Results of Operations

For the Interim Periods Ended September 30, 2011 and 2010

     The results of operations related to the eCOST business unit that was sold in February 2011 have been reported as discontinued operations for all periods presented below. The following table discloses certain financial information for the periods presented, expressed in terms of dollars, dollar change, percentage change and as a percentage of total revenue (in millions):

		Three Months Ended September 30,																				Nine Months Ended September 30,
														% of Net Revenues																				% of Net Revenues
Revenues:		2011				2010				Change				2011				2010				2011				2010				Change				2011				2010
Product revenue, net		$	37.9			$	39.3			$	(1.4	)			53.5	%			61.9	%		$	122.0			$	128.6			$	(6.6	)			57.8	%			64.9	%
Service fee revenue			23.0				16.4				6.6				32.4	%			25.8	%			62.8				48.9				13.9				29.7	%			24.7	%
Pass-through revenue			10.0				7.9				2.1				14.1	%			12.3	%			26.4				20.7				5.7				12.5	%			10.4	%
Total net revenues			70.9				63.6				7.3				100.0	%			100.0	%			211.2				198.2				13.0				100.0	%			100.0	%
Cost of Revenues
Cost of product revenue (1)			35.3				36.4				(1.1	)			93.1	%			92.6	%			113.2				119.4				(6.2	)			92.8	%			92.8	%
Cost of service fee revenue (2)			17.7				11.9				5.8				77.0	%			73.0	%			47.2				35.4				11.8				75.2	%			72.4	%
Pass-through cost of revenue (3)			10.0				7.9				2.1				100.0	%			100.0	%			26.4				20.7				5.7				100.0	%			100.0	%
Total cost of revenues			63.0				56.2				6.8				88.8	%			88.4	%			186.8				175.5				11.3				88.5	%			88.5	%
Product revenue gross profit			2.6				2.9				(0.3	)			6.9	%			7.4	%			8.8				9.2				(0.4	)			7.2	%			7.2	%
Service fee gross profit			5.3				4.5				0.8				23.0	%			27.0	%			15.6				13.5				2.1				24.8	%			27.6	%
Pass-through gross profit			—				—				—				—	%			—	%			—				—				—				—	%			—	%
Total gross profit			7.9				7.4				0.5				11.2	%			11.6	%			24.4				22.7				1.7				11.4	%			11.5	%
Selling, General and Administrative expenses			9.4				8.6				0.8				13.2	%			13.4	%			28.1				25.6				2.5				13.3	%			12.9	%
Loss from operations			(1.5	)			(1.2	)			(0.3	)			(2.0	)%			(1.8	)%			(3.7	)			(2.9	)			(0.8	)			(1.9)	%			(1.4)	%
Interest expense, net			0.3				0.3				—				0.4	%			0.4	%			0.8				0.7				0.1				0.4	%			—	%
Loss from continuing operations before income taxes			(1.8	)			(1.5	)			(0.3	)			(2.4	)%			(2.2	)%			(4.5	)			(3.6	)			(0.9	)			(2.3)	%			(1.8)	%
Income tax expense, net			—				0.1				0.1				0.2	%			(0.2	)%			0.3				0.2				0.1				0.1	%			0.1	%
Loss from continuing operations			(1.8	)			(1.6	)			(0.2	)			(2.6	)%			(2.4	)%			(4.8	)			(3.8	)			(1.0	)			(2.2)	%			(1.9)	%
Income (loss) from discontinued operations, net of tax			—				(0.3	)			0.3				0.1	%			(1.2	)%			(0.5	)			(0.8	)			0.3				(0.3)	%			(0.4)	%
Net loss		$	(1.8	)		$	(1.9	)		$	0.1				(2.5	)%			(4.6	)%		$	(5.3	)		$	(4.6	)		$	(0.7	)			(2.5)	%			(2.3)	%

     Product Revenue, net. Product revenue was $37.9 million for the three months ended September 30, 2011, which represents a decrease of $1.4 million or 3.5% as compared to the same quarter of the prior year. Product revenue in the nine months ended September 30, 2011 decreased $6.6 million to $122.0 million or 5.1% compared to the nine months ended September 30, 2010. The decrease was primarily due to the impact of lower sales volume, partially offset by increased unit pricing on certain products, changes in end-user customer utilization and the impact of euro currency conversion rates. We currently expect 2011 annual product revenue to be slightly lower than in 2010.

     RICOH has advised Supplies Distributors that it is restructuring its IPS business which will include certain operational changes in the sale and distribution of IPS products. We are currently evaluating the impact of these changes to our business, though we believe the changes will result in reduced revenues and profitability for Supplies Distributors beginning in 2012.