still very much in the beginning of a major turnaround and results just wont happen overnight. We
are implementing dramatic changes that we believe will ultimately drive positive results for eCOST
both operationally and financially. Were still very much at the front end of this integration
effort, eight weeks since the merger, and as we navigate through a great deal of issues, included
customer service issues and fulfillment costs that were trying to address, an attack priority as I
mentioned a few minutes ago.
Now, in addition we were just informed this week that the FBI shut down the operations of one of
cCOSTs business-to-business customers which forced that company to cease operations. This is
currently expected to result in a loss of about $1.4 million in the December 2005 quarterly results
for eCOST. Thats eCOSTs, not PFSwebs results. And theres another 600,000 expected to be
recorded in the March quarter, including about 400,000 that could be reflected in PFSwebs
consolidated financial results for the March 2006 quarter. Thats still uncertain at this point.
The situation was quite extraordinary given the involvement of federal authorities and the scope of
the accusations of fraud and other criminal activities that have been alleged against the operators
of the business. Were still assessing the situation, but at this point, as I said, there may be
further write-offs for the customer in the range of 400,000 to 500,000, some of which may hit the
PFSweb P&L. But, again, at this point its still undetermined.
Given this recent extraordinary development together with the great number of moving parts in the
turnaround of eCOST that our integration effort has just begun to set in motion, its difficult at
this time to have a clear enough vision to provide a reasonable forecast for cCOSTs 2006 financial
targets. We anticipate having a clearer picture of our progress over the coming months as we
continue to make advancements in the integration project and we can better judge the speed at which
the improvements are taking hold. Again, its been eight weeks since the close. This is a major
turnaround activity. Its going to take time for things to begin to happen.
So I know thats a lot of information. Sorry for the long prepared comments, but we needed to
provide you a lot of basis to be able to go from there. Operator, that concludes our prepared side
of things. Well now be available for questions.
OPERATOR: At this time I would like to remind everyone if you would like to ask a question, press
star then the number one on your telephone keypad. Well pause for just a moment to compile the
Your first question comes from Alex Silverman, of Special Situations.
ALEX SILVERMAN, SPECIAL SITUATIONS: Good morning.
MARK LAYTON: Good morning, Alex.
ALEX SILVERMAN: Thank you for providing as much info as you did. Just a couple of quick
clarifications, if you would. Is it your is it your current proposal pipeline is 25 million in
annual service fees?
THOMAS MADDEN: Yes, thats correct.