MALVERN, Pa. July 15, 2008--IKON Office Solutions, the world's largest independent channel for document management systems and services, today announced that it expects to report third quarter fiscal 2008 diluted earnings per share in the range of $0.35 to $0.37, excluding an expected $0.03 per share net charge primarily from the early extinguishment of debt. The Company previously communicated third quarter fiscal 2008 guidance of $0.29 to $0.32 per diluted share, excluding non-recurring items. In the third quarter of fiscal 2007, the Company earned $0.23 per diluted share. The improved outlook for the third quarter is driven by better than anticipated Customer Service and Supplies revenue and gross margin, and a higher gross margin in Managed and Professional Services.
For the third quarter, total revenue is expected to be approximately $1.05 billion. The Company anticipates its third quarter gross profit margin to be approximately 34 percent, its selling and administrative expense-to-revenue ratio to be less than 28 percent, its operating income margin to be approximately 6 percent, and its tax rate to be approximately 26 percent. The Company previously communicated third quarter fiscal 2008 tax rate guidance of less than 24 percent.
"We are pleased by another quarter of better than expected results," said IKON Chairman and Chief Executive Officer Matthew J. Espe. "In particular, we are encouraged by our improved operating income margin in the third quarter, which was driven by the $25 million cost and expense reduction plan we announced in January, our new U.S. leadership, and continued strong performance in Europe.
"Given our seasonally lower fourth fiscal quarter in Customer Service and Supplies and Off-site Managed Services, as well as higher lease rates, our preliminary outlook for the fourth quarter of fiscal 2008 diluted earnings per share is a range of $0.25 to $0.30, resulting in expected full year diluted earnings per share of $1.00 to $1.05, each excluding any non-recurring items. We plan to provide further guidance in our earnings conference call on July 24, 2008 at 11 a.m. EDT," stated Espe.
The Company's previous outlook for fiscal 2008 diluted earnings per share was a range of $0.92 to $0.98, excluding any non-recurring items.
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