IKN Ikon Office Solutions

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 11-K

(Mark One)

þ		Annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2007 or

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

Commission file number 1-5964

      A.  Full title of the plan and the address of the plan, if different from that of the issuer named below:

IKON OFFICE SOLUTIONS, INC. RETIREMENT SAVINGS PLAN

     B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:

IKON OFFICE SOLUTIONS, INC., 70 Valley Stream Parkway, Malvern, PA 19355

 

 

REQUIRED INFORMATION

a.		Financial Statements
1.		Audited Statements of Net Assets Available for Benefits — December 31, 2007 and 2006		2
2.		Audited Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2007 and 2006		3
3.		Notes to Financial Statements		4
4.		Supplemental Schedule
(a)		Schedule of Assets (Held at End of Year)
b.		Exhibits
		Exhibit 23(a) — Consent of Independent Registered Public Accounting Firm		11

IKON Office Solutions, Inc.
Retirement Savings Plan

Financial Statements and Supplemental Schedule
December 31, 2007 and 2006

IKON Office Solutions, Inc. Retirement Savings Plan
Index
December 31, 2007 and 2006

		Page(s)
Report of Independent Registered Public Accounting Firm			1
Financial Statements
Statements of Net Assets Available for Benefits as of December 31, 2007 and 2006			2
Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2007 and 2006			3
Notes to Financial Statements			4-10
Supplemental Schedule *
Schedule I — Schedule of Assets (Held at End of Year)			11

*		Other schedules required by Section 2520.103-10 of the Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

Report of Independent Registered Public Accounting Firm

To the Participants and Administrator of
IKON Office Solutions, Inc. Retirement Savings Plan

In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of IKON Office Solutions, Inc Retirement Savings Plan

(the “Plan”) at December 31, 2007 and 2006, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’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 the standards of the Public Company Accounting Oversight Board (United States). 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, 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.

Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
June 25, 2008

IKON Office Solutions, Inc. Retirement Savings Plan

Statements of Net Assets Available for Benefits
December 31, 2007 and 2006

		2007				2006
Assets
Investments, at fair value		$	738,287,006			$	746,418,518
Receivables:
Investment income receivable			426,185				454,095
Receivable for investments sold			607,780				487,613
Employer contributions receivable			5,265,152				5,248,764
Employee contributions receivable			2,614,325				1,719,352
Total receivables			8,913,442				7,909,824
Total assets			747,200,448				754,328,342
Liabilities
Accrued administrative expenses			288,742				247,722
Payable for investments purchased			545,268				181,855
Total liabilities			834,010				429,577
Net assets available for benefits at fair value			746,366,438				753,898,765
Adjustment from fair value to contract value for interest in a collective trust relating to fully benefit-responsive investment contracts			637,089				1,940,876
Net assets available for benefits		$	747,003,527			$	755,839,641

The accompanying notes are an integral part of these financial statements.

IKON Office Solutions, Inc. Retirement Savings Plan

Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2007 and 2006

		2007				2006
Additions
Investment (losses) income:
Net (depreciation) appreciation in fair value of investments		$	(58,880,696	)		$	117,283,669
Interest			7,578,451				5,280,080
Dividends			39,221,441				25,458,257
			(12,080,804	)			148,022,006
Contributions:
Employee			51,229,839				50,344,966
Employer			23,502,589				23,127,269
			74,732,428				73,472,235
Total additions			62,651,624				221,494,241
Deductions
Payment of benefits			69,155,631				71,552,534
Administrative expenses			2,332,107				2,534,002
Total deductions			71,487,738				74,086,536
Net (decrease) increase			(8,836,114	)			147,407,705
Net assets available for benefits
Beginning of year			755,839,641				608,431,936
End of year		$	747,003,527			$	755,839,641

The accompanying notes are an integral part of these financial statements.

IKON Office Solutions, Inc. Retirement Savings Plan

Notes to Financial Statements
December 31, 2007 and 2006

1.		Description of the Plan
		The following description of the IKON Office Solutions, Inc. Retirement Savings Plan (the “Plan”) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.
		General
		The Plan is a defined contribution plan covering all regular full-time and part-time nonunion employees, as defined by the Plan, of IKON Office Solutions, Inc. (the “Company”) and its domestic subsidiaries, which adopt the Plan.
		The IKON Office Solutions, Inc. Stock Fund is designated as an Employee Stock Ownership Plan (“ESOP”) under the provisions of the Internal Revenue Code. Accordingly, participants are allowed to elect to reinvest dividends in IKON common stock or receive a cash payment. Additionally, any dividends that are reinvested in IKON common stock are fully vested.
		The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
		Plan Administration
		The Plan is administered by the IKON Office Solutions, Inc. Retirement Plans Committee (the “Committee”). State Street Bank and Trust Company (the “Trustee”) is the trustee of the Plan and custodian of the Plan’s assets. The Committee and Trustee are appointed by the Board of Directors of the Company. Recordkeeping of the Plan is performed by Hewitt Associates LLC.
		Contributions
		Each year, participants may contribute up to 25% of their annual base pay plus commissions (“compensation”), as defined by the Plan, in multiples of 1%, except for certain highly compensated participants who may be subject to certain regulatory limitations. Participants may also contribute amounts representing rollovers from other qualified plans. The Company will contribute a percentage of compensation that a participant contributed to the plan based upon the hire date of the participant. Participants hired or rehired on or after July 1, 2004 receive an amount equal to 50% of their basic contributions. Any participant who was hired before July 1, 2004, applies the following matching formula based on years of service:

		Percentage of Basic
# Years of Matching		Contributions
Service		Matched
1-9			60	%
10-14			70	%
15-19			80	%
20-24			90	%
25-29			100	%
30+			125	%

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2007 and 2006

		The Company funds the matching contribution quarterly to participants employed or absent on qualified leave on the last day of the calendar quarter. There is a one-year eligibility waiting period for Company matching contributions for new employees.
		Participant Accounts
		Each participant’s account is credited with the participant’s contributions and an allocation of (a) the Company contributions and (b) Plan earnings; and each participant’s account is charged with an allocation of administrative expenses. Allocations are based on participant contributions or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
		Vesting
		Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the Company’s matching portion of their accounts plus actual earnings thereon is based on the following:

Years of Service		Vesting
Less than 2 years			0	%
2 years			25	%
3 years			50	%
4 years			75	%
5 years			100	%

		Participants are also fully vested in the Company’s matching portion of their accounts upon retirement age (62), position termination due to permanent shutdown of plant or department, total and permanent disability, or death. Pursuant to the ESOP designation, participants are fully vested in dividends on IKON common stock regardless of years of service.
		Investment Options
		Upon enrollment in the Plan, a participant may direct employee contributions in 1% increments in any of the following 19 investment options.

American Funds Group EuroPacific Growth Fund
Barclay’s Life Path Index Retirement Fund
Barclay’s Life Path Index 2010 Fund
Barclay’s Life Path Index 2020 Fund
Barclay’s Life Path Index 2030 Fund
Barclay’s Life Path Index 2040 Fund
Dodge & Cox Balanced Fund
Dodge & Cox Stock Fund
Fidelity Spartan International Index Fund
IKON Office Solutions, Inc. Common Stock Fund
INVESCO Stable Value Fund
Laudus Rosenberg US Small Cap Fund
PIMCO Total Return Fund
Vanguard PRIMECAP Fund
Vanguard Institutional Index Fund
Vanguard Strategic Equity Fund

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2007 and 2006

Vanguard Balanced Index Fund
Vanguard Total Bond Market Index Fund
Vanguard Total Stock Market Index Fund

		Effective September 28, 2007, the IKON Stock Fund was closed to additional investment and any reinvestment of any portion of participant accounts. The IKON Stock Fund is not open to new basic or supplemental contributions, catch-up contributions, rollover contributions, employer matching contributions or participant-directed transfers from other investment funds. Employees are permitted to transfer amounts out of the Fund at anytime in the future. The Fund is open to receive reinvested dividends and other investment income earned on shares of IKON common stock held in the participant’s account.
		Participant Loans
		Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balance. Loan terms generally may not exceed five years; however, loan terms may extend up to 15 years for the purchase of a primary residence. Loans are secured by the balance in the participant’s account and bear interest, which is set in the month the loan is made, at the prime lending rate as published in the Wall Street Journal on the last Wednesday of the prior month, plus 1%. Principal and interest are paid ratably through payroll deductions.
		Payment of Benefits
		Participants are entitled to receive a distribution equal to their vested account balances upon death, retirement, termination, or permanent disability. Participants may elect to receive benefits in either a lump-sum payment, periodic installments limited in duration by the provisions of the Plan, or by the purchase and delivery of a life annuity or qualified joint and survivor annuity contract. Participants under the age of 59-1/2 may make withdrawals from their accounts only from after-tax salary deferral contributions. Participants under the age of 59-1/2 who have participated in the Plan for at least five years may make withdrawals from their accounts derived from employer matching contributions and earnings thereon. Participants under the age of 59-1/2 who have not participated in the Plan for five years may make withdrawals of all or any portion of their vested interest derived from employer matching contributions, which have been held by the Plan for at least two full plan years. Any portion of vested assets may be withdrawn by participants in the case of personal financial hardship upon approval of the plan administrator. After reaching age 59-1/2 participants may make withdrawals of any portion of their vested assets at any time without regard to financial hardship. Participants who terminate their employment with a balance of $1,000 or less will receive a single sum payment. Participants who terminate their employment with a balance of less than $5,000 may receive a direct lump-sum payment or rollover their balance to an IRA or other eligible retirement plan. Participants under the age of 59-1/2 who terminate their employment with a balance greater than $5,000 may continue to maintain their account within the Plan, receive a direct lump-sum payment, or rollover their balance into an eligible retirement plan. Participants who take withdrawals before reaching age 59-1/2 may be subject to penalties and taxes.
		Forfeitures
		During the years ended December 31, 2007 and 2006, $289,062 and $313,559, respectively, of employer matching contributions were forfeited by terminated employees before those amounts became vested. Such forfeited amounts were used to reduce employer remittance of employer matching contributions. At December 31, 2007 and 2006, there was $431 and $10,208, respectively, of unapplied forfeited nonvested amounts.

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2007 and 2006

		Plan Expenses
		Expenses incurred in connection with the administration of the Plan are paid by the Plan, such as recordkeeping, trustee, administrative, and professional fees.
2.		Significant Accounting Policies
		Basis of Accounting
		The accompanying financial statements have been prepared on the accrual basis of accounting.
		Investment Valuation and Income Recognition
		The Plan’s investments are stated at fair value. Shares of registered investment companies are valued at net asset value. The IKON Stock Fund is valued at net unit value, which is based upon the quoted market price of common stock, and the value of cash and cash equivalents held for liquidity purposes. Participant loans are valued at the outstanding balance, which approximates fair value. Common/collective funds are valued at net unit value as determined by the Trustee.
		The Plan invests in a common collective trust (the INVESCO Stable Value Fund), which holds fully benefit responsive investment contracts. A common collective trust is a trust for a collective investment and reinvestment of assets contributed from employee benefit plans maintained by more than one employer or a controlled group of corporations that is maintained by a bank, trust company, or similar institution that is regulated, supervised, and subject to periodic examination by a state or federal agency. As required by the Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the “FSP”), the Statements of Net Assets Available for Benefits present the fair value of the investment contracts as well as the adjustment of the fully benefit responsive investment contracts from fair value to contract value. The Statements of Changes in Net Assets Available for Benefits are prepared on a contract value basis.
		Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
		Payment of Benefits
		Benefits are recorded when paid.
		Use of Estimates
		The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2007 and 2006

		Pending Accounting Changes
		In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (SFAS 157). The standard defines fair value, outlines a framework for measuring fair value, and details the required disclosures about fair value measurements. The standard is effective for fiscal years beginning after November 15, 2007. Plan management does not believe the adoption of FAS 157 will have a material impact on the financial statements.
3.		Investments
		The following investments represent 5% or more of the Plan’s net assets:

December 31, 2007
IKON Office Solutions, Inc. Common Stock Fund		$	144,925,216
INVESCO Stable Value Fund			90,375,689
American Funds Group EuroPacific Growth Fund			97,686,475
Dodge & Cox Stock Fund			70,731,214
Vanguard Strategic Equity Fund			55,449,017
Vanguard Institutional Index Fund			57,355,830
Dodge & Cox Balanced Fund			54,917,235
December 31, 2006
IKON Office Solutions, Inc. Common Stock Fund		$	225,160,167
INVESCO Stable Value Fund			88,735,003
American Funds Group EuroPacific Growth Fund			72,653,696
Dodge & Cox Stock Fund			72,173,532
Vanguard Strategic Equity Fund			56,807,430
Vanguard Institutional Index Fund			56,774,591
Dodge & Cox Balanced Fund			54,131,211
Laudus Rosenberg US Small Cap Fund			38,999,517

During the years ended December 31, 2007 and 2006, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) (depreciated) appreciated in value as follows:

		2007				2006
Registered investment companies		$	(15,081,797	)		$	28,199,060
Common stock			(43,798,899	)			89,084,609
		$	(58,880,696	)		$	117,283,669

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2007 and 2006

		Included in our State Street Bank & Trust Company Cash Fund we have unallocated funds related to a settlement that we received from a former investment option of the Plan, Pilgrim Baxter PBHG Growth Fund, of $1,537,020. Subsequent to year end, these funds were allocated on a pro rata basis to current participants during 2008 who had investments in the PBHG fund as of December 31, 2001.
4.		Related Party Transactions
		At December 31, 2007 and 2006, the Plan had an investment in the State Street Bank & Trust Company (SSB) Cash Fund of $4,503,732 and $3,814,100, respectively. SSB is the Trustee Custodian of the Plan. During 2007 and 2006 the Plan offered the IKON Office Solutions, Inc. Stock Fund as an investment option. Effective September 28, 2007 the IKON Stock Fund was closed to additional investments. The transactions in these investments are party-in-interest transactions, which are exempt from prohibited transaction rules.
		The Plan invests in Common Stock of the Company and transactions in the Common Stock are exempt related party transactions. During the years ended December 31, 2007 and 2006, the Plan purchased shares of the Common Stock having values of $2,012,062 and $1,839,599, respectively, and sold shares of the Common Stock having values of $38,463,779 and $31,980,377, respectively. Loans to participants also qualify as exempt party-in-interest transactions.
5.		Plan Termination
		Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.
6.		Differences Between Financial Statements and Form 5500
		The following is a reconciliation of net assets available for benefits per the financial statements to the Plan’s Form 5500:

		2007				2006
Net assets available for benefits per the financial statements		$	747,003,527			$	755,839,641
Adjustment from fair value to contract value for interest in collective trust relating to fully benefit-responsive investment contracts			(637,089	)			(1,940,876	)
Amounts allocated to withdrawing participants			(475,607	)			(280,457	)
Net assets available for benefits per Form 5500		$	745,890,831			$	753,618,308

The following is a reconciliation of benefits paid to participants for the year ended December 31, 2007 per the financial statements to the Form 5500:

Benefits paid to participants per the financial statements		$	69,155,631
Add: Amounts allocated to withdrawing participants at December 31, 2007			475,607
Less: Amounts allocated to withdrawing participants at December 31, 2006			(280,457	)
Benefits paid to participants per Form 5500		$	69,350,781

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2007 and 2006

		Amounts allocated to withdrawing participants are recorded on the Plan’s Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date.
		The following is a reconciliation of net depreciation in fair value for the year ended December 31, 2007 per the financial statements to the Form 5500:

Net investment loss per the financial statements		$	(12,080,804	)
Add: Adjustment from fair value to contract value at December 31, 2007			(637,089	)
Less: Adjustment from fair value to contract value at December 31, 2006			1,940,876
Net investment loss per Form 5500		$	(10,777,017	)

7.		Risks and Uncertainties
		The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits and participant account balances.
8.		Tax Status
		The Internal Revenue Service has determined and informed the Company by a letter dated September 20, 2002, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (“IRC”). The Plan has been amended since receiving the determination letter. The Company believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC.
9.		Subsequent Events
		As of January 1, 2008, the INVESCO National Trust Company (“INVESCO”) was replaced as the stable value manager with Galliard Capital Management, Inc. (“Galliard”). On February 1, 2008, Galliard gained full control of the assets under the stable value fund from Invesco.

IKON Office Solutions, Inc. Retirement Savings Plan Schedule H, Line 4i — Schedule of Assets (Held at End of Year) December 31, 2007		Schedule I EIN # 230334400

Identity of Issue		Investment Type		Cost**				Current Value
IKON Office Solutions, Inc. Common Stock Fund*		Common Stock						$	144,925,217
INVESCO Stable Value Fund		Common Collective Trust							90,375,689
American Funds Group EuroPacific Growth Fund		Registered Investment Company							97,686,475
Dodge & Cox Stock Fund		Registered Investment Company							70,731,214
Vanguard Strategic Equity Fund		Registered Investment Company							55,449,017
Vanguard Institutional Index Fund		Registered Investment Company							57,355,830
Dodge & Cox Balanced Fund		Registered Investment Company							54,917,235
Laudus Rosenberg US Small Cap Fund		Registered Investment Company							34,132,654
PIMCO Total Return Fund		Registered Investment Company							23,368,763
Vanguard PRIMECAP Fund		Registered Investment Company							25,727,117
Barclay’s Life Path Index Retirement Fund		Common Collective Trust							2,495,029
Barclay’s Life Path Index 2010 Fund		Common Collective Trust							3,062,350
Barclay’s Life Path Index 2020 Fund		Common Collective Trust							6,422,406
Barclay’s Life Path Index 2030 Fund		Common Collective Trust							7,085,810
Barclay’s Life Path Index 2040 Fund		Common Collective Trust							6,904,862
Fidelity Spartan Internaional Index Fund		Registered Investment Company							15,012,553
Vanguard Total Stock Market Index Fund		Registered Investment Company							4,517,344
Vanguard Balanced Index Fund		Registered Investment Company							11,375,096
Vanguard Total Bond Market Index Fund		Registered Investment Company							2,823,074
State Street Bank & Trust Company Cash Fund*		Interest Bearing Cash							4,503,732
Participant Loans		Interest rates ranging from 5.00% to 10.50% maturing between January 1, 2008 and January 1, 2023							19,415,539
								$	738,287,006

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed by the undersigned thereunto duly authorized.

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