Question-and-Answer Session
Operator
(Operator Instructions) Our first question is coming from John Fitzgerald with Bishop Rosen & Company. Please go ahead.
John Fitzgerald – Bishop Rosen & Company
One of the concerns I guess as we go through 08 here, our banking relationships, loan covenants, etcetera, I think you guys are in pretty good shape. Would you kind of comment on where you stand, the shape that you’re in there, relationships and basically the condition of some of your lenders?
Thomas J. Madden
As I indicated in my comments we are in the process right now of finalizing over the next couple of days some renewals and extensions of a couple of our working capital facilities that we have in place for both our service fee business and supplies distributors business units. We have in place today across all three service fees, supplies distributors and the eCOST business primarily operate on asset based facility agreements which are properly secured by the accounts receivable and the inventory and collateralized through those instruments. The banking relationships have been quite strong with us. They like the improved performance of the business units. They have been able to work with us to address some of the growing working capital needs of the business over the last year so that’s all been favorable. The relationships that we have in place are with large financial institutions including Wachovia, Comerica and IBM Global Finance. All three are very sound financial organizations and again it’s been a continuing improving relationship that we have in place with them.
John Fitzgerald – Bishop Rosen & Company
Tom, if I may interrupt you. You indicated over the next few days, do you have every reason to believe that this will go according to plan?
Thomas J. Madden
Yes.
Operator
(Operator Instructions) Your next question is coming from John Hickman with MDB Capital Group. Please go ahead.
John Hickman – MDB Capital Group
I’ve got a couple of questions, you said something about your supplies distributor was affected by foreign exchange and also by lack of promotion or advertising there. Is that what you said or did I catch that right?
Mark C. Layton
Yes, that was a comment primarily applicable to earlier quarters in the year which we had previously discussed and disclosed. A good high portion of our supplies distributors business is driven through our activity with IBM and now Infoprint. In the early part of 2006 IBM had been doing an additional amount of vendor promotional activity in order to drive some increased volume to its products so it generated some additional sales volumes in early 2006 which created difficult comparisons year-over-year and some of that promotional activity while it didn’t occur at the same levels as what it had been doing previously. So that was one component of it and then secondly because of movements from a foreign currency standpoint there were opportunities available to certain customers in the US to buy some of that product internationally from other channels that were cheaper than buying the product directly through our master distributor relationship and it took a couple of months for the vendors to work through that pricing situation and get that taken care of. So there was some loss of revenue the early part of this year applicable to that situation, early part of 07.
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