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%
<FN>
(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.
</FN>
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%
<FN>
(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.
</FN>
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%
<FN>
(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.
</FN>
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%
<FN>
(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).
</FN>
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
============================================================================================================
<FN>
(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).
</FN>
This information is provided for additional analysis and is not intended to be a
presentation in accordance with generally accepted accounting principles.