-----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, CM2mA9zP2ZDPe7PFI3zjE6SSp5zvRx0DGWFR+9QlJ5Q1q2NLLSA2d6m46dwQXR39 QRwaOFBzK4VmsyGA5OBqxg== 0000950159-99-000197.txt : 19990802 0000950159-99-000197.hdr.sgml : 19990802 ACCESSION NUMBER: 0000950159-99-000197 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990728 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990730 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: SEC FILE NUMBER: 001-05964 FILM NUMBER: 99674279 BUSINESS ADDRESS: STREET 1: 70 VALLEY STREAM CITY: MALVERN STATE: PA ZIP: 19355 BUSINESS PHONE: 6102968000 MAIL ADDRESS: STREET 1: BOX 834 CITY: VALLEY FORGE STATE: PA ZIP: 19482 FORMER COMPANY: FORMER CONFORMED NAME: ALCO STANDARD CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ALCO CHEMICAL CORP DATE OF NAME CHANGE: 19680218 8-K 1 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) July 28, 1999 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. The Registrant's press release dated July 28, 1999, regarding its financial results for the period ended June 30, 1999, including unaudited consolidated statements of income for the three months ended June 30, 1999 and the nine months ended June 30, 1999 are attached. This Report includes or incorporates by reference information which may constitute forward-looking statements within the meaning of the federal securities laws. Although the Registrant 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 information is based upon management's current plans or expectations and is subject to a number of risks and uncertainties that could significantly affect current plans, anticipated actions and the Registrant's future financial condition and results. These risks and uncertainties include, but are not limited to, risks and uncertainties relating to conducting operations in a competitive environment; 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 the Registrant's 1998 Annual Report on Form 10-K/A filed with the Securities and Exchange Commission. As a consequence of these and other risks and uncertainties, current plans, anticipated actions and future financial condition and results may differ materially from those expressed in any forward-looking statements made by or on behalf of the Registrant. 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 July 28, 1999 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/MICHAEL J. DILLON -------------------------------- Michael J. Dillon Vice President and Controller Dated: July 28, 1999 EX-99 2 Contacts: Susan G. Gaffney Veronica L. Rosa Investor Relations Investor Relations 610-408-7292 610-408-7196 sgaffney@ikon.com vrosa@ikon.com IKON OFFICE SOLUTIONS ANNOUNCES THIRD QUARTER RESULTS REPORTS INCREASE OVER PRIOR QUARTER AND YEAR AGO SEES ONGOING BENEFITS FROM PRODUCTIVITY AND COMPETITIVENESS PROGRAMS Valley Forge, Pennsylvania - July 28, 1999 -- IKON Office Solutions (NYSE: IKN) today reported results for the third quarter of fiscal 1999. IKON generated net income of $27.3 million or $.18 per share, up from $22.9 million, or $.15 per share, for the second quarter of this fiscal year. For the third quarter of fiscal 1998, the Company generated a net loss of $10.6 million or $.11 per share before transformation costs of $16 million and special charges of $94 million before tax. "We are pleased with the continuing improvements generated by our productivity and competitiveness programs," stated James J. Forese, President and Chief Executive Officer. "We posted strong earnings growth and solid revenues this quarter." "Sustaining the momentum of prior quarters, the quality of our business continues to strengthen, allowing us to increase our investments in long-term growth opportunities for the Company. These investments include expanded training for sales and service professionals, a global branding campaign and key initiatives designed to better leverage IKON. We will also look to expand the sales force in key growth areas such as color, high volume, and major accounts as our national sales model becomes more firmly established." Revenues for the third quarter of fiscal 1999 were $1.39 billion, compared to $1.42 billion in the third quarter of fiscal 1998 without special charges and $1.37 billion in the second quarter of 1999. Revenues increased from this year's prior quarter, but were slightly down year over year -- due primarily to reductions in and realignment of the sales force, as well as the closure or consolidations of 22 Document Services branches and two Technology Services companies over the course of the year. These actions were taken to strengthen productivity, tighten marketing disciplines, and build a solid cost-competitive infrastructure. The Company's gross margin for the 1999 third quarter was 37.8%, an increase of 20 basis points from the second quarter of 1999 that stems largely from improved service margins. Service margins increased by 170 basis points from the second quarter of fiscal 1999, reflecting the growing discipline and productivity from the national sales model, which includes a focus on protecting and growing aftermarket. Improved service margins were partially offset by a decline in equipment margins due to continued price pressure in analog sales and to the closing of a portion of the Company's remanufacturing operations in June. As previously announced, in an effort to achieve better economies of scale, the Company consolidated its three North American remanufacturing operations into one plant located in Mexico. IKON continues to show improvement in Selling, General and Administrative expenses (SG&A) as a result of the ongoing expense reduction programs launched in the second half of fiscal 1998. Expenses in the third quarter declined as a percent of revenue by 70 basis points from the second quarter. "As we previously stated, our goal for fiscal 1999 is to reduce our SG&A expenses by 200 basis points from the fourth quarter of fiscal 1998 level excluding charges." stated Mr. Forese. "Toward that end, we have reduced expenses by 140 basis points, or $35 million, as of the end of the third quarter." During the quarter, in an ongoing effort to increase productivity and to position itself for growth, the Company: o Expanded the implementation of the new sales model in North America, which is designed to maximize the Company's national presence and marketing capabilities in key focus areas, to over 70%; o Increased color and digital equipment revenues to more than 60% of total equipment sales; o Combined Business Services and Management Services into IKON North America, to leverage the 4,000 person sales force and expand the marketing of management services, which includes document handling, mailroom administration and related information management services at clients' facilities; and o Began investing in a new digital service offering for legal documents, which will enable customers to manage the entire life cycle of their documents from a remote location, through digital scanning, coding and archiving capabilities. "We continue to hold steadfast to our goal of building a company that can deliver optimal added value to its customers by providing solutions that reflect a thorough understanding of their business needs," Mr. Forese said. "IKON has a number of key demonstrable strengths to support this goal, including a strong cash flow and recurring revenue stream, a broad array of products and services and a highly skilled and dedicated workforce." IKON Office Solutions (www.ikon.com) is one of the world's leading office technology companies, providing customers with total office solutions from copier and printing systems, computer networking and digital document services to copy center management, technology training and electronic file conversion. With fiscal 1998 revenues of $5.6 billion, IKON has more than 1,000 locations including the United States, Canada, Mexico, the United Kingdom, France, Germany and Denmark. This news release includes information which may constitute forward-looking statements within the meaning of the federal securities laws. 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 information is based upon management's current plans or expectations and is subject to a number of risks and uncertainties that could significantly affect current plans, anticipated actions and IKON's future financial condition and results. These risks and uncertainties include, but are not limited to, risks and uncertainties relating to conducting operations in a competitive environment; 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 1998 Annual Report on Form 10-K/A filed with the Securities and Exchange Commission. As a consequence of these and other risks and uncertainties, current plans, anticipated actions and future financial condition and results may differ materially from those expressed in any forward-looking statements made by or on behalf of IKON. # # # IKON Office Solutions, Inc. FINANCIAL SUMMARY (in thousands, except earnings per share)
Three Months Ended June 30, ----------------------------------------------- 1999 1998 % Change ------------ ----------- --------- Revenues Net sales $ 719,047 $ 721,044 (0.3)% Service and rentals 586,850 594,806 (1.3) Finance income 79,570 78,878 0.9 - ----------------------------------------------------------------------------------------------------------- 1,385,467 1,394,728 (0.7) - ----------------------------------------------------------------------------------------------------------- Costs and Expenses Cost of goods sold 500,614 520,442 (3.8) Service and rental costs 331,240 351,701 (5.8) Finance interest expense 30,553 33,171 (7.9) Selling and administrative 455,043 543,703 (16.3) Loss from asset impairment 20,000 Transformation costs 16,539 - ----------------------------------------------------------------------------------------------------------- 1,317,450 1,485,556 (11.3) - ----------------------------------------------------------------------------------------------------------- Operating income (loss) 68,017 (90,828) (174.9) Interest expense 17,031 17,684 (3.7) - ----------------------------------------------------------------------------------------------------------- Income (loss) before taxes 50,986 (108,512) (147.0) Income taxes (benefit) 23,708 (19,867) (219.3) - ----------------------------------------------------------------------------------------------------------- Net income (loss) 27,278 (88,645) (130.8) - ----------------------------------------------------------------------------------------------------------- Less preferred dividends 4,885 - ----------------------------------------------------------------------------------------------------------- Available to common shareholders $ 27,278 $ (93,530) (129.2) =========== =========== Basic Earnings (Loss) Per Share $ 0.18 ($ 0.69) =========== =========== Diluted Earnings (Loss) Per Share $ 0.18 ($ 0.69) =========== =========== Weighted Average Common Shares Outstanding, Basic 148,787 135,581 9.7% =========== =========== Weighted Average Common Shares Outstanding, Diluted 149,115 135,581 10.0% =========== =========== Operations Analysis: Gross profit %, net sales 30.4% 27.8% Gross profit %, service and rentals 43.6% 40.9% Gross profit %, finance subsidiaries 61.6% 57.9% Total gross profit % 37.8% 35.1% SG&A as a % of revenue 32.9% 39.0% Operating income (loss) % of revenue 4.9% -6.5% Oper inc (loss) % of rev, excl trans costs and asset impairment loss -3.9%
IKON Office Solutions, Inc. FINANCIAL SUMMARY (in thousands, except earnings per share)
Nine Months Ended June 30, ------------------------------------------------ 1999 1998 % Change ----------- ----------- -------- Revenues Net sales $ 2,146,828 $ 2,236,092 (4.0)% Service and rentals 1,754,734 1,740,694 0.8 Finance income 252,972 223,788 13.0 - ---------------------------------------------------------------------------------------------------- 4,154,534 4,200,574 (1.1) - ---------------------------------------------------------------------------------------------------- Costs and Expenses Cost of goods sold 1,464,723 1,490,189 (1.7) Service and rental costs 1,007,930 1,028,514 (2.0) Finance interest expense 92,539 96,876 (4.5) Selling and administrative 1,393,917 1,450,307 (3.9) Loss from asset impairment 20,000 Transformation costs 54,250 - ---------------------------------------------------------------------------------------------------- 3,959,109 4,140,136 (4.4) - ---------------------------------------------------------------------------------------------------- Operating income 195,425 60,438 223.3 Interest expense 55,573 50,956 9.1 - ---------------------------------------------------------------------------------------------------- Income before taxes 139,852 9,482 1,374.9 Income taxes 61,031 30,852 97.8 - ---------------------------------------------------------------------------------------------------- Net income (loss) 78,821 (21,370) (468.8) - ---------------------------------------------------------------------------------------------------- Less preferred dividends 14,655 - ---------------------------------------------------------------------------------------------------- Available to common shareholders $ 78,821 $ (36,025) (318.8) =========== =========== Basic Earnings (Loss) Per Share $ 0.53 ($ 0.27) =========== =========== Diluted Earnings (Loss) Per Share $ 0.53 ($ 0.27) =========== =========== Weighted Average Common Shares Outstanding, Basic 148,576 134,799 10.2% =========== =========== Weighted Average Common Shares Outstanding, Diluted 148,961 134,799 10.5% =========== =========== Operations Analysis: Gross profit %, net sales 31.8% 33.4% Gross profit %, service and rentals 42.6% 40.9% Gross profit %, finance subsidiaries, excl. gain 61.2% 56.7% Total gross profit %, excl. gain 38.0% 37.7% SG&A as a % of revenue, excl. gain 33.6% 34.5% Operating income % of revenue, excl. gain 4.4% 1.4% Oper inc % of rev, excl trans costs and asset impairment loss 3.2%
IKON Office Solutions, Inc. FINANCIAL SUMMARY (in thousands, except earnings per share)
Nine Months Ended June 30, 1999 1st Qtr. 2nd Qtr. 3rd Qtr. Total ---------- ---------- ---------- ---------- Revenues Net sales $ 707,719 $ 720,062 $ 719,047 $2,146,828 Service and rentals 591,417 576,467 586,850 1,754,734 Finance income 97,281 ** 76,121 79,570 252,972 - ------------------------------------------------------------------------------------------------------------- 1,396,417 1,372,650 1,385,467 4,154,534 - ------------------------------------------------------------------------------------------------------------- Costs and Expenses Cost of goods sold 471,746 492,363 500,614 1,464,723 Service and rental costs 341,589 335,101 331,240 1,007,930 Finance interest expense 32,680 29,306 30,553 92,539 Selling and administrative expense 477,255 461,619 455,043 1,393,917 - ------------------------------------------------------------------------------------------------------------- 1,323,270 1,318,389 1,317,450 3,959,109 - ------------------------------------------------------------------------------------------------------------- Operating income 73,147 54,261 68,017 195,425 Interest expense 19,547 18,995 17,031 55,573 - ------------------------------------------------------------------------------------------------------------- Income before taxes 53,600 35,266 50,986 139,852 Taxes on income 24,924 12,399 23,708 61,031 - ------------------------------------------------------------------------------------------------------------- Net income available to shareholders $ 28,676 $ 22,867 $ 27,278 $ 78,821 ========== ========== ========== ========== Basic EPS $ 0.19 $ 0.15 $ 0.18 $ 0.53 ========== ========== ========== ========== Shares 148,349 148,601 148,787 148,576 ========== ========== ========== ========== Diluted EPS $ 0.19 $ 0.15 $ 0.18 $ 0.53 ========== ========== ========== ========== Shares 148,907 148,870 149,115 148,961 ========== ========== ========== ========== Operational Analysis: Gross profit %, net sales 33.3% 31.6% 30.4% 31.8% Gross profit %, service and rentals 42.2% 41.9% 43.6% 42.6% Gross profit %, financing, excl. gain 60.6% 61.5% 61.6% 61.2% Total gross profit, excl. gain 38.8% 37.6% 37.8% 38.0% SG&A as a % of revenue, excl. gain 34.5% 33.6% 32.9% 33.6% Operating income % of revenue, excl gain 4.3% 4.0% 4.9% 4.4% ** - Includes $14.3 million gain on asset securitization
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