IKON Receivables, LLC
FORM 10-K
September 30, 2002
As filed with the Securities and Exchange Commission on December 26, 2002
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, 2002 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 333-71073
_______________________________________________________
IKON RECEIVABLES, LLC
(Exact name of registrant as specified in its charter)
DELAWARE 23-2990188
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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 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 the 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]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [_] No [X]
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 |_|
Registered debt outstanding as of December 26, 2002 was $897,128,462.
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.
INDEX *
Page No.
--------
PART I
ITEM 1. BUSINESS 1
ITEM 2. PROPERTIES 1
ITEM 3. LEGAL PROCEEDINGS 1
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 1
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 2
ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 3
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 4
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE 4
PART III
ITEM 14.CONTROLS AND PROCEDURES 5
PART IV
ITEM 15.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K 5
*All amounts contained in this annual report on Form 10-K are in thousands
unless otherwise noted.
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, 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 recoup the full amount due on
the Leases (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 the 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 the Company's business segments and the anticipated benefits
of operational synergies related thereto; and the Company'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.
PART I
ITEM 1. Business
IKON Receivables, LLC (the "Company") is a special purpose Delaware
limited liability company, all of the membership interests in which are held by
IKON Receivables-1, LLC ("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 2002 revenues of
approximately $4.8 billion. IKON is a leading provider of products and services
that help businesses manage document workflow and increase efficiency. IKON
provides customers with total business solutions for every office, production
and outsourcing need, including copiers and printers, color solutions,
distributed printing, facilities management, imaging and legal document
solutions, as well as network design and consulting and e-business development.
The Company was organized in the State of Delaware on January 20, 1999 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, "Lease Receivables"),
and hold, sell, transfer, pledge or otherwise dispose of Lease Receivables or
interests therein; to enter into any agreement related to any Lease Receivables
that provides for the administration, servicing and collection of amounts due on
such Lease Receivables and any interest rate hedging arrangements in connection
therewith; to distribute Lease Receivables or proceeds from Lease 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 necessary or
convenient to the foregoing and permitted under Delaware law.
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 Registrant does not utilize any facilities. Actions related to
servicing and maintaining the Registrant's assets are performed by IOSC.
ITEM 3. Legal Proceedings
None.
PART II
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
There is currently no market for the Registrant's equity securities nor
is it anticipated that such a market will develop.
1
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.
The Company has issued Series 1999-1, 1999-2, 2000-1, 2000-2 and 2001-1
Lease-Backed Notes (collectively, the "Notes") as described below:
Principal
Amount
Principal Outstanding at Stated
Issuance September 30, Maturity
Series Notes Issuance Date Amount 2002 Interest Rate Date
------ ----- ------------- ------ ---- ------------- ----
1999-1 Class A-1 05/25/99 $ 304,474 5.11% June 2000
Class A-2 05/25/99 61,579 5.60% May 2005
Class A-3 05/25/99 304,127 $ 23,046 5.99% May 2005
Class A-4 05/25/99 81,462 81,462 6.23% May 2005
------- -------
Sub-Total 751,642 104,508
------- -------
1999-2 Class A-1 10/07/99 235,326 6.14125% October 2000
Class A-2 10/07/99 51,100 6.31% May 2001
Class A-3a 10/07/99 100,000 19,319 6.59% August 2003
Class A-3b 10/07/99 240,891 46,538 LIBOR + 0.36% August 2003
Class A-4 10/07/99 72,278 72,278 6.88% November 2005
------- -------
Sub-Total 699,595 138,135
------- -------
2000-1 Class A-1 06/02/00 130,000 6.99625% June 2001
Class A-2 06/02/00 54,000 7.51% March 2002
Class A-3 06/02/00 230,000 86,634 LIBOR + 0.19% March 2004
Class A-4 06/02/00 84,510 84,510 LIBOR + 0.23% September 2006
------- -------
Sub-Total 498,510 171,144
------- -------
2000-2 Class A-1 12/07/00 193,532 6.66125% December 2001
Class A-2 12/07/00 70,193 6.60% September 2002
Class A-3 12/07/00 290,800 192,557 LIBOR + 0.23% October 2004
Class A-4 12/07/00 79,906 79,906 LIBOR + 0.27% July 2007
------- -------
Sub-Total 634,431 272,463
------- -------
2001-1 Class A-1 06/28/01 168,000 3.73375% July 2002
Class A-2 06/28/01 41,000 4.16% March 2004
Class A-3 06/28/01 260,000 241,592 LIBOR + 0.23% January 2006
Class A-4 06/28/01 126,200 126,200 LIBOR + 0.26% October 2008
------- -------
Sub-Total 595,200 367,792
------- -------
Total $3,179,378 $1,054,042
========== ==========
The Notes were issued pursuant to certain indentures ("Indentures")
between the Company, IOSC, and certain Indenture trustees. The Notes are
collateralized by a pool of office equipment leases or contracts and related
assets (the "Leases") acquired or originated by IOSC (together with the
equipment financing portion of each periodic lease or rental payment due under
the Leases on or after the related indenture date) and all related casualty
payments, retainable deposits, and termination payments. Payments on the Notes
are made from payments on the Leases. The Notes have certain credit enhancement
features available to noteholders, including reserve accounts,
overcollateralization accounts and noncancelable insurance policies from Ambac
Assurance
2
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 1999-2 Class A-3b, 2000-1 Class A-3,
2000-1 Class A-4, 2000-2 Class A-3, 2000-2 Class A-4, 2001-1 Class A-3 and
2001-1 Class A-4 Notes have been fixed at 6.63%, 7.802%, 7.82%, 6.475%, 6.475%,
4.825% and 5.435%, respectively, through interest rate swaps.
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.
Restricted cash on the balance sheet represents the cash that has been
collected on the leases that are pledged as collateral for lease-backed 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 lease-backed 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 lease-backed notes and timing of collections on such leases.
Future maturities of the Notes, based on contractual maturities of the
Leases for each of the succeeding fiscal years, are as follows:
1999-1 1999-2 2000-1 2000-2 2001-1
Series Notes Series Notes Series Notes Series Notes Series Notes Total
----------------------------------------------------------------------------------------
2003 $ 104,508 $ 138,135 $ 99,682 $ 145,201 $ 168,106 $ 655,632
2004 71,462 127,262 129,148 327,872
2005 70,538 70,538
----------------------------------------------------------------------------------------
$ 104,508 $ 138,135 $ 171,144 $ 272,463 $ 367,792 $ 1,054,042
========================================================================================
During fiscal 2002, income generated from the Leases was $196,882, other
income earned was $1,758, while interest expense was $93,609 and administrative
expenses were $10,853. Principal collections on lease receivables during fiscal
2002 were $886,408, proceeds from lease-backed notes were $0 and the Company
repaid $743,347 of principal on the Notes. During fiscal 2001, income generated
from the Leases was $213,947, other income earned was $5,494, while interest
expense was $113,383 and administrative expenses were $11,806. Principal
collections on lease receivables during fiscal 2001 were $1,484,435, proceeds
from lease-backed notes were $1,226,761 and the Company repaid $699,883 of
principal on the Notes. The Company's portfolio of Leases has an average yield
of 10.6% at September 30, 2002, while the Company's weighted average interest
rate of its total debt cost during fiscal 2002 is 6.3%.
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
finance lease receivables. 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.
3
The following tables present, as of September 30, 2002 and 2001,
information regarding the interest rate swap agreements 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, 2002
- ----------------------------------------------------------------------------------------------------
Notional Amount Fixed Interest Rate Variable Interest Rate Fair Value Maturity Date
- ----------------------------------------------------------------------------------------------------
$ 272,463 6.475% LIBOR $ (13,671) July 2007
$ 241,592 4.825% LIBOR + 0.23% $ (6,002) January 2006
$ 86,634 7.802% LIBOR + 0.19% $ (2,536) March 2004
$ 46,538 6.270% LIBOR $ (314) August 2003
$ 126,200 5.435% LIBOR + 0.26% $ (8,383) October 2008
$ 84,510 7.820% LIBOR + 0.23% $ (7,281) September 2006
September 30, 2001
- ----------------------------------------------------------------------------------------------------
Notional Amount Fixed Interest Rate Variable Interest Rate Fair Value Maturity Date
- ----------------------------------------------------------------------------------------------------
$ 370,706 6.475% LIBOR $ (19,060) July 2007
$ 260,000 4.825% LIBOR + 0.23% $ (6,004) January 2006
$ 219,939 7.802% LIBOR + 0.19% $ (9,357) March 2004
$ 145,407 6.270% LIBOR $ (3,382) August 2003
$ 126,200 5.435% LIBOR + 0.26% $ (4,715) October 2008
$ 84,510 7.820% LIBOR + 0.23% $ (8,104) September 2006
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 comparative summarized unaudited quarterly
results for fiscal 2002 and 2001:
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
-----------------------------------------------------------------------
2002
Lease finance income $ 56,855 $ 52,610 $ 46,089 $ 41,328 $196,882
Interest expense 28,392 24,507 21,934 18,776 93,609
Net income before cumulative effect of
change in accounting principle 15,519 15,424 13,163 13,143 57,249
Net income (loss) 15,519 15,424 (830,589) 13,143 (786,503)
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
-----------------------------------------------------------------------
2001
Lease finance income $ 45,011 $ 53,587 $ 52,590 $ 62,759 $ 213,947
Interest expense 24,652 29,853 27,192 31,686 113,383
Net income 19,523 22,255 23,767 28,707 94,252
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
(No response to this item is required.)
4
PART III
ITEM 14. Controls and Procedures
(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 Accountants F-1
Balance Sheets at September 30, 2002 and 2001 F-2
Statements of Operations for Fiscal Years Ended September 30, 2002, 2001 and 2000 F-3
Statements of Cash Flows for Fiscal Years Ended September 30, 2002, 2001 and 2000 F-4
Statements of Changes in Member's (Deficit) Equity for Fiscal Years Ended September 30,
2002, 2001 and 2000 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 Certificate of Formation of IKON Receivables, LLC, filed as Exhibit 3.1
to the Company's Registration Statement on Form S-3 (File No. 333-71073)
is incorporated herein by reference.
3.2 Third Amended and Restated Limited Liability Company Agreement of IKON
Receivables, LLC, filed as Exhibit 3.3 to the Company's Form 8-K dated
June 16, 2001 is incorporated herein by reference.
4.1 Indenture, dated as of April 1, 1999 among the Company, Harris Trust
Savings Bank, as Trustee, and IOS Capital, Inc., as Servicer, filed as
Exhibit 4.1 to the Company's Form 8-K dated May 25, 1999 is incorporated
herein by reference.
4.2 Indenture, dated as of October 1, 1999 among the Company, Harris Trust
Savings Bank, as Trustee, and IOS Capital, Inc., as Servicer, filed as
Exhibit 4.1 to the Company's Form 8-K dated October 21, 1999 is
incorporated herein by reference.
4.3 Indenture, dated as of June 1, 2000 among the Company, Bank One, NA, as
Trustee, and IOS Capital Inc., as Servicer, filed as Exhibit 4.1 to the
Company's Form 8-K dated June 16, 2001 is incorporated herein by
reference.
4.4 Indenture, dated as of December 1, 2000 among the Company, The Chase
Manhattan Bank, as Trustee, and IOS Capital, Inc., as Servicer, filed as
Exhibit 4.1 to the Company's Form 8-K dated November 29, 2000 is
incorporated herein by reference.
5
4.5 Indenture, dated as of June 1, 2001, among the Company, SunTrust Bank, as
Trustee, and IOS Capital, Inc., as Servicer, filed as Exhibit 4.1 to the
Company's Form 8-K dated June 16, 2001 is incorporated herein by
reference.
10.1 Assignment and Servicing Agreement, dated as of April 1, 1999, among the
Company, IKON Receivables-1, LLC, and IOS Capital, Inc., as Originator
and Servicer, filed as Exhibit 10.1 to the Company's Form 8-K dated May
25, 1999 is incorporated herein by reference.
10.2 Assignment and Servicing Agreement, dated as of October 1, 1999, among
the Company, IKON Receivables-1, LLC, and IOS Capital, Inc., as
Originator and Servicer, filed as Exhibit 10.1 to the Company's Form 8-K
dated October 21, 1999 is incorporated herein by reference.
10.3 Assignment and Servicing Agreement, dated as of June 1, 2000, among the
Company, IKON Receivables-1, LLC, and IOS Capital, Inc., as Originator
and Servicer, filed as Exhibit 10.1 to the Company's Form 8-K dated June
16, 2001 is incorporated herein by reference.
10.4 Assignment and Servicing Agreement, dated as of December 1, 2000, among
the Company, IKON Receivables-1, LLC, and IOS Capital, Inc., as
Originator and Servicer, filed as Exhibit 10.1 to the Company's Form 8-K
dated November 29, 2000 is incorporated herein by reference.
10.5 Assignment and Servicing Agreement, dated as of June 1, 2001, among the
Company, IKON Receivables-1, LLC, and IOS Capital, Inc., as Originator
and Servicer, filed as Exhibit 10.1 to the Company's Form 8-K dated June
16, 2001 is incorporated herein by reference.
10.6 Indemnification Agreement, dated as of October 7, 1999, among Lehman
Brothers, Chase Securities Inc., Deutsche Bank Securities Inc., PNC
Capital Markets, Inc., as Underwriters, and Ambac Assurance Corporation,
as Insurer, filed as Exhibit 10.2 to the Company's Form 8-K dated October
21, 1999 is incorporated herein by reference.
10.7 Indemnification Agreement, dated as of May 25, 1999, among Lehman
Brothers, Chase Securities Inc., Deutsche Bank Securities Inc., PNC
Capital Markets, Inc., as Underwriters, and Ambac Assurance Corporation,
as Insurer, filed as Exhibit 10.2 to the Company's Form 8-K dated May 25,
1999 is incorporated herein by reference.
10.8 Indemnification Agreement, dated June 2, 2000, among Chase Securities
Inc., Banc of America Securities LLC, Deutsche Banc Alex. Brown, Lehman
Brothers Inc., and PNC Capital Markets, Inc., as Underwriters, and Ambac
Assurance Corporation, as Insurer, filed as Exhibit 10.2 to the Company's
Form 8-K dated June 16, 2001 is incorporated herein by reference.
10.9 Indemnification Agreement, dated December 7, 2000, among Chase
Securities, Inc., Banc of America Securities LLC, Deutsche Banc Alex.
Brown, Lehman Brothers, Inc. and PNC Capital Markets, Inc., as
Underwriters, and Ambac Assurance Corporation, as Insurer, filed as
Exhibit 10.2 to the Company's Form 8-K dated November 29, 2000 is
incorporated herein by reference.
10.10 Indemnification Agreement, dated June 28, 2001, among Deutsche Banc Alex.
Brown Inc., Banc of America Securities LLC, J. P. Morgan Securities Inc.,
Lehman Brothers Inc. and PNC Capital Markets, Inc., as Underwriters, and
Ambac Assurance Corporation, as Insurer, filed as Exhibit 10.2 to the
Company's Form 8-K dated June 16, 2001 is incorporated herein by
reference.
10.11 Insurance and Indemnity Agreement, dated as of May 25, 1999, among IOS
Capital, Inc., as Originator and Servicer, the Company, IKON
Receivables-1, LLC, Harris Trust and Savings Bank and Ambac Assurance
Corporation, as Insurer, filed as Exhibit 10.3 to the Company's Form 8-K
dated May 25, 1999 is incorporated herein by reference.
6
10.12 Insurance and Indemnity Agreement, dated as of October 7, 1999, among IOS
Capital, Inc., as Originator and Servicer, the Company, IKON
Receivables-1, LLC, Harris Trust and Savings Bank and Ambac Assurance
Corporation, as Insurer, filed as Exhibit 10.3 to the Company's Form 8-K
dated October 21,1999 is incorporated herein by reference.
10.13 Insurance and Indemnity Agreement, dated June 2, 2000, among IOS Capital,
Inc., as Originator and Servicer, the Company, IKON Receivables-1, LLC,
Bank One, N.A. and Ambac Assurance Corporation, as Insurer, filed as
Exhibit 10.3 to the Company's Form 8-K dated June 16, 2001 is
incorporated herein by reference.
10.14 Insurance and Indemnity Agreement, dated December 7, 2000, among IOS
Capital, Inc., as Originator and Servicer, the Company, IKON
Receivables-1, LLC, The Chase Manhattan Bank and Ambac Assurance
Corporation, as Insurer, filed as Exhibit 10.3 to the Company's Form 8-K
dated November 29, 2000 is incorporated herein by reference.
10.15 Insurance and Indemnity Agreement, dated June 28, 2001, among IOS
Capital, Inc., as Originator and Servicer, the Company, IKON
Receivables-1, LLC, SunTrust Bank and Ambac Assurance Corporation, as
Insurer, filed as Exhibit 10.3 to the Company's Form 8-K dated June 16,
2001 is incorporated herein by reference.
10.16 Schedule to ISDA Master Agreement (the "Schedule"), between The Chase
Manhattan Bank and the Issuer, Credit Support Annex to the Schedule,
between the Chase Manhattan Bank and the Issuer, Confirmation to the ISDA
Master Agreement for the Class A-3 Notes, between the Chase Manhattan
Bank and the Issuer, and Confirmation to the ISDA Master Agreement for
the Class A-4 Notes, between the Chase Manhattan Bank and the Company,
each dated as of June 2, 2000, filed as Exhibit 10.4 to the Company's
Form 8-K dated June 16, 2001 is incorporated herein by reference.
10.17 Schedule to ISDA Master Agreement (the "Schedule"), between Lehman
Brothers Financial Products, Inc. and the Issuer, Credit Support Annex to
the Schedule, between Lehman Brothers Financial Products, Inc. and the
Issuer, Confirmation to the ISDA Master Agreement for the Class 3b Notes,
between Lehman Brothers Financial Products, Inc. and the Company, each
dated as of October 7, 1999, filed as Exhibit 10.4 to the Company's Form
8-K dated October 21, 1999 is incorporated herein by reference.
10.18 Schedule to ISDA Master Agreement, between Lehman Brothers Special
Financing Inc. and the Issuer and Confirmation to the ISDA Master
Agreement, between Lehman Brothers Special Financing, Inc. and the
Company, each dated as of December 7, 2000, filed as Exhibit 10.4 to the
Company's Form 8-K dated November 29, 2000 is incorporated herein by
reference.
10.19 Schedule to ISDA Master Agreement, between Deutsche Bank AG, New York
Branch and the Issuer and Confirmations to the ISDA Master Agreement,
between Deutsche Bank AG, New York Branch and the Company, each dated as
of June 28, 2001, filed as Exhibit 10.4 to the Company's Form 8-K dated
November 29, 2000 is incorporated herein by reference.
12 Ratio of Earnings to Fixed Charges.
23 Consent of PricewaterhouseCoopers LLP
99.1 Certifications Pursuant to 18 U.S.C. Section 1850, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(c) Reports on Form 8-K
None.
7
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of IKON Office Solutions, Inc.
In our opinion, the accompanying balance sheets as of September 30, 2002 and
2001 and the related statements of operations, cash flows, changes in member's
(deficit) equity present fairly, in all material respects, the financial
position of IKON Receivables, LLC at September 30, 2002 and 2001, and the
results of its operations and its cash flows for each of the three years in the
period ended September 30, 2002 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.
As discussed in Notes 2 and 8 to the financial statements, the Company adopted
Statements of Financial Accounting Standards No. 133, as amended, Accounting For
Derivative Instruments and Hedging Activities, in Fiscal 2001.
As discussed in Notes 2 and 7 to the financial statements, the Company has
recorded a change in accounting for income taxes, which has been retroactively
adopted as of October 1, 2001.
/s/ PricewaterhouseCoopers LLP
Philadelphia, PA
December 2, 2002
F-1
IKON RECEIVABLES, LLC
BALANCE SHEETS
September 30,
Assets 2002 2001
----------- -----------
Investments in leases:
Finance lease receivables $ 1,518,632 $ 2,493,399
Less: Unearned income (202,312) (384,020)
----------- -----------
1,316,320 2,109,379
Cash 1 1
Restricted cash 83,084 126,861
Accounts receivable 39,788 67,144
Prepaid expenses and other assets 2,905 5,894
Deferred tax assets 15,353 20,416
----------- -----------
Total assets $ 1,457,451 $ 2,329,695
=========== ===========
Liabilities and Member's (Deficit) Equity
Liabilities:
Accrued expenses $ 41,188 $ 56,265
Lease-backed notes 1,054,042 1,797,389
Deferred income taxes 526,528
----------- -----------
Total liabilities 1,621,758 1,853,654
----------- -----------
Commitments and contingencies
Member's (deficit) equity:
Contributed capital 467,286 328,476
Retained (deficit) earnings (608,564) 177,939
Accumulated other comprehensive loss (23,029) (30,374)
----------- -----------
Total member's (deficit) equity (164,307) 476,041
----------- -----------
Total liabilities and member's (deficit) equity $ 1,457,451 $ 2,329,695
=========== ===========
See accompanying notes to financial statements.
F-2
IKON RECEIVABLES, LLC
STATEMENTS OF OPERATIONS
Fiscal Year Ended
September 30,
2002 2001 2000
--------- --------- ---------
Revenues:
Lease finance income $ 196,882 $ 213,947 $ 153,097
Other income 1,758 5,494 4,241
--------- --------- ---------
198,640 219,441 157,338
--------- --------- ---------
Expenses:
Interest 93,609 113,383 82,431
General and administrative 10,853 11,806 8,794
--------- --------- ---------
104,462 125,189 91,225
--------- --------- ---------
Income before income taxes and cumulative effect
of change in accounting principle 94,178 94,252 66,113
Provision for income taxes 36,929
--------- --------- ---------
Net income before cumulative effect of change in
accounting principle 57,249 94,252 66,113
Cumulative effect of change in accounting
principle (Note 7) (843,752)
--------- --------- ---------
Net (loss) income $(786,503) $ 94,252 $ 66,113
========= ========= =========
Proforma net income assuming the change in
accounting principle had been applied
retroactively:
Reported net income $ 94,252 $ 66,113
Proforma tax expense 37,701 26,445
--------- ----------
Proforma net income $ 56,551 $ 39,668
========= ==========
See accompanying notes to financial statements.
F-3
IKON RECEIVABLES, LLC
STATEMENTS OF CASH FLOWS
Fiscal Year Ended
September 30,
2002 2001 2000
----------- ----------- -----------
Cash flows from operating activities
Net (loss) income $ (786,503) $ 94,252 $ 66,113
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Amortization 3,160 3,477 2,763
Cumulative effect of change in accounting principle 843,752
Provision for deferred taxes 36,929
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 27,356 (13,520) (29,566)
Increase in prepaid expenses and other assets (171) (1,444) (1,523)
(Decrease) increase in accrued expenses (2,669) 1,000 2,332
----------- ----------- -----------
Net cash provided by operating activities 121,854 83,765 40,119
----------- ----------- -----------
Cash flows from investing activities
Investments in leases:
Collections, net of finance income earned 886,408 1,484,435 721,855
----------- ----------- -----------
Net cash provided by investing activities 886,408 1,484,435 721,855
----------- ----------- -----------
Cash flows from financing activities
Proceeds from lease-backed notes 1,226,761 1,194,849
Payments on lease-backed notes (743,347) (699,883) (553,412)
Decrease (increase) in restricted cash 43,777 (34,947) (62,289)
Capital distributed to Sole Member (308,692) (2,060,131) (1,367,815)
----------- ----------- -----------
Net cash used in financing activities (1,008,262) (1,568,200) (788,667)
----------- ----------- -----------
Decrease in cash (26,693)
Cash at beginning of year 1 1 26,694
----------- ----------- -----------
Cash at end of year $ 1 $ 1 $ 1
=========== =========== ===========
Supplemental financing activities:
Noncash capital contributions $ 484,841 $ 2,109,129 $ 1,498,169
=========== =========== ===========
Interest paid $ 85,935 $ 112,276 $ 80,210
=========== =========== ===========
See accompanying notes to financial statements.
F-4
IKON RECEIVABLES, LLC
STATEMENTS OF CHANGES IN MEMBER'S (DEFICIT) EQUITY
Accumulated Total
Retained Other Member's Total
Contributed Earnings Comprehensive Equity Comprehensive
Capital (Deficit) Loss (Deficit) Income (Loss)
-----------------------------------------------------------------------------
Balance at September 30, 1999 $ 149,124 $ 17,574 $ 166,698
Net income 66,113 66,113 $ 66,113
Equipment leases contributed by Sole
Member 1,498,169 1,498,169
Capital distributions (1,367,815) (1,367,815)
-----------
Total comprehensive income 66,113
------------------------------------------------------------ ===========
Balance at September 30, 2000 279,478 83,687 363,165
Net income 94,252 94,252 94,252
Equipment leases contributed by Sole
Member 2,109,129 2,109,129
Capital distributions (2,060,131) (2,060,131)
Cumulative effect of change in
accounting principle for derivative
and hedging activities (SFAS 133),
net of taxes of $2,314 $ (3,471) (3,471) (3,471)
Loss on derivative financial
instruments, net of taxes of $17,934 (26,903) (26,903) (26,903)
-----------
Total comprehensive income 63,878
------------------------------------------------------------ ===========
Balance at September 30, 2001 328,476 177,939 (30,374) 476,041
Net income before cumulative effect of
change in accounting principle 57,249 57,249 57,249
Cumulative effect of change in
accounting principle (Note 7) (843,752) (843,752) (843,752)
Equipment leases contributed by Sole
Member, net of deferred taxes of $37,339 56,010 56,010
Reversal of income tax liability (Note 7) 391,492 391,492
Capital distributions (308,692) (308,692)
Gain on derivative financial
instruments, net of taxes of $4,897 7,345 7,345 7,345
-----------
Total comprehensive loss $ (779,158)
------------------------------------------------------------ ===========
Balance at September 30, 2002 $ 467,286 $ (608,564) $ (23,029) $ (164,307)
============================================================
See accompanying notes to financial statements.
F-5
IKON RECEIVABLES, LLC
NOTES TO FINANCIAL STATEMENTS
1. Organization
IKON Receivables, LLC (the "Company") is a special purpose Delaware
limited liability company, all of the membership interests in which are held by
IKON Receivables-1, LLC ("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 2002 revenues of
approximately $4.8 billion. IKON is a leading provider of products and services
that help businesses manage document workflow and increase efficiency. IKON
provides customers with total business solutions for every office, production
and outsourcing need, including copiers and printers, color solutions,
distributed printing, facilities management, imaging and legal document
solutions, as well as network design and consulting and e-business development.
The Company was organized in the State of Delaware on January 20, 1999 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, "Lease Receivables"),
and hold, sell, transfer, pledge or otherwise dispose of Lease Receivables or
interests therein; to enter into any agreement related to any Lease Receivables
that provides for the administration, servicing and collection of amounts due on
such Lease Receivables and any interest rate hedging arrangements in connection
therewith; to distribute Lease Receivables or proceeds from Lease 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 necessary or
convenient to the foregoing and permitted under Delaware law.
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.
2. Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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
Finance income and rental income are recognized over the related lease
term. Revenue for other income is recognized in the period earned.
F-6
Income Taxes
The Company is classified as a single-member limited liability
corporation ("LLC") and, as such, is disregarded as an entity separate from its
owners for income tax purposes. The Company has become aware that the
predominant practice for single-member LLCs is to provide for income taxes in
their separate financial statements, and has concluded this is a more
informative presentation. On April 1, 2002, the Company changed its accounting
policy to a preferable method and began recording income taxes in accordance
with Statement of Financial Accounting Standards ("SFAS") 109, "Accounting for
Income Taxes." The Company and the Sole Member are included in the consolidated
tax return of IKON, and for purposes of applying SFAS 109, are allocated current
and deferred income taxes on a separate return basis. Currently
payable/receivable income taxes are settled in accordance with an informal tax
sharing agreement with IKON and 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 adopted SFAS 133, as amended by SFAS 138, "Accounting for
Derivative Instruments and Hedging Activities", on October 1, 2000. SFAS 133
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. In accordance with the
transition provisions of SFAS 133, the Company recorded a cumulative loss
adjustment to OCI of $3,471, after taxes, to recognize the fair value of its
derivatives as of the date of adoption.
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 of adoption of SFAS
133 or at the time they were executed, if later than October 1, 2000. 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.
As of September 30, 2002, 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 our 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 year ended
September 30, 2002, unrealized net gains totaling $7,345, after taxes, were
recorded in OCI.
Restricted Cash
Restricted cash on the balance sheet represents the cash that has been
collected on the leases that are pledged as collateral for lease-backed 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 lease-backed 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 lease-backed notes and timing of collections on such leases.
3. Capital Contributions
In fiscal 2002, 2001 and 2000, the Sole Member made non-cash capital
contributions to the Company of $484,841, $2,109,129 and $1,498,169,
respectively, of office equipment leases or contracts and related assets (the
"Leases") and the reversal of income tax liability (see note 7).
F-7
4. Servicing Agreement
The Company has a servicing agreement with IOSC pursuant to 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 performing leases or the outstanding amount of the lease-backed
notes (see Note 6). The servicing fee expense was $10,853, $11,806 and $8,794
for the fiscal years ended September 30, 2002, 2001 and 2000, respectively.
5. Investments in Leases
At September 30, 2002, contractual maturities of finance lease
receivables are as follows:
Net Investment
Leases Residual In Leases
-------------------------------------------------
2003 $ 462,700 $ 90,240 $ 552,940
2004 367,513 71,675 439,188
2005 249,965 48,750 298,715
2006 138,389 26,990 165,379
2007 51,848 10,112 61,960
2008 358 92 450
-------------------------------------------------
$ 1,270,773 $ 247,859 $ 1,518,632
Less unearned interest (169,295) (33,017) (202,312)
-------------------------------------------------
$ 1,101,478 $ 214,842 $ 1,316,320
=================================================
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.
F-8
6. Lease-Backed Notes
The Company has issued Series 1999-1, 1999-2, 2000-1, 2000-2 and 2001-1
Lease-Backed Notes (collectively, the "Notes") as described below:
Principal
Amount
Principal Outstanding at Stated
Issuance September 30, Maturity
Series Notes Issuance Date Amount 2002 Interest Rate Date
------ ----- ------------- ------ ---- ------------- ----
1999-1 Class A-1 05/25/99 $ 304,474 5.11% June 2000
Class A-2 05/25/99 61,579 5.60% May 2005
Class A-3 05/25/99 304,127 $ 23,046 5.99% May 2005
Class A-4 05/25/99 81,462 81,462 6.23% May 2005
------- -------
Sub-Total 751,642 104,508
------- -------
1999-2 Class A-1 10/07/99 235,326 6.14125% October 2000
Class A-2 10/07/99 51,100 6.31% May 2001
Class A-3a 10/07/99 100,000 19,319 6.59% August 2003
Class A-3b 10/07/99 240,891 46,538 LIBOR + 0.36% August 2003
Class A-4 10/07/99 72,278 72,278 6.88% November 2005
------- -------
Sub-Total 699,595 138,135
------- -------
2000-1 Class A-1 06/02/00 130,000 6.99625% June 2001
Class A-2 06/02/00 54,000 7.51% March 2002
Class A-3 06/02/00 230,000 86,634 LIBOR + 0.19% March 2004
Class A-4 06/02/00 84,510 84,510 LIBOR + 0.23% September 2006
------- -------
Sub-Total 498,510 171,144
------- -------
2000-2 Class A-1 12/07/00 193,532 6.66125% December 2001
Class A-2 12/07/00 70,193 6.60% September 2002
Class A-3 12/07/00 290,800 192,557 LIBOR + 0.23% October 2004
Class A-4 12/07/00 79,906 79,906 LIBOR + 0.27% July 2007
------- -------
Sub-Total 634,431 272,463
------- -------
2001-1 Class A-1 06/28/01 168,000 3.73375% July 2002
Class A-2 06/28/01 41,000 4.16% March 2004
Class A-3 06/28/01 260,000 241,592 LIBOR + 0.23% January 2006
Class A-4 06/28/01 126,200 126,200 LIBOR + 0.26% October 2008
------- -------
Sub-Total 595,200 367,792
------- -------
Total $3,179,378 $1,054,042
========== ==========
The Notes were issued pursuant to certain indentures ("Indentures")
between the Company, IOSC, and certain Indenture trustees. The Notes are
collateralized by a pool of office equipment leases or contracts and related
assets (the "Leases") acquired or originated by IOSC (together with the
equipment financing portion of each periodic lease or rental payment due under
the Leases on or after the related indenture date) and all related casualty
payments, retainable deposits, and termination payments. Payments on the Notes
are made from payments on the 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.
F-9
The Notes bear interest from the related issuance date at the stated
rates specified above. The variable rate 1999-2 Class A-3b, 2000-1 Class A-3,
2000-1 Class A-4, 2000-2 Class A-3, 2000-2 Class A-4, 2001-1 Class A-3 and
2001-1 Class A-4 Notes have been fixed at 6.63%, 7.802%, 7.82%, 6.475%, 6.475%,
4.825% and 5.435%, respectively, through interest rate swaps.
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.
Future maturities of the Notes, based on contractual maturities of the
Leases for each of the succeeding fiscal years, are as follows:
1999-1 1999-2 2000-1 2000-2 2001-1
Series Notes Series Notes Series Notes Series Notes Series Notes Total
----------------------------------------------------------------------------------------
2003 $ 104,508 $ 138,135 $ 99,682 $ 145,201 $ 168,106 $ 655,632
2004 71,462 127,262 129,148 327,872
2005 70,538 70,538
----------------------------------------------------------------------------------------
$ 104,508 $ 138,135 $ 171,144 $ 272,463 $ 367,792 $ 1,054,042
========================================================================================
7. Income Taxes
The Company is classified as a single-member LLC and, as such, is
disregarded as an entity separate from its owners for income tax purposes. The
Company has become aware that the predominant practice for single-member LLCs is
to provide for income taxes in their separate financial statements, and has
concluded that is a more informative presentation. On April 1, 2002, the Company
changed its accounting policy to a preferable method and began recording income
taxes in accordance with SFAS 109. The Company and the Sole Member are included
in the consolidated tax return of IKON, and for purposes of applying SFAS 109,
are allocated current and deferred income taxes on a separate return basis.
Currently payable/receivable income taxes are settled in accordance with an
informal tax sharing agreement with IKON and the Sole Member.
The change in accounting for income taxes has been retroactively adopted
as of October 1, 2001, the first day of the current fiscal year. The net
investments 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 effect of the
change in principle has resulted in a deferred tax liability of $843,752 and
$526,528 at October 1, 2001 and September 30, 2002, respectively. The related
deferred tax liability is attributed to the difference between the book and tax
basis of the net leases outstanding. Because under the informal tax-sharing
agreement 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 for the Company are expected to result in additional capital
contributions from the Sole Member at the time of the reversal.
The deferred tax asset balance of $15,353 on the balance sheet at
September 30, 2002 is related to SFAS 133. See notes 1 and 8 to the financial
statements.
The components of the effective income tax rate were as follows:
Fiscal Year Ended
September 30,
2002
-----------------
Taxes at federal statutory rate 35.0%
State taxes, net of federal benefit 4.2
-------
Effective income tax rate 39.2%
-------
F-10
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
finance lease receivables. 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 tables present, as of September 30, 2002 and 2001,
information regarding the interest rate swap agreements 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, 2002
Notional Amount Fixed Interest Rate Variable Interest Rate Fair Value Maturity Date
- ----------------------------------------------------------------------------------------------------
$ 272,463 6.475% LIBOR $ (13,671) July 2007
$ 241,592 4.825% LIBOR + 0.23% $ (6,002) January 2006
$ 86,634 7.802% LIBOR + 0.19% $ (2,536) March 2004
$ 46,538 6.270% LIBOR $ (314) August 2003
$ 126,200 5.435% LIBOR + 0.26% $ (8,383) October 2008
$ 84,510 7.820% LIBOR + 0.23% $ (7,281) September 2006
- ----------------------------------------------------------------------------------------------------
September 30, 2001
- ----------------------------------------------------------------------------------------------------
Notional Amount Fixed Interest Rate Variable Interest Rate Fair Value Maturity Date
- ----------------------------------------------------------------------------------------------------
$ 370,706 6.475% LIBOR $ (19,060) July 2007
$ 260,000 4.825% LIBOR + 0.23% $ (6,004) January 2006
$ 219,939 7.802% LIBOR + 0.19% $ (9,357) March 2004
$ 145,407 6.270% LIBOR $ (3,382) August 2003
$ 126,200 5.435% LIBOR + 0.26% $ (4,715) October 2008
$ 84,510 7.820% LIBOR + 0.23% $ (8,104) September 2006
F-11
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, 2002 to be signed on its behalf by the
undersigned, thereunto duly authorized.
IKON RECEIVABLES, LLC
Date: December 26, 2002
By: IKON RECEIVABLES FUNDING, INC.,
as Sole Member and Manager
By: /s/ Russell S. Slack
--------------------------------
Name: Russell S. Slack
Title: President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report on Form 10-K has been signed below on December 26, 2002 by the
following persons on behalf of the registrant and in the capacities indicated.
Signatures Title
---------- -----
/s/ Russell S. Slack President, Director and
- -------------------------------- Principal Executive Officer
Russell S. Slack
/s/ Harry G. Kozee Vice President, Director and
- -------------------------------- Principal Financial Officer
Harry G. Kozee
/s/ Kathleen M. Burns Vice President, Director and
- -------------------------------- Treasurer
Kathleen M. Burns
Director
- --------------------------------
Robert C. Campbell
Director
- --------------------------------
Robert W. Grier
CERTIFICATIONS
I, Russell S. Slack, President and Principal Executive Officer of IKON
Receivables, LLC, certify that:
1. I have reviewed this annual report on Form 10-K, and all reports on
Form 8-K containing distribution or servicing reports filed in respect
of periods included in the year covered by this annual report, of IKON
Receivables, LLC;
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by this annual
report;
3. Based on my knowledge, the servicing information required to be
provided to the trustee by the servicer under the pooling and servicing
agreement is included in these reports;
4. I am responsible for reviewing the activities performed by the
servicer under the pooling and servicing agreement and based upon the
review required under the pooling and servicing agreement, and except
as disclosed in the report, the servicer has fulfilled its obligations
under the servicing agreement; and
5. I have disclosed to the registrant's certified public accountants
all significant deficiencies relating to the servicer's compliance with
the minimum servicing standards in accordance with a review conducted
in compliance with the Uniform Single Attestation Program for Mortgage
Brokers or similar standard as set forth in the pooling and servicing
agreement.
Date: December 26, 2002
/s/ Russell S. Slack
Russell S. Slack
President and Principal Executive Officer
CERTIFICATIONS
I, Harry G. Kozee, Vice President - Finance, Principal Financial Officer, and
Principal Accounting Officer of IKON Receivables, LLC, certify that:
1. I have reviewed this annual report on Form 10-K, and all reports on
Form 8-K containing distribution or servicing reports filed in respect
of periods included in the year covered by this annual report, of IKON
Receivables, LLC;
2. Based on my knowledge, the information in these reports, taken as a
whole, does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not
misleading as of the last day of the period covered by this annual
report;
3. Based on my knowledge, the servicing information required to be
provided to the trustee by the servicer under the pooling and servicing
agreement is included in these reports;
4. I am responsible for reviewing the activities performed by the
servicer under the pooling and servicing agreement and based upon the
review required under the pooling and servicing agreement, and except
as disclosed in the report, the servicer has fulfilled its obligations
under the servicing agreement; and
5. I have disclosed to the registrant's certified public accountants
all significant deficiencies relating to the servicer's compliance with
the minimum servicing standards in accordance with a review conducted
in compliance with the Uniform Single Attestation Program for Mortgage
Brokers or similar standard as set forth in the pooling and servicing
agreement.
Date: December 26, 2002
/s/ Harry G. Kozee
Harry G. Kozee
Vice President - Finance, Principal Financial Officer,
and Principal Accounting Officer