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"Our consolidated results for the second quarter are within our expectations, which take into account the current economic environment and changes to our client mix. We are encouraged by the addition of several new service fee client programs that have been or are in the process of being finalized and which we expect to ramp up in the second half of 2009 and first quarter of 2010. When combined with our existing operations, we expect these new client agreements to help us achieve improved top and bottom line results on a consolidated basis starting in the third quarter," stated Mark Layton, Chairman and Chief Executive Officer of PFSweb. "We have a solid financial footing to support our operations through this tough economic period, with approximately $17 million in cash and cash equivalents in addition to our lenders renewing our lines of credit earlier this year. We continue to target breakeven to positive free cash flow performance in calendar year 2009." Summary of consolidated results for the quarter ended June 30, 2009: -- Total reported revenue was $82.3 million compared to $110.7 million for the second quarter of 2008; -- Adjusted EBITDA (as defined) was $(0.7) million versus $2.5 million for the same period last year; -- Net loss was $2.5 million, or $0.25 per basic and diluted share, compared to net income of $0.1 million, or $0.01 per basic and diluted share, for the second quarter of 2008; -- Non-GAAP net loss (as defined) was $2.4 million, or $0.24 per basic and diluted share, compared to non-GAAP net income of $0.4 million, or $0.04 per basic and diluted share, for the second quarter of 2008; and -- Total cash, cash equivalents and restricted cash equaled $17.2 million as of June 30, 2009 compared to $18.1 million as of December 31, 2008. Summary of consolidated results for the six months ended June 30, 2009: -- Total reported revenue was $171.3 million, compared to $229.2 million for the six months ended June 30, 2008; -- Adjusted EBITDA (as defined) was $1.9 million versus $5.2 million for the same period last year; -- Net loss was $2.8 million, or $0.28 per basic and diluted share, compared to net income of $0.5 million, or $0.05 per basic and diluted share, for the six month period ended June 30, 2008; -- Non-GAAP net loss (as defined) was $2.5 million, or $0.25 per basic and diluted share, compared to non-GAAP net income of $1.2 million, or $0.12 per basic and diluted share, for the same period last year; Summary of results by business: Service Fee Business: For the second quarter of 2009, Service Fee revenue was $12.4 million, compared with $21.3 million for the same period in 2008. This decline was primarily due to the non-renewal of a U.S. Government agency client relationship and lower activity among existing clients as a result of the economy, partially offset by increased service fees generated from new service contract relationships. The Service Fee business reported Adjusted EBITDA of $(1.3) million for the second quarter of 2009, compared to Adjusted EBITDA of $1.0 million for the same period last year. For the six months ended June 30, 2009, Service Fee revenue was $29.5 million, compared with $42.1 million for the same period in 2008. This decline was primarily due to the non-renewal of a U.S. Government agency client relationship and lower activity among existing clients as a result of the economy, partially offset by increased service fees generated from new service contract relationships. The Service Fee business reported Adjusted EBITDA of $0.3 million for the six months ended June 30, 2009, compared to $2.7 million for the same period last year. Mike Willoughby, President of PFSweb's services division, commented, "We believe we are on the right path towards reporting improved financial performance in the second half of this year. Currently there are several new client agreements in different phases of contracting and implementation that are expected to have a positive impact on service fee revenue and bottom line performance as they become operational." Mr. Willoughby continued, "One of the game changing events for us has been our End2End solution, which we launched in 2008. The feedback from potential clients regarding this solution has been extremely positive and has reinvigorated our new business outreach. In a relatively short period of time we have signed or are in final contracting phase with several new client agreements for this solution, and continue to maintain a robust pipeline of potential new agreements. Also, we recently received an extremely positive endorsement from Roots Canada, one of the first companies to utilize the End2End solution, stating that its business has improved dramatically since transitioning to the new service approximately one year ago." Supplies Distributors Business: For the second quarter of 2009, Supplies Distributors revenue was $45.3 million, compared to $60.0 million for the same period last year. Adjusted EBITDA was $1.0 million for the second quarter of 2009, compared to $2.1 million for the same period last year. For the six months ended June 30, 2009, Supplies Distributors revenue was $90.6 million, compared to $122.3 million for the same period last year. Adjusted EBITDA was $2.4 million for the six month period of 2009, compared to $3.7 million for six month period in 2008. Mr. Willoughby concluded, "Revenue for the Supplies Distributors business continued to be negatively impacted by the overall global economic pressures and inventory rationalization by customers. While the decline in activity is disappointing, this business continues to be profitable with steady net income each quarter. " eCOST.com Business: For the second quarter of 2009, eCOST.com revenue was $20.3 million, compared to $23.0 million for the same period in 2008. Adjusted EBITDA for eCOST.com in the quarter was $(0.4) million, an improvement compared to $(0.6) million for the same period last year. For the six months ended June 2009, eCOST.com revenue was $41.2 million, compared to $51.0 million for the same period in 2008. While revenue from our business-to-consumer (B2C) segment continued to experience growth over the prior year, this growth was more than offset by a decline in our business-to-business (B2B) segment. Adjusted EBITDA for eCOST.com in the six month period ended June 30, 2009 was $(0.8) million, an improvement compared to $(1.2) million for the same period last year. "In the second quarter we were able to limit the impact of the economic challenges on eCOST.com through special promotions to club members. Our club membership programs have resulted in greater customer loyalty, which is a key metric for our long-term success," concluded Mr. Layton. Conference Call Information Management will host a conference call at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Monday, August 17, 2009, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number (24525973) at least five minutes before the scheduled start time. Investors can also access the call in a "listen only" mode via the Internet at the Company's website, www.pfsweb.com. Please allow extra time prior to the call to visit the site and download any necessary audio software. A digital replay of the conference call will be available through September 17, 2009 at (800) 642-1687, pin number (24525973). The replay also will be available at the Company's website for a limited time. Non-GAAP Financial Measures This news release contains the non-GAAP measures free cash flow, non-GAAP net income (loss), Earnings Before Interest, Income Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, amortization of identifiable intangible assets and impairment of goodwill and identifiable intangible assets. EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation and impairment of goodwill and identifiable intangible assets. Free cash flow, non-GAAP net income (loss), EBITDA and Adjusted EBITDA are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. Free cash flow is used as a supplemental financial measure in our evaluation of liquidity and financial strength. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, amortization of intangible assets and impairment of goodwill and intangible assets and EBITDA and Adjusted EBITDA further eliminates the effect of financing, income taxes, and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. PFSweb believes these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables. About PFSweb, Inc. PFSweb develops and deploys integrated business infrastructure solutions and fulfillment services for Fortune 1000, Global 2000 and brand name companies, including third party logistics, call center support and e-commerce services. The company serves a multitude of industries and company types, including such clients as LEGO, Riverbed, InfoPrint Solutions Company (a joint venture company owned by Ricoh and International Business Machines), Hawker Beechcraft Corp., Rene Furterer USA, Roots Canada Ltd. and Xerox. Through its wholly owned eCOST.com subsidiary, PFSweb also serves as a leading multi-category online discount retailer of high-quality new, "close-out" and manufacturer recertified brand-name merchandise for consumers and small to medium size business buyers. The eCOST.com brand markets approximately 300,000 different products from leading manufacturers such as Sony, Hewlett-Packard, Denon, JVC, Canon, Nikon, Panasonic, Toshiba, Microsoft, Dyson, Kitchen Aid, Braun, Black & Decker, Cuisinart, Coleman, and Citizen primarily over the Internet and through direct marketing. To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit the company's websites at http://www.pfsweb.com and http://www.ecost.com. The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb's Annual Report on Form 10-K for the year ended December 31, 2008 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report and the Risk Factors described therein. These factors include: our ability to retain and expand relationships with existing clients and attract and implement new clients; our reliance on the fees generated by the transaction volume or product sales of our clients; our reliance on our clients' projections or transaction volume or product sales; our dependence upon our agreements with IBM and Infoprint Solutions; our dependence upon our agreements with our major clients; our client mix, their business volumes and the seasonality of their business; our ability to finalize pending contracts; the impact of strategic alliances and acquisitions; trends in the e-commerce, outsourcing, government regulation both foreign and domestic and the market for our services; whether we can continue and manage growth; increased competition; our ability to generate more revenue and achieve sustainable profitability; effects of changes in profit margins; the customer and supplier concentration of our business; the unknown effects of possible system failures and rapid changes in technology; foreign currency risks and other risks of operating in foreign countries; potential litigation; the impact of our reverse stock split; potential delisting; our dependency on key personnel; the impact of new accounting standards and changes in existing accounting rules or the interpretations of those rules; our ability to raise additional capital or obtain additional financing; our ability and the ability of our subsidiaries to borrow under current financing arrangements and maintain compliance with debt covenants; relationship with and our guarantees of certain of the liabilities and indebtedness of our subsidiaries; taxation on the sale of our products; eCOST's potential indemnification obligations to its former parent; eCOST's ability to maintain existing and build new relationships with manufacturers and vendors and the success of its advertising and marketing efforts; eCOST's ability to increase its sales revenue and sales margin and improve operating efficiencies and eCOST's ability to generate a profit and cash flows sufficient to cover the values of its intangible assets. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known. (TABLES FOLLOW)
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
REVENUES:
Product revenue, net $ 65,546 $ 83,048 $ 131,809 $ 173,339
Service fee revenue 12,367 21,254 29,486 42,066
Pass-thru revenue 4,417 6,382 9,972 13,748
Total revenues 82,330 110,684 171,267 229,153
COSTS OF REVENUES:
Cost of product revenue 60,303 76,368 121,134 160,347
Cost of service fee revenue 9,414 15,105 20,733 28,949
Cost of pass-thru revenue 4,417 6,382 9,972 13,748
Total costs of revenues 74,134 97,855 151,839 203,044
Gross profit 8,196 12,829 19,428 26,109
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 10,643 11,849 21,310 23,943
AMORTIZATION OF IDENTIFIABLE INTANGIBLES 27 201 53 403
Total operating expenses 10,670 12,050 21,363 24,346
Income (loss) from operations (2,474 ) 779 (1,935 ) 1,763
INTEREST EXPENSE, NET 321 366 678 696
Income (loss) before income taxes (2,795 ) 413 (2,613 ) 1,067
INCOME TAX PROVISION (BENEFIT) (266 ) 351 164 591
NET INCOME (LOSS) $ (2,529 ) $ 62 $ (2,777 ) $ 476
NON-GAAP NET INCOME (LOSS) $ (2,393 ) $ 391 $ (2,512 ) $ 1,208
NET INCOME (LOSS) PER SHARE:
Basic $ (0.25 ) $ 0.01 $ (0.28 ) $ 0.05
Diluted $ (0.25 ) $ 0.01 $ (0.28 ) $ 0.05
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic 9,927 9,900 9,925 9,896
Diluted 9,927 10,037 9,925 10,045
EBITDA $ (851 ) $ 2,341 $ 1,716 $ 4,906
ADJUSTED EBITDA $ (742 ) $ 2,469 $ 1,928 $ 5,235
(A) The financial data above should be read in conjunction with
the audited consolidated financial statements of
PFSweb, Inc.
included in its Form 10-K for the year ended December 31, 2008.
PFSweb, Inc. and Subsidiaries
Reconciliation of certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
NET INCOME (LOSS) $ (2,529 ) $ 62 $ (2,777 ) $ 476
Income tax expense (benefit) (266 ) 351 164 591
Interest expense 321 366 678 696
Depreciation and amortization 1,623 1,562 3,651 3,143
EBITDA $ (851 ) $ 2,341 $ 1,716 $ 4,906
Stock-based compensation 109 128 212 329
ADJUSTED EBITDA $ (742 ) $ 2,469 $ 1,928 $ 5,235
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
NET INCOME (LOSS) $ (2,529 ) $ 62 $ (2,777 ) $ 476
Stock-based compensation 109 128 212 329
Amortization of identifiable intangible assets 27 201 53 403
NON-GAAP NET INCOME (LOSS) $ (2,393 ) $ 391 $ (2,512 ) $ 1,208
NET INCOME (LOSS) PER SHARE:
Basic $ (0.25 ) $ 0.01 $ (0.28 ) $ 0.05
Diluted $ (0.25 ) $ 0.01 $ (0.28 ) $ 0.05
NON-GAAP NET INCOME (LOSS) Per Share:
Basic $ (0.24 ) $ 0.04 $ (0.25 ) $ 0.12
Diluted $ (0.24 ) $ 0.04 $ (0.25 ) $ 0.12
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
June 30, December 31,
2009 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,147 $ 16,050
Restricted cash 2,089 2,008
Accounts receivable, net of allowance for doubtful accounts of $625
and
$980 at June 30, 2009 and December 31, 2008, respectively 32,704 44,546
Inventories, net of reserves of $1,997 and $2,124 at June 30, 2009
and
December 31, 2008, respectively 40,540 47,186
Other receivables 11,847 13,072
Prepaid expenses and other current assets 3,468 3,802
Total current assets 105,795 126,664
PROPERTY AND EQUIPMENT, net 10,878 12,106
IDENTIFIABLE INTANGIBLES 883 961
GOODWILL 3,602 3,602
OTHER ASSETS 1,560 1,188
Total assets 122,718 144,521
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 22,010 $ 22,251
Trade accounts payable 47,240 61,988
Accrued expenses 19,431 21,054
Total current liabilities 88,681 105,293
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 1,858 4,951
OTHER LIABILITIES 1,534 1,192
Total liabilities 92,073 111,436
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none
issued
and outstanding - -
Common stock, $.001 par value; 35,000,000 shares authorized;
9,946,585 and 9,935,095 shares issued at June 30, 2009 and
December 31, 2008, respectively; and 9,928,224 and 9,916,734
outstanding as of June 30, 2009 and December 31, 2008, respectively 10 10
Additional paid-in capital 92,949 92,728
Accumulated deficit (64,170 ) (61,393 )
Accumulated other comprehensive income 1,941 1,825
Treasury stock at cost, 18,361 shares (85 ) (85 )
Total shareholders' equity 30,645 33,085
Total liabilities and shareholders' equity $ 122,718 $ 144,521
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 45,269 $ 20,277 $ - $ 65,546
Service fee revenue 12,367 - - - 12,367
Service fee revenue - affiliate 1,736 - - (1,736 ) -
Pass-thru revenue 4,451 - - (34 ) 4,417
Total revenues 18,554 45,269 20,277 (1,770 ) 82,330
COSTS OF REVENUES:
Cost of product revenue - 41,984 18,319 - 60,303
Cost of service fee revenue 10,052 - - (638 ) 9,414
Cost of pass-thru revenue 4,451 - - (34 ) 4,417
Total costs of revenues 14,503 41,984 18,319 (672 ) 74,134
Gross profit 4,051 3,285 1,958 (1,098 ) 8,196
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,033 2,304 2,404 (1,098 ) 10,643
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - - 27 27
Total operating expenses 7,033 2,304 2,431 (1,098 ) 10,670
Income (loss) from operations (2,982 ) 981 (473 ) - (2,474 )
INTEREST EXPENSE (INCOME), NET (59 ) 377 3 - 321
Income (loss) before income taxes (2,923 ) 604 (476 ) - (2,795 )
INCOME TAX PROVISION (BENEFIT) (62 ) (213 ) 9 - (266 )
NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 ) $ - $ (2,529 )
NON-GAAP NET INCOME (LOSS) $ (2,752 ) $ 817 $ (458 ) $ - $ (2,393 )
EBITDA $ (1,452 ) $ 989 $ (388 ) $ - $ (851 )
ADJUSTED EBITDA $ (1,343 ) $ 989 $ (388 ) $ - $ (742 )
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 ) $ - $ (2,529 )
Income tax expense (benefit) (62 ) (213 ) 9 - (266 )
Interest expense (income) (59 ) 377 3 - 321
Depreciation and amortization 1,530 8 85 - 1,623
EBITDA $ (1,452 ) $ 989 $ (388 ) $ - $ (851 )
Stock-based compensation 109 - - - 109
ADJUSTED EBITDA $ (1,343 ) $ 989 $ (388 ) $ - $ (742 )
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (2,861 ) $ 817 $ (485 ) $ - $ (2,529 )
Stock-based compensation 109 - - - 109
Amortization of intangible assets - - 27 - 27
NON-GAAP NET INCOME (LOSS) $ (2,752 ) $ 817 $ (458 ) $ - $ (2,393 )
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 90,600 $ 41,209 $ - $ 131,809
Service fee revenue 29,486 - - - 29,486
Service fee revenue - affiliate 3,795 - - (3,795 ) -
Pass-thru revenue 10,037 - - (65 ) 9,972
Total revenues 43,318 90,600 41,209 (3,860 ) 171,267
COSTS OF REVENUES:
Cost of product revenue - 83,934 37,200 - 121,134
Cost of service fee revenue 22,016 - - (1,283 ) 20,733
Cost of pass-thru revenue 10,037 - - (65 ) 9,972
Total costs of revenues 32,053 83,934 37,200 (1,348 ) 151,839
Gross profit 11,265 6,666 4,009 (2,512 ) 19,428
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 14,650 4,268 4,904 (2,512 ) 21,310
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - - 53 53
Total operating expenses 14,650 4,268 4,957 (2,512 ) 21,363
Income (loss) from operations (3,385 ) 2,398 (948 ) - (1,935 )
INTEREST EXPENSE (INCOME), NET (82 ) 754 6 - 678
Income (loss) before income taxes (3,303 ) 1,644 (954 ) - (2,613 )
INCOME TAX PROVISION (BENEFIT) (114 ) 269 9 - 164
NET INCOME (LOSS) $ (3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 )
NON-GAAP NET INCOME (LOSS) $ (2,977 ) $ 1,375 $ (910 ) $ - $ (2,512 )
EBITDA $ 80 $ 2,416 $ (780 ) $ - $ 1,716
ADJUSTED EBITDA $ 292 $ 2,416 $ (780 ) $ - $ 1,928
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 )
Income tax expense (benefit) (114 ) 269 9 - 164
Interest expense (income) (82 ) 754 6 - 678
Depreciation and amortization 3,465 18 168 - 3,651
EBITDA $ 80 $ 2,416 $ (780 ) $ - $ 1,716
Stock-based compensation 212 - - - 212
ADJUSTED EBITDA $ 292 $ 2,416 $ (780 ) $ - $ 1,928
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (3,189 ) $ 1,375 $ (963 ) $ - $ (2,777 )
Stock-based compensation 212 - - - 212
Amortization of intangible assets - - 53 - 53
NON-GAAP NET INCOME (LOSS) $ (2,977 ) $ 1,375 $ (910 ) $ - $ (2,512 )
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of June 30, 2009
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 10,760 $ 2,751 $ 1,636 $ - $ 15,147
Restricted cash 1,551 314 224 - 2,089
Accounts receivable, net 13,197 20,423 1,411 (2,327 ) 32,704
Inventories, net - 36,290 4,250 - 40,540
Other receivables - 11,847 - - 11,847
Prepaid expenses and other current assets 1,785 1,631 52 - 3,468
Total current assets 27,293 73,256 7,573 (2,327 ) 105,795
PROPERTY AND EQUIPMENT, net 10,345 69 464 - 10,878
NOTES RECEIVABLE FROM AFFILIATES 21,095 - - (21,095 ) -
INVESTMENT IN AFFILIATES 38,859 - - (38,859 ) -
IDENTIFIABLE INTANGIBLES 408 - 475 - 883
GOODWILL - - 3,602 - 3,602
OTHER ASSETS 1,418 - 142 - 1,560
Total assets 99,418 73,325 12,256 (62,281 ) 122,718
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 9,523 $ 12,487 $ - $ - $ 22,010
Trade accounts payable 4,955 39,041 5,571 (2,327 ) 47,240
Accrued expenses 11,464 5,457 2,510 - 19,431
Total current liabilities 25,942 56,985 8,081 (2,327 ) 88,681
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 1,858 - - - 1,858
NOTES PAYABLE TO AFFILIATES - 5,505 15,590 (21,095 ) -
OTHER LIABILITIES 1,441 - 93 - 1,534
Total liabilities 29,241 62,490 23,764 (23,422 ) 92,073
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 10 - 19 (19 ) 10
Capital contributions 1,000 (1,000 ) -
Additional paid-in capital 92,949 - 28,059 (28,059 ) 92,949
Retained earnings (accumulated deficit) (24,640 ) 7,377 (39,581 ) (7,326 ) (64,170 )
Accumulated other comprehensive income 1,943 2,458 (5 ) (2,455 ) 1,941
Treasury stock (85 ) - - - (85 )
Total shareholders' equity 70,177 10,835 (11,508 ) (38,859 ) 30,645
Total liabilities and shareholders' equity $ 99,418 $ 73,325 $ 12,256 $ (62,281 ) $ 122,718
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2008
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 60,025 $ 23,023 $ - $ 83,048
Service fee revenue 21,254 - - - 21,254
Service fee revenue - affiliate 2,069 - - (2,069 ) -
Pass-thru revenue 6,389 - - (7 ) 6,382
Total revenues 29,712 60,025 23,023 (2,076 ) 110,684
COSTS OF REVENUES:
Cost of product revenue - 55,247 21,121 - 76,368
Cost of service fee revenue 15,771 - - (666 ) 15,105
Cost of pass-thru revenue 6,389 - - (7 ) 6,382
Total costs of revenues 22,160 55,247 21,121 (673 ) 97,855
Gross profit 7,552 4,778 1,902 (1,403 ) 12,829
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,946 2,721 2,585 (1,403 ) 11,849
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - - 201 - 201
Total operating expenses 7,946 2,721 2,786 (1,403 ) 12,050
Income (loss) from operations (394 ) 2,057 (884 ) - 779
INTEREST EXPENSE (INCOME), NET (1 ) 361 6 - 366
Income (loss) before income taxes (393 ) 1,696 (890 ) - 413
INCOME TAX PROVISION (BENEFIT) (249 ) 600 - - 351
NET INCOME (LOSS) $ (144 ) $ 1,096 $ (890 ) $ - $ 62
NON-GAAP NET INCOME (LOSS) $ (16 ) $ 1,096 $ (689 ) $ - $ 391
EBITDA $ 919 $ 2,063 $ (641 ) $ - $ 2,341
ADJUSTED EBITDA $ 1,047 $ 2,063 $ (641 ) $ - $ 2,469
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (144 ) $ 1,096 $ (890 ) $ - $ 62
Income tax expense (benefit) (249 ) 600 - - 351
Interest expense (income) (1 ) 361 6 - 366
Depreciation and amortization 1,313 6 243 - 1,562
EBITDA $ 919 $ 2,063 $ (641 ) $ - $ 2,341
Stock-based compensation 128 - - - 128
ADJUSTED EBITDA $ 1,047 $ 2,063 $ (641 ) $ - $ 2,469
A reconciliation of NET INCOME(LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (144 ) $ 1,096 $ (890 ) $ - $ 62
Stock-based compensation 128 - - - 128
Amortization of intangible assets - - 201 - 201
NON-GAAP NET INCOME (LOSS) $ (16 ) $ 1,096 $ (689 ) $ - $ 391
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2008
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 122,347 $ 50,992 $ - $ 173,339
Service fee revenue 42,066 - - - 42,066
Service fee revenue - affiliate 4,220 - - (4,220 ) -
Pass-thru revenue 13,706 - - 42 13,748
Total revenues 59,992 122,347 50,992 (4,178 ) 229,153
COSTS OF REVENUES:
Cost of product revenue - 113,499 46,848 - 160,347
Cost of service fee revenue 30,322 - - (1,373 ) 28,949
Cost of pass-thru revenue 13,706 - - 42 13,748
Total costs of revenues 44,028 113,499 46,848 (1,331 ) 203,044
Gross profit 15,964 8,848 4,144 (2,847 ) 26,109
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 16,259 5,139 5,392 (2,847 ) 23,943
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - - 403 - 403
Total operating expenses 16,259 5,139 5,795 (2,847 ) 24,346
Income (loss) from operations (295 ) 3,709 (1,651 ) - 1,763
INTEREST EXPENSE (INCOME), NET (61 ) 750 7 - 696
Income (loss) before income taxes (234 ) 2,959 (1,658 ) - 1,067
INCOME TAX PROVISION (BENEFIT) (444 ) 1,035 - - 591
NET INCOME (LOSS) $ 210 $ 1,924 $ (1,658 ) $ - $ 476
NON-GAAP NET INCOME (LOSS) $ 539 $ 1,924 $ (1,255 ) $ - $ 1,208
EBITDA $ 2,353 $ 3,719 $ (1,166 ) $ - $ 4,906
ADJUSTED EBITDA $ 2,682 $ 3,719 $ (1,166 ) $ - $ 5,235
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ 210 $ 1,924 $ (1,658 ) $ - $ 476
Income tax expense (benefit) (444 ) 1,035 - - 591
Interest expense (income) (61 ) 750 7 - 696
Depreciation and amortization 2,648 10 485 - 3,143
EBITDA $ 2,353 $ 3,719 $ (1,166 ) $ - $ 4,906
Stock-based compensation 329 - - - 329
ADJUSTED EBITDA $ 2,682 $ 3,719 $ (1,166 ) $ - $ 5,235
A reconciliation of NET INCOME(LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ 210 $ 1,924 $ (1,658 ) $ - $ 476
Stock-based compensation 329 - - - 329
Amortization of intangible assets - - 403 - 403
NON-GAAP NET INCOME (LOSS) $ 539 $ 1,924 $ (1,255 ) $ - $ 1,208
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2008
(In Thousands)
Supplies
PFSweb Distributors eCOST Eliminations Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,570 $ 3,870 $ 610 $ - $ 16,050
Restricted cash 1,550 242 216 - 2,008
Accounts receivable, net 21,676 22,103 2,065 (1,298 ) 44,546
Inventories, net - 41,382 5,804 - 47,186
Other receivables - 13,072 - - 13,072
Prepaid expenses and other current assets 2,222 1,526 54 - 3,802
Total current assets 37,018 82,195 8,749 (1,298 ) 126,664
PROPERTY AND EQUIPMENT, net 11,544 85 477 - 12,106
NOTES RECEIVABLE FROM AFFILIATES 20,845 - - (20,845 ) -
INVESTMENT IN AFFILIATES 37,541 - - (37,541 ) -
IDENTIFIABLE INTANGIBLES 434 - 527 - 961
GOODWILL - - 3,602 - 3,602
OTHER ASSETS 1,054 - 134 - 1,188
Total assets 108,436 82,280 13,489 (59,684 ) 144,521
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 9,045 $ 13,206 $ - $ - $ 22,251
Trade accounts payable 9,063 48,640 5,583 (1,298 ) 61,988
Accrued expenses 12,665 5,434 2,955 - 21,054
Total current liabilities 30,773 67,280 8,538 (1,298 ) 105,293
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 4,951 - - - 4,951
NOTES PAYABLE TO AFFILIATES - 5,505 15,340 (20,845 ) -
OTHER LIABILITIES 1,029 - 163 - 1,192
Total liabilities 36,753 72,785 24,041 (22,143 ) 111,436
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock 10 - 19 (19 ) 10
Capital contributions 1,000 (1,000 ) -
Additional paid-in capital 92,728 - 28,059 (28,059 ) 92,728
Retained earnings (accumulated deficit) (22,825 ) 6,002 (38,618 ) (5,952 ) (61,393 )
Accumulated other comprehensive income 1,855 2,493 (12 ) (2,511 ) 1,825
Treasury stock (85 ) - - - (85 )
Total shareholders' equity 71,683 9,495 (10,552 ) (37,541 ) 33,085
Total liabilities and shareholders' equity $ 108,436 $ 82,280 $ 13,489 $ (59,684 ) $ 144,521
eCOST.com, Inc.
Selected Operating Data
Three Months Ended
June 30,
2009 2008
Total Customers (1) 1,969,610 1,805,076
Active Customers (2) 222,095 171,794
New Customers (3) 49,192 29,440
Number of Orders (4) 96,186 61,851
Average Order Value (5) $ 203 $ 364
Advertising Expense (6) $ 218,943 $ 171,252
Cost to Acquire a New Customer (7) $ 4.44 $ 5.69
(1) Total customers have been calculated as the cumulative number of
customers for which orders
have been taken from eCOST.com's
inception to the end of the reported period.
(2) Active customers consist of the approximate number of customers
who placed orders during
the 12 months prior to the end of
the reported period.
(3) New Customers represent the number of persons that established a
new account and placed an
order during the reported period.
(4) Number of orders represents the total number of orders shipped
during the reported period
(not reflecting returns).
(5) Average order value has been calculated as gross sales divided by
the total number of orders
during the period presented. The
impact of returns is not reflected in average order value.
(6) Advertising expense includes the total dollars spent on
advertising during the reported period,
including internet,
direct mail, print and e-mail advertising, as well as customer list
enhancement
services.
(7) Catalog expense of $303 and $3,842 was not included in the 2009
and 2008 calculation,
respectively, as it is used for
retention and not acquisition.
SOURCE: PFSweb, Inc. PFSweb, Inc. Mark C. Layton, 972-881-2900 Senior Partner and Chief Executive Officer or Thomas J. Madden, 972-881-2900 Senior Partner and Chief Financial Officer or KCSA Strategic Communications Investor Relations Todd Fromer / Garth Russell 212-896-1215 / 212-896-1250 tfromer@kcsa.com / grussell@kcsa.com For full details for PFSW click here.
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