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) January 27, 1999
IKON Office Solutions, Inc.
(Exact name of registrant as specified in its charter)
OHIO File No. 1-5964 23-0334400
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
P.O. Box 834, Valley Forge, Pennsylvania 19482
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Registrant's telephone number, including area code: (610) 296-8000
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Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events.
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On January 27, 1999, IKON Office Solutions, Inc. ("IKON" or "the
Registrant") announced its earnings for the first quarter of fiscal 1999. IKON
generated net income of $20.1 million or $.13 per share, excluding an after-tax
gain of $8.6 million or $.06 per share from a $250 million asset securitization.
The fiscal 1999 first quarter results reflect substantial improvements in
earnings trends as compared to results reported for the second half of fiscal
1998.
For the first quarter of fiscal 1998, IKON generated $49.7 million in net
income or $.33 per share before transformation costs. Including transformation
costs, net income was $37 million or $.24 per share.
Revenues for the first quarter of fiscal 1999 were $1.38 billion excluding
the gain, compared to $1.37 billion in the first quarter of fiscal 1998. The
flat revenue reflects the elimination of unprofitable revenue streams and a
transition away from low-margin, commodity products.
The Registrant's 38.8% gross margin, excluding the securitization gain, for
the 1999 first quarter reflected an improvement of 450 basis points over the
34.3% gross margin reported for the 1998 fourth quarter. The improvement
reflected greater profitability in both equipment and service sales, due to the
elimination of inappropriate discounting, an increased focus on controlling
service costs, and the strong turnaround in Management Services.
The Registrant continues to roll out the program of expense reductions and
productivity initiatives announced in the 3rd and 4th quarters of fiscal 1998.
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, no assurances can be given 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
uncertainties and risks that could significantly affect current plans,
anticipated actions and the Registrant's future financial condition and results.
These uncertainties and risks include, but are not limited to, risks and
uncertainties relating to conducting operations in a competitive environment;
delays, difficulties, technological changes, management transitions and
employment issues associated with consolidation of business operations; risks
and uncertainties associated with the implementation of a preferred vendor
program; risks and uncertainties relating to successfully managing the
integration of acquired companies, including companies with technical services
and products that are relatively new to the Registrant, and also including
companies outside the United States, which present additional risks relating to
international operations; risks and uncertainties relating to potential year
2000 deficiencies associated with the operation of IKON's internal systems and
distributed products; debt service requirements (including sensitivity to
fluctuation in interest rates); and general economic conditions. As a
consequence, 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.
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(99) Press Release dated January 27, 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
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Michael J. Dillon
Vice President and Controller
Dated: January 27, 1999