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PFSweb Reports Second Quarter 2013 Results

PFSweb, Inc. (Nasdaq: PFSW), an international provider of end-to-end eCommerce solutions, today announced its financial results for the quarter ended June 30, 2013.

“We are pleased with our results for the June 2013 quarter. Higher than expected service fee revenue activity, including project work, partially offset the anticipated decline in revenue and profits related to client transitions. In addition, we continue to make progress implementing initiatives to drive operational efficiencies and reduce costs,” stated Mike Willoughby, Chief Executive Officer of PFSweb. “We also continue to see a number of opportunities to expand existing client engagements and sign new customers. Based on client projections, our current business pipeline has strengthened from last quarter to more than $55 million in average annual contract value.

“Our strategic relationship with transcosmos inc. is beginning to yield additional new business opportunities. In July, our management team traveled to China and Japan, where we made a series of presentations to executives on how to expand their eCommerce presence in the United States, Canada and Western Europe. In conjunction with this activity and our new relationship with transcosmos, several companies have already reached out to us to express their interest in our eCommerce solutions, and we have recently delivered our first proposal. In addition, PFSweb is in discussions with several of our existing clients to provide assistance to them with expanding into Asia. Overall, we are confident that these steps will drive growth and help unlock the operating leverage inherent in our business.

“With the higher than anticipated second quarter results and our current expectations of client volumes for the remainder of the year, including this upcoming holiday season, we now believe our 2013 Service Fee Equivalent Revenue will be toward the high end of the previously announced range of $110 million to $115 million, and we are increasing our Adjusted EBITDA target to a range of $9 million to $10.5 million for the year,” added Mr. Willoughby.

Summary of consolidated results for the second quarter ended June 30, 2013:

  • Service Fee revenue decreased 7% to $26.5 million, compared to $28.4 million for the same period in 2012; Service Fee Equivalent Revenue (as defined) decreased 8% to $28.0 million, compared to $30.5 million for the same period in 2012;
  • Total revenue decreased 13% to $58.2 million, compared to $67.1 million for the second quarter of 2012;
  • Adjusted EBITDA (as defined) decreased 11% to $2.5 million, compared to $2.8 million for the same period in 2012; Adjusted EBITDA for the second quarter of 2013 included an incremental benefit of approximately $0.4 million applicable to certain client transition related agreements;
  • Net loss was $1.0 million, or $0.07 per basic and diluted share, compared to net loss of $0.5 million, or $0.04 per basic and diluted share, for the second quarter of 2012; Net loss for the second quarter of 2013 included $0.3 million of restructuring and other charges while net loss for the second quarter of 2012 included $0.3 million of move related expenses;
  • Non-GAAP net loss (as defined) was $0.4 million, or $0.03 per basic and diluted share, compared to non-GAAP net income of $0.2 million, or $0.01 per basic and diluted share, for the quarter ended June 30, 2012.

Summary of consolidated results for the six months ended June 30, 2013:

  • Service Fee revenue decreased 4% to $54.5 million, compared to $56.8 million for the same period in 2012; Service Fee Equivalent Revenue (as defined) decreased 6% to $58.0 million, compared to $61.8 million for the same period in 2012;
  • Total revenue decreased 13% to $121.3 million, compared to $139.8 million for the first six months of 2012;
  • Adjusted EBITDA (as defined) remained flat at $5.4 million in both the six months ended June 30, 2013 and 2012; Adjusted EBITDA in the 2013 period included an incremental benefit of approximately $1.0 million applicable to certain client transition related agreements;
  • Net loss was $3.5 million, or $0.26 per basic and diluted share, compared to net loss of $1.8 million, or $0.14 per basic and diluted share, for the same period in 2012; Net loss for the six months ended June 30, 2013 included $2.5 million of restructuring and other charges while net loss for the same 2012 period included $0.9 million of move related expenses and $0.5 million of lease termination costs;
  • Non-GAAP net loss (as defined) was $0.4 million, or $0.03 per basic and diluted share, compared to non-GAAP net income of $0.2 million, or $0.02 per basic and diluted share, for the 2012 period.

Mr. Willoughby continued, “As we expected, the financial results for the second quarter reflect the partial impact of previously announced client transitions and certain restructuring-related activities, minimized by higher than expected client activity. We currently expect our third quarter results to be more negatively impacted as the remaining client transitions will be completed in the early part of the third quarter. We then expect to see a sequential improvement in our fourth quarter as we realize increased benefits from new and expanded client relationships, including potential new clients from our transcosmos relationship, and seasonal client volumes. Overall, we remain excited about the direction of our business and committed to enhancing value for our shareholders. Given the ramp-up time required to contract and implement new client solutions, we expect the benefits of these opportunities will primarily be reflected in our results beginning in CY2014.”

Conference Call Information

Management will host a conference call at 11:00 am Eastern Time (10:00 am Central Time) on Tuesday, August 13, 2013, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter pin number 20367798 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 or www.kcsa.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 13, 2013 at (855) 859-2056, pin number 20367798. The replay also will be available at the Company’s website for a limited time.

Non-GAAP Financial Measures

This news release may contain certain non-GAAP measures, including non-GAAP net income (loss), Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA and Service Fee Equivalent Revenue.

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, restructuring and other charges, lease termination costs and certain move related expenses.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, restructuring and other charges, lease termination costs and certain move related expenses.

Service Fee Equivalent Revenue represents service fee revenue plus the gross profit earned on product revenue.

Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and Service Fee Equivalent Revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, restructuring and other charges, lease termination costs and certain move related expenses and EBITDA and Adjusted EBITDA further eliminate 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. Service Fee Equivalent Revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

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. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

About PFSweb, Inc.

PFSweb is engaged by iconic brands to enable and manage customized eCommerce and omni-channel commerce initiatives. PFSweb’s iCommerce Hub(SM) technology ecosystem offers retailers a multi-channel order management system that allows partner/client data integration and international payment processing. PFSweb’s iCommerce Professional Service(SM) provides interactive marketing services, eCommerce web site development and support services, IT development services, content management, customer intelligence and relationship and account management services. PFSweb’s iCommerce Centers of Excellence(SM) provides global fulfillment and logistics, high-touch customer care, client financial services and technology hosting.

Together, PFSweb’s iCommerce Solutions allows for international reach and expertise in both direct-to-consumer and business-to-business initiatives. PFSweb supports organizations across multiple industries including Procter & Gamble, L’Oreal, LEGO, Columbia Sportswear, Sorel, Carter’s, AAFES, Riverbed, Ricoh, Hawker Beechcraft Corp, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, BCBGENERATION and HERVÉ LÉGER BY MAX AZRIA. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Canada, Belgium, and the Philippines.

To find out more about PFSweb (NASDAQ: PFSW), visit the company’s website at http://www.PFSweb.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, 2012 and the three months ended March 31, 2013 identify 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 and Quarterly Reports and the Risk Factors described therein. 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.

(Financial Tables Below)

 

PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
       
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
REVENUES:
Product revenue, net

$

22,985

$ 29,423 $ 48,467 $ 63,974
Service fee revenue 26,496 28,384 54,498 56,762
Pass-thru revenue   8,704     9,264     18,361     19,103  
Total revenues   58,185     67,071     121,326     139,839  
 
COSTS OF REVENUES:
Cost of product revenue 21,479 27,263 44,994 58,945
Cost of service fee revenue 17,811 20,698 37,069 42,353
Cost of pass-thru revenue   8,704     9,264     18,361     19,103  
Total costs of revenues   47,994     57,225     100,424     120,401  
Gross profit 10,191 9,846 20,902 19,438
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   10,938     9,902     23,739     20,406  
Income (loss) from operations (747 ) (56 ) (2,837 ) (968 )
INTEREST EXPENSE (INCOME), NET   184     258     402     522  
Income (loss) before income taxes (931 ) (314 ) (3,239 ) (1,490 )
INCOME TAX PROVISION (BENEFIT)   24     194     291     303  
NET INCOME (LOSS) $ (955 ) $ (508 ) $ (3,530 ) $ (1,793 )
NON-GAAP INCOME (LOSS) $ (421 ) $ 152   $ (400 ) $ 229  
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.07 ) $ (0.04 ) $ (0.26 ) $ (0.14 )
Diluted $ (0.07 ) $ (0.04 ) $ (0.26 ) $ (0.14 )
 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic   14,525     12,783     13,661     12,774  
Diluted   14,525     12,783     13,661     12,774  
 
EBITDA $ 1,941   $ 2,134   $ 2,259   $ 3,364  
ADJUSTED EBITDA $ 2,475   $ 2,794   $ 5,389   $ 5,386  
 
(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, 2012.
 
 

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,
2013 2012 2013 2012
NET INCOME (LOSS) $ (955 ) $ (508 ) $ (3,530 ) $ (1,793 )
Income tax expense 24 194 291 303
Interest expense, net 184 258 402 522
Depreciation and amortization   2,688     2,190     5,096     4,332  
EBITDA $ 1,941 $ 2,134 $ 2,259 $ 3,364
Stock-based compensation 282 366 585 706
Restructuring and other charges 252 - 2,545 -
Lease terminations costs - - - 450
Move related expenses   -     294     -     866  
ADJUSTED EBITDA $ 2,475   $ 2,794   $ 5,389   $ 5,386  
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
 
NET INCOME (LOSS) $ (955 ) $ (508 ) $ (3,530 ) $ (1,793 )
Stock-based compensation 282 366 585 706
Restructuring and other charges 252 - 2,545 -
Lease terminations costs - - - 450
Move related expenses   -     294     -     866  
NON-GAAP INCOME (LOSS) $ (421 ) $ 152   $ (400 ) $ 229  
 
NET INCOME (LOSS) PER SHARE:
Basic $ (0.07 ) $ (0.04 ) $ (0.26 ) $ (0.14 )
Diluted $ (0.07 ) $ (0.04 ) $ (0.26 ) $ (0.14 )
 
NON-GAAP INCOME (LOSS) Per Share:
Basic $ (0.03 ) $ 0.01   $ (0.03 ) $ 0.02  
Diluted $ (0.03 ) $ 0.01   $ (0.03 ) $ 0.02  
 
 
 
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
 
TOTAL REVENUES $ 58,185 $ 67,071 $ 121,326 $ 139,839
Pass-thru revenue (8,704 ) (9,264 ) (18,361 ) (19,103 )
Cost of product revenue   (21,479 )   (27,263 )   (44,994 )   (58,945 )
SERVICE FEE EQUIVALENT REVENUE $ 28,002   $ 30,544   $ 57,971   $ 61,791  
 
 

PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
   
 
June 30, December 31,
2013 2012

ASSETS

 

CURRENT ASSETS:
Cash and cash equivalents $ 21,638 $ 19,626
Restricted cash 457 283
Accounts receivable, net of allowance for doubtful accounts of $391 and
$450 at June 30, 2013 and December 31, 2012, respectively 37,873 45,684
Inventories, net of reserves of $1,753 and $1,789 at June 30, 2013 and
December 31, 2012, respectively 17,822 24,654
Other receivables 6,984 7,675
Prepaid expenses and other current assets   4,364     4,346  
Total current assets 89,138 102,268
 
PROPERTY AND EQUIPMENT, net 26,611 27,917
OTHER ASSETS   2,887     3,286  
Total assets   118,636     133,471  
 

LIABILITIES AND SHAREHOLDERS EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 8,940 $ 16,660
Trade accounts payable 26,760 40,493
Deferred revenue 7,870 6,648
Accrued expenses   18,981     23,097  
Total current liabilities 62,551 86,898
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 4,224 5,400
DEFERRED REVENUE 7,343 7,562
DEFERRED RENT   5,237     5,560  
Total liabilities   79,355     105,420  
 
 
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;
16,138,172 and 12,812,386 shares issued at June 30, 2013 and
December 31, 2012, respectively; and 16,104,705 and 12,778,919
shares outstanding as of June 30, 2013 and December 31, 2012, respectively 16 13
Additional paid-in capital 120,915 106,018
Accumulated deficit (82,939 ) (79,409 )
Accumulated other comprehensive income 1,414 1,554
Treasury stock at cost, 33,467 shares as of June 30, 2013 and December 31, 2012   (125 )   (125 )
Total shareholders' equity   39,281     28,051  
Total liabilities and shareholders' equity $ 118,636   $ 133,471  
 
 

PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2013
(In Thousands)
       
Business &
PFSweb Retail Connect Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 22,985 $ - $ 22,985
Service fee revenue 25,303 1,193 - 26,496
Service fee revenue - affiliate 1,915 435

(2,350

)

-
Pass-thru revenue   8,704     -     -     8,704  
Total revenues   35,922     24,613     (2,350 )   58,185  
 
COSTS OF REVENUES:
Cost of product revenue - 21,479 - 21,479
Cost of service fee revenue 18,401 1,433 (2,023 ) 17,811
Cost of pass-thru revenue   8,704     -     -     8,704  
Total costs of revenues   27,105     22,912     (2,023 )   47,994  
Gross profit 8,817 1,701 (327 ) 10,191
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   9,600     1,665     (327 )   10,938  
Income (loss) from operations (783 ) 36 - (747 )
INTEREST EXPENSE (INCOME), NET   35     149     -     184  
Income (loss) before income taxes (818 ) (113 ) - (931 )
INCOME TAX PROVISION (BENEFIT)   23     1     -     24  
NET INCOME (LOSS) $ (841 ) $ (114 ) $ -   $ (955 )
NON-GAAP NET INCOME (LOSS) $ (307 ) $ (114 ) $ -   $ (421 )
 
EBITDA $ 1,865   $ 76   $ -   $ 1,941  
ADJUSTED EBITDA $ 2,399   $ 76   $ -   $ 2,475  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (841 ) $ (114 ) $ - (955 )
Income tax expense (benefit) 23 1 - 24
Interest expense (income), net 35 149 - 184
Depreciation and amortization   2,648     40     -     2,688  
EBITDA $ 1,865 $ 76 $ - $ 1,941
Stock-based compensation 282 - - 282
Restructuring and other charges   252     -     -     252  
ADJUSTED EBITDA $ 2,399   $ 76   $ -   $ 2,475  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (841 ) $ (114 ) $ - $ (955 )
Stock-based compensation 282 - - 282
Restructuring and other charges   252     -     -     252  
NON-GAAP NET INCOME (LOSS) $ (307 ) $ (114 ) $ -   $ (421 )
 
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.
 
 

PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2013
(In Thousands)
       
Business &
PFSweb Retail Connect Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 48,467 $ - $ 48,467
Service fee revenue 51,744 2,754 - 54,498
Service fee revenue - affiliate 4,269 797 (5,066 ) -
Pass-thru revenue   18,362     -   (1 )   18,361  
Total revenues   74,375     52,018   (5,067 )   121,326  
 
COSTS OF REVENUES:
Cost of product revenue - 44,994 - 44,994
Cost of service fee revenue 38,181 3,080 (4,192 ) 37,069
Cost of pass-thru revenue   18,362     -   (1 )   18,361  
Total costs of revenues   56,543     48,074   (4,193 )   100,424  
Gross profit 17,832 3,944 (874 ) 20,902
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   21,162     3,451   (874 )   23,739  
Income (loss) from operations (3,330 ) 493 - (2,837 )
INTEREST EXPENSE (INCOME), NET   101     301   -     402  
Income (loss) before income taxes (3,431 ) 192 - (3,239 )
INCOME TAX PROVISION (BENEFIT)   143     148   -     291  
NET INCOME (LOSS) $ (3,574 ) $ 44 $ -   $ (3,530 )
NON-GAAP NET INCOME (LOSS) $ (444 ) $ 44 $ -   $ (400 )
 
EBITDA $ 1,688   $ 571 $ -   $ 2,259  
ADJUSTED EBITDA $ 4,818   $ 571 $ -   $ 5,389  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (3,574 ) $ 44 $ - (3,530 )
Income tax expense (benefit) 143 148 - 291
Interest expense (income), net 101 301 - 402
Depreciation and amortization   5,018     78   -     5,096  
EBITDA $ 1,688 $ 571 $ - $ 2,259
Stock-based compensation 585 - - 585
Restructuring and other charges   2,545     -   -     2,545  
ADJUSTED EBITDA $ 4,818   $ 571 $ -   $ 5,389  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (3,574 ) $ 44 $ - $ (3,530 )
Stock-based compensation 585 - - 585
Restructuring and other charges   2,545     -   -     2,545  
NON-GAAP NET INCOME (LOSS) $ (444 ) $ 44 $ -   $ (400 )
 
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.
 
 

PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2012
(In Thousands)
         
Business &
PFSweb Retail Connect Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 29,423 $ - $ 29,423
Service fee revenue 28,384 - - 28,384
Service fee revenue - affiliate 1,124 134 (1,258 ) -
Pass-thru revenue   9,264     -   -     9,264  
Total revenues   38,772     29,557   (1,258 )   67,071  
 
COSTS OF REVENUES:
Cost of product revenue - 27,263 - 27,263
Cost of service fee revenue 21,273 134 (709 ) 20,698
Cost of pass-thru revenue   9,264     -   -     9,264  
Total costs of revenues   30,537     27,397   (709 )   57,225  
Gross profit 8,235 2,160 (549 ) 9,846
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   8,823     1,628   (549 )   9,902  
Income (loss) from operations (588 ) 532 - (56 )
INTEREST EXPENSE (INCOME), NET   57     201   -     258  
Income (loss) before income taxes (645 ) 331 - (314 )
INCOME TAX PROVISION (BENEFIT)   55     139   -     194  
NET INCOME (LOSS) $ (700 ) $ 192 $ -   $ (508 )
NON-GAAP NET INCOME (LOSS) $ (40 ) $ 192 $ -   $ 152  
 
EBITDA $ 1,578   $ 556 $ -   $ 2,134  
ADJUSTED EBITDA $ 2,238   $ 556 $ -   $ 2,794  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (700 ) $ 192 $ - (508 )
Income tax expense (benefit) 55 139 - 194
Interest expense (income), net 57 201 - 258
Depreciation and amortization   2,166     24   -     2,190  
EBITDA $ 1,578 $ 556 $ - $ 2,134
Stock-based compensation 366 - - 366
Move related expenses   294         294  
ADJUSTED EBITDA $ 2,238   $ 556 $ -   $ 2,794  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (700 ) $ 192 $ - $ (508 )
Stock-based compensation 366 - - 366
Move related expenses   294     -   -     294  
NON-GAAP NET INCOME (LOSS) $ (40 ) $ 192 $ -   $ 152  
 
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.
 
 

PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2012
(In Thousands)
       
Business &
PFSweb Retail Connect Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 63,974 $ - $ 63,974
Service fee revenue 56,762 - - 56,762
Service fee revenue - affiliate 2,586 308 (2,894 ) -
Pass-thru revenue   19,103     -     19,103  
Total revenues   78,451     64,282   (2,894 )   139,839  
 
COSTS OF REVENUES:
Cost of product revenue - 58,945 - 58,945
Cost of service fee revenue 43,543 308 (1,498 ) 42,353
Cost of pass-thru revenue   19,103     -   -     19,103  
Total costs of revenues   62,646     59,253   (1,498 )   120,401  
Gross profit 15,805 5,029 (1,396 ) 19,438
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   18,133     3,669   (1,396 )   20,406  
Income (loss) from operations (2,328 ) 1,360 - (968 )
INTEREST EXPENSE (INCOME), NET   91     431   -     522  
Income (loss) before income taxes (2,419 ) 929 - (1,490 )
INCOME TAX PROVISION (BENEFIT)   (69 )   372   -     303  
NET INCOME (LOSS) $ (2,350 ) $ 557 $ -   $ (1,793 )
NON-GAAP NET INCOME (LOSS) $ (328 ) $ 557 $ -   $ 229  
 
EBITDA $ 1,964   $ 1,400 $ -   $ 3,364  
ADJUSTED EBITDA $ 3,986   $ 1,400 $ -   $ 5,386  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (2,350 ) $ 557 $ - (1,793 )
Income tax expense (benefit) (69 ) 372 - 303
Interest expense (income), net 91 431 - 522
Depreciation and amortization   4,292     40   -     4,332  
EBITDA $ 1,964 $ 1,400 $ - $ 3,364
Stock-based compensation 706 - - 706
Lease termination costs 450 - - 450
Move related expenses   866         866  
ADJUSTED EBITDA $ 3,986   $ 1,400 $ -   $ 5,386  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (2,350 ) $ 557 $ - $ (1,793 )
Stock-based compensation 706 - - 706
Lease termination costs 450 - - 450
Move related expenses   866         866  
NON-GAAP NET INCOME (LOSS) $ (328 ) $ 557 $ -   $ 229  
 
Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.
 
 

PFSweb, Inc. and Subsidiaries

Unaudited Condensed Consolidating Balance Sheets
as of June 30, 2013
(In Thousands)
         
 
Business &
PFSweb Retail Connect Eliminations Consolidated

ASSETS

 

CURRENT ASSETS:

Cash and cash equivalents $ 15,967 $ 5,671 $ - $ 21,638
Restricted cash - 457 - 457
Accounts receivable, net 27,212 10,906 (245 ) 37,873
Inventories, net - 17,822 - 17,822
Other receivables - 6,984 - 6,984
Prepaid expenses and other current assets   2,928     1,436     -     4,364  
Total current assets 46,107 43,276 (245 ) 89,138
 
PROPERTY AND EQUIPMENT, net 26,392 219 - 26,611
RECEIVABLE/INVESTMENT IN AFFILIATES 13,775 - (13,775 ) -
OTHER ASSETS   2,786     101     -     2,887  
Total assets   89,060     43,596     (14,020 )   118,636  
 

LIABILITIES AND SHAREHOLDERS EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 4,258 $ 4,682 $ - $ 8,940
Trade accounts payable 7,046 19,959 (245 ) 26,760
Deferred revenue 7,825 45 - 7,870
Accrued expenses   13,760     5,221     -     18,981  
Total current liabilities 32,889 29,907 (245 ) 62,551
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 4,224 - - 4,224
PAYABLE TO AFFILIATES - 23,045 (23,045 ) -
DEFERRED REVENUE 7,343 - - 7,343
DEFERRED RENT   5,195     42     -     5,237  
Total liabilities   49,651     52,994     (23,290 )   79,355  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock 16 19 (19 ) 16
Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 120,915 28,060 (28,060 ) 120,915
Retained earnings (accumulated deficit) (82,811 ) (40,562 ) 40,434 (82,939 )
Accumulated other comprehensive income 1,414 2,085 (2,085 ) 1,414
Treasury stock   (125 )   -     -     (125 )
Total shareholders' equity   39,409     (9,398 )   9,270     39,281  
Total liabilities and shareholders' equity $ 89,060   $ 43,596   $ (14,020 ) $ 118,636  
 
 

PFSweb, Inc. and Subsidiaries

Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2012
(In Thousands)
           
 
Business &
PFSweb Retail Connect Eliminations Consolidated

ASSETS

 

CURRENT ASSETS:
Cash and cash equivalents

$

13,079

$ 6,547 $ - $ 19,626
Restricted cash - 283 - 283
Accounts receivable, net 34,831 11,574 (721 ) 45,684
Inventories, net - 24,654 - 24,654
Other receivables - 7,675 - 7,675
Prepaid expenses and other current assets   2,817     1,529     -     4,346  
Total current assets   50,727     52,262     (721 )   102,268  
 
PROPERTY AND EQUIPMENT, net 27,651 266 - 27,917
RECEIVABLE/INVESTMENT IN AFFILIATES 13,396 - (13,396 ) -
OTHER ASSETS   3,166     120     -     3,286  
Total assets   94,940     52,648     (14,117 )   133,471  
 

LIABILITIES AND SHAREHOLDERS EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 13,072 $ 3,588 $ - $ 16,660
Trade accounts payable 12,109 29,105 (721 ) 40,493
Deferred revenue 6,573 75 - 6,648
Accrued expenses   16,743     6,354     -     23,097  
Total current liabilities 48,497 39,122 (721 ) 86,898
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 5,400 - - 5,400
PAYABLE TO AFFILIATES - 22,795 (22,795 ) -
DEFERRED REVENUE 7,562 - - 7,562
DEFERRED RENT   5,482     78     -     5,560  
Total liabilities   66,941     61,995     (23,516 )   105,420  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock 13 19 (19 ) 13
Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 106,018 28,059 (28,059 ) 106,018
Retained earnings (accumulated deficit) (79,461 ) (40,606 ) 40,658 (79,409 )
Accumulated other comprehensive income 1,554 2,181 (2,181 ) 1,554
Treasury stock   (125 )   -     -     (125 )
Total shareholders' equity   27,999     (9,347 )   9,399     28,051  
Total liabilities and shareholders' equity $ 94,940   $ 52,648   $ (14,117 ) $ 133,471  
 

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