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, 1999
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
Of the issuer named below:
IKON OFFICE SOLUTIONS, INC. RETIREMENT SAVINGS PLAN
B. 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,
1999 and 1998
2. Audited Statements of Changes in Net Assets Available for Benefits for
the years ended December 31, 1999 and 1998
3. Notes to Financial Statements
4. Supplemental Schedule
(a) Assets Held for Investment Purposes
b. Exhibits
Exhibit 23(a) - Consent of PricewaterhouseCoopers LLP - Independent Accountants
Exhibit 23(b) - Consent of Ernst and Young LLP - Independent Accountants
<PAGE>
IKON OFFICE Solutions, Inc. Retirement Savings Plan
Financial Statements
And Supplemental Schedule
Years ended December 31, 1999 and 1998
Contents
Reports of Independent Accountants..................................... 1-2
Financial Statements
Statements of Net Assets Available for Benefits........................ 3
Statements of Changes in Net Assets Available for Benefits............. 4
Notes to Financial Statements..........................................5-11
Supplemental Schedule*
Assets Held for Investment Purposes.................................... 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.
<PAGE>
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, 1999, and the changes in net assets available for benefits for the
year ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States. 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 audit. We conducted our audit of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit 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
audit provides a reasonable basis for the opinion expressed above.
Our audit was conducted for the purpose of forming an opinion of the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is 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. The supplemental schedule is the responsibility of the Plan's management.
The supplemental schedule has been subjected to the auditing procedures applied
in the audit of the basic financial statements and, in our opinion, is fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
PRICEWATERHOUSECOOPERS LLP
Philadelphia, PA
July 13, 2000
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<PAGE>
Report of Independent Auditors
Retirement Plans Committee
IKON Office Solutions, Inc.
We have audited the accompanying statement of net assets available for benefits
of the IKON Office Solutions, Inc. Retirement Savings Plan as of December 31,
1998, and the related statement of changes in net assets available for benefits
for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998, and the changes in its net assets available for benefits for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young, LLP
Philadelphia, Pennsylvania
June 3, 1999
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<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Statements of Net Assets Available for Benefits
December 31, 1999 and 1998
--------------------------------------------------------------------------------
Year Ended
December 31,
-----------------------------
1999 1998
Assets:
Investments, at fair value $347,588,861 $290,710,408
------------ ------------
Receivables:
Investment income receivable 19,000 810,091
Receivable for investments sold 133,961 --
------------ ------------
Total receivables 152,961 810,091
------------ ------------
Total assets 347,741,822 291,520,499
------------ ------------
Liabilities:
Accrued administrative expenses 580,111 596,577
Payable for investments purchased 15,462 272,630
------------ ------------
Total liabilities 595,573 869,207
------------ ------------
Net assets available for benefits $347,146,249 $290,651,292
------------ ------------
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998
--------------------------------------------------------------------------------
Year Ended
December 31,
--------------------------------
1999 1998
Additions:
Investment income:
Net appreciation (depreciation) in
fair value of investments $ 23,775,296 $(154,739,998)
Interest and dividends 8,123,439 9,195,402
------------- -------------
31,898,735 (145,544,596)
------------- -------------
Contributions:
Participant 60,551,062 57,825,193
Employer 27,721,398 28,456,006
------------- -------------
88,272,460 86,281,199
------------- -------------
Assets transferred from merged plans -- 6,525,585
------------- -------------
Total additions 120,171,195 (52,737,812)
Deductions:
Payment of benefits 58,907,688 60,767,514
Administrative expenses 4,768,550 4,297,386
------------- -------------
Total deductions 63,676,238 65,064,900
Net increase (decrease) 56,494,957 (117,802,712)
Net assets available for benefits:
Beginning of year 290,651,292 408,454,004
------------- -------------
End of year $ 347,146,249 $ 290,651,292
------------- -------------
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
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"). The Northern Trust Company (the
"Trustee") is 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 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.
-5-
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
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 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 Chicago Equity Partners Small-Cap Equity Fund, the PIMCO Total Return
Fund and the Vanguard Windsor II Fund were not available investment options
during 1998.
On May 25, 1999, Unisource Worldwide, Inc. agreed to accept Georgia
Pacific's $12 a share in cash buyout offer. All shares held by the
Unisource Stock Fund were converted to cash and the Unisource Stock Fund
was closed. The cash received was allocated to other investment options
based on participants' current contribution elections or to the Stable
Value Fund for those participants not currently making contributions.
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 to any of the other available investment
options until the attainment of age 55.
-6-
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
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 derived 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 1999 and 1998, $2,386,300 and $1,227,400, respectively, of employer
matching contributions were forfeited by terminating employees before those
amounts became vested. Such forfeited amounts will be used to pay future
employer matching contributions.
2. Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared on the accrual
basis of accounting.
Financial Statement Presentation
The Plan adopted American Institute of Certified Public Accountants
Statement of Position 99-3, Accounting for and Reporting of Certain Defined
Contribution Benefit Plan Investments and Other Disclosure Matters ("SOP
99-3"). Certain reclassifications of the 1998 amounts have been made to
conform to the 1999 presentation in accordance with SOP 99-3.
-7-
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
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. Common stock is
valued at its quoted market price. 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.
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.
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 generally
accepted accounting principles 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.
3. Investments
The following investments represent five percent or more of the Plan's net
assets:
December 31, 1999
IKON Office Solutions, Inc. Common Stock Fund $ 105,514,802
American Funds Group Euro Pacific 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
-8-
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
December 31, 1998
IKON Office Solutions, Inc. Common Stock Fund $ 104,592,120
PBHG Growth Fund 24,843,227
Vanguard Institutional Index Fund 64,412,486
Vanguard Investment Contract Trust 18,535,919
Deutsche Bank Guaranteed Investment Contract 14,866,601
During 1999 and 1998, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
1999 1998
Registered investment companies $ 48,077,990 $ 14,119,246
Common stock (24,302,694) (168,859,244)
------------- -------------
$ 23,775,296 $(154,739,998)
------------- -------------
4. Nonparticipant-Directed Investments
Employer contributions included in the IKON Office Solutions, Inc. Common
Stock Fund are nonparticipant-directed as employer matching contributions
are made in IKON common stock and may not be redirected to the other
available investment options until the attainment of age 55. Information
about the net assets and significant components of the changes in net
assets relating to the IKON Office Solutions, Inc. Common Stock Fund is as
follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1999 1998
<S> <C> <C>
Changes in net assets:
Net depreciation in fair value of investments $ (31,864,903) $(155,304,330)
Dividends 2,831,886 1,678,412
Contributions 51,194,743 55,409,251
Plan mergers -- 1,087,251
Payment of benefits (18,547,404) (22,502,780)
Administrative expenses -- 188,464
Transfer (from) to other investment options (5,046,303) 2,834,279
------------- -------------
$ (1,431,981) $(116,609,453)
------------- -------------
</TABLE>
5. Investment Contracts with Financial Institutions, Insurance Companies
and Banks
The Stable Value Fund (the "Fund") consists of synthetic investment
contracts with various banks and insurance companies ("Issuers") with a
value of $24,037,551. Additionally, the Fund holds shares of a
common/collective trust sponsored by The Vanguard Group with a value of
$49,013,712. The Fund is credited with earnings on the underlying
investments and charged for plan withdrawals and administrative expenses
charged by the Issuers. The investment contracts included in the Fund are
carried at contract value, which approximates fair value, because the
contracts are fully benefit responsive for normal participant-directed
transactions. The investment contracts constitute investments in collective
investment funds, mutual funds and mortgage backed securities. The
crediting interest rates on the investment contracts ranged from 6.2% to
6.7% at December 31, 1999.
-9-
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
6. Related Party Transactions
During 1999 and 1998, certain Plan investments were shares of a
common/collective trust, The Collective Short-Term Investment Fund of the
Northern Trust Company, managed by The Northern Trust Company. The Northern
Trust Company is the trustee as defined by the Plan. The transactions in
this fund are party-in-interest transactions 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. Plan Mergers
The following plans with net assets of $6,525,585 were merged with and into
the Plan during 1998:
<TABLE>
<CAPTION>
Effective Date
Plan of Merger
<S> <C>
Professional Computing, Inc. 401(k) Plan February 1, 1998
FotoBeam, Inc. Profit Sharing Plan April 1, 1998
Percomco, Inc. Employees' Profit Sharing Plan April 1, 1998
3-D Communication, Inc. 401(k) Profit Sharing Plan May 1, 1998
Copifax, Inc. 401(k) Plan May 1, 1998
Datafax Systems, Inc. 401(k) Plan June 1, 1998
American Business Systems, Inc. 401(k) Profit Sharing Plan July 1, 1998
The Eagle Copy Service Profit Sharing Plan July 1, 1998
Sierra Office, Inc. Profit Sharing Plan July 1, 1998
Virtual Networks, Inc. 401(k) Profit Sharing Plan July 1, 1998
Financial Systems Products Corp. 401(k) Plan September 1, 1998
Command Services Corp. 401(k) Plan October 1, 1998
Valcom Computer Center 401(k) Savings Plan November 1, 1998
</TABLE>
-10-
<PAGE>
IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 1999 and 1998
--------------------------------------------------------------------------------
9. Differences between Financial Statements and Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
<S> <C> <C>
Net assets available for benefits per the financial statements $ 347,146,249 $ 290,651,292
Amounts allocated to withdrawing participants (269,627) (232,325)
------------- -------------
Net assets available for benefits per Form 5500 $ 346,876,622 $ 290,418,967
------------- -------------
</TABLE>
The following is a reconciliation of benefits paid to participants for the
year ended December 31, 1999 per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
<S> <C>
Benefits paid to participants per the financial statements $ 58,907,688
Add: Amounts allocated to withdrawn participants
at December 31, 1999 269,627
Less: Amounts allocated to withdrawn participants
at December 31, 1998 (232,325)
------------
Benefits paid to participants per Form 5500 $ 58,944,990
------------
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior
to December 31 but not yet paid as of that date.
10. Tax Status
The Internal Revenue Service has determined and informed the Company by a
letter dated October 24, 1996, 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 Committee believes that the Plan is designed and is
currently being operated in compliance with the applicable requirements of
the IRC.
-11-
<PAGE>
<TABLE>
<CAPTION>
Additional Information
IKON Office Solutions, Inc. Retirement Savings Plan Schedule I
Schedule of Assets Held for Investment Purposes
December 31, 1999
------------------------------------------------------------------------------------------------------------------------------------
Form 5500, Schedule H, Part IV, Line I
Current
Identity of Issue Investment Type Cost Value
<S> <C> <C> <C>
IKON Office Solutions, Inc. Common Stock Fund** Common Stock $ 142,647,004 $ 105,514,802
Chicago Equity Partners Small-Cap Equity Fund Registered Investment Company 110,120
American Funds Group EuroPacific Growth Fund Registered Investment Company 22,611,569
PBHG Growth Fund Registered Investment Company 49,922,643
PIMCO Total Return Fund Registered Investment Company 148,593
Vanguard Institutional Index Fund Registered Investment Company 81,569,581
Vanguard Windsor II Fund Registered Investment Company 560,982
Principal Mutual Life Insurance Company Synthetic Investment Contract 3,827,968
Bayerische Landesbank Synthetic Investment Contract 2,634,685
Caisse des Depots et Consignations Synthetic Investment Contract 1,732,497
Deutsche Bank AG Synthetic Investment Contract 15,842,401
Vanguard Investment Contract Trust Common/Collective Trust 49,013,712
Collective Short-term Investment Fund of the
Northern Trust Company* Common/Collective Trust 1,176,371
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 12,922,937
-------------
$ 347,588,861
-------------
<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 to the other available investment
options until the attainment of age 55.
</FN>
</TABLE>
-12-
<PAGE>
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, 2000 By: /s/ALLISTER H. MCCREE, JR.
--------------------------
Allister H. McCree, Jr.
Plan Administrator
-13-
