##### Table of Contents

As filed with the Securities and Exchange Commission on December 29, 2003

---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-K



---



(Mark One)

| | x |  | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended September 30, 2003 or
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  ̈ |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period fromto.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



Commission file number 333-71362



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IKON RECEIVABLES FUNDING, LLC

(Exact name of registrant as specified in its charter)



|DELAWARE                                                       |  | 52-2652209                          
|-------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|1738 Bass Road, P.O. Box 9115, Macon, Georgia |  | 31208     
|--------------------------------------------- |  | ----------
|(Address of principal executive offices)      |  | (Zip Code)



Registrants
telephone number, including area code: (478) 471-2300



---



Securities registered pursuant to Section 12(b) of the Act:    None



Securities registered pursuant to Section 12(g) of the
Act:    None



---



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes  x    No ̈



Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.  x



Registered debt outstanding as of December 19, 2003 was $1,000,711,725.



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



DOCUMENTS INCORPORATED BY REFERENCE:



None





The registrant meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore
filing with the reduced disclosure format contemplated thereby.



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##### Table of Contents

INDEX*



|         |  |                                                                                       |  | Page No.
|-------- |  | ------------------------------------------------------------------------------------- |  | --------
|PART I   |  |                                                                                      
|         |  |                                                                                      
|ITEM 1.  |  | BUSINESS                                                                              |  | 1       
|         |  |                                                                                      
|ITEM 2.  |  | PROPERTIES                                                                            |  | 2       
|         |  |                                                                                      
|ITEM 3.  |  | LEGAL PROCEEDINGS                                                                     |  | 2       
|PART II  |  |                                                                                      
|         |  |                                                                                      
|ITEM 5.  |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                 |  | 2       
|         |  |                                                                                      
|ITEM 7.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 2       
|         |  |                                                                                      
|ITEM 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  | 5       
|         |  |                                                                                      
|ITEM 8.  |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                           |  | 5       
|         |  |                                                                                      
|ITEM 9.  |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE  |  | 6       
|         |  |                                                                                      
|ITEM 9A. |  | EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES                                      |  | 6       
|         | 
|PART III |  |                                                                                      
|         |  |                                                                                      
|ITEM 14. |  | PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                |  | 6       
|         | 
|PART IV  |  |                                                                                      
|         |  |                                                                                      
|ITEM 15. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                      |  | 6       



|* | All amounts contained in this annual report on Form 10-K are in thousands unless otherwise noted.
|- | -------------------------------------------------------------------------------------------------



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##### Table of Contents

FORWARD LOOKING INFORMATION



This Report includes or incorporates by reference information which may constitute forward-looking statements within the
meaning of the federal securities laws. Although IKON Receivables Funding, LLC (the Company) believes the expectations contained in such forward-looking statements are reasonable, it can give no assurance that such expectations will
prove correct. Such forward-looking information is based upon managements current plans or expectations and is subject to a number of risks and uncertainties that could significantly affect current plans, anticipated actions and the future
financial condition and results of the Company, IOS Capital, LLC (IOSC), and IKON Office Solutions, Inc. (IKON). These risks and uncertainties, which apply to the Company, IOSC and IKON, include, but are not limited to, risks
and uncertainties relating to: the consummation of the announced transaction with General Electric Capital Corporation; factors which may affect the Companys ability to collect amounts due from lessees in order to make payments due in
connection with the Companys lease-backed notes (such as lessee defaults or factors impeding recovery efforts); conducting operations in a competitive environment and a changing industry (which includes technical services and products that are
relatively new to the industry and to the Company); delays, difficulties, management transitions and employment issues associated with consolidations and/or changes in business operations; existing and future vendor relationships; risks relating to
foreign currency exchange; economic, legal and political issues associated with international operations; the Companys ability to access capital and meet its debt service requirements (including sensitivity to fluctuations in interest rates);
and general economic conditions. As a consequence of these and other risks and uncertainties, current plans, anticipated actions and future financial condition and results may differ materially from those expressed in any forward-looking statements
made by or on behalf of the Company, IOSC or IKON.



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##### Table of Contents

PART I



Recent Developments



|ITEM 1. |  | Business.
|------- |  | ---------



IKON Office Solutions, Inc. (IKON) entered into an asset purchase agreement (the Agreement), dated December 10, 2003, by and among
IKON, IOS Capital, LLC (IOSC) and General Electric Capital Corporation (GE), pursuant to which, among other things, GE will acquire certain assets and liabilities of IOSC, including, without limitation, IOSCs servicing
functions, facilities, systems and processes. As a condition to the consummation of the transactions contemplated by the Agreement, IKON and GE will enter into a program agreement (the Program Agreement), under which, among other things,
GE will become the preferred lease-financing source for IKONs customers in the United States and Canada. Under the terms of the Agreement, and subject to closing adjustments, IKON will receive approximately $1.5 billion of gross proceeds.



IKON is a publicly traded company with fiscal 2003 revenues of
approximately $4.7 billion. IKON integrates imaging systems and services that help businesses manage document workflow and increase efficiency. IKON represents the industrys broadest portfolio of document management services including:
outsourcing and professional services, on-site copy and mailroom management, fleet management, off-site digital printing solutions, and customized workflow and imaging application development. IOSC is currently a wholly-owned finance subsidiary of
IKON. IKON Receivables-2, LLC (the Sole Member), a special purpose Delaware limited liability company, is a wholly owned-direct subsidiary of IOSC, and IKON Receivables Funding, LLC (the Company), is a wholly-owned indirect
subsidiary of IOSC held through the Sole Member. The Company was organized in the State of Delaware on October 9, 2001 and is managed by IKON Receivables Funding, Inc. (the Manager).



Before the closing of the transaction with GE (as described above), IKON
intends to merge IOSC into IKON. As a result of the merger of IOSC into IKON, the Sole Member will become a direct, wholly owned subsidiary of IKON, and the Sole Member will continue to hold the Company as a subsidiary. Immediately after the
effectiveness of the merger, IKON will sell certain former assets and liabilities of IOSC to GE or one of its affiliates. The Company will continue to be the issuer of the Notes (as defined below). Following the closing of the transaction described
above, the Lease Receivables (as defined below) will be serviced or sub-serviced by GE or one of its affiliates.



The closing of the transaction is subject to execution of the Program Agreement relating to GEs relationship with IKON as its preferred
lease-financing source, as well as execution of other agreements and customary conditions, including receipt of certain third party consents. The transaction is expected to close in the second quarter of fiscal 2004. We cannot assure you that the
transactions contemplated by the Agreement will occur.



The
Company intends to file a Form 15, and thereafter cease filing periodic reports under the Securities Exchange Act of 1934, promptly upon, and subject to, receipt of certain third party consents.



General



The Company was organized to engage exclusively in the following business
and financial activities: to purchase or acquire from IKON, or any subsidiary or affiliate of IKON, any right to payment, whether constituting an account, chattel paper, instrument or general intangible, and certain related property (other than
equipment) and rights (collectively, Finance Receivables), and hold, sell, transfer, pledge or otherwise dispose of Finance Receivables or interests therein; to enter into any agreement related to any Finance Receivables that provides
for the administration, servicing and collection of amounts due on such Finance



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Receivables and any interest rate hedging arrangements in connection therewith; to distribute Finance Receivables or
proceeds from Finance Receivables and any other income to its Sole Member; and to engage in any lawful act or activity and to exercise any power that is incidental and is necessary or convenient to the foregoing and permitted under Delaware law.



The Company has issued Series 2002-1 and 2003-1 lease-backed
notes (collectively, the Notes) which are secured by a segregated pool of assets (the Asset Pool) that includes a portfolio of chattel paper composed of leases, leases intended as security agreements and installment sales
contracts acquired or originated by IOSC (the Leases), together with the equipment financing portion of each periodic rental payment due pursuant to the terms of each series of Notes. The Leases, including the Companys security
interest (which is limited to recoveries on non-performing Leases) in the underlying equipment and other property related to the Leases (such equipment and property herein referred to as the Equipment), are referred to as Lease
Receivables.



The Lease Receivables, including the
Equipment, have been transferred to the Company and the Lease Receivables have been pledged by the Company to the applicable indenture trustee (the Trustee) in accordance with the terms of the assignment and servicing agreement
applicable to each such series of Notes. The Notes are secured solely by the Asset Pool and have no right, title or interest in the Equipment. The sole source of funds available for payment of the Notes are the Asset Pool and any applicable reserve
account established in accordance with each applicable indenture and financial guarantee insurance policy. The Trustee has no right, title, or interest in the residual values of any of the Equipment except to the extent of the Companys limited
security interest with respect to recoveries on non-performing Leases.



Neither the Sole Member nor the Manager is liable for the debts, liabilities, contracts or other obligations of the Company solely by reason of being the Sole Member or Manager of the Company.



The Companys organizational documents require it to operate in such a
manner that it should not be consolidated in the bankruptcy estate of the Sole Member, IOSC, or IKON, should any of these entities become subject to such a proceeding. The Company is legally separate from each of the foregoing entities, and the
assets of the Company, including, without limitation, the Lease Receivables, are not available to the creditors of the Sole Member, IOSC, or IKON.



|ITEM 2. |  | Properties.
|------- |  | -----------



The Company does not utilize any facilities. Actions related to servicing and maintaining the Companys assets are performed by IOSC.



|ITEM 3. |  | Legal Proceedings.
|------- |  | ------------------



None.



PART II



|ITEM 5. |  | Market for Registrants Common Equity and Related Stockholder Matters.
|------- |  | ----------------------------------------------------------------------



There is currently no market for the Companys equity securities nor is it anticipated that such a market will develop.



|ITEM 7. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- |  | --------------------------------------------------------------------------------------



Pursuant to General Instruction I(2)(a) of Form 10-K, the following analysis
of the results of operations is presented in lieu of Managements Discussion and Analysis of Financial Condition and Results of Operations.



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##### Table of Contents

The Company has issued the Notes as described below:



|Series |  | Notes      |  | Issuance Date |  | Principal Issuance Amount |  | Principal Amount Outstanding atSeptember 30, 2003 |  | Interest Rate |  | Stated Maturity Date
|------ |  | ---------- |  | ------------- |  | ------------------------- |  | ------------------------------------------------- |  | ------------- |  | --------------------
|2002-1 |  | Class A-1  |  | 05/30/02      |  | $171,000                  |  |                                                   |  | 2.044%        |  | June 2003           
|       |  | Class A-2  |  | 05/30/02      |  | 46,000                    |  |                                                   |  | 2.91%         |  | February 2005       
|       |  | Class A-3  |  | 05/30/02      |  | 266,400                   |  | $227,751                                          |  | 3.90%         |  | October 2006        
|       |  | Class A-4  |  | 05/30/02      |  | 151,400                   |  | 151,400                                           |  | 4.68%         |  | November 2009       
|       |  |            |  |               |  |                           |  |                                                   |  |               |  |                     
|       |  |            |  | Sub-Total     |  | 634,800                   |  | 379,151                                           |  |               |  |                     
|       |  |            |  |               |  |                           |  |                                                   |  |               |  |                     
|2003-1 |  | Class A-1  |  | 04/23/03      |  | 253,200                   |  | 134,526                                           |  | 1.30813%      |  | May 2004            
|       |  | Class A-2  |  | 04/23/03      |  | 26,700                    |  | 26,700                                            |  | 1.68%         |  | November 2005       
|       |  | Class A-3a |  | 04/23/03      |  | 206,400                   |  | 206,400                                           |  | LIBOR + 0.24% |  | December 2007       
|       |  | Class A-3b |  | 04/23/03      |  | 206,400                   |  | 206,400                                           |  | 2.33%         |  | December 2007       
|       |  | Class A-4  |  | 04/23/03      |  | 159,385                   |  | 159,385                                           |  | 3.27%         |  | July 2011           
|       |  |            |  |               |  |                           |  |                                                   |  |               |  |                     
|       |  |            |  | Sub-Total     |  | 852,085                   |  | 733,411                                           |  |               |  |                     
|       |  |            |  |               |  |                           |  |                                                   |  |               |  |                     
|       |  |            |  | Total         |  | $1,486,885                |  | $1,112,562                                        |  |               |  |                     
|       |  |            |  |               |  |                           |  |                                                   |  |               |  |                     



The Notes were issued
pursuant to certain indentures (the Indentures) between the Company, IOSC, and the Trustee. The Notes are secured by the Asset Pool that includes a portfolio of Leases acquired or originated by IOSC, together with the equipment financing
portion of each periodic rental payment due pursuant to the terms of each series of Notes.



The Lease Receivables, including the Equipment, have been transferred to the Company and the Lease Receivables have been pledged by the Company to the Trustee in accordance with the terms of the assignment and
servicing agreement applicable to each such series of Notes. The Notes are secured solely by the Asset Pool and have no right, title or interest in the Equipment. The sole source of funds available for payment of the Notes are the Asset Pool and any
applicable reserve account established in accordance with each applicable indenture and financial guarantee insurance policy. The Trustee has no right, title, or interest in the residual values of any of the Equipment except to the extent of the
Companys limited security interest with respect to recoveries on non-performing Leases.



The Notes have certain credit enhancement features available to noteholders, including reserve accounts, overcollateralization accounts and noncancelable insurance policies from Ambac Assurance Corporation with
respect to the Notes. On each payment date, funds available from the collection of Lease Receivables will be paid to the noteholders in the order of their priority class.



The Notes bear interest from the related issuance date at the stated rates specified above. The variable rate 2003-1 Class
A-3a Notes have been fixed at 2.095% through an interest rate swap.



IOSC services the Leases and may delegate its servicing responsibilities to one or more sub-servicers, but such delegation does not relieve IOSC of its liabilities with respect thereto. IOSC retains possession of the Leases and related
files, and receives a monthly service fee from the Company for servicing the Leases (see Recent Developments).



Restricted cash on the balance sheets represents the cash that has been collected on the Leases that are pledged as collateral for the Notes. This cash
must be segregated within two business days into a trust account and the cash is used to pay the principal and interest on the Notes as well as any associated



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administrative expenses. The level of restricted cash is impacted from one period to the next by the volume of Leases
pledged as collateral on the Notes and timing of collections on such Leases.



As of September 30, 2003, the Company has $1,013,115 available under the $2,500,000 shelf registration statement.



Future maturities of the Notes, based on contractual maturities of the Leases for each of the succeeding fiscal years, are as follows:



|     |  | 2002-1 SeriesNotes |         | 2003-1 SeriesNotes |   | Total  
|---- |  | ------------------ | ------- | ------------------ | - | -------
|2004 |  | $                  | 168,835 |                    | $ | 268,444
|2005 |  |                    | 128,398 |                    |   | 226,286
|2006 |  |                    | 81,918  |                    |   | 162,345
|2007 |  |                    |         |                    |   | 76,336 
|     |  |                    |         |                    |   |        
|     |  | $                  | 379,151 |                    | $ | 733,411
|     |  |                    |         |                    |   |        



During fiscal 2003,
income generated from the Leases was $99,235, interest income on restricted cash was $190, while interest expense was $30,600 and general and administrative expenses were $5,971. Principal collections on the Leases during fiscal 2003 were $294,099,
proceeds from issuance of the Notes were $852,085 and the Company repaid $309,746 of principal on the Notes. During fiscal 2002, income generated from the Leases was $29,779, interest income on restricted cash was $110, while interest expense was
$8,323 and general and administrative expenses were $1,365. Principal collections on the Leases during fiscal 2002 were $68,390, proceeds from the Notes were $634,800, and the Company repaid $64,576 of principal on the Notes. The Companys
portfolio of Leases had an average yield of 11.9% and 9.9% during fiscal 2003 and 2002, respectively, and the Companys weighted average interest rate of its total debt cost during fiscal 2003 and 2002 was 3.5% and 3.7%, respectively. The
Companys effective income tax rate was 36% for fiscal 2003 and 40% for fiscal 2002.



IOSC provides, in accordance with the applicable assignment and servicing agreement for the Notes, servicer reports to the Trustee for each series (the Servicer Reports). The Servicer Reports prepared
during fiscal 2003 are furnished with this report. During 2003, IOSC made certain adjustments to the Servicer Reports that modified the following:



| | i) | Substitutions for non-performing leases, early terminations and system maintenance had previously been calculated on a net present value basis and were adjusted in the February 2003
Servicer Reports to a discounted present value basis. As a result, no actual substitutions were made in certain months in which substitutions were reported, as detailed in the respective Servicer Report footnotes;
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | Beginning in February 2003, the annualized default rate and delinquency rate calculations were restated in accordance with the definitions set forth in the Indenture and the
assignment and servicing agreement. The annualized default rates did not previously include recoveries on non-performing loans and did not reflect adjustments for loans cured up to five business days prior to the payment date. Both calculations were
also adjusted to reflect previously unreported non-performing loans;
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | Beginning in February 2003, renewal payments were reflected in collection account balances, and related additional data concerning such matters were furnished; and
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | iv) | Beginning in February 2003, the Company began reporting cumulative substitutions for adjusted and warranty leases, non-performing leases, and early terminated leases, pursuant
to Section 11.01(a) of each applicable assignment and servicing agreement.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ITEM 7A. |  | Quantitative and Qualitative Disclosures About Market Risk.
|-------- |  | -----------------------------------------------------------



The Company incurs debt to fund the origination of Leases for IKON. The interest rates charged on the debt are determined
based on current market conditions and include variable measures of interest rates such as LIBOR. The Company monitors interest rates on debt in order to mitigate exposure to unfavorable variations as compared to the interest rate earned on the
pledged Leases. The objective in managing this risk is to achieve fixed-rate financing at the same time the Company establishes the rate to be received by the Company on the Leases. As a result, from time to time, interest rate swaps are utilized to
effectively fix the rate on variable rate debt, as opposed to a direct issuance of fixed rate debt. The risk associated with the use of interest rate swaps is the possible inability of the counterparties to meet the terms of their contracts. The
Company does not enter into interest rate swap agreements for trading purposes.



The following table presents, as of September 30, 2003, information regarding the interest rate swap agreement to which the Company is a party: (i) the notional amount, (ii) the fixed interest rate payable by the
Company, (iii) the variable interest rate payable to the Company by the counterparty under the agreement, (iv) the fair value of the instrument, and (v) the maturity date of the agreement.



|September 30, 2003
|------------------
|Notional Amount   
|$ 206,400         



|ITEM 8. |  | Financial Statements and Supplementary Data.
|------- |  | --------------------------------------------



The financial statements of the Company are submitted herewith on Pages F-1 through F-11 of this report.



Quarterly Data



The following table shows summarized unaudited quarterly results for fiscal
2003 and 2002:



|                     |  | First Quarter |        | Second Quarter |   | Third Quarter |  | Fourth Quarter |        | Total
|-------------------- |  | ------------- | ------ | -------------- | - | ------------- |  | -------------- | ------ | -----
|2003                 |  |               |        |                |   |               |  |                |        |      
|Lease finance income |  | $             | 16,704 |                | $ | 15,468        |  | $              | 32,513 |      
|Interest expense     |  |               | 5,801  |                |   | 5,497         |  |                | 9,292  |      
|Net income           |  |               | 5,957  |                |   | 5,440         |  |                | 14,522 |      
|                     |  |               |        |                |  
|                     |  | First Quarter |        | Second Quarter |   | Third Quarter |  | Fourth Quarter |        | Total
|2002                 |  |               |        |                |   |               |  |                |        |      
|Lease finance income |  |               |        |                |   |               |  | $              | 11,862 |      
|Interest expense     |  |               |        |                |   |               |  |                | 2,259  |      
|Net income           |  |               |        |                |   |               |  |                | 5,638  |      



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|ITEM 9. |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|------- |  | -------------------------------------------------------------------------------------



(No response to this item is required.)



|ITEM 9A. |  | Evaluation of Disclosure Controls and Procedures.
|-------- |  | -------------------------------------------------



The Companys Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of the Companys disclosure controls
and procedures (as such term is defined in Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, they have concluded that, as of the evaluation date, the
Companys disclosure controls and procedures are reasonably designed to alert them on a timely basis to material information relating to the Company required to be included in its reports filed or submitted under the Exchange Act.



PART III



|ITEM 14. |  | Principal Accountant Fees and Services.
|-------- |  | ---------------------------------------



(No response to this item is required.)



PART IV



|ITEM 15. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
|-------- |  | -----------------------------------------------------------------



(a) List of Financial Statements



|                                                                                                 |  | Page
|------------------------------------------------------------------------------------------------ |  | ----
|Report of Independent Auditors                                                                   |  | F-1 
|Balance Sheets at September 30, 2003 and 2002                                                    |  | F-2 
|Statements of Income for the Fiscal Years Ended September 30, 2003 and 2002                      |  | F-3 
|Statements of Cash Flows for the Fiscal Years Ended September 30, 2003 and 2002                  |  | F-4 
|Statements of Changes in Members Deficit for the Fiscal Years Ended September 30, 2003 and 2002 |  | F-5 
|Notes to Financial Statements                                                                    |  | F-6 



Financial Statements
and Schedules other than those listed above are omitted because the required information is included in the financial statements or the notes thereto or because they are inapplicable.



(b) Exhibits



|     | 
|---- | 
|3.1  | 
|     | 
|3.2  | 
|     | 
|4.1  | 
|     | 
|4.2  | 
|     | 
|10.1 | 
|     | 
|10.2 | 



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|     | 
|---- | 
|10.3 | 
|     | 
|10.4 | 
|     | 
|10.5 | 
|     | 
|10.6 | 
|     | 
|10.7 | 
|     | 
|12   | 
|     | 
|23   | 
|     | 
|31.1 | 
|     | 
|31.2 | 
|     | 
|32.1 | 
|     | 
|32.2 | 
|     | 
|99.1 | 
|     | 
|(c)  | 
|     | 
|     | 



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REPORT OF INDEPENDENT AUDITORS



To the Board of Directors and Shareholders

of IKON Office Solutions, Inc.:



In our opinion, the accompanying balance sheets and the
related statements of income, cash flows and changes in members deficit, present fairly, in all material respects, the financial position of IKON Receivables Funding, LLC at September 30, 2003 and 2002, and the results of its operations and
its cash flows for each of the two years in the period ended September 30, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys
management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



/s/    
PricewaterhouseCoopers LLP

Philadelphia, PA

December 18, 2003



F-1



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



BALANCE SHEETS



|                                       |  | September 30 |          
|-------------------------------------- |  | ------------ | ---------
|                                       |  | 2003         |          
|Assets                                 |  |              |          
|                                       |  |             
|Investment in leases:                  |  |              |          
|Finance lease receivables              |  | $            | 1,429,390
|Less: Unearned income                  |  |              | (232,574 
|                                       |  |              |          
|                                       |  |              | 1,196,816
|                                       |  |             
|Cash                                   |  |              | 1        
|Restricted cash                        |  |              | 52,080   
|Accounts receivable                    |  |              | 16,770   
|Prepaid expenses and other assets      |  |              | 4,856    
|Deferred tax assets                    |  |              | 566      
|                                       |  |              |          
|Total Assets                           |  | $            | 1,271,089
|                                       |  |              |          
|                                       |  |             
|Liabilities and Members Deficit       |  |              |          
|                                       |  |             
|Liabilities:                           |  |              |          
|Accrued expenses                       |  | $            | 7,240    
|Lease-backed notes                     |  |              | 1,112,562
|Deferred income taxes                  |  |              | 430,854  
|                                       |  |              |          
|Total Liabilities                      |  |              | 1,550,656
|                                       |  |              |          
|                                       |  |             
|Commitments and contingencies          |  |              |          
|                                       |  |             
|Members deficit:                      |  |              |          
|Contributed capital                    |  |              | (330,908 
|Retained earnings                      |  |              | 52,347   
|Accumulated other comprehensive loss   |  |              | (1,006   
|                                       |  |              |          
|Total Members Deficit                 |  |              | (279,567 
|                                       |  |              |          
|Total Liabilities and Members Deficit |  | $            | 1,271,089
|                                       |  |              |          



See accompanying
notes to financial statements.



F-2



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



STATEMENTS OF INCOME



|                                   |  | Fiscal Year EndedSeptember 30
|---------------------------------- |  | -----------------------------
|                                   |  | 2003                         
|Revenues:                          |  |                              
|Lease finance income               |  | $                            
|Interest income on restricted cash |  |                              
|                                   |  |                              
|                                   |  |                              
|                                   |  |                              
|                                   |  |                              
|Expenses:                          |  |                              
|Interest                           |  |                              
|General and administrative         |  |                              
|                                   |  |                              
|                                   |  |                              
|                                   |  |                              
|                                   |  |                              
|Income before taxes on income      |  |                              
|Taxes on income                    |  |                              
|                                   |  |                              
|Net income                         |  | $                            
|                                   |  |                              



See accompanying
notes to financial statements.



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



STATEMENTS OF CASH FLOWS



|                                                           |  | Fiscal Year Ended September 30 |          
|---------------------------------------------------------- |  | ------------------------------ | ---------
|                                                           |  | 2003                           |          
|Cash Flows from Operating Activities                       |  |                                |          
|Net income                                                 |  | $                              | 40,226   
|Additions (deductions) to reconcile net income to net cash |  |                                |          
|provided by operating activities:                          |  |                                |          
|Amortization                                               |  |                                | 1,563    
|Provision for income taxes                                 |  |                                | 22,628   
|Changes in operating assets and liabilities:               |  |                                |          
|Increase in accounts receivable                            |  |                                | (6,184   
|Increase in prepaid expenses and other assets              |  |                                | (4,524   
|Increase in accrued expenses                               |  |                                | 4,690    
|                                                           |  |                                |          
|Net cash provided by operating activities                  |  |                                | 58,399   
|                                                           |  |                                |          
|Cash Flows from Investing Activities                       |  |                                |          
|Investment in leases:                                      |  |                                |          
|Collections (net of financing income)                      |  |                                | 294,099  
|                                                           |  |                                |          
|Net cash provided by investing activities                  |  |                                | 294,099  
|                                                           |  |                                |          
|Cash Flows from Financing Activities                       |  |                                |          
|Proceeds from issuance of lease-backed notes               |  |                                | 852,085  
|Payments on lease-backed notes                             |  |                                | (309,746 
|Deposit to restricted cash                                 |  |                                | (25,065  
|Capital contributed from Sole Member                       |  |                                |          
|Capital distributed to Sole Member                         |  |                                | (869,772 
|                                                           |  |                                |          
|Net cash used in financing activities                      |  |                                | (352,498 
|                                                           |  |                                |          
|Net increase in cash                                       |  |                                |         
|Cash at beginning of year                                  |  |                                | 1        
|                                                           |  |                                |          
|Cash at end of year                                        |  | $                              | 1        
|                                                           |  |                                |          
|                                                           |  |                                |          
|Supplemental noncash financing activities:                 |  |                                |          
|Noncash capital contributions, net                         |  | $                              | 1,041,302
|                                                           |  |                                |          
|Interest paid                                              |  | $                              | 29,669   
|                                                           |  |                                |          



See accompanying
notes to financial statements.



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



STATEMENTS OF CHANGES IN MEMBERS DEFICIT



|                                                                               |  | Contributed Capital |          |   | Retained Earnings |   | Accumulated OtherComprehensiveLoss |  |   | TotalMembersDeficit |   |  | TotalComprehensiveIncome |         
|------------------------------------------------------------------------------ |  | ------------------- | -------- | - | ----------------- | - | ---------------------------------- |  | - | -------------------- | - |  | ------------------------ | --------
|                                                                               |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         
|Balance at September 30, 2001                                                  |  |                     |         |   |                   |   |                                   |  |   |                     |   |  |                          |        
|Net income                                                                     |  |                     |          |   |                   | $ | 12,121                             |  |   |                      |   |  | $                        | 12,121  
|Initial capital contribution by Sole Member                                    |  | $                   | 1        |   |                   |   |                                    |  |   |                      |   |  |                          | 1       
|Equipment leases contributed by Sole Member, net of deferred taxes of $268,238 |  |                     | 402,358  |   |                   |   |                                    |  |   |                      |   |  |                          | 402,358 
|Distributions to Sole Member                                                   |  |                     | (620,297 | ) |                   |   |                                    |  |   |                      |   |  |                          | (620,297
|Reversal of income tax liability (note 2)                                      |  |                     | 35,436   |   |                   |   |                                    |  |   |                      |   |  |                          | 35,436  
|                                                                               |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         
|Total comprehensive income                                                     |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         
|                                                                               |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         
|Balance at September 30, 2002                                                  |  |                     | (182,502 | ) |                   |   | 12,121                             |  |   |                      |   |  |                          | (170,381
|                                                                               |  |                     |          |   |                  
|Net income                                                                     |  |                     |          |   |                   |   | 40,226                             |  |   |                      |   |  |                          | 40,226  
|Equipment leases contributed by Sole Member, net of deferred taxes of $319,936 |  |                     | 568,774  |   |                   |   |                                    |  |   |                      |   |  |                          | 568,774 
|Distributions to Sole Member                                                   |  |                     | (869,772 | ) |                   |   |                                    |  |   |                      |   |  |                          | (869,772
|Reversal of income tax liability (note 2)                                      |  |                     | 152,592  |   |                   |   |                                    |  |   |                      |   |  |                          | 152,592 
|Loss on derivative instruments, net of taxes of $566                           |  |                     |          |   |                   |   |                                    |  | $ | (1,006               | ) |  |                          | (1,006  
|                                                                               |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         
|Total comprehensive income                                                     |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         
|                                                                               |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         
|Balance at September 30, 2003                                                  |  | $                   | (330,908 | ) |                   | $ | 52,347                             |  | $ | (1,006               | ) |  | $                        | (279,567
|                                                                               |  |                     |          |   |                   |   |                                    |  |   |                      |   |  |                          |         



See accompanying
notes to financial statements.



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



NOTES TO FINANCIAL STATEMENTS



1.    ORGANIZATION



IKON
Receivables Funding, LLC (the Company) is a special purpose Delaware limited liability company, all of the membership interests in which are held by IKON Receivables-2, LLC (the Sole Member), also a special purpose Delaware
limited liability company. All of the membership interests in the Sole Member are owned by IOS Capital, LLC (IOSC), a wholly-owned finance subsidiary of IKON Office Solutions, Inc. (IKON), a publicly traded company with
fiscal 2003 revenues of approximately $4.7 billion. IKON integrates imaging systems and services that help businesses manage document workflow and increase efficiency. IKON represents the industrys broadest portfolio of document management
services: outsourcing and professional services, on-site copy and mailroom management, fleet management, off-site digital printing solutions, and customized workflow and imaging application development. The Company was organized in the State of
Delaware on October 9, 2001 and is managed by IKON Receivables Funding, Inc. (the Manager).



The Company was organized to engage exclusively in the following business and financial activities: to purchase or acquire from IKON, or any subsidiary or
affiliate of IKON, any right to payment, whether constituting an account, chattel paper, instrument or general intangible, and certain related property (other than equipment) and rights (collectively, Finance Receivables), and hold,
sell, transfer, pledge or otherwise dispose of Finance Receivables or interests therein; to enter into any agreement related to any Finance Receivables that provides for the administration, servicing and collection of amounts due on such Finance
Receivables and any interest rate hedging arrangements in connection therewith; to distribute Finance Receivables or proceeds from Finance Receivables and any other income to its Sole Member; and to engage in any lawful act or activity and to
exercise any power that is incidental and is necessary or convenient to the foregoing and permitted under Delaware law.



The Company has issued the Series 2002-1 and 2003-1 lease-backed notes (collectively, the Notes) which are secured by a segregated pool of
assets (the Asset Pool) that includes a portfolio of chattel paper composed of leases, leases intended as security agreements and installment sales contracts acquired or originated by IOSC (the Leases), together with the
equipment financing portion of each periodic rental payment due pursuant to the terms of each series of Notes. The Leases, including the Companys security interest (which is limited to recoveries on non-performing Leases) in the underlying
equipment and other property related to the Leases (such equipment and property herein referred to as the Equipment), are referred to as Lease Receivables.



The Lease Receivables, including the Equipment, have been transferred to the Company and the Lease Receivables have been
pledged by the Company to the applicable indenture trustee (the Trustee) in accordance with the terms of the assignment and servicing agreement applicable to each series of Notes. The Notes are secured solely by the Asset Pool and have
no right, title or interest in the Equipment. The sole source of funds available for payment of the Notes are the Asset Pool and any applicable reserve account established in accordance with each applicable indenture and financial guarantee
insurance policy. The Trustee has no right, title, or interest in the residual values of any of the Equipment except to the extent of the Companys limited security interest with respect to recoveries on non-performing Leases.



Neither the Sole Member nor the Manager is liable for the debts, liabilities,
contracts or other obligations of the Company solely by reason of being the Sole Member or Manager of the Company.



The Companys organizational documents require it to operate in such a manner that it should not be consolidated in the bankruptcy estate of the Sole
Member, IOSC, or IKON, should any of these entities become subject to such a proceeding. The Company is legally separate from each of the foregoing entities, and the assets of the Company, including, without limitation, the Lease Receivables, are
not available to the creditors of the Sole Member, IOSC, or IKON.



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



NOTES TO FINANCIAL STATEMENTS(Continued)



2.    SIGNIFICANT ACCOUNTING POLICIES



Use of Estimates



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect amounts reported in the financial statements and notes. Actual results could differ from those estimates and assumptions.



Revenue Recognition



Lease finance income is recognized over the related lease term. Revenue for interest income on restricted cash is recognized
in the period earned.



Income Taxes



The Company is classified as a single-member limited liability corporation
and, as such, is disregarded as an entity separate from its owners for income tax purposes. Income taxes are reported in accordance with an informal tax sharing agreement with IKON. The income tax provision provided by the Company pursuant to this
agreement is on a separate return basis.



The net investment in
leases represents the uncollected contractual cash flow of the Leases that were contributed to the Company by the Sole Member in the form of contributed capital. The tax basis and related income tax benefits attributable to the Leases are retained
by the Sole Member. Therefore, the contribution of the Leases results in a deferred tax liability and is attributed to the differences between the book and tax basis of the net Leases outstanding as calculated by the Company pursuant to Statement of
Financial Accounting Standards (SFAS) 109, Accounting for Income Taxes. Because the Company is not obligated to reimburse the Sole Member for current income taxes, all reversals of the deferred tax liability to current income
taxes payable and any current income taxes payable are considered additional capital contributions from the Sole Member.



Financial Instruments



The Company uses interest rate swap agreements for purposes other than trading. Interest rate swap agreements are used by the Company to modify variable
rate obligations to fixed rate obligations, thereby reducing the exposure to market rate fluctuations. The interest rate swap agreements are designated as hedges, and effectiveness is determined by matching the principal balance and terms with that
specific obligation. Such an agreement involves the exchange of amounts based on fixed interest rates for amounts based on variable interest rates over the life of the agreement without an exchange of the notional amount upon which payments are
based. Gains and losses on terminations of interest rate swap agreements are deferred and amortized over the remaining term of the original contract life of the terminated swap agreement. In the event of early extinguishment of the obligation, any
realized or unrealized gain or loss from the swap would be recognized in income at the time of extinguishment.



The Company follows Statement of Financial Accounting Standards (SFAS) 133, as amended, which requires that all derivatives be recorded on the
balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in earnings or Other Comprehensive Income (Loss) (OCI) depending on the type of hedging instrument and the effectiveness of those
hedges.



All of the derivatives used by the Company as hedges
are highly effective as defined by SFAS 133 because all of the critical terms of the derivatives match those of the hedged item. All of the derivatives used by the Company have been designated as cash flow hedges at the time they were executed. All
derivatives are adjusted to their fair market values at the end of each quarter. Unrealized net gains and losses for cash flow hedges are recorded in OCI.



F-7



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



NOTES TO FINANCIAL STATEMENTS(Continued)



As of September 30, 2003, the Companys derivative was designated as a hedge. This interest rate
swap qualifies for evaluation using the short cut method for assessing effectiveness. As such, there is an assumption of no ineffectiveness. During the year ended September 30, 2003, unrealized net losses totaling $1,006, after taxes,
were recorded in OCI.



Restricted Cash



Restricted cash on the balance sheets represents the cash that has been
collected on the Leases that are pledged as collateral for the Notes. This cash must be segregated within two business days into a trust account and the cash is used to pay the principal and interest on the Notes as well as any associated
administrative expenses. The level of restricted cash is impacted from one period to the next by the volume of Leases pledged as collateral on the Notes and timing of collections on such Leases.



3.    CAPITAL CONTRIBUTIONS AND DISTRIBUTIONS



In fiscal 2003 and 2002, the Sole Member made non-cash capital contributions
to the Company of $1,041,302 and $706,032, respectively, of Leases and the reversal of income tax liability (see note 2). The Company was formed on October 9, 2001 and the Sole Member made an initial capital contribution of $1 to the Company on
March 5, 2002. During fiscal 2003 and 2002, the Company made capital distributions to the Sole Member of $869,772 and $620,297, respectively.



4.    SERVICING AGREEMENT



The Company has a servicing agreement with IOSC for which IOSC services the Leases and provides administrative services to the Company. The
servicing fee is calculated by multiplying 0.75% by the lesser of the discounted present value of the Leases or the outstanding amount of the Notes (see note 6). The servicing fee expense was $5,971 for the fiscal year ended September 30, 2003 and
$1,365 for the fiscal year ended September 30, 2002.



5.    INVESTMENT IN LEASES



At September 30, 2003, contractual maturities of finance lease receivables were as follows:



|                      |  | Net Leases |           |   | Residual |   |         | Investment in Leases | 
|--------------------- |  | ---------- | --------- | - | -------- | - | ------- | -------------------- | 
|                      |  |            |           |   |          |   |         |                      | 
|2004                  |  | $          | 463,328   |   |          | $ | 16,479  |                      | 
|2005                  |  |            | 385,793   |   |          |   | 32,275  |                      | 
|2006                  |  |            | 269,602   |   |          |   | 46,747  |                      | 
|2007                  |  |            | 128,977   |   |          |   | 53,280  |                      | 
|2008                  |  |            | 10,914    |   |          |   | 21,910  |                      | 
|2009                  |  |            | 56        |   |          |   | 29      |                      | 
|                      |  |            |           |   |          |   |         |                      | 
|                      |  | $          | 1,258,670 |   |          | $ | 170,720 |                      | 
|Less: Unearned income |  |            | (204,796  | ) |          |   | (27,778 | )                    | 
|                      |  |            |           |   |          |   |         |                      | 
|                      |  | $          | 1,053,874 |   |          | $ | 142,942 |                      | 
|                      |  |            |           |   |          |   |         |                      | 



Residual values
included in the investment in leases are paid by IKON at the end of the Lease. The equipment is then transferred to IKON, who is responsible for remarketing. IKON has no obligation or responsibility to make such payments at the end of the lease term
and, if any such amounts are paid by IKON, holders of the Notes have no right or claim to any such amounts.



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



NOTES TO FINANCIAL STATEMENTS(Continued)



6.    LEASE-BACKED NOTES



The Company has issued the Notes as described below:



|Series |  | Notes      |  | IssuanceDate |  | Principal Issuance Amount |           | Principal Amount Outstanding atSeptember 30, 2003 |   | Interest Rate |  |              | Stated Maturity Date
|------ |  | ---------- |  | ------------ |  | ------------------------- | --------- | ------------------------------------------------- | - | ------------- |  | ------------ | --------------------
|2002-1 |  | Class A-1  |  | 05/30/02     |  | $                         | 171,000   |                                                   |   |               |  | 2.044        | %                   
|       |  | Class A-2  |  | 05/30/02     |  |                           | 46,000    |                                                   |   |               |  | 2.91         | %                   
|       |  | Class A-3  |  | 05/30/02     |  |                           | 266,400   |                                                   | $ | 227,751       |  | 3.90         | %                   
|       |  | Class A-4  |  | 05/30/02     |  |                           | 151,400   |                                                   |   | 151,400       |  | 4.68         | %                   
|       |  |            |  |              |  |                           |           |                                                   |   |               |  |              |                     
|       |  |            |  |              |  |                          
|       |  |            |  | Sub-Total    |  |                           | 634,800   |                                                   |   | 379,151       |  |              |                     
|       |  |            |  |              |  |                           |           |                                                   |   |               |  |              |                     
|2003-1 |  | Class A-1  |  | 04/23/03     |  |                           | 253,200   |                                                   |   | 134,526       |  | 1.30813      | %                   
|       |  | Class A-2  |  | 04/23/03     |  |                           | 26,700    |                                                   |   | 26,700        |  | 1.68         | %                   
|       |  | Class A-3a |  | 04/23/03     |  |                           | 206,400   |                                                   |   | 206,400       |  | LIBOR + 0.24 | %                   
|       |  | Class A-3b |  | 04/23/03     |  |                           | 206,400   |                                                   |   | 206,400       |  | 2.33         | %                   
|       |  | Class A-4  |  | 04/23/03     |  |                           | 159,385   |                                                   |   | 159,385       |  | 3.27         | %                   
|       |  |            |  |              |  |                           |           |                                                   |   |               |  |              |                     
|       |  |            |  |              |  |                          
|       |  |            |  | Sub-Total    |  |                           | 852,085   |                                                   |   | 733,411       |  |              |                     
|       |  |            |  |              |  |                           |           |                                                   |   |               |  |              |                     
|       |  |            |  | Total        |  | $                         | 1,486,885 |                                                   | $ | 1,112,562     |  |              |                     
|       |  |            |  |              |  |                           |           |                                                   |   |               |  |              |                     



The Notes were issued
pursuant to certain indentures (the Indentures) between the Company, IOSC, and the Trustee. The Notes are secured by the Asset Pool that includes a portfolio of Leases acquired or originated by IOSC, together with the equipment financing
portion of each periodic rental payment due pursuant to the terms of each series of Notes.



The Lease Receivables, including the Equipment, have been transferred to the Company and the Lease Receivables have been pledged by the Company to the Trustee in accordance with the terms of the assignment and
servicing agreement applicable to each such series. The Notes are secured solely by the Asset Pool and have no right, title or interest in the Equipment. The sole source of funds available for payment of the Notes are the Asset Pool and any
applicable reserve account established in accordance with each applicable Indenture and financial guarantee insurance policy. The Trustee has no right, title, or interest in the residual values of any of the Equipment except to the extent of the
Companys limited security interest with respect to recoveries on non-performing Leases.



The Notes have certain credit enhancement features available to noteholders, including reserve accounts, overcollateralization accounts and noncancelable insurance policies from Ambac Assurance Corporation with
respect to the Notes. On each payment date, funds available from the collection of Lease Receivables will be paid to the noteholders in the order of their priority class.



The Notes bear interest from the related issuance date at the stated rates specified above. The variable rate 2003-1 Class
A-3a Notes have been fixed at 2.095% through an interest rate swap.



IOSC services the Leases and may delegate its servicing responsibilities to one or more sub-servicers, but such delegation does not relieve IOSC of its liabilities with respect thereto. IOSC retains possession of the Leases and related
files, and receives a monthly service fee from the Company for servicing the Leases.



As of September 30, 2003, the Company had $1,013,115 available under the $2,500,000 shelf registration statement.



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



NOTES TO FINANCIAL STATEMENTS(Continued)



Future maturities of the Notes, based on contractual maturities of the Leases for each of the
succeeding fiscal years, are as follows:







|     |  | 2002-1 Series Notes |         | 2003-1 Series Notes |   | Total  
|---- |  | ------------------- | ------- | ------------------- | - | -------
|     |  |                     |         |                     |   |        
|2004 |  | $                   | 168,835 |                     | $ | 268,444
|2005 |  |                     | 128,398 |                     |   | 226,286
|2006 |  |                     | 81,918  |                     |   | 162,345
|2007 |  |                     |         |                     |   | 76,336 
|     |  |                     |         |                     |   |        
|     |  | $                   | 379,151 |                     | $ | 733,411
|     |  |                     |         |                     |   |        



7.    INCOME
TAXES



The deferred tax asset balance of $566 on the
balance sheet at September 30, 2003 is related to SFAS 133. See notes 2 and 8 to the financial statements.



The components of the effective tax rate were as follows:





|                                    |  | Fiscal YearEndedSeptember 30 |  
|----------------------------------- |  | ---------------------------- | -
|                                    |  | 2003                         |  
|Taxes at federal statutory rate     |  | 35.0                         | %
|State taxes, net of federal benefit |  | 1.0                          | %
|                                    |  |                              |  
|Effective income tax rate           |  | 36.0                         | %
|                                    |  |                              |  



8.    DERIVATIVE FINANCIAL INSTRUMENTS



The Company incurs debt to fund the origination of Leases for IKON. The interest rates charged on the debt are determined based on current market conditions and include variable measures of interest rates such as
LIBOR. The Company monitors interest rates on debt in order to mitigate exposure to unfavorable variations as compared to the interest rate earned on the pledged Leases. The objective in managing this risk is to achieve fixed-rate financing at the
same time the Company establishes the rate to be received by the Company on the Leases. As a result, from time to time interest rate swaps are utilized to effectively fix the rate on variable rate debt, as opposed to a direct issuance of fixed rate
debt. The risk associated with the use of interest rate swaps is the possible inability of the counterparties to meet the terms of their contracts. The Company does not enter into interest rate swap agreements for trading purposes.



The following table presents, as of September 30, 2003, information regarding
the interest rate swap agreement to which we are a party: (i) the notional amount, (ii) the fixed interest rate payable by the Company, (iii) the variable interest rate payable to the Company by the counterparty under the agreement, (iv) the fair
value of the instrument, and (v) the maturity date of the agreement.



|September 30, 2003
|------------------
|Notional Amount   
|$206,400          



F-10



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##### Table of Contents

IKON RECEIVABLES FUNDING, LLC



NOTES TO FINANCIAL STATEMENTS(Continued)



9.    SUBSEQUENT EVENT



IKON entered into an asset purchase agreement (the Agreement), dated December 10, 2003, by and among IKON, IOSC
and General Electric Capital Corporation (GE), pursuant to which, among other things, GE will acquire certain assets and liabilities of IOSC, including, without limitation, IOSCs servicing functions, facilities, systems and
processes. As a condition to the consummation of the transactions contemplated by the Agreement, IKON and GE will enter into a program agreement (the Program Agreement), under which, among other things, GE will become the preferred
lease-financing source for IKONs customers in the United States and Canada. Under the terms of the Agreement, and subject to closing adjustments, IKON will receive approximately $1.5 billion of gross proceeds.



IOSC is currently a wholly-owned finance subsidiary of IKON. The Sole Member
is a special purpose Delaware limited liability company and is a wholly-owned direct subsidiary of IOSC, and the Company is a wholly-owned indirect subsidiary of IOSC held through the Sole Member.



Before the closing of the transaction with GE, IKON intends to merge IOSC
into IKON. As a result of the merger of IOSC into IKON, the Sole Member will become a direct, wholly-owned subsidiary of IKON, and the Sole Member will continue to hold the Company as a subsidiary. Immediately after the effectiveness of the merger,
IKON will sell certain former assets and liabilities of IOSC to GE or one of its affiliates. The Company will continue to be the issuer of the Notes. Following the closing of the transaction described above, the underlying Lease Receivables will be
serviced or sub-serviced by GE or one of its affiliates.



The
closing of the transaction is subject to execution of the Program Agreement relating to GEs relationship with IKON as its preferred lease-financing source, as well as execution of other agreements and customary conditions, including receipt of
certain third party consents. The transaction is expected to close in the second quarter of fiscal 2004.



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##### Table of Contents

SIGNATURES



Pursuant to the requirements of section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report on Form 10-K for the
fiscal year ended September 30, 2003 to be signed on its behalf by the undersigned, thereunto duly authorized.



|IKON RECEIVABLES FUNDING, LLC
|-----------------------------
|Date:                        
|                             
|By:                          
|                             



|    | 
|--- | 
|By: | 
|    | 
|    | 



Pursuant to the
requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below on December 29, 2003 by the following persons on behalf of the registrant and in the capacities indicated.



|Signatures                                |  | Title                                                   
|----------------------------------------- |  | --------------------------------------------------------
|                                          | 
|/s/    Russell S. SlackRussell S. Slack   |  | President, Director and Principal Executive Officer     
|                                          | 
|/s/    Harry G.
KozeeHarry G. Kozee       |  | Vice President, Director and Principal Financial Officer
|                                          | 
|/s/    Kathleen M.
BurnsKathleen M. Burns |  | Vice President, Director and Treasurer                  
|                                          | 
|Robert C. Campbell                        |  | Director                                                
|                                          | 
|Robert W. Grier                           |  | Director