PFSweb Reports Fourth Quarter And Year-End 2011 Results

PFSweb, Inc. (Nasdaq: PFSW), an international provider of end-to-end web commerce solutions, today announced its financial results for the fourth quarter and year ended December 31, 2011.

“We are pleased to report that our Service Fee business segment reported record revenue for the December 2011 quarter of $32.5 million, an increase of 50% compared to the prior year,” stated Mark Layton, Chairman and Chief Executive Officer of PFSweb. “On a year-to-date basis, service fee revenues were $95.3 million in 2011, an increase of 35% compared to the prior year. The strong increases for the 2011 fourth quarter and yearly results were attributable to organic growth of existing clients as well as new client programs launched during the year, and included the benefit of strong holiday season ecommerce activity of our clients.”

“Our Adjusted EBITDA for the December quarter was a record $3.9 million, resulting in Adjusted EBITDA of $6.1 million for calendar 2011, which was within our guidance for the year. Our gross margin and SG&A results were impacted both during the fourth quarter and during the full year by certain infrastructure investments and expenses to support our growth, including incremental costs related to promotional sales events on clients’ e-commerce sites,” continued Mr. Layton.

Summary of consolidated results for the fourth quarter ended December 31, 2011:
  • Total revenue increased 15% to $87.5 million for the fourth quarter of 2011, compared to $76.3 million for fourth quarter of 2010;
  • Service Fee revenue increased 50% to $32.5 million, compared to $21.7 million for the same period in 2010;
  • Adjusted EBITDA (as defined) was $3.9 million for the fourth quarter of 2011, compared to $2.6 million for the same period in 2010;
  • Net income was $0.8 million, or $0.06 per basic and diluted share, compared to a net loss of $2.7 million, or $0.22 per basic and diluted share, for the fourth quarter of 2010. Net income for the fourth quarter of 2011 included approximately $0.2 million of relocation related costs. Net income for the fourth quarter of 2011 also included a $0.3 million loss from discontinued operations related to eCOST.com, compared to a $3.2 million loss from discontinued operations related to eCOST.com for the same period last year;
  • Non-GAAP net income (as defined) was $1.4 million, or $0.11 per basic and diluted share, compared to Non-GAAP net income of $0.7 million, or $0.05 per basic and diluted share, for the quarter ended December 31, 2010;
  • Total cash, cash equivalents and restricted cash was $18.5 million as of December 31, 2011, compared to $20.3 million as of December 31, 2010.

Summary of consolidated results for the year ended December 31, 2011:
  • Total revenue increased 9% to $298.8 million, compared to $274.5 million for the year ended December 31, 2010;
  • Service Fee revenue increased 35% to $95.3 million, compared to $70.6 million for the year ended December 31, 2010;
  • Service Fee equivalent revenue (as defined) increased 29% to $107.1 million, compared to $82.8 million for the year ended December 31, 2010;
  • Adjusted EBITDA (as defined) was $6.1 million, compared to $5.5 million for the year ended December 31, 2010;
  • Net loss was $4.6 million, or $0.36 per basic and diluted share, compared to net loss of $7.4 million or $0.65 per basic and diluted share, for the year ended December 31, 2010. Net loss for 2011 included approximately $0.5 million of relocation related costs. Net loss for the year 2011 also included a $0.9 million loss from discontinued operations related to eCOST.com, compared to a $4.0 million loss from discontinued operations related to eCOST.com in the same period last year;
  • Non-GAAP net loss (as defined) was $2.3 million, or $0.18 per basic and diluted share, compared to a Non-GAAP net loss of $1.9 million, or $0.17 per basic and diluted share, for the year ended December 31, 2010.

“Our new business pipeline remains strong and we currently anticipate continued service fee revenue growth in 2012. We are currently targeting 10 to 15 new client programs to be implemented or signed during the year, the growth from which will be partially offset by approximately 3 to 6 client programs that we currently expect will conclude or significantly reduce operations during 2012. Also, we expect further reductions in product revenue due to the impact of a reorganization by our largest client relationship in this segment. On an overall basis, we are currently targeting a year-over-year increase in service fee equivalent revenue (as defined) of approximately 20% in 2012. While we continue to make investments to support our growth, we are targeting an improved consolidated Adjusted EBITDA performance for 2012 to approximately $8 million to $10 million,” Mr. Layton concluded.

Conference Call Information

Management will host a conference call at 11:00 am Eastern Time (10:00 am Central Time) on Thursday, March 22, 2012, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number 55437082 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 April 22, 2012 at (855) 859-2056, pin number 55437082. 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, income (loss) from discontinued operations and executive disability benefits.

EBITDA represents earnings (or losses) before income (loss) from discontinued operations, interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, executive disability benefits and certain relocation related costs.

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, income (loss) from discontinued operations and executive disability benefits and EBITDA and Adjusted EBITDA further eliminate the effect of financing, income taxes, the accounting effects of capital spending and certain relocation related costs, 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.

Iconic brands engage PFSweb to enable their eCommerce initiatives. PFSweb’s End2End eCommerce® solution includes interactive marketing services, robust eCommerce technology, global fulfillment and logistics, high-touch customer care, financial services, and order management. PFSweb’s eCommerce solutions provide international reach and expertise in both direct-to-consumer and business-to-business initiatives, supporting organizations across multiple industries including Procter & Gamble, L’Oreal, LEGO, Columbia Sportswear, Sorel, Carter’s, Lucky Brand Jeans, kate spade new york, Juicy Couture, AAFES, Riverbed, Ricoh, Hawker Beechcraft Corp, Roots Canada Ltd. and Xerox. PFSweb is headquartered in Plano, TX with additional locations in Tennessee, Mississippi, Canada, Belgium, and the Philippines.

To find out more about PFSweb, Inc. (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, 2010 and Quarterly Report on Form 10-Q for the nine months ended September 30, 2011 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.
     
 

PFSweb, Inc. and SubsidiariesUnaudited Condensed Consolidated Statements of Operations (A)(In Thousands, Except Per Share Data)
                 

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,
2011 2010 2011 2010
REVENUES:

Product revenue, net
$

40,442
$

46,021
$ 162,447 $ 174,613
Service fee revenue 32,526 21,688 95,345 70,636
Pass-thru revenue   14,530     8,605     40,974     29,267  
Total revenues   87,498     76,314     298,766     274,516  
 
COSTS OF REVENUES:
Cost of product revenue 37,557 43,108 150,738 162,485
Cost of service fee revenue 24,510 15,722 71,751 51,144
Cost of pass-thru revenue   14,530     8,605     40,974     29,267  
Total costs of revenues   76,597     67,435     263,463     242,896  
Gross profit 10,901 8,879 35,303 31,620
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   9,409     8,020     37,512     33,611  
Loss from operations 1,492 859 (2,209 ) (1,991 )
INTEREST EXPENSE, NET   316     202     1,085     940  
Income (loss) before income taxes 1,176 657 (3,294 ) (2,931 )
INCOME TAX PROVISION   93     210     380     463  
INCOME (LOSS) FROM CONTINUING OPERATIONS 1,083 447 (3,674 ) (3,394 )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   (323 )   (3,192 )   (892 )   (3,975 )
NET INCOME (LOSS) $ 760   $ (2,745 ) $ (4,566 ) $ (7,369 )
NON-GAAP INCOME (LOSS) $ 1,430   $ 673   $ (2,272 ) $ (1,935 )
 
NET INCOME (LOSS) PER SHARE:
Basic $ 0.06   $ (0.22 ) $ (0.36 ) $ (0.65 )
Diluted $ 0.06   $ (0.22 ) $ (0.36 ) $ (0.65 )
 
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic   12,764     12,237     12,574     11,310  
Diluted   12,909     12,237     12,574     11,310  
 
EBITDA $ 3,261   $ 2,326   $ 4,135   $ 4,069  
ADJUSTED EBITDA $ 3,852   $ 2,552   $ 6,085   $ 5,528  
(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, 2010.
 
           
PFSweb, Inc. and SubsidiariesReconciliation of certain Non-GAAP Items to GAAP(In Thousands, Except Per Share Data)
       

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,
2011 2010 2011 2010
NET INCOME (LOSS) $ 760 $ (2,745 ) $ (4,566 ) $ (7,369 )
Loss from discontinued operations, net of tax 323 3,192 892 3,975
Income tax expense 93 210 380 463
Interest expense 316 202 1,085 940
Depreciation and amortization   1,769     1,467     6,344     6,060  
EBITDA $ 3,261 $ 2,326 $ 4,135 $ 4,069
Stock-based compensation 347 226 1,402 809
Executive disability benefits - - - 650
Relocation related costs   244     -     548     -  
ADJUSTED EBITDA $ 3,852   $ 2,552   $ 6,085   $ 5,528  
 
 

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,
2011 2010 2011 2010
 
NET INCOME (LOSS) $ 760 $ (2,745 ) $ (4,566 ) $ (7,369 )
Loss from discontinued operations, net of tax 323 3,192 892 3,975
Stock-based compensation 347 226 1,402 809
Executive disability benefits   -     -     -     650  
NON-GAAP INCOME (LOSS) $ 1,430   $ 673   $ (2,272 ) $ (1,935 )
 
NET INCOME (LOSS) PER SHARE:
Basic $ 0.06   $ (0.22 ) $ (0.36 ) $ (0.65 )
Diluted $ 0.06   $ (0.22 ) $ (0.36 ) $ (0.65 )
 
NON-GAAP INCOME (LOSS) Per Share:
Basic $ 0.11   $ 0.05   $ (0.18 ) $ (0.17 )
Diluted $ 0.11   $ 0.05   $ (0.18 ) $ (0.17 )
 
 

Three Months EndedDecember 31,

Twelve Months EndedDecember 31,
2011 2010 2011 2010
 
TOTAL REVENUES $ 87,498 $ 76,314 $ 298,766 $ 274,516
Pass-thru revenue (14,530 ) (8,605 ) (40,974 ) (29,267 )
Cost of product revenue   (37,557 )   (43,108 )   (150,738 )   (162,485 )
SERVICE FEE REVENUE EQUIVALENT $ 35,411   $ 24,601   $ 107,054   $ 82,764  
 
 

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
         
 

December 31,2011
December 31,2010

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,695 $ 18,430
Restricted cash 827 1,853

Accounts receivable, net of allowance for doubtful accounts of $663 and $754 at December 31, 2011 and December 31, 2010, respectively
52,679 41,438

Inventories, net of reserves of $1,555 and $1,561 at December 31, 2011 and December 31, 2010, respectively
30,487 35,161
Assets of discontinued operations - 2,776
Other receivables 11,915 14,539
Prepaid expenses and other current assets   4,697     3,580  
Total current assets   118,300     117,777  
 
PROPERTY AND EQUIPMENT, net 14,945 9,124
ASSETS OF DISCONTINUED OPERATIONS - 1,126
OTHER ASSETS   3,127     2,203  
Total assets   136,372     130,230  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 23,939 $ 18,320
Trade accounts payable 48,544 55,692
Deferred revenue 6,766 5,254
Accrued expenses   18,657     15,870  
Total current liabilities 97,906 95,136
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 3,583 2,136
OTHER LIABILITIES   6,809     3,608  
Total liabilities   108,298     100,880  
 
 
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;12,782,907 and 12,255,064 shares issued at December 31, 2011 and December 31, 2010, respectively; and 12,764,546 and 12,236,703 outstanding as of December 31, 2011 and December 31, 2010, respectively
13 12
Additional paid-in capital 104,645 101,229
Accumulated deficit (77,898 ) (73,332 )
Accumulated other comprehensive income 1,399 1,526
Treasury stock at cost, 18,361 shares   (85 )   (85 )
Total shareholders' equity   28,074     29,350  
Total liabilities and shareholders' equity $ 136,372   $ 130,230  
 
 

PFSweb, Inc. and SubsidiariesUnaudited Consolidating Statements of OperationsFor the Three Months Ended December 31, 2011(In Thousands)
               
PFSweb Business &Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 40,442 $ - $ - $ 40,442
Service fee revenue 32,526 - - - 32,526
Service fee revenue - affiliate 1,732 - - (1,732 ) -
Pass-thru revenue   14,530     -   -     -     14,530  
Total revenues   48,788     40,442   -     (1,732 )   87,498  
 
COSTS OF REVENUES:
Cost of product revenue - 37,557 - - 37,557
Cost of service fee revenue 25,463 - - (953 ) 24,510
Cost of pass-thru revenue   14,530     -   -     -     14,530  
Total costs of revenues   39,993     37,557   -     (953 )   76,597  
Gross profit 8,795 2,885 - (779 ) 10,901
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   7,918     2,270   -     (779 )   9,409  
Income from operations 877 615 - - 1,492
INTEREST EXPENSE, NET   6     310   -     -     316  
Income before income taxes 871 305 - - 1,176
INCOME TAX PROVISION (BENEFIT)   (51 )   144   -     -     93  
INCOME FROM CONTINUING OPERATIONS 922 161 - - 1,083
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   (323 )     (323 )
NET INCOME (LOSS) $ 922   $ 161 $ (323 ) $ -   $ 760  
NON-GAAP NET INCOME $ 1,269   $ 161 $ -   $ -   $ 1,430  
 
EBITDA $ 2,629   $ 632 $ -   $ -   $ 3,261  
ADJUSTED EBITDA $ 3,220   $ 632 $ -   $ -   $ 3,852  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ 922 $ 161 $ (323 ) $ - 760
Loss from discontinued operations, net of tax - - 323 - 323
Income tax expense (benefit) (51 ) 144 - - 93
Interest expense , net 6 310 - - 316
Depreciation and amortization   1,752     17   -     -     1,769  
EBITDA $ 2,629 $ 632 $ - $ - $ 3,261
Stock-based compensation 347 - - - 347
Move related costs   244           244  
ADJUSTED EBITDA $ 3,220   $ 632 $ -   $ -   $ 3,852  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME follows:
 
NET INCOME (LOSS) $ 922 $ 161 $ (323 ) $ - $ 760
Loss from discontinued operations, net of tax - - 323 - 323
Stock-based compensation   347     -   -     -     347  
NON-GAAP NET INCOME $ 1,269   $ 161 $ -   $ -   $ 1,430  

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 and PFSweb Retail Connect include certain ongoing activity formerly reported as eCOST.
 

PFSweb, Inc. and SubsidiariesUnaudited Consolidating Statements of OperationsFor the Twelve Months Ended December 31, 2011(In Thousands)
               
PFSweb Business &Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 162,447 $ - $ - $ 162,447
Service fee revenue 95,345 - - - 95,345
Service fee revenue - affiliate 6,501 - - (6,501 ) -
Pass-thru revenue   40,976     -   -     (2 )   40,974  
Total revenues   142,822     162,447   -     (6,503 )   298,766  
 
COSTS OF REVENUES:
Cost of product revenue - 150,738 - - 150,738
Cost of service fee revenue 74,367 - - (2,616 ) 71,751
Cost of pass-thru revenue   40,976     -   -     (2 )   40,974  
Total costs of revenues   115,343     150,738   -     (2,618 )   263,463  
Gross profit 27,479 11,709 - (3,885 ) 35,303
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   32,892     8,505   -     (3,885 )   37,512  
Income (loss) from operations (5,413 ) 3,204 - - (2,209 )
INTEREST EXPENSE (INCOME), NET   (140 )   1,225   -     -     1,085  
Income (loss) before income taxes (5,273 ) 1,979 - - (3,294 )
INCOME TAX PROVISION (BENEFIT)   (401 )   781   -     -     380  
INCOME (LOSS) FROM CONTINUING OPERATIONS (4,872 ) 1,198 - - (3,674 )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   (892 )     (892 )
NET INCOME (LOSS) $ (4,872 ) $ 1,198 $ (892 ) $ -   $ (4,566 )
NON-GAAP NET INCOME (LOSS) $ (3,470 ) $ 1,198 $ -   $ -   $ (2,272 )
 
EBITDA $ 892   $ 3,243 $ -   $ -   $ 4,135  
ADJUSTED EBITDA $ 2,842   $ 3,243 $ -   $ -   $ 6,085  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (4,872 ) $ 1,198 $ (892 ) $ - (4,566 )
Loss from discontinued operations, net of tax - - 892 - 892
Income tax expense (benefit) (401 ) 781 - - 380
Interest expense (income) (140 ) 1,225 - - 1,085
Depreciation and amortization   6,305     39   -     -     6,344  
EBITDA $ 892 $ 3,243 $ - $ - $ 4,135
Stock-based compensation 1,402 - - - 1,402
Relocation related costs   548           548  
ADJUSTED EBITDA $ 2,842   $ 3,243 $ -   $ -   $ 6,085  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (4,872 ) $ 1,198 $ (892 ) $ - $ (4,566 )
Loss from discontinued operations, net of tax - - 892 - 892
Stock-based compensation   1,402     -   -     -     1,402  
NON-GAAP NET INCOME (LOSS) $ (3,470 ) $ 1,198 $ -   $ -   $ (2,272 )

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 and PFSweb Retail Connect include certain ongoing activity formerly reported as eCOST.
 

PFSweb, Inc. and SubsidiariesUnaudited Consolidating Statements of OperationsFor the Twelve Months Ended December 31, 2011(In Thousands)
               
PFSweb Business &Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 162,447 $ - $ - $ 162,447
Service fee revenue 95,345 - - - 95,345
Service fee revenue - affiliate 6,501 - - (6,501 ) -
Pass-thru revenue   40,976     -   -     (2 )   40,974  
Total revenues   142,822     162,447   -     (6,503 )   298,766  
 
COSTS OF REVENUES:
Cost of product revenue - 150,738 - - 150,738
Cost of service fee revenue 74,367 - - (2,616 ) 71,751
Cost of pass-thru revenue   40,976     -   -     (2 )   40,974  
Total costs of revenues   115,343     150,738   -     (2,618 )   263,463  
Gross profit 27,479 11,709 - (3,885 ) 35,303
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   32,892     8,505   -     (3,885 )   37,512  
Income (loss) from operations (5,413 ) 3,204 - - (2,209 )
INTEREST EXPENSE (INCOME), NET   (140 )   1,225   -     -     1,085  
Income (loss) before income taxes (5,273 ) 1,979 - - (3,294 )
INCOME TAX PROVISION (BENEFIT)   (401 )   781   -     -     380  
INCOME (LOSS) FROM CONTINUING OPERATIONS (4,872 ) 1,198 - - (3,674 )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   (892 )     (892 )
NET INCOME (LOSS) $ (4,872 ) $ 1,198 $ (892 ) $ -   $ (4,566 )
NON-GAAP NET INCOME (LOSS) $ (3,470 ) $ 1,198 $ -   $ -   $ (2,272 )
 
EBITDA $ 892   $ 3,243 $ -   $ -   $ 4,135  
ADJUSTED EBITDA $ 2,842   $ 3,243 $ -   $ -   $ 6,085  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (4,872 ) $ 1,198 $ (892 ) $ - (4,566 )
Loss from discontinued operations, net of tax - - 892 - 892
Income tax expense (benefit) (401 ) 781 - - 380
Interest expense (income) (140 ) 1,225 - - 1,085
Depreciation and amortization   6,305     39   -     -     6,344  
EBITDA $ 892 $ 3,243 $ - $ - $ 4,135
Stock-based compensation 1,402 - - - 1,402
Relocation related costs   548           548  
ADJUSTED EBITDA $ 2,842   $ 3,243 $ -   $ -   $ 6,085  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (4,872 ) $ 1,198 $ (892 ) $ - $ (4,566 )
Loss from discontinued operations, net of tax - - 892 - 892
Stock-based compensation   1,402     -   -     -     1,402  
NON-GAAP NET INCOME (LOSS) $ (3,470 ) $ 1,198 $ -   $ -   $ (2,272 )

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 and PFSweb Retail Connect include certain ongoing activity formerly reported as eCOST.
 

PFSweb, Inc. and SubsidiariesUnaudited Consolidating Statements of OperationsFor the Three Months Ended December 31, 2010(In Thousands)
               
PFSweb Business &Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 46,021 $ - $ - $ 46,021
Service fee revenue 21,688 - - - 21,688
Service fee revenue - affiliate 1,701 - - (1,701 ) -
Pass-thru revenue   8,612     -   -     (7 )   8,605  
Total revenues   32,001     46,021   -     (1,708 )   76,314  
 
COSTS OF REVENUES:
Cost of product revenue - 43,108 - - 43,108
Cost of service fee revenue 16,328 - - (606 ) 15,722
Cost of pass-thru revenue   8,612     -   -     (7 )   8,605  
Total costs of revenues   24,940     43,108   -     (613 )   67,435  
Gross profit 7,061 2,913 - (1,095 ) 8,879
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   6,893     2,222   -     (1,095 )   8,020  
Income from operations 168 691 - - 859
INTEREST EXPENSE (INCOME), NET   (79 )   281   -     -     202  
Income before income taxes 247 410 - - 657
INCOME TAX PROVISION   51     159   -     -     210  
INCOME FROM CONTINUING OPERATIONS 196 251 - - 447
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   (3,192 )     (3,192 )
NET INCOME (LOSS) $ 196   $ 251 $ (3,192 ) $ -   $ (2,745 )
NON-GAAP NET INCOME $ 422   $ 251 $ -   $ -   $ 673  
 
EBITDA $ 1,628   $ 698 $ -   $ -   $ 2,326  
ADJUSTED EBITDA $ 1,854   $ 698 $ -   $ -   $ 2,552  
 
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ 196 $ 251 $ (3,192 ) $ - (2,745 )
Loss from discontinued operations, net of tax - - 3,192 - 3,192
Income tax expense 51 159 - - 210
Interest expense (income) (79 ) 281 - - 202
Depreciation and amortization   1,460     7   -     -     1,467  
EBITDA $ 1,628 $ 698 $ - $ - $ 2,326
Stock-based compensation   226     -   -     -     226  
ADJUSTED EBITDA $ 1,854   $ 698 $ -   $ -   $ 2,552  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME follows:
 
NET INCOME (LOSS) $ 196 $ 251 $ (3,192 ) $ - $ (2,745 )
Loss from discontinued operations, net of tax - - 3,192 - 3,192
Stock-based compensation   226     -   -     -     226  
NON-GAAP NET INCOME $ 422   $ 251 $ -   $ -   $ 673  

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 and PFSweb Retail Connect include certain ongoing activity formerly reported as eCOST.
 

PFSweb, Inc. and SubsidiariesUnaudited Consolidating Statements of OperationsFor the Twelve Months Ended December 31, 2010(In Thousands)
               
PFSweb Business &Retail Connect eCOST Eliminations Consolidated
REVENUES:
Product revenue, net $ - $ 174,613 $ - $ - $ 174,613
Service fee revenue 70,636 - - - 70,636
Service fee revenue - affiliate 6,622 - - (6,622 ) -
Pass-thru revenue   29,294     -   -     (27 )   29,267  
Total revenues   106,552     174,613   -     (6,649 )   274,516  
 
COSTS OF REVENUES:
Cost of product revenue - 162,485 - - 162,485
Cost of service fee revenue 53,543 - - (2,399 ) 51,144
Cost of pass-thru revenue   29,294     -   -     (27 )   29,267  
Total costs of revenues   82,837     162,485   -     (2,426 )   242,896  
Gross profit 23,715 12,128 - (4,223 ) 31,620
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   29,158     8,676   -     (4,223 )   33,611  
Income (loss) from operations (5,443 ) 3,452 - - (1,991 )
INTEREST EXPENSE (INCOME), NET   (257 )   1,197   -     -     940  
Income (loss) before income taxes (5,186 ) 2,255 - - (2,931 )
INCOME TAX PROVISION (BENEFIT)   (355 )   818   -     -     463  
INCOME (LOSS) FROM CONTINUING OPERATIONS (4,831 ) 1,437 - - (3,394 )
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX   -     -   (3,975 )     (3,975 )
NET INCOME (LOSS) $ (4,831 ) $ 1,437 $ (3,975 ) $ -   $ (7,369 )
NON-GAAP NET INCOME (LOSS) $ (3,372 ) $ 1,437 $ -   $ -   $ (1,935 )
 
EBITDA $ 589   $ 3,480 $ -   $ -   $ 4,069  
ADJUSTED EBITDA $ 2,048   $ 3,480 $ -   $ -   $ 5,528  
 
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
 
NET INCOME (LOSS) $ (4,831 ) $ 1,437 $ (3,975 ) $ - (7,369 )
Loss from discontinued operations, net of tax - - 3,975 - 3,975
Income tax expense (benefit) (355 ) 818 - - 463
Interest expense (income) (257 ) 1,197 - - 940
Depreciation and amortization   6,032     28   -     -     6,060  
EBITDA $ 589 $ 3,480 $ - $ - $ 4,069
Stock-based compensation 809 - - - 809
Executive disability benefit   650           650  
ADJUSTED EBITDA $ 2,048   $ 3,480 $ -   $ -   $ 5,528  
 
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
 
NET INCOME (LOSS) $ (4,831 ) $ 1,437 $ (3,975 ) $ - $ (7,369 )
Loss from discontinued operations, net of tax - - 3,975 - 3,975
Stock-based compensation 809 - - - 809
Executive disability benefit   650     -   -     -     650  
NON-GAAP NET INCOME (LOSS) $ (3,372 ) $ 1,437 $ -   $ -   $ (1,935 )

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 and PFSweb Retail Connect include certain ongoing activity formerly reported as eCOST.
 

PFSweb, Inc. and SubsidiariesUnaudited Condensed Consolidating Balance Sheetsas of December 31, 2011(In Thousands)
               
PFSweb Business &Retail Connect Eliminations Consolidated

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,818 $ 4,877 $ - $ 17,695
Restricted cash 138 689 - 827
Accounts receivable, net 35,881 17,133 (335 ) 52,679
Inventories, net - 30,487 - 30,487
Other receivables - 11,915 - 11,915
Prepaid expenses and other current assets   3,273     1,424     -     4,697  
Total current assets   52,110     66,525     (335 )   118,300  
 
PROPERTY AND EQUIPMENT, net 14,884 61 - 14,945
RECEIVABLE/INVESTMENT IN AFFILIATES 13,130 - (13,130 ) -
OTHER ASSETS   2,973     154     -     3,127  
Total assets   83,097     66,740     (13,465 )   136,372  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 13,918 $ 10,021 $ - $ 23,939
Trade accounts payable 12,089 36,790 (335 ) 48,544
Accrued expenses   18,747     6,676     -     25,423  
Total current liabilities 44,754 53,487 (335 ) 97,906
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 3,513 70 - 3,583
PAYABLE TO AFFILIATES - 22,495 (22,495 ) -
OTHER LIABILITIES   6,809     -     -     6,809  
Total liabilities   55,076     76,052     (22,830 )   108,298  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock 13 19 (19 ) 13
Capital contributions - 1,000 (1,000 ) -
Additional paid-in capital 104,645 28,059 (28,059 ) 104,645
Retained earnings (accumulated deficit) (77,950 ) (40,446 ) 40,498 (77,898 )
Accumulated other comprehensive income 1,398 2,056 (2,055 ) 1,399
Treasury stock   (85 )   -     -     (85 )
Total shareholders' equity   28,021     (9,312 )   9,365     28,074  
Total liabilities and shareholders' equity $ 83,097   $ 66,740   $ (13,465 ) $ 136,372  
 
 

PFSweb, Inc. and SubsidiariesUnaudited Condensed Consolidating Balance Sheetsas of December 31, 2010(In Thousands)
               
 
PFSweb SuppliesDistributors eCOST Eliminations Consolidated

ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 13,471 $

3,110

 
$ 1,849 $ - $ 18,430
Restricted cash 777 884 192 - 1,853
Accounts receivable, net 21,234 19,524 987 (307 ) 41,438
Inventories, net - 35,161 - - 35,161
Assets of discontinued operations - - 2,776 - 2,776
Other receivables - 13,822 717 - 14,539
Prepaid expenses and other current assets   2,006     1,469     105     -     3,580  
Total current assets   37,488     73,970     6,626     (307 )   117,777  
 
PROPERTY AND EQUIPMENT, net 8,861 22 241 - 9,124
RECEIVABLE/INVESTMENT IN AFFILIATES 14,255 - - (14,255 ) -
ASSETS OF DISCONTINUED OPERATIONS - - 1,126 - 1,126
OTHER ASSETS   2,013     -     190     -     2,203  
Total assets   62,617     73,992     8,183     (14,562 )   130,230  
 

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $ 8,332 $ 9,953 $ 35 $ - $ 18,320
Trade accounts payable 6,356 44,896 4,747 (307 ) 55,692
Accrued expenses   12,994     6,260     1,870     -     21,124  
Total current liabilities 27,682 61,109 6,652 (307 ) 95,136
 
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 2,031 - 105 - 2,136
PAYABLE TO AFFILIATES - 4,255 18,490 (22,745 ) -
OTHER LIABILITIES   3,608     -     -     -     3,608  
Total liabilities   33,321     65,364     25,247     (23,052 )   100,880  
 
COMMITMENTS AND CONTINGENCIES
 
SHAREHOLDERS' EQUITY:
Common stock 12 - 19 (19 ) 12
Capital contributions - 1,000 - (1,000 ) -
Additional paid-in capital 101,229 - 28,059 (28,059 ) 101,229
Retained earnings (accumulated deficit) (73,387 ) 5,410 (45,148 ) 39,793 (73,332 )
Accumulated other comprehensive income 1,527 2,218 6 (2,225 ) 1,526
Treasury stock   (85 )   -     -     -     (85 )
Total shareholders' equity   29,296     8,628     (17,064 )   8,490     29,350  
Total liabilities and shareholders' equity $ 62,617   $ 73,992   $ 8,183   $ (14,562 ) $ 130,230  

Copyright Business Wire 2010

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