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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[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 0-20828.
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below: Danka Office Imaging Company 401(k) Profit
Sharing Plan.
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office: Danka Business Systems PLC, 11201
Danka Circle North, St. Petersburg, Florida 33716.
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REQUIRED INFORMATION
Item 4. Plan financial statements and schedules prepared in accordance with
the financial reporting requirements of ERISA.
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DANKA OFFICE IMAGING COMPANY
401(k) PROFIT SHARING PLAN
Financial Statements and Schedules
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
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DANKA OFFICE IMAGING COMPANY
401(k) PROFIT SHARING PLAN
Table of Contents
PAGE
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits 2
Statements of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4-8
SCHEDULES
1 Schedule of Assets Held for Investment Purposes at End of Year 9
2 Schedule of Reportable Transactions 10
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[KPMG LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Plan Trustees
Danka Office Imaging Company
401(k) Profit Sharing Plan:
We have audited the accompanying statement of net assets available for benefits
of Danka Office Imaging Company 401(k) Profit Sharing Plan (the Plan) as of
December 31, 1999 and 1998, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1999. 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 as of
December 31, 1999 and 1998, and the changes in net assets available for benefits
for the years then ended in conformity with generally accepted accounting
principles.
Our audit was performed with the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at end of year 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 audit 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.
/s/ KPMG LLP
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June 23, 2000
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DANKA OFFICE IMAGING COMPANY
401(k) PROFIT SHARING PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS 1999 1998
------------ -----------
<S> <C> <C>
Investments at fair value (notes 3 and 4) $277,913,655 235,762,647
Accrued income 77,425 94,786
Cash 1,128,725 151,455
Receivables:
Participant contributions 1,516,667 1,994,389
Employer contributions 669,274 903,133
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Total contributions receivable 2,185,941 2,897,522
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Total assets 281,305,746 238,906,410
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LIABILITIES
Refunds payable 279,350 --
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Total liabilities 279,350 --
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Net assets available for plan benefits $281,026,396 238,906,410
============ ===========
</TABLE>
See accompanying notes to financial statements
2
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DANKA OFFICE IMAGING COMPANY
401(k) PROFIT SHARING PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1999
<TABLE>
<S> <C>
Additions to net assets attributed to:
Investment income:
Net appreciation in fair value of investments $ 58,257,974
Interest 1,078,665
Dividends 9,971,443
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Total investment income 69,308,082
Contributions:
Participants 21,613,497
Employer 10,948,032
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Total contributions 32,561,529
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Total additions 101,869,611
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Deductions from net assets attributed to:
Participant distributions 59,552,484
Administrative expenses 197,141
------------
Total deductions 59,749,625
------------
Net increase 42,119,986
Net assets at beginning of year 238,906,410
------------
Net assets at end of year $281,026,396
============
</TABLE>
See accompanying notes to financial statements.
3
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DANKA OFFICE IMAGING COMPANY
401(K) PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) DESCRIPTION OF THE PLAN
Danka Office Imaging Company 401(k) Profit Sharing Plan (the Plan) was
adopted by Danka Corporation (the Sponsor or Employer) on August 8,
1984. The following description of the Plan provides only general
information. The Plan document should be referred to for a complete
description of the Plan's provisions.
(a) GENERAL
The Plan is a defined contribution plan that contains an
employee salary deferral arrangement under Internal Revenue
Code Section 401(k). Any employee who has completed three
months of service is eligible to participate. The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
(b) AMENDMENTS
The Plan has been amended at various times, including an
amendment in January 1994, creating the Danka Business
Systems PLC Fund. On April 1, 1996, the Employer changed its
name from Danka Industries, Inc. to Danka Corporation. On
January 1, 1997, the plan was amended and restated affecting
employee contributions, vesting percentages and participant
loans. In addition, former Kodak employees were eligible to
participate in the plan, which effectively doubled the number
of plan participants. During 1998, the Danka Corporation
401(k) Plan changed its name from Profit Sharing Plan to
Danka Office Imaging Company 401(k).
In October 1999, Danka Office Imaging Company amended its
matching policy from a cash match to a match in Danka
Business Systems PLC common stock. The change was effective
as of February 1, 1999. All employer contributions since
February have been in Danka Business Systems common stock.
(c) CONTRIBUTIONS
The Plan provides that contributions each year will consist
of (a) voluntary employee contributions equal to the amount
of total compensation that each participant has elected to
defer (which may range from 2 percent to 15 percent of the
participant's gross compensation) and (b) an employer
matching contribution. The employer matching contribution is
equal to 100 percent on the first 3 percent of the voluntary
employee contributions and 50 percent on the next 3 percent
contribution. Total elective deferrals for any individual
participant cannot exceed $10,000 for 1999 and 1998,
respectively. In the case of certain highly compensated
individuals, additional restrictions may be applicable.
4
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In October 1999, Danka Office Imaging Company amended its
matching policy from a cash match to a match in Danka
Business Systems PLC common stock. The change was effective
as of February 1, 1999. All employer contributions since
February have been in Danka Business Systems common stock.
Contributions are credited to the individual accounts of each
participant. The Plan allows participants to direct the
investment of their contributions into 28 different
investment options including participant loans and Danka
Business Systems PLC common stock. Unvested Sponsor matching
contributions made in the form of Danka Business Systems PLC
common stock must remain in the Plan until vested, at which
point the participant my direct the value of the investment.
(d) PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution, the Sponsor's matching contribution and an
allocation of Plan earnings and investment gains or losses on
Plan investments. Allocations of earnings and investment
gains or losses are based on the participant's account
balance valued on a daily basis.
(e) FORFEITURES
At December 31, 1999, forfeited nonvested accounts totaled
$249,230. These accounts will be used to pay future expenses
of the Plan.
(f) VESTING
Participants are immediately vested in their voluntary
contributions. Vesting in sponsor contributions is determined
based upon a participant's years of service. The following
schedules indicate the vesting percentages for 1999 and 1998
plan years:
YEARS OF SERVICE VESTED PERCENTAGE
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Less than 1 year --
1 25%
2 50%
3 75%
4 100%
In the event of death or total and permanent disability all
amounts credited to such participant's account shall become
fully vested.
5
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(g) PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of
$1,000 up to a maximum equal to the lesser of $50,000 or 50
percent of their account balance. Loan transactions are
treated as a transfer to (from) the investment fund (from) to
the participant loan fund. Loan terms range from six months
to five years. The loans are secured by the balance in the
participant's account and bear interest at prime interest
rate of the previous quarter before the loan was made, plus
one percent.
(h) PAYMENT OF BENEFITS
Upon retirement, death or termination of service, a
participant may elect to receive either a lump sum amount
equal to the value of his or her account, annual installments
over a ten-year period, or annuity payments for the life of
the participant.
(i) PLAN TERMINATION
Although it has not expressed any intention to do so, the
Company has the right under the Plan to discontinue its
contributions at any time and to discontinue the Plan. In the
event of plan termination, each participant shall receive his
individual account balance in accordance with the Plan
provisions in effect at the time of the Plan termination.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The accompanying financial statements have been prepared
under the accrual method of accounting.
(b) INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair market value.
Valuation of market is determined as of the close of business
on the last day of the plan year. Purchases and sales of
securities are recorded on a trade date basis. Interest
income is recorded on an accrual basis. Dividends are
recorded at the ex-dividend date.
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(c) USE OF ESTIMATES
Management of the Plan has made a number of estimates and
assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and
liabilities and additions to and deletions from net assets to
prepare these financial statements in conformity with
generally accepted accounting principles. Actual results
could differ from those estimates.
(d) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(3) INVESTMENTS
In September 1999, the American Institute of Certified Public
Accountants issued Statement of Position 99-3, "Accounting and
Reporting Certain Defined Contribution Plan Investments and Other
Disclosure Matters". SOP 99-3 simplifies the disclosure for certain
investments and is effective for plan years ending after December 15,
1999. The Plan adopted SOP 99-3 during the year ending December 31,
1999. Accordingly, information previously required to be disclosed
about participant-directed fund investment programs is not presented
in the Plans 1999 financial statements. The Plan's 1998 financial
statements have been reclassified to conform to the current year's
presentation.
The following presents investments that represent 5 percent or more of
the Plan's net assets available for plan benefits at December 31, 1999
and 1998:
1999 1998
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ML Retirement Preservation Trust $ 48,357,714 55,447,816
ML Equity Index Trust 37,454,672 33,995,355
Davis New York Venture Fund 35,819,654 33,900,187
AIM Equity Constellation Fund 27,842,080 20,387,852
Danka Business Systems PLC Fund 50,754,889 11,843,514
Alliance Quasar Fund Class A 15,530,631 23,161,679
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Total $ 215,759,640 178,736,403
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During 1999, the Plan's investments (including investments bought,
sold and held during the year) appreciated in value by $58,257,974 a
follows:
YEAR ENDED DECEMBER
31, 1999
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Investments at fair value as determined by
quoted market price:
Common stocks $ 32,912,351
Common/collective trusts 6,859,931
Mutual Funds 18,485,692
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Net change in fair value $ 58,257,974
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(4) NON-PARTICIPANT DIRECTED INVESTMENTS
As noted in 1(b), effective February 1, 1999, employer contributions
were made in Danka Business Systems PLC common stock. As a result,
this fund contains participant directed and non-participant directed
amounts. As of December 31, 1999 the fair value of this fund, which
was non-participant directed, totaled $966,508.
(5) TRANSACTIONS WITH PARTIES-IN-INTEREST
The Plan held investments in trust funds invested by the Trustee with
a current value of $113,525,398 in 1999 and $116,117,722 in 1998.
The Plan held investments in the common stock of the Sponsor with a
current value of $50,754,889 in 1999 and $11,843,514 in 1998.
(6) TAX STATUS
The Internal Revenue Service has determined and informed the Company
by a letter dated October 22, 1998 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 Plan administrator and the Plan's
tax counsel believe that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
8
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Schedule 1
DANKA OFFICE IMAGING COMPANY
401(k) PROFIT SHARING PLAN
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 1999
<TABLE>
<CAPTION>
IDENTITY FAIR
of Party Involved DESCRIPTION OF INVESTMENT COST VALUE
-------------------------------- ----------------------------------------------------- ----------- --------------
<S> <C> <C> <C>
Common Stocks:
*Danka Business Systems PLC 76,181 shares of Danka Business Systems $ 520,390 966,508
==========
PLC Common Stock (Restricted)
*Danka Business Systems PLC 3,924,362 shares of Danka Business Systems 49,788,381
PLC Common Stock
Eastman Kodak 90,609 shares of Eastman Kodak Common Stock 6,002,863
--------------
Total Common Stocks 56,757,752
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Common/Collective Trusts:
*Merrill Lynch Trust Company 48,357,714 units of Merrill Lynch Retirement 48,357,714
Preservation Trust
*Merrill Lynch Trust Company 370,106 units of Merrill Lynch Equity Index Trust 37,454,672
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Total Common/Collective Trusts 85,812,386
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Mutual Funds:
Davis Venture Advisors 36,195 units of Davis Series Financial Class A 1,052,184
Davis Venture Advisors 4,253 units of Davis Series Inc Real Estate 77,705
AIM Management 3,735 units of AIM Global Resources Fund Class A 48,632
*Merrill Lynch Trust Company 32,590 units of Merrill Lynch Dragon Fund Class A 424,976
*Merrill Lynch Trust Company 980,799 units of Merrill Lynch Federal 9,141,045
Securities Trust
*Merrill Lynch Trust Company 8,297 units of Merrill Lynch Latin American Fund 138,188
Pimco 213,969 units of Pimco Total Return Fund Class A 2,118,296
*Merrill Lynch Trust Company 16,644 units of Merrill Lynch Small Cap Index 196,062
*Merrill Lynch Trust Company 28,685 units of Merrill Lynch Aggregate 282,555
*Merrill Lynch Trust Company 50,564 units of Merrill Lynch International Index 765,034
Pimco 42,272 units of Pimco Long Term US Government 395,667
John Hancock 7,372 units of John Hancock Sovereign 104,455
Seligman 165,090 units of Seligman Communications 7,800,509
Alliance 549,951 units of Alliance Quasar Fund Class A 15,530,631
Calvert 4,576 units of Calvert Social Invest Fund 147,939
*Merrill Lynch Trust Company 66,951 units of Merrill Lynch Eurofund Class A 1,000,242
*Merrill Lynch Trust Company 17,999 units of Merrill Lynch Growth Fund Class A 493,529
*Merrill Lynch Trust Company 861,547 units of Merrill Lynch Global Allocation Fund 12,078,888
AIM Management 687,289 units of AIM Equity Constellation Fund 27,842,080
Templeton 21,025 units of Templeton Developing Markets 328,193
*Merrill Lynch Trust Company 83,683 units of Merrill Lynch Basic Value Fund 3,192,493
Davis Venture Advisors 1,245,468 units of Davis New York Venture Fund 35,819,654
Templeton 792,019 units of Templeton Foreign Fund 8,101,054
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Total Mutual Funds 127,080,011
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Loans:
Loan Fund Participant Loans 8,250,203
Pending Settlement Fund:
*Merrill Lynch Trust Company 13,304 units of CMA Money Fund 13,303
--------------
Total $ 277,913,655
==============
</TABLE>
* Party-in-interest to the Plan.
See accompanying independent auditors' report.
9
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SCHEDULE 2
DANKA OFFICE IMAGING COMPANY
401(k) PROFIT SHARING PLAN
Schedule of Reportable Transactions
December 31, 1999
<TABLE>
<CAPTION>
HISTORICAL NET
PURCHASE SELLING COST OF GAIN/
DESCRIPTION OF ASSET PRICE PRICE ASSET (LOSS)
--------------------------------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Investment transactions:
Danka Business Systems PLC $ 9,375,576 16,742,709 8,847,003 7,895,706
Restricted Common Stock*
</TABLE>
* Party-in-interest to the Plan.
10
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SIGNATURES
The Danka Office Imaging Company 401(k) Profit Sharing Plan. Pursuant
to the requirements of the Securities Exchange Act of 1934, the trustees (or
other persons who administer the employee benefit plan) have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
Danka Office Imaging Company
401(k) Profit Sharing Plan
(Name of Plan)
/s/ Keith J. Nelsen
Date: June 28, 2000 --------------------------------
(Signature)
By: Keith J. Nelsen
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Its: SVP General Counsel and
Secretary
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