PC Connection (CNXN) 10-Q 5 Aug 14 2014 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 01, 2014
Document Information [Line Items]	'	'
Document Type	'10-Q	'
Amendment Flag	'false	'
Document Period End Date	30-Jun-14	'
Document Fiscal Year Focus	'2014	'
Document Fiscal Period Focus	'Q2	'
Trading Symbol	'PCCC	'
Entity Registrant Name	'PC CONNECTION INC	'
Entity Central Index Key	'0001050377	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Accelerated Filer	'
Entity Common Stock, Shares Outstanding	'	26,224,138

Condensed_Consolidated_Balance

Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Current Assets:	'	'
Cash and cash equivalents	$60,289	$42,547
Accounts receivable, net	295,327	283,051
Inventories	97,187	79,141
Deferred income taxes	6,382	6,382
Prepaid expenses and other current assets	4,533	5,117
Income taxes receivable	783	2,256
Total current assets	464,501	418,494
Property and equipment, net	27,679	27,600
Goodwill	51,276	51,276
Other intangibles, net	2,404	2,854
Other assets	698	720
Total Assets	546,558	500,944
Current Liabilities:	'	'
Accounts payable	153,222	124,821
Accrued expenses and other liabilities	20,161	22,362
Accrued payroll	15,139	14,935
Total current liabilities	188,522	162,118
Deferred income taxes	16,281	16,224
Other liabilities	2,504	2,773
Total Liabilities	207,307	181,115
Stockholders' Equity:	'	'
Common stock	281	281
Additional paid-in capital	105,794	104,932
Retained earnings	249,038	230,478
Treasury stock, at cost	-15,862	-15,862
Total Stockholders' Equity	339,251	319,829
Total Liabilities and Stockholders' Equity	$546,558	$500,944

Condensed_Consolidated_Stateme

Condensed Consolidated Statements of Income (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Net sales	$633,244	$557,287	$1,193,004	$1,062,710
Cost of sales	549,478	483,371	1,036,391	921,956
Gross profit	83,766	73,916	156,613	140,754
Selling, general and administrative expenses	64,564	58,533	125,665	115,246
Income from operations	19,202	15,383	30,948	25,508
Interest/other expense, net	-26	-46	-36	-96
Income before taxes	19,176	15,337	30,912	25,412
Income tax provision	-7,747	-6,183	-12,352	-10,160
Net income	$11,429	$9,154	$18,560	$15,252
Earnings per common share:	'	'	'	'
Basic	$0.44	$0.35	$0.71	$0.59
Diluted	$0.43	$0.35	$0.70	$0.58
Shares used in computation of earnings per common share:	'	'	'	'
Basic	26,206	26,127	26,204	26,063
Diluted	26,487	26,379	26,485	26,329

Condensed_Consolidated_Stateme1

Condensed Consolidated Statements of Cash Flows (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013
Cash Flows from Operating Activities:	'	'
Net income	$18,560	$15,252
Adjustments to reconcile net income to net cash provided by operating activities:	'	'
Depreciation and amortization	3,863	3,337
Stock-based compensation expense	486	301
Provision for doubtful accounts	365	564
Deferred income taxes	57	-110
Excess tax benefit from exercise of equity awards	-34	-228
Loss on disposal of fixed assets	'	5
Income tax benefit from stock-based compensation	'	196
Changes in assets and liabilities:	'	'
Accounts receivable	-12,641	10,613
Inventories	-18,046	-7,498
Prepaid expenses and other current assets	2,057	-660
Other non-current assets	22	13
Accounts payable	28,392	-1,400
Accrued expenses and other liabilities	-2,232	6,590
Net cash provided by operating activities	20,849	26,975
Cash Flows from Investing Activities:	'	'
Purchases of property and equipment	-3,493	-4,257
Proceeds from sale of equipment	10	'
Net cash used for investing activities	-3,483	-4,257
Cash Flows from Financing Activities:	'	'
Excess tax benefit from exercise of equity awards	34	228
Exercise of stock options	16	1,586
Issuance of stock under Employee Stock Purchase Plan	360	307
Payment of payroll taxes on stock-based compensation through shares withheld	-34	'
Repayment of capital lease obligation to affiliate	'	-527
Net cash provided by financing activities	376	1,594
Increase in cash and cash equivalents	17,742	24,312
Cash and cash equivalents, beginning of period	42,547	39,907
Cash and cash equivalents, end of period	60,289	64,219
Non-cash Investing Activity:	'	'
Accrued capital expenditures	343	151
Supplemental Cash Flow Information:	'	'
Income taxes paid	$10,933	$10,936

Basis_of_Presentation

Basis of Presentation	6 Months Ended
	Jun. 30, 2014
Basis of Presentation	'
	Note 1–Basis of Presentation
	The accompanying condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries (the “Company,” “we,” “us,” or “our”) have been prepared in accordance with accounting principles generally accepted in the United States of America. Such principles were applied on a basis consistent with the accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission (the “SEC”). The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements contained in our Annual Report on Form 10-K.
	In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods reported and of the Company’s financial condition as of the date of the interim balance sheet. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. The operating results for the three and six months ended June 30, 2014 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2014.
	Use of Estimates in the Preparation of Financial Statements
	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the amounts reported in the accompanying condensed consolidated financial statements. Actual results could differ from those estimates.
	Comprehensive Income
	We had no items of comprehensive income, other than our net income for each of the periods presented.
	Recently Issued Financial Accounting Standard
	On May 28, 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASU 2014-09), its final standard on revenue from contracts with customers. ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the revenue model to contracts within its scope, an entity identifies the contract(s) with a customer, identifies the performance obligations in the contract, determines the transaction price, allocates the transaction price to the performance obligations in the contract, and recognizes revenue when (or as) the entity satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers that are within the scope of other topics in the FASB Accounting Standards Codification. ASU 2014-09 also requires significantly expanded disclosures about revenue recognition. ASU 2014-09 is effective for the Company on January 1, 2017. We are currently assessing the potential impact of the adoption of ASU 2014-09 on its financial statements.

Earnings_Per_Share

Earnings Per Share	6 Months Ended
	Jun. 30, 2014
Earnings Per Share	'
	Note 2–Earnings Per Share
	Basic earnings per common share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributable to nonvested stock units and stock options outstanding, if dilutive.
	The following table sets forth the computation of basic and diluted earnings per share:
		Three Months Ended				Six Months Ended
	June 30,	2014		2013		2014		2013
	Numerator:
	Net income	$	11,429	$	9,154	$	18,560	$	15,252
	Denominator:
	Denominator for basic earnings per share		26,206		26,127		26,204		26,063
	Dilutive effect of employee stock awards		281		252		281		266
	Denominator for diluted earnings per share		26,487		26,379		26,485		26,329
	Earnings per share:
	Basic	$	0.44	$	0.35	$	0.71	$	0.59
	Diluted	$	0.43	$	0.35	$	0.7	$	0.58
	For the three and six months ended June 30, 2014 and 2013, the following outstanding nonvested stock units and stock options were excluded from the computation of diluted earnings per share because including them would have had an anti-dilutive effect:
		Three Months Ended				Six Months Ended
	June 30,	2014		2013		2014		2013
	Employee stock awards		120		—		—		—

Segment_and_Related_Disclosure

Segment and Related Disclosures	6 Months Ended
	Jun. 30, 2014
Segment and Related Disclosures	'
	Note 3–Segment and Related Disclosures
	The internal reporting structure used by our chief operating decision maker (“CODM”) to assess performance and allocate resources determines the basis for our reportable operating segments. Our CODM is our Chairman of the Board of Directors, and she evaluates operations and allocates resources based on a measure of operating income.
	Our operations are organized under three reporting segments—the SMB segment, which serves primarily small- and medium-sized businesses; the Large Account segment, which serves primarily medium-to-large corporations; and the Public Sector segment, which serves primarily federal, state, and local governmental and educational institutions. In addition, the Headquarters/Other group provides services in areas such as finance, human resources, information technology, marketing, and product management. Most of the operating costs associated with the Headquarters/Other group functions are charged to the operating segments based on their estimated usage of the underlying functions. Certain headquarters costs relating to executive oversight and other fiduciary functions that are not allocated to the operating segments are included under the heading of Headquarters/Other in the tables below.
	Net sales presented below exclude inter-segment product revenues. Segment information applicable to our reportable operating segments for the three and six months ended June 30, 2014 and 2013 is shown below:
		Three Months Ended						Six Months Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
	Net sales:
	SMB	$	268,056		$	242,194		$	521,527		$	477,872
	Large Account		222,276			196,152			423,208			382,547
	Public Sector		142,912			118,941			248,269			202,291
	Total net sales	$	633,244		$	557,287		$	1,193,004		$	1,062,710
	Operating income (loss):
	SMB		9,570			8,897			17,377			16,035
	Large Account		10,326			7,099			18,102			13,275
	Public Sector		1,694			1,120			(191	)		(402	)
	Headquarters/Other		(2,388	)		(1,733	)		(4,340	)		(3,400	)
	Total operating income	$	19,202		$	15,383		$	30,948		$	25,508
	Interest/other expense, net		(26	)		(46	)		(36	)		(96	)
	Income before taxes	$	19,176		$	15,337		$	30,912		$	25,412
	Selected Operating Expense:
	Depreciation and amortization:
	SMB		1			1			2			2
	Large Account		341			521			675			1,038
	Public Sector		24			39			68			77
	Headquarters/Other		1,420			1,149			3,118			2,220
	Total depreciation and amortization	$	1,786		$	1,710		$	3,863		$	3,337
	Assets at June 30, 2014:
	SMB							$	173,149
	Large Account								238,344
	Public Sector								56,294
	Headquarters/Other								78,771
	Total assets							$	546,558
	The assets of our three operating segments presented above consist primarily of accounts receivable, intercompany receivable, goodwill, and other intangibles. Assets reported under the Headquarters/Other group are managed by corporate headquarters, including cash, inventory, and property and equipment. Total assets for the Headquarters/Other group are presented net of intercompany balances eliminations of $23,726 as of June 30, 2014. Our capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade our management information systems. These systems serve all of our subsidiaries, to varying degrees, and as a result, our CODM does not evaluate capital expenditures on a segment basis.

Commitments_and_Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2014
Commitments and Contingencies	'
	Note 4–Commitments and Contingencies
	We are subject to various legal proceedings and claims, including patent infringement claims, which have arisen during the ordinary course of business. In the opinion of management, the outcome of such matters is not expected to have a material effect on our financial position, results of operations, and cash flows.
	We are subject to audits by states on sales and income taxes, unclaimed property, employment matters, and other assessments. A comprehensive multi-state unclaimed property audit continues to be in progress. While management believes that known and estimated unclaimed property liabilities have been adequately provided for, it is too early to determine the ultimate outcome of such audits, as not all formal assessments have been finalized. Additional liabilities for this and other audits could be assessed, and such outcomes could have a material, negative impact on our financial position, results of operations, and cash flows.

Bank_Borrowing_and_Trade_Credi

Bank Borrowing and Trade Credit Arrangements	6 Months Ended
	Jun. 30, 2014
Bank Borrowing and Trade Credit Arrangements	'
	Note 5–Bank Borrowing and Trade Credit Arrangements
	We have a $50,000 credit facility collateralized by our receivables that expires February 24, 2017. This facility can be increased, at our option, to $80,000 for approved acquisitions or other uses authorized by the lender on substantially the same terms. Amounts outstanding under this facility bear interest at the one-month London Interbank Offered Rate, or LIBOR, plus a spread based on our funded debt ratio, or in the absence of LIBOR, the prime rate (3.25% at June 30, 2014). The one-month LIBOR rate at June 30, 2014 was 0.15%. The credit facility includes various customary financial ratios and operating covenants, including minimum net worth and maximum funded debt ratio requirements, and default acceleration provisions. Funded debt ratio is the ratio of average outstanding advances under the credit facility to Adjusted EBITDA (Earnings Before Interest Expense, Taxes, Depreciation, Amortization, and Special Charges). The maximum allowable funded debt ratio under the agreement is 2.0 to 1.0. Decreases in our consolidated Adjusted EBITDA could limit our potential borrowings under the credit facility. We had no outstanding bank borrowings at June 30, 2014, and accordingly, the entire $50,000 facility was available for borrowings under the credit facility.
	At June 30, 2014, we had security agreements with two financial institutions to facilitate the purchase of inventory from various suppliers under certain terms and conditions. The agreements allow a collateralized first position in certain branded products in our inventory financed by the financial institutions up to an aggregated amount of $47,000. The cost of such financing under these agreements is borne by the suppliers by discounting their invoices to the financial institutions. We do not pay any interest or discount fees on such inventory. At June 30, 2014 and December 31, 2013, accounts payable included $26,205 and $15,543, respectively, owed to these financial institutions.

Earnings_Per_Share_Tables

Earnings Per Share (Tables)	6 Months Ended
	Jun. 30, 2014
Computation of Basic and Diluted Earnings Per Share	'
	The following table sets forth the computation of basic and diluted earnings per share:
		Three Months Ended				Six Months Ended
	June 30,	2014		2013		2014		2013
	Numerator:
	Net income	$	11,429	$	9,154	$	18,560	$	15,252
	Denominator:
	Denominator for basic earnings per share		26,206		26,127		26,204		26,063
	Dilutive effect of employee stock awards		281		252		281		266
	Denominator for diluted earnings per share		26,487		26,379		26,485		26,329
	Earnings per share:
	Basic	$	0.44	$	0.35	$	0.71	$	0.59
	Diluted	$	0.43	$	0.35	$	0.7	$	0.58
Outstanding Non Vested Stock Units and Stock Options Excluded from Computation of Diluted Earnings Per Share	'
	For the three and six months ended June 30, 2014 and 2013, the following outstanding nonvested stock units and stock options were excluded from the computation of diluted earnings per share because including them would have had an anti-dilutive effect:
		Three Months Ended				Six Months Ended
	June 30,	2014		2013		2014		2013
	Employee stock awards		120		—		—		—

Segment_and_Related_Disclosure1

Segment and Related Disclosures (Tables)	6 Months Ended
	Jun. 30, 2014
Segment Information Applicable to Reportable Operating Segments	'
	Net sales presented below exclude inter-segment product revenues. Segment information applicable to our reportable operating segments for the three and six months ended June 30, 2014 and 2013 is shown below:
		Three Months Ended						Six Months Ended
		June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
	Net sales:
	SMB	$	268,056		$	242,194		$	521,527		$	477,872
	Large Account		222,276			196,152			423,208			382,547
	Public Sector		142,912			118,941			248,269			202,291
	Total net sales	$	633,244		$	557,287		$	1,193,004		$	1,062,710
	Operating income (loss):
	SMB		9,570			8,897			17,377			16,035
	Large Account		10,326			7,099			18,102			13,275
	Public Sector		1,694			1,120			(191	)		(402	)
	Headquarters/Other		(2,388	)		(1,733	)		(4,340	)		(3,400	)
	Total operating income	$	19,202		$	15,383		$	30,948		$	25,508
	Interest/other expense, net		(26	)		(46	)		(36	)		(96	)
	Income before taxes	$	19,176		$	15,337		$	30,912		$	25,412
	Selected Operating Expense:
	Depreciation and amortization:
	SMB		1			1			2			2
	Large Account		341			521			675			1,038
	Public Sector		24			39			68			77
	Headquarters/Other		1,420			1,149			3,118			2,220
	Total depreciation and amortization	$	1,786		$	1,710		$	3,863		$	3,337
	Assets at June 30, 2014:
	SMB							$	173,149
	Large Account								238,344
	Public Sector								56,294
	Headquarters/Other								78,771
	Total assets							$	546,558

Computation_of_Basic_and_Dilut

Computation of Basic and Diluted Earnings Per Share (Detail) (USD $)	3 Months Ended		6 Months Ended
In Thousands, except Per Share data, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Numerator:	'	'	'	'
Net income	$11,429	$9,154	$18,560	$15,252
Denominator:	'	'	'	'
Denominator for basic earnings per share	26,206	26,127	26,204	26,063
Dilutive effect of employee stock awards	281	252	281	266
Denominator for diluted earnings per share	26,487	26,379	26,485	26,329
Earnings per share:	'	'	'	'
Basic	$0.44	$0.35	$0.71	$0.59
Diluted	$0.43	$0.35	$0.70	$0.58

Outstanding_Non_Vested_Stock_U

Outstanding Non Vested Stock Units and Stock Options Excluded from Computation of Diluted Earnings Per Share (Detail)	3 Months Ended		6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]	'	'	'	'
Employee stock awards	120	0	0	0

Segment_and_Related_Disclosure2

Segment and Related Disclosures - Additional Information (Detail) (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
	Segment
Segment Reporting Information [Line Items]	'	'
Number of reporting segments	3	'
Total assets net	$546,558	$500,944
Intersegment Elimination	'	'
Segment Reporting Information [Line Items]	'	'
Total assets net	$23,726	'

Segment_Information_Applicable

Segment Information Applicable to Reportable Operating Segment (Detail) (USD $)	3 Months Ended		6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Net sales:	'	'	'	'	'
Net sales	$633,244	$557,287	$1,193,004	$1,062,710	'
Operating income (loss):	'	'	'	'	'
Operating income (loss)	19,202	15,383	30,948	25,508	'
Interest/other expense, net	-26	-46	-36	-96	'
Income before taxes	19,176	15,337	30,912	25,412	'
Depreciation and amortization:	'	'	'	'	'
Depreciation and amortization	1,786	1,710	3,863	3,337	'
Total assets:	'	'	'	'	'
Total assets	546,558	'	546,558	'	500,944
Small and Medium Sized Businesses segment	'	'	'	'	'
Net sales:	'	'	'	'	'
Net sales	268,056	242,194	521,527	477,872	'
Operating income (loss):	'	'	'	'	'
Operating income (loss)	9,570	8,897	17,377	16,035	'
Depreciation and amortization:	'	'	'	'	'
Depreciation and amortization	1	1	2	2	'
Total assets:	'	'	'	'	'
Total assets	173,149	'	173,149	'	'
Large Account Segment	'	'	'	'	'
Net sales:	'	'	'	'	'
Net sales	222,276	196,152	423,208	382,547	'
Operating income (loss):	'	'	'	'	'
Operating income (loss)	10,326	7,099	18,102	13,275	'
Depreciation and amortization:	'	'	'	'	'
Depreciation and amortization	341	521	675	1,038	'
Total assets:	'	'	'	'	'
Total assets	238,344	'	238,344	'	'
Public Sector	'	'	'	'	'
Net sales:	'	'	'	'	'
Net sales	142,912	118,941	248,269	202,291	'
Operating income (loss):	'	'	'	'	'
Operating income (loss)	1,694	1,120	-191	-402	'
Depreciation and amortization:	'	'	'	'	'
Depreciation and amortization	24	39	68	77	'
Total assets:	'	'	'	'	'
Total assets	56,294	'	56,294	'	'
Headquarters and Other	'	'	'	'	'
Operating income (loss):	'	'	'	'	'
Operating income (loss)	-2,388	-1,733	-4,340	-3,400	'
Depreciation and amortization:	'	'	'	'	'
Depreciation and amortization	1,420	1,149	3,118	2,220	'
Total assets:	'	'	'	'	'
Total assets	$78,771	'	$78,771	'	'

Bank_Borrowings_Additional_inf

Bank Borrowings - Additional information (Detail) (USD $)	6 Months Ended
In Thousands, unless otherwise specified	Jun. 30, 2014
Subordinated Borrowing [Line Items]	'
Line of credit, borrowing capacity	$50,000
Credit facility, expiration date	24-Feb-17
Line of credit, maximum borrowing capacity	80,000
Debt instrument, description of variable rate basis	'One-month LIBOR
Debt ratio	2
Line of credit, outstanding borrowing	0
Line of credit, available for borrowing	$50,000
Prime Rate	'
Subordinated Borrowing [Line Items]	'
Debt instrument, interest rate	3.25%
One-month LIBOR rate	'
Subordinated Borrowing [Line Items]	'
Debt instrument, interest rate	0.15%

Bank_Borrowing_and_Trade_Credi1

Bank Borrowing and Trade Credit Arrangements - Additional information (Detail) (USD $)	Jun. 30, 2014	Dec. 31, 2013
In Thousands, unless otherwise specified
Maximum	'	'
Subordinated Borrowing [Line Items]	'	'
Amount owed to financial institution for inventory financing	$47,000	'
Accounts Payable	'	'
Subordinated Borrowing [Line Items]	'	'
Amount owed to financial institution for inventory financing	$26,205	$15,543