Results of Operations

For the Interim Periods Ended September 30, 2008 and 2007

     The following table sets forth certain historical financial information from our unaudited interim condensed consolidated statements of operations expressed as a percent of net revenues.

		Three Months Ended																				Nine Months Ended
		September 30,																				September 30,
														% of Net Revenues																				% of Net Revenues
		2008				2007				Change				2008				2007				2008				2007				Change				2008				2007
Revenues:
Product revenue, net		$	79.1			$	85.3			$	(6.2	)			72.0	%			76.1	%		$	252.5			$	250.4			$	2.1				74.4	%			77.1	%
Service fee revenue			22.9				18.4				4.5				20.9	%			16.4	%			65.0				53.0				12.0				19.2	%			16.3	%
Pass-through revenue			7.9				8.3				(0.4	)			7.1	%			7.5	%			21.6				21.4				0.2				6.4	%			6.6	%
Total net revenues			109.9				112.0				(2.1	)			100.0	%			100.0	%			339.1				324.8				14.3				100.0	%			100.0	%
Cost of Revenues
Cost of product revenue (1)			73.1				78.9				(5.8	)			92.4	%			92.5	%			233.5				231.5				2.0				92.5	%			92.4	%
Cost of service fee revenue (2)			15.6				12.9				2.7				68.1	%			70.2	%			44.5				38.2				6.3				68.6	%			72.1	%
Pass-through cost of revenue (3)			7.9				8.3				(0.4	)			100.0	%			100.0	%			21.6				21.4				0.2				100.0	%			100.0	%
Total cost of revenues			96.6				100.1				(3.5	)			87.9	%			89.4	%			299.6				291.1				8.5				88.4	%			89.6	%
Product revenue gross profit			6.0				6.4				(0.4	)			7.6	%			7.5	%			19.0				18.9				0.1				7.5	%			7.6	%
Service fee gross profit			7.3				5.5				1.8				31.9	%			29.8	%			20.5				14.8				5.7				31.4	%			27.9	%
Pass-through gross profit			—				—				—				—	%			—	%			—				—				—				—	%			—	%
Total gross profit			13.3				11.9				1.4				12.1	%			10.6	%			39.5				33.7				5.8				11.6	%			10.4	%
Operating Expenses			12.7				10.9				1.8				11.5	%			9.7	%			37.0				33.2				3.8				10.9	%			10.2	%
Income (loss) from operations			0.6				1.0				(0.4	)			0.6	%			0.9	%			2.5				0.5				2.0				0.7	%			0.2	%
Interest expense, net			0.4				0.6				(0.2	)			0.4	%			0.6	%			1.2				1.9				(0.7	)			0.3	%			0.6	%
Income (loss) before income taxes			0.2				0.4				(0.2	)			0.2	%			0.3	%			1.3				(1.4	)			2.7				0.4	%			(0.4	)%
Income tax expense, net			0.2				0.2				—				0.2	%			0.2	%			0.8				0.7				0.1				0.2	%			0.2	%
Net income (loss)		$	0.0			$	0.2			$	(0.2	)			—	%			0.1	%		$	0.5			$	(2.0	)		$	2.5				0.2	%			(0.6	)%

     Product Revenue, net. eCOST product revenue was $23.7 million in the three months ended September 30, 2008, a 12.0% decrease as compared to $26.9 million in the comparable quarter of the prior year. eCOST product revenue was $74.7 million in the nine months ended September 30, 2008, a 1.3% decrease as compared to $75.7 million in the comparable period of the prior year. The decrease for both periods is primarily due to a decline in sales to its business to business channel during the 2008 period partially offset by an increase in its higher margin business to consumer sales channel. The business to consumer sales channel increase is primarily due to continued emphasis on growth through an expanded product line, improved service capabilities and enhanced website capabilities.

     Supplies Distributors product revenue of $55.4 million decreased $2.9 million, or 4.9% in the three months ended September 30, 2008 as compared to the same quarter of the prior year. The decrease is primarily due to decreased sales volume on certain products partially offset by the impact of foreign exchange rates.

     Supplies Distributors product revenue of $177.8 million increased $3.1 million, or 1.8% in the nine months ended September 30, 2008 as compared to the same period of the prior year. The increase is