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) January 13, 2000
IOS CAPITAL, Inc.
(Exact name of registrant as specified in its charter)
------------------------------------------------------
DELAWARE File No. 0-20405 23-2493042
----------------------- ------------------------- -------------------
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification
incorporation) Number)
1738 Bass Road, Macon, Georgia 31210
------------------------------ -----
Registrant's telephone number, including area code: (912) 471-2300
--------------
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
------------
On January 13, 2000, the Registrant's parent, IKON Office Solutions, Inc.
("IKON"), announced that Kurt M. Landgraf had been elected to IKON's Board of
Directors. IKON's press release dated January 13, 2000 containing further detail
is attached.
On January 26, 2000, IKON also announced results for the first quarter of
its fiscal year 2000. The Registrant's press release dated January 26, 2000
containing further detail is attached.
This Report includes or incorporates by reference information about the
Registrant and/or IKON which may constitute forward-looking statements within
the meaning of the federal securities laws, including, but not limited to:
statements concerning IKON's expected revenue growth, cost savings and increased
productivity and margins resulting from IKON's growth and productivity
initiatives; statements concerning IKON's restructuring charge, and the expected
savings and operational benefits relating to IKON's restructuring programs,
including but not limited to, certain planned asset dispositions and
consolidations; statements relating to product availability; and statements
concerning IKON's anticipated earnings and revenue improvements during the
second quarter of fiscal 2000. 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
statements are based upon the Registrant's and/or IKON's current plans or
expectations and are subject to a number of risks and uncertainties applicable
to both the Registrant and IKON, including, but not limited to, risks and
uncertainties relating to conducting operations in a competitive environment and
a changing industry; 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 1999 Annual Report on Form 10-K/A filed with the
Securities and Exchange Commission. As a consequence of these and other risks
and uncertainties, the Registrant's current plans, anticipated actions and
future financial condition and results may differ materially from those
expressed in any forward-looking statements.
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 January 13, 2000
(99.1) IKON's Press Release dated January 26, 2000
<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: February 4, 2000
Exhibit 99
P.O. Box 834
Valley Forge, PA 19482-0834
70 Valley Stream Parkway
Malvern, PA 19355
News Release
---------------------------------------------------------------------------
Contacts:
Susan G. Gaffney Veronica L. Rosa Wendy Pinckney
Investor Relations Investor Relations Media Relations
610-408-7292 610-408-7196 610-408-7297
[email protected] [email protected] [email protected]
- ----------------- ------------------ ------------------
IKON OFFICE SOLUTIONS APPOINTS NEW BOARD MEMBER
Kurt M. Landgraf Elected to Board of Directors
Valley Forge, Pennsylvania - January 13, 2000 - IKON Office Solutions (NYSE:
IKN) today announced that Kurt Landgraf has been elected a member of the
Company's Board of Directors. This appointment fills the vacancy created by the
resignation of board member Thomas Gerrity, who resigned in December due to
other commitments.
"We are pleased to elect Kurt Landgraf to our Board of Directors," said James J.
Forese, President and Chief Executive Officer of IKON Office Solutions. "Mr.
Landgraf's many years of business experience and respected leadership will be a
significant contribution to the board."
Kurt M. Landgraf, 53, is currently Executive Vice President and Chief Operating
Officer for E.I. DuPont de Nemours & Company and Chairman of DuPont Europe and
the DuPont Pharmaceutical Company. Landgraf is also Chairman of the DuPont
Pharmaceutical Advisory Board, and is responsible for leading and implementing
DuPont's pharmaceutical strategy.
Since 1980, Landgraf has held numerous high level executive positions at DuPont
including Executive Vice President for DuPont U.S. and President and Chief
Executive Officer of the DuPont Merck Pharmaceutical Company, as well as several
director positions within DuPont international and domestic business and
marketing divisions. Prior to joining DuPont, Landgraf was Manager of Marketing
Analysis and Planning for The Upjohn Company's Worldwide Business Development
Division.
<PAGE>
In addition to his current role at DuPont, Landgraf is currently the Board
Chairman of Christiana Care Health Services, Inc. and Director of the University
of Delaware Research Foundation and the Delaware Biotechnology Institute. He
also serves on numerous pharmaceutical industry, research and business boards as
well as many Delaware-based community and education boards.
Landgraf received his bachelor's degree in economics/business administration
from Wagner College. He has also earned three master's degrees: in economics
from Pennsylvania State University, in administration from Rutgers University,
and in sociology from Western Michigan University. He graduated from the Harvard
Business School Advanced Management Program in 1992 and holds two honorary
doctoral degrees.
IKON Office Solutions (www.ikon.com) is one of the world's leading providers of
products and services that help businesses communicate. IKON provides customers
with total business solutions for every office, production and outsourcing need,
including copiers and printers, color solutions, distributed printing,
facilities management, imaging and legal outsourcing solutions, as well as
network design and consulting, application development and technology training.
With fiscal 1999 revenues of $5.5 billion, IKON has nearly 1,000 locations
worldwide including the United States, Canada, Mexico, the United Kingdom,
France, Germany, Ireland, and Denmark.
###
Exhibit 99.1
P.O. Box 834
Valley Forge, PA 19482-0834
70 Valley Stream Parkway
Malvern, PA 19355
News Release
---------------------------------------------------------------------------
Contacts:
Susan G. Gaffney Veronica L. Rosa Steve Eck
Investor Relations Investor Relations Media Relations
610-408-7292 610-408-7196 610-408-7295
[email protected] [email protected] [email protected]
- ----------------- ----------------- ---------------
IKON OFFICE SOLUTIONS announceS First QUARTER results
Operating Margin Improvement Marks Quarter
Company Takes Restructuring Charge To
Consolidate Facilities and Implement Further Productivity-Building Initiatives
Valley Forge, Pennsylvania - January 26, 2000 - IKON Office Solutions (NYSE:
IKN) today reported results for the first quarter of fiscal 2000. IKON generated
net income of $22.8 million, or $.15 per share, excluding a pre-tax
restructuring charge of $105 million, or an after-tax charge of $.52 per share.
Including the charge, the Company reported a net loss of $55.6 million, or $.37
per share. For the first quarter of fiscal 1999, the Company had reported net
income of $28.7 million, or $.19 per share, including a gain from asset
securitization of $.06 per share.
"Our operating margin improvement this quarter signifies that our ongoing
competitiveness and productivity initiatives are taking hold and delivering
results," said James J. Forese, President and Chief Executive Officer. "I am
optimistic that we are on the right course and making progress. We are seeing
efficiency gains in lower administrative costs as a result of our centralization
of key support areas that will allow us to continue to make investments for
growth - our top priority this fiscal year."
Revenues for the quarter were $1.33 billion, a 2.6% decrease from the fourth
quarter of fiscal 1999 and a 3.6% decrease from the same period a year ago,
excluding the securitization gain. The revenue decline can be attributed to
customers' Y2K delays industry-wide that mostly affected the Company's
<PAGE>
Technology Services business, a continued backlog of Canon digital products that
is expected to ease in the second quarter, and the cumulative impact of the
reduced sales force from last fiscal year.
"We have made steady progress in recruiting sales representatives in the areas
of strongest growth - such as color, high-volume, outsourcing and major
accounts. Through this effort and reduced attrition, the net addition to our
sales force was approximately 175 representatives in the first quarter. However,
we have not yet seen additional revenue because of the time it takes new
representatives to ramp up and become fully productive," Mr. Forese said.
Revenues in key areas of opportunity, such as digital and higher volume
equipment and outsourcing, did show signs of growth during the first quarter.
Digital sales of color and black-and-white equipment continue to increase as a
percent of total equipment revenues - up to 79% compared to 69% last quarter.
Revenues from outsourcing contracts were up 15% from the first quarter of fiscal
1999 and up 10% sequentially, and IKON's higher volume equipment base grew 4%
sequentially.
"Also of particular note is our European business which is on a fully-integrated
services model. Revenues were up 2.5% from the first quarter of the prior year,
despite a year-over-year decline in the technology service business due to Y2K
deferrals in Europe. This growth is further evidence that we are winning
business and growing through the delivery of integrated solutions to our
customers," Mr. Forese stated.
During the quarter the Company continued to make investments and progress on its
growth strategy by:
o Developing a branding campaign that is scheduled to launch in February. The
campaign focuses on how IKON's broad array of products and services helps
businesses communicate, and will use the positioning, "IKON: The Way
Business Gets CommunicatedSM" to represent IKON's ability to understand its
customers' business communications needs and deliver customized solutions
uniquely matched to those needs.
o Expanding its products and services portfolio with the launch of the Canon
imageRUNNER 110 high-volume digital production copier/printer and
additional digital devices from Ricoh. In the second quarter the Company
will continue to develop relationships with vendors for cluster printing,
<PAGE>
document management workflow and network print volume assessments. Rounding
out its full range of offerings for the legal industry, IKON also recently
announced the launch of the Virtual File Room(TM), an Internet-based
litigation management solution that provides attorneys with rapid access to
electronic case documents.
o Adopting a national Technology Services platform to promote growth and
productivity, focused on education, e-business development, network
assessment and consulting, project management and security.
o Focusing its Business Document Services locations on a digital,
print-on-demand strategy to aid in the integration of these production
facilities with the Company's growing facilities management business and to
leverage the strength of its Digital Express(R) network to provide Internet
data repository and printing services.
o Developing programs to increase sales productivity through national sales
training and a Web-based sales automation tool, as well as enhanced
customer service and billing capabilities that will free up sales
representatives to spend more time on customer consulting and sales.
The Company also announced a restructuring plan to address underperformance in
certain Technology Services, Business Document Services and Business Information
Services locations, to consolidate real estate and to implement certain
productivity initiatives, which resulted in a pre-tax restructuring charge of
$105 million for the quarter.
"We believe the approximate savings from these programs will be $15 million
during fiscal 2000 and $45 million on an annualized basis. This restructuring
will significantly aid our efforts to convert fully to an operating company and
will position us for sustained productivity improvements as we focus on revenue
growth," Mr. Forese stated.
The restructuring charge includes actions relating to:
o Consolidation, disposition or right-sizing of certain underperforming and
specific non-strategic Technology Services, Business Document Services and
Business Information Services locations. Approximately 65 locations will be
affected, two-thirds of which will be consolidated to leverage back-office
operations and co-location with other IKON units. The restructuring will
further aid our implementation of consistent, national service offerings in
these business units.
<PAGE>
o A real estate strategy to close or consolidate more than 140 facilities to
achieve cost savings as well as increased administrative and marketing
synergies by co-locating its businesses.
o Severance related to various productivity initiatives that will be
implemented within the next 12 months in the areas of inventory management,
purchasing, finance/accounting and other administrative functions.
"We have made steady progress in increasing our efficiency and productivity, and
I am confident that we have the right strategy in place to take advantage of the
growing opportunities in our industry. As I have stated before, we will not see
the results of these initiatives overnight - they will take time and a lot of
hard work - but we are clearly on the right course. In the upcoming quarter we
anticipate earnings improvement of 12% to 15% sequentially and revenue growth
for the same period of close to 3%." Mr. Forese concluded.
A complete replay of IKON's conference call with investors will be available
over the Internet on IKON's investor relations home page. To listen, go to
ikon.com/corporate info and click on Investor Relations.
IKON Office Solutions (www.ikon.com) is one of the world's leading providers of
products and services that help businesses communicate. IKON provides customers
with total business solutions for every office, production and outsourcing need,
including copiers and printers, color solutions, distributed printing,
facilities management, imaging and legal outsourcing solutions, as well as
network design and consulting, application development and technology training.
With fiscal 1999 revenues of $5.5 billion, IKON has nearly 950 locations
worldwide including the United States, Canada, Mexico, the United Kingdom,
France, Germany, Ireland, and Denmark.
This news release includes information which may constitute forward-looking
statements within the meaning of the federal securities laws, including, but not
limited to: statements concerning expected revenue growth, cost savings and
increased productivity and margins resulting from IKON's growth and productivity
initiatives; and statements concerning the restructuring charge, expected
savings and operational benefits relating to certain planned asset dispositions
and consolidations. Although IKON 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 statements are based upon
management's current plans or expectations and are subject to a number of risks
and uncertainties, including, but not limited to, risks and uncertainties
relating to conducting operations in a competitive environment and a changing
industry; 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 IKON's 1999 Annual Report on Form 10-K/A filed with the Securities and
Exchange Commission. As a consequence of these and other risks and
uncertainties, IKON's current plans, anticipated actions and future financial
condition and results may differ materially from those expressed in any
forward-looking statements.
# # #
<PAGE>
IKON Office Solutions, Inc.
FINANCIAL SUMMARY (in thousands, except earnings per share)
<TABLE>
<CAPTION>
First Quarter Fiscal
-------------------------------------------------------------------
2000 1999 % Change
----------------- ----------------- --------------------
<S> <C> <C> <C>
Revenues
Net sales $ 668,482 $ 707,719 (5.5)%
Service and rentals 582,921 601,259 (3.0)
Finance income 81,097 87,439 (7.3)
- ---------------------------------------------------------------------------------------------------------
1,332,500 1,396,417 (4.6)
- ---------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 451,092 471,746 (4.4)
Service and rental costs 345,438 349,881 (1.3)
Finance interest expense 39,452 32,680 20.7
Selling and administrative 438,223 468,963 (6.6)
Restructuring charge 105,340
- ---------------------------------------------------------------------------------------------------------
1,379,545 1,323,270 4.3
- ---------------------------------------------------------------------------------------------------------
Operating income (loss) (47,045) 73,147
Interest expense 15,994 19,547 (18.2)
- ---------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (benefit) (63,039) 53,600
Income taxes (benefit) (7,403) 24,924
- ---------------------------------------------------------------------------------------------------------
Net income (loss) $ (55,636) $ 28,676
================= =================
Basic Earnings (Loss) Per Share ($0.37) $0.19
================= =================
Diluted Earnings (Loss) Per Share ($0.37) $0.19
================= =================
Weighted Average Common Shares Outstanding, Basic 149,279 148,349 0.6 %
================= =================
Weighted Average Common Shares Outstanding, Diluted 149,279 148,907 0.2 %
================= =================
Operations Analysis:
Gross profit %, net sales 32.5% 33.3%
Gross profit %, service and rentals 40.7% 41.8%
Gross profit %, finance subsidiaries 51.4% 62.6%
Total gross profit % 37.3% 38.8%
SG&A as a % of revenue 32.9% 33.6%
Operating income (loss) % of revenue (3.5%) 5.2%
Oper inc % of rev, excl restructuring charge in fiscal
2000 and gain on asset securitization in fiscal 1999 4.4% 4.3%
</TABLE>
<PAGE>
IKON Office Solutions, Inc.
FINANCIAL SUMMARY (in thousands, except earnings per share)
EXCLUDING SPECIAL ITEMS
<TABLE>
<CAPTION>
First Quarter Fiscal
-------------------------------------------------------------------
2000 1999 % Change
----------------- ----------------- --------------------
<S> <C> <C> <C>
Revenues
Net sales $ 668,482 $ 707,719 (5.5)%
Service and rentals 582,921 601,259 (3.0)
Finance income 81,097 73,106 * 10.9
- -------------------------------------------------------------------------------------------------
1,332,500 1,382,084 (3.6)
- -------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 451,092 471,746 (4.4)
Service and rental costs 345,438 349,881 (1.3)
Finance interest expense 39,452 32,680 20.7
Selling and administrative 438,223 468,963 (6.6)
- -------------------------------------------------------------------------------------------------
1,274,205 ** 1,323,270 (3.7)
- -------------------------------------------------------------------------------------------------
Operating income 58,295 58,814
Interest expense 15,994 19,547 (18.2)
- -------------------------------------------------------------------------------------------------
Income before taxes 42,301 39,267
Income taxes 19,458 19,191
- -------------------------------------------------------------------------------------------------
Net income $ 22,843 $ 20,076
================= =================
Basic Earnings Per Share $0.15 $0.13
================= =================
Diluted Earnings Per Share $0.15 $0.13
================= =================
Weighted Average Common Shares Outstanding, Basic 149,279 148,349 0.6 %
================= =================
Weighted Average Common Shares Outstanding, Diluted 149,443 *** 148,907 0.4 %
================= =================
Operations Analysis:
Gross profit %, net sales 32.5% 33.3%
Gross profit %, service and rentals 40.7% 41.8%
Gross profit %, finance subsidiaries 51.4% 55.3%
Total gross profit % 37.3% 38.2%
SG&A as a % of revenue 32.9% 33.9%
Operating income % of revenue 4.4% 4.3%
<FN>
* Excludes $14.3 million gain from asset securitization
** Excludes $105.3 million restructuring charge
*** As a result of exclusion items, shares that were previously excluded
because of a net loss, are now included in the diluted earnings per share
calculation
</FN>
</TABLE>
This information is provided for additional analysis and is not intended to be a
presentation in accordance with generally accepted accounting principles.
<PAGE>
IKON Office Solutions, Inc.
FINANCIAL SUMMARY (in thousands, except earnings per share)
<TABLE>
<CAPTION>
First Quarter Fourth Quarter
Fiscal Fiscal
2000 1999 % Change
----------------- ----------------- --------------------
<S> <C> <C> <C>
Revenues
Net sales $ 668,482 $ 717,970 (6.9)%
Service and rentals 582,921 577,780 0.9
Finance income 81,097 71,860 12.9
- ----------------------------------------------------------------------------------------------------------
1,332,500 1,367,610 (2.6)
- ----------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 451,092 482,843 (6.6)
Service and rental costs 345,438 341,886 1.0
Finance interest expense 39,452 34,137 15.6
Selling and administrative 438,223 452,447 (3.1)
Shareholder litigation settlement 101,106
Restructuring charge 105,340
- ----------------------------------------------------------------------------------------------------------
1,379,545 1,412,419 (2.3)
- ----------------------------------------------------------------------------------------------------------
Operating loss (47,045) (44,809)
Interest expense 15,994 15,652 2.2
- ----------------------------------------------------------------------------------------------------------
Loss before income tax benefit (63,039) (60,461)
Income tax benefit (7,403) (15,476)
- ----------------------------------------------------------------------------------------------------------
Net loss $ (55,636) $ (44,985)
================= =================
Basic Loss Per Share ($0.37) ($0.30)
================= =================
Diluted Loss Per Share ($0.37) ($0.30)
================= =================
Weighted Average Common Shares Outstanding, Basic 149,279 148,958 0.2 %
================= =================
Weighted Average Common Shares Outstanding, Diluted 149,279 148,958 0.2 %
================= =================
Operations Analysis:
Gross profit %, net sales 32.5% 32.7%
Gross profit %, service and rentals 40.7% 40.8%
Gross profit %, finance subsidiaries 51.4% 52.5%
Total gross profit % 37.3% 37.2%
SG&A as a % of revenue 32.9% 33.1%
Operating loss % of revenue (3.5%) (3.3%)
Oper inc % of rev, excl restructuring charge in
fiscal 2000 and shareholder litigation settlement
in fiscal 1999 4.4% 4.1%
</TABLE>
<PAGE>
IKON Office Solutions, Inc.
FINANCIAL SUMMARY (in thousands, except earnings per share)
EXCLUDING SPECIAL ITEMS
<TABLE>
<CAPTION>
First Quarter Fourth Quarter
Fiscal Fiscal
2000 1999 % Change
----------------- ----------------- --------------------
<S> <C> <C> <C>
Revenues
Net sales $ 668,482 $ 717,970 (6.9)%
Service and rentals 582,921 577,780 0.9
Finance income 81,097 71,860 12.9
- ------------------------------------------------------------------------------------------------------
1,332,500 1,367,610 (2.6)
- ------------------------------------------------------------------------------------------------------
Costs and Expenses
Cost of goods sold 451,092 482,843 (6.6)
Service and rental costs 345,438 341,886 1.0
Finance interest expense 39,452 34,137 15.6
Selling and administrative 438,223 452,447 (3.1)
- ------------------------------------------------------------------------------------------------------
1,274,205 * 1,311,313 ** (2.8)
- ------------------------------------------------------------------------------------------------------
Operating income 58,295 56,297
Interest expense 15,994 15,652 2.2
- ------------------------------------------------------------------------------------------------------
Income before taxes 42,301 40,645
Income taxes 19,458 18,900
- ------------------------------------------------------------------------------------------------------
Net income $ 22,843 $ 21,745
================= =================
Basic Earnings Per Share $0.15 $0.15
================= =================
Diluted Earnings Per Share $0.15 $0.15
================= =================
Weighted Average Common Shares Outstanding, Basic 149,279 148,958 0.2 %
================= =================
Weighted Average Common Shares Outstanding, Diluted 149,443 *** 149,119 *** 0.2 %
================= =================
Operations Analysis:
Gross profit %, net sales 32.5% 32.7%
Gross profit %, service and rentals 40.7% 40.8%
Gross profit %, finance subsidiaries 51.4% 52.5%
Total gross profit % 37.3% 37.2%
SG&A as a % of revenue 32.9% 33.1%
Operating income % of revenue 4.4% 4.1%
<FN>
* Excludes $105.3 million restructuring charge
** Excludes $101.1 million shareholder litigation settlement
*** As a result of exclusion items, shares that were previously excluded
because of a net loss, are now included in the diluted earnings per share
calculation
</FN>
</TABLE>
This information is provided for additional analysis and is not intended to be a
presentation in accordance with generally accepted accounting principles.
