As a result of consolidating Supplies Distributors financial position and results of
operations, our total revenues arising under our new IBM agreements have increased, as compared to
the total revenues arising under the prior IBM agreements. However, our gross profit margin as a
percent of product revenue under the new IBM agreements is lower as compared to our gross profit
margin as a percent of net service fee revenue under the prior IBM service fee agreements.
The selected consolidated financial data should be read in conjunction with Managements
Discussion and Analysis of Financial Condition and Results of Operations, Risks Related to Our
Business Certain of our historical financial information may not be representative of our future
results, and the consolidated financial statements and notes thereto that are included elsewhere
in this Form 10-K.