the Far East and, to a lesser extent, from North America to Europe. Ocean freight net revenues from the Far East and from Europe increased 21% and 14%, respectively, for 2002 compared with 2001. 

Customs brokerage and import services net revenues increased 9% in 2002 as com- pared with 2001 as a result of the Company’s growing reputation for providing high quality service and consolidation within the customs brokerage market as customers seek out customs brokers with more sophisticated computerized capabilities critical to an overall logistics management program. 

Salaries and related costs increased in 2002 compared to 2001 as a result of (1) the Company’s increased hiring of sales, operations, and administrative personnel in exist- ing offices to accommodate increases in business activity and (2) increased compensation levels. Salaries and related costs decreased 1% as a percentage of net revenues. The relatively consistent relationship between salaries and net revenues is the result of a compensation philosophy that has been maintained since the inception of the Company: offer a modest base salary and the opportunity to share in a fixed and determinable percentage of the operating profit of the business unit controlled by each key employee. Using this compensation model, changes in individual compensation will occur in pro- portion to changes in Company profits. Management believes that the growth in revenues, net revenues and net earnings for 2002 are a result of the incentives inherent in the Company’s compensation program. 

Other operating expenses increased in 2002 as compared with 2001 as rent expense, communications expense, quality and training expenses, and other costs expanded to accommodate the Company’s growing operations. Other operating expenses as a percentage of net revenues remained constant in 2002 as compared with 2001. Management believes that this was significant as it reflects the successful achievement of cost containment objectives initiated at the branch level. The ability to sustain these savings into future periods is contingent upon branch level management’s ability to adhere to these objectives. During the fourth quarter of 2002, the Company evaluated the recoverability of certain other assets and determined that an impairment had oc- curred. Accordingly, a $3.5 million loss was recorded as an operating expense. 

Other income, net, decreased in 2002 as compared with 2001. Due to much lower interest rates on higher average cash balances and short-term investments during 2002, interest income decreased by $2.9 million. The decrease in interest income during the year ended December 31, 2002, was offset by a $1.5 million gain on the sale of the Company’s former Dublin, Ireland facility. 

