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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of our results of operations and
financial condition should be read in conjunction with the consolidated
financial statements and related notes thereto appearing elsewhere in this Form
10-K.
FORWARD-LOOKING INFORMATION
We have made forward-looking statements in this Report on Form 10-K. These
statements are subject to risks and uncertainties, and there can be no guarantee
that these statements will prove to be correct. Forward-looking statements
include assumptions as to how we may perform in the future. When we use words
like "seek," "strive," "believe," "expect," "anticipate," "predict,"
"potential," "continue," "will," "may," "could," "intend," "plan," "target" and
"estimate" or similar expressions, we are making forward-looking statements. You
should understand that the following important factors, in addition to those set
forth above or elsewhere in this Report on Form 10-K and our Prospectus dated
December 2, 1999, could cause our results to differ materially from those
expressed in our forward-looking statements. These factors include:
- our reliance on the fees generated by the transaction volume or product
sales of our clients;
- the impact of strategic alliances;
- trends in the market for our services;
- trends in e-commerce;
- whether we can continue and manage growth;
- changes in the trend toward outsourcing;
- increased competition;
- effects of changes in profit margins;
- the unknown effects of possible system failures and rapid changes in
technology;
- trends in government regulation; and
- our relationship with and separation from Daisytek.
We have based these statements on our current expectations about future
events. Although we believe that the expectations reflected in our
forward-looking statements are reasonable, we cannot guarantee you that these
expectations actually will be achieved. This report on Form 10-K also contains
other forward-looking statements, including those related to our anticipated
spin-off from Daisytek. Consummation of the spin-off is uncertain and
realization of the anticipated results could take longer than expected and
implementation difficulties and market factors could alter anticipated results.
In evaluating these statements, you should consider various factors, including
the risks set forth in the section entitled "Risk Factors" beginning on page 19.
These factors may cause our actual results to differ materially from any
forward-looking statements.
OVERVIEW
We are an international provider of transaction management services to both
traditional and e-commerce companies. We derive our revenues from a broad range
of services, including order management, Web-enabled customer care services,
billing services, information management, international fulfillment and
distribution services and professional consulting services. Our distribution
services are conducted at our warehouses and include picking, packing and
shipping our clients' customer orders. We offer our services as an integrated
solution, which enables our clients to outsource their complete transaction
management needs to a single source and to focus on their core competencies. We
currently provide transaction management services to over 30 clients that
operate in a range of vertical markets, including apparel, computer products,
printers, sporting goods, cosmetics and consumer electronics, among others.
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