Ikon Office Solutions (IKN) 11-K Annual report of employee stock purchases

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, 2005 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, 2005 and 2004
2.	Audited Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2005 and 2004
3.	Notes to Financial Statements
4.	Supplemental Schedule
(a)	Schedule of Assets (Held at End of Year)
b.	Exhibits
	Exhibit 23(a) — Consent of Independent Registered Public Accounting Firm

IKON Office Solutions, Inc.
Retirement Savings Plan
Financial Statements and Supplemental Schedule
December 31, 2005 and 2004

IKON Office Solutions, Inc. Retirement Savings Plan
Index
December 31, 2005 and 2004

	Page(s)
Report of Independent Registered Public Accounting Firm		1
Financial Statements
Statements of Net Assets Available for Benefits as of December 31, 2005 and 2004		2
Statements of Changes in Net Assets Available for Benefits for the years ended December 31, 2005 and 2004		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 the IKON Office Solutions, Inc. Retirement Savings Plan (the “Plan”) at December 31, 2005 and 2004, and the changes in net assets available for benefits for the years then ended in conformity with the 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.

PricewaterhouseCoopers LLP

Philadelphia, Pennsylvania
June 15, 2006

1

IKON Office Solutions, Inc. Retirement Savings Plan

Statements of Net Assets Available for Benefits
December 31, 2005 and 2004

	2005		2004
Assets
Investments, at fair value	$	601,464,365	$	608,256,659
Receivables:
Investment income receivable		406,824		345,471
Receivable for investments sold		1,132,947		864,122
Employer contributions receivable		3,781,423		3,819,524
Employee contributions receivable		2,175,293		1,732,019
Total receivables		7,496,487		6,761,136
Total assets		608,960,852		615,017,795
Liabilities
Accrued administrative expenses		258,466		128,719
Payable for investments purchased		270,450		297,340
Total liabilities		528,916		426,059
Net assets available for benefits	$	608,431,936	$	614,591,736

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

2

IKON Office Solutions, Inc. Retirement Savings Plan

Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2005 and 2004

	2005			2004
Additions
Investment income:
Net (depreciation) appreciation in fair value of investments	$	(15,350,625	)	$	15,761,050
Interest		4,588,376			4,301,442
Dividends		19,132,470			14,184,388
		8,370,221			34,246,880
Contributions:
Participant		50,657,544			53,973,707
Employer		16,695,192			16,980,071
		67,352,736			70,953,778
Total additions		75,722,957			105,200,658
Deductions
Payment of benefits		79,522,883			67,901,781
Administrative expenses		2,359,874			1,945,243
Total deductions		81,882,757			69,847,024
Net (decrease) increase		(6,159,800	)		35,353,634
Net assets available for benefits
Beginning of year		614,591,736			579,238,102
End of year	$	608,431,936		$	614,591,736

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

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IKON Office Solutions, Inc. Retirement Savings Plan

Notes to Financial Statements
December 31, 2005 and 2004

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. During 2004 and 2005, the Company contributed an amount equal to 50% of the first 6% of the compensation that a participant contributed to the Plan. Effective January 1, 2006, an amended matching formula will apply to any participant who was hired before July 1, 2004 and does not terminate employment after that date, based on years of service, as follows:

	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%

4

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004

For all employees hired on or after July 1, 2004, they will continue to receive an amount equal to 50% of the first 6% of the compensation that a participant contributes to the Plan. 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 compensation 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, 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 15 investment options.

American Funds Group EuroPacific Growth Fund
Barclay’s Life Path Retirement Fund
Barclay’s Life Path 2010 Fund
Barclay’s Life Path 2020 Fund
Barclay’s Life Path 2030 Fund
Barclay’s Life Path 2040 Fund
Dodge & Cox Balanced Fund
Dodge & Cox Stock Fund
IKON Office Solutions, Inc. 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

5

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004

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, 2005 and 2004, $319,604 and $448,845, 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 employee contributions. At December 31, 2005 and 2004, there was $25,657 and $22,599, respectively, of forfeited nonvested amounts.

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.

6

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004

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 cost, which approximates fair value. Common/collective funds are valued at net unit value as determined by the Trustee.
	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.
	Reclassification:
	Certain prior year amounts have been reclassified to conform to the current year presentation.
3.	Investments
	The following investments represent 5% or more of the Plan’s net assets:

December 31, 2005
IKON Office Solutions, Inc. Common Stock (note 4)	$	166,232,002
INVESCO Stable Value Fund		86,712,056
Dodge & Cox Stock Fund		53,713,975
Vanguard Institutional Index Fund		53,169,900
American Funds Group Euro Pacific Growth Fund		52,424,041
Vanguard Strategic Equity Fund		48,889,329
Dodge & Cox Balanced Fund		43,150,525
Laudus Rosenberg US Small Cap Fund		32,825,095
December 31, 2004
IKON Office Solutions, Inc. Common Stock (note 4)	$	230,492,889
INVESCO Stable Value Fund		81,599,257
Vanguard Institutional Index Fund		58,164,422
Dodge & Cox Stock Fund		41,696,075
Vanguard Strategic Equity Fund		36,322,319
Dodge & Cox Balanced Fund		36,035,851
Laudus Rosenberg US Small Cap Fund		34,040,612
American Funds Group Euro Pacific Growth Fund		33,641,075

7

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004

During the years ended December 31, 2005 and 2004, 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:

	2005			2004
Registered investment companies	$	8,811,253		$	21,666,058
Common stock		(24,161,878	)		(5,905,008	)
	$	(15,350,625	)	$	15,761,050

4.

Nonparticipant-Directed Investments

Prior to July 1, 2004, employer matching contributions were made in IKON common stock and were invested in the IKON Office Solutions, Inc. Stock Fund. Employer matching contributions were nonparticipant directed and could only be redirected to the other available investment options by the participants who had completed two or more years of service with IKON or attained the age of 55. As a result of a Plan amendment, which allows all participants to redirect employer matching contributions in any of the other available investment options, the IKON Office Solutions, Inc. Stock Fund became participant directed on July 1, 2004. Information about significant components of the changes in net assets of the IKON Office Solutions, Inc. Stock Fund, which includes both the nonparticipant directed portion of investments and the participant-directed portion of investments, is as follows:

	2004
Beginning Net Assets	$	283,425,938
Changes in net assets
Net (depreciation) in fair value of investments		(5,905,008	)
Dividends		3,391,620
Contributions		27,828,069
Payment of benefits		(25,855,752	)
Administrative expenses		(852,287	)
Net transfers to/from other investment options		(50,057,456	)
Ending Net Assets	$	231,975,124

5.	Related Party Transactions
	At December 31, 2005, the Plan has an investment in the State Street Bank & Trust Company (SSB) Cash Fund. SSB is the Trustee Custodian of the Plan. In addition, the Plan offers an investment in the IKON Office Solutions, Inc. Stock Fund as an investment option. The transactions in these investments are party-in-interest transactions, which are exempt from prohibited transaction rules.

8

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004

6.	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.
7.	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:

	2005			2004
Net assets available for benefits per the financial statements	$	608,431,936		$	614,591,736
Amounts allocated to withdrawing participants		(484,987	)		(1,073,690	)
Net assets available for benefits per Form 5500	$	607,946,949		$	613,518,046

The following is a reconciliation of benefits paid to participants for the year ended December 31, 2005 per the financial statements to the Form 5500:

Benefits paid to participants per the financial statements	$	79,522,883
Add: Amounts allocated to withdrawing participants at December 31, 2005		484,987
Less: Amounts allocated to withdrawing participants at December 31, 2004		(1,073,690	)
Benefits paid to participants per Form 5500	$	78,934,180

	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.
8.	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 statement of net assets available for benefits.
9.	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

IKON Office Solutions, Inc. Retirement Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004

10.	Subsequent Event
	Effective September 29, 2007, the Plan will not allow new contributions to be invested nor existing funds to be transferred into the IKON Office Solutions, Inc. Stock Fund. Any contributions invested in the IKON Office Solutions, Inc. Stock Fund prior to September 29, 2007 will remain allocated to the fund, unless redirected by the participant to other investment options at their discretion.

10

IKON Office Solutions, Inc. Retirement Savings Plan
Schedule of Assets (Held at End of Year)
Form 5500, Schedule H, Part IV, Line I
December 31, 2005

 

Schedule I
EIN # 223739194

Identity of Issue	Investment Type	Cost**	Current Value
IKON Office Solutions, Inc. Stock Fund*	Common Stock		$	166,232,002
American Funds Group EuroPacific Growth Fund	Registered Investment Company			52,424,041
Dodge & Cox Balanced Fund	Registered Investment Company			43,150,525
INVESCO Stable Value Fund	Common Collective Trust			86,712,056
Dodge & Cox Stock Fund	Registered Investment Company			53,713,975
PIMCO Total Return Fund	Registered Investment Company			21,254,437
Vanguard Institutional Index Fund	Registered Investment Company			53,169,900
Vanguard PRIMECAP Fund	Registered Investment Company			12,809,415
Vanguard Strategic Equity Fund	Registered Investment Company			48,889,329
Laudus Rosenberg US Small Cap Fund	Registered Investment Company			32,825,095
Barclay’s Life Path Retirement Fund	Registered Investment Company			1,480,626
Barclay’s Life Path 2010 Fund	Registered Investment Company			1,300,149
Barclay’s Life Path 2020 Fund	Registered Investment Company			2,701,543
Barclay’s Life Path 2030 Fund	Registered Investment Company			2,497,909
Barclay’s Life Path 2040 Fund	Registered Investment Company			1,190,198
State Street Bank & Trust Company Cash Fund*	Interest Bearing Cash			2,878,534
Participant Loans	Interest rates ranging from 5.0% to 10.5%, maturing between January 1, 2006 and January 1, 2021			18,234,631
			$	601,464,365

* Party-in-interest.

** Cost is not required because investment is participant-directed.

11

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.

Date:	June 16, 2006	/s/ ALLISTER H. MCCREE, JR.
		Allister H. McCree, Jr. Plan Administrator

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