Results of Operations
The following table sets forth certain historical financial information
from our consolidated statements of operations expressed as a percent of net
revenues.
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Year Ended December 31
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2003
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2002
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2001
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(Unaudited) |
Product revenue, net |
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88.2 |
% |
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61.6 |
% |
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— |
% |
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Gross service fee revenue |
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13.0 |
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37.1 |
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107.7 |
|
Gross service fee revenue, affiliate |
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— |
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5.2 |
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4.0 |
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Total gross service fee revenue |
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13.0 |
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42.3 |
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111.7 |
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Pass-through charges |
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(1.2 |
) |
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(3.9 |
) |
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(13.0 |
) |
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Net service fee revenues |
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11.8 |
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38.4 |
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98.7 |
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Other revenue |
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— |
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— |
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1.3 |
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Total net revenues |
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100.0 |
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100.0 |
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100.0 |
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Cost of product revenue (as % of product
revenue) |
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94.4 |
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94.5 |
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— |
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Cost of net service fee revenue (as % of net
service fee revenue) |
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68.9 |
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63.3 |
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65.9 |
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Cost of other revenue (as % of total revenues) |
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— |
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— |
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(1.4 |
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Total costs of revenues |
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91.4 |
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82.5 |
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63.7 |
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Gross profit |
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8.6 |
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17.5 |
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36.3 |
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Selling, general and administrative expenses |
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8.9 |
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28.9 |
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58.6 |
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Severance and other termination costs |
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— |
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1.3 |
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— |
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Asset and lease impairments |
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0.1 |
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1.0 |
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— |
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Other |
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— |
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— |
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(13.0 |
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Loss from operations |
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(0.4 |
) |
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(13.7 |
) |
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(9.3 |
) |
Equity in earnings of affiliate |
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— |
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1.2 |
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— |
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Interest expense |
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0.8 |
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0.9 |
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0.6 |
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Interest income |
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(0.1 |
) |
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(1.1 |
) |
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(2.4 |
) |
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Loss before income taxes and
extraordinary gain |
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(1.1 |
) |
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(12.3 |
) |
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(7.5 |
) |
Income tax expense (benefit) |
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0.2 |
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0.1 |
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(0.6 |
) |
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Loss before extraordinary gain |
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(1.3 |
) |
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(12.4 |
) |
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(6.9 |
) |
Extraordinary gain |
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— |
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0.2 |
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— |
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Net loss |
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(1.3 |
)% |
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(12.2 |
)% |
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(6.9 |
)% |
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Year Ended December 31, 2003 Compared to Year Ended December 31, 2002
Product Revenue. Product revenue was $249.2 million for the year ended
December 31, 2003, as compared to $57.5 million for the year ended December 31,
2002, which reflects product sales for Supplies Distributors subsequent to its
consolidation effective October 1, 2002 (see “Supplies Distributors”). Supplies
Distributors had $163.6 million of product revenue for the nine months ended
September 30, 2002 prior to consolidation, or a total of $221.1 million of
product revenue for the year ended December 31, 2002. The increase in annual
product revenue resulted primarily from the favorable impact of exchange rates
on our European and Canadian operations and increased sales volumes of many
existing products. In addition, product revenue was favorably impacted by the
addition of certain new products and increased sales prices for certain
products.
29