<PAGE>
As filed with the Securities and Exchange Commission on November 21, 2000
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
(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, 2000 or
[_] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from to
FORM 10-K
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)
(912) 471-2300
(Registrant's telephone number, including area code)
----------------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Not Applicable
(Title of Class)
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 November 17, 2000 was $1,222,466,366.
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.
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
PART I
<S> <C>
ITEM 1. BUSINESS............................................................................................ 1
ITEM 2. PROPERTIES.......................................................................................... 1
ITEM 3. LEGAL PROCEEDINGS................................................................................... 1
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................. 1
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS........................... 1
ITEM 6. SELECTED FINANCIAL DATA............................................................................. 1
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............... 1
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................................... 4
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA......................................................... 4
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE................ 5
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................................................. 5
ITEM 11. EXECUTIVE COMPENSATION.............................................................................. 5
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...................................... 5
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................................................... 5
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.................................... 6
</TABLE>
<PAGE>
ITEM 1. BUSINESS
IKON Receivables, LLC (the "Company" or the "Registrant") is an indirect
wholly-owned bankruptcy-remote subsidiary of IOS Capital, Inc. ("IOS Capital")
which is a wholly-owned finance subsidiary of IKON Office Solutions, Inc.
("IKON"), a publicly traded office technology company with fiscal 2000 revenues
of $5.4 billion. The Registrant was formed solely for the purpose of acquiring
from IKON or any of its subsidiaries, from time to time, certain leases (the
"Leases") and any security interests in the equipment underlying the leases (the
"Equipment"), and pledging the Leases through the issuance of debt securities
(the "Notes"). As a bankruptcy-remote entity, the Registrant's operations are
restricted so that (a) it does not engage in business with, or incur liabilities
to, any other entity (other than the trustee on behalf of the holders of the
Notes) which may bring bankruptcy proceedings against the Registrant and (b) the
risk that it will be consolidated into the bankruptcy proceedings of any other
entity is diminished. 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. The Company was organized in the State of Delaware on January
20, 1999 and is managed by IKON Receivables Funding, Inc. (the "Manager").
ITEM 2. PROPERTIES
The Registrant does not utilize any facilities. Actions related to servicing
and maintaining the Registrant's assets are performed by IOS Capital.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The information called for by this item has been omitted pursuant to General
Instruction I(2)(c) of Form 10-K.
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.
ITEM 6. SELECTED FINANCIAL DATA
The information called for by this item has been omitted pursuant to General
Instruction I(2)(a).
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, and 2000-1 Lease-Backed Notes
as described below:
<PAGE>
<TABLE>
<CAPTION>
Principal Stated
Issuance Issuance Interest Maturity
Series Notes Date Amount Rate Date
------ ----- ---- ------ ---- ----
<S> <C> <C> <C> <C> <C>
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 5.99% May, 2005
Class A-4 05/25/99 81,462 6.23% May, 2005
---------
Sub-Total 751,642
=========
1999-2 Class A-1 10/07/99 235,326 6.14125% Oct, 2000
Class A-2 10/07/99 51,100 6.31% May, 2001
Class A-3a 10/07/99 100,000 6.59% Aug, 2003
Class A-3b 10/07/99 240,891 LIBOR + 0.36% Aug, 2003
Class A-4 10/07/99 72,278 6.88% Nov, 2005
---------
Sub-Total 699,595
=========
2000-1 Class A-1 06/02/00 130,000 6.99625% June, 2001
Class A-2 06/02/00 54,000 7.51000% March, 2002
Class A-3 06/02/00 230,000 LIBOR + 0.19% March, 2004
Class A-4 06/02/00 84,510 LIBOR + 0.23% Sept, 2006
---------
Sub-Total 498,510
=========
Grand Total 1,949,747
=========
</TABLE>
The Company issued aggregate principal amounts of Lease-Backed Notes;
$751,642 for 1999-1 Notes, $699,595 for 1999-2 Notes and $498,510 for 2000-1
Notes, known as the "Notes" on May 25, 1999, October 7, 1999, and June 2, 2000,
respectively. The Notes were issued pursuant to an Indenture between the
Company, IOS Capital, and Harris Trust and Savings Bank, as Indenture Trustee on
the 1999-1 Notes and the 1999-2 Notes, and Bank One Trust Company, as Indenture
Trustee on the 2000-1 Notes, dated as of April 1, 1999, October 1, 1999, and
June 1, 2000, respectively. On May 8, 2000 Harris Trust and Savings Bank became
Bank of New York. The Sole Member contributed a segregated pool of $819,572 for
the 1999-1 Notes, $809,556 for the 1999-2 Notes, and $575,761 for the 2000-1
Notes of office equipment leases or contracts and related assets (the "Asset
Pool") to the Company as an initial transfer of leases. The Notes are
collateralized solely by the Asset Pools, which include a portfolio of chattel
paper composed of leases, leases intended as security agreements and installment
sales contracts acquired or originated by IOS Capital (the "Leases") (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. The Notes have
certain credit enhancement features available to noteholders including reserve
accounts, overcollateralization accounts and noncancellable insurance policies
from Ambac Assurance Corporation with respect to the Notes.
Payments on the Notes are due on the fifteenth day of each month (or if
that is not a Business Day, the next succeeding Business Day), commencing on
June 15, 1999, November 15, 1999, and June 15, 2000, respectively. The Notes
bear interest from the related issuance date at the respective fixed per annum
interest rates specified above. With the exception of the 1999-2 Class A3b, 2000
-1 Class A3 and 2000-1 Class A4 Notes which are variable rate notes paying an
interest rate of one-month London Interbank Offered Rate ("LIBOR") plus 0.36%,
0.19%, and 0.23%, respectively (which have been fixed at 6.63%, 7.802%, 7.82%,
respectively, through interest rate swaps). The interest rate on the 1999-1
Notes and 1999-2 Notes are calculated on the basis of a year of 360 days
comprised of twelve 30-day months (except in the case of the 1999-1 Class A-1
Notes, the 1999-2 Class A-1 Notes and the 1999-2 Class A-3b Notes for which
interest will be calculated on the basis of a year of 360 days and the actual
number of days in the interest period) payable on the payment date. The interest
rate on the 2000-1 Notes is calculated on the basis of a year of 360 days and
the actual number of days in the interest period (except in the case of the
Class A-2 Notes, for which the interest will be calculated on the basis of a
year of 360 days comprised of twelve 30-day months and the actual number of days
in the interest period) payable on the payment date. On each payment date, to
the extent funds are available from the collection of the lease receivables,
principal payments will be made to noteholders in the following priority: (i) to
the Class A-1 noteholders only, until the
<PAGE>
outstanding principal amount on the Class A-1 Notes has been reduced to zero,
then (ii) to the Class A-2 noteholders only, until the outstanding principal
amount on the Class A-2 Notes has been reduced to zero, then (iii) to the Class
A-3 noteholders only, until the outstanding principal amount on the Class A-3
Notes has been reduced to zero, and then (iv) to the Class A-4 noteholders,
until the outstanding principal amount on the Class A-4 Notes has been reduced
to zero. Each class of Notes will be payable in full on the applicable stated
maturity date as indicated above. However, if all payments are made on the
Leases as scheduled, final payment on the Notes will be earlier than the stated
maturity dates. The Company may, on any payment date, redeem the Notes when the
total discounted lease balance is less than or equal to 10% of the total
discounted lease balance as of related Indenture date.
IOS Capital services the Leases pursuant to Assignment and Servicing
Agreements by and among IOS Capital, as Originator and Servicer, the Sole
Member, as Seller, and the Company, as Issuer. IOS Capital may delegate its
servicing responsibilities to one or more sub-servicers, but such delegation
does not relieve IOS Capital of its liabilities with respect thereto. IOS
Capital 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 leases
for each of the succeeding fiscal years are as follows (in thousands):
<TABLE>
<CAPTION>
1999-1 1999-2 2000-1
Series Series Series
Notes Notes Notes Total
----- ----- ----- -----
<S> <C> <C> <C> <C>
2001................................................ $ 185,517 $ 197,551 $ 139,879 $ 522,947
2002................................................ 134,297 143,174 131,100 408,571
2003................................................ 52,136 88,815 95,616 236,567
2004................................................ 0 20,961 72,679 93,640
2005................................................ 0 0 5,916 5,916
------- ------- ------- ---------
$ 371,950 $ 450,501 $ 445,190 $1,267,641
======= ======= ======= =========
</TABLE>
During fiscal 2000, income generated from the Asset Pool was $153,097,
other income earned was $4,241, while interest expense was $82,431 and
administrative expenses were $8,794. Principal collections on lease receivables
during fiscal 2000, were $721,855 and the Company repaid $553,412 of principal
on the Notes. For the period from April 6, 1999 (Inception) through September
30, 1999, income generated from the Asset Pool was $33,348, other income earned
was $501, while interest expense was $14,702 and administrative expenses were
$1,573. Principal collections on lease receivables for the period from April 6,
1999 (Inception) through September 30, 1999, were $115,825 and the Company
repaid $128,694 of principal on the Notes. The Company portfolio of leases has
an average yield of 10.6% at September 30, 2000, while the Company's weighted
average interest rate of its total debt cost during fiscal 2000 is 6.8%. This
rate differential, in addition to the overcollateralization of the lease
portfolio, gives rise to the 42% net income to revenue relationship. The
differences between income and expense year to year is due to increased activity
in the Company.
<PAGE>
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 the 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 fair value of the swaps at any particular time is determined by
calculating the difference between the contractual payments at the contract rate
and the prevailing market rate of the swap at such time, and discounting the
stream of payments at the appropriate market discount rate.
The following table presents, as of September 30, 2000, the following
information regarding the interest rate swap agreements to which we are a party:
(i) the notional amount of the agreement, (ii) the fixed interest rate to be
paid by the Company, (iii) the variable rate to be paid by the counterparty
under the agreement, (iv) the fair value of the instrument, and (v) the maturity
of the agreement.
<TABLE>
<CAPTION>
Notional Amount Fixed Interest Rate Variable Interest Rate Fair Value Maturity Date
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
240,891 6.6300% LIBOR + 36 bp 936 8/15/03
-----------------------------------------------------------------------------------------------------
230,000 7.8020% LIBOR + 19 bp (3,992) 3/15/04
-----------------------------------------------------------------------------------------------------
84,510 7.8200% LIBOR + 23bp (2,535) 9/15/06
-----------------------------------------------------------------------------------------------------
</TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of IKON Receivables, LLC are submitted herewith on
Pages F-1 through F-10 of this report.
Quarterly Data
The following table shows comparative summarized results for the fiscal
year ended September 30, 2000 and from the period April 6, 1999 (Inception)
through September 30, 1999.
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter Total
------------- ---------------- --------------- --------------- ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
2000
Lease finance income.......................... $ 38,740 $ 35,104 $ 36,581 $ 42,672 $ 153,097
Interest expense.............................. 19,871 18,793 19,534 24,233 82,431
Net income.................................... 17,687 15,141 16,095 17,190 66,113
First Quarter Second Quarter April 6,1999 Fourth Quarter Total
------------- ---------------- (Inception) to --------------- ------------
June 30, 1999
---------------
(in thousands)
1999
Lease finance income.......................... $ 0 $ 0 $ 13,031 $ 20,317 $ 33,348
Interest expense.............................. 0 0 4,530 10,172 14,702
Net income.................................... 0 0 7,935 9,639 17,574
</TABLE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information called for by this item has been omitted pursuant to General
Instruction I(2)(c) of Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information called for by this item has been omitted pursuant to General
Instruction I(2)(c) of Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information called for by this item has been omitted pursuant to General
Instruction I(2)(c) of Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See Item 1 hereof for information concerning the relationship between the
Company, IOS Capital, Inc. and IKON Receivables Funding, Inc.
Any additional information required by this item has been omitted pursuant to
General Instruction I(2)(c) of Form 10-K.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
(a) Financial Statements
Page
----
<S> <C>
Reports of Independent Acountants............................................................ F-1 & F-2
Balance Sheets at September 30, 2000 and 1999................................................ F-3
Statements of Income for the Fiscal Year Ended September 30, 2000 and from
April 6, 1999 (Inception) - September 30, 1999 F-4
Statements of Changes in Member's Equity for Fiscal Years Ended
September 30, 2000 and 1999................................................................ F-5
Statements of Cash Flows for the Fiscal Year Ended September 30, 2000 and from F-6
April 6, 1999 (Inception) - September 30, 1999
Notes to Financial Statements................................................................ F-7
</TABLE>
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 not applicable.
(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 Current Report
on Form 8-K dated June 16, 2000, 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 Current Report on 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 Current Report on 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 Current Report on Form 8-K dated June 16, 2000, is incorporated
herein by reference.
4.4 Certificate Guaranty Insurance Policy, dated May 25, 1999, issued and
delivered by Ambac Assurance Corporation, filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K dated May 25, 1999, is incorporated
herein by reference.
4.5 Certificate Guaranty Insurance Policy, dated October 7, 1999, issued and
delivered by Ambac Assurance Corporation, filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K dated October 21, 1999 is
incorporated herein by reference.
4.6 Certificate Guaranty Insurance Policy, dated June 2, 2000, issued and
delivered by Ambac Assurance Corporation, filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K dated June 16, 2000, 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 Current Report on
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 Current
Report on 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 Current
<PAGE>
Report on Form 8-K dated June 16, 2000, is incorporated herein by
reference.
10.4 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 Current Report on Form
8-K dated October 21,1999, is incorporated herein by reference.
10.5 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 Current Report on Form
8-K dated May 25, 1999, is incorporated herein by reference.
10.6 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 (the
"Underwriters"), and Ambac Assurance Corporation, as Insurer., filed as
Exhibit 10.2 to the Company's Current Report on Form 8-K dated June 16,
2000, is incorporated herein by reference.
10.7 Insurance and Indemnity Agreement, dated as of May 25, 1999, among IOS
Capital, Inc., as Originator and Servicer, the Company, IKON Receivables-
1, LLC, and Ambac Assurance Corporation, as Insurer, filed as Exhibit 10.3
to the Company's Current Report on Form 8-K dated May 25, 1999, is
incorporated herein by reference.
10.8 Insurance and Indemnity Agreement, dated as of October 7, 1999, among IOS
Capital, Inc., as Originator and Servicer, the Company, IKON Receivables-
1, LLC, and Ambac Assurance Corporation, as Insurer, filed as Exhibit 10.3
to the Company's Current Report on Form 8-K dated October 21, 1999, is
incorporated herein by reference.
10.9 Insurance and Indemnity Agreement, dated June 2, 2000, among IOS Capital,
Inc., as Originator and Servicer, the Company, IKON Receivables-1, LLC,
and Ambac Assurance Corporation, as Insurer., filed as Exhibit 10.3 to the
Company's Current Report on Form 8-K dated June 16, 2000, is incorporated
herein by reference.
10.10 Schedule to ISDA Master Agreement (the "Schedule"), between The Chase
Manhattan Bank and the Company, Credit Support Annex to the Schedule,
between the Chase Manhattan Bank and the Company, Confirmation to the ISDA
Master Agreement for the Class A-3 Notes, between the Chase Manhattan Bank
and the Company, 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 Current
Report on Form 8-K dated June 16, 2000, is incorporated herein by
reference.
10.11 Schedule to ISDA Master Agreement (the "Schedule"), between Lehman
Brothers Financial Products, Inc. and the Company, Credit Support Annex to
the Schedule, between Lehman Brothers Financial Products, Inc. and the
Company, 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
Current Report on Form 8-K dated October 21, 1999, is incorporated herein
by reference.
12 Ratio of Earnings to Fixed Charges
23.1 Consent of PriceWaterhouse Coopers LLP
23.2 Consent of Ernst & Young LLP
27 Financial Data Schedule
(c) Reports on Form 8-K
None
<PAGE>
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 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 Company's and/or IKON's future financial condition
and results. These risks and uncertainties include, but are not limited to,
factors which may affect the Company's ability to recoup the full amount due on
the 1999-1, 1999-2 and 2000-1 Leases (such as lessee defaults or factors
impeding recovery efforts), the continuation of the substitution of terminated
or defaulted leases which is currently done at IOS Capital's option, and risks
and uncertainties affecting the business of IOS Capital and/or IKON as set forth
in IOS Capital's and IKON's periodic reports filed with the Securities &
Exchange Commission, including, but not limited to, risks and uncertainties
relating to conducting operations in a competitive environment; delays,
difficulties, management transitions and employment issues associated with
consolidation of, and/or changes in business operations; managing the
integration of existing and acquired companies; risks and uncertainties
associated with existing or future vendor relationships; 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this Form 10-K for the period ended
September 30, 2000 to be signed on its behalf by the undersigned, thereunto duly
authorized.
IKON RECEIVABLES, LLC
Date: November 21, 2000
By: IKON RECEIVABLES FUNDING INC.,
as Sole Member and Initial Manager
By: /s/ Russell S. Slack
---------------------
Name: Russell S. Slack
Title: President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-K has been signed below on November 21, 2000 by the following persons on
behalf of the registrant and in the capacities indicated.
Signatures Title
---------- -----
/s/ Russell S. Slack President, Director and
----------------------------------------
Russell S. Slack Principal Executive Officer
/s/ Harry Kozee Vice President, Director and
----------------------------------------
Harry Kozee Principal Financial Officer
/s/ J. F. Quinn Vice President, Director and
----------------------------------------
J. F. Quinn Treasurer
Director
----------------------------------------
Robert C. Campbell
Director
----------------------------------------
Robert W. Grier
<PAGE>
To the Board of Directors and Shareholders, IKON Office Solutions, Inc.
In our opinion, the accompanying balance sheet as of September 30, 2000 and the
related statements of operations, changes in shareholders' equity and cash flows
present fairly, in all material respects, the financial position of IKON
Receivables LLC at September 30, 2000, and the results of its operations and its
cash flows for the year then ended 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 audit. We
conducted our audit 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 audit provides a reasonable basis for our opinion.
Philadelphia, Pennsylvania
November 13, 2000
F-1
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Board of Directors
IKON Office Solutions, Inc.
We have audited the accompanying balance sheet of IKON Receivables, LLC as of
September 30, 1999, and the related statements of income, changes in member's
equity, and cash flows for the period April 6, 1999 to September 30, 1999. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of IKON Receivables, LLC at
September 30, 1999, and the results of its operations and its cash flows for the
period April 6, 1999 to September 30, 1999, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
---------------------------
Ernst & Young LLP
Philadelphia, Pennsylvania
October 25, 1999
F-2
<PAGE>
IKON RECEIVABLES, LLC
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, September 30,
Assets 2000 1999
---- ----
<S> <C> <C>
Investments in leases (Note 5)
Finance lease receivables.................................................... $1,735,784 $ 827,842
Less: Unearned income........................................................ (251,349) (120,076)
---------------- ---------------
1,484,435 707,766
Cash.............................................................................. 1 26,694
Restricted cash (Note 2).......................................................... 91,914 29,625
Accounts receivable............................................................... 53,624 24,057
Prepaid expenses and other assets................................................. 5,059 3,045
---------------- ---------------
Total assets......................................................... $1,635,033 $ 791,187
================ ===============
Liabilities and Member's Equity
Liabilities:
Accounts payable and accrued expenses........................................ $ 1
Security Deposits............................................................ $ 466
Accrued interest............................................................. 3,761 1,540
Lease-backed notes (Note 6).................................................. 1,267,641 622,948
---------------- ---------------
Total liabilities.................................................... 1,271,868 624,489
Member's equity:
Contributed capital (Note 3)................................................. 279,478 149,124
Retained earnings............................................................ 83,687 17,574
---------------- ---------------
Total member's equity................................................ 363,165 166,698
---------------- ---------------
Total liabilities and member's equity................................ $1,635,033 $ 791,187
================ ===============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
IKON RECEIVABLES, LLC
STATEMENTS OF INCOME
(in thousands)
<TABLE>
<CAPTION>
Fiscal April 6, 1999
Year Ended (Inception) -
September 30, 2000 September 30, 1999
------------------ ------------------
<S> <C> <C>
Revenues:
Finance income........................................................ $ 153,097 $ 33,348
Other income.......................................................... 4,241 501
-------- -------
157,338 33,849
-------- -------
Expenses:
Interest expense (Note 6)............................................. 82,431 14,702
General and administrative expenses (Note 4).......................... 8,794 1,573
-------- -------
91,225 16,275
-------- -------
Net income.............................................................. $ 66,113 $ 17,574
========= ========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
IKON RECEIVABLES, LLC
STATEMENTS OF CHANGES IN MEMBER'S EQUITY
(in thousands)
<TABLE>
<CAPTION>
Contributed Retained
Capital Earnings Total
--------------- ---------- ------------
<S> <C> <C> <C>
Balance at April 6, 1999 (Inception)................................. $ 1 $ 1
Net income........................................................... $17,574 17,574
Capital contributions................................................ 823,591 823,591
Capital distributions................................................ (674,468) (674,468)
----------- ---------- -----------
Balance at September 30, 1999........................................ 149,124 17,574 166,698
Net income........................................................... 66,113 66,113
Capital contributions................................................ 1,498,169 1,498,169
Capital distributions................................................ (1,367,815) (1,367,815)
----------- ---------- -----------
Balance at September 30, 2000........................................ $ 279,478 $83,687 $ 363,165
=========== ======= ===========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
IKON RECEIVABLES, LLC
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
April 6, 1999
Fiscal Year Ended (Inception) -
September 30, 2000 September 30, 1999
----------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net income............................................................... $ 66,113 $ 17,574
Adjustments to reconcile net income to net cash used in operating
Activities:
Amortization........................................................... 2,763 726
Changes in operating assets and liabilities:
Accounts receivable................................................... (29,566) (24,057)
Prepaid expenses and other assets..................................... (1,523) (1,460)
Accounts payable and accrued expenses................................. 0 1
Accrued interest...................................................... 2,221 1,540
----------- ---------
Net cash provided by (used in) operating activities...................... 40,008 (5,676)
----------- ---------
Cash flows from investing activities
Investment in leases:
Collections (net of finance income earned)............................. 721,855 115,825
Security Deposits..................................................... 111
----------- ---------
Net cash provided by investing activities................................ 721,966 115,825
----------- ---------
Cash flows from financing activities
Proceeds from lease-backed notes....................................... 1,194,849 749,331
Payments on lease-backed notes......................................... (553,412) (128,694)
Deposit to restricted cash............................................. (62,289) (29,625)
Capital contributed by Sole Member..................................... 1
Capital distributed to Sole Member..................................... (1,367,815) (674,468)
----------- ---------
Net cash used in financing activities.................................... (788,667) (83,455)
----------- ---------
Cash at beginning of year................................................ 26,694
(Decrease)/Increase in cash.............................................. (26,693) 26,694
----------- ---------
Cash at end of year...................................................... $ 1 $ 26,694
=========== =========
Supplemental noncash financing activities:
Noncash capital contributions $ 1,498,169 $ 823,591
=========== =========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
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, Inc. ("IOS Capital"), a wholly owned finance subsidiary of IKON
Office Solutions, Inc. ("IKON"), a publicly traded office technology company
with fiscal 2000 revenues of $5.4 billion. 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 to enter into 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, IOS Capital, 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, IOS Capital,
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
Unearned lease finance income is amortized into revenue using the effective
interest method over the term of the lease agreements.
Income Taxes
As a limited liability company, the Company will be treated as a
disregarded entity for tax purposes. The Company, the Sole Member and IOS
Capital will be treated as a single entity for tax purposes. The Company's
income and losses are passed through to the Sole Member and, accordingly, no
provision for income taxes has been recorded.
F-7
<PAGE>
IRON RECEIVABLES, LLC
NOTES TO FINANCIAL STATEMENTS
2. Significant Accounting Policies - continued
Fair Value Disclosures
FASB Statement No. 107, "Disclosures about Fair Value of Financial
Instruments" (SFAS 107), requires disclosure of fair value information about
financial instruments, whether or not recognized in the balance sheet, for which
it is practicable to estimate that value. In cases where quoted market prices
are not available, fair values are based on estimates using present value or
other valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. SFAS 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements.
Restricted Cash
Cash related to the pledged 1999-1, 1999-2, and 2000-1 Leases is held in
segregated accounts pending distribution to the holders of the respective Notes
and is restricted in its use.
Pending Accounting Change (Unaudited)
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (SFAS) 133, "Accounting for Derivative Instruments
and Hedging Activities" which will be effective for IKON's fiscal 2001. This
standard, as amended, requires that all derivative instruments be recorded on
the balance sheet at their fair value and that changes in fair value be recorded
each period in current earnings or comprehensive income. IKON anticipates that
the adoption of SFAS 133 will result in the recording of a cumulative adjustment
as of October 1, 2000 for the change in accounting required by SFAS 133. This
adjustment is expected to increase current liabilities and other comprehensive
loss by $5,591 as of October 1, 2000. No significant effects on future net
income are expected as a result of adopting SFAS 133 because IKON's current
hedging instruments are considered to be highly effective.
F-8
<PAGE>
IKON RECEIVABLES, LLC
NOTES TO FINANCIAL STATEMENTS
(in thousands)
3. Capital Contributions
The Sole Member made an initial cash capital contribution of $1 to the
Company on April 6, 1999. Subsequently, the Sole Member contributed a segregated
pool of $819,572 for the 1999-1 Notes, $809,556 for the 1999-2 Notes, and
$579,097 for the 2000-1 Notes of office equipment leases or contracts and
related assets (the "Asset Pool") to the Company as an initial transfer of
leases. During the fiscal year 2000, an additional $190,674, $107,413, and
$10,773 of leases were added to the 1999-1, 1999-2, and 2000-1 Asset Pool as
substitution for $105,705, $82,984, and $10,654 that were cancelled or defaulted
during the fiscal year 2000 resulting in a net non-cash capital contribution of
$109,517. During the fiscal year 1999, and additional $45,941 of leases were
added to the 1999-1 Asset Pool as substitution for $41,922 that were cancelled
or defaulted during the fiscal year 1999, resulting in a net non-cash capital
contribution of $4,019.
4. Servicing Agreement
The Company has a servicing agreement with IOS Capital for which IOS
Capital services the Asset Pool 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 $8,794 for
the fiscal year ended September 30, 2000 and $1,573 for the period April 6, 1999
through September 30, 1999.
5. Investments in Leases
At September 30, 2000, contractual maturities of finance lease receivables
are as follows:
<TABLE>
<CAPTION>
Gross Net
----- ---
Leases Residual Leases
------ -------- ------
<S> <C> <C> <C>
2001.................................................................... $ 678,793 $ 75,111 $ 603,682
2002.................................................................... 533,473 59,031 474,442
2003.................................................................... 334,641 37,029 297,612
2004.................................................................... 159,967 17,701 142,266
2005.................................................................... 28,910 3,199 25,711
------ ----- ------
$1,735,784 $192,071 $1,543,713
Less unearned interest.................................................. (251,349) (27,813) (223,536)
------- ------ -------
$1,484,435 $164,258 $1,320,177
========== ======== ==========
</TABLE>
Ikon is responsible for the remarketing of equipment.
F-9
<PAGE>
6. Lease-Backed Notes
The Company has issued Series 1999-1, 1999-2, and 2000-1 Lease-Backed Notes
as described below:
<TABLE>
<CAPTION>
Principal Stated
Issuance Issuance Interest Maturity
Series Notes Date Amount Rate Date
------ ----- ---- ------ ---- --------
<S> <C> <C> <C> <C> <C>
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 5.99% May, 2005
Class A-4 05/25/99 81,462 6.23% May, 2005
Sub-Total ---------
751,642
=========
1999-2 Class A-1 10/07/99 235,326 6.14125% Oct, 2000
Class A-2 10/07/99 51,100 6.31% May, 2001
Class A-3a 10/07/99 100,000 6.59% Aug, 2003
Class A-3b 10/07/99 240,891 LIBOR + 0.36% Aug, 2003
Class A-4 10/07/99 72,278 6.88% Nov, 2005
---------
Sub-Total 699,595
=========
2000-1 Class A-1 06/02/00 130,000 6.99625% June, 2001
Class A-2 06/02/00 54,000 7.51000% March, 2002
Class A-3 06/02/00 230,000 LIBOR + 0.19% March, 2004
Class A-4 06/02/00 84,510 LIBOR + 0.23% Sept, 2006
---------
Sub-Total 498,510
=========
Grand Total 1,949,747
=========
</TABLE>
The Company issued aggregate principal amounts of Leased-Back Notes;
$751,642 for 1999-1 Notes, $699,595 for 1999-2 Notes and $498,510 for 2000-1
Notes, known as the "Notes" on May 25, 1999, October 7, 1999, and June 2, 2000,
respectively. The Notes were issued pursuant to an Indenture between the
Company, IOS Capital, and Harris Trust and Savings Bank, as Indenture Trustee on
the 1999-1 Notes and the 1999-2 Notes, and Bank One Trust Company, as Indenture
Trustee on the 2000-1 Notes, dated as of April 1, 1999, October 1, 1999, and
June 1, 2000, respectively. On May 8, 2000 Harris Trust and Savings Bank became
Bank of New York. The Sole Member contributed a segregated pool of $819,572 for
the 1999-1 Notes, $809,556 for the 1999-2 Notes, and $575,761 for the 2000-1
Notes of office equipment leases or contracts and related assets (the "Asset
Pool") to the Company as an initial transfer of leases. The Notes are
collateralized solely by the Asset Pools, which include a portfolio of chattel
paper composed of leases, leases intended as security agreements and installment
sales contracts acquired or originated by IOS Capital (the "Leases") (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. The Notes have
certain credit enhancement features available to noteholders including reserve
accounts, overcollateralization accounts and noncancellable insurance policies
from Ambac Assurance Corporation with respect to the Notes.
F-10
<PAGE>
Payments on the Notes are due on the fifteenth day of each month (or if
that is not a Business Day, the next succeeding Business Day), commencing on
June 15, 1999, November 15, 1999, and June 15, 2000, respectively. The Notes
bear interest from the related issuance date at the respective fixed per annum
interest rates specified above. With the exception of the 1999-2 Class A3b, 2000
-1 Class A3 and 2000-1 Class A4 Notes which are variable rate notes paying
interest rate of one-month LIBOR plus 0.36%, 0.19%, and 0.23%, respectively
(which have been fixed at 6.63%, 7.802%, 7.82%, respectively, through an
interest rate swap). The interest rate on the 1999-1 Notes and 1999-2 Notes are
calculated on the basis of a year of 360 days comprised of twelve 30-day months
(except in the case of the 1999-1 Class A-1 Notes, the 1999-2 Class A-1 Notes
and the 1999-2 Class A-3b Notes for which interest will be calculated on the
basis of a year of 360 days and the actual number of days in the interest
period) payable on the payment date. The interest rate on the 2000-1 Notes is
calculated on the basis of a year of 360 days and the actual number of days in
the interest period (except in the case of the Class A-2 Notes, for which the
interest will be calculated on the basis of a year of 360 days comprised of
twelve 30-day months and the actual number of days in the interest period)
payable on the payment date. On each payment date, to the extent funds are
available therefore from the collection of the lease receivables, principal
payments will be made to noteholders in the following priority: (i) to the Class
A-1 noteholders only, until the outstanding principal amount on the Class A-1
Notes has been reduced to zero, then (ii) to the Class A-2 noteholders only,
until the outstanding principal amount on the Class A-2 Notes has been reduced
to zero, then (iii) to the Class A-3 noteholders only, until the outstanding
principal amount on the Class A-3 Notes has been reduced to zero, and then (iv)
to the Class A-4 noteholders, until the outstanding principal amount on the
Class A-4 Notes has been reduced to zero. Each class of Notes will be payable in
full on the applicable stated maturity date as indicated above. However, if all
payments are made on the Leases as scheduled, final payment on the Notes will be
earlier than the stated maturity dates. The Company may, on any payment date,
redeem the Notes when the total discounted lease balance is less than or equal
to 10% of the total discounted lease balance as of related Indenture date.
IOS Capital services the Leases pursuant to Assignment and Servicing
Agreements by and among IOS Capital, as Originator and Servicer, the Sole
Member, as Seller, and the Company, as Issuer. IOS Capital may delegate its
servicing responsibilities to one or more sub-servicers, but such delegation
does not relieve IOS Capital of its liabilities with respect thereto. IOS
Capital 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 leases
for each of the succeeding fiscal years are as follows (in thousands):
<TABLE>
<CAPTION>
1999-1 1999-2 2000-1
Series Series Series
Notes Notes Notes Total
----- ----- ----- -----
<S> <C> <C> <C> <C>
2001................................................ $ 185,517 $ 197,551 $ 139,879 $ 522,947
2002................................................ 134,297 143,174 131,100 408,571
2003................................................ 52,136 88,815 95,616 236,567
2004................................................ 20,961 72,679 93,640
2005................................................ 5,916 5,916
------- ------- ------- ---------
$ 371,950 $ 450,501 $ 445,190 $1,267,641
======= ======= ======= =========
</TABLE>
F-11
<PAGE>
7. 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 the 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 fair value of the swaps at any particular time is determined by
calculating the difference between the contractual payments at the contract rate
and the prevailing market rate of the swap at such time, and discounting the
stream of payments at the appropriate market discount rate.
The following table presents, as of September 30, 2000, the following
information regarding the interest rate swap agreements to which we are a party:
(i) the notional amount of the agreement, (ii) the fixed interest rate to be
paid by the Company, (iii) the variable rate to be paid by the counterparty
under the agreement, (iv) the fair value of the instrument, and (v) the maturity
of the agreement.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Notional Amount Fixed Interest Rate Variable Interest Rate Fair Value Maturity Date
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------
240,891 6.6300% LIBOR + 36 bp 936 8/15/03
-----------------------------------------------------------------------------------------------------
230,000 7.8020% LIBOR + 19 bp (3,992) 3/15/04
-----------------------------------------------------------------------------------------------------
84,510 7.8200% LIBOR + 23bp (2,535) 9/15/06
-----------------------------------------------------------------------------------------------------
</TABLE>
F-12
