UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to _________________.
Commission file number 1-5964
A. Full title of the plan and the address of the plan, if different from that
B. Of the issuer named below:
IKON OFFICE SOLUTIONS, INC. RETIREMENT SAVINGS PLAN
C. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
IKON OFFICE SOLUTIONS, INC., P.O. BOX 834, VALLEY FORGE, PA 19482-0834
REQUIRED INFORMATION
a. Financial Statements.
The following financial statements are furnished for the Plan.
1. Audited Statements of Net Assets Available for Benefits - December 31,
2000 and 1999
2. Audited Statements of Changes in Net Assets Available for Benefits for
the years ended December 31, 2000 and 1999
3. Notes to Financial Statements
4. Supplemental Schedules
(a) Assets Held (at End of Year)
(b) Schedule of Reportable Transactions
b. Exhibits
Exhibit 23(a) Consent of PricewaterhouseCoopers LLP - Independent Accountant
IKON Office Solutions, Inc. Retirement Savings Plan
Index to Financial Statements and Supplemental Schedules
December 31, 2000 and 1999
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Page(s)
Financial Statements:
Report of Independent Accountants 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4 - 10
Supplemental Schedules:*
Schedule I - Schedule of Assets Held (at End of Year) 11
Schedule II - Schedule of Reportable Transactions 12
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
Report of Independent Accountants
To the Participants and Administrator of
IKON Office Solutions, Inc. Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the IKON Office Solutions, Inc. Retirement Savings Plan (the "Plan") at
December 31, 2000 and 1999, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
PricewaterhouseCoopers LLP
Philadelphia, PA
July 13, 2001
IKON Office Solutions, Inc. Retirement Savings Plan
Statements of Net Assets Available for Benefits
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
2000 1999
Assets:
Investments, at fair value $286,363,831 $347,588,861
------------ ------------
Receivables:
Investment income receivable 12,200 19,000
Receivable for investments sold 595,325 133,961
------------ ------------
Total receivables 607,525 152,961
------------ ------------
Total assets 286,971,356 347,741,822
------------ ------------
Liabilities:
Accrued administrative expenses 562,964 580,111
Payable for investments purchased 6,519,990 15,462
------------ ------------
Total liabilities 7,082,954 595,573
------------ ------------
Net assets available for benefits $279,888,402 $347,146,249
============ ============
The accompanying notes are an integral part of these financial statements.
- 2 -
IKON Office Solutions, Inc. Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 2000 and 1999
- --------------------------------------------------------------------------------
2000 1999
Additions:
Investment income:
Net (depreciation) appreciation in fair value of investments $(116,180,521) $ 23,775,296
Interest and dividends 13,353,903 8,123,439
------------- -------------
(102,826,618) 31,898,735
------------- -------------
Contributions:
Participant 58,920,692 60,551,062
Employer 30,305,252 27,721,398
------------- -------------
89,225,944 88,272,460
------------- -------------
Total additions (13,600,674) 120,171,195
------------- -------------
Deductions:
Payment of benefits 49,162,745 58,907,688
Administrative expenses 4,494,428 4,768,550
------------- -------------
Total deductions 53,657,173 63,676,238
------------- -------------
Net (decrease) increase (67,257,847) 56,494,957
Net assets available for benefits:
Beginning of year 347,146,249 290,651,292
------------- -------------
End of year $ 279,888,402 $ 347,146,249
============= =============
The accompanying notes are an integral part of these financial statements.
- 3 -
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
1. Description of the Plan
The following description of the IKON Office Solutions, Inc. Retirement
Savings Plan (the "Plan") provides only general information. Participants
should refer to the Plan document for a more complete description of the
Plan's provisions.
General
The Plan is a defined contribution plan covering all regular full-time and
part-time non-union employees, as defined by the Plan, of IKON Office
Solutions, Inc. (the "Company") and its domestic subsidiaries which adopt
the Plan.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
Plan Administration
The Plan is administered by the IKON Office Solutions, Inc. Retirement
Plans Committee (the "Committee"). Effective August 1, 2000, Bankers Trust
Company was appointed trustee (the "Trustee") of the Plan and custodian of
the Plan's assets. During the period prior to August 2000, The Northern
Trust Company was the trustee of the Plan and custodian of the Plan's
assets. The Committee and Trustee of the Plan are appointed by the Board of
Directors of the Company. Recordkeeping of the Plan is performed by Hewitt
Associates LLC.
Contributions
Each year, participants may contribute up to 16 percent of their annual
compensation ("Compensation"), as defined by the Plan, in multiples of one
percent except for certain highly compensated participants who may be
subject to certain regulatory limitations. Participants may also contribute
amounts representing rollovers from other qualified plans. The Company
contributes an amount equal to two-thirds of the first 6% of the
Compensation that a participant contributes to the Plan. Employer matching
contributions are made in IKON Office Solutions, Inc. common stock and may
not be redirected by the participant to any of the other available
investment options until the attainment of age 55.
Participant Accounts
Each participant's account is credited with the participant's contribution
and an allocation of (a) the Company contributions and (b) Plan earnings
and charged with an allocation of administrative expenses, if any.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's vested account.
-4-
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
Vesting
Participants are immediately vested in their contributions plus an
allocation of actual earnings thereon. Vesting in the Company's matching
portion of their accounts plus actual earnings thereon is based on the
following:
Years of service Vesting
Less than 2 years 0%
2 years 25%
3 years 50%
4 years 75%
5 years 100%
Participants are also fully vested in the Company's matching portion upon
retirement, position termination due to permanent shutdown of plant or
department, total and permanent disability, or death.
Investment Options
Upon enrollment in the Plan, a participant may direct employee
contributions in one-percent increments in any of the following nine
investment options.
o IKON Office Solutions, Inc. Common Stock Fund
o Chicago Equity Partners Small-Cap Equity Fund
o American Funds Group EuroPacific Growth Fund
o PBHG Growth Fund
o PIMCO Total Return Fund
o Vanguard Institutional Index Fund
o Vanguard Windsor II Fund
o Stable Value Fund
o Balanced Fund
The Stable Value Fund and the Balanced Fund are investment options created
exclusively for the Plan's participants by the Vanguard Group. The Stable
Value Fund invests in investment contracts with various banks and insurance
companies and a common/collective trust sponsored by the Vanguard Group.
The Balanced Fund invests in both the Stable Value Fund and the Vanguard
Institutional Index Fund.
Participants may change their investment options or transfer existing
account balances to other investment options daily, except for employer
matching contributions which are made in IKON Office Solutions, Inc. common
stock and may not be redirected by the participant to any of the other
available investment options until the attainment of age 55.
-5-
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
Participant Loans
Participants may borrow from their accounts a minimum of $1,000 up to a
maximum equal to the lesser of $50,000 or 50 percent of their vested
account balance. Loan terms may not exceed 5 years; however, loan terms may
extend up to 15 years for the purchase of a primary residence. Loans are
secured by the balance in the participant's account and bear interest,
which is set in the month the loan is made, at the prime lending rate as
published in the Wall Street Journal on the last Wednesday of the month
plus one percent. Principal and interest are paid ratably through payroll
deductions.
Payment of Benefits
Participants are entitled to receive a distribution equal to their vested
account balances upon death, retirement, termination, or permanent
disability. Participants may elect to receive benefits in either a lump-sum
payment, periodic installments limited in duration by the provisions of the
Plan, or by the purchase and delivery of a life annuity or qualified joint
and survivor annuity contract. Participants under the age of 59 1/2 may
make withdrawals from their accounts only from after-tax salary deferral
contributions. Participants under the age of 59 1/2 who have participated
in the Plan for at least five years may make withdrawals from their
accounts derived from employer matching contributions and earnings thereon.
Participants under the age of 59 1/2 who have not participated in the Plan
for five years may make withdrawals of all or any portion of their vested
interest derived from employer matching contributions which have been held
by the Plan for at least two full plan years. Any portion of vested assets
may be withdrawn by participants in the case of personal financial hardship
upon approval of the plan administrator. After reaching age 59 1/2
participants may make withdrawals of any portion of their vested assets at
any time without regard to financial hardship.
Forfeitures
During the years ended December 31, 2000 and 1999, $1,333,980 and
$2,386,300, respectively, of employer matching contributions were forfeited
by terminated employees before those amounts became vested. Such forfeited
amounts were used to pay future employer matching contributions. At
December 31, 2000 and 1999, there were no forfeited non-vested amounts.
2. Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared on the accrual
basis of accounting.
Investment Valuation and Income Recognition
The Plan's investments are stated at fair value. Shares of registered
investment companies are valued at quoted market prices which represent the
net asset value of shares held by the Plan at year-end. The Common Stock
Fund is valued at net unit value which is based upon the quoted market
price of common stock and the value of cash and cash equivalents held for
liquidity purposes. Participant loans are valued at cost which approximates
fair value. Cash equivalents are valued at cost which is equal to market
value. Guaranteed investment contracts held in the Stable Value Fund are
stated at contract value which approximates fair value. Common/colletive
funds are valued at net unit value as determined by the Trustee.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
-6-
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
Net appreciation on investments represents the sum of the change in the
difference between year-end market value and cost and the difference
between the proceeds received and the cost of investments sold.
Payment of Benefits
Benefits are recorded when paid.
Plan Expenses
Expenses incurred in connection with the administration of the Plan are
paid by the Plan.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of additions and deductions during the reporting period. Actual
results could differ from those estimates.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133 requires that an entity recognize all derivatives and
measure those instruments at fair value.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000.
Pursuant to SFAS No. 137, the Plan is required to adopt SFAS No. 133
effective January 1, 2001. Management has not yet been able to determine
the impact of SFAS No. 133 on the Plan financial statements as a result of
the inconsistency in accounting literature between SFAS No. 133, requiring
derivatives to be measured at fair value, and the AICPA Audit and
Accounting Guide on "Audits of Employee Benefit Plans" and Statement of
Position 94-4, "Reporting of Investment Contracts Held by Health and
Welfare Benefit Plans and Defined-Contribution Pension Plans", requiring
benefit responsive investment contracts (including synthetic GICs) to be
measured at contract value. Until this discrepancy is resolved, management
is unable to determine the impact that SFAS 133 will have on the Plan
financial statements. The carrying value of those instruments is $7,919,879
at December 31, 2000.
The actual impact on the Plan's net assets available for plan benefits of
adopting SFAS No. 133 will be made based on the derivative positions and
hedging relationships at the date of adoption.
-7-
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
3. Investments
The following investments represent five percent or more of the Plan's net
assets:
December 31, 2000
IKON Office Solutions, Inc. Common Stock Fund $ 64,747,200
American Funds Group EuroPacific Growth Fund 19,029,989
PBHG Growth Fund 39,372,913
Vanguard Investment Contract Trust 58,002,978
Vanguard Institutional Index Fund 69,432,601
December 31, 1999
IKON Office Solutions, Inc. Common Stock Fund $ 105,514,802
American Funds Group EuroPacific Growth Fund 22,611,569
PBHG Growth Fund 49,922,643
Vanguard Investment Contract Trust 49,013,712
Vanguard Institutional Index Fund 81,569,581
During the years ended December 31, 2000 and 1999, the Plan's investments
(including gains and losses on investments bought and sold, as well as held
during the year) (depreciated) appreciated in value as follows:
2000 1999
Registered investment companies $ (27,249,337) $ 48,077,990
Common stock (88,931,184) (24,302,694)
------------- -------------
$(116,180,521) $ 23,775,296
============= =============
-8-
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
4. Nonparticipant-Directed Investments
Employer matching contributions are made in IKON Common Stock and invested
in the IKON Office Solutions, Inc. Common Stock Fund. Employer matching
contributions are non-participant directed and may not be redirected to the
other available investment options by the participants until the attainment
of age 55. Information about significant components of the changes in net
assets of the IKON Office Solutions, Inc. Common Stock Fund is as follows:
2000 1999
Changes in net assets:
Net (depreciation) in fair value of investments $(88,931,184) $(31,864,903)
Dividends 3,350,182 2,831,886
Contributions 48,302,278 51,194,743
Payment of benefits (9,758,589) (18,547,404)
Administrative expenses (331,290)
Transfer from (to) other investment options 6,601,001 (5,046,303)
------------ ------------
$(40,767,602) $ (1,431,981)
============ ============
5. Investment Contracts with Financial Institutions, Insurance Companies and
Banks
The Stable Value Fund (the "Fund") holds shares of a common/collective
trust sponsored by The Vanguard Group with a value of $58,002,978.
Additionally, the Fund holds a guaranteed investment contract, valued at
$1,301,617, and synthetic investment contracts with various banks and
insurance companies ("Issuers"). The Plan is credited with earnings on the
underlying investments and charged for administrative expenses by the
Issuers. The investment contracts included in the Plan are carried at
contract value, which approximates fair value, because the contracts are
fully benefit responsive. The synthetic investment contracts constitute
investments in a unit trust, an individual mortgage security, and an asset
backed security, valued at $6,788,994 and wrapper contracts, valued at
($170,732). The value provided by the wrapper contracts represents the
difference between the value of the synthetic investment contracts and the
underlying investments. The crediting interest rates of the investment
contracts ranged from 6.2 % to 6.7 % at December 31, 2000.
6. Related Party Transactions
During a portion of the year ended December 31, 2000 and the entire year
ended December 31, 1999, certain Plan investments were shares of a
common/collective trust managed by The Northern Trust Company. At December
31, 2000 and a portion of the year then ended, certain Plan investments
were shares of a common/collective trust managed by Bankers Trust Company.
The transactions in these funds are party-in-interest transactions which
are exempt from prohibited transaction rules.
7. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, participants will become 100 percent vested in their accounts.
8. Differences Between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Plan's Form 5500:
2000 1999
Net assets available for benefits per the financial statements $ 279,888,402 $ 347,146,249
Amounts allocated to withdrawing participants (514,488) (269,627)
------------- -------------
Net assets available for benefits per Form 5500 $ 279,373,914 $ 346,876,622
============= =============
The following is a reconciliation of benefits paid to participants for the
year ended December 31, 2000 per the financial statements to the Form 5500:
Year Ended
December 31, 2000
Benefits paid to participants per the financial statements $ 49,162,745
Add: Amounts allocated to withdrawn participants
at December 31, 2000 514,488
Less: Amounts allocated to withdrawn participants
at December 31, 1999 (269,627)
------------
Benefits paid to participants per Form 5500 $ 49,407,606
============
-9-
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2000 and 1999
- --------------------------------------------------------------------------------
Amounts allocated to withdrawing participants are recorded on the Plan's
Form 5500 for benefit claims that have been processed and approved for
payment prior to December 31 but have not yet been paid as of that date.
9. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated April 2, 1999, that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code ("IRC").
The Plan has been amended since receiving the determination letter.
However, the Company believes that the Plan is designed and is currently
being operated in compliance with the applicable requirements of the IRC.
-10-
IKON Office Solutions, Inc. Retirement Savings Plan Schedule I
Schedule of Assets Held for Investment Purposes EIN # 230334400
Form 5500, Schedule H, Part IV, Line I
December 31, 2000
- -------------------------------------------------------------------------------------------------------------------------------
Current
Identity of Issue Investment Type Cost Value
IKON Office Solutions, Inc. Common Stock Fund** Common Stock Fund $ 270,329,799 $64,747,200
Chicago Equity Partners Small-Cap Equity Fund Registered Investment Company 2,029,680
American Funds Group EuroPacific Growth Fund Registered Investment Company 19,029,989
PBHG Growth Fund Registered Investment Company 39,372,913
PIMCO Total Return Fund Registered Investment Company 1,481,402
Vanguard Institutional Index Fund Registered Investment Company 69,432,601
Vanguard Windsor II Fund Registered Investment Company 4,169,819
Principal Mutual Life Insurance Company Guaranteed Investment Contract 1,301,617
Deutsche Bank AG Synthetic Investment Contract 5,611,811
Caisse des Depots et Consignations Synthetic Investment Contract 1,006,451
Vanguard Investment Contract Trust Common/Collective Trust 58,002,978
Pyramid Directed Cash Fund* Common/Collective Trust 9,572,171
IKON Office Solutions, Inc. Retirement
Savings Plan* Participant loans, interest rates
ranging from 8.75% to 9.50%,
maturing between January 1, 2000
and November 2, 2025 10,605,199
--------------
$ 286,363,831
==============
<FN>
* Party-in-interest.
** Party-in-interest. Employer contributions included in this fund are nonparticipant-directed as employer matching
contributions are made in IKON common stock and may not be redirected by participants to the other available investment
options until the attainment of age 55.
</FN>
-11-
IKON Office Solutions, Inc. Retirement Savings Plan Schedule II
Schedule of Reportable Transactions* EIN # 23033440
December 31, 2000
- -----------------------------------------------------------------------------------------------------------------------------------
Dollar Dollar Cost of
Identity of Parties Description Number of Number Value of Value Asset Net
Involved of Assets Purchases of Sales Purchases of Sales Sold Gain/(Loss)
IKON Office Solutions, Inc. Common Stock 83 16 $56,898,205 $6,972,287 $17,614,266 $(10,641,979)
<FN>
* Series of transactions in excess of 5% of the current value of the Plan's assets as of January 1, 2000 as defined in
Section 2520.103-6 of the Department of Labor's Rules and Regulation for Reporting and Disclosure under ERISA.
</FN>
- 12 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
IKON OFFICE SOLUTIONS, INC.
RETIREMENT SAVINGS PLAN
Dated: July 13, 2001 By: /s/ ALLISTER H. MCCREE, JR.
----------------------------
Allister H. McCree, Jr.
Plan Administrator