##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
 (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    September 30, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to          .   Commission file number 1-5964
      IKON OFFICE SOLUTIONS,
    INC.
 (Exact name of registrant as
    specified in its charter)
 OHIO

23-0334400(State or other jurisdiction
    of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)70 Valley Stream Parkway
    Malvern, Pennsylvania(Address of principal
    executive offices)

19355(Zip
    Code)   Registrants telephone number, including area code:
 (610) 296-8000
      Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, no par value


New York Stock Exchange   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 þ o o
  Rule 12b-2 o
      DOCUMENTS
    INCORPORATED BY REFERENCE




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##### 



INDEX
  Page No.PART IITEM 1.

BUSINESS


4ITEM 1A.

RISK FACTORS


10ITEM 1B.

UNRESOLVED STAFF COMMENTS


13ITEM 2.

PROPERTIES


13ITEM 3.

LEGAL PROCEEDINGS


13ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY
    HOLDERS


13ITEM 4A.

EXECUTIVE OFFICERS OF THE REGISTRANT


14PART IIITEM 5.

MARKET FOR REGISTRANTS COMMON EQUITY,
    RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
    SECURITIES


16ITEM 6.

SELECTED FINANCIAL DATA


18ITEM 7.

MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


20ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


39ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


41ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
    ACCOUNTING AND FINANCIAL DISCLOSURE


79ITEM 9A.

CONTROLS AND PROCEDURES


79ITEM 9B.

OTHER INFORMATION


81PART IIIITEM 10.

DIRECTORS AND EXECUTIVE OFFICERS OF THE
    REGISTRANT


81ITEM 11.

EXECUTIVE COMPENSATION


81ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


81ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


82ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES


82PART IVITEM 15.

EXHIBITS AND FINANCIAL STATEMENT
    SCHEDULES


82Amendment 2007-1, dated as of November 27, 2007, to the Amended and Restated IKON Office Solutions, Inc. Deferred Executive Compensation PlanRatio of Earnings to Fixed ChargesSubsidiaries of IKONConsent of PricewaterhouseCoopers LLPCertification of Principal Executive OfficerCertification of Principal Financial OfficerCertification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350     2




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##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
  Form 10-K, E-Business
    
    conducting operations in a competitive environment and a
    changing industry;
    existing or future supplier relationships;
    our lease program relationships with GE;
    our ability to execute on our strategic priorities;
    our One Platform Conversion and our infrastructure and
    productivity initiatives;
    new technologies;
    economic, legal and political issues associated with our
    international operations; and
    our ability to maintain effective internal control over
    financial reporting. 3




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##### Table of Contents



PART I
  Item 1.
    Business  best-in-class on-site
  Strategy
    Overview
  on-site
  Growth ®
      Operational Leverage
 4




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Capital Strategy 
  General
    Business Developments
    Business Division Integration.
  Operations Integration and Enhancements.
 5




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Product Transition.
  Equipment Financing.
  Segments
        Sales and
    Services Organizations
    on-site
 6




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##### Table of Contents



off-site
  Products
    and Services Offerings
      Digital Copying and Printing.
  Professional Services.
  Managed Services. on-site
  
    On-site Managed
    Services.On-site
    fleet management of equipment and turnkey copy center and
    mailroom management solutions that blend equipment, staff,
    service and supplies to maximize resources, minimize costs and
    improve customer operations;
    Off-site Managed Services.  Specialized
    document management solutions for the legal industry through
    Legal Document Services, addressing the requirements of law
    firms and corporate counsel, including litigation reprographics,
    document imaging, coding and conversion services, legal graphics
    and electronic data discovery.  Customer Services.
  Lease Financing.
    ® ® ®
 7




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tm tm ® ® ®
  Efficiency
    Initiatives
    Customers
      Suppliers
    and Inventory
     8




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Proprietary
    Matters
  and/or
  Environmental
    Regulation
      Employees
    Competition
     9




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Foreign
    Operations
    Availability
    of SEC Reports
  www.ikon.com. Form 10-K, Form 10-Q, Form 8-K 610-296-8000.
  www.sec.gov. 1-800-SEC-0330
  Item 1A.
    Risk
    Factors  The
    intense competition in our industry could result in reduced
    profitability and loss of market share.
   10




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A
    deterioration in our relationships with our suppliers or in the
    financial condition of our suppliers could have a material
    adverse effect on our liquidity, financial position and results
    of operations.
    Our
    liquidity, financial position and results of operations are
    dependent on our relationship with GE.
       11




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##### Table of Contents



Our
    inability to successfully implement initiatives related to our
    strategic priorities may adversely affect our liquidity,
    financial position and results of operations.
    
    customer demand for our products, services, solutions and
    marketing programs;
    our ability to meet or exceed customer expectations relating to
    the delivery and performance of our products, services and
    solutions;
    our supplier relationships, including product pricing and
    promotional support;
    our ability to continue to identify and effectively remediate
    process or structural inefficiencies;
    our ability to maintain adequate levels of liquidity to finance
    our strategic priorities; and
    our ability to execute effectively, and to attract, manage and
    retain a motivated and productive workforce in a competitive
    industry and a challenging corporate governance environment
    impacted by investor activism.    We
    continue to implement substantial changes to our information
    systems. These actions could disrupt our business.
    New
    technologies may affect our operations, and failures in the
    transition to new technologies could have a material adverse
    effect on our business.
   12




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Added
    risks are associated with our international
    operations.
    If we
    fail to maintain effective internal control over financial
    reporting, we may not be able to accurately report our financial
    results or prevent fraud. As a result, our business, brand and
    operating results could be harmed or we could fail to meet our
    reporting obligations.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings  Regulation S-K.
  Item 4.
    Submission
    of Matters to a Vote of Security Holders   13




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Item 4A.
    Executive
    Officers of the Registrant    Year FirstName

Title

Appointed

AgeMatthew J. Espe

Chief Executive Officer, President and Chairman of the Board of
    Directors


2002



49Robert F. Woods

Senior Vice President and Chief Financial Officer


2004



52Brian D. Edwards

Senior Vice President, U.S. Sales and Services


2004



44Mark A. Hershey

Senior Vice President, General Counsel and Secretary


2005



38Jeffrey W. Hickling

Senior Vice President, Operations


2005



52Beth B. Sexton

Senior Vice President, Human Resources


1999



51Tracey J. Rothenberger

Senior Vice President and Chief Information Officer


2007



39David Mills

Vice President, IKON Europe


1998



49Theodore E. Strand

Vice President and Controller


2002



63   Matthew J. Espe.
  Robert F. Woods.
  Brian D. Edwards.
  Mark A. Hershey.
  Jeffrey W. Hickling.
  Tracey Rothenberger.
 14




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Beth B. Sexton.
  David Mills.
  Theodore E. Strand.
 15




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##### Table of Contents



PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities    10-year
      ApproximateTotal Number of


Dollar Value ofShares Purchased


Shares That MayTotal Number


Average


as Part of


Yet be Purchasedof Shares


Price Paid


Repurchase


Under thePeriod

Purchased


per Share


Plan


Repurchase Plan*July 1, 2007 - July 31, 2007


1,325


$
14.96



1,325


$
185,451August 1, 2007 - August 31, 2007


3,139



13.44



3,139



143,265September 1, 2007 - September 30, 2007


979



13.25



979



130,2855,443


$
13.78



5,443


$
130,285     *
    
    In March 2004, our Board of
    Directors authorized us to repurchase up to $250,000 of our
    outstanding common stock. Subsequent to March 2004, our Board of
    Directors authorized $150,000, and $200,000 capacity increases
    in February 2006, and April 2007, respectively, raising the
    authority to $600,000 at such time (the Repurchase
    Plan). The Repurchase Plan will remain in effect until the
    repurchase authority limit is reached; however, our Board of
    Directors may discontinue, decrease or increase the capacity of
    the Repurchase Plan at any time. As of September 30, 2007,
    we had utilized $469,715 under the Repurchase Plan. Our share
    repurchases under the Repurchase Plan generally occur in the
    open market in connection with a trading plan under
    Rule 10b5-1.
    For additional information concerning our share repurchases and
    the limits imposed by our 2015 Notes and the potential limits
    related to financial covenant compliance under our $200,000
    secured credit facility, refer to Note 9 to our
    Consolidated Financial Statements included in Item 8 of
    this report. During the first quarter of fiscal 2008, our Board
    of Directors authorized us to repurchase an additional $500,000
    of our common stock, thereby raising the authorization to
    $1,100,000 under the Repurchase Plan. In connection with this
    additional increase, we announced on November 20, 2007 that
    we intend to repurchase up to $295,000 of our common stock
    through a modified Dutch auction self-tender offer (the
    Dutch Auction) at a price of not less than $13 per
    share, or more than $15 per share, subject to certain
    conditions. Refer to the Companys
    Form 8-K
    and Form SC TO-I filed with the SEC on November 21, 2007
    for additional information. We expect to repurchase the
    difference between the $500,000 and the amount repurchased
    through the Dutch Auction during fiscal 2008; however, the rate
    and pace of such share repurchases will be subject to certain
    conditions, including the receipt of additional financing. 16




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Comparison
    of five-year cumulative return among IKON vs. Peer Group vs.
    Russell 2000 Index
    Five-year
    financial performance graph:
  
 17




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##### Table of Contents



Item 6.
    Selected
    Financial Data  2007


2006(b)


2005(c)


2004(d)


2003(e)(in millions, except per share data, ratios and employees)Continuing OperationsRevenue

$
4,168.3


$
4,228.2


$
4,377.3


$
4,565.7


$
4,661.2Gross profit


1,383.2



1,441.8



1,551.7



1,684.7



1,778.6Selling and administrative(j)


1,180.3



1,251.8



1,396.7



1,470.7



1,505.4Operating income


202.9



201.7



156.0



202.6



273.2Income before taxes


163.4



157.9



105.0



118.6



205.0Income from continuing operations


114.5



106.2



73.2



88.3



127.4Earnings per common shareBasic


0.92



0.81



0.52



0.60



0.88Diluted


0.91



0.80



0.51



0.58



0.81Capital expenditures(a)


63.9



78.2



72.1



90.2



124.4Depreciation and amortization


72.1



73.4



78.4



90.5



110.8Discontinued OperationsNet loss

$



$
0.00


$
(12.5
)

$
(4.6
)

$
(4.3
)Net loss per common shareBasic






0.00



(0.09
)


(0.03
)


(0.03
)Diluted






0.00



(0.08
)


(0.03
)


(0.03
)Total OperationsNet income

$
114.5


$
106.2


$
60.7


$
83.7


$
123.1Earnings per common shareBasic


0.92



0.81



0.43



0.57



0.85Diluted


0.91



0.80



0.43



0.55



0.79Share ActivityDividends per common share

$
0.16


$
0.16


$
0.16


$
0.16


$
0.16Per common share book value


14.55



13.21



11.64



11.87



10.97Return on shareholders equity %


6.7



6.3



3.9



5.0



7.7Weighted average common shares (basic)


124.6



131.3



139.9



146.6



145.2Weighted average common shares (diluted)


126.3



132.9



157.7



169.3



167.8Supplementary InformationCurrent ratio(f)


2.0



1.8



1.8



1.6



1.2Working capital(g)

$
682.8


$
621.9


$
790.6


$
789.9


$
395.1Total assets


3,278.1



3,238.2



3,833.9



4,518.4



6,600.6Total debt


825.4



812.0



1,254.0



1,667.7



3,438.3% of capitalization(i)


32.5



32.5



44.4



49.7



68.2Total debt, excluding non-corporate debt(h)

$
593.0


$
595.1


$
729.3


$
804.9


$
429.5% of capitalization(h)(i)


25.7



26.1



31.7



32.3



21.1Employees


25,000



25,100



25,700



29,400



30,250   Notes:
  (a)
    
    Capital expenditures exclude
    non-cash property and equipment financed under capital leases.(b)
    
    Fiscal year results include an
    $11.5 net gain on the divestiture of businesses and a $5.5
    charge from the early extinguishment of debt. The gain on
    divestiture of business resulted in an increase in operating
    income of $11.5. The gain on divestiture of businesses and the
    loss from the early extinguishment of debt resulted in an
    increase in pre-tax income of $6.0 and an increase in net income
    of $7.9.(c)
    
    Fiscal year results include a $7.0
    charge from the early termination of a consulting contract, a
    $3.8 charge due to a change in certain U.K. pension liabilities,
    a $1.0 charge from the impact of Hurricanes Katrina and Rita, a
    $0.3 charge related to the consolidation of the Legal 18




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##### Table of Contents



Document Services business, a $10.5
    charge for restructuring and asset impairments, a $6.1 charge
    from the early termination of real estate leases, a
    $11.5 net gain from the divestiture of businesses
    (collectively, the Charges) and a $6.0 charge from
    the early extinguishment of debt. The Charges resulted in a
    decrease in operating income of $17.2. The Charges and the loss
    from the early extinguishment of debt resulted in a decrease in
    pre-tax income of $23.2 and net income of $12.2.(d)
    
    Fiscal year results include $35.9
    of losses from the early extinguishment of debt, a net loss of
    $11.4 on the divestiture of our North American leasing
    businesses (the Loss on Sale), tax reserve
    adjustments of $11.8 related to a tax gain on the sale of our
    U.S. leasing operations and benefits mainly from the settlement
    of a U.S. federal audit (the Tax Adjustments). The
    losses from the early extinguishment of debt and Loss on Sale
    resulted in a decrease in pre-tax income of $47.3 and the losses
    from the early extinguishment of debt, the Loss on Sale and the
    Tax Adjustments resulted in a decrease in net income of $17.9.(e)
    
    Fiscal year results include losses
    from early extinguishment of debt, resulting in a decrease in
    pre-tax income of $19.2 and net income of $11.9.(f)
    
    Current ratio = Total current
    assets/Total current liabilities(g)
    
    Working capital = Total current
    assets − Total current liabilities(h)
    
    Non-corporate debt refers to the
    line items on the balance sheet, current portion of
    non-corporate debt and long-term non-corporate
    debt. This debt is excluded from this calculation because
    lease receivables represent the primary source of repayment of
    non-corporate debt.(i)
    
    Capitalization = Total
    shareholders equity + Total debt(j)
    
    The amount of stock based
    compensation reflected in selling and administrative expense for
    fiscal years 2007, 2006 and 2005 was $9.6, $9.2, and $10.1,
    respectively, as a result of the adoption of Statement of
    Financial Accounting Standards (SFAS) 123(R),
    Share Based Payment  Revised 2004 in
    fiscal 2005. 19




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  OVERVIEW
  The
    Company
  best-in-class on-site
  Fiscal
    2007 Financial Highlights
  September 30


September 302007


2006


ChangeRevenue

$
4,168,344


$
4,228,249


$(59,905)Gross profit %


33.2
%


34.1
%

(90) basis pointsSelling and administrative expense as a % of revenue


28.3
%


29.6
%

(130) basis pointsOperating income as % of revenue


4.9
%


4.8
%

10 basis pointsDiluted earnings per share

$
0.91


$
0.80


13.8%   on-site
 20




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##### Table of Contents



Fiscal
    2007 Business Highlights
  (walk-up
    Fiscal
    2008 Outlook
   21




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##### Table of Contents



RESULTS
    OF OPERATIONS
    Fiscal
    2007 Compared to Fiscal 2006
  Reportable
    Segments
    *CorporateIKON North


IKON


andAmerica


Europe


Eliminations


TotalFiscal 2007Revenues:Equipment

$
1,546,797


$
240,933


$



$
1,787,730Customer service and supplies


1,204,523



173,146







1,377,669Managed and professional services


739,268



57,694







796,962Rental and fees


128,466



8,208







136,674Other






69,309







69,309Total revenues


3,619,054



549,290







4,168,344Gross profit:Equipment


359,159



82,327







441,486Customer service and supplies


546,572



53,084







599,656Managed and professional services


210,195



6,603







216,798Rental and fees


94,693



7,331







102,024Other






23,215







23,215Total gross profit


1,210,619



172,560







1,383,179Selling and administrative


892,989



137,864



149,473



1,180,326Operating income (loss)


317,630



34,696



(149,473
)


202,853Interest income










11,372



11,372Interest expense










50,791



50,791Income before taxes

$
317,630


$
34,696


$
(188,892
)

$
163,434 22




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##### Table of Contents



*CorporateIKON North


IKON


andAmerica


Europe


Eliminations


TotalFiscal 2006Revenues:Equipment

$
1,576,071


$
214,117


$



$
1,790,188Customer service and supplies


1,296,012



149,549







1,445,561Managed and professional services


688,357



52,641







740,998Rental and fees


144,347



6,881







151,228Other


26,448



73,826







100,274Total revenues


3,731,235



497,014







4,228,249Gross ProfitEquipment


373,904



76,422







450,326Customer service and supplies


604,075



43,945







648,020Managed and professional services


187,213



6,501







193,714Rental and fees


100,465



5,475







105,940Other


17,503



26,275







43,778Total gross profit


1,283,160



158,618







1,441,778Selling and administrative


944,838



127,816



179,194



1,251,848Gain on the divestiture of businesses, net


6,161



5,336







11,497Restructuring and asset impairments benefit


322











322Operating income (loss)


344,805



36,138



(179,194
)


201,749Loss from the early extinguishment of debt










5,535



5,535Interest income










13,040



13,040Interest expense










51,336



51,336Income from continuing operations before taxes on income

$
344,805


$
36,138


$
(223,025
)

$
157,918   *
    
    Corporate and eliminations, which
    is not treated as a reportable segment, includes certain
    administrative functions such as information technology,
    finance, legal, marketing, human resources and executive costs.  Equipment
  2007


2006


$ Change


% ChangeRevenue

$
1,787,730


$
1,790,188


$
(2,458
)


(0.1
)%Cost of revenue


1,346,244



1,339,862



6,382



0.5
%Gross profit

$
441,486


$
450,326


$
(8,840
)


(2.0
)%Gross profit %


24.7
%


25.2
%   walk-up
   23




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##### Table of Contents



TM
  TM
  Customer
    Service and Supplies
  2007


2006


$ Change


% ChangeRevenue

$
1,377,669


$
1,445,561


$
(67,892
)


(4.7
)%Cost of revenue


778,013



797,541



(19,528
)


(2.4
)%Gross profit

$
599,656


$
648,020


$
(48,364
)


(7.5
)%Gross profit %


43.5
%


44.8
%   on-site on-site
   24




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##### Table of Contents



Managed
    and Professional Services
  2007


2006


$ Change


% ChangeRevenue

$
796,962


$
740,998


$
55,964



7.6
%Cost of revenue


580,164



547,284



32,880



6.0
%Gross profit

$
216,798


$
193,714


$
23,084



11.9
%Gross profit %


27.2
%


26.1
%   on-site on-site
  on-site on-site on-site
  on-site
  Rental
    and Fees
  2007


2006


$ Change


% ChangeRevenue

$
136,674


$
151,228


$
(14,554
)


(9.6
)%Cost of revenue


34,650



45,288



(10,638
)


(23.5
)%Gross profit

$
102,024


$
105,940


$
(3,916
)


(3.7
)%Gross profit %


74.7
%


70.1
%    25




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##### Table of Contents



Other
    Revenue
  2007


2006


$ Change


% ChangeFinance income

$
24,553


$
48,018


$
(23,465
)


(48.9
)%Other


44,756



52,256



(7,500
)


(14.4
)%Total other revenue

$
69,309


$
100,274


$
(30,965
)


(30.9
)%Finance interest expense

$
6,013


$
10,902


$
(4,889
)


(44.8
)%Other


40,081



45,594



(5,513
)


(12.1
)%Total cost of other revenue

$
46,094


$
56,496


$
(10,402
)


(18.4
)%Finance income gross profit

$
18,540


$
37,116


$
(18,576
)


(50.0
)%Other gross profit


4,675



6,662



(1,987
)


(29.8
)%Total other gross profit

$
23,215


$
43,778


$
(20,563
)


(47.0
)%Finance income gross profit %


75.5
%


77.3
%Other gross profit %


10.4
%


12.7
%Total gross profit %


33.5
%


43.7
%     Selling
    and Administrative Expenses
  2007


2006


$ Change


% ChangeSelling and administrative expenses

$
1,180,326


$
1,251,848


$
(71,522
)


(5.7
)%Selling and administrative expenses as a % of revenue


28.3
%


29.6
%       
    a decrease of $32,568 related to compensation and benefits
    driven by a reduction year over year in the number of employees
    and from a decrease in expense year over year related to lower
    accrual requirements for performance compensation;
    a decrease of $24,255 as a result of lower spending for contract
    labor and professional fees;
    pension expense, which is allocated between selling and
    administrative expense and cost of revenues based on the number
    of employees related to those areas, decreased from $27,603 in
    fiscal 2006 to $2,372 in fiscal 2007 primarily as a result of
    the freezing of certain of our defined benefit pension plans
    (which resulted in curtailment charges in the aggregate of
    $3,650 during fiscal 2006) and as a result of the positive
    impact of the expected returns on assets due largely to the
    significant voluntary contributions we made during the second
    half of fiscal 2006. The year-over-year decline attributed
    specifically to selling and administrative was approximately
    $13,000; 26




---



##### Table of Contents




    a decrease of $11,088 compared to fiscal 2006 as a result of
    lower spending on facilities and information technology;
    an increase in bad debt expense of approximately $5,000. In
    fiscal 2006, we had lower bad debt expense due to improvements
    in our accounts receivable aging compared to prior periods.
    This, coupled with a large customer bankruptcy during the second
    quarter of fiscal 2007, resulted in higher bad debt expense for
    fiscal 2007; and
    an increase of $4,284 related to higher travel, non-income
    related taxes and advertising expenses.  Other
    Items
  2007


2006Gain on divestiture of businesses and assets, net

$



$
11,497Restructuring benefit






322Loss from the early extinguishment of debt






5,535Interest income


11,372



13,040Interest expense


50,791



51,336Taxes on income


48,947



51,669Net income


114,487



106,202Diluted earnings per common share

$
0.91


$
0.80              27




---



##### Table of Contents



Fiscal
    2006 Compared to Fiscal 2005
  CorporateIKON North


IKON


andAmerica


Europe


Eliminations*


TotalFiscal 2006Revenues:Equipment

$
1,576,071


$
214,117


$



$
1,790,188Customer service and supplies


1,296,012



149,549







1,445,561Managed and professional services


688,357



52,641







740,998Rental and fees


144,347



6,881







151,228Other


26,448



73,826







100,274Total revenues


3,731,235



497,014







4,228,249Gross profitEquipment


373,904



76,422







450,326Customer service and supplies


604,075



43,945







648,020Managed and professional services


187,213



6,501







193,714Rental and fees


100,465



5,475







105,940Other


17,503



26,275







43,778Total gross profit


1,283,160



158,618







1,441,778Selling and administrative


944,838



127,816



179,194



1,251,848Gain on the divestiture of businesses


6,161



5,336







11,497Restructuring and asset impairments benefit


322











322Operating income (loss)


344,805



36,138



(179,194
)


201,749Loss from the early extinguishment of debt










5,535



5,535Interest income










13,040



13,040Interest expense










51,336



51,336Income from continuing operations before taxes on income

$
344,805


$
36,138


$
(223,025
)

$
157,918Fiscal 2005Revenues:Equipment

$
1,560,977


$
206,035


$



$
1,767,012Customer service and supplies


1,336,369



145,651







1,482,020Managed and professional services


652,999



57,003







710,002Rental and fees


169,540



5,717







175,257Other


100,861



142,153







243,014Total revenues


3,820,746



556,559







4,377,305Gross ProfitEquipment


390,402



76,454







466,856Customer service and supplies


626,558



43,922







670,480Managed and professional services


175,821



6,522







182,343Rental and fees


118,528



5,065







123,593Other


60,747



47,659







108,406Total gross profit


1,372,056



179,622







1,551,678Selling and administrative


1,003,139



150,271



243,259



1,396,669Gain on the divestiture of businesses, net


1,421



10,110







11,531Restructuring and asset impairments charge


9,423







1,120



10,543Operating income (loss)


360,915



39,461



(244,379
)


155,997Loss from the early extinguishment of debt










6,034



6,034Interest income










7,388



7,388Interest expense










52,401



52,401Income from continuing operations before taxes on income

$
360,915


$
39,461


$
(295,426
)

$
104,950     *
    
    Corporate and eliminations, which
    is not treated as a reportable segment, includes certain
    administrative functions such as information technology,
    finance, legal, marketing, human resources and executive costs. 28




---



##### Table of Contents



Equipment
  2006


2005


$ Change


% ChangeRevenue

$
1,790,188


$
1,767,012


$
23,176



1.3
%Cost of revenue


1,339,862



1,300,156



39,706



3.1
%Gross profit

$
450,326


$
466,856


$
(16,530
)


(3.5
)%Gross profit %


25.2
%


26.4
%     tm tm
    Customer
    Service and Supplies
  2006


2005


$ Change


% ChangeRevenue

$
1,445,561


$
1,482,020


$
(36,459
)


(2.5
)%Cost of revenue


797,541



811,540



(13,999
)


(1.7
)%Gross profit

$
648,020


$
670,480


$
(22,460
)


(3.3
)%Gross profit %


44.8
%


45.2
%      29




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##### Table of Contents



Managed
    and Professional Services
  2006


2005


$ Change


% ChangeRevenue

$
740,998


$
710,002


$
30,996



4.4
%Cost of revenue


547,284



527,659



19,625



3.7
%Gross profit

$
193,714


$
182,343


$
11,371



6.2
%Gross profit %


26.1
%


25.7
%   on-site
  On-site on-site
  Rental
    and Fees
  2006


2005


$ Change


% ChangeRevenue

$
151,228


$
175,257


$
(24,029
)


(13.7
)%Cost of revenue


45,288



51,664



(6,376
)


(12.3
)%Gross profit

$
105,940


$
123,593


$
(17,653
)


(14.3
)%Gross profit %


70.1
%


70.5
%    30




---



##### Table of Contents



Other
    Revenue
  2006


2005


$ Change


% ChangeFinance income

$
48,018


$
105,272


$
(57,254
)


(54.4
)%Other


52,256



137,742



(85,486
)


(62.1
)%Total other revenue

$
100,274


$
243,014


$
(142,740
)


(58.7
)%Finance interest expense

$
10,902


$
26,288


$
(15,386
)


(58.5
)%Other


45,594



108,320



(62,726
)


(57.9
)%Total cost of other revenue

$
56,496


$
134,608


$
(78,112
)


(58.0
)%Finance income gross profit

$
37,116


$
78,984


$
(41,868
)


(53.0
)%Other gross profit


6,662



29,422



(22,760
)


(77.4
)%Total other gross profit

$
43,778


$
108,406


$
(64,628
)


(59.6
)%Finance income gross profit %


77.3
%


75.0
%Other gross profit %


12.7
%


21.4
%Total gross profit %


43.7
%


44.6
%     Selling
    and Administrative Expenses
  2006


2005


$ Change


% ChangeSelling and administrative expenses

$
1,251,848


$
1,396,669


$
(144,821
)


10.4
%Selling and administrative expenses as a % of revenue


29.6
%


31.9
%       
    a decrease of $54,529 compared to fiscal 2005 as a result of
    lower spending for information technology, travel and other
    expenses due to spending actions taken during fiscal 2005 and
    fiscal 2006;
    a decrease of approximately $21,462 related to the sale of
    businesses during fiscal 2005 and October 2005;
    a decrease of $11,926 related to rent and facilities expense
    primarily due to the closure of 16 LDS sites as a result of the
    restructuring actions taken during the second quarter of fiscal
    2005 and the closure and consolidation of other facilities
    during the third and fourth quarters of fiscal 2005 offset
    slightly by charges incurred in fiscal 2006 related to other
    real estate closures as we continue to rationalize our real
    estate needs;
    a decrease of $23,334 in professional fees related primarily to
    a decrease in marketing and other professional fees during
    fiscal 2006 compared to fiscal 2005, a one time charge of $7,000
    in the fourth quarter of fiscal 2005 related to the termination
    of a consulting contract and lower fees incurred in fiscal 2006
    compared to fiscal 2005 in our effort to comply with the
    Sarbanes-Oxley Act of 2002 (SOX);
    a one time charge of $3,798 incurred in fiscal 2005 related to
    changes in certain U.K. pension liabilities;
    pension expense, which is allocated between selling and
    administrative expense and cost of revenues based on the number
    of employees related to those areas, decreased from $43,079 in
    fiscal 2005 to $27,603 in fiscal 2006 as a result of the freeze
    of our U.S. Pension Plans and the change in the weighted
    average discount rate assumption. The year-over-year decline
    attributed specifically to selling and administrative was $9,569. 31




---



##### Table of Contents



Other
    Items
  2006


2005


$ ChangeGain on divestiture of businesses and assets, net

$
11,497


$
11,531


$
(34
)Asset impairments and restructuring (benefit) charge


(322
)


10,543



(10,865
)Loss from the early extinguishment of debt


5,535



6,034



(499
)Interest income


13,040



7,388



5,652Interest expense


51,336



52,401



(1,065
)Taxes on income


51,669



31,755



19,914Income from continuing operations


106,249



73,195



33,054Diluted earnings per common share  continuing
    operations

$
0.80


$
0.51


$
0.29              32




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##### Table of Contents



Summary
    of Fourth Quarter Fiscal 2007 Results
  on-site on-site
  Financial
    Condition and Liquidity
  Cash
    Flows and Liquidity
    2007Cash provided by operating activities

$
167,881Cash used in investing activities


(45,138
)Cash used in financing activities


(202,407
)Effect of exchange rate changes on cash and cash equivalents


14,662Decrease in cash and cash equivalents


(65,002
)Cash and cash equivalents at the beginning of the year


414,239Cash and cash equivalents at the end of the year

$
349,237   Operating
    Cash Flows
   33




---



##### Table of Contents



Investing
    Cash Flows
    Financing
    Cash Flows
    Capital
    Structure
   34




---



##### Table of Contents



Contractual
    Obligations and Commitments
    Payments Due by PeriodLess ThanContractual Obligations

Total


1 Year


1-3 Years


3-5 Years


ThereafterCorporate debt (including estimated interest payments)

$
1,199,032


$
61,336


$
95,349


$
86,071


$
956,276Non-corporate debt (including estimated interest payments)*


169,548



54,560



89,587



25,261



140Purchase commitments **


24,950



24,950











Other long-term liabilities ***


113,355



4,033



25,729



13,250



70,343Operating leases ****


264,364



75,478



108,477



53,075



27,334Total

$
1,771,249


$
220,357


$
319,142


$
177,657


$
1,054,093     *
    
    Non-corporate debt excludes debt
    supporting certain lease and residual value guarantees of
    $73,687. This debt will not be repaid unless (1) GE is
    unable to recover lease payments from a lessee as a result of
    our retained ownership risk in certain lease receivables, in
    which case we would be required to repurchase the related lease
    receivable (since inception of our relationship with GE in 2004,
    we have not been required to repurchase any lease receivables
    under this scenario), or (2) an IKON service performance
    failure relating to certain sold lease receivables is determined
    to relieve the lessee of its lease payment obligations. We
    anticipate that total repurchases, if any, of these sold lease
    receivables as a result of our service performance will be
    immaterial. Refer to Note 7 of our Consolidated Financial
    Statements included in Item 8 of this report for further
    discussion regarding debt supporting certain lease and residual
    value guarantees. Payments on non-corporate debt are generally
    made from collections of our lease receivables. At
    September 30, 2007, non-corporate debt (excluding debt
    supporting certain lease and residual value guarantees) was
    $158,724 and lease receivables (excluding the present value and
    residual value of certain lease receivable guarantees of
    $71,805), net of allowances, were $264,178.**
    
    Purchase commitments include
    unrecorded enforceable agreements to purchase goods or services
    that specify all significant and enforceable terms, including:
    fixed or minimum quantities to be purchased; fixed, minimum or
    variable price provisions; and the approximate timing of the
    transaction. Purchase commitments exclude agreements that are
    cancelable without penalty.***
    
    Amounts totaling $14,856
    representing non-cash items and long term deferred revenues have
    been excluded from the table above. Planned contributions to our
    defined benefit plans have been included in the estimated period
    of payment. All other long-term liabilities related to pension
    are included in Thereafter ($21,605) as required
    payments are based on actuarial data that has not yet been
    determined. Payment requirements may change significantly based
    on the outcome or changes of various actuarial assumptions and
    the impact of any future voluntary contributions we may make.****
    
    Our future minimum rental
    commitments under noncancellable leases, net of sublease income,
    comprise the majority of the operating lease obligations
    presented above.  Off-Balance
    Sheet Arrangements
  Regulation S-K, Accounting for Contingencies, Guarantors
    Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Indebtedness of Others
  Other
    Information
     35




---



##### Table of Contents



CRITICAL
    ACCOUNTING POLICIES
    Revenue
    Recognition
     36




---



##### Table of Contents



Goodwill
    Income
    Taxes
    Pension
    non-U.S. Plans.
 37




---



##### Table of Contents



Pension
    Assumptions
    Fiscal 2007


Fiscal 2006


Fiscal 2005U.S.


Non-U.S.


U.S.


Non-U.S.


U.S.


Non-U.S.Plans


Plans


Plans


Plans


Plans


PlansWeighted average discount rates


6.4
%


5.4
%


5.3
%


5.3
%


6.3
%


5.8
%Rates of increase in compensation levels


N/A



4.0



N/A



4.0



3.0



4.0Expected long-term rate of return on assets


7.3



7.5



7.5



7.6



8.5



8.0     Ended September 302007


2006


2005U.S.


Non-U.S.


U.S.


Non-U.S.


U.S.


Non-U.S.Plans


Plans


Plans


Plans


Plans


PlansWeighted average discount rates


6.4
%


5.8
%


6.4
%


5.4
%


5.2
%


5.1
%Rates of increase in compensation levels


N/A



4.0



N/A



4.0



3.0



4.0   non-U.S. defined
    
    Moodys AA bond averages plus a spread to approximate the
    duration of our plan liabilities;
    the zero coupon Treasury bond rates; and
    the Citigroup Pension Discount Curve.  non-U.S. Plans.
   38




---



##### Table of Contents



non-U.S. Plans,
      
    a 25 basis point change in the discount rates from those
    used would have changed fiscal 2007 pension expense by
    approximately $1,830; and
    a 25 basis point change in the expected rates of return
    from those used would have changed fiscal 2007 pension expense
    by approximately $1,250.  non-U.S. Plans
  Financial
    Impact of Pensions
  non-U.S. Plans
  non-U.S. Plans,
  non-U.S. plans non-U.S. Plans,
    Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
   39




---



##### Table of Contents



2008


2009


2010


2011


2012


ThereafterCorporate debtFixed rate

$
16,798


$
4,786


$
3,518


$
1,560


$
39


$
566,296Average interest rate


7.3
%


7.6
%


7.6
%


7.6
%


6.7
%


7.2
%Non-corporate debtVariable rate

$
51,077


$
49,751


$
34,115


$
18,758


$
4,890


$
133Average interest rate


6.8
%


6.8
%


6.8
%


6.8
%


6.8
%


6.8
%     September 30,2007


2006Carrying





CarryingAmount


Fair Value


Amount


Fair ValueLong-term debt:Bond issues

$
578,557


$
520,362


$
593,571


$
550,318Present value of capital lease obligations, sundry notes, and
    bonds


14,440



14,440



1,494



1,494Non-corporate debt


158,724



158,723



153,016



153,016Interest rate swaps


(1,099
)


(1,099
)






     September 30, 2007Notional Amount


Fixed Interest Rate

Variable Interest Rate

Fair Value


Maturity Date£77,500 ($158,666 as of 9/30/07)

6.2%

one month LIBOR
    (approx 5.1% as of
    September 30, 2007)

$
(1,099
)


September 2012   Foreign
    Exchange Risk
  non-U.S. operating
 40




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  Report
    of Independent Registered Public Accounting Firm
     Internal Control 
    Integrated Framework
            41




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  CONSOLIDATED STATEMENTS OF INCOME
  Fiscal Year Ended September 302007


2006


2005(in thousands, except per share data)RevenuesEquipment

$
1,787,730


$
1,790,188


$
1,767,012Customer service and supplies


1,377,669



1,445,561



1,482,020Managed and professional services


796,962



740,998



710,002Rental and fees


136,674



151,228



175,257Other


69,309



100,274



243,0144,168,344



4,228,249



4,377,305Cost of RevenuesEquipment


1,346,244



1,339,862



1,300,156Customer service and supplies


778,013



797,541



811,540Managed and professional services


580,164



547,284



527,659Rental and fees


34,650



45,288



51,664Other


46,094



56,496



134,6082,785,165



2,786,471



2,825,627Gross ProfitEquipment


441,486



450,326



466,856Customer service and supplies


599,656



648,020



670,480Managed and professional services


216,798



193,714



182,343Rental and fees


102,024



105,940



123,593Other


23,215



43,778



108,4061,383,179



1,441,778



1,551,678Selling and administrative


1,180,326



1,251,848



1,396,669Gain on divestiture of businesses and assets, net






11,497



11,531Asset impairments and restructuring benefit (charge)






322



(10,543
)Operating income


202,853



201,749



155,997Loss from the early extinguishment of debt






5,535



6,034Interest income


11,372



13,040



7,388Interest expense


50,791



51,336



52,401Income from continuing operations before taxes on income


163,434



157,918



104,950Taxes on income


48,947



51,669



31,755Income from continuing operations


114,487



106,249



73,195Discontinued OperationsOperating loss






(78
)


(20,709
)Tax benefit






31



8,180Net loss from discontinued operations






(47
)


(12,529
)Net income

$
114,487


$
106,202


$
60,666Basic Earnings (Loss) Per Common ShareContinuing operations

$
0.92


$
0.81


$
0.52Discontinued operations






0.00



(0.09
)Net income

$
0.92


$
0.81


$
0.43Diluted Earnings (Loss) Per Common ShareContinuing operations

$
0.91


$
0.80


$
0.51Discontinued operations






0.00



(0.08
)Net income

$
0.91


$
0.80


$
0.43Cash dividends per common share

$
0.16


$
0.16


$
0.16   See notes to consolidated financial statements.
 42




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  CONSOLIDATED BALANCE SHEETS
  September 302007


2006(in thousands)AssetsCash and cash equivalents

$
349,237


$
414,239Accounts receivable, net (Note 2)


560,089



592,733Lease receivables, net (Note 3)


84,207



83,051Inventories


287,503



214,792Prepaid expenses and other current assets


35,085



34,742Deferred taxes (Note 14)


48,167



46,504Total current assets


1,364,288



1,386,061Long-term lease receivables, net (Note 3)


251,776



222,333Equipment on operating leases, net (Note 5)


72,052



83,248Property and equipment, net (Note 5)


154,218



144,453Deferred taxes (Note 14)


18,144



30,215Goodwill (Note 6)


1,333,249



1,297,333Other assets


84,354



74,543Total Assets

$
3,278,081


$
3,238,186LiabilitiesCurrent portion of corporate debt (Note 7)

$
16,798


$
1,487Current portion of non-corporate debt (Note 7)


51,077



152,971Trade accounts payable


263,657



224,312Accrued salaries, wages, and commissions


93,052



109,090Deferred revenues


109,796



118,146Accrued income taxes payable


17,820



15,831Other accrued expenses


129,323



142,350Total current liabilities


681,523



764,187Long-term corporate debt (Note 7)


576,199



593,578Long-term non-corporate debt (Note 7)


181,334



64,005Other long-term liabilities


128,211



130,283Commitments and contingencies (Note 8)Shareholders Equity(Note 9)Common stock, no par value


1,058,104



1,044,633Retained earnings


917,767



828,255Accumulated other comprehensive income


132,189



59,169Cost of common shares in treasury, at average cost


(397,246
)


(245,924
)Total Shareholders Equity


1,710,814



1,686,133Total Liabilities and Shareholders Equity

$
3,278,081


$
3,238,186Supplemental InformationShares of common stock authorized


300,000



300,000Shares of common stock issued


149,310



149,310Treasury stock


31,740



21,695Shares of common stock outstanding


117,570



127,615   See notes to consolidated financial statements.
 43




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Fiscal Year Ended September 302007


2006


2005(in thousands)Cash Flows from Operating ActivitiesNet income

$
114,487


$
106,202


$
60,666Net loss from discontinued operations






47



12,529Income from continuing operations


114,487



106,249



73,195Additions (deductions) to reconcile net income to net cash
    provided by (used in) operating activities:Depreciation


68,719



70,070



73,110Amortization


3,404



3,300



5,256Gain from the divestiture of businesses and assets






(11,497
)


(11,531
)Loss on disposal of property and equipment


759



4,057



3,729Provision for losses on accounts and lease receivables


6,940



2,602



17,166Restructuring and asset impairment (benefit) charge






(322
)


10,543Provision for deferred income taxes


6,333



(95,261
)


(102,972
)Stock-based compensation expense


9,637



9,197



10,060Excess tax benefits from stock-based compensation arrangements


(1,740
)


(4,334
)


(1,514
)Pension expense


2,372



27,603



43,079Loss from the early extinguishment of debt






5,535



6,034Changes in operating assets and liabilities, net of divestiture
    of businesses:Decrease in accounts receivable


40,624



87,086



37,208(Increase) decrease in inventories


(67,893
)


29,204



(14,116
)(Increase) decrease in prepaid expenses and other current assets


(3
)


2,704



8,003Increase (decrease) in accounts payable


33,523



(19,868
)


(68,557
)(Decrease) increase in deferred revenue


(12,858
)


3,220



2,058Decrease in accrued expenses


(28,040
)


(10,622
)


(1,614
)Contributions to pension plans


(9,725
)


(100,210
)


(44,108
)Increase (decrease) in taxes payable


1,262



(5,936
)


(26,255
)Decrease in accrued restructuring






(1,534
)


(8,306
)Other


80



(931
)


218Net cash provided by continuing operations


167,881



100,312



10,686Net cash used in discontinued operations






(1,159
)


(13,076
)Net cash provided by (used in) operating activities


167,881



99,153



(2,390
)Cash Flows from Investing ActivitiesProceeds from the divestiture of businesses and assets






242,043



23,107Expenditures for property and equipment


(34,269
)


(37,470
)


(28,000
)Expenditures for equipment on operating leases


(29,600
)


(40,705
)


(44,149
)Proceeds from the sale of equipment on operating leases


11,015



21,647



23,677Proceeds from the sale of lease receivables


238,618



201,687



249,083Lease receivables  additions


(332,305
)


(348,119
)


(385,630
)Lease receivables  collections


97,706



292,421



531,267Proceeds from life insurance (cash surrender value)


5,821



5,177



55,343Other


(2,124
)


(9,123
)


(1,032
)Net cash (used in) provided by continuing operations


(45,138
)


327,558



423,666Net cash provided by discontinued operations










1,558Net cash (used in) provided by investing activities


(45,138
)


327,558



425,224Cash Flows from Financing ActivitiesShort-term corporate debt repayments, net


1



(30
)


(774
)Repayment of other borrowings


(67
)


(7,786
)


(3,429
)Proceeds from the issuance of long-term corporate debt










227,049Debt modification costs


(16,430
)






Debt issuance costs






(2,510
)


(4,140
)Long-term corporate debt repayments


(2,598
)


(138,748
)


(300,723
)Non-corporate debt  issuances


158,244



23,964



18,756Non-corporate debt  repayments


(166,225
)


(142,452
)


(366,481
)Dividends paid


(20,048
)


(21,009
)


(22,393
)Decrease in restricted cash






2,127



8,760Proceeds from option exercises


17,944



22,182



4,787Excess tax benefit from stock-based compensation arrangements


1,740



4,334



1,514Purchase of treasury shares


(174,968
)


(131,190
)


(86,943
)Other






(49
)


Net cash used in financing activities


(202,407
)


(391,167
)


(524,017
)Effect of exchange rate changes on cash and cash equivalents


14,662



4,990



1,937Net (decrease) increase in cash and cash equivalents


(65,002
)


40,534



(99,246
)Cash and cash equivalents at the beginning of the year


414,239



373,705



472,951Cash and cash equivalents at the end of the year

$
349,237


$
414,239


$
373,705   See notes to consolidated financial statements.
 44




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
    EQUITY
  Fiscal Year Ended September 302007


2006


2005Common StockBalance, beginning of year

$
1,044,633


$
1,030,462


$
1,020,603Stock based compensation expense


9,637



9,197



10,060Tax benefit relating to stock plans


3,423



5,696



1,843Stock awards earned


(1,518
)


(760
)


(1,735
)Compensation deferred in common stock


1,896







2Other


33



38



(311
)Balance, end of year

$
1,058,104


$
1,044,633


$
1,030,462Retained EarningsBalance, beginning of year

$
828,255


$
755,864


$
723,847Net income


114,487



106,202



60,666Cash dividends declared on shares outstanding:Common stock, per share: 2007  $0.16;
    2006  $0.16; 2005  $0.16


(19,894
)


(21,009
)


(22,393
)Issuance of treasury shares for stock option exercises


(4,531
)


(12,848
)


(6,310
)Issuance of treasury shares for stock awards


(444
)


(31
)


(482
)Non-cash dividends on deferred compensation


(114
)


(3
)


(4
)Other


8



80



540Balance, end of year

$
917,767


$
828,255


$
755,864Accumulated Other Comprehensive Income(Loss)Balance, beginning of year

$
59,169


$
(65,426
)

$
20,195Translation adjustment


64,434



38,444



(4,402
)SFAS 133 adjustment


(962
)


(262
)


85Minimum pension liability adjustment before adoption of
    FAS 158


39,055



86,413



(81,304
)Other comprehensive income (loss)


102,527



124,595



(85,621
)Reversal of minimum pension liability under FAS 158


2,236Adjustments to initially adopt FAS 158


(31,623
)Other


(120
)Balance, end of year

$
132,189


$
59,169


$
(65,426
)Treasury Stock (at average cost)Balance, beginning of year

$
(245,924
)

$
(150,556
)

$
(76,927
)Purchases


(174,968
)


(131,190
)


(86,943
)Exercise of options


22,475



35,031



11,097Issuance of shares for employee stock plans


1,171



791



2,217Balance, end of year

$
(397,246
)

$
(245,924
)

$
(150,556
)Comprehensive Income (Loss)Net income

$
114,487


$
106,202


$
60,666Other comprehensive income (loss) per above


102,527



124,595



(85,621
)Comprehensive income (loss)

$
217,014


$
230,797


$
(24,955
)Components of Accumulated Other Comprehensive Income
    (Loss)Accumulated translation

$
164,894


$
100,460


$
62,016Net (Loss) gain on derivative financial instruments, net of tax
    benefit (expense) of: 2007  $137, 2005
     $(150);


(962
)






262Adjustments to initially adopt FAS 158Net gains/(losses) (net of tax expense of $19,043)


(33,484
)






Prior service credit (net of tax benefit of $861)


1,861







Other


(120
)






Minimum pension liability






(41,291
)


(127,704
)Balance, end of year

$
132,189


$
59,169


$
(65,426
)   See notes to consolidated financial statements.
 45




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    1.
    SIGNIFICANT
    ACCOUNTING POLICIES  Basis
    of Presentation
    Use of
    Estimates
    Revenue
    Recognition
     46




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Advertising
    Income
    Taxes
    Sales
    Taxes
    Cash
    and Cash Equivalents
    Book
    Overdrafts
   47




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Supplier
    Allowances
  No. 02-16,
  Sale
    of Lease Receivables
    Inventories
    Long-Lived
    Assets
    Equipment on operating leases

1-5 yearsProduction equipment

3-5 yearsFurniture and office equipment

3-7 yearsCapitalized software

3-10 yearsLeasehold improvements

shorter of the asset life or term of leaseBuildings

20 years   98-1,
   48




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
    Environmental
    Liabilities
    Shipping
    and Handling Fees
    Cost
    of Revenues and Selling and Administrative
    Expenses
    Cost of
    Revenues
    Selling
    and Administrative
   49




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign
    Currency Translation
  non-U.S. subsidiaries
  Financial
    Instruments
      Reclassifications
    Pending
    Accounting Changes
   50




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      New
    Accounting Standards and Accounting Changes
        Before





AfterApplication


Adjustments


Applicationof SFAS 158


Increase/(Decrease)


of SFAS 158Prepaid expenses and other current assets

$
97,020


$
(61,935
)

$
35,085Deferred taxes


31,444



16,723



48,167Other assets


68,071



16,283



84,354Other accrued expenses


150,868



(21,545
)


129,323Other long-term liabilities


106,208



22,003



128,211Accumulated other comprehensive income

$
161,576


$
(29,387
)

$
132,189  51




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      2.
    ACCOUNTS
    RECEIVABLE    2007


2006Gross trade receivables from GE and other third party
    syndicators, including amounts unbilled

$
75,972


$
99,842Gross trade receivables from other customers


435,397



442,599Allowance for doubtful accounts  trade receivables


(7,349
)


(8,493
)Total trade receivables, net


504,020



533,948Other receivables, gross


70,544



72,645Allowance for doubtful accounts  other receivables


(14,475
)


(13,860
)Total other receivables, net


56,069



58,785Total accounts receivable, net

$
560,089


$
592,733     3.
    LEASE
    RECEIVABLES      September 302007


2006Gross receivables

$
272,735


$
252,877Unearned income


(43,247
)


(42,893
)Unguaranteed residuals


111,224



100,873Lease default reserve


(4,729
)


(5,473
)Lease receivables, net


335,983



305,384Less: current portion


84,207



83,051Long-term lease receivables, net

$
251,776


$
222,333  52




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              4.
    OPERATING
    LEASES     53




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  5.
    PROPERTY
    AND EQUIPMENT    September 302007


2006Land

$
1,484


$
1,484Buildings and leasehold improvements


39,138



38,247Production equipment


28,371



27,801Furniture and office equipment


55,131



47,494Capitalized software


161,161



146,887285,285



261,913Less: accumulated depreciation


(131,067
)


(117,460
)$
154,218


$
144,453       September 302007


2006Equipment on operating leases

$
137,537


$
147,855Less: accumulated depreciation


(65,485
)


(64,607
)$
72,052


$
83,248   6.
    GOODWILL    IKON North


IKONAmerica


Europe


TotalGoodwill at September 30, 2005

$
960,830


$
319,748


$
1,280,578Sale of business






(12,511
)


(12,511
)Acquisitions






5,512



5,512Foreign currency translation adjustment


1,577



22,177



23,754Goodwill at September 30, 2006

$
962,407


$
334,926


$
1,297,333Foreign currency translation adjustment


2,110



33,806



35,916Goodwill at September 30, 2007

$
964,517


$
368,732


$
1,333,249    54




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    LONG-TERM
    DEBT  Long-term
    Debt
    September 302007


2006Bond issue at stated interest rate of 6.75%, net of discount
    (2007  $3,268; 2006  $3,356), due 2025,
    effective interest rate of 6.85%

$
260,474


$
260,386Bond issue at stated interest rate of 7.30%, net of discount
    (2007  $436; 2006  $446), due 2027,
    effective interest rate of 7.34%


94,564



94,554Notes payable at stated interest rate of 7.25%, due 2008


13,631



13,631Notes payable at stated interest rate of 7.75%, net of
    unamortized costs (2007  $15,112), due 2015


209,888



225,000Sundry notes, bonds, and mortgages at average interest rate
    (2006  5.6%)






709Present value of capital lease obligations (gross amount:
    2007  $16,193; 2006  $911)


14,440



785592,997



595,065Less: current maturities


16,798



1,487$
576,199


$
593,578     September 302007


2006Asset securitization conduit financing at average interest rate
    of 6.8% (2007) and 6.04% (2006)

$
158,666


$
152,915Notes payable to banks at average interest rate: 6.23% (2007
    & 2006) due 2008


58



101Debt supporting certain lease and residual value guarantees


73,687



63,960232,411



216,976Less: current maturities


51,077



152,971$
181,334


$
64,005     Corporate


Non-CorporateFiscal Year

Debt


Debt2008

$
16,798


$
51,0772009


4,786



49,7512010


3,518



34,1152011


1,560



18,7582012


39



4,8902013  2028


566,296



133    55




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Debt
    Purchases
        Lease-Backed
    Notes
    Debt
    Issuances
            Asset
    Securitization Conduit Financing Agreements  United
    Kingdom
   56




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  2015
    Notes
  Form 8-K Form 10-Q
  Credit
    Facility
  Form 8-K
  Lines
    of Credit
    Debt
    Covenants
    Debt
    Supporting Certain Lease and Residual Value
    Guarantees
    
    We have transferred $62,994 of lease receivables to GE ($61,934
    in the U.S. and $1,060 in Germany), for which we have
    retained certain risks of ownership relating to the assignment
    of the lease receivables. As a result, we are required to record
    an asset and a corresponding amount of debt representing the
    present value of the lease receivables on our balance sheet. In
    the event GE is unable to recover any lease payments from the
    lessee as a result of our retained ownership risk, we would be
    required to repurchase the lease receivable. 57




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Since the inception of our relationship with GE in 2004, we have
    not been required to repurchase any lease receivables under this
    scenario. This balance was $54,623 at September 30, 2006.  
    We have transferred lease receivables to GE and other third
    party syndicators for which we have retained certain risks of
    ownership relating to potential service performance failures. As
    a result, we are required to record an asset and a corresponding
    amount of debt representing the present value of the residual
    value related to these lease receivables. At September 30,
    2007 and 2006, we had recorded $8,811 and $3,850, respectively,
    of debt and associated residual value. This debt will not be
    repaid unless required under the applicable lease agreement in
    the event that an IKON service performance failure is determined
    to relieve the lessee of its lease payment obligations. We
    expect the total repurchases of lease receivables in the future,
    if any, relating to our service performance to be immaterial.
    We have $1,882 of debt related to equipment on operating leases
    that has been funded by GE for which we are required to keep the
    net book value of the operating leases and a corresponding
    amount of debt on our balance sheet until the expiration of the
    operating lease agreement. This balance was $5,487 at
    September 30, 2006.  Senior
    Unsecured Notes to be Issued in Fiscal 2008
    8.
    CONTINGENCIES  Environmental
    and Legal
       58




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Other
    Contingencies
       59




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  9.
    SHAREHOLDERS
    EQUITY    Fiscal Year Ended September 30,2007


2006


2005Shares outstanding at beginning of year


127,615



134,920



142,134Treasury share activity:Repurchases


(12,074
)


(10,683
)


(8,453
)Reissued for:Exercise of options


1,931



3,305



1,030Issuance of shares for employee stock plans


98



73



209Shares outstanding at end of year


117,570



127,615



134,920        60




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    EARNINGS
    PER COMMON SHARE    September 302007


2006


2005Numerator:Numerator for basic earnings per common share  income
    from continuing operations

$
114,487


$
106,249


$
73,195Effect of dilutive securities:Interest expense on Convertible Notes, net of taxes of:
    2006  $58; 2005  $4,931






88



7,553Numerator for diluted earnings per common share  net
    income from continuing operations

$
114,487


$
106,337


$
80,748Denominator:Denominator for basic earnings per common share 
    weighted average common shares


124,563



131,336



139,890Effect of dilutive securities:Convertible Notes






194



16,613Employee stock awards


696



551



378Employee stock options


1,083



860



810Dilutive potential common shares


1,779



1,605



17,801Denominator for diluted earnings per common share 
    adjusted weighted average common shares and assumed conversions


126,342



132,941



157,691Basic earnings per common share from continuing operations

$
0.92


$
0.81


$
0.52Diluted earnings per common share from continuing operations

$
0.91


$
0.80


$
0.51         11.
    STOCK
    BASED COMPENSATION   61




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Stock
    Options
         62




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    WeightedShares


Average PriceSeptember 30, 2004


13,170


$
11.28Granted


1,656



10.89Exercised


(1,030
)


4.61Cancelled


(1,292
)


14.34September 30, 2005


12,504



11.46Granted


1,242



10.92Exercised


(3,305
)


12.07Cancelled


(1,075
)


25.10September 30, 2006


9,366



11.50Granted


657



16.30Exercised


(1,931
)


15.23Cancelled


(436
)


26.80September 30, 2007


7,656


$
11.60Exercisable at September 30, 2007


5,989
*

$
11.28     *
    
    4,696 of the 5,989 options
    exercisable at September 30, 2007 have an exercise price
    that is lower than the closing price of the Companys stock
    on September 30, 2007.      Fiscal Year Ended September 302007


2006


2005Expected dividend yield(1)


1.0%



1.5%



1.5%Expected volatility rate(2)


24.7%



55.0%



53.7%Expected life(3)


5.0 years



5.0 years



5.0 yearsRisk-free interest rate(4)


4.5%



4.4%



3.6%     (1)
    
    Dividend yield assumption is based
    on the Companys history and expectation of future dividend
    payouts.(2)
    
    For options granted prior to
    October 1, 2006, the expected volatility rate was
    determined using historical price observations at regular
    intervals since 1993 through the respective option date. For
    options granted after October 1, 2006, the expected
    volatility rate was determined using historical price
    observations at regular intervals since April 1, 2004.
    Effective October 1, 2006, we revised the historical period
    in which we use to calculate our volatility assumption. This
    change was made to more accurately reflect our current business
    model by utilizing the date which we sold our U.S. leasing
    business, April 1, 2004, as the historical starting point.
    We believe this period more accurately reflects the volatility
    of our stock price going forward. Furthermore, the change in our
    methodology did not have a material impact on our consolidated
    statement of operations for fiscal 2007; however, this change
    may or may not have a material impact on future years.(3)
    
    The expected life of employee stock
    options is based on both historical exercise pattern and from
    calculating an expected term from the option date to full
    exercise for the options granted.(4)
    
    Risk-free interest rate assumption
    is based upon the interest rates published by the Federal
    Reserve for U.S. Treasury
    Securities          
    with a five-year life. 63




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options Outstanding


Options ExercisableWeighted-











Weighted-Number


Weighted-


Average





Number


Weighted-


AverageOutstanding at


Average


Remaining


Aggregate


Exercisable at


Average


Remaining


AggregateSeptember 30,


Exercise


Contractual


Intrinsic


September 30,


Exercise


Contractual


IntrinsicRange of Exercise Prices

2007


Price


Life


Value


2007


Price


Life


Value$ 2.38 - 9.10


1,774


$
6.27



5.41 years


$
11,675



1,774


$
6.27



5.41 years


$
11,6759.11 - 10.79


1,276



10.57



6.07



2,909



1,204



10.59



5.97



2,71910.83 - 12.69


2,749



11.11



6.71



4,787



1,718



11.23



6.10



2,77612.85 - 20.00


1,460



15.86



5.14







896



15.46



2.60



20.00 - 33.47


397



26.46



1.21







397



26.46



1.21



7,656


$
11.60



5.72


$
19,371



5,989


$
11.28



5.02


$
17,170     Stock
    Awards
        12.
    EMPLOYEE
    BENEFIT PLANS  Defined
    Benefit Plans
     64




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##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  non-U.S. Plans.
    Fiscal Year Ended September 302007


2006


2005U.S. Plans





U.S. Plans





U.S. PlansMain


Other


Non-U.S.


Main


Other


Non-U.S.


Main


Other


Non-U.S.Plan


Plans


Plans


Plan


Plans


Plans


Plan


Plans


PlansService cost

$



$



$
2,951


$
8,872


$
80


$
4,170


$
28,218


$
272


$
3,899Interest cost on projected benefit obligation


31,957



1,029



5,070



31,020



1,022



4,562



31,652



1,217



3,839Expected return on assets


(36,496
)






(5,750
)


(31,871
)






(4,603
)


(31,476
)






(3,736
)Amortization of prior service cost










(213
)


42



5



(207
)


511



55



6Recognized net actuarial loss


2,538



270



1,016



8,930



443



1,470



7,439



504



642Amortization of transition amount






















18











37Curtailment














2,641



211



798











Net periodic pension (benefit) cost

$
(2,001
)

$
1,299


$
3,074


$
19,634


$
1,761


$
6,208


$
36,344


$
2,048


$
4,687     Fiscal Year Ended September 302007


2006


2005U.S.


Non-U.S.


U.S.


Non-U.S.


U.S.


Non-U.S.Plans


Plans


Plans


Plans


Plans


PlansWeighted average discount rates


6.4
%


5.4
%


5.3
%


5.3
%


6.3
%


5.8
%Rates of increase in compensation levels


N/A



4.0



N/A



4.0



3.0



4.0Expected long-term rate of return on assets


7.3



7.5



7.5



7.6



8.5



8.0     Ended September 302007


2006


2005U.S.


Non-U.S.


U.S.


Non-U.S.


U.S.


Non-U.S.Plans


Plans


Plans


Plans


Plans


PlansWeighted average discount rates


6.4
%


5.8
%


6.4
%


5.4
%


5.2
%


5.1
%Rates of increase in compensation levels


N/A



4.0



N/A



4.0



3.0



4.0   non-U.S. defined
 65




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006U.S. Plans





U.S. PlansMain


Other


Non-U.S.


Main


Other


Non-U.S.Plan


Plans


Plans


Plan


Plans


PlansChange in Benefit ObligationBenefit obligation at beginning of year

$
509,312


$
17,252


$
89,612


$
693,572


$
22,996


$
87,973Service cost










2,951



8,872



80



4,170Interest cost


31,957



1,030



5,070



31,020



1,022



4,562Amendments






















(2,849
)Actuarial loss (gain)


6,391



(260
)


(6,280
)


(124,234
)


(3,705
)


(5,787
)Benefits paid


(19,799
)


(1,461
)


(2,879
)


(18,067
)


(1,500
)


(2,203
)Employee contributions






















167Translation adjustment










8,574











5,529Curtailment














(81,851
)


(1,641
)


(1,950
)Benefit obligation at end of year

$
527,861


$
16,561


$
97,048


$
509,312


$
17,252


$
89,612Accumulated benefit obligation

$
527,861


$
16,561


$
88,658


$
509,312


$
17,252


$
81,923Change in Plan AssetsFair value of plan assets at beginning of year

$
508,922


$
378


$
74,106


$
403,578


$



$
53,697Actual return on plan assets


54,968







7,583



42,011







6,293Employer contribution






1,469



8,256



85,000



1,878



13,332Employee contributions






















167Expenses


(3,947
)






(180
)


(3,600
)






(975
)Benefits paid


(19,799
)


(1,461
)


(2,879
)


(18,067
)


(1,500
)


(2,203
)Translation adjustment










8,335











3,795Fair value of plan assets at end of year

$
540,144


$
386


$
95,221


$
508,922


$
378


$
74,106Funded status

$
12,283


$
(16,175
)

$
(1,827
)

$
(390
)

$
(16,874
)

$
(15,506
)Net actuarial loss


32,991



3,695



15,841



43,664



4,225



23,150Prior service credit










(2,722
)










(2,628
)Net amount recognized

$
45,274


$
(12,480
)

$
11,292


$
43,274


$
(12,649
)

$
5,016Amounts recognized on the consolidated balance sheetOther long-term assets

$
12,283


$



$
4,000


$



$



$
Accrued benefit obligation






(16,175
)


(5,827
)


(390
)


(16,874
)


(12,898
)Deferred taxes


13,031



1,460



3,691



17,247



1,670



5,595Accumulated other comprehensive loss


19,960



2,235



9,428



26,417



2,555



12,319Net amount recognized

$
45,274


$
(12,480
)

$
11,292


$
43,274


$
(12,649
)

$
5,016  66




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    September 302007


2006U.S.


Non-U.S.


U.S.


Non-U.S.Plans


Plans


Plans


PlansPercentage of Plan AssetsEquity securities


31
%


40
%


50
%


66
%Debt securities


66



53



43



20Other, primarily cash/cash equivalents


3



7



7



14100
%


100
%


100
%


100
%       non-U.S. Plans
  non-U.S. Plans,
    U.S.


Non-U.S.Plans


PlansFiscal year:2008

$
17,799


$
2,3262009


18,083



2,3902010


18,222



2,4792011


18,727



2,6522012


19,393



2,7812013 - 2017


116,162



18,334    67




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Defined
    Contribution Plan
    Long-Term
    Incentive Compensation Plan
      13.
    DIVESTITURE
    OF BUSINESSES AND ASSETS  LEASING
    OPERATIONS
  United
    States
     68




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Germany
    KAFEVEND
    SALE OF
    FRENCH OPERATING SUBSIDIARY
    SALE OF
    MEXICAN OPERATING SUBSIDIARY
    OTHER
    DIVESTITURES
       69




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  14.
    TAXES ON
    INCOME    Fiscal Year Ended September 302007


2006


2005Current


Deferred


Current


Deferred


Current


DeferredFederal

$
38,343


$
1,543


$
132,912


$
(89,522
)

$
115,404


$
(89,711
)Foreign


2,526



3,637



5,742



944



14,414



(12,015
)State


1,745



1,153



8,276



(6,683
)


4,909



(1,246
)Taxes on income

$
42,614


$
6,333


$
146,930


$
(95,261
)

$
134,727


$
(102,972
)     September 302007


2006Deferred tax assets:Accrued liabilities, inventory and accounts receivable reserves

$
81,999


$
97,991Net operating loss and capital loss carryforwards


40,875



39,947Tax credit carryforwards


379



406Total deferred tax assets


123,253



138,344Valuation allowance


30,487



28,483Net deferred tax assets

$
92,766


$
109,861Deferred tax liabilities:Depreciation and lease income recognition

$
25,910


$
32,992Other


545



150Total deferred tax liabilities


26,455



33,142Net deferred tax assets

$
66,311


$
76,719       
    a valuation allowance of $547 against net operating losses
    generated in certain foreign jurisdictions, primarily Italy,
    Spain, Switzerland, and the Netherlands;
    a tax benefit of $1,432 associated with the release of a
    Canadian valuation allowance due to improved Canadian operating
    performance;
    a tax benefit of $4,838 as a result of tax audit settlements
    with numerous taxing authorities primarily in state and foreign
    jurisdictions;
    a tax benefit of $1,284 from the difference between our actual
    liability upon filing our tax returns compared to the tax
    provision; and
    other miscellaneous tax benefits totaling $1,356. 70




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     
    a valuation allowance of $910 against net operating losses
    generated in certain foreign jurisdictions, primarily Italy,
    Spain and Switzerland;
    a valuation allowance of $251 against net operating losses
    generated in France. Partially offsetting this tax expense, we
    recorded a tax benefit of $245 associated with the reversal of
    valuation allowances for capital loss carryforwards, as
    additional proceeds were received from the sale of our French
    operations that occurred in fiscal 2005;
    a tax benefit of $1,723 associated with the divestiture of
    Kafevend as the gain on the divestiture of Kafevend is exempt
    from income tax under United Kingdom tax law;
    a tax benefit of $2,700 associated with the release of a
    Canadian tax reserve for which the underlying tax exposure has
    been resolved;
    additional tax expense of $2,400 resulting from the revaluation
    of a Canadian deferred tax asset driven by legislative tax rate
    changes;
    a tax benefit of $2,341 associated with the reversal of
    valuation allowances for capital loss carryforwards as a result
    of the gain on sale of the U.S. Retained Portfolio;
    a tax benefit of $1,039 resulting from the revaluation of the
    state net operating loss deferred tax asset driven by a
    Pennsylvania legislative change to annual NOL utilization
    limitations; and
    a tax benefit of $1,821 from the difference between our actual
    state tax liability upon the filing of our state tax returns
    compared to the deferred state tax provision.        Fiscal Year Ended September 302007


2006


2005Tax at statutory rate

$
57,202


$
55,271


$
37,010State income taxes, net of U.S. federal tax benefit


4,827



1,298



4,917Net decrease in tax reserves


(4,838
)


(2,373
)


(691
)Valuation allowance changes


(996
)


(2,145
)


(2,674
)Foreign, including credits


(4,358
)


(3,265
)


(5,118
)Homeland Repatriation






2,400



Other


(2,890
)


483



(1,689
)$
48,947


$
51,669


$
31,755    71




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    15.
    SEGMENT
    REPORTING          IKON North


IKON


Corporate andAmerica


Europe


Eliminations


TotalYear Ended September 30, 2007Revenues:Equipment

$
1,546,797


$
240,933


$



$
1,787,730Customer service and supplies


1,204,523



173,146







1,377,669Managed and professional services


739,268



57,694







796,962Rental and fees


128,466



8,208







136,674Other






69,309







69,309Total revenues


3,619,054



549,290







4,168,344 72




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  IKON North


IKON


Corporate andAmerica


Europe


Eliminations


TotalGross profit:Equipment


359,159



82,327







441,486Customer service and supplies


546,572



53,084







599,656Managed and professional services


210,195



6,603







216,798Rental and fees


94,693



7,331







102,024Other






23,215







23,215Total gross profit


1,210,619



172,560







1,383,179Selling and administrative


892,989



137,864



149,473



1,180,326Operating income(loss)


317,630



34,696



(149,473
)


202,853Interest income










11,372



11,372Interest expense










50,791



50,791Income from continuing operations before taxes on income

$
317,630


$
34,696


$
(188,892
)

$
163,434Year Ended September 30, 2006Revenues:Equipment

$
1,576,071


$
214,117


$



$
1,790,188Customer service and supplies


1,296,012



149,549







1,445,561Managed and professional services


688,357



52,641







740,998Rental and fees


144,347



6,881







151,228Other


26,448



73,826







100,274Total revenues


3,731,235



497,014







4,228,249Gross profitEquipment


373,904



76,422







450,326Customer service and supplies


604,075



43,945







648,020Managed and professional services


187,213



6,501







193,714Rental and fees


100,465



5,475







105,940Other


17,503



26,275







43,778Total gross profit


1,283,160



158,618







1,441,778Selling and administrative


944,838



127,816



179,194



1,251,848Gain on the divestiture of businesses, net


6,161



5,336







11,497Restructuring and asset impairments benefit


322











322Operating income (loss)


344,805



36,138



(179,194
)


201,749Loss from the early extinguishment of debt










5,535



5,535Interest income










13,040



13,040Interest expense










51,336



51,336Income from continuing operations before taxes on income

$
344,805


$
36,138


$
(223,025
)

$
157,918Year Ended September 30, 2005Revenues:Equipment

$
1,560,977


$
206,035


$



$
1,767,012Customer service and supplies


1,336,369



145,651







1,482,020Managed and professional services


652,999



57,003







710,002Rental and fees


169,540



5,717







175,257Other


100,861



142,153







243,014Total revenues


3,820,746



556,559







4,377,305 73




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  IKON North


IKON


Corporate andAmerica


Europe


Eliminations


TotalGross profitEquipment


390,402



76,454







466,856Customer service and supplies


626,558



43,922







670,480Managed and professional services


175,821



6,522







182,343Rental and fees


118,528



5,065







123,593Other


60,747



47,659







108,406Total gross profit


1,372,056



179,622







1,551,678Selling and administrative


1,003,139



150,271



243,259



1,396,669Gain on the divestiture of businesses, net


1,421



10,110







11,531Restructuring and asset impairments charge


9,423







1,120



10,543Operating income (loss)


360,915



39,461



(244,379
)


155,997Loss from the early extinguishment of debt










6,034



6,034Interest income










7,388



7,388Interest expense










52,401



52,401Income from continuing operations before taxes on income

$
360,915


$
39,461


$
(295,426
)

$
104,950     IKON North


IKON


Corporate andAmerica


Europe


Eliminations


TotalYear Ended September 30, 2007Segment assets

$
1,866,863


$
910,276


$
500,942


$
3,278,081Depreciation expense from continuing operations


43,776



6,959



17,984



68,719Expenditures for fixed assets from continuing operations


57,333



6,536







63,869Year Ended September 30, 2006Segment assets

$
1,642,112


$
822,428


$
773,646


$
3,238,186Depreciation expense from continuing operations


45,564



6,913



17,593



70,070Expenditures for fixed assets from continuing operations


70,666



7,509







78,175Year Ended September 30, 2005Segment assets

$
2,265,889


$
821,642


$
746,324


$
3,833,855Depreciation expense from continuing operations


48,494



7,542



17,074



73,110Expenditures for fixed assets from continuing operations


60,942



9,698



1,509



72,149  74




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2007


2006


2005RevenuesUnited States

$
3,409,679


$
3,516,683


$
3,602,492United Kingdom


377,925



350,397



378,755Canada


202,614



207,690



207,280Other


178,126



153,479



188,778$
4,168,344


$
4,228,249


$
4,377,305   2007


2006


2005Long-Lived AssetsUnited States

$
1,221,047


$
1,072,649


$
1,093,068United Kingdom


318,059



286,847



280,752Canada


15,028



159,655



155,981Other


89,739



80,426



70,823$
1,643,873


$
1,599,577


$
1,600,624     16.
    FINANCIAL
    INSTRUMENTS    Concentration
    of Credit Risk
      Interest
    Rate Cap
   75




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Interest
    Rate Swap Agreement
          Cash
    and Cash Equivalents, Accounts Receivable and Notes
    Payable
    Long-Term
    Debt
      September 30,2007


2006Carrying





CarryingAmount


Fair Value


Amount


Fair ValueLong-term debt:Corporate debt

$
578,557


$
520,362


$
593,571


$
550,318Present value of capital lease obligations, sundry notes, and
    bonds


14,440



14,440



1,494



1,494Non-corporate debt


158,724



158,723



153,016



153,016Interest rate swaps


(1,099
)


(1,099
)






   17.
    RESTRUCTURING
    AND DISCONTINUED OPERATIONS   76




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Ending








Ending


Cash


EndingCash


Non-Cash


Balance


Fiscal


Cash


Balance


Payments


BalanceFiscal 2005


Payments


Charges


September 30,


2006


Payments


September 30,


Fiscal


September 30,Charge


Fiscal 2005


Fiscal 2005


2005


Adjustments


Fiscal 2006


2006


2007


2007Severance

$
13,082


$
(11,107
)

$



$
1,975


$
(469
)

$
(1,506
)

$



$



$
Contractual commitments


3,298



(1,846
)






1,452



656



(1,211
)


897



(897
)


Contract termination


3,157



(3,034
)






123



(65
)


(58
)










Asset impairments


1,672







(1,672
)






















Other non-restructuring items


1,003







(1,003
)






(367
)


367











Total

$
22,212


$
(15,987
)

$
(2,675
)

$
3,550


$
(245
)

$
(2,408
)

$
897


$
(897
)

$
     Fiscal Year Ended September 302007


2006


2005Revenues

$



$



$
20,577Operating loss






(78
)


(20,709
)Tax benefit






31



8,180Net loss from discontinued operations

$



$
(47
)

$
(12,259
)     18.
    SUPPLEMENTAL
    CASH FLOW INFORMATION  Fiscal Year Ended September 302007


2006


2005Cash paid for income taxes

$
37,794


$
155,364


$
92,291Cash paid for interest on corporate and non-corporate debt

$
54,118


$
64,192


$
81,016Non-cash investing and financing activities:Property and equipment acquired under capital leases

$
15,406


$



$
  77




---



##### Table of Contents



IKON
    OFFICE SOLUTIONS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   19.
    QUARTERLY
    FINANCIAL SUMMARY (unaudited)  First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Total2007Revenues

$
1,007,884


$
1,050,736


$
1,045,016


$
1,064,708


$
4,168,344Gross profit


337,112



345,009



346,958



354,100



1,383,179Income from continuing operations before taxes on income


39,883



42,238



43,198



38,115



163,434Income from continuing operations


27,337



30,453



29,066



27,631



114,487Net income


27,337



30,453



29,066



27,631



114,487Basic earnings per common share


0.21



0.24



0.23



0.23



0.92Diluted earnings per common share


0.21



0.24



0.23



0.23



0.91Dividends per common share


0.04



0.04



0.04



0.04



0.16Common stock price-high/low


16.85/13.00



17.41/13.41



16.11/14.00



16.11/11.81



17.41/11.81   First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Total2006Revenues

$
1,042,863


$
1,080,509


$
1,046,897


$
1,057,980


$
4,228,249Gross profit


362,193



365,327



358,040



356,218



1,441,778Income from continuing operations before taxes on income


40,405



39,638



42,078



35,797



157,918Income from continuing operations


27,632



25,368



26,871



26,378



106,249Net loss from discontinued operations


11



(30
)


10



(38
)


(47
)Net income (loss)


27,643



25,338



26,881



26,340



106,202Basic earnings (loss) per common shareContinuing operations


0.21



0.19



0.21



0.20



0.81Discontinued operations


0.00



0.00



0.00



0.00



0.00Net income


0.21



0.19



0.21



0.20



0.81Diluted earnings (loss) per common shareContinuing operations


0.21



0.19



0.20



0.20



0.80Discontinued operations


0.00



0.00



0.00



0.00



0.00Net income


0.21



0.19



0.20



0.20



0.80Dividends per common share


0.04



0.04



0.04



0.04



0.16Common stock price-high/low


11.06/9.60



14.34/10.32



14.37/12.15



14.36/12.15



14.37/9.60    78




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  (a)
    Evaluation
    of Disclosure Controls and Procedures    Rule 13a-15(e) Rule 13a-15(b)
    Remediation
    of Material Weakness Previously Reported
      
    establishing a fully-staffed service billing organization under
    an aligned organization structure;
    refocusing on our conversion to One Platform comprised of a
    common enterprise resource planning system, primarily based on
    the Oracle
    E-Business
    Suite;
    conducting tests of contract
    set-up
    procedures at each of our North American billing centers and
    subsequently launching a re-designed contract
    set-up
    module in the Oracle
    E-Business
    Suite in order to simplify the contract
    set-up
    process and reduce billing errors;
    using actual service billing data from our service provider in
    lieu of estimated amounts;
    initializing and subsequently expanding a program designed to
    assess the accuracy of estimated meter reads; 79




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##### Table of Contents




    launching a standardization project to re-evaluate key controls
    over financial reporting at our North American billing
    centers; and
    developing improved analyses of historical collections, credits
    and write-offs to calculate an estimate of billing disputes and
    inaccuracies to ensure that revenue, accounts receivable, and
    deferred revenue were appropriately stated.  E-Business E-Business
  Form 10-K.
  (b)
    Managements
    Report on Internal Control Over Financial Reporting  Rule 13a-15(f).
    Internal Control  Integrated
    Framework
    (c)
    Changes
    in Internal Control Over Financial Reporting  Rules 13a-15(f) 15d-15(f)
 80




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##### Table of Contents



E-Business
  Item 9B.
    Other
    Information  2007-1
    PART III
  Item 10.
    Directors
    and Executive Officers of the Registrant  Form 10-K
  www.ikon.com Form 8-K
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   81




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##### Table of Contents



(c)(a)





Number of SecuritiesNumber of Securities


(b)


Remaining Available forto be Issued Upon


Weighted-Average


Future Equity IssuanceExercise of


Exercise Price of


Under Compensation PlansOutstanding Options,


Outstanding Options,


(Excluding SecuritiesWarrants or Rights(1)


Warrants or Rights


Reflected in Column(a))Plan CategoryEquity compensation plans approved by security holders


9,733,404


$
11.81



9,599,318Equity compensation plans not approved by security holders


142,037



16.02



352,448Total


9,875,441


$
11.87



9,951,766     (1)
    
    Includes shares issuable upon
    vesting of outstanding stock awards under the 2006 Omnibus
    Equity Compensation Plan (including the former Plans merged),
    and the IKON Long Term Incentive Compensation Plan.  Item 13.
    Certain
    Relationships and Related Transactions    Item 14.
    Principal
    Accountant Fees and Services    PART IV
  Item 15.
    Exhibits
    and Financial Statement Schedules      PageReport of Independent Registered Public
    Accounting Firm


41Consolidated Statements of Income


42Consolidated Balance Sheets


43Consolidated Statements of Cash Flows


44Consolidated Statements of Changes in
    Shareholders Equity


45Notes to Consolidated Financial Statements


46Quarterly Financial Summary


78  82




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##### Table of Contents



SCHEDULE II 
    VALUATION AND QUALIFYING ACCOUNTS
  Col. A

Col. B


Col. C


Col. D


Col. EBalance at





Charged





Balance atBeginning of


Charged to Costs


to Other


Deductions


End ofDescription

Period


and Expenses


Accounts


(additions)


Period(in thousands)Year Ended September 30, 2007Allowance for doubtful accounts on trade receivables

$
8,493


$
6,750






$
7,894


$
7,349Lease default reserve(3)


5,473



190







934



4,729Deferred tax valuation allowance


28,483



(996
)






(3,000
)


30,487Reserve for other receivables


13,860



1,778







1,163



14,475Year Ended September 30, 2006Allowance for doubtful accounts on trade receivables

$
12,284


$
2,410
(2)





$
6,201
(1)

$
8,493Lease default reserve(3)


6,613



436







1,576
(1)


5,473Deferred tax valuation allowance


30,946



(2,145
)






318



28,483Reserve for other receivables


12,438



2,313







891



13,860Year Ended September 30, 2005Allowance for doubtful accounts on trade receivables

$
7,224


$
13,899
(2)





$
8,839
(1)

$
12,284Lease default reserve(3)


6,446



2,929







2,762
(1)


6,613Deferred tax valuation allowance


29,162



(2,674
)






(4,458
)


30,946Reserve for other receivables


13,837



2,521







3,920



12,438   (1)
    
    Accounts written-off during the
    year, net of recoveries for total operations.(2)
    
    Amounts represent charges related
    to total operations.(3)
    
    Balance relates only to our
    European leasing operations.  Regulation S-K):
    Sale of Certain Assets and Liabilities Relating to our
    Leasing Operations in the U.S. and Canada2
.1

Asset Purchase Agreement dated as of December 11, 2003, by
    and among IKON, IOS Capital, LLC (IOSC) and General
    Electric Capital Corporation, filed as Exhibit 2.1 to
    IKONs
    Form 8-K
    dated December 15, 2003, is incorporated herein by
    reference.2
.2

First Amendment dated as of March 31, 2004, between IKON
    and General Electric Capital Corporation, to the Asset Purchase
    Agreement dated as of December 10, 2003, filed as
    Exhibit 2.1 to IKONs
    Form 8-K
    dated April 6, 2004, is incorporated herein by reference.2
.3

Asset Purchase Agreement dated as of March 31, 2004,
    between IKON, an Ontario corporation, and Heller Financial
    Canada, filed as Exhibit 2.2 to IKONs
    Form 8-K
    dated April 6, 2004, is incorporated herein by reference. 83




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##### Table of Contents



2
.4

Assignment and Amendment Agreement dated as of June 30,
    2004, by and among Heller Financial Canada, General Electric
    Capital Canada, Inc., as general partner of GE VFS Canada
    Limited Partnership Corporation, IKON, and IKON Office Solutions
    Northern Ltd., to the Asset Purchase Agreement dated as of
    March 31, 2004, filed as Exhibit 2.1 to IKONs
    Form 8-K
    dated July 7, 2004, is incorporated herein by reference.2
.5

Asset Purchase Agreement dated as of April 1, 2006, between
    IKON and General Electric Capital Corporation, filed as
    Exhibit 2.1 to IKONs
    Form 10-Q
    for the quarter ended March 31, 2006, is incorporated
    herein by reference.Corporate Documents3
.1

Amended and Restated Articles of Incorporation, filed as
    Exhibit 3.1 to IKONs 1997
    Form 10-K,
    is incorporated herein by reference.3
.2

Amendment to Amended and Restated Articles of Incorporation,
    filed as Exhibit 3.1 to IKONs 1998
    Form 10-K,
    is incorporated herein by reference.3
.3

Code of Regulations, filed as Exhibit 3.2 to IKONs
    Form 10-Q
    for the quarter ended March 31, 1996, is incorporated
    herein by reference.Instruments Defining the Rights of Security Holders$300 Million
    63/4% Notes
    Due 2025 and Notes due 20274
.1

Indenture dated as of December 11, 1995, between IKON and
    First Fidelity Bank, N.A., as Trustee, filed as Exhibit 4
    to IKONs Registration Statement
    No. 33-64177,
    is incorporated herein by reference.$225 Million
    73/4% Notes
    due 20154
.2

Indenture dated as of September 21, 2005 between IKON and
    The Bank of New York, filed as Exhibit 10.1 to IKONs
    Form 8-K
    dated September 22, 2005, is incorporated herein by
    reference.4
.3

Registration Rights Agreement dated as of September 21,
    2005 between IKON and the Initial Purchasers of the Notes, filed
    as Exhibit 10.2 to IKONs
    Form 8-K
    dated September 22, 2005, is incorporated herein by
    reference.4
.4

First Supplemental Indenture dated as of March 29, 2007,
    between IKON and The Bank of New York, as trustee, to the
    Indenture dated as of September 21, 2005 between IKON
    Office Solutions, Inc. and The Bank of New York, as Trustee,
    filed as Exhibit 10.1 to IKONs
    Form 8-K
    dated March 27, 2007.Agreement with Commission pursuant to
    Regulation S-K,
    Item 6.01(b)(4)(iii)4
.5

Pursuant to
    Regulation S-K,
    Item 601(b)(4)(iii), IKON agrees to furnish to the
    Commission, upon request, a copy of other instruments defining
    the rights of holders of long-term debt of IKON and its
    subsidiaries.Proposed Senior Unsecured Floating Rate Notes due 201110
.1

Commitment Letter among IKON, Wachovia Investment Holdings, LLC,
    and Wachovia Capital Markets, LLC, filed as Exhibit 10.2 to
    IKONs
    Form 8-K
    dated November 21, 2007, is incorporated herein by
    reference.Credit Facility10
.2

Amended and Restated Credit Agreement dated as of June 28,
    2006, by and among IKON, as Borrower, the lenders referred to
    therein, Deutsche Bank Securities Inc., as Syndication Agent,
    PNC Bank National Association, as Syndication Agent, The Royal
    Bank of Scotland PLC, as Documentation Agent, LaSalle Bank
    National Association, as Documentation Agent, Wachovia Bank,
    National Association, as Administrative Agent, Collateral Agent,
    Swingline Lender, and Issuing Lender, and Wachovia Capital
    Markets, LLC as Sole Lead Arranger and Sole Book Manager, filed
    as Exhibit 10.1 to IKONs
    Form 8-K
    dated July 5, 2006, is incorporated herein by reference.10
.3

Amendment No. 1 to Amended and Restated Credit Agreement,
    filed as Exhibit 10.1 to IKONs
    Form 8-K
    dated March 27, 2007, is incorporated herein by reference.Leasing Programs10
.4

Program Agreement dated March 31, 2004, between IKON and
    General Electric Capital Corporation, filed as Exhibit 10.1
    to IKONs
    Form 8-K
    dated April 6, 2004, is incorporated herein by reference. 84




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##### Table of Contents



10
.5

Canadian Rider, dated June 30, 2004, among IKON Office
    Solutions, Inc., General Electric Capital Canada, Inc., as
    general partner of GE VFS Canada Limited Partnership
    Corporation, and IKON Office Solutions Northern Ltd., to the
    Program Agreement dated March 31, 2004 among IKON, General
    Electric Capital Corporation, and GE Capital Information
    Technology Solutions, Inc., filed as Exhibit 10.1 to
    IKONs
    Form 8-K
    dated July 7, 2004, is incorporated herein by reference.10
.6

Amended and Restated Program Agreement dated as of April 1,
    2006, by and among IKON, General Electric Capital Corporation
    and GE Capital Information Technology Solutions, Inc., filed as
    Exhibit 10.1 to IKONs
    Form 10-Q
    for the quarter ended March 31, 2006, is incorporated
    herein by reference.10
.7

First Amendment to Amended and Restated Program Agreement dated
    as of October 11, 2006, by and among IKON, General Electric
    Capital Corporation and GE Capital Information Technology
    Solutions, Inc., filed as Exhibit. 10.1 to IKONs
    Form 8-K
    dated October 11, 2006, is incorporated herein by reference.10
.8

Second Amendment to Amended and Restated Program Agreement dated
    as of June 26, 2007, filed as Exhibit 10.1 to
    IKONs
    Form 8-K
    dated June 27, 2007, is incorporated herein by reference.Compensatory Plans10
.9

Amended and Restated Long Term Incentive Compensation Plan,
    filed as Exhibit 10.1 to IKONs
    Form 10-Q
    for the quarter ended March 31, 1996, is incorporated
    herein by reference.**10
.10

Amendment Number 1 to Amended and Restated Long Term Incentive
    Compensation Plan, filed as Exhibit 10.2 to IKONs
    1998
    Form 10-K,
    is incorporated herein by reference.**10
.11

1995 Stock Option Plan, filed as Exhibit 10.5 to
    IKONs
    Form 10-Q
    for the quarter ended March 31, 1996, is incorporated
    herein by reference.**10
.12

Amendment to 1995 Stock Option Plan, filed as Exhibit 10.23
    to IKONs 1998
    Form 10-K,
    is incorporated herein by reference.**10
.13

Non-Employee Directors Stock Option Plan, filed as
    Exhibit 10.31 to IKONs 1997
    Form 10-K,
    is incorporated herein by reference.**10
.14

1980 Deferred Compensation Plan, filed as Exhibit 10.7 to
    IKONs 1992
    Form 10-K,
    is incorporated herein by reference.**10
.15

Amendment dated January 1, 1997, to the 1980 Deferred
    Compensation Plan, filed as Exhibit 10.37 to IKONs
    2000
    Form 10-K,
    is incorporated herein by reference.**10
.16

Amendment dated November 6, 1997, to 1980 Deferred
    Compensation Plan, filed as Exhibit 10.28 to IKONs
    1998
    Form 10-K,
    is incorporated herein by reference.**10
.17

1985 Deferred Compensation Plan, filed as Exhibit 10.8 to
    IKONs 1992
    Form 10-K,
    is incorporated herein by reference.**10
.18

Amendment dated November 6, 1997, to 1985 Deferred
    Compensation Plan, filed as Exhibit 10.29 to IKONs
    1998
    Form 10-K,
    is incorporated herein by reference.**10
.19

Amendment dated January 1, 1997, to the 1985 Deferred
    Compensation Plan, filed as Exhibit 10.41 to IKONs
    2000
    Form 10-K,
    is incorporated herein by reference.**10
.20

Amended and Restated 1994 Deferred Compensation Plan, filed as
    Exhibit 10.42 to IKONs 2000
    Form 10-K,
    is incorporated herein by reference.**10
.21

Amendment
    2005-1,
    dated as of July 26, 2005, to IKONs 1994 Deferred
    Compensation Plan, filed as Exhibit 10.28 to IKONs
    2005
    Form 10-K,
    is incorporated herein by reference.**10
.22

Changes to the compensation payable to IKONs independent
    directors, filed under Item 1.01 to IKONs
    Form 8-K
    dated December 14, 2004, is incorporated herein by
    reference.**10
.23

Amended and Restated IKON Office Solutions, Inc. Executive
    Deferred Compensation Plan dated as of February 22, 2006,
    filed as Exhibit 10.4 to IKONs
    Form 8-K
    dated February 22, 2006, is incorporated herein by
    reference.**10
.24

2006 Omnibus Equity Compensation Plan, effective
    February 22, 2006, filed as Exhibit 10.1 to
    IKONs
    Form 8-K
    dated February 22, 2006, is incorporated herein by
    reference.**10
.25

Amendment
    2007-1,
    dated as of November 27, 2007, to the Amended and Restated
    IKON Office Solutions, Inc. Deferred Executive Compensation
    Plan. 85




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##### Table of Contents



Management Contracts10
.26

Employment Agreement for Matthew J. Espe dated as of
    September 28, 2005, filed as Exhibit 10.1 to
    IKONs
    Form 8-K
    dated September 30, 2005, is incorporated herein by
    reference.**10
.27

Amendment dated as of October 25, 2005 to the Employment
    Agreement for Matthew J. Espe, filed as Exhibit 10.2 to
    IKONs
    Form 8-K
    dated October 26, 2005, is incorporated herein by
    reference.**10
.28

Senior Executive Employment Agreement for Robert F. Woods, filed
    as Exhibit 10.1 to IKONs
    Form 8-K
    dated September 23, 2004, is incorporated herein by
    reference.**10
.29

Employment Agreement for Jeffrey W. Hickling dated as of
    March 11, 2005, filed as Exhibit 10.1 to IKONs
    Form 8-K
    dated March 21, 2005, is incorporated herein by reference.**10
.30

Senior Executive Employment Agreement for Brian D. Edwards dated
    August 9, 2004, filed as Exhibit 10.42 to IKONs
    2004
    Form 10-K,
    is incorporated herein by reference.**10
.31

Executive Employment Agreement for David Mills dated as of
    October 22, 1997, filed as Exhibit 10.36 to
    IKONs 2005
    Form 10-K,
    is incorporated herein by reference.**10
.32

Supplemental Executive Employment Agreement for David Mills
    dated as of April 16, 1999, filed as Exhibit 10.37 to
    IKONs 2005
    Form 10-K,
    is incorporated herein by reference.**Miscellaneous10
.33

Lease between Lexington Malvern L.P. and IKON Office Solutions,
    Inc. dated September 22, 2003 for 70 Valley Stream Parkway,
    Malvern, PA 19355, filed as Exhibit 10.80 to IKONs
    2003
    Form 10-K,
    is incorporated herein reference.10
.34

Amendment dated as of November 20, 2007 to the
    Confidentiality Agreement between IKON and Steel Partners II,
    L.P., filed as Exhibit 10.1 to IKONs
    Form 8-K
    dated November 21, 2007, is incorporated herein by
    reference.12
.1

Ratio of Earnings to Fixed Charges.21


Subsidiaries of IKON.23


Consent of PricewaterhouseCoopers LLP.31
.1

Certification of Principal Executive Officer pursuant to
    Rule 13a-14(a).31
.2

Certification of Principal Financial Officer pursuant to
    Rule 13a-14(a).32
.1

Certification of Principal Executive Officer pursuant to
    18 U.S.C. Section 1350.32
.2

Certification of Principal Financial Officer pursuant to
    18 U.S.C. Section 1350.     *
    
    Copies of the exhibits will be
    furnished to any security holder of IKON upon payment of the
    reasonable cost of reproduction.**
    
    Management contract or compensatory
    plan or arrangement.
    
    Filed herewith.(b)
    
    The response to this portion of Item 15 is contained in
    Item 15(a)(3) above.(c)
    
    The response to this portion of Item 15 is contained on
    page 83 of this Report. 86




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##### Table of Contents



SIGNATURES
  Form 10-K
  IKON Office Solutions,
    Inc.
    By:
    /s/  Robert
    F. Woods  (Robert F. Woods)
 Senior Vice President and Chief Financial Officer
    Signature

Title

Date/s/  Matthew
    J. Espe(Matthew
    J. Espe)

Chairman and 
    Chief Executive Officer
    (Principal Executive Officer)

November 29, 2007/s/  Robert
    F. Woods(Robert
    F. Woods)

Senior Vice President and 
    Chief Financial Officer
    (Principal Financial Officer)

November 29, 2007/s/  Theodore
    E. Strand(Theodore
    E. Strand)

Vice President and Controller 
    (Principal Accounting Officer)

November 29, 2007/s/  Philip
    E. Cushing(Philip
    E. Cushing)

Director

November 29, 2007/s/  Thomas
    R. Gibson(Thomas
    R. Gibson)

Director

November 29, 2007/s/  Richard
    A. Jalkut(Richard
    A. Jalkut)

Director

November 29, 2007/s/  Arthur
    E. Johnson(Arthur
    E. Johnson)

Director

November 29, 2007/s/  Kurt
    M. Landgraf(Kurt
    M. Landgraf)

Director

November 29, 2007/s/  Gerald
    Luterman(Gerald
    Luterman)

Director

November 29, 2007 87




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##### Table of Contents



Signature

Title

Date/s/  William
    E. McCracken(William
    E. McCracken)

Director

November 29, 2007/s/  William
    L. Meddaugh(William
    L. Meddaugh)

Director

November 29, 2007/s/  Hellene
    S. Runtagh(Hellene
    S. Runtagh)

Director

November 29, 2007/s/  Anthony
    P. Terracciano(Anthony
    P. Terracciano)

Director

November 29, 2007  88