Forward-Looking Statements

When used in this Quarterly Report on Form 10-Q (the "Report"), the words "believes," "plans," "estimates," "anticipates," "expects," "intends," "allows," "can," "may," "designed," "will," and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include statements about our business model and our services, expected benefits of our services, potential effects of the economic environment, anticipated benefits of our acquisitions, impact of the final purchase price of our acquisitions on our financial position, anticipated benefits of our restructuring, our revenue and operating results, economic and industry trends, thefts at our warehouses, our gross margins, our agreements with MiTAC International, our relationship with MiTAC International and Sun Microsystems, our estimates regarding our capital requirements and our needs for additional financing, concentration of products and customers, the expansion of our operations, our international operations, our strategic acquisitions of businesses and assets, effect of future expansion on our operations, adequacy of our cash resources to meet our capital needs, adequacy of our disclosure controls and procedures, impact of rules and regulations affecting public companies, impact of our accounting policies, the anticipated interest rate on our Notes, statements regarding future unrecognized tax benefits, and statements regarding our securitization program. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, those risks discussed below, as well as the seasonality of the buying patterns of our customers, the concentration of sales to large customers, dependence upon and trends in capital spending budgets in the IT industry, fluctuations in general economic conditions and the risks set forth below under Part II, Item 1A, "Risk Factors." These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Overview

We are a Fortune 500 Corporation and a leading business process services company, serving resellers and original equipment manufacturers, or OEMs, in multiple regions around the world. We provide services in IT distribution, supply chain management, contract assembly and business process outsourcing, or BPO. Our BPO services solutions include: demand generation, pre-sales support, product marketing, print and fulfillment, back office outsourcing and post-sales technical support.

We bring synergy to our customers' business process services requirements. By bringing supply chain management, contract assembly and distribution expertise together under one service provider, the result is high quality products built at a lower cost with industry-leading components delivered on time. Our business model is flexible and designed to accommodate the specific needs of our customers. To further enhance our business process services solutions, we provide value-added support services such as demand generation, pre-sales support, product marketing, print and fulfillment, back office outsourcing and post-sales technical support.

We combine our core strengths in demand generation, IT distribution, supply chain management, and contract assembly in an effort to help our customers achieve efficient time to market, cost minimization, real-time linkages in the supply chain and aftermarket product support. As of August 31, 2008, we distributed approximately 15,000 technology products, as measured by active SKUs, from more than 100 IT OEM suppliers to more than 15,000 resellers throughout the United States, Canada and Mexico. As of August 31, 2008, we had over 6,000 full-time employees worldwide with operations in the United States, Canada, China, Mexico, Japan, the Philippines and the United Kingdom. From a geographic perspective, approximately 98% and 97% of our total revenue was from North America for the three and nine months ended August 31, 2008, respectively.

We purchase IT systems, peripherals, system components, packaged software and networking equipment from OEM suppliers such as Hewlett-Packard Company, or HP, Panasonic, Lenovo, IBM and Acer and sell them to our reseller customers. We perform the same function for our purchases of licensed software products. Our reseller customers include value-added resellers, or VARs, corporate resellers, government resellers, system integrators, direct marketers and retailers. Our largest OEM supplier, HP, accounted for approximately 35% and 32% of our total revenue for the three and nine months ended August 31, 2008, respectively.

The IT distribution and contract assembly industries in which we operate are characterized by low gross profit as a percentage of revenue, or gross margin, and low income from operations as a percentage of revenue, or operating margin. As well, the market for IT products and services is generally characterized by declining unit prices and short product life cycles. We set our sales price based on the market supply and demand characteristics for each particular product or bundle of products we distribute and services we provide.

Our revenue is highly dependent on the end-market demand for IT products and services. This end-market demand is influenced by many factors including the introduction of new IT products and software by OEMs, replacement cycles for existing IT products, overall economic growth and general business activity. A difficult and challenging economic environment may also lead to consolidation or decline in the IT industry or increased price-based competition.

Recent Acquisitions and Divestitures

We seek to augment our services offering with strategic acquisitions of businesses and assets that complement and expand our business process capabilities. We also divest businesses that we deem not strategic to our ongoing operations. Our historical

acquisitions have brought us new reseller customers and OEM suppliers, extended the geographic reach of our operations, particularly in international markets, and diversified and expanded the services we provide to our OEM suppliers and customers. We account for acquisitions using the purchase method of accounting and include acquired entities within our consolidated financial statements from the closing date of the acquisition.

On April 1, 2008, we purchased substantially all of the assets of New Age Electronics Inc., or NAE, a privately-held distributor of IT and consumer electronics products to the retail sector. We expect this acquisition will expand our consumer electronics distribution business. We have paid a purchase price of $31.5 million in cash and accrued $11.8 million, to be paid subject to compliance with certain post-closing conditions. As of August 31, 2008, we have paid $4.2 million of the accrual. The acquisition agreement provides for additional earn-out payments of up to $11.0 million to be paid subject to achieving certain milestones after the first 12 months from the date of acquisition. In connection with the net assets acquired, we refinanced approximately $84.0 million in working capital debt. The NAE business has been substantially integrated into our operations.

The preliminary purchase price allocation based on the estimated fair value of assets acquired and liabilities assumed is as follows:

                                                          Fair Value
                                                        (in thousands)
          Purchase consideration
          Cash paid                                    $         35,658
          Accrual subject to post-closing conditions              7,099

                                                       $         42,757

          Allocation
          Cash                                         $         11,164
          Accounts receivable                                    69,600
          Inventories                                            72,073
          Program receivable                                      4,771
          Fixed assets                                            1,248
          Prepaid expenses and other assets                         648
          Goodwill                                               24,599
          Intangible assets                                       8,000
          Accounts payable                                      (53,953 )
          Accrued liabilities                                   (11,188 )
          Lease obligations                                        (202 )
          Loan payable                                          (84,003 )

                                                       $         42,757

The following unaudited pro forma financial information combines the consolidated results of operations as if the acquisition of NAE had occurred as of the beginning of the periods presented. Pro forma adjustments include only the effects of events directly attributable to transactions that are factually supportable and expected to have a continuing impact. The pro forma results contained in the table below include pro forma adjustments for amortization of acquired intangibles and depreciation expense.

                                                 Three Months Ended                        Nine Months Ended
                                        August 31, 2008      August 31, 2007      August 31, 2008      August 31, 2007
                                                           (in thousands, except per share amounts)
Revenue                                $       2,045,689    $       1,987,815    $       5,971,987    $       5,657,267
Net income                                        22,060               16,236               58,151               42,761

Net income per common share-basic      $            0.70    $            0.52    $            1.84    $            1.39
Net income per common share-diluted                 0.66                 0.50                 1.75                 1.32

The pro forma financial information is not necessarily indicative of the operating results that would have occurred had the acquisition been consummated as of the beginning of the periods presented, nor are they necessarily indicative of future operating results.

Other Fiscal Year 2008 Acquisitions

Our other fiscal year 2008 acquisitions, which were all in our BPO business, were not significant individually or in the aggregate. In the second quarter of fiscal year 2008, we acquired three companies for an estimated total cash consideration of approximately $3.0 million.

The allocation of purchase price in the above acquisitions is preliminary and the estimates and assumptions used are subject to change. We are continuing to evaluate the allocation of the purchase price to net tangible and identifiable intangible assets and do not expect the final allocation of the purchase price to have a material impact on our financial position, results of operations or cash flows.

Restructuring Charges

In fiscal year 2007, in connection with the acquisition of substantially all of the assets of the Redmond Group of Companies, or RGC, we announced a restructuring program in Canada. The measures, which included workforce reductions, facilities consolidation and other related expenses, were intended to align our capacity and infrastructure, and utilize synergies within the business to provide more cost effective services to our customers. During fiscal year 2007, we accrued $2.4 million in restructuring costs against goodwill related to the RGC acquisition in Canada under Emerging Issues Task Force 95-3 "Recognition of Liabilities in Connection with a Purchase Business Combination," or EITF 95-3. These charges were primarily associated with facilities consolidation of $1.1 million, workforce reductions of $0.7 million and contract termination costs of $0.6 million.

In fiscal year 2007, we recorded $2.7 million for the restructuring, impairment and consolidation of our Canadian operations as a result of the acquisition of RGC and the purchase of our logistics facility in Guelph, Canada in March 2007. These charges were primarily associated with $1.1 million for facilities consolidation, $0.5 million for workforce reductions, and $0.3 million for other costs. All charges were recorded in accordance with Statement of Financial Accounting Standards, or SFAS, No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." The majority of all employee terminations were completed by the end of November 30, 2007.

In conjunction with the above restructuring, we recorded an impairment loss of $0.8 million for a property located in Ontario, Canada that was held for sale based on the fair value less costs to sell in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The net book value of the property was $2.0 million at August 31, 2008 and $2.1 million at November 30, 2007.

In fiscal year 2008, in connection with the acquisition of NAE, we recorded liabilities of $0.6 million under EITF 95-3. The measures, which included workforce reductions and facilities consolidation, were intended to align our capacity and infrastructure, and utilize synergies within the business to provide more cost effective services to our customers. These charges were primarily associated with workforce reductions of $0.4 million and facilities consolidation of $0.2 million. These items are subject to change based on the actual costs incurred. Changes to these estimates could increase or decrease the amount of the purchase price allocated to goodwill.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates for the three and nine-month periods ended August 31, 2008 from our disclosure in our Annual Report on Form 10-K for the year ended November 30, 2007. For a discussion of the critical accounting policies, please see the discussion in our Annual Report on Form 10-K for the fiscal year ended November 30, 2007.

Results of Operations

The following table sets forth, for the indicated periods, data as percentages
of revenue:



                                           Three Months Ended                           Nine Months Ended
                                  August 31, 2008       August 31, 2007       August 31, 2008       August 31, 2007
Statements of Operations
Data:
Revenue                                    100.00 %              100.00 %              100.00 %              100.00 %
Cost of revenue                            (94.48 )              (94.82 )              (94.54 )              (95.04 )

Gross profit                                 5.52                  5.18                  5.46                  4.96
Selling, general and
administrative expenses                     (3.59 )               (3.63 )               (3.62 )               (3.41 )
Restructuring charges                        0.00                 (0.16 )                0.00                 (0.05 )

Income from operations before
non-operating items, income
taxes and minority interest                  1.93                  1.39                  1.84                  1.50
Interest expense and finance
charges, net                                (0.15 )               (0.20 )               (0.19 )               (0.21 )
Other income (expense), net                 (0.09 )               (0.01 )               (0.06 )                0.02

Income before income taxes
and minority interest                        1.69                  1.18                  1.59                  1.31
Provision for income taxes                  (0.61 )               (0.36 )               (0.57 )               (0.46 )

Income before minority
interest                                     1.08                  0.82                  1.02                  0.85
Minority interest                            0.00                  0.00                 (0.01 )                0.00

Net income                                   1.08 %                0.82 %                1.01 %                0.85 %

Three and Nine Months Ended August 31, 2008 and 2007

Revenue.

We sell in excess of 15,000 (as measured by active SKU's) technology products from more than 100 IT OEM suppliers to more than 15,000 resellers. The prices of our products are highly dependent on the volumes purchased within a product category. The products we sell from one period to the next are often not comparable because of rapid changes in product models and features.

Our increase in revenue year over year for the three months ended August 31, 2008, was primarily attributable to an increase in our U.S. and Canadian distribution operations. More than three-fourths of the increase in the U.S. was attributable to our acquisition of NAE on April 1, 2008.

More than half of the increase in revenue year over year for the nine months ended August 31, 2008 was attributable to our acquisition of NAE and the full impact of nine months operations of PC Wholesale and RGC, which were acquired in the first and second quarter of fiscal year 2007, respectively. The remaining increase in revenue was a result of continued organic growth in our business in all major categories, primarily due to increased volumes resulting from market share gains, augmented by stronger execution and increased selling and marketing efforts. The BPO services revenue was not material to our overall revenue growth.

These revenue growth increases were somewhat mitigated by continued significant competition in the IT distribution marketplace, vendor direct sales models, our desire to focus on operating income growth before revenue growth, and a softer North American economy.

Gross Profit.



                                                   Three Months Ended                                             Nine Months Ended
                                 August 31, 2008         August 31, 2007        % Change        August 31, 2008         August 31, 2007        % Change
                                             (in thousands)                                                 (in thousands)
Gross profit                    $         112,899       $          91,226           23.8 %     $         309,554       $         249,895           23.9 %
Percentage of revenue                        5.52 %                  5.18 %          6.6 %                  5.46 %                  4.96 %         10.1 %

Our gross profit is affected by a variety of factors, including competition, the mix and various selling prices of products and services we sell, the mix of customers to whom we sell, our sources of revenue by division, rebate and discount programs from our suppliers, freight costs, reserves for inventory losses, fluctuations in revenue and overhead costs of our contract assembly business and demand for our BPO services.

Our gross profit as a percentage of revenue increased by 34 basis points over the prior year quarter for the three months ended

August 31, 2008 primarily due to greater success in maximizing our variable incentives and continued focus on costs, inventory and freight management. The increase was also driven by our continued focus to improve all aspects of our gross margin as well as the continuing impact of expansion of our business process services model.

The increase of 50 basis points in our gross profit as a percentage of revenue over the prior year period for the nine months ended August 31, 2008 was primarily due to higher gross margin profile for our BPO acquisitions made in fiscal year 2007 and also including all the above mentioned factors.

No specific products or customers, or changes in pricing strategy individually or as a group, contributed significantly to the change in gross profit.

Selling, General and Administrative Expenses.



                                                     Three Months Ended                                             Nine Months Ended
                                   August 31, 2008         August 31, 2007        % Change        August 31, 2008         August 31, 2007        % Change
                                               (in thousands)                                                 (in thousands)
Selling, general and
administrative expenses           $          73,394       $          63,960           14.7 %     $         205,597       $         171,874           19.6 %
Percentage of revenue                          3.59 %                  3.63 %         -1.1 %                  3.62 %                  3.41 %          6.2 %

Approximately two-thirds of our selling, general and administrative expenses consist of personnel costs such as salaries, commissions, bonuses, share-based compensation, deferred compensation expense or income, and temporary personnel fees. Selling, general and administrative expenses also include costs of our facilities, utility expense, professional fees, depreciation expense on our capital equipment, bad debt expense, amortization expense on our intangible assets and marketing expenses, offset in part by reimbursements from OEM suppliers.

Selling, general and administrative expenses increased in the third quarter of fiscal year 2008, on a dollar basis mainly due to an increase in compensation cost of $7.4 million resulting from an increase in employees, primarily from acquisitions and the remainder was due to an increase of $1.5 million in professional services fees, rent, amortization and costs to support our increased revenue partially offset by $1.5 million of increased losses related to our deferred compensation program. Selling, general and administrative expenses decreased as a percentage of revenue as a result of revenue leverage and our continued focus on managing our costs.

Selling, general and administrative expenses increased in the nine months ended August 31, 2008, both on a dollar basis as well as percentage of revenue due to an increase in compensation cost of $25.7 million resulting from an increase in employees, primarily from partial impact of acquisitions made in fiscal year 2008 and the full impact of acquisitions made in fiscal year 2007, an increase in professional fees of $2.0 million, an increase in amortization expense of intangible assets of $1.3 million and an increase in travel expenses of $1.1 million partially offset by $3.1 million of increased losses related to our deferred compensation program. The remaining increase was mainly due to an increase in variable operating costs to support our increased revenue.

Income from Continuing Operations before Non-Operating Items, Income Taxes and Minority Interest.

                                                     Three Months Ended                                             Nine Months Ended
                                   August 31, 2008         August 31, 2007        % Change        August 31, 2008         August 31, 2007        % Change
                                               (in thousands)                                                 (in thousands)
Income from operations before
non-operating items, income
taxes and minority interest       $          39,505       $          24,522           61.1 %     $         103,957       $          75,277           38.1 %
Percentage of revenue                          1.93 %                  1.39 %         38.8 %                  1.84 %                  1.50 %         22.7 %

The increase in our income from operations before non-operating items, income taxes and minority interest as a percentage of revenue was primarily a result of an increase in our revenue as well as an increase in gross margin. This increase was slightly offset in part by increases in selling, general and administrative expenses. The percentage of income from operations before non-operating items, income taxes and minority interest for the three and nine months ended August 31, 2007 was also impacted by a $2.7 million restructuring charge taken in Canada.

Interest Expense and Finance Charges, Net.



                                                    Three Months Ended                                                Nine Months Ended
                                 August 31, 2008          August 31, 2007         % Change         August 31, 2008          August 31, 2007         % Change
                                              (in thousands)                                                    (in thousands)
Interest expense and
finance charges, net            $           3,137        $           3,472            -9.6 %      $          10,614        $          10,225             3.8 %
Percentage of revenue                        0.15 %                   0.20 %         -25.0 %                   0.19 %                   0.21 %          -9.5 %

Amounts recorded in interest expense and finance charges, net, consist primarily of interest expense paid on our lines of credit, other debt, fees associated with third party accounts receivable flooring arrangements and the sale or pledge of accounts receivable through our securitization facilities, offset by income earned on our cash investments and financing income from our Mexico operation.

The decrease in interest expense and finance charges, net, for the three months ended August 31, 2008 compared to the prior year quarter was due to lower finance charges of $0.3 million primarily as a result of lower interest rates.

The increase in interest expense and finance charges, net, for the nine months ended August 31, 2008 compared to the prior year period was due to higher finance charges of $0.6 million primarily as a result of increased borrowings to support our business growth and acquisitions, partially offset by decreased interest rates. In addition, our interest income from our Mexico operation and other deposits decreased by $0.7 million offset by decreased finance charges on reduced flooring sales of $0.9 million.

Other Income (Expense), Net.



                                                    Three Months Ended                                                Nine Months Ended
. . .