| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Year Ended December 31 |
|
| |
|
2004 |
|
|
2003 |
|
|
2002 |
|
Product revenue, net |
|
|
83.1 |
% |
|
|
87.0 |
% |
|
|
59.3 |
% |
Service fee revenue |
|
|
13.1 |
|
|
|
11.8 |
|
|
|
31.9 |
|
Service fee revenue, affiliate |
|
|
— |
|
|
|
— |
|
|
|
5.0 |
|
Pass-through revenue |
|
|
3.8 |
|
|
|
1.2 |
|
|
|
3.8 |
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
Cost of product revenue (as % of product
revenue) |
|
|
94.2 |
|
|
|
94.4 |
|
|
|
94.5 |
|
Cost of service fee revenue (as % of service
fee revenue) |
|
|
66.7 |
|
|
|
68.6 |
|
|
|
63.3 |
|
Cost of pass-through revenue (as % of
pass-through revenue) |
|
|
100.0 |
|
|
|
100.0 |
|
|
|
100.0 |
|
|
|
|
|
|
|
|
|
|
|
Total costs of revenues |
|
|
90.8 |
|
|
|
91.4 |
|
|
|
83.2 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
9.2 |
|
|
|
8.6 |
|
|
|
16.8 |
|
Selling, general and administrative expenses |
|
|
8.4 |
|
|
|
8.9 |
|
|
|
27.8 |
|
Severance and other termination costs |
|
|
— |
|
|
|
— |
|
|
|
1.3 |
|
Asset and lease impairments |
|
|
— |
|
|
|
0.1 |
|
|
|
1.0 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
0.8 |
|
|
|
(0.4 |
) |
|
|
(13.3 |
) |
Equity in earnings of affiliate |
|
|
— |
|
|
|
— |
|
|
|
1.2 |
|
Interest expense |
|
|
0.5 |
|
|
|
0.7 |
|
|
|
1.0 |
|
Interest income |
|
|
— |
|
|
|
— |
|
|
|
(0.8 |
)% |
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes and
extraordinary gain |
|
|
0.3 |
|
|
|
(1.1 |
) |
|
|
(11.9 |
) |
Income tax expense (benefit) |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before extraordinary gain |
|
|
0.1 |
|
|
|
(1.3 |
) |
|
|
(12.0 |
) |
Extraordinary gain |
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
0.1 |
% |
|
|
(1.3 |
)% |
|
|
(11.8 |
)% |
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
Product Revenue, Net. Product revenue was $267.5 million for the year ended December 31,
2004, as compared to $249.2 million for the year ended December 31, 2003, an increase of $18.3
million or 7.3%. The increase in annual product revenue resulted primarily from the favorable
impact of exchange rates on our European and Canadian operations, increased sales volumes of
certain existing products and the addition of certain new products.
Service
Fee Revenue. Service fee revenue was $42.1 million for the year ended December 31,
2004 as compared to $33.7 million for the year ended December 31, 2003, an increase of $8.4 million
or 24.6%. Service fee revenue for the period included increased service fees generated from
incremental projects with certain client relationships. The change in service fee revenue is shown
below ($ millions):
| |
|
|
|
|
Year ended December 31, 2003 |
|
$ |
33.7 |
|
New service contract relationships, including projects |
|
|
5.3 |
|
Increase in existing client service fees from organic
growth and certain incremental projects |
|
|
4.7 |
|
Terminated clients not included in 2004 revenue |
|
|
(1.6 |
) |
|
|
|
|
Year ended December 31, 2004 |
|
$ |
42.1 |
|
|
|
|
|
Service fee revenue for the year ended December 31, 2004 included approximately $1.0 million
of fees earned from client contracts terminated during 2004.
Cost of Product Revenue. Cost of product revenue was $252.0 million for the year ended
December 31, 2004, as compared to $235.3 million for the year ended December 31, 2003, an increase
of $16.7 million or 7.1%. Cost of product revenue as a percent of product revenue was 94.2% during
the year ended December 31, 2004 and 94.4% during the year ended December 31, 2003. The increase
in annual cost of product revenue from the prior year resulted primarily from the impact of
exchange rates on our European and Canadian operations, increased sales volumes of certain existing
products and the addition of certain new products partially offset by
a reduction in our provision for excess and obsolete inventory. In both years, the cost of product revenue was also partially offset by other
29