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, 1997 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, 1997.
Common Stock, $.01 par value per share 1,000 shares
Registered Debt Outstanding as of July 31, 1997 $1,481,250,000
The registrant, an indirect wholly owned subsidiary of IKON Office Solutions,
Inc. ("IKON"), 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, 1997 and
September 30, 1996
Statements of Income--Three months ended
June 30, 1997 and June 30, 1996 and Nine months
ended June 30, 1997 and June 30, 1996
Statements of Cash Flows--Nine months ended
June 30, 1997 and June 30, 1996
Notes to Financial Statements--June 30, 1997
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 (unaudited)
IKON CAPITAL, INC.
BALANCE SHEETS
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
June 30, September 30,
1997 1996
<S> <C> <C>
Assets
Investment in leases:
Direct financing leases $1,529,879 $1,140,851
Less: Unearned income (268,000) (203,459)
----------- -----------
1,261,879 937,392
Funded leases, net 443,374 313,250
----------- -----------
1,705,253 1,250,642
Cash 349
Accounts receivable 52,098 48,334
Due from IKON 38,134
Prepaid expenses and other assets 13,389 15,582
Leased equipment-operating rentals at cost
less accumulated depreciation of:
6/97 - $29,751 9/96 - $ 17,624 43,028 31,341
Property and equipment at cost, less
accumulated depreciation of:
6/97 - $3,220 9/96 - $ 2,536 11,210 6,889
=========== ===========
Total assets $1,863,461 $1,352,788
=========== ===========
Liabilities and shareholder's equity
Liabilities:
Accounts payable and accrued expenses $37,464 $42,538
Accrued interest 5,258 20,870
Due to IKON 24,330
Notes payable to banks 25,000 58,000
Medium term notes 1,476,250 969,900
Deferred income taxes 65,924 45,750
----------- -----------
Total liabilities 1,609,896 1,161,388
Shareholder's equity:
Common Stock - $.01 par value, 1,000 shares
authorized, issued, and outstanding
Contributed capital 144,415 112,415
Retained earnings 109,150 78,985
----------- -----------
Total shareholder's equity 253,565 191,400
=========== ===========
Total liabilities and shareholder's equity $1,863,461 $1,352,788
=========== ===========
</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
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $44,494 $32,025 $122,051 $85,565
Rental income 6,545 3,733 16,473 10,310
Interest on IKON tax deferrals 3,148 2,273 8,772 6,284
Other income 2,090 1,584 5,921 4,673
------ ------ ------- -------
56,277 39,615 153,217 106,832
Expenses:
Interest 22,075 15,564 59,303 42,677
General and administrative 16,634 10,835 44,706 29,631
------ ------ ------- -------
38,709 26,399 104,009 72,308
Gain on sale of investment in leases 642 329 1,919 918
------ ------ ------- -------
Income before income taxes 18,210 13,545 51,127 35,442
Provision for income taxes 7,466 5,553 20,962 14,531
------ ------ ------- -------
Net income $10,744 $7,992 $30,165 $20,911
====== ====== ======= =======
</TABLE>
See notes to financial statements
<PAGE>
IKON CAPITAL, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30
1997 1996
<S> <C> <C>
Operating activities:
Net income $30,165 $20,911
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 13,743 10,044
Provision for deferred taxes 20,174 27,014
Gain on sale of investment in leases (1,919) (918)
Changes in operating assets and liabilities:
Accounts receivable (3,764) (11,477)
Prepaid expenses and other assets 4,112 (3,904)
Accounts payable and accrued expenses (5,074) (573)
Accrued interest (15,612) (7,754)
--------- ---------
Net cash provided 41,825 33,343
--------- ---------
Investing activities:
Purchases of leased equipment, net (24,746) (14,076)
Purchases of property and equipment, net (5,005) (1,420)
Direct financing leases:
Additions (884,826) (625,591)
Cancellations 139,510 104,835
Collections 343,578 224,383
Proceeds from sale 77,251 39,571
Funded leases:
Additions (314,058) (197,577)
Cancellations 49,518 24,407
Collections 134,416 52,241
--------- ---------
Net cash used (484,362) (393,227)
--------- ---------
Financing activities:
Proceeds from bank borrowings 60,000
Payments on bank borrowings (33,000) (150,000)
Proceeds from issuance of medium term notes 632,350 397,900
Payments on medium term notes (126,000) (30,000)
Capital contributed by IKON 32,000 30,000
--------- ---------
Net cash provided 505,350 307,900
--------- ---------
Decrease (increase) in amounts due to IKON 62,813 (51,984)
Due (to) from IKON at beginning of year (24,330) 26,577
========= =========
Cash and due from (to) IKON at end of period $38,483 ($25,407)
========= =========
</TABLE>
See notes to financial statements.
<PAGE>
IKON Capital, Inc.
Notes to Financial Statements
June 30, 1997
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, 1996.
Note 2: Medium Term Note Program
During the nine months ended June 30, 1997, IKON Capital issued
$632.4 million under its medium term note program. In May 1997, the Company
filed a shelf registration to increase the total amount of the program from $1.5
billion to $3.5 billion. At June 30, 1997, $1,476.3 million of medium term notes
were outstanding with a weighted average interest rate of 6.7%. The remaining
amount available under this registration statement is $1,867.8 million.
Note 3: Asset Securitization
In September 1996, IKON Capital entered into a new agreement to sell,
under an asset securitization program, an undivided ownership interest in $150
million of eligible direct financing lease receivables. This is in addition to
an existing agreement for $125 million entered into in September 1994. Under
these agreements, the Company sold $77.3 million in direct financing leases
during the first nine months of fiscal 1997, replacing leases which had been
liquidated during the period and recognized a pretax gain of approximately $1.9
million. Under the terms of the sales agreements, the Company will continue to
service the lease portfolio.
<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, 1997 Compared
with the Three Months Ended June 30, 1996
Comparative summarized results of operations for the three months ended June 30,
1997 and 1996 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
1997 1996 Amount Percent
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $44,494 $32,025 $ 12,469 38.9%
Rental income 6,545 3,733 2,812 75.3%
Interest on IKON tax deferrals 3,148 2,273 875 38.5%
Other income 2,090 1,584 506 31.9%
---------- ---------- ----------
56,277 39,615 16,662 42.1%
Expenses:
Interest 22,075 15,564 6,511 41.8%
General and administrative 16,634 10,835 5,799 53.5%
---------- ---------- ----------
38,709 26,399 12,310 46.6%
Gain on sale of investment in leases 642 329 313 95.1%
---------- ---------- ----------
Income before income taxes 18,210 13,545 4,665 34.4%
Provision for income taxes 7,466 5,553 1,913 34.4%
---------- ---------- ----------
Net income $ 10,744 $ 7,992 $ 2,752 34.4%
========== ========== ==========
</TABLE>
Revenues
Total revenues increased $16.7 million or 42.1% in the third quarter of fiscal
1997 compared to the third quarter of fiscal 1996. Approximately 74.8% or $12.5
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. The lease portfolio, net of lease receivables that were sold in asset
securitization transactions, increased 36.5% from June 30, 1996 to June 30,
1997.
Office equipment placed on rental by the IKON dealers to customers, with
cancelable terms, may be purchased by the Company. During the third quarters of
fiscal 1997 and 1996, IKON Capital purchased operating lease equipment of $8.3
million and $5.0 million, respectively. Operating leases contributed $6.5
million in rental income during the third quarter of fiscal 1997, compared to
$3.7 million in the third quarter of fiscal 1996.
<PAGE>
The Company earns interest income on the deferred tax liabilities of the IKON
dealers associated with leases funded through the Company at a rate consistent
with the Company's weighted average outside borrowing rate of interest. The
Company's average rate was 6.7% for both the third quarter of fiscal 1997 and
fiscal 1996. The deferred tax base upon which these payments are calculated
increased 41.8% to $201.4 million at June 30, 1997 from $142.0 million at June
30, 1996. As a result of the increased deferred tax liabilities, interest income
on deferred taxes rose $875,000 or 38.5% when comparing the three months ended
June 30, 1997 to the three months ended June 30, 1996.
Other income consists primarily of late payment charges and various billing
fees. The structure of these fees has remained basically unchanged from fiscal
1996. 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 $506,000 or 31.9%, when comparing the third quarter
of fiscal 1997 to the same period of fiscal 1996.
Expenses
Debt to fund the lease portfolio in the form of loans from banks and the
issuance of medium term notes in the public market increased by 42.6%, to
$1,501.3 million outstanding at June 30, 1997. The Company paid a weighted
average interest rate on all borrowings for the third quarters of fiscal 1997
and fiscal 1996 of 6.7%. As a result of the increased borrowings, interest
expense grew by $6.5 million or 41.8%, when comparing the third quarter of
fiscal 1997 to fiscal 1996. At June 30, 1997, the Company's debt to equity
ratio, including intercompany amounts due from IKON was 5.8 to 1.
Total general and administrative expenses for the quarter ended June 30, 1997
increased by $5.8 million or 53.5%, over the quarter ended June 30, 1996. The
general and administrative expense category in the third quarter of fiscal 1997
includes depreciation expense on leased equipment totaling $5.2 million,
compared to $3.3 million for the third quarter of fiscal 1996. In addition, the
general and administrative expense category includes lease bonus subsidy
payments to either IKON or directly to the IKON dealers, based on the level of
dealer participation in the Company's leasing programs or for the funding of
targeted new lease volume. During the third quarter of fiscal 1997, lease bonus
subsidy payments totaled $2.1 million as compared to $2.0 million during the
third quarter of fiscal 1996.
Excluding the effects of increased depreciation expense on operating leases and
lease bonus subsidy payments, remaining general and administrative expenses grew
by $3.8 million or 35.2% compared to general and administrative expenses in the
third quarter of fiscal 1996. This increase is attributable to the growth in the
lease portfolio.
Gain on Sale of Investment in Leases
In September 1996, the Company entered into an asset securitization transaction
whereby the Company sold an undivided ownership interest in $150 million in
eligible direct financing lease receivables. This agreement was structured as a
revolving securitization so that as collections reduce previously sold
interests, additional leases can be sold up to $150 million.
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 was also structured as a revolving
securitization. Under this program, additional leases can be sold up to $125
million as collections reduce previously sold lease receivables.
During the three months ended June 30, 1997, collections reduced previously sold
interests under these two agreements by approximately $25.8 million. The Company
sold an additional $25.8 million in net eligible direct financing leases during
the third quarter of fiscal 1997 and recognized pretax gains of $642,000.
<PAGE>
Income Before Income Taxes
Income before income taxes for the third quarter of fiscal 1997 increased by
$4.7 million or 34.4% over the third quarter of fiscal 1996. This increase in
income before income taxes was essentially the effect of higher earnings on a
larger lease portfolio base net of increased general and administrative
expenses, partially offset by higher borrowing costs due to the increased debt
to fund the lease portfolio.
Provision for Income Taxes
Income taxes for the third quarter of fiscal 1997 increased by $1.9 million or
34.4% over the third quarter of fiscal 1996. This increase in income taxes is
directly attributable to the increase in income before taxes in the third
quarter of fiscal 1997 as compared to the third quarter of fiscal 1996. The
effective tax rate was 41% for both the third quarter of fiscal 1997 and 1996.
Nine Months Ended June 30, 1997 Compared
with the Nine Months Ended June 30, 1996
Comparative summarized results of operations for the nine months ended June 30,
1997 and 1996 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
1997 1996 Amount Percent
<S> <C> <C> <C> <C>
Revenues:
Lease finance income $122,051 $85,565 $ 36,486 42.6%
Rental income 16,473 10,310 6,163 59.8%
Interest on IKON tax deferrals 8,772 6,284 2,488 39.6%
Other income 5,921 4,673 1,248 26.7%
------- ------- -------
153,217 106,832 46,385 43.4%
Expenses:
Interest 59,303 42,677 16,626 39.0%
General and administrative 44,706 29,631 15,075 50.9%
------- ------- -------
104,009 72,308 31,701 43.8%
Gain on sale of investment in leases 1,919 918 1,001 109.0%
------- ------- -------
Income before income taxes 51,127 35,442 15,685 44.3%
Provision for income taxes 20,962 14,531 6,431 44.3%
------- ------- -------
Net income $30,165 $20,911 $ 9,254 44.3%
======= ======= =======
</TABLE>
Revenues
Total revenues increased $46.4 million or 43.4% in the first nine months of
fiscal 1997 compared to the first nine months of fiscal 1996. Approximately
78.7% or $36.5 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. The lease portfolio, net of lease receivables that
were sold in asset securitization transactions, increased 36.5% from June 30,
1996 to June 30, 1997.
<PAGE>
Office equipment placed on rental by the IKON dealers to customers, with
cancelable terms, may be purchased by the Company. During the first nine months
of fiscal 1997 and 1996, IKON Capital purchased operating lease equipment of
$24.7 million and $14.1 million, respectively. Operating leases contributed
$16.5 million in rental income during the first nine months of fiscal 1997,
compared to $10.3 million in the first nine months of fiscal 1996.
The Company earns interest income on the deferred tax liabilities of the IKON
dealers associated with leases funded through the Company at a rate consistent
with the Company's weighted average outside borrowing rate of interest. The
Company's average rate was 6.7% for the both the first nine months of fiscal
1997 and fiscal 1996. The deferred tax base upon which these payments are
calculated increased 41.8% to $201.4 million at June 30, 1997 from $142.0
million at June 30, 1996. As a result of the increased deferred tax liabilities,
interest income on deferred taxes rose $2.5 million or 39.6% when comparing the
nine months ended June 30, 1997 to the nine months ended June 30, 1996.
Other income consists primarily of late payment charges and various billing
fees. The structure of these fees has remained basically unchanged from fiscal
1996. 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 $1.2 million or 26.7%, when comparing the first nine
months of fiscal 1997 to the same period of fiscal 1996.
Expenses
Debt to fund the lease portfolio in the form of loans from banks and the
issuance of medium term notes in the public market increased by 42.6%, to
$1,501.3 million outstanding at June 30, 1997. The Company paid a weighted
average interest rate on all borrowings for the first nine months of both fiscal
1997 and fiscal 1996 of 6.7%. As a result of the increased borrowings, interest
expense grew by $16.6 million or 39.0%, when comparing the first nine months of
fiscal 1997 to the first nine months of fiscal 1996. At June 30, 1997, the
Company's debt to equity ratio, including intercompany amounts due from IKON,
was 5.8 to 1.
Total general and administrative expenses for the nine months ended June 30,
1997 increased by $15.1 million or 50.9%, over the nine months ended June 30,
1996. The general and administrative expense category in the first nine months
of fiscal 1997 includes depreciation expense on leased equipment totaling $13.1
million, compared to $9.6 million for the first nine months of fiscal 1996. In
addition, the general and administrative expense category includes lease bonus
subsidy payments to either IKON or directly to the IKON dealers, based on the
level of dealer participation in the Company's leasing programs or for the
funding of targeted new lease volume. During the first nine months of fiscal
1997, lease bonus subsidy payments totaled $7.7 million as compared to $4.5
million during the first nine months of fiscal 1996.
Excluding the effects of increased depreciation expense on operating leases and
lease bonus subsidy payments, remaining general and administrative expenses grew
by $8.4 million or 28.4% compared to general and administrative expense for the
first nine months of fiscal 1996. This increase is attributable to the growth in
the lease portfolio.
Gain on Sale of Investment in Leases
In September 1996, the Company entered into an asset securitization transaction
whereby the Company sold an undivided ownership interest in $150 million in
eligible direct financing lease receivables. This agreement was structured as a
revolving securitization so that as collections reduce previously sold
interests, additional leases can be sold up to $150 million.
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 was also structured as a revolving
securitization. Under this program, additional leases can be sold up to $125
million as collections reduce previously sold lease receivables.
<PAGE>
During the nine months ended June 30, 1997, collections reduced previously sold
interests under these two agreements by approximately $77.3 million. The Company
sold an additional $77.3 million in net eligible direct financing leases during
the first nine months of fiscal 1997 and recognized pretax gains of
approximately $1.9 million.
Income Before Income Taxes
Income before income taxes for the first nine months of fiscal 1997 increased by
$15.7 million or 44.3% over the first nine months of fiscal 1996. This increase
in income before income taxes was essentially the effect of higher earnings on a
larger lease portfolio base net of increased general and administrative
expenses, partially offset by higher borrowing costs due to the increased debt
to fund the lease portfolio.
Provision for Income Taxes
Income taxes for the first nine months of fiscal 1997 increased by $6.4 million
or 44.3% over the first nine months of fiscal 1996. This increase in income
taxes is directly attributable to the increase in income before taxes in the
first nine months of fiscal 1997 compared to the first nine months of fiscal
1996. The effective tax rate was 41% for both the first nine months of fiscal
1997 and 1996.
FORWARD-LOOKING INFORMATION
This document contains disclosures which are forward-looking statements relating
to the Company or its parent, IKON, within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the 1934 Act. Such forward-looking statements address, among other things,
strategic initiatives (including plans for enhancing the Company's or IKON's
business through new acquisitions, information technology systems, sales
strategies, market growth plans, margin enhancement initiatives, capital
expenditure requirements and financing sources). 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
the Company's and/or IKON's current plans, anticipated actions and future
financial condition and results. These uncertainties and risks include, but are
not limited to, those relating to IKON's successful management of an aggressive
program to acquire and integrate new companies, including companies with
technical services and products that are relatively new to IKON, and also
including companies outside the United States, which present additional risks
relating to international operations; risks and uncertainties (applicable to
both the Company and IKON) relating to conducting operations in a competitive
environment; delays, difficulties, technological changes and employment issues
(applicable to both the Company and IKON) associated in a large-scale
transformation project; debt service requirements (applicable to both the
Company and IKON) 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 from those
expressed in any forward-looking statements made by or on behalf of the Company
or IKON.
<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 21, 1997, the registrant filed a Current Report on Form
8-K to file, under Item 5 of the form, information contained in a
press release issued by its parent, IKON Office Solutions, Inc.
("IKON") announcing i) earnings for the fiscal quarter ended March
31, 1997; ii) certain management changes, and iii) its intention to
repurchase from time to time as much as 5 percent of outstanding
shares in open market transactions.
On April 24, 1997, the registrant filed a Current Report on Form
8-K to file, under Item 5 of the form, information contained in a
press release issued by the Registrant's parent, IKON Office
Solutions, Inc. ("IKON"), which stated that IKON was unaware of any
reason its stock, which recently had traded down sharply, should be
under pressure, and stated that IKON knew of no material
developments concerning its business or financial statements which
had not been publicly disclosed.
On June 27, 1997, the registrant filed a Current Report on Form 8-K
to file, under Item 5 of the form, information contained in a press
release issued by its parent, IKON Office Solutions, Inc. ("IKON"),
which indicated that IKON's third and fourth quarter earnings would
be lower than expected.
On July 17, 1997, the registrant filed a Current Report on Form 8-K
to file, under Item 5 of the form, information contained in a press
release issued by its parent, IKON Office Solutions, Inc. ("IKON")
concerning IKON's earnings for the fiscal quarter ended June 30,
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 12, 1997 /s/ Harry G. Kozee
Harry G. Kozee
Vice President - Finance
(Chief Accounting Officer)
<PAGE>
Index to Exhibits
Exhibit Number
(27) Financial Data Schedule
<TABLE> <S> <C>
<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>
<CIK> 0000922255
<NAME> IKON CAPITAL INC
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 349,000
<SECURITIES> 0
<RECEIVABLES> 1,757,351,000<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 87,209,000<F2>
<DEPRECIATION> 32,971,000<F2>
<TOTAL-ASSETS> 1,863,461,000
<CURRENT-LIABILITIES> 0
<BONDS> 1,501,250,000
0
0
<COMMON> 0<F3>
<OTHER-SE> 253,565,000
<TOTAL-LIABILITY-AND-EQUITY> 1,863,461,000
<SALES> 0
<TOTAL-REVENUES> 153,217,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 44,706,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 59,303,000
<INCOME-PRETAX> 51,127,000
<INCOME-TAX> 20,962,000
<INCOME-CONTINUING> 30,165,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 30,165,000
<EPS-PRIMARY> 0<F4>
<EPS-DILUTED> 0<F4>
<FN>
<F1> Includes net investments in leases of $1,705,253,000 and other
accounts receivable.
<F2>Includes leased equipment of cost - $72,779,000; accumulated depreciation -
$29,751,000.
<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>
