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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)

[X]     Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2003 or

[   ]     Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from          to          .

Commission file number 333-71362

IKON Receivables Funding, LLC

(Exact name of registrant as specified in its charter)

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

Former name, former address and former fiscal year, if changed since last report:   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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).   Yes   [   ]      No  [X]

Registered debt outstanding as of August 12, 2003 was $1,189,334,925.

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

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IKON Receivables Funding, LLC

INDEX*

PART I.   FINANCIAL INFORMATION

PART II.   OTHER INFORMATION

SIGNATURES

*All amounts contained in this quarterly report on Form 10-Q are in thousands unless otherwise noted.

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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 assurances 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 IKON Office Solutions, Inc. (“IKON”) and IOS Capital, LLC (“IOSC”). These risks and uncertainties, which apply to the Company, IOSC and IKON, include, but are not limited to, risks and uncertainties relating to: 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); growth opportunities and increasing market share; productivity and infrastructure initiatives; earnings, revenue, cash flow, margin, and cost-savings projections; the effect of competitive pressures on equipment sales; expected savings and lower costs from productivity and infrastructure initiatives; developing and expanding strategic alliances and partnerships; the impact of e-commerce and e-procurement initiatives; the implementation of e-IKON; anticipated growth rates in the digital and color equipment and outsourcing industries; the effect of foreign currency exchange risk; the reorganization of IKON’s business segments and the anticipated benefits of operational synergies related thereto; and IKON’s ability to finance its current operations and its growth initiatives. 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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PART I.   FINANCIAL INFORMATION

Item 1.   Condensed Financial Statements

IKON Receivables Funding, LLC
Balance Sheets

See notes to condensed financial statements.

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IKON Receivables Funding, LLC
Statements of Income
(unaudited)

See notes to condensed financial statements.

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IKON Receivables Funding, LLC
Statements of Cash Flows
(unaudited)

See notes to condensed financial statements.

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IKON Receivables Funding, LLC
Notes to Condensed Financial Statements
(unaudited)

Note 1:   Basis of Presentation

The accompanying unaudited condensed financial statements of IKON Receivables Funding, LLC (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2002. Certain prior year amounts have been reclassified to conform with the current year presentation.

Note 2:   Capital Contributions

In fiscal 2003, IOSC made non-cash capital contributions to the Company of $666,237 of office equipment leases or contracts and related assets, net of deferred taxes, and the reversal of current income tax liability.

Note 3:   Lease-Backed Notes

On April 23, 2003, the Company issued Series 2003-1 Lease-Backed Notes (the “2003-1 Notes”) as described below:

The 2003-1 Notes are collateralized by a pool of office equipment leases or contracts and related assets and the payments on the 2003-1 Notes are made from payments received on the equipment leases. The Company repaid $194,984 of lease-backed notes during the nine months ended June 30, 2003.

In April 2003, the Company entered into a swap transaction to hedge the variable rate 2003-1 Class A-3a lease-backed note to a fixed rate of 2.095%. This hedge qualifies for evaluation using the "short cut" method of assessing effectiveness; accordingly, there is an assumption of no ineffectiveness.

Note 4:   Comprehensive Income

Total comprehensive income is as follows:

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Note 5:   Financial Instruments

As of June 30, 2003, all of the Company’s derivatives designated as hedges are interest rate swaps which qualify for evaluation using the “short cut” method for assessing effectiveness. As such, there is an assumption of no ineffectiveness. The Company uses interest rate swaps to fix the interest rates on its variable rate classes of lease-backed notes, which results in a lower cost of capital than if we had issued fixed rate notes. During the nine months ended June 30, 2003, unrealized losses totaling $1,327 after taxes, were recorded in accumulated other comprehensive loss.

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

Pursuant to General Instruction H(2)(a) of Form 10-Q, 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.

The Company was formed on October 10, 2001 and initiated its first debt issuance on May 22, 2002. Therefore, operating results and financial condition may not be comparable for each period.

Three Months Ended June 30, 2003
Compared to the Three Months Ended June 30, 2002

Lease finance income earned on the leases offsets interest expense on the lease-backed notes, amortization of debt issuance costs and the fees charged by IOSC for servicing the leases and providing administrative services to the Company. For the three months ended June 30, 2003 and 2002, income generated from the leases was $32,513 and $11,862, interest income on restricted cash was $43 and $32, while interest expense during the period was $9,292 and $2,259 and administrative expenses were $1,761 and $239, respectively. Collections on the lease receivables, net of financing income, were $93,381 and $26,871 and the Company repaid $97,799 and $16,746 of principal on the lease-backed notes for the three months ended June 30, 2003 and 2002, respectively. Taxes on income for the three months ended June 30, 2003 and 2002 were $6,981 and $3,758, respectively. The Company’s effective income tax rate was decreased from 40% to 36% during the quarter ended June 30, 2003. The changes described above are directly related to the collections on finance lease receivables, the paydown of the debt, and the issuance of new notes from June 30, 2002 to June 30, 2003.

Nine Months Ended June 30, 2003
Compared to the Nine Months Ended June 30, 2002

Lease finance income earned on the leases offsets interest expense on the lease-backed notes, amortization of debt issuance costs and the fees charged by IOSC for servicing the leases and providing administrative services to the Company. For the nine months ended June 30, 2003 and 2002, income generated from the leases was $64,685 and $11,862, interest income on restricted cash was $148 and $32, while interest expense during the period was $20,590 and $2,259 and administrative expenses were $3,746 and $239, respectively. Collections on the lease receivables, net of financing income, were $180,939 and $26,871 and the Company repaid $194,984 and $16,746 of principal on the lease-backed notes for the nine months ended June 30, 2003 and 2002, respectively. Taxes on income for the nine months ended June 30, 2003 and 2002 were $14,579 and $3,758, respectively. The Company’s effective income tax rate was 36% for the nine months ended June 30, 2003 and 40% for the nine months ended June 30, 2002. The changes described above are directly related to the collections on finance lease receivables and the paydown of the debt, and the issuance of new notes from June 30, 2002 to June 30, 2003.

Contractual Obligations

The following summarizes the Company’s significant contractual obligations and commitments as of June 30, 2003:

Payments on lease-backed notes generally are made from collections of our finance lease receivables. At June 30, 2003, lease-backed notes were $1,227,325 and net finance lease receivables were $1,300,068.

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On April 23, 2003, the Company issued Series 2003-1 Lease-Backed Notes as described below:

In April 2003, the Company entered into a swap transaction to hedge the variable rate 2003-1 Class A-3a lease-backed note to a fixed rate of 2.095%. This hedge qualifies for evaluation using the “short cut” method of assessing effectiveness; accordingly, there is an assumption of no ineffectiveness.

Item 4.   Controls and Procedures

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 Rules 13a-15(e) and under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. 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 (including its consolidated subsidiaries) required to be included in its reports filed or submitted under the Exchange Act.

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PART II.  OTHER INFORMATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. This report has also been signed by the undersigned in his capacity as the chief accounting officer of the Registrant.

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