<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 22, 1999
IOS CAPITAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE File No. 0-20405 23-2493042
- ------------------------------ ---------------- --------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification
Number)
1738 Bass Road, Macon, Georgia 31210
------------------------------ -----
(Address of principal executive offices) (Zip Code)
(912) 471-2300
Registrant's telephone number, including area code:
Not Applicable
-----------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
------------
A press release issued by the Registrant's parent, IKON Office Solutions,
Inc. ("IKON"), dated April 22, 1999, regarding the appointment of William S.
Urkiel as IKON's Chief Financial Officer and Senior Vice President, is attached.
A press release issued by IKON dated April 28, 1999, regarding IKON's
financial results for the period ended March 31, 1999, including unaudited
consolidated statements of income for the three months ended March 31, 1999 and
the six months ended March 31, 1999, is attached.
This Report includes or incorporates by reference information which may
constitute forward-looking statements within the meaning of the federal
securities laws. Although the Registrant believes the expectations contained in
such forward-looking statements are reasonable, it can give no assurances that
such expectations will prove correct. Such forward-looking information is based
upon management's current plans or expectations and is subject to a number of
risks and uncertainties that could significantly affect current plans,
anticipated actions and the Registrant's and/or IKON's future financial
condition and results. These risks and uncertainties, which apply to both the
Registrant and IKON, include, but are not limited to, risks and uncertainties
relating to conducting operations in a competitive environment; delays,
difficulties, management transitions and employment issues associated with
consolidation of, and/or changes in business operations; managing the
integration of existing and acquired companies; risks and uncertainties
associated with existing or future vendor relationships; and general economic
conditions. Certain additional risks and uncertainties are set forth in the
Registrant's 1998 Annual Report on Form 10-K filed with the Securities and
Exchange Commission. As a consequence of these and other risks and
uncertainties, current plans, anticipated actions and future financial condition
and results may differ materially from those expressed in any forward-looking
statements made by or on behalf of the Registrant.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
c. The following exhibits are furnished in accordance with the
provisions of Item 601 of Regulation S-K:
(99) IKON's Press Release dated April 22, 1999
(99.1) IKON's Press Release dated April 28, 1999
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IOS CAPITAL, INC.
By: /s/ Harry Kozee
----------------
Harry Kozee
Vice President - Finance
Dated: May 4, 1999
<PAGE>
Exhibit 99
IKON P.O. Box 834
Office Solutions Valley Forge, PA 19482-0834
70 Valley Stream Parkway
Malvern, PA 19355
News Release
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Contacts:
Susan Gaffney Veronica Rosa Steven Eck
Investor Relations Investor Relations Media Relations
610-408-7292 610-408-7196 610-408-7295
[email protected] [email protected] [email protected]
----------------- -------------- -------------
IKON NAMES WILLIAM S. URKIEL NEW CFO
Valley Forge, Pennsylvania - April 22, 1999 - IKON Office Solutions
(NYSE:IKN) today announced the appointment of William S. Urkiel to Chief
Financial Officer and Senior Vice President, effective May 10, 1999.
Mr. Urkiel, 53, most recently served as Corporate Vice President and Chief
Financial Officer of AMP Incorporated, a $5.5 billion electronic connector
manufacturer in Harrisburg, PA. Prior to his employment with AMP, Mr. Urkiel
spent 27 years with IBM Corporation, where he held a variety of financial and
planning positions in both operations and corporate finance. A graduate of
Marist College, he also holds a master's degree from Iona College.
"I am excited to welcome Bill to the IKON team," stated James J. Forese,
President and CEO. "He has a strong financial and operational background in
diverse technology companies. We are confident that his strong results-oriented
style will be a great asset to IKON as we strive to deliver greater operational
efficiencies and solid financial results, and to unleash the value of this
strong franchise."
IKON Office Solutions, Inc. (www.ikon.com) is one of the world's leading
office technology companies, providing customers with the total office solutions
from copier and printing systems, computer networking and digital document
services to copy center management, technology training and electronic file
conversion. With fiscal 1998 revenues of more than $5.6 billion, IKON has more
than 1000 locations in the United States, Canada, Mexico, the United Kingdom,
France, Germany and Denmark.
###
<PAGE>
Exhibit 99.1
CONTACTS:
Susan G. Gaffney Veronica L. Rosa
Investor Relations Investor Relations
610-408-7292 610-408-7196
[email protected] [email protected]
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IKON OFFICE SOLUTIONS ANNOUNCES
SECOND QUARTER RESULTS
CONTINUES IMPROVEMENT IN FISCAL 1999
VALLEY FORGE, PENNSYLVANIA APRIL 28, 1999 -- IKON Office Solutions (NYSE:
IKN) today reported results for the second quarter of fiscal 1999. IKON
generated net income of $22.9 million or $.15 per share.
"We are encouraged with our continued progress," stated James J. Forese,
President and Chief Executive Officer. "We posted solid earnings this quarter
due in part to the effects of our expense reduction programs."
"We have made marked progress in strengthening the quality and foundation
of our business, and we're encouraged by the continuing gains in productivity
that are being made in a growing number of our business regions. However, given
the changing dynamics of this industry, including the rapid transition to
digital solutions and the mounting competition from traditional and non-
traditional players, it is clear that we must continue to move aggressively to
ensure IKON's position as a leader."
For the second quarter of fiscal 1998, the Company generated $42.1 million
in net income- before transformation costs of $18.2 million - or $.27 per share.
Including transformation costs, net income was $30.3 million or $.19 per share.
Revenues for the quarter were $1.37 billion, compared to $1.43 billion in
the second quarter of fiscal 1998. The 4% decline in revenue is attributable
primarily to limited availability of digital equipment from IKON suppliers,
reductions in the Company's salesforce and the impact of more-disciplined
marketing practices, including tighter credit standards.
<PAGE>
As anticipated, the Company's 37.6% gross margin for the 1999 second
quarter reflects a decline of 120 basis points from the first quarter of 1999,
as a result of a 170 basis point decline in equipment margins due to price
compression in analog products, given the advent of new digital products.
As a result of IKON's ongoing expense reduction programs launched in the
second half of Fiscal 1998, the Company posted improvement in selling, general
and administrative expenses. Expenses in the quarter declined from the first
quarter as a percentage of revenues by 90 basis points. "Our internal goal for
the year," stated Mr. Forese, "is to reduce expenses 200 basis points from the
fourth quarter of Fiscal 1998, excluding $40.4 million in charges in the fourth
quarter relating to the closing of underperforming branches, executive severance
packages and the settlement of lawsuits. Relative to that, we lowered expenses
70 basis points or $28.2 million in the second quarter."
During the quarter, as a part of its ongoing program to reduce costs and
raise productivity, the Company:
. Completed its previously announced workforce reduction, eliminating 1,500
positions worldwide to enhance productivity throughout the organization;
. Closed or merged 19 field offices in Document Services;
. Merged four districts and three marketplaces in Business Services, North
America;
. Completed a previously announced initiative aimed at identifying ways to
increase efficiency and reduce expenses. Final recommendations, developed
jointly with PricewaterhouseCoopers, are now under review; and,
. Began implementation of several new initiatives, including centralization of
purchasing and logistics under a new vice president and the recruiting of a
senior vice president of marketing to lead the development of IKON's new brand
campaign and integrated marketing programs.
"We are committed to our mission of building a total solutions company
organized around our customers and the market opportunities," Mr. Forese said.
IKON continues to have a number of key strengths on which to build the
foundation for this strategy, including a strong cash flow and recurring revenue
stream, a broad array of products and services and a highly skilled workforce."
<PAGE>
IKON Office Solutions (www.ikon.com) is one of the world's leading office
technology companies, providing customers with total office solutions from
copier and printing systems, computer networking and digital document services
to copy center management, technology training and electronic file conversion.
With fiscal 1998 revenues of $5.6 billion, IKON has more than 1,000 locations
including the United States, Canada, Mexico, the United Kingdom, France, Germany
and Denmark.
This news release includes information that may constitute forward-looking
statements made pursuant to the safe harbor provisions of the federal securities
laws. Although IKON believes the expectations contained in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove correct. This information is subject to risk and uncertainties such as
those relating to conducting activities in a competitive environment; delays,
difficulties, management transitions and employment issues associated with
consolidation of, and/or changes in business operations; managing the
integration of existing and acquired companies; risks and uncertainties
associated with existing or future vendor relationships and general economic
conditions. Therefore, actual results may differ materially from the forward-
looking statements.
# # #
<PAGE>
IKON OFFICE SOLUTIONS, INC.
FINANCIAL SUMMARY (in thousands, except earnings per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------------
1999 1998 % CHANGE
------------------- ----------------------------
<S> <C><C> <C><C> <C>
REVENUES
Net sales $ 720,062 $ 786,943 (8.5) %
Service and rentals 576,467 570,066 1.1
Finance income 76,121 74,580 2.1
- ---------------------------------------------------------------------------------------------------------------
1,372,650 1,431,589 (4.1)
- ---------------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 492,363 501,547 (1.8)
Service and rental costs 335,101 344,658 (2.8)
Finance interest expense 29,306 32,959 (11.1)
Selling and administrative 461,619 465,385 (0.8)
Transformation costs 18,192
- ---------------------------------------------------------------------------------------------------------------
1,318,389 1,362,741 (3.3)
- ---------------------------------------------------------------------------------------------------------------
Operating income 54,261 68,848 (21.2)
Interest expense 18,995 16,243 16.9
- ---------------------------------------------------------------------------------------------------------------
Income before taxes 35,266 52,605 (33.0)
Income taxes 12,399 22,314 (44.4)
- ---------------------------------------------------------------------------------------------------------------
Net income 22,867 30,291 (24.5)
- ---------------------------------------------------------------------------------------------------------------
Less preferred dividends 4,885
- ---------------------------------------------------------------------------------------------------------------
Available to common shareholders $ 22,867 $ 25,406 (10.0)
=================== ============
Basic Earnings Per Share $ 0.15 $ 0.19 (21.1) %
=================== ============
Diluted Earnings Per Share $ 0.15 $ 0.19 (21.1) %
=================== ============
Weighted Average Common Shares Outstanding, Basic 148,601 134,974 10.1 %
=================== ============
Weighted Average Common Shares Outstanding, Diluted 148,870 136,302 9.2 %
=================== ============
Operations Analysis:
Gross profit %, net sales 31.6% 36.3%
Gross profit %, service and rentals 41.9% 39.5%
Gross profit %, finance subsidiaries 61.5% 55.8%
Total gross profit % 37.6% 38.6%
SG&A as a % of revenue 33.6% 32.5%
Operating income % of revenue 4.0% 4.8%
Oper inc % of rev, excl trans costs 6.1%
</TABLE>
<PAGE>
IKON Office Solutions, Inc.
FINANCIAL SUMMARY (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------------------------------------------
1999 1998 % CHANGE
-------------- ------------------ ----------------
<S> <C> <C> <C>
REVENUES
Net sales $ 1,427,781 $ 1,515,048 (5.8) %
Service and rentals 1,167,884 1,145,888 1.9
Finance income 173,402 ** 144,910 19.7
- ----------------------------------------------------------------------------------------------------
2,769,067 2,805,846 (1.3)
- ----------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 964,109 969,747 (0.6)
Service and rental costs 676,690 676,813 0.0
Finance interest expense 61,986 63,705 (2.7)
Selling and administrative 938,874 906,604 3.6
Transformation costs 37,711
- ----------------------------------------------------------------------------------------------------
2,641,659 2,654,580 (0.5)
- ----------------------------------------------------------------------------------------------------
Operating income 127,408 151,266 (15.8)
Interest expense 38,542 33,272 15.8
- ----------------------------------------------------------------------------------------------------
Income before taxes 88,866 117,994 (24.7)
Income taxes 37,323 50,719 (26.4)
- ----------------------------------------------------------------------------------------------------
Net income 51,543 67,275 (23.4)
- ----------------------------------------------------------------------------------------------------
Less preferred dividends 9,770
- ----------------------------------------------------------------------------------------------------
Available to common shareholders $ 51,543 $ 57,505 (10.4)
============== ==================
Basic Earnings Per Share $ 0.35 $ 0.43 (18.6) %
============== ==================
Diluted Earnings Per Share $ 0.35 $ 0.43 (18.6) %
============== ==================
Weighted Average Common Shares Outstanding, Basic 148,468 134,344 10.5 %
============== ==================
Weighted Average Common Shares Outstanding, Diluted 148,882 135,649 9.8 %
============== ==================
Operations Analysis:
Gross profit %, net sales 32.5% 36.0%
Gross profit %, service and rentals 42.1% 40.9%
Gross profit %, finance subsidiaries, excl. gain 61.0% 56.0%
Total gross profit %, excl. gain 38.2% 39.0%
SG&A as a % of revenue, excl. gain 34.1% 32.3%
Operating income % of revenue, excl. gain 4.1% 5.4%
Oper inc % of rev, excl trans costs 6.7%
</TABLE>
** - Includes $14.3 million gain on asset securitization
<PAGE>
IKON OFFICE SOLUTIONS, INC.
- --------------------------------------------------------
FINANCIAL SUMMARY (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
4TH QTR. 1ST QTR. 2ND QTR
FY 1998* FY 1999 FY 1999
----------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Net sales $ 775,914 $ 707,719 $ 720,062
Service and rentals 569,420 591,417 576,467
Finance income 82,755 97,281 ** 76,121
- ---------------------------------------------------------------------------------------------------------------------------------
1,428,089 1,396,417 1,372,650
- ---------------------------------------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of goods sold 548,493 471,746 492,363
Service and rental costs 357,266 341,589 335,101
Finance interest expense 32,272 32,680 29,306
Selling and administrative 489,840 477,255 461,619
- ---------------------------------------------------------------------------------------------------------------------------------
1,427,871 1,323,270 1,318,389
- ---------------------------------------------------------------------------------------------------------------------------------
Operating income 218 73,147 54,261
Interest expense 19,712 19,547 18,995
- ---------------------------------------------------------------------------------------------------------------------------------
Income before taxes (19,494) 53,600 35,266
Taxes on income (1,978) 24,924 12,399
- ---------------------------------------------------------------------------------------------------------------------------------
Net income (17,516) 28,676 22,867
- ---------------------------------------------------------------------------------------------------------------------------------
Less preferred dividends 4,885
- ---------------------------------------------------------------------------------------------------------------------------------
Net income available to common shareholders $ (22,401) $ 28,676 $ 22,867
================= ================== ==================
BASIC EPS ($0.16) $ 0.19 $ 0.15
================= ================== ==================
SHARES 136,145 148,349 148,601
================= ================== ==================
DILUTED EPS** ($0.16) $ 0.19 $ 0.15
================= ================== ==================
SHARES 136,145 148,907 148,870
================= ================== ==================
Operations Analysis:
Gross profit %, net sales 29.3% 33.3% 31.6%
Gross profit %, service and rentals 37.3% 42.2% 41.9%
Gross profit %, financing, excl. gain 61.0% 60.6% 61.5%
Total gross profit, excl. gain 34.3% 38.8% 37.6%
SG&A as a % of revenue, excl. gain 34.3% 34.5% 33.6%
Operating income % of revenue, excl. gain 0.0% 4.3% 4.0%
</TABLE>
* - Excludes $40.4 million of unusual items and transformation costs
** - Includes $14.3 million gain on asset securitization
THIS INFORMATION IS PROVIDED FOR ADDITIONAL ANALYSIS AND IS NOT INTENDED TO BE
A PRESENTATION IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
