<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
(Mark One)*
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1996 or [ ] Transition
-------------
report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
for the transition period from ________ to ______
Commission file number 0-20405
----------------------------------------------------------
IKON CAPITAL, INC
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2493042
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1738 Bass Road, Macon, Georgia 31210
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(912) 471-2300
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
NONE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
* Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
----- -----
* Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 31, 1996.
Common Stock, $.01 par value per share 1,000 shares
Registered Debt Outstanding as of July 31, 1996 $969,900,000
The registrant, an indirect wholly owned subsidiary of Alco Standard Corporation
("Alco"), meets the conditions set forth in General Instruction H(1)(a) and (b)
of Form 10-Q and is, therefore, filing with the reduced disclosure format
contemplated thereby.
<PAGE>
INDEX
IKON CAPITAL, INC.
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (Unaudited)
Balance Sheets--June 30, 1996 and
September 30, 1995
Statements of Income--Three months ended
June 30, 1996 and June 30, 1995 and
Nine months ended June 30, 1996 and June 30, 1995
Statements of Cash Flows--Nine months ended
June 30, 1996 and June 30, 1995
Notes to Financial Statements--June 30, 1996
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
- ----------
<PAGE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1: FINANCIAL STATEMENTS
- ----------------------------
IKON CAPITAL, INC.
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1996 1995
-------------- ----------------
<S> <C> <C>
ASSETS
Investments in leases:
Direct financing leases $1,133,089 $ 824,876
Less: Unearned income (183,839) (132,428)
-------------- ----------------
949,250 692,448
Funded leases, net 299,877 178,948
-------------- ----------------
1,249,127 871,396
Accounts receivable 38,124 26,647
Due from Alco Standard Corporation 26,577
Prepaid expenses and other assets 12,470 7,648
Leased equipment-operating rentals at cost
less accumulated depreciation of:
6/96 - $14,780 9/95 - $5,912 29,764 25,247
Property and equipment at cost, less
accumulated depreciation of:
6/96 - $2,354 9/95 - $1,869 5,595 4,660
-------------- ----------------
Total assets $1,335,080 $ 962,175
============== ================
LIABILLITIES AND SHAREHOLDER'S EQUITY
Liabilities:
Accounts payable and accrued expenses $ 10,267 $ 10,840
Accrued interest 4,795 12,549
Due to Alco Standard Corporation 25,407
Notes payable to Banks 83,000 173,000
Medium Term Notes 969,900 602,000
Deferred income taxes 60,912 33,898
-------------- ----------------
Total liabilities 1,154,281 832,287
Shareholder's equity:
Common Stock - $.01 par value, 1,000 shares
authorized, issued, and outstanding
Contributed capital 112,415 82,415
Retained earnings 68,384 47,473
-------------- ----------------
Total shareholder's equity 180,799 129,888
-------------- ----------------
Total liabilities and shareholder's equity $1,335,080 $ 962,175
============== ================
</TABLE>
See notes to financial statements.
<PAGE>
IKON CAPITAL, INC.
STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30 JUNE 30
1996 1995 1996 1995
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
REVENUES:
Lease finance income $32,025 $20,051 $85,565 $53,848
Rental income 3,733 2,226 10,310 4,060
Interest on Alco income tax deferrals 2,273 1,602 6,284 4,398
Other income 1,584 1,184 4,673 3,319
------------- ------------- ------------ -------------
39,615 25,063 106,832 65,625
EXPENSES:
Interest 15,564 9,752 42,677 24,952
General and administrative 10,835 7,245 29,631 19,153
------------- ------------- ------------ -------------
26,399 16,997 72,308 44,105
GAIN ON SALE OF LEASE RECEIVABLES 329 311 918 884
------------- ------------- ------------ -------------
INCOME BEFORE INCOME TAXES 13,545 8,377 35,442 22,404
PROVISION FOR INCOME TAXES 5,553 3,306 14,531 8,683
------------- ------------- ------------ -------------
NET INCOME $7,992 $5,071 $20,911 $13,721
============= ============== ============ =============
</TABLE>
See notes to financial statements.
<PAGE>
IKON CAPITAL, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $20,911 $13,721
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 10,044 3,993
Provision for deferred taxes 27,014 4,313
Gain on sale of lease receivables (918) (884)
Changes in operating assets and liabilities:
Accounts receivable (11,477) (4,108)
Prepaid expenses and other assets (3,904) (1,312)
Accounts payable and accrued expenses (573) 2,708
Accrued interest (7,754) (1,726)
---------- ----------
Net cash provided 33,343 16,705
---------- ----------
INVESTING ACTIVITIES:
Purchases of leased equipment for operating
rentals, net (14,076) (22,370)
Purchases of property and equipment, net of
disposals (1,420) (1,563)
Direct financing leases:
Additions (625,591) (463,814)
Cancellations 104,835 71,820
Collections 224,383 147,649
Proceeds from sale 39,571 50,220
Funded leases:
Additions (197,577) (90,418)
Cancellations 24,407 14,001
Collections 52,241 27,231
---------- ----------
Net cash used (393,227) (267,244)
---------- ----------
FINANCING ACTIVITIES:
Proceeds from bank borrowings 60,000
Payments on bank borrowings (150,000) (120,000)
Proceeds from issuance of medium term notes 397,900 367,000
Payments on medium term notes (30,000)
Contributed capital 30,000 18,000
---------- ----------
Net cash provided 307,900 265,000
---------- ----------
(INCREASE) DECREASE IN AMOUNTS DUE TO ALCO (51,984) 14,461
DUE FROM (TO) ALCO AT BEGINNING OF PERIOD 26,577 (11,419)
---------- ----------
DUE (TO) FROM ALCO AT END OF PERIOD ($25,407) $3,042
========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
IKON CAPITAL, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
Note 1: Basis of Presentation
---------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the financial statements and
footnotes thereto included in the Company's report on Form 10-K for the year
ended September 30, 1995. Certain prior year amounts have been reclassified to
conform with the current year presentation.
Note 2: Medium Term Note Program
------------------------
During the nine months ended June 30, 1996, IKON Capital issued an
additional $397.9 million under its medium term note program. At June 30, 1996,
$969.9 million of medium term notes remain outstanding with a weighted average
interest rate of 6.7%, leaving $500.1 million available under this program.
Note 3: Asset Securitization
--------------------
Under its $125 million asset securitization agreement commenced in
September 1994, IKON Capital sold $39.6 million of direct financing leases
during the first nine months of fiscal 1996, replacing leases which had been
liquidated during the period and recognized a pretax gain of $918,000. Under the
terms of the sales agreement, the Company continues to service the sold lease
portfolio.
Note 4: Other Developments
------------------
On April 17, 1996, Alco announced that its Board of Directors has approved
the structuring of its businesses, IKON Office Solutions and Unisource, under
separate ownership in order to maximize the future growth potential of both
businesses. On June 19, 1996, Alco announced that Unisource would be spun off
through a tax-free distribution of Unisource stock to Alco shareholders. The
transaction is expected to be completed by the end of calendar year 1996, and
Unisource will then be a separately owned public company. Management does not
believe that this transaction will have a material effect on the Company's
financial position or results of operations.
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
- -------------
Pursuant to General Instruction H(2) (a) of Form 10-Q, the following analysis of
the results of operations is presented in lieu of Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Three Months Ended June 30, 1996 Compared
-----------------------------------------
with the Three Months Ended June 30, 1995
-----------------------------------------
Comparative summarized results of operations for the three months ended June 30,
1996 and 1995 are set forth in the table below. This table also shows the
increase in the dollar amounts of major revenue and expense items between
periods, as well as the related percentage increase.
<TABLE>
<CAPTION>
Three Months
(dollars in thousands) Ended June 30 Increase
------------- --------
1996 1995 Amount Percent
---- ---- ------ -------
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $32,025 $20,051 $11,974 59.7%
Rental income 3,733 2,226 1,507 67.7%
Interest on Alco income tax deferrals 2,273 1,602 671 41.9%
Other income 1,584 1,184 400 33.8%
------- ------- -------
39,615 25,063 14,552 58.1%
Expenses:
Interest 15,564 9,752 5,812 59.6%
General and administrative 10,835 7,245 3,590 49.6%
------- ------- -------
26,399 16,997 9,402 55.3%
Gain on sale of lease receivables 329 311 18 5.8%
------- ------- -------
Income before income taxes 13,545 8,377 5,168 61.7%
Provision for income taxes 5,553 3,306 2,247 68.0%
------- ------- -------
Net income $ 7,992 $ 5,071 $ 2,921 57.6%
======= ======= =======
</TABLE>
Revenues
- --------
Total revenues increased $14.6 million or 58.1% in the third quarter of fiscal
1996 compared to the third quarter of fiscal 1995. Approximately 82.3% or $12.0
million of this increase in revenues was a result of increased lease finance
income due to continued growth in the portfolio of direct financing and funded
leases. During the twelve month period from June 30, 1995 to June 30, 1996, the
portfolio grew at a 60.4% rate, net of lease receivables that were sold in asset
securitization transactions.
Effective October 1, 1994, the Company began offering a new operating lease
program to the IKON dealer network, whereby office equipment placed on rental
with a customer, with cancelable terms, could be funded through the Company and
rented back to the IKON dealer. In prior years, this equipment was funded by
the respective IKON dealer instead of the Company. At June 30, 1996, equipment
with a net book value of $29.8 million was leased under this program, compared
to $18.8 million at June 30, 1995, resulting in rental income of $3.7 million in
the third quarter of fiscal 1996 compared to $2.2 million in the third quarter
of fiscal 1995.
<PAGE>
The Company continues to charge Alco interest on the benefit that Alco receives
for income tax deferrals associated with the Company's leasing transactions. By
agreement with Alco, the Company earns interest income on the deferred tax
balances at a rate consistent with the Company's average cost of debt.
Under this agreement, the Company earned interest at a 6.8% rate for the third
quarter of fiscal 1996, compared to 6.6% for the third quarter of fiscal 1995.
At June 30, 1996, the deferred tax base upon which these payments are calculated
increased to $142.0 million, up from $102.4 million at June 30, 1995. Due to
the combined effect of the increased rate of interest and the increased deferred
tax balances, interest on Alco income tax deferrals rose $671,000 or 41.9% when
comparing the three months ended June 30, 1996 to the three months ended June
30, 1995.
Other income consists primarily of late payment charges and various billing
fees. The structure of these fees has remained basically unchanged from fiscal
1995. The growth in other income from fees is primarily due to the increased
size of the lease portfolio upon which these fees are based. Overall, fee income
from these sources grew by $400,000 or 33.8%, when comparing the third quarter
of fiscal 1996 to the same period of fiscal 1995.
Expenses
- --------
Debt to fund the lease portfolio in the form of loans from major banks and the
issuance of medium term notes in the public markets rose by 54.4%, to a total of
$1.05 billion outstanding at June 30, 1996, up from $682 million outstanding at
June 30, 1995. Due to the combined effect of increased borrowing to fund the
portfolio and an increase in the Company's overall weighted average interest
rate on all borrowings, interest expense grew by $5.8 million or 59.6% when
comparing the third quarter of fiscal 1996 to the third quarter of fiscal 1995.
At June 30, 1996, the Company's debt to equity ratio, including intercompany
amounts due to Alco, was 6.0 to 1.
Total general and administrative expenses grew by approximately $3.6 million or
49.6%, when comparing the third quarter of fiscal 1996 to the same period of
fiscal 1995. However, the general and administrative category includes
depreciation expense on leased equipment which was higher in the third quarter
of fiscal 1996 as compared to the third quarter of fiscal 1995, due to growth in
the balance of leased equipment. Depreciation expense was $3.3 million for the
third quarter of fiscal 1996 and $2.0 million for the third quarter of fiscal
1995. In addition, lease bonus subsidy payments to IKON dealers were $2.0
million for the third quarter of fiscal 1996 compared to $1.8 million for the
third quarter of fiscal 1995.
Excluding the effects of the additional depreciation expense on operating leases
and the additional dealer lease bonus payments in the third quarter of fiscal
1996, remaining general and administrative expenses grew $2.0 million or 58.8%,
when comparing the third quarter of fiscal 1996 to the third quarter of fiscal
1995. This increase is a direct result of the growth of the serviced lease
portfolio.
Gain on Sale of Lease Receivables
- ---------------------------------
Under an asset securitization program entered into in September 1994, the
Company sold an undivided ownership interest in $125 million of eligible direct
financing lease receivables. This agreement, which expires in March 1997, was
structured as a revolving securitization so that as collections reduce
previously sold interests, new leases can be sold up to $125 million. During
the three months ended June 30, 1996, collections reduced previously sold
interests by approximately $13.1 million. The Company sold an additional $13.1
million in net eligible direct financing leases during the quarter and
recognized gains of $329,000.
<PAGE>
Income Before Taxes
- -------------------
Income before taxes increased by $5.2 million or 61.7%, when comparing the third
quarters of fiscal 1996 and fiscal 1995. This increase resulted primarily from
higher earnings on a larger lease portfolio base, partially offset by higher
borrowing costs due to the increased debt to fund the lease portfolio and a
slightly higher average cost of debt in fiscal 1996 versus fiscal 1995.
Taxes on Income
- ---------------
The $2.2 million or 68% increase in income taxes in the three month period ended
June 30, 1996 compared to the three month period ended June 30, 1995 is directly
attributable to the higher income before taxes in the third quarter of fiscal
1996 as compared to the third quarter of fiscal 1995. The effective tax rate
was 41% for the third quarter of fiscal 1996 as compared to an effective tax
rate of 39.5% for the third quarter of fiscal 1995.
Nine Months Ended June 30, 1996 Compared
-----------------------------------------
with the Nine Months Ended June 30, 1995
----------------------------------------
Comparative summarized results of operations for the nine months ended June 30,
1996 and 1995 are set forth in the table below. This table also shows the
increase in the dollar amounts of major revenue and expense items between
periods, as well as the related percentage increase.
<TABLE>
<CAPTION>
Nine Months
(dollars in thousands) Ended June 30 Increase
------------- --------
1996 1995 Amount Percent
---- ---- ------ -------
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $ 85,565 $53,848 $31,717 58.9%
Rental income 10,310 4,060 6,250 153.9%
Interest on Alco income tax deferrals 6,284 4,398 1,886 42.9%
Other income 4,673 3,319 1,354 40.8%
-------- ------- -------
106,832 65,625 41,207 62.8%
Expenses:
Interest 42,677 24,952 17,725 71.0%
General and administrative 29,631 19,153 10,478 54.7%
-------- ------- -------
72,308 44,105 28,203 63.9%
Gain on sale of lease receivables 918 884 34 3.8%
-------- ------- -------
Income before income taxes 35,442 22,404 13,038 58.2%
Provision for income taxes 14,531 8,683 5,848 67.3%
-------- ------- -------
Net income $ 20,911 $13,721 $ 7,190 52.4%
======== ======= =======
</TABLE>
Revenues
- --------
Total revenues increased $41.2 million or 62.8% in the first nine months of
fiscal 1996 compared to the first nine months of fiscal 1995. Approximately 77%
or $31.7 million of this increase in revenues was a result of increased lease
finance income due to continued growth in the portfolio of direct financing and
funded leases. During the twelve month period from June 30, 1995 to June 30,
1996, the portfolio grew at a 60.4% rate, net of lease receivables that were
sold in asset securitization transactions.
<PAGE>
Effective October 1, 1994, the Company began offering a new operating lease
program to the IKON dealer network, whereby office equipment placed on rental
with a customer, with cancelable terms, could be funded through the Company and
rented back to the IKON dealer. In prior years, this equipment was funded by
the respective IKON dealer instead of the Company. At June 30, 1996, equipment
with a net book value of $29.8 million was leased under this program, compared
to $18.8 million at June 30, 1995, resulting in rental income of $10.3 million
for the first nine months of fiscal 1996 as compared to $4.1 million for the
first nine months of fiscal 1995.
The Company continues to charge Alco interest on the benefit that Alco receives
for income tax deferrals associated with the Company's leasing transactions. By
agreement with Alco, the Company earns interest income on the deferred tax
balances at a rate consistent with the Company's average cost of debt. Under
this agreement, the Company earned interest at a 6.8% rate for the first nine
months of fiscal 1996, compared to 6.6% for the first nine months of fiscal
1995. At June 30, 1996, the deferred tax base upon which these payments are
calculated increased to $142.0 million, up from $102.4 million at June 30, 1995.
Due to the combined effect of the increased rate of interest and the increased
deferred tax balances, interest on Alco income tax deferrals rose $1.9 million
or 42.9%, when comparing the first nine months of fiscal 1996 to the first nine
months of fiscal 1995.
Other income consists primarily of late payment charges and various billing
fees. The structure of these fees has remained basically unchanged from fiscal
1995. The growth in other income from fees is primarily due to the increased
size of the lease portfolio upon which these fees are based. Overall, fee
income from these sources grew by $1.4 million or 40.8%, when comparing the
first nine months of fiscal 1996 to the same period of fiscal 1995.
Expenses
- --------
Debt to fund the lease portfolio in the form of loans from major banks and the
issuance of medium term notes in the public markets rose by 54.4%, to a total of
$1.05 billion outstanding at June 30, 1996, up from $682 million outstanding at
June 30, 1995. Due to the combined effect of increased borrowing to fund the
portfolio and an increase in the Company's overall weighted average interest
rate on all borrowings, interest expense grew by $17.7 million or 71%, when
comparing the first nine months of fiscal 1996 to the first nine months of
fiscal 1995. At June 30, 1996, the Company's debt to equity ratio, including
intercompany amounts due to Alco, was 6.0 to 1.
Total general and administrative expenses grew by approximately $10.5 million or
54.7%, when comparing the nine month period ending June 30, 1996 to the nine
month period ending June 30, 1995. However, the general and administrative
category includes depreciation expense on leased equipment which was higher in
the first nine months of fiscal 1996 as compared to the first nine months of
fiscal 1995, due to growth in the balance of leased equipment. Depreciation
expense was $9.6 million for the first nine months of fiscal 1996 and $3.6
million for the first nine months of fiscal 1995. Additionally, lease bonus
subsidy payments to IKON dealers were $4.5 million during the first nine months
of fiscal 1996 compared to $5.9 million during the first nine months of fiscal
1995. This reduction was due to the suspension of the program during the first
two months of fiscal 1996. This program, which was reinstated in December 1995,
is expected to continue for the remainder of fiscal 1996 at levels consistent
with fiscal 1995.
Excluding the effects of the additional depreciation expense on operating leases
and the reduction of dealer lease bonus payments, the remaining general and
administrative expenses grew $5.9 million or 60.6%, when comparing the first
nine months of fiscal 1996 to the same period of fiscal 1995. This increase is
a direct result of growth of the serviced lease portfolio.
<PAGE>
Gain of Sale of Lease Receivables
- ---------------------------------
Under an asset securitization program entered into in September 1994, the
Company sold an undivided ownership interest in $125 million of eligible direct
financing lease receivables. This agreement, which expires in March 1997 and
can be renewed, was structured as a revolving securitization so that as
collections reduce previously sold interests, new leases can be sold up to $125
million. During the first nine months of fiscal 1996, collections reduced
previously sold interest by approximately $39.6 million. The Company sold an
additional $39.6 million in net eligible direct financing leases during the
first nine months of fiscal 1996 and recognized gains of $918,000.
Income Before Taxes
- -------------------
Income before taxes increased $13 million or 58.2%, when comparing the first
nine months of fiscal 1996 and fiscal 1995. This increase resulted primarily
from higher earnings on a larger lease portfolio base, partially offset by
higher borrowing costs due to the increased debt to fund the lease portfolio and
a slightly higher average cost of debt in fiscal 1996 versus fiscal 1995.
Taxes on Income
- ---------------
The $5.8 million or 67.3% increase in income taxes in the first nine months of
fiscal 1996 as compared to the first nine months of fiscal 1995 is directly
attributable to the higher income before taxes in fiscal 1996 as compared to
fiscal 1995. The effective tax rate was 41% for the first nine months of fiscal
1996 as compared to an effective tax rate of 38.8% for the first nine months of
fiscal 1995.
<PAGE>
PART II. OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) The following Exhibits are furnished pursuant to Item 601 of
Regulation S-K:
Exhibit No. (27) Financial Data Schedule
(b) Reports on Form 8-K
On April 22, 1996, the registrant filed a Current Report on Form 8-K
to file, under Item 5 of the Form, the announcement made April 17,
1996 by its parent, Alco Standard Corporation, of the decision to
structure Alco's two businesses, IKON Office Solutions, Inc. and
Unisource Worldwide, Inc., under separate ownership.
On June 27, 1996, the registrant filed a Current Report on Form 8-K to
file, under Item 5 of the form, the announcement made June 19, 1996 by
Alco of its decision to spin off Unisource. The Form 8-K also reported
additional information announced on June 19, 1996, including (i)
Alco's lowering of its earnings expectation for the third quarter due
to lower than expected revenues at Unisource (ii) a one-time charge
against earnings by Alco of approximately $40-$50 million in the third
quarter for new restructuring activities at Unisource, and (iii) a
charge against earnings by Alco in the third quarter of $12-$18
million for costs associated with the disposition of Unisource.
On August 2, 1996, the registrant filed a Current Report on Form 8-K
to file, under Item 5 of the form, the long-term growth goals for IKON
Office Solutions and Unisource Worldwide, Inc. as presented at an
investors' conference held by Alco in New York City on July 31, 1996.
The two businesses will begin operating as independent publicly-owned
companies in January 1997.
<PAGE>
SIGNATURES
----------
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. This report has also been signed by the
undersigned in his capacity as the chief accounting officer of the Registrant.
IKON CAPITAL, INC.
Date August 13, 1996 /s/Robert M. Kearns II
--------------- ----------------------
Robert M. Kearns II
Vice President
(Chief Accounting Officer)
<PAGE>
Index to Exhibits
-----------------
Exhibit Number
- --------------
(27) Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of IKON Capital, Inc. and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Sep-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> JUN-30-1996
<CASH> $0
<SECURITIES> 0
<RECEIVABLES> 1,287,251,000<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 52,493,000<F2>
<DEPRECIATION> 17,134,000<F2>
<TOTAL-ASSETS> 1,335,080,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,052,900,000
0
0
<COMMON> 0<F3>
<OTHER-SE> 180,799,000
<TOTAL-LIABILITY-AND-EQUITY> 1,335,080,000
<SALES> 0
<TOTAL-REVENUES> 106,832,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 29,631,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,677,000
<INCOME-PRETAX> 35,442,000
<INCOME-TAX> 14,531,000
<INCOME-CONTINUING> 20,911,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,911,000
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0<F4>
<FN>
<F1>Includes net investments in leases of $1,249,127,000 and other accounts
receivable.
<F2>Includes leased equipment of: cost - $44,544,000; accumulated depreciation -
$14,780,000
<F3>Common stock, $.01 par value, 1,000 shares outstanding. Since total is less
than $1,000, zero is reported.
<F4>Not required as the registrant is a wholly - owned subsidiary.
</FN>
</TABLE>
