - ---------------------------------------------------------------------------------------------- Costs and Expenses Cost of goods sold 1,531,086 1,712,939 Services costs 1,260,225 1,367,301 Finance interest expense 157,891 177,519 Selling and administrative 1,595,208 1,809,669 - ---------------------------------------------------------------------------------------------- 4,544,410 5,067,428 - ---------------------------------------------------------------------------------------------- Operating income 283,092 206,051 Interest expense 54,389 69,373 - ---------------------------------------------------------------------------------------------- Income before income taxes 228,703 136,678 Income taxes 85,192 60,138 - ---------------------------------------------------------------------------------------------- Net income $ 143,511 $ 76,540 - ---------------------------------------------------------------------------------------------- Basic Earnings Per Common Share $ 1.00 $ 0.54 ========== ========== Diluted Earnings Per Common Share $ 0.95 (a) $ 0.53 ========== ========== Weighted Average Common Shares Outstanding, Basic 143,178 141,888 ========== ========== Weighted Average Common Shares Outstanding, Diluted 155,084 144,408 ========== ========== Operations Analysis: Gross profit %, net sales 34.3% 35.0% Gross profit %, services 40.6% 40.0% Gross profit %, finance subsidiaries 57.9% 50.7% Total gross profit % 38.9% 38.2% Selling and administrative as a % of revenue 33.0% 34.3% Operating income as a % of revenue 5.9% 3.9% (a) The calculation of diluted earnings per common share for fiscal 2002 assumes the conversion of convertible notes issued in May 2002 by IOS Capital, LLC, weighted for days outstanding in the fiscal year resulting in 7,711 shares. For purposes of diluted earnings per common share, net income in fiscal 2002 includes the add-back of $3,636 representing interest expense, net of taxes, associated with such convertible notes. (b) Year ended September 30, 2002 excludes a reversal of restructuring charges of $10,497. (c) Year ended September 30, 2001 excludes a restructuring charge of $34,500, asset impairment charges of $29,082, reserve adjustments primarily related to the exit of the Company's telephony operations of $5,300, a tax reserve adjustment related to a leveraged corporate owned life insurance program of $10,000 and a benefit from discontinued operations of $2,142 ($1,200 after-tax).
This information is provided for additional analysis and is not intended to be a presentation in accordance with generally accepted accounting principles.
IKON Office Solutions, Inc. - --------------------------- COMPUTATIONS OF EARNINGS PER COMMON SHARE (in thousands, except earnings per share) 2002 2001 ---------------------------- ----------------------------- Basic Diluted Basic Diluted ----- ------- ----- ------- Three Months September 30 Average Shares Outstanding Common shares 144,000 144,000 141,827 141,827 Convertible loan notes 19,960 Awards 529 Options 2,952 - ----------------------------------------------------------------------------------------------------------------- Total shares 144,000 167,441 141,827 141,827 - ----------------------------------------------------------------------------------------------------------------- Income (Loss) Net Income $ 39,323 $ 39,323 $ (44,906) $ (44,906) Interest on convertible loan notes 2,372 - ----------------------------------------------------------------------------------------------------------------- Adjusted Net Income $ 39,323 $ 41,695 $ (44,906) $ (44,906) - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- EPS $ 0.27 $ 0.25 $ (0.32) $ (0.32) ================================================================================================================= Fiscal YTD September 30 Average Shares Outstanding Common shares 143,178 143,178 141,888 141,888 Convertible loan notes 7,711 Awards 470 248 Options 3,725 2,272 - ----------------------------------------------------------------------------------------------------------------- Total shares 143,178 155,084 141,888 144,408 - ----------------------------------------------------------------------------------------------------------------- Income Income from continuing operations $ 150,334 $ 150,334 $ 14,005 $ 14,005 Interest on convertible loan notes 3,636 Discontinued operations 1,200 1,200 - ----------------------------------------------------------------------------------------------------------------- Adjusted Net Income $ 150,334 $ 153,970 $ 15,205 $ 15,205 - ----------------------------------------------------------------------------------------------------------------- EPS before extrardinary items $ 1.05 $ 0.99 $ 0.10 $ 0.10 Discontinued Operations 0.01 0.01 - ----------------------------------------------------------------------------------------------------------------- EPS $ 1.05 $ 0.99 $ 0.11 $ 0.11 =================================================================================================================
IKON Office Solutions, Inc. - --------------------------- COMPUTATIONS OF EARNINGS PER COMMON SHARE Excluding Special Items (in thousands, except earnings per share)
2002 2001 ----------------------------- ------------------------------ Basic Diluted Basic Diluted ----- ------- ----- ------- Three Months September 30 Average Shares Outstanding Common shares 144,000 144,000 141,827 141,827 Convertible loan notes 19,960 Awards 529 470 Options 2,952 3,770 - ------------------------------------------------------------------------------------------------------------ Total shares 144,000 167,441 141,827 146,067 - ------------------------------------------------------------------------------------------------------------ Income Net Income $ 32,500 (a) $ 32,500 $ 17,629 (b) $ 17,629 Interest on convertible loan notes 2,372 - ------------------------------------------------------------------------------------------------------------ Adjusted Net Income $ 32,500 $ 34,872 $ 17,629 $ 17,629 - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ EPS $ 0.23 $ 0.21 $ 0.12 $ 0.12 ============================================================================================================ Fiscal YTD September 30 Average Shares Outstanding Common shares 143,178 143,178 141,888 141,888 Convertible loan notes 7,711 Awards 470 248 Options 3,725 2,272 - ------------------------------------------------------------------------------------------------------------ Total shares 143,178 155,084 141,888 144,408 - ------------------------------------------------------------------------------------------------------------ Income Net Income $143,511 (a) $143,511 $ 76,540 (b) $ 76,540 Interest on convertible loan notes 3,636 - ------------------------------------------------------------------------------------------------------------ Adjusted Net Income $143,511 $147,147 $ 76,540 $ 76,540 - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ EPS $ 1.00 $ 0.95 $ 0.54 $ 0.53 ============================================================================================================ (a) Fourth quarter and year ended September 30, 2002 excludes a reversal of restructuring charges of $10,497. (b) Fourth quarter and year ended September 30, 2001 excludes a restructuring charge of $34,500, asset impairment charges of $29,082, reserve adjustments primarily related to the exit of the Company's telephony operations of $5,300 and a tax reserve adjustment related to a leveraged corporate owned life insurance program of $10,000. Year ended September 30, 2001 also excludes a benefit from discontinued operations of $2,142 (1,200 after-tax).
This information is provided for additional analysis and is not intended to be a presentation in accordance with generally accepted accounting principles. -----END PRIVACY-ENHANCED MESSAGE-----