---

---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

---

Form 10-Q

|ý                                                 | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
|------------------------------------------------- | ----------------------------------------------------------------------------------------
|For the quarterly period ended September 30, 2003
|OR                                               
|o                                                 | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|For the transition period from
 to               

Commission File No. 333-40708

---

Chesapeake Funding LLC(Exact name of Registrant as specified in its charter)

Delaware(State or other jurisdiction
of incorporation or organization)

51-0391968(I.R.S. Employer
Identification Number)307 International Circle
Hunt Valley, Maryland(Address of principal executive office)

21030(Zip Code)(410) 771-1900(Registrant's telephone number, including area code)


---

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 and 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 ý    No o

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act). Yes o    No ý

---

---

---

Chesapeake Funding LLC    Index

|        |  |                                                                                                |  | Page
|------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|PART I  |  | Financial Information                                                                          |  |     
|Item 1. |  | Financial Statements                                                                           |  |     
|        |  | Condensed Statements of Income for the Three and Nine Months Ended September 30, 2003 and 2002 |  | 2   
|        |  | Condensed Balance Sheets as of September 30, 2003 and December 31, 2002                        |  | 3   
|        |  | Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002       |  | 4   
|        |  | Notes to Condensed Financial Statements                                                        |  | 5   
|Item 2. |  | Management's Discussion and Analysis of Financial Condition and Results of Operations          |  | 8   
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                     |  | 13  
|Item 4. |  | Controls and Procedures                                                                        |  | 14  
|PART II |  | Other Information                                                                              |  |     
|Item 2. |  | Changes in Securities and Use of Proceeds                                                      |  | 14  
|Item 6. |  | Exhibits and Reports on Form 8-K                                                               |  | 15  
|        |  | Signatures                                                                                     |  | 16  

---



FORWARD-LOOKING STATEMENTS

Forward-looking statements in our public filings or other public statements are subject to known and unknown risks, uncertainties and other factors which may
cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived utilizing numerous important assumptions and other important factors that could cause actual results to differ materially from
those in the forward-looking statements. Forward-looking statements include information concerning our future financial performance, business strategy, projected plans and objectives. Statements
preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may fluctuate" and similar expressions
or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. You should understand that the following important
factors and assumptions could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:



Other
factors and assumptions not identified above were also involved in the derivation of these forward-looking statements, and the failure of such other assumptions to be realized as
well as other factors may also cause actual results to differ materially from those projected. Most of these factors are difficult to predict accurately and are generally beyond our control.

You should consider the areas of risk described above in connection with any forward-looking statements that may be made by us. Except for our ongoing obligations
to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the
occurrence of unanticipated events unless required by law. For any forward-looking statements contained in any document, we claim the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.

1

---



PART IFINANCIAL INFORMATION

Item 1.    Financial Statements

Chesapeake Funding LLC  CONDENSED STATEMENTS OF INCOME  (In thousands)

|                                                                                      |                                                                           | Three Months Ended
September 30, |        | Nine Months Ended
September 30,
|------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- | -------------------------------- | ------ | -------------------------------
|
|Income:                                                                               |                                                                           |                                  |        |                                
|Income from investment in related party special unit of beneficial interest in leases |                                                                           | $                                | 30,138 |                                
|                                                                                      |                                                                           |                                  |        |                                
|Expenses:                                                                             |                                                                           |                                  |        |                                
|                                                                                      | Interest expense                                                          |                                  |        | 9,394                          
|                                                                                      | Interest expense on mandatorily redeemable preferred membership interests |                                  |        | 2,922                          
|                                                                                      | Service fees to related party                                             |                                  |        | 1,926                          
|                                                                                      |                                                                           |                                  |        |                                
|                                                                                      |                                                                           | Total expenses                   |        |                                
|                                                                                      |                                                                           |                                  |        |                                
|Operating income                                                                      |                                                                           |                                  | 15,896 |                                
|Interest income                                                                       |                                                                           |                                  | 434    |                                
|                                                                                      |                                                                           |                                  |        |                                
|Income before income taxes                                                            |                                                                           |                                  | 16,330 |                                
|Income tax provision                                                                  |                                                                           |                                  | 408    |                                
|                                                                                      |                                                                           |                                  |        |                                
|Net income                                                                            |                                                                           | $                                | 15,922 |                                
|                                                                                      |                                                                           |                                  |        |                                

See
Notes to Condensed Financial Statements.

2

---



Chesapeake Funding LLC  CONDENSED BALANCE SHEETS  (In thousands)

|                                      |                                                                        | September 30,
2003 |           | December 31,
2002 |  
|------------------------------------- | ---------------------------------------------------------------------- | ------------------ | --------- | ----------------- | -
|Assets:                               |                                                                        |                    |           |                   |  
|                                      | Cash and cash equivalents                                              |                    | $         | 107,839           |  
|                                      | Restricted cash                                                        |                    |           | 76,450            |  
|                                      | Special unit of beneficial interest in fleet receivablesrelated party |                    |           | 84,886            |  
|                                      | Special unit of beneficial interest in leasesrelated party            |                    |           | 3,323,870         |  
|                                      | Income tax receivable                                                  |                    |           |                  |  
|                                      | Other assets                                                           |                    |           | 22,657            |  
|                                      |                                                                        |                    |           |                   |  
|Total assets                          |                                                                        | $                  | 3,615,702 |                   | $
|                                      |                                                                        |                    |           |                   |  
|Liabilities and members' equity       |                                                                        |                    |           |                   |  
|Liabilities:                          |                                                                        |                    |           |                   |  
|                                      | Accrued interest and income taxes payable                              |                    | $         | 3,851             |  
|                                      | Deferred income taxes                                                  |                    |           | 7,725             |  
|                                      | Medium-term notes                                                      |                    |           | 2,199,971         |  
|                                      | Mandatorily redeemable preferred membership interests                  |                    |           | 362,564           |  
|                                      | Variable funding notes                                                 |                    |           | 470,017           |  
|                                      |                                                                        |                    |           |                   |  
|Total liabilities                     |                                                                        |                    | 3,044,128 |                   |  
|                                      |                                                                        |                    |           |                   |  
|Members' equity:                      |                                                                        |                    |           |                   |  
|                                      | Preferred membership interests                                         |                    |           |                  |  
|                                      | Common membership interests, no par value                              |                    |           | 312,117           |  
|                                      | Note receivable from common member                                     |                    |           | (12,915           | )
|                                      | Retained earnings                                                      |                    |           | 272,372           |  
|                                      |                                                                        |                    |           |                   |  
|Total members' equity                 |                                                                        |                    | 571,574   |                   |  
|                                      |                                                                        |                    |           |                   |  
|Total liabilities and members' equity |                                                                        | $                  | 3,615,702 |                   | $
|                                      |                                                                        |                    |           |                   |  

See
Notes to Condensed Financial Statements.

3

---



Chesapeake Funding LLC  CONDENSED STATEMENTS OF CASH FLOWS  (In thousands)

|                                                                                  |                                                                          | Nine Months Ended
September 30,           |         
|--------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----------------------------------------- | --------
|
|Operating Activities                                                              |                                                                          |                                           |         
|Net income                                                                        |                                                                          | $                                         | 51,269  
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                                          |                                           |         
|                                                                                  | Amortization of deferred financing fees                                  |                                           |         
|                                                                                  | Net losses (gains) on interest rate cap                                  |                                           |         
|                                                                                  | Net changes in other assets and liabilities:                             |                                           |         
|                                                                                  |                                                                          | Accrued interest and income taxes payable |         
|                                                                                  |                                                                          | Income tax receivable                     |         
|                                                                                  |                                                                          | Interest income receivable                |         
|                                                                                  |                                                                          | Restricted cash                           |         
|                                                                                  |                                                                          |                                           |         
|Net cash provided by operating activities                                         |                                                                          |                                           | 75,940  
|                                                                                  |                                                                          |                                           |         
|Investing Activities                                                              |                                                                          |                                           |         
|                                                                                  | Special unit of beneficial interest in leases  related party            |                                           |         
|                                                                                  | Special unit of beneficial interest in fleet receivables  related party |                                           |         
|                                                                                  |                                                                          |                                           |         
|Net cash provided by investing activities                                         |                                                                          |                                           | 156,780 
|                                                                                  |                                                                          |                                           |         
|Financing Activities                                                              |                                                                          |                                           |         
|                                                                                  | Payment of deferred financing fees                                       |                                           |         
|                                                                                  | Proceeds from issuance of preferred membership interests                 |                                           |         
|                                                                                  | Payment of preferred membership interests                                |                                           |         
|                                                                                  | Capital distribution to common member                                    |                                           |         
|                                                                                  | Preferred membership interests dividends paid                            |                                           |         
|                                                                                  | Proceeds from issuance of variable funding notes                         |                                           |         
|                                                                                  | Payment of variable funding notes                                        |                                           |         
|                                                                                  | Proceeds from issuance of medium-term notes                              |                                           |         
|                                                                                  | Payment of medium-term notes                                             |                                           |         
|                                                                                  |                                                                          |                                           |         
|Net cash used in financing activities                                             |                                                                          |                                           | (290,430
|                                                                                  |                                                                          |                                           |         
|Net increase (decrease) in cash and cash equivalents                              |                                                                          |                                           | (57,710 
|Cash and cash equivalents, beginning of period                                    |                                                                          |                                           | 165,549 
|                                                                                  |                                                                          |                                           |         
|Cash and cash equivalents, end of period                                          |                                                                          | $                                         | 107,839 
|                                                                                  |                                                                          |                                           |         
|Supplemental disclosures of cash flow information:                                |                                                                          |                                           |         
|Interest on notes and dividends on preferred membership interests paid            |                                                                          | $                                         | 33,265  
|                                                                                  |                                                                          |                                           |         
|Interest on mandatorily redeemable preferred membership interests paid            |                                                                          | $                                         | 6,580   
|                                                                                  |                                                                          |                                           |         
|Income taxes paid, net of refunds                                                 |                                                                          | $                                         | 705     
|                                                                                  |                                                                          |                                           |         

See
Notes to Condensed Financial Statements.

4

---



Chesapeake Funding LLC  NOTES TO CONDENSED FINANCIAL STATEMENTS  (Unless otherwise noted, all amounts are in millions)

1.     Summary of Significant Accounting Policies



Chesapeake Funding LLC ("Chesapeake" or "the Company") is a special purpose limited liability company, which was organized on June 24, 1999 as Greyhound
Funding LLC under the laws of the State of Delaware. On April 25, 2002, the Company's name was changed to Chesapeake Funding LLC. The sole common member of Chesapeake is Raven Funding LLC
("Raven"), which itself is a special purpose limited liability company established under the laws of the State of Delaware. The sole member of Raven is PHH Vehicle Management Services, LLC ("VMS"), a
limited liability company and from its date of organization to March 1, 2001, a wholly-owned subsidiary of Avis Group Holdings, Inc. ("Avis"). On March 1, 2001, Avis was acquired
by PHH Corporation. VMS became a wholly-owned subsidiary of PHH Corporation, which is a wholly-owned subsidiary of Cendant Corporation. All assets and liabilities were recorded by the Company at fair
value as of March 1, 2001. No significant adjustments were made by the Company.

Chesapeake
was formed for the purpose of issuing indebtedness, issuing preferred membership interests, acquiring and holding a special unit of beneficial interest in certain leases (the
"Lease SUBI") and acquiring and holding a portion of a special unit of beneficial interest in certain fleet management receivables (the "Fleet Receivable SUBI") owned by D.L. Peterson Trust ("DLPT").
The Lease SUBI is a beneficial ownership interest in the leases, vehicles and paid-in-advance vehicles owned by DLPT ("SUBI Assets"). DLPT is a Delaware statutory trust
established by VMS in order to administer the titling and to act as lessor of the vehicles in connection with the financing and transfer of vehicles subject to leases. Chesapeake owns a certificate
representing the Lease SUBI (the "Lease SUBI Certificate") and a certificate
representing an interest in the Fleet Receivable SUBI in an amount up to $120 million (the "Fleet Receivable SUBI Certificate"). VMS acts as servicer of the assets held by DLPT including the
assets allocated to the Lease SUBI and the Fleet Receivable SUBI. In its role as servicer, VMS will maintain all property, equipment and employees required to perform the servicing activities. The
Fleet Receivable SUBI Certificate and the Lease SUBI Certificate were issued by DLPT to Raven, and were then contributed to Chesapeake by Raven.

In
management's opinion the accompanying unaudited Condensed Financial Statements contain all normal recurring adjustments necessary for a fair presentation of interim results reported.
The results of operations reported for interim periods are not necessarily indicative of the results of operations for the entire year or any subsequent interim period. In addition, management is
required to make estimates and assumptions that affect the amounts reported and related disclosures. Estimates by their nature, are based on judgments and available information. Accordingly, actual
results could differ from those estimates.

The
Condensed Financial Statements should be read in conjunction with the Company's 2002 Annual Report on Form 10-K filed on March 10, 2003.



Guarantees.On January 1, 2003, the Company adopted Financial Accounting Standards Board Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," in its entirety. Such Interpretation elaborates on the disclosures to be
made by a guarantor about its obligations under certain guarantees issued. It also clarifies that a guarantor is required to recognize, at the inception of any guarantee issued or modified after
December 31, 2002, a liability for the fair value of the obligation undertaken in issuing the guarantee. The impact of adopting this Interpretation was not material to the Company's results of
operations or financial position.

5

---

Derivative Instruments and Hedging Activities.On June 30, 2003, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." Such standard amends and clarifies the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The
impact of adopting this standard was not material to the Company's results of operations or financial position.

Financial Instruments with Characteristics of Both Liabilities and Equity.On July 1, 2003, the Company adopted SFAS
No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This standard addresses how certain financial instruments with characteristics of
both liabilities and equity should be classified and measured. As a result, the Company reclassified its $362.6 million senior preferred membership interests ("PMI's") from the equity section
of the Condensed Balance Sheets to the liability section as mandatorily redeemable preferred membership interests. The interest and dividend distributions on the PMI's for the three and nine months
ended September 30, 2003 and 2002 were $2.9 million and $3.8 million and $7.2 million and $8.2 million, respectively. The Company is precluded from reclassifying
prior period amounts, therefore, the third quarter 2003 amount is recorded as interest expense on the Condensed Statements of Income, while the 2002 amount and the amount for the six months ended
June 30, 2003 is recorded as dividends.

2.     Debt

During the nine months ended September 30, 2003, the Company made principal payments of $159.1 million and $200.0 million to the holders of
its series 1999-2 Class A-2 medium-term notes and series 2001-1 Class A-1 medium-term notes,
respectively. In July 2003, the Company purchased and retired the class B notes of its series 2002-2 which had a balance of $44.9 million. In
August 2003, the Company issued $500 million of series 2003-1 medium-term notes bearing interest at a rate that is reset monthly at LIBOR plus 25 basis
points for $230 million of such notes and LIBOR plus 36 basis points for $270 million of such notes.

During
the nine months ended September 30, 2003 the Company made drawdowns increasing the outstanding principal amount of its series 1999-3 variable funding
notes by an aggregate of $432 million and made principal payments on its series 1999-3 variable funding notes in an aggregate amount of $529 million. As of
September 30, 2003, the Company's series 1999-3 variable funding notes had a weighted average interest rate of approximately 1.32%. The series 1999-3
variable funding notes are renewable annually for an indefinite period if the Company and the multi-seller commercial paper conduits agree to do so. The principal amount of the
series 1999-3 variable funding notes will begin to amortize when the notes are not renewed.

3.     Preferred Membership Interests

During the nine months ended September 30, 2003, the Company redeemed $135.5 million, $93.1 million, $72.6 million and
$62.9 million of the series of PMI's relating to its series 1999-3 variable funding notes, series 1999-2 medium-term notes,
series 2001-1 medium-term notes and series 2002-1 medium-term notes, respectively.

During
the nine months ended September 30, 2003, the Company issued five new series of PMI's relating to its: (i) series 2001-1 medium-term
notes having an aggregate liquidation preference of approximately $88.5 million, (ii) series 2002-1 medium-term notes having an aggregate liquidation
preference of approximately $76.7 million, (iii) series 2002-2 medium-term notes having an aggregate liquidation preference of approximately
$57.3 million,

6

---

(iv) series 2003-1
medium-term notes having an aggregate liquidation preference of approximately $45.6 million and
(v) series 1999-3 variable funding notes having an aggregate liquidation preference of approximately $94.4 million. These PMI's were issued to an affiliate of Raven.
The Company used a portion of the proceeds to purchase and retire the Class B notes of its series 2002-2 medium-term notes (discussed above).

4.     Note Receivable From Common Member

On
July 31, 2003, simultaneously with the retirement of the class B notes of the series 2002-2 notes, a $53.3 million demand note issued by VMS to
Raven and contributed to the Company was cancelled, which reduced Raven's common membership interest in the Company by $53.3 million. On August 14, 2003, Raven increased its common
membership interest in the Company by contributing $12.9 million demand note of VMS. The Company can call on this demand note from time to time in whole or in part at the Company's discretion
with any calls reducing the available principal amount thereof. The demand note is not and will not be pledged as collateral to secure any series of the Company's notes.

*****

7

---

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our unaudited Condensed Financial Statements and accompanying Notes thereto
included elsewhere herein and with our 2002 Annual Report on Form 10-K filed with the Commission on March 10, 2003. Unless otherwise noted, all dollar amounts are in
thousands.

We
are a limited purpose entity formed in 1999. Our activities are limited to acquiring and holding an investment in the Lease SUBI (which is a special unit of beneficial interest in
certain leases and vehicles owned by DLPT) and a portion of the Fleet Receivable SUBI (which is a special unit of beneficial interest in certain fleet management receivables owned by DLPT), issuing
indebtedness and preferred membership interests to finance such investment and engaging in other activities that are related or incidental to the foregoing and necessary, convenient or advisable to
accomplish the foregoing. We do not conduct operating activities.

Income
from investment in related party special unit of beneficial interest in leases for the three and nine months ended September 30, 2003 decreased by $7,786 and $20,871,
respectively, from the comparable periods in 2002. Such decreases resulted primarily from declines in the floating rate indices on which interest billings under the leases allocated to the Lease SUBI
are based. Interest expense for the three and nine months ended September 30, 2003 decreased by $5,715 and $10,308, respectively, as a result of decreases in the commercial paper rates and
LIBOR (the rates at which our floating rate debt accrues interest). Accordingly, operating income for the three and nine months ended September 30, 2003 decreased by $1,856 and $10,027,
respectively.

The
principal source of our revenue is payments received on the Lease SUBI held by us. Set forth below is certain historical data with respect to delinquency experience, loss and
recovery experience, residual value loss experience, conversions of floating rate leases to fixed rate leases, and fleet management billing experience, in each case for leases and fleet management
receivables that are of the same type as those allocated to the Lease SUBI and the Fleet Receivable SUBI.

In
presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported
therein. Several of the estimates and assumptions that we are required to make pertain to matters that are inherently uncertain as they relate to future events. We do not believe the estimates and
assumptions that we are required to make are particularly subjective or complex and as such we do not believe that any change in these estimates or assumptions would have a material impact on our
results of operations or financial condition.



Guarantees.On January 1, 2003, we adopted Financial Accounting Standards Board Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others," in its entirety. Such Interpretation elaborates on the disclosures to be
made by a guarantor about its obligations under certain guarantees issued. It also clarifies that a guarantor is required to recognize, at the inception of any guarantee issued or modified after
December 31, 2002, a liability for the fair value of the obligation undertaken in issuing the guarantee. The impact of adopting this Interpretation was not material to our results of operations
or financial position.

Derivative Instruments and Hedging Activities.On June 30, 2003, we adopted Statement of Financial Accounting
Standards ("SFAS") No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." Such standard amends and clarifies the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The impact
of adopting this standard was not material to our results of operations or financial position.

8

---

Financial Instruments with Characteristics of Both Liabilities and Equity.On July 1, 2003, we adopted SFAS
No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This standard addresses how certain financial instruments with characteristics of
both liabilities and equity should be classified and measured. As a result we reclassified our $362.6 million PMI's from the equity section of the Condensed Balance Sheets to the liability
section as mandatorily redeemable preferred membership interests. The interest and dividend distributions on the PMI's for the three and nine months ended September 30, 2003 and 2002 were
$2.9 million and $3.8 million and $7.2 million and $8.2 million, respectively. We are precluded from reclassifying prior period amounts, therefore, the third quarter 2003
amount is recorded as interest expense on the Condensed Statement of Income, while the 2002 amount and the amount for the six months ended June 30, 2003 is recorded as dividends.

Delinquency Experience

The following table sets forth delinquency data with respect to aggregate billings of lease payments for all of VMS' leases and fleet management receivables for
the nine months ended September 30, 2003 and 2002. These leases and fleet management receivables are of the same type as the leases allocated
to the Lease SUBI and the fleet management receivables allocated to the Fleet Receivable SUBI and do not include any other types of leases or fleet management receivables.

|                                          |  | Nine Months Ended
September 30, |  
|----------------------------------------- |  | ------------------------------- | -
|
|Percentage of Billings Delinquent (1)(2): |  |                                 |  
|30-59 Days                                |  | 0.53                            | %
|60 Days or More                           |  | 2.85                            | %
|                                          |  |                                 |  
|Total 30 or More Days Delinquent          |  | 3.38                            | %
|                                          |  |                                 |  

---

Total
delinquencies for the nine months ended September 30, 2003 remained below 5% of total billings, which is consistent with the performance of the portfolio
over the last several years. Delinquencies of 30-59 days decreased due to successful collection efforts and a reduction in the number of new bankruptcies. Management is not aware of
any factors, which would negatively impact delinquencies for the remainder of 2003 beyond historical levels.

Loss and Recovery Experience

The following table sets forth loss and recovery data with respect to VMS' leases and fleet management receivables for the nine months ended September 30,
2003 and 2002. These leases and fleet management receivables are of the same type as the leases allocated to the Lease SUBI and the fleet management receivables allocated to the Fleet Receivable SUBI
and do not include any other types of leases or fleet management receivables.

9

---

|                                                             |  | Nine Months Ended
September 30, |          
|------------------------------------------------------------ |  | ------------------------------- | ---------
|
|Ending dollar amount of leases (1)                           |  | $                               | 3,323,870
|Total billings for period                                    |  |                                 | 1,675,416
|Gross losses (2)                                             |  |                                 | 134      
|Recoveries (3)                                               |  |                                 | 42       
|                                                             |  |                                 |          
|Net losses                                                   |  | $                               | 176      
|                                                             |  |                                 |          
|Net losses as a percentage of ending dollar amount of leases |  |                                 | 0.01     
|Net losses as a percentage of total billings for period      |  |                                 | 0.01     

---

Net
losses as a percentage of total billings decreased during the nine months ended September 30, 2003 as compared to the comparable period in 2002 due to lower losses from
bankruptcies.

Gross
losses with respect to bankrupt obligors generally are not recognized by VMS until it receives payment upon the confirmation of the plan of reorganization of the bankrupt obligor
and receives any terminal rental adjustment payments that may be applied to satisfy outstanding obligations with respect to fleet management receivables. Losses are charged against previously
established reserves. Reserve adequacy for the purposes of VMS' financial statements is determined at the time of a client's bankruptcy filing and any necessary charge is recorded to the income
statement at that time.

10

---



Residual Value Loss Experience

The following table sets forth residual value loss performance data for VMS' closed-end leases for the nine months ended September 30, 2003 and
2002. These closed-end leases are of the same type as the closed-end leases allocated to the Lease SUBI and do not include any other types of closed-end leases.

|                                                                    |  | Nine Months Ended
September 30, |       
|------------------------------------------------------------------- |  | ------------------------------- | ------
|
|Total number of closed-end leases scheduled to terminate            |  |                                 | 2,778 
|Number of sold vehicles                                             |  |                                 | 3,006 
|Full termination ratio (1)                                          |  |                                 | 108.21
|Total loss on sold vehicles (2)                                     |  | $                               | (704  
|Average loss per sold vehicles (3)                                  |  | $                               | (234  
|Loss as a percentage of stated residual values of sold vehicles (4) |  |                                 | (2.72 

---

Total
residual value losses increased $603 during the nine months ended September 30, 2003 as compared to the comparable period in 2002 and the total number of sold vehicles
decreased by 3% due to lower used car values resulting from higher volumes of used cars available in the market. The average loss per vehicle returned and sold increased $202 per unit for the same
reason.

Conversions of Floating Rate Leases to Fixed Rate Leases

The following table sets forth data with respect to conversions of VMS' floating rate leases to fixed rate leases during the nine months ended
September 30, 2003 and 2002.

|                                                              |  | Nine Months Ended
September 30, |          
|------------------------------------------------------------- |  | ------------------------------- | ---------
|
|Dollar amount of conversions for period (1)                   |  | $                               | 304      
|Ending dollar amount of leases (2)                            |  |                                 | 3,323,870
|Conversions as a percentage of ending dollar amount of leases |  |                                 | 0.01     

---

Conversion
of floating rate leases to fixed rate leases are at the discretion of the client. Management believes that the lack of conversions in the nine months ended
September 30, 2003 is due to the clients' perception that floating rates will remain at, or decline from, current levels.

11

---

Fleet Management Receivable Billing Experience

The following table sets forth data for VMS' aggregate billings of fleet management receivables for the nine months ended September 30, 2003 and 2002.
These fleet management receivables are of the same type as the fleet management receivables allocated to the Fleet Receivable SUBI and do not include any other types of fleet management receivables.

|                         |  | Nine Months Ended
September 30,
|------------------------ |  | -------------------------------
|
|Aggregate billings       |  | $                              
|Average monthly billings |  |                                
|Maximum monthly billings |  |                                
|Minimum monthly billings |  |                                

Aggregate
fleet management receivable billings increased $63.5 million in the nine months ended September 30, 2003 from the comparable period in 2002 primarily due to an
increase in fuel and maintenance billings.

Characteristics of Leases Allocated to Lease SUBI

The following tables contain certain statistical information relating to the leases allocated to the Lease SUBI as of September 18, 2003 (the last Lease SUBI
monthly reporting period cutoff date during the third quarter of 2003). The following information does not include vehicles ordered at the request of lessees party to a master lease agreement
allocated to the Lease SUBI, having an aggregate cost of $74,307,492 as of that date because such vehicles were not yet subject to a lease. For the purposes of preparing the following tables, we
assumed the original term of each lease to be the period over which the related vehicle is scheduled to be depreciated.

12

---

|Composition of Leases                                                                       |  |   |                      
|------------------------------------------------------------------------------------------- |  | - | ---------------------
|Aggregate unit balance of leases                                                            |  | $ | 3,080,788,048.56     
|Number of leases                                                                            |  |   | 208,696              
|Average unit balance                                                                        |  | $ | 14,762.08            
|Range of unit balances                                                                      |  | $ | 2.52 to $757,699.72  
|Aggregate unit balance of open-end leases                                                   |  | $ | 2,986,762,936.14     
|Aggregate unit balance of floating rate leases                                              |  | $ | 2,376,115,855.45     
|Aggregate lease balance of CP rate index floating rate leases                               |  | $ | 2,260,126,036.67     
|Weighted average spread over CP rate                                                        |  |   | 0.335%               
|Range of spreads over CP rate                                                               |  |   | 0.00% to 3.00%       
|Aggregate unit balance of floating rate leases indexed to floating rates other than CP rate |  | $ | 115,989,818.78       
|Aggregate unit balance of fixed rate leases                                                 |  | $ | 704,672,193.11       
|Weighted average fixed rate                                                                 |  |   | 4.709%               
|Range of fixed rates                                                                        |  |   | 0.00% to 41.47%      
|Weighted average original lease term                                                        |  |   | 62.33                
|Range of original lease terms                                                               |  |   | 12 to 132 months     
|Weighted average remaining term                                                             |  |   | 41.71                
|Range of remaining terms                                                                    |  |   | 0 to 119 months      
|Aggregate unit balance of closed-end leases                                                 |  | $ | 94,025,112.42        
|Average unit balance of closed-end leases                                                   |  | $ | 16,205.64            
|Range of unit balance of closed-end leases                                                  |  | $ | 623.60 to $480,213.89
|Average stated residual value of closed-end leases                                          |  | $ | 8,987.74             

---

Note:
Dollar amounts are in whole amounts

As
of September 18, 2003, the aggregate lease balance of the leases allocated to the Lease SUBI with the lessee having the largest aggregate lease balances was $130,244,170. The aggregate lease
balance of the leases allocated to the Lease SUBI with the lessees having the five largest aggregate lease balances was $498,914,386 and the aggregate lease balance of the leases allocated to the
Lease SUBI with the lessees having the ten largest aggregate lease balances was $800,420,756.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

We use interest rate caps to manage and reduce the interest rate risk related specifically to our asset-backed debt. Interest rate risk is our only market
exposure. We do not engage in trading, market-making, or other speculative activities in the derivatives markets. We assess our interest rate risk based on changes in the interest rates utilizing a
sensitivity analysis, which measures the potential loss in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in our asset-backed debt and interest rate
caps. We used September 30, 2003 interest rates to perform a sensitivity analysis. We have determined, through such analyses, that the impact of a 10% change in interest rates on our earnings,
fair values and cash flows would not be material.

13

---

Item 4.    Controls and Procedures

PART IIOTHER INFORMATION

Item 2.    Changes in Securities and Use of Proceeds



14

---



Item 6.    Exhibits and Reports on Form 8-K

|    |  |                            
|--- |  | ---------------------------
|(a) |  | Exhibits
See Exhibit Index.
|(b) |  | Reports on Form 8-K
None.  

15

---



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.

| | CHESAPEAKE FUNDING LLC                                                                                                             
| | -----------------------------------------------------------------------------------------------------------------------------------
| | /s/NEIL J. CASHENNeil J. Cashen
Chief Financial Officer
(Principal Financial Officer
and duly authorized officer
of the Registrant)

Date:
November 13, 2003

16

---

Exhibit Index

|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                   
|----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Certificate of Formation of Chesapeake Funding LLC (formerly known as Greyhound Funding LLC), incorporated by reference to the Registration Statement on Form S-1 (File no. 333-40708) filed with the Securities and Exchange
Commission on June 30, 2000.                                                                                                                                                                                    
|3.2         |  | Certificate of Amendment to Certificate of Formation of Chesapeake Funding LLC (formerly known as Greyhound Funding LLC) dated April 25, 2002, incorporated by reference to the Registration Statement on Form S-3 (File no. 333-87568) filed with the
Securities and Exchange Commission on May 3, 2002.                                                                                                                                     
|3.3         |  | Certificate of Amendment to Certificate of Formation of Chesapeake Funding LLC (formerly known as Greyhound Funding LLC), dated June 24, 2002, incorporated by reference to the Registration Statement on Form S-3 (File no. 333-103678) filed with the
Securities and Exchange Commission on August 1, 2003.                                                                                                                                 
|3.4         |  | Amended and Restated Limited Liability Company Agreement of Chesapeake Funding LLC (formerly known as Greyhound Funding LLC) dated as of October 28, 1999, incorporated by reference to the Registration Statement on Form S-1 (File no. 333-40708) filed
with the Securities and Exchange Commission on June 30, 2000.                                                                                                                       
|3.5         |  | First Amendment, dated as of April 25, 2002, to the Amended and Restated Limited Liability Company Agreement of Chesapeake Funding LLC (formerly known as Greyhound Funding LLC), dated as of October 28, 1999, incorporated by reference to the
Registration Statement on Form S-3 (File no. 333-87568) filed with the Securities and Exchange Commission on May 3, 2002.                                                                    
|3.6         |  | Second Amendment, dated as of June 18, 2003, to the Amended and Restated Limited Liability Company Agreement of Chesapeake Funding LLC (formerly known as Greyhound Funding LLC), dated as of October 28, 1999, incorporated by reference to the
Registration Statement on Form S-3 (File no. 333-103678) filed with the Securities and Exchange Commission on August 1, 2003.                                                                
|3.7         |  | Third Amendment, dated as of August 14, 2003, to the Amended and Restated Limited Liability Company Agreement of Chesapeake Funding LLC (formerly known as Greyhound Funding LLC), dated as of October 28, 1999, incorporated by reference to the
Registration Statement on Form S-3 (File no. 333-109007) filed with the Securities and Exchange Commission on September 22, 2003.                                                           
|10.1        |  | Supplemental Indenture No. 4, dated as of July 31, 2003, to the Base Indenture, dated as of June 30, 1999, between Chesapeake Funding LLC (formerly known as Greyhound Funding LLC) and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank),
as Indenture Trustee, incorporated by reference to the Registration Statement on Form S-3 (File No. 333-103678) filed with the Securities and Exchange Commission on August 1, 2003.
|10.2        |  | Series 2003-1 Indenture Supplement, dated as of August 14, 2003, to the Base Indenture, dated as of June 30, 1999, between Chesapeake Funding LLC (formerly known as Greyhound Funding LLC) and JPMorgan Chase Bank (formerly known as The Chase Manhattan
Bank), as Indenture Trustee.                                                                                                                                                       
|31.1        |  | Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                                                                                                                                                                                         
|31.2        |  | Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                                                                                                                                                                                         
|32          |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                       

---

QuickLinks