Exhibit 99.1
IKON ANNOUNCES RESULTS FOR THE FIRST QUARTER OF FISCAL YEAR 2006
- -- Achieves High End of Earnings Expectations
-- Equipment Revenue Up 4%
-- Selling & Administrative Expenses Down 10
Malvern, Pa. – January 26, 2006 – IKON Office Solutions (NYSE:IKN), the world’s largest independent channel for document management systems and services, today reported results for the quarter ended December 31, 2005. Net income from continuing operations for the first quarter of fiscal year 2006 was $28 million, or $0.21 per diluted share, including a $0.04 gain related to the previously announced sale of Kafevend, a non-strategic UK business, and a $0.01 charge for the loss from early extinguishment of debt. Excluding these items, first quarter earnings per diluted share from continuing operations were $0.18, consistent with the Company’s previously communicated range of $0.16 — $0.18.
Total revenue for the first quarter of fiscal year 2006 was $1.04 billion, compared to $1.09 billion for the first quarter of fiscal year 2005, a decline of 4% year over year. Targeted revenue, which represents 97% of total revenue, was flat for the quarter. Currency negatively impacted revenue growth by 1 point.
Targeted revenue includes all revenues except those categorized as “Other.” Other revenue includes finance income and revenue generated by the remaining technology services and hardware businesses. Prior to fiscal year 2006, Other revenue also included revenue from the Company’s operating subsidiaries in France and Mexico, which were sold during fiscal year 2005, and revenue from Kafevend, which was sold in the first quarter of fiscal year 2006.
Selling and administrative (S&A) expenses decreased 10%, or $35 million, to $314 million, compared to the first quarter of fiscal year 2005. This decline resulted in a lower S&A expense-to-revenue ratio of 30.1%, compared with 32.1% for the first quarter of fiscal year 2005.
Operating margin increased to 5.1% in the quarter. Excluding the gain on the sale of Kafevend, operating margin was 4.6%, representing a 50 basis point improvement over the first quarter of fiscal year 2005.
“Our results in the first quarter demonstrate continued progress and represent a great start to the year,” said Matthew J. Espe, IKON’s Chairman and Chief Executive Officer. “New digital equipment revenue grew in the office, production and color segments. In our services business, we increased Professional Services revenue by 23% and North American on-site Managed Services revenue by 4%, compared to the first quarter of fiscal year 2005. In Europe, strong growth in Germany and Denmark contributed significantly to European revenue. In addition, we continued to reduce selling and administrative expenses and increased our operating income margin, resulting in EPS growth.
“This quarter’s results are consistent with the plan we presented during our Investor Conference in November 2005,” Espe said. “We attained the high end of our EPS range for the quarter, our selling and administrative expense-to-revenue ratio improved to 30% and our operating income margin is approaching 5%.”
First Quarter 2006 Financial Details
Equipment revenue of $425 million, which includes the sale of copier/printer multifunction products, increased 4% from the first quarter of fiscal year 2005. The year over year increase was driven by growth in the color market and the black and white production market. Gross margin on equipment declined to 23.9% from 28.8% in the first quarter of fiscal year 2005, due to a combination of factors, including mix shift between new and used equipment, a significant increase in the mix of color-capable products with lower-than-historical color margins, continued competitive pressure in the color segment, and lease-end activities.
Customer Services and Supplies revenue of $371 million, which includes revenue from the servicing of copier/printer equipment and direct sales of supplies, declined 2% compared to the first quarter of fiscal year 2005. Revenue continued to be impacted by the rapid decline in the analog equipment base, partially offset by continued growth in the digital equipment base. Gross margin on Customer Services and Supplies increased to 46.4% from 44.8% a year ago, driven by an improvement in parts costs and a lower cost structure in North America, as well as a continued focus on cost reduction and productivity improvements.
Managed and Professional Servicesrevenueof $176 million, which includes both on-site and off-site Managed Services, as well as Professional Services, declined 2% compared to the first quarter of fiscal year 2005. Revenue growth in Professional Services and on-site Managed Services was offset by a revenue decline in off-site Managed Services. Gross margin on Managed and Professional Services increased to 25.4% from 24.7% a year ago, due to improved margins in Professional Services and on-site Managed Services, partially offset by a lower mix of higher-margin off-site Managed Services.
Rental and Fees revenue of $40 million declined 8% and gross margin decreased to 68.3% from 71.9% a year ago due to a decline in higher-margin renewal sharing revenue on certain lease-end activities.
Otherrevenue of $30 million declined 61% compared to the first quarter of fiscal year 2005, primarily due to the sale of non-strategic businesses and the continued runoff of the U.S. retained leasing portfolio. Substantially all of the finance income from the retained portfolio is expected to run off by the end of fiscal year 2007.
Balance Sheet and Liquidity
Unrestricted cash was $266 million as of December 31, 2005, with cash used in continuing operations totaling $37 million for the first quarter, primarily due to annual year-end incentive payments made in the quarter. Capital expenditures on operating rentals and property and equipment, net of proceeds, totaled $8 million for the first quarter, compared to $17 million for the first quarter of fiscal year 2005. The total debt-to-capital ratio decreased to 42% as of December 31, 2005, from 47% as of December 31, 2004.
Consistent with its capital structure objectives, the Company purchased 3.3 million shares of outstanding common stock for approximately $33 million during the quarter.
IKON’s Board of Directors approved the Company’s regular quarterly cash dividend of $0.04 per common share, payable on March 10, 2006 to holders of record at the close of business on February 21, 2006.
Outlook
“Looking ahead, we remain focused on executing our long-term plan and continue to address our business challenges, including equipment gross profit margin and the performance of our off-site Managed Services business,” continued Espe. “We are working on these issues with the same commitment that we have applied to increasing equipment revenue and improving operating margin.
“Our expectations for fiscal year 2006 earnings per diluted share from continuing operations remain in the previously communicated range of $0.70 to $0.75, excluding any non-recurring items. For the second quarter, we expect earnings per diluted share from continuing operations to be between $0.16 and $0.18, an increase of over 30% as compared to the $0.12 per diluted share earned in the second quarter of fiscal year 2005, which excludes the impact of certain charges incurred in that quarter. In addition, we remain on track to achieve our previously communicated 2006 fiscal year expectation of targeted revenue flat to up 1%.”
About IKON
IKON Office Solutions, Inc. (www.ikon.com), the world’s largest independent channel for copier, printer and MFP technologies, delivers integrated document management solutions and systems, enabling customers worldwide to improve document workflow and increase efficiency. IKON integrates best-in-class systems from leading manufacturers, such as Canon, Ricoh, Konica Minolta, EFI and HP, and document management software from companies like Captaris, Kofax and others, to deliver tailored, high-value solutions implemented and supported by its global services organization—IKON Enterprise Services. With fiscal year 2005 revenue of $4.4 billion, IKON has approximately 26,000 employees in 450 locations throughout North America and Western Europe.
QUARTERLY EARNINGS CONFERENCE CALL: Additional information regarding the first quarter results and the Company’s outlook for fiscal year 2006 will be discussed on a conference call hosted by IKON at 10:00 a.m. ET on Thursday, January 26, 2006. Thelive audio broadcast of the call, with slides, can be accessed on IKON’s Investor Relations homepage. A complete replay of the conference call will also be available on IKON’s Investor Relations homepage approximately two hours after the call ends through the next quarterly reporting period. To listen, please go to www.ikon.com and click on Investor Relations. Beginning at 1:00 p.m. ET on January 26, 2006 and ending at midnight ET on January 30, 2006, a complete replay of the conference call can also be accessed via telephone by calling (706) 645-9291 and using the access code 3280180.
NON-GAAP INFORMATION: In the event any non-GAAP measures are discussed during the conference call, a file will be available, within 24 hours, on the Company’s website, www.ikon.com, that reconciles non-GAAP and GAAP results. The file can be accessed on the Investor Relations home page.
MARK YOUR CALENDAR: IKON’s second quarter fiscal year 2006 results will be discussed on Thursday, April 27, 2006 on a conference call hosted at 10:00 a.m. ET. More information on how to access the audio broadcast and replay will be provided at a later date. |
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 our expected second quarter and full year fiscal 2006 results from continuing operations, growth in targeted revenue, the runoff of our retained U.S. portfolio, our transition out of analog technologies, our ability to execute on our strategic priorities. 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; 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 2005 Annual Report on Form 10-K, 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. This news release also refers to certain non-GAAP financial measures, which IKON believes provide a reasonable basis on which to present adjusted financial information that provides investors with a useful indication of the performance of IKON’s ongoing operations and financial position. This adjusted financial information should not be construed as an alternative to our reported results determined in accordance with GAAP. A reconciliation of these non-GAAP financial measures to GAAP can be found within the Investor Relations section of www.IKON.com.
(FIKN)
_________________
IKON Office Solutions, Inc.
Income Statement and Operational Analysis (in thousands, except
earnings per share)
(unaudited)
First Quarter Fiscal
--------------------------
2006 2005
----------- -----------
Revenues
Equipment $ 424,989 $ 407,414
Customer service and supplies 371,223 378,230
Managed and professional services 176,382 179,232
Rental and fees 40,427 43,864
Other 29,842 76,706
----------- -----------
1,042,863 1,085,446
----------- -----------
Costs and Expenses
Equipment 323,243 290,248
Customer service and supplies 199,053 208,809
Managed and professional services 131,646 135,051
Rental and fees 12,798 12,322
Other 13,930 45,541
----------- -----------
680,670 691,971
----------- -----------
Gross Profit
Equipment 101,746 117,166
Customer service and supplies 172,170 169,421
Managed and professional services 44,736 44,181
Rental and fees 27,629 31,542
Other 15,912 31,165
----------- -----------
362,193 393,475
----------- -----------
Selling and administrative expense 313,987 348,908
Gain on divestiture of business 4,924 -
Restructuring (152) -
Operating income 53,282 44,567
Loss from the early extinguishment
of debt (1,650) -
Interest income 2,571 928
Interest expense (13,798) (13,731)
----------- -----------
Income from continuing operations
before taxes on income 40,405 31,764
Taxes on income 12,773 10,892
----------- -----------
Income from continuing operations 27,632 20,872
Discontinued operations:
Operating income (loss) 19 (1,861)
Tax (expense) benefit (8) 735
Net income (loss) from discontinued
operations 11 (1,126)
----------- -----------
Net income $ 27,643 $ 19,746
=========== ===========
Basic Earnings Per Common Share
Continuing operations $ 0.21 $ 0.15
Discontinued operations 0.00 (0.01)
----------- -----------
Net income $ 0.21 $ 0.14
=========== ===========
Diluted Earnings Per Common Share
Continuing operations $ 0.21 $ 0.14
Discontinued operations 0.00 (0.01)
----------- -----------
Net income $ 0.21 (b) $ 0.14 (a) (b)
=========== ===========
Weighted Average Common Shares
Outstanding, Basic 133,141 141,477
=========== ===========
Weighted Average Common Shares
Outstanding, Diluted 134,858 162,302
=========== ===========
Operational Analysis:
Gross profit %, equipment 23.9% 28.8%
Gross profit %, customer
services and supplies 46.4% 44.8%
Gross profit %, managed and
prof services 25.4% 24.7%
Gross profit %, rental and
fees 68.3% 71.9%
Gross profit %, other 53.3% 40.6%
Total gross profit % 34.7% 36.3%
Selling and administrative as
a % of revenue 30.1% 32.1%
Operating income as a % of
revenue 5.1% 4.1%
(a) The sum of the earnings per share amounts do not equal the total
due to rounding.
(b) The calculation of diluted earnings per common share for the first
quarter of fiscal 2006 and 2005 assumes the conversion of
convertible notes resulting in 770 and 19,295 shares,
respectively. For purposes of diluted earnings per common share,
net income for the first quarter of fiscal 2006 and 2005 includes
the add-back of $88 and $2,248, respectively, representing
interest expense, net of taxes, associated with such convertible
notes.
IKON Office Solutions, Inc.
Computations of Earnings per Common Share
(in thousands, except earnings per share)
(unaudited)
Three Months Ended December 31,
----------------------------------------
2006 2005
------------------- -------------------
Basic Diluted Basic Diluted
--------- --------- --------- ---------
Average Shares Outstanding
Common shares 133,141 133,141 141,477 141,477
Convertible notes - 770 - 19,295
Restricted stock awards - 435 - 420
Stock options - 512 - 1,110
- ---------------------------------------------------------------------
Total shares 133,141 134,858 141,477 162,302
- ---------------------------------------------------------------------
Income from continuing
operations
Net income from continuing
operations $ 27,632 $ 27,632 $ 20,872 $ 20,872
Interest on convertible
notes, net - 88 - 2,248
- ---------------------------------------------------------------------
Adjusted net income from
continuing operations $ 27,632 $ 27,720 $ 20,872 $ 23,120
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Net income (loss) from
discontinued operations $ 11 $ 11 $ (1,126) $ (1,126)
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Total adjusted net income $ 27,643 $ 27,731 $ 19,746 $ 21,994
- ---------------------------------------------------------------------
Earnings per share ("EPS")
EPS from continued
operations $ 0.21 $ 0.21 $ 0.15 $ 0.14
EPS from discontinued
operations 0.00 0.00 (0.01) (0.01)
- ---------------------------------------------------------------------
Total EPS $ 0.21 $ 0.21 $ 0.14 $ 0.14 *
=====================================================================
* Does not add due to rounding.
IKON Office Solutions, Inc.
Consolidated Balance Sheets
(in thousands and unaudited)
December 31, September 30,
2005 2005
------------ -------------
Assets
Cash and cash equivalents $ 265,754 $ 373,705
Restricted cash 18,277 18,272
Accounts receivable, net 694,115 678,313
Lease receivables, net 302,936 317,928
Inventories 262,761 241,470
Prepaid expenses and other current assets 37,711 42,660
Deferred taxes 55,708 55,566
------------ -------------
Total current assets 1,637,262 1,727,914
------------ -------------
Long-term lease receivables, net 424,384 503,281
Equipment on operating leases, net 96,690 101,614
Property and equipment, net 140,011 144,309
Goodwill 1,258,623 1,277,785
Other assets 79,712 76,916
------------ -------------
Total Assets $ 3,636,682 $ 3,831,819
============ =============
Liabilities
Current portion of corporate debt $ 1,060 $ 1,137
Current portion of non-corporate debt 265,214 299,359
Trade accounts payable 175,962 211,783
Accrued salaries, wages and commissions 72,603 94,614
Deferred revenues 114,767 111,890
Taxes payable 87,582 79,458
Other accrued expenses 123,358 139,099
------------ -------------
Total current liabilities 840,546 937,340
------------ -------------
Long-term corporate debt 674,799 728,156
Long-term non-corporate debt 185,394 225,307
Deferred taxes 29,814 20,853
Other long-term liabilities 323,124 349,819
Commitments and contingencies
Shareholders' Equity 1,583,005 1,570,344
------------ -------------
Total Liabilities and Shareholders'
Equity $ 3,636,682 $ 3,831,819
============ =============
IKON Office Solutions, Inc.
Consolidated Statements of Cash Flows
(in thousands and unaudited)
Three Months Ended
December 31
---------------------
2005 2004
---------- ----------
Cash Flows from Operating Activities
Net income $ 27,643 $ 19,746
Net income (loss) from discontinued operations 11 (1,126)
---------- ----------
Income from continuing operations 27,632 20,872
Additions (deductions) to reconcile net income
to net cash used in operating activities:
Depreciation 17,251 19,092
Amortization 1,097 946
Gain on divestiture of business (4,924) --
Provision for losses on accounts receivable 97 3,361
Deferred income taxes (7,289) (34,093)
Provision for lease default reserves 802 288
Stock-based compensation expense 2,551 2,627
Pension expense 16,844 10,938
Loss from early extinguishment of debt 1,650 --
Changes in operating assets and liabilities,
net of divestiture of businesses:
Increase in accounts receivable (20,214) (21,048)
Increase in inventories (17,328) (52,972)
Decrease in prepaid expenses and other
current assets 2,509 8,733
Decrease in accounts payable, deferred
revenues, and accrued expenses (56,615) (50,597)
Other (722) 1,992
---------- ----------
Net cash used in continuing operations (36,659) (89,861)
Net cash used in discontinued operations (2,114) (2,626)
---------- ----------
Net cash used in operating activities (38,773) (92,487)
---------- ----------
Cash Flows from Investing Activities
Proceeds from the divestiture of business 19,128 --
Expenditures for property and equipment (3,611) (4,848)
Expenditures for equipment on operating leases (7,371) (13,856)
Proceeds from sale of property and equipment 633 643
Proceeds from sale of equipment on operating
leases 2,823 975
Proceeds from the sale of lease receivables 51,142 61,428
Lease receivables -- additions (94,180) (88,159)
Lease receivables -- collections 122,389 136,106
Other (734) (3,804)
---------- ----------
Net cash provided by investing activities 90,219 88,485
---------- ----------
Cash Flows from Financing Activities
Short-term corporate debt repayments, net (29) (91)
Repayment of other borrowings (3,752) (1,981)
Proceeds from issuance of long-term corporate
debt -- 230
Debt issuance costs (821) --
Long-term corporate debt repayments (54,482) (57,496)
Non-corporate debt -- issuances 18,432 5,926
Non-corporate debt -- repayments (87,358) (103,905)
Dividends paid (5,249) (5,667)
(Increase) decrease in restricted cash (5) 311
Proceeds from stock option exercises 5,283 712
Tax benefit relating to stock plans 2,962 354
Purchase of treasury shares (33,392) (21,916)
---------- ----------
Net cash used in financing activities (158,411) (183,523)
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents (986) 6,815
---------- ----------
Net decrease in cash and cash equivalents (107,951) (180,710)
Cash and cash equivalents at beginning of the
year 373,705 472,951
---------- ----------
Cash and cash equivalents at end of the period $ 265,754 $ 292,241
========== ==========
IKON OFFICE SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Three Months Ended
December 31, March 31,
2004 2003 2005 2004
---------- ---------- ---------- ----------
Revenues
--------
Equipment $ 407,413 $ 389,931 $ 444,068 $ 423,112
Customer Service &
Supplies 378,230 376,777 362,752 387,365
Managed and
Professional Services 179,232 187,179 174,916 177,609
Rental & Fees 43,864 26,306 43,039 27,763
Other 76,706 144,117 67,498 145,278
---------- ---------- ---------- ----------
Total Revenues 1,085,445 1,124,310 1,092,273 1,161,127
---------- ---------- ---------- ----------
Cost of Sales
-------------
Equipment 290,248 275,398 322,098 306,453
Customer Service &
Supplies 208,809 207,764 210,547 220,963
Managed and
Professional Services 135,051 133,746 127,844 122,464
Rental & Fees 12,322 7,411 11,512 7,899
Other 45,541 72,277 38,059 73,258
---------- ---------- ---------- ----------
Total Cost of Sales 691,971 696,596 710,060 731,037
---------- ---------- ---------- ----------
Gross Profit
------------
Equipment 117,165 114,533 121,970 116,659
Customer Service &
Supplies 169,421 169,013 152,205 166,402
Managed and
Professional Services 44,181 53,433 47,072 55,145
Rental & Fees 31,542 18,895 31,527 19,864
Other 31,165 71,840 29,439 72,020
---------- ---------- ---------- ----------
Total Gross Profit 393,474 427,714 382,213 430,090
---------- ---------- ---------- ----------
S&A Expense
-----------
Selling Expense 145,516 146,965 139,795 147,782
Administrative Expense 203,392 222,678 207,746 223,538
---------- ---------- ---------- ----------
Total S&A Expense 348,908 369,643 347,541 371,320
---------- ---------- ---------- ----------
(Gain) Loss on
divestiture of business - - (1,901) 12,125
Asset Impairment - - 313 -
Restructuring - - 11,396 -
Operating income 44,566 58,071 24,864 46,645
Loss from early
extinguishment of debt - 73 1,735 3,146
Interest expense, net 12,803 10,085 10,507 9,662
---------- ---------- ---------- ----------
Income from continuing
operations before taxes
on income 31,763 47,913 12,622 33,837
Taxes on income 10,891 18,147 4,873 5,398
---------- ---------- ---------- ----------
Income from continuing
operations 20,872 29,766 7,749 28,439
Discontinued operations:
Operating loss (1,861) (1,632) (14,339) (1,949)
Tax benefit 735 644 5,664 769
---------- ---------- ---------- ----------
Net loss from
discontinued operations (1,126) (988) (8,675) (1,180)
---------- ---------- ---------- ----------
Net income $ 19,746 $ 28,778 $ (926) $ 27,259
========== ========== ========== ==========
Basic Earnings Per Common
Share
Continuing operations $ 0.15 $ 0.20 $ 0.06 $ 0.19
Discontinued operations,
net of income taxes (0.01) (0.01) (0.06) (0.01)
---------- ---------- ---------- ----------
Net income $ 0.14 $ 0.20* $ (0.01)*$ 0.18
========== ========== ========== ==========
Diluted Earnings Per
Common Share
Continuing operations $ 0.14 $ 0.19 $ 0.06 $ 0.18
Discontinued operations,
net of income taxes (0.01) (0.01) (0.06) (0.01)
---------- ---------- ---------- ----------
Net income $ 0.14* $ 0.18 $ (0.01)*$ 0.17
========== ========== ========== ==========
* Does not add due to rounding.
Three Months Ended Three Months Ended
June 30, September 30,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues
--------
Equipment $ 440,378 $ 449,973 $ 475,153 $ 481,177
Customer Service &
Supplies 377,522 380,024 363,516 361,378
Managed and
Professional Services 180,386 180,538 175,468 175,435
Rental & Fees 42,578 40,780 45,776 38,948
Other 57,441 91,912 41,369 80,106
---------- ---------- ---------- ----------
Total Revenues 1,098,305 1,143,227 1,101,282 1,137,044
---------- ---------- ---------- ----------
Cost of Sales
-------------
Equipment 335,590 319,032 352,220 351,847
Customer Service &
Supplies 198,312 207,102 193,872 206,203
Managed and
Professional Services 131,271 124,971 133,493 126,317
Rental & Fees 13,572 13,991 14,258 4,632
Other 30,121 53,560 20,887 45,704
---------- ---------- ---------- ----------
Total Cost of Sales 708,866 718,656 714,730 734,703
---------- ---------- ---------- ----------
Gross Profit
------------
Equipment 104,788 130,941 122,933 129,330
Customer Service &
Supplies 179,210 172,922 169,644 155,175
Managed and
Professional Services 49,115 55,567 41,975 49,118
Rental & Fees 29,006 26,789 31,518 34,316
Other 27,320 38,352 20,482 34,402
---------- ---------- ---------- ----------
Total Gross Profit 389,439 424,571 386,552 402,341
---------- ---------- ---------- ----------
S&A Expense
-----------
Selling Expense 147,968 147,054 147,380 155,598
Administrative Expense 192,476 215,523 212,396 211,571
---------- ---------- ---------- ----------
Total S&A Expense 340,444 362,577 359,776 367,169
---------- ---------- ---------- ----------
(Gain) Loss on
divestiture of business 21 (698) (9,651) -
Asset Impairment 27 - - -
Restructuring (406) - (788) -
Operating income 49,353 62,692 37,215 35,172
Loss from early
extinguishment of debt - 32,687 4,300 -
Interest expense, net 11,260 15,175 10,443 13,135
---------- ---------- ---------- ----------
Income from continuing
operations before taxes
on income 38,093 14,830 22,472 22,037
Taxes on income 12,720 5,628 3,271 1,135
---------- ---------- ---------- ----------
Income from continuing
operations 25,373 9,202 19,201 20,902
Discontinued operations:
Operating loss (3,210) (1,336) (1,299) (2,706)
Tax benefit 1,268 527 513 1,068
---------- ---------- ---------- ----------
Net loss from
discontinued operations (1,942) (809) (786) (1,638)
---------- ---------- ---------- ----------
Net income $ 23,431 $ 8,393 $ 18,415 $ 19,264
========== ========== ========== ==========
Basic Earnings Per Common
Share
Continuing operations $ 0.18 $ 0.06 $ 0.14 $ 0.14
Discontinued operations,
net of income taxes (0.01) (0.01) (0.01) (0.01)
---------- ---------- ---------- ----------
Net income $ 0.17 $ 0.06* $ 0.13 $ 0.13
========== ========== ========== ==========
Diluted Earnings Per
Common Share
Continuing operations $ 0.17 $ 0.06 $ 0.14 $ 0.14
Discontinued operations,
net of income taxes (0.01) (0.01) (0.01) (0.01)
---------- ---------- ---------- ----------
Net income $ 0.16 $ 0.06* $ 0.13 $ 0.13
========== ========== ========== ==========
* Does not add due to rounding.
IKON Office Solutions, Inc.
Reconciliation of Reported to Adjusted Earnings per Diluted Share
(in millions, except per share data)
First Quarter Fiscal 2006 Non-GAAP
Reported Adjustments Adjusted
----------- ----------- ----------
Income from continuing
operations before taxes on
income $ 40,405 $ (3,274)(a) $ 37,131
Taxes on income 12,773 594 (b) 13,367
----------- ----------
Net income from continuing
operations $ 27,632 $ 23,764
=========== ==========
Diluted EPS - continuing
operations $ 0.21 $ 0.18
=========== ==========
May not add due to rounding
(a) Includes a charge of $1,650 from the early extinguishment of debt
and a benefit of $4,924 as a result of the sale of Kafevend.
(b) Tax impact of the charge from the early extinguishment of debt.
The gain on the divestiture of Kafevend is exempt from income tax
under United Kingdom tax law.
IKON Office Solutions, Inc.
Reconciliation of Revenue to Targeted Revenue
(in thousands)
Targeted
Revenues Adjustments(1) Revenues
----------- ----------- -----------
First Quarter Fiscal 2006
Total Revenues $1,042,863 $ (29,842) $1,013,021
First Quarter Fiscal 2005
Total Revenues $1,085,446 $ (76,706) $1,008,740
1Q Yr/Yr Growth -4% 0%
(1) Adjusted to remove the revenues from "Other."
IKON Office Solutions, Inc.
Reconciliation of Reported to Adjusted Operating Income
(in thousands)
Reported Adjustments(1) Adjusted
----------- ----------- -----------
First Quarter Fiscal 2006
Revenues $1,042,863 $1,042,863
Operating income 53,282 (4,924) 48,358
Operating Income Margin % 5.1% 4.6%
First Quarter Fiscal 2005
Revenues $1,085,446 $1,085,446
Operating income 44,567 44,567
Operating Income Margin % 4.1% 4.1%
Basis Point increase 100 50
(1) Adjusted for gain on the sale of Kafevend
