IKON Office Solutions Announces Second Quarter Results

Earnings on Target;

Cash Flow Outlook Remains Strong



Apr 26, 2001, 01:00 ET from IKON Office Solutions

    VALLEY FORGE, Pa., April 26 /PRNewswire/ -- IKON Office Solutions
 (NYSE:   IKN) today announced results for the second fiscal quarter ended
 March 31, 2001.  Earnings for the second quarter were $16.7 million, or $.12
 per share.  For the same period in 2000, earnings were $.17 per share, or $.23
 per share including a one-time gain from insurance proceeds.  Revenues for the
 second quarter of fiscal 2001 were $1.36 billion, comparable to the same
 period in 2000.  Without the negative effect of foreign currency, revenue
 growth for the second quarter of fiscal 2001 would have been 1%.
     "Our revenues and earnings results were solid this quarter, despite a
 tough competitive and economic climate," stated James J. Forese, Chairman and
 Chief Executive Officer.  "Earnings of $.12 per share were in line with our
 expectations and reflect the ongoing investments we are making to continue to
 position the Company for stronger, long-term returns.  We feel that these
 ongoing investments, which have impacted our earnings, are a necessity for
 long-term revenue growth and operating margin improvement.  In addition, our
 balance sheet and cash flow position remain strong.  During the second
 quarter, we achieved greater asset productivity as evidenced in our days sales
 outstanding and inventory turn measurements, and based on first half results,
 our free cash flow outlook for the year remains on target at $170 - $185
 million."
     Revenues of $1.36 billion included continued growth in the Company's
 targeted markets, including outsourcing and the high-volume, Segment 5 and
 6 copier/printer equipment for the production market.  IKON's principal
 outsourcing offering, facilities management, secured its fifth sequential
 quarter of double-digit growth.  However, revenue growth was offset by
 declines in other markets that the Company has de-emphasized, such as
 low-margin technology hardware.
     "Our high-end equipment sales and outsourcing results are representative
 of IKON's response to our customers' needs for a partner that can provide a
 host of services on a strong equipment platform," stated Mr. Forese.  "With
 more complex technologies and a greater variety of document management
 applications available from many vendors today, IKON's multi-vendor product
 portfolio, our proven technical service support, and our array of integrated
 outsourcing offerings serve to make IKON a valuable partner for any customer."
     Net Sales, which include the sale of copier/printer equipment, supplies,
 and technology hardware, declined 0.5% from the prior year.  Positive growth
 in copier/printer equipment sales was offset by the anticipated decline in
 certain technology hardware.  Copier/printer equipment sales were led by the
 placement of new, higher-volume digital technologies not available in the
 prior year, primarily the Ricoh Aficio 850 and 1050 and the Canon imageRUNNER
 110.  Gross profit margin on Net Sales was slightly up from the prior year,
 reflecting a mix of increased competitive pressures offset by the benefit of
 less low-margin technology hardware in current year results.
     Service & Rentals, which include revenues from the servicing of
 copier/printer equipment, outsourcing, technology services, and rentals,
 declined 1.5% from the prior year.  Growth in outsourcing was offset by
 declines in equipment service and rental revenues, as the Company's overall
 Service & Rentals revenue base transitions to higher-end, digital technologies
 and outsourcing.  Service & Rentals gross profit margin remained stable from
 the prior year reflecting excellent improvement in the margins associated with
 equipment service.
     Finance Income generated by the Company's captive leasing organizations
 grew 15.9% from the prior year reflecting the Company's ongoing success in
 utilizing leasing as a competitive differentiator.  Gross profit margin on
 Finance Income was essentially unchanged from the prior year.
     Operating margins of 3.6% improved sequentially but were down from the
 prior year primarily due to increased Selling and Administrative expenses.
 Selling and Administrative expenses have increased as the Company accelerated
 certain targeted investments designed to improve its infrastructure and
 competitive edge long-term.  These investments include the continued
 development of e-services such as Digital Express(R) 2000; expanded sales
 coverage and training directed toward integrated solutions and major accounts;
 the Company's comprehensive e-commerce initiative; and additional
 infrastructure technology costs to support the Company's ongoing productivity
 programs.  The Company's productivity programs are designed to generate
 continued savings over the next 18 to 24 months.
     "Our outlook for the long-term continues to be positive," stated Mr.
 Forese.  "However, we realize that today's economic climate dictates a more
 conservative program, as companies focus on the quality of their balance
 sheets, cash flows, and cost structures.  Accordingly, while we will remain
 committed to continuing our investments that have facilitated the great
 progress IKON has made in converting to an integrated, services-oriented
 operating company, for the second half of our fiscal year we will be taking
 more aggressive actions to minimize our costs.
     "For the third quarter, we expect our earnings per share to show
 sequential improvement, but a decline from the prior year (excluding special
 items) due to the higher level of investments this year," continued Mr.
 Forese.
     "IKON's reputation has solidified as a strong and established company that
 is able to provide customers with innovative, comprehensive business
 communications solutions.  We will continue to differentiate IKON from our
 competitors to ensure our position as a valuable partner to our customers,"
 concluded Mr. Forese.
 
     Additional information regarding the second quarter results and the
 Company's outlook for next quarter and the full fiscal year will be discussed
 on a conference call hosted by IKON at 10:00 a.m. Eastern Standard Time on
 Thursday, April 26, 2001.  Please call (913) 981-4900 to participate.  A
 complete replay of the conference call will be available over the Internet on
 IKON's Investor Relations home page approximately 90 minutes after the call
 ends.  To listen, please go to www.ikon.com and click on Invest in IKON.
 Beginning at 1:00 p.m. EST on April 26, 2001 and ending at midnight on
 April 30, 2001, a complete replay of the conference call can also be accessed
 via telephone by calling (719) 457-0820 and using the access code 447599.
 
     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 document
 solutions, as well as network design and consulting, e-business development,
 telecommunications services and technology training.  With fiscal 2000
 revenues of $5.4 billion, IKON has approximately 800 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.
 These forward-looking statements include, but are not limited to, statements
 relating to the Company's outlook for the third quarter and the full year and
 the Company's long-term returns from its investments.  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.  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.  Certain additional risks and uncertainties are set forth in
 IKON's 2000 Annual Report on Form 10-K/A filed with the Securities and
 Exchange Commission.
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
 
                                              Second Quarter Fiscal
                                                 2001       2000       % Change
     Revenues
      Net sales                              $704,719   $708,467         (0.5)%
      Service and rentals                     562,520    571,329         (1.5)
      Finance income                           93,987     81,070         15.9
                                            1,361,226  1,360,866          0.0
 
     Costs and Expenses
      Cost of goods sold                      460,619    464,612
      Service and rental costs                348,891    353,831
      Finance interest expense                 44,363     39,508
      Selling and administrative              458,356    424,559
                                            1,312,229  1,282,510
 
     Operating income                          48,997     78,356
     Interest expense                          19,123     17,626
     Income before income taxes                29,874     60,730
     Income taxes                              13,144     25,877
     Net income                               $16,730    $34,853
 
     Basic and Diluted Earnings Per Common
      Share                                     $0.12      $0.23
 
     Weighted Average Common Shares
      Outstanding, Basic                      141,402    149,297
 
     Weighted Average Common Shares
      Outstanding, Diluted                    143,262    149,592
 
     Operations Analysis:
      Gross profit %, net sales                  34.6%      34.4%
      Gross profit %, service and rentals        38.0%      38.1%
      Gross profit %, finance subsidiaries       52.8%      51.3%
      Total gross profit %                       37.3%      37.0%
      Selling and administrative as a
       % of revenue                              33.7%      31.2%
      Operating income as a % of revenue          3.6%       5.8%
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
                            Excluding Special Items
 
                                        Second Quarter Fiscal
                                            2001       2000       % Change
     Revenues
      Net sales                         $704,719   $708,467           (0.5)%
      Service and rentals                562,520    571,329           (1.5)
      Finance income                      93,987     81,070           15.9
                                       1,361,226  1,360,866            0.0
 
     Costs and Expenses
      Cost of goods sold                 460,619    464,612
      Service and rental costs           348,891    353,831
      Finance interest expense            44,363     39,508
      Selling and administrative         458,356    441,559 *
                                       1,312,229  1,299,510
 
     Operating income                     48,997     61,356
     Interest expense                     19,123     17,626
     Income before income taxes           29,874     43,730
     Income taxes                         13,144     18,387
     Net income                          $16,730    $25,343
 
 
     Basic and Diluted Earnings
      Per Common Share                     $0.12      $0.17
 
     Weighted Average Common Shares
      Outstanding, Basic                 141,402    149,297
 
     Weighted Average Common Shares
      Outstanding, Diluted               143,262    149,592
 
     Operations Analysis:
      Gross profit %, net sales             34.6%      34.4%
      Gross profit %, service and rentals   38.0%      38.1%
      Gross profit %, finance subsidiaries  52.8%      51.3%
      Total gross profit %                  37.3%      37.0%
      Selling and administrative as a
       % of revenue                         33.7%      32.4%
      Operating income as a  % of revenue    3.6%       4.5%
 
     *  Excludes $17,000 of insurance proceeds related to the shareholder
         litigation settlement.
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
 
                                               Year to Date Fiscal
                                                 2001        2000    % Change
     Revenues
      Net sales                            $1,359,790  $1,360,570       (0.1) %
      Service and rentals                   1,132,133   1,154,250       (1.9)
      Finance income                          187,354     162,167       15.5
                                            2,679,277   2,676,987        0.1
 
     Costs and Expenses
      Cost of goods sold                      895,612     899,325
      Service and rental costs                690,945     699,269
      Finance interest expense                 90,567      78,960
      Selling and administrative              907,511     862,782
      Restructuring and asset impairment
       charge                                      --     105,340
                                            2,584,635   2,645,676
 
     Operating income                          94,642      31,311
     Interest expense                          35,877      33,620
     Income (loss) from continuing
      operations before income taxes           58,765      (2,309)
     Income taxes                              25,856      18,474
     Income (loss) from continuing operations  32,909     (20,783)
     Discontinued operations, net of
      income taxes                              1,200
     Net income (loss)                        $34,109    $(20,783)
 
     Basic and Diluted Earnings (Loss) Per
      Common Share
       Continuing operations                    $0.23      ($0.14)
       Discontinued operations                   0.01          --
       Net income (loss)                        $0.24      ($0.14)
 
     Weighted Average Common Shares
      Outstanding, Basic                      142,087     149,283
 
     Weighted Average Common Shares
      Outstanding, Diluted                    143,005     149,283
 
     Operations Analysis:
      Gross profit %, net sales                  34.1%       33.9%
      Gross profit %, service and rentals        39.0%       39.4%
      Gross profit %, finance subsidiaries       51.7%       51.3%
      Total gross profit %                       37.4%       37.3%
      Selling and administrative as a
       % of revenue                              33.9%       32.2%
      Operating income as a % of revenue          3.5%        1.2%
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
                            Excluding Special Items
 
                                                 Year to Date Fiscal
                                                   2001        2000   % Change
     Revenues
      Net sales                              $1,359,790  $1,360,570     (0.1)%
      Service and rentals                     1,132,133   1,154,250     (1.9)
      Finance income                            187,354     162,167     15.5
                                              2,679,277   2,676,987      0.1
 
     Costs and Expenses
      Cost of goods sold                        895,612     899,325
      Service and rental costs                  690,945     699,269
      Finance interest expense                   90,567      78,960
      Selling and administrative                907,511     879,782
                                              2,584,635   2,557,336 *
 
     Operating income                            94,642     119,651
     Interest expense                            35,877      33,620
     Income before income taxes                  58,765      86,031
     Income taxes                                25,856      37,845
     Net income                                 $32,909     $48,186
 
     Basic and Diluted Earnings Per Common
      Share                                       $0.23       $0.32
 
     Weighted Average Common Shares
      Outstanding, Basic                        142,087     149,283
 
     Weighted Average Common Shares
      Outstanding, Diluted                      143,005     149,513 **
 
     Operations Analysis:
      Gross profit %, net sales                    34.1%       33.9%
      Gross profit %, service and rentals          39.0%       39.4%
      Gross profit %, finance subsidiaries         51.7%       51.3%
      Total gross profit %                         37.4%       37.3%
      Selling and administrative as a %
       of revenue                                  33.9%       32.9%
      Operating income as a % of revenue            3.5%        4.5%
 
     *  Excludes $17,000 of insurance proceeds related to the shareholder
         litigation settlement and $105,340 restructuring and asset impairment
         charge.
 
     **  The exclusion of the special items results in net income; therefore,
          shares that were previously excluded because of a net loss are now
          included in the diluted earnings per share calculation.
 
 

SOURCE IKON Office Solutions
    VALLEY FORGE, Pa., April 26 /PRNewswire/ -- IKON Office Solutions
 (NYSE:   IKN) today announced results for the second fiscal quarter ended
 March 31, 2001.  Earnings for the second quarter were $16.7 million, or $.12
 per share.  For the same period in 2000, earnings were $.17 per share, or $.23
 per share including a one-time gain from insurance proceeds.  Revenues for the
 second quarter of fiscal 2001 were $1.36 billion, comparable to the same
 period in 2000.  Without the negative effect of foreign currency, revenue
 growth for the second quarter of fiscal 2001 would have been 1%.
     "Our revenues and earnings results were solid this quarter, despite a
 tough competitive and economic climate," stated James J. Forese, Chairman and
 Chief Executive Officer.  "Earnings of $.12 per share were in line with our
 expectations and reflect the ongoing investments we are making to continue to
 position the Company for stronger, long-term returns.  We feel that these
 ongoing investments, which have impacted our earnings, are a necessity for
 long-term revenue growth and operating margin improvement.  In addition, our
 balance sheet and cash flow position remain strong.  During the second
 quarter, we achieved greater asset productivity as evidenced in our days sales
 outstanding and inventory turn measurements, and based on first half results,
 our free cash flow outlook for the year remains on target at $170 - $185
 million."
     Revenues of $1.36 billion included continued growth in the Company's
 targeted markets, including outsourcing and the high-volume, Segment 5 and
 6 copier/printer equipment for the production market.  IKON's principal
 outsourcing offering, facilities management, secured its fifth sequential
 quarter of double-digit growth.  However, revenue growth was offset by
 declines in other markets that the Company has de-emphasized, such as
 low-margin technology hardware.
     "Our high-end equipment sales and outsourcing results are representative
 of IKON's response to our customers' needs for a partner that can provide a
 host of services on a strong equipment platform," stated Mr. Forese.  "With
 more complex technologies and a greater variety of document management
 applications available from many vendors today, IKON's multi-vendor product
 portfolio, our proven technical service support, and our array of integrated
 outsourcing offerings serve to make IKON a valuable partner for any customer."
     Net Sales, which include the sale of copier/printer equipment, supplies,
 and technology hardware, declined 0.5% from the prior year.  Positive growth
 in copier/printer equipment sales was offset by the anticipated decline in
 certain technology hardware.  Copier/printer equipment sales were led by the
 placement of new, higher-volume digital technologies not available in the
 prior year, primarily the Ricoh Aficio 850 and 1050 and the Canon imageRUNNER
 110.  Gross profit margin on Net Sales was slightly up from the prior year,
 reflecting a mix of increased competitive pressures offset by the benefit of
 less low-margin technology hardware in current year results.
     Service & Rentals, which include revenues from the servicing of
 copier/printer equipment, outsourcing, technology services, and rentals,
 declined 1.5% from the prior year.  Growth in outsourcing was offset by
 declines in equipment service and rental revenues, as the Company's overall
 Service & Rentals revenue base transitions to higher-end, digital technologies
 and outsourcing.  Service & Rentals gross profit margin remained stable from
 the prior year reflecting excellent improvement in the margins associated with
 equipment service.
     Finance Income generated by the Company's captive leasing organizations
 grew 15.9% from the prior year reflecting the Company's ongoing success in
 utilizing leasing as a competitive differentiator.  Gross profit margin on
 Finance Income was essentially unchanged from the prior year.
     Operating margins of 3.6% improved sequentially but were down from the
 prior year primarily due to increased Selling and Administrative expenses.
 Selling and Administrative expenses have increased as the Company accelerated
 certain targeted investments designed to improve its infrastructure and
 competitive edge long-term.  These investments include the continued
 development of e-services such as Digital Express(R) 2000; expanded sales
 coverage and training directed toward integrated solutions and major accounts;
 the Company's comprehensive e-commerce initiative; and additional
 infrastructure technology costs to support the Company's ongoing productivity
 programs.  The Company's productivity programs are designed to generate
 continued savings over the next 18 to 24 months.
     "Our outlook for the long-term continues to be positive," stated Mr.
 Forese.  "However, we realize that today's economic climate dictates a more
 conservative program, as companies focus on the quality of their balance
 sheets, cash flows, and cost structures.  Accordingly, while we will remain
 committed to continuing our investments that have facilitated the great
 progress IKON has made in converting to an integrated, services-oriented
 operating company, for the second half of our fiscal year we will be taking
 more aggressive actions to minimize our costs.
     "For the third quarter, we expect our earnings per share to show
 sequential improvement, but a decline from the prior year (excluding special
 items) due to the higher level of investments this year," continued Mr.
 Forese.
     "IKON's reputation has solidified as a strong and established company that
 is able to provide customers with innovative, comprehensive business
 communications solutions.  We will continue to differentiate IKON from our
 competitors to ensure our position as a valuable partner to our customers,"
 concluded Mr. Forese.
 
     Additional information regarding the second quarter results and the
 Company's outlook for next quarter and the full fiscal year will be discussed
 on a conference call hosted by IKON at 10:00 a.m. Eastern Standard Time on
 Thursday, April 26, 2001.  Please call (913) 981-4900 to participate.  A
 complete replay of the conference call will be available over the Internet on
 IKON's Investor Relations home page approximately 90 minutes after the call
 ends.  To listen, please go to www.ikon.com and click on Invest in IKON.
 Beginning at 1:00 p.m. EST on April 26, 2001 and ending at midnight on
 April 30, 2001, a complete replay of the conference call can also be accessed
 via telephone by calling (719) 457-0820 and using the access code 447599.
 
     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 document
 solutions, as well as network design and consulting, e-business development,
 telecommunications services and technology training.  With fiscal 2000
 revenues of $5.4 billion, IKON has approximately 800 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.
 These forward-looking statements include, but are not limited to, statements
 relating to the Company's outlook for the third quarter and the full year and
 the Company's long-term returns from its investments.  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.  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.  Certain additional risks and uncertainties are set forth in
 IKON's 2000 Annual Report on Form 10-K/A filed with the Securities and
 Exchange Commission.
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
 
                                              Second Quarter Fiscal
                                                 2001       2000       % Change
     Revenues
      Net sales                              $704,719   $708,467         (0.5)%
      Service and rentals                     562,520    571,329         (1.5)
      Finance income                           93,987     81,070         15.9
                                            1,361,226  1,360,866          0.0
 
     Costs and Expenses
      Cost of goods sold                      460,619    464,612
      Service and rental costs                348,891    353,831
      Finance interest expense                 44,363     39,508
      Selling and administrative              458,356    424,559
                                            1,312,229  1,282,510
 
     Operating income                          48,997     78,356
     Interest expense                          19,123     17,626
     Income before income taxes                29,874     60,730
     Income taxes                              13,144     25,877
     Net income                               $16,730    $34,853
 
     Basic and Diluted Earnings Per Common
      Share                                     $0.12      $0.23
 
     Weighted Average Common Shares
      Outstanding, Basic                      141,402    149,297
 
     Weighted Average Common Shares
      Outstanding, Diluted                    143,262    149,592
 
     Operations Analysis:
      Gross profit %, net sales                  34.6%      34.4%
      Gross profit %, service and rentals        38.0%      38.1%
      Gross profit %, finance subsidiaries       52.8%      51.3%
      Total gross profit %                       37.3%      37.0%
      Selling and administrative as a
       % of revenue                              33.7%      31.2%
      Operating income as a % of revenue          3.6%       5.8%
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
                            Excluding Special Items
 
                                        Second Quarter Fiscal
                                            2001       2000       % Change
     Revenues
      Net sales                         $704,719   $708,467           (0.5)%
      Service and rentals                562,520    571,329           (1.5)
      Finance income                      93,987     81,070           15.9
                                       1,361,226  1,360,866            0.0
 
     Costs and Expenses
      Cost of goods sold                 460,619    464,612
      Service and rental costs           348,891    353,831
      Finance interest expense            44,363     39,508
      Selling and administrative         458,356    441,559 *
                                       1,312,229  1,299,510
 
     Operating income                     48,997     61,356
     Interest expense                     19,123     17,626
     Income before income taxes           29,874     43,730
     Income taxes                         13,144     18,387
     Net income                          $16,730    $25,343
 
 
     Basic and Diluted Earnings
      Per Common Share                     $0.12      $0.17
 
     Weighted Average Common Shares
      Outstanding, Basic                 141,402    149,297
 
     Weighted Average Common Shares
      Outstanding, Diluted               143,262    149,592
 
     Operations Analysis:
      Gross profit %, net sales             34.6%      34.4%
      Gross profit %, service and rentals   38.0%      38.1%
      Gross profit %, finance subsidiaries  52.8%      51.3%
      Total gross profit %                  37.3%      37.0%
      Selling and administrative as a
       % of revenue                         33.7%      32.4%
      Operating income as a  % of revenue    3.6%       4.5%
 
     *  Excludes $17,000 of insurance proceeds related to the shareholder
         litigation settlement.
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
 
                                               Year to Date Fiscal
                                                 2001        2000    % Change
     Revenues
      Net sales                            $1,359,790  $1,360,570       (0.1) %
      Service and rentals                   1,132,133   1,154,250       (1.9)
      Finance income                          187,354     162,167       15.5
                                            2,679,277   2,676,987        0.1
 
     Costs and Expenses
      Cost of goods sold                      895,612     899,325
      Service and rental costs                690,945     699,269
      Finance interest expense                 90,567      78,960
      Selling and administrative              907,511     862,782
      Restructuring and asset impairment
       charge                                      --     105,340
                                            2,584,635   2,645,676
 
     Operating income                          94,642      31,311
     Interest expense                          35,877      33,620
     Income (loss) from continuing
      operations before income taxes           58,765      (2,309)
     Income taxes                              25,856      18,474
     Income (loss) from continuing operations  32,909     (20,783)
     Discontinued operations, net of
      income taxes                              1,200
     Net income (loss)                        $34,109    $(20,783)
 
     Basic and Diluted Earnings (Loss) Per
      Common Share
       Continuing operations                    $0.23      ($0.14)
       Discontinued operations                   0.01          --
       Net income (loss)                        $0.24      ($0.14)
 
     Weighted Average Common Shares
      Outstanding, Basic                      142,087     149,283
 
     Weighted Average Common Shares
      Outstanding, Diluted                    143,005     149,283
 
     Operations Analysis:
      Gross profit %, net sales                  34.1%       33.9%
      Gross profit %, service and rentals        39.0%       39.4%
      Gross profit %, finance subsidiaries       51.7%       51.3%
      Total gross profit %                       37.4%       37.3%
      Selling and administrative as a
       % of revenue                              33.9%       32.2%
      Operating income as a % of revenue          3.5%        1.2%
 
 
                          IKON Office Solutions, Inc.
          FINANCIAL SUMMARY (in thousands, except earnings per share)
                            Excluding Special Items
 
                                                 Year to Date Fiscal
                                                   2001        2000   % Change
     Revenues
      Net sales                              $1,359,790  $1,360,570     (0.1)%
      Service and rentals                     1,132,133   1,154,250     (1.9)
      Finance income                            187,354     162,167     15.5
                                              2,679,277   2,676,987      0.1
 
     Costs and Expenses
      Cost of goods sold                        895,612     899,325
      Service and rental costs                  690,945     699,269
      Finance interest expense                   90,567      78,960
      Selling and administrative                907,511     879,782
                                              2,584,635   2,557,336 *
 
     Operating income                            94,642     119,651
     Interest expense                            35,877      33,620
     Income before income taxes                  58,765      86,031
     Income taxes                                25,856      37,845
     Net income                                 $32,909     $48,186
 
     Basic and Diluted Earnings Per Common
      Share                                       $0.23       $0.32
 
     Weighted Average Common Shares
      Outstanding, Basic                        142,087     149,283
 
     Weighted Average Common Shares
      Outstanding, Diluted                      143,005     149,513 **
 
     Operations Analysis:
      Gross profit %, net sales                    34.1%       33.9%
      Gross profit %, service and rentals          39.0%       39.4%
      Gross profit %, finance subsidiaries         51.7%       51.3%
      Total gross profit %                         37.4%       37.3%
      Selling and administrative as a %
       of revenue                                  33.9%       32.9%
      Operating income as a % of revenue            3.5%        4.5%
 
     *  Excludes $17,000 of insurance proceeds related to the shareholder
         litigation settlement and $105,340 restructuring and asset impairment
         charge.
 
     **  The exclusion of the special items results in net income; therefore,
          shares that were previously excluded because of a net loss are now
          included in the diluted earnings per share calculation.
 
 SOURCE  IKON Office Solutions

RELATED LINKS

http://www.ikon.com