PC Connection (CNXN) 10-Q 4 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Trading Symbol	PCCC
Entity Registrant Name	PC CONNECTION INC
Entity Central Index Key	1,050,377
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		26,559,311

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 66,883	$ 80,188
Accounts receivable, net	357,967	356,145
Inventories	101,982	102,780
Deferred income taxes		7,909
Prepaid expenses and other current assets	4,109	4,254
Income taxes receivable	1,660	1,575
Total current assets	532,601	552,851
Property and equipment, net	34,287	32,227
Goodwill	67,510	51,276
Other intangibles, net	12,142	1,668
Other assets	1,193	1,052
Total Assets	647,733	639,074
Current Liabilities:
Accounts payable	159,619	166,516
Accrued expenses and other liabilities	25,885	36,207
Accrued payroll	17,301	19,280
Total current liabilities	202,805	222,003
Deferred income taxes	13,871	21,615
Other liabilities	2,284	3,005
Total Liabilities	218,960	246,623
Stockholders' Equity:
Common stock	284	284
Additional paid-in capital	110,369	109,161
Retained earnings	333,982	298,868
Treasury stock, at cost	(15,862)	(15,862)
Total Stockholders' Equity	428,773	392,451
Total Liabilities and Stockholders' Equity	$ 647,733	$ 639,074

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Condensed Consolidated Statements of Income
Net sales	$ 708,485	$ 680,769	$ 1,957,044	$ 1,889,650
Cost of sales	611,518	592,201	1,684,010	1,640,482
Gross profit	96,967	88,568	273,034	249,168
Selling, general and administrative expenses	74,522	66,707	214,415	193,505
Income from operations	22,445	21,861	58,619	55,663
Interest/other expense, net	(27)	(29)	(53)	(67)
Income before taxes	22,418	21,832	58,566	55,596
Income tax provision	(8,825)	(8,831)	(23,452)	(22,382)
Net income	$ 13,593	$ 13,001	$ 35,114	$ 33,214
Earnings per common share:
Basic	$ 0.51	$ 0.49	$ 1.32	$ 1.26
Diluted	$ 0.51	$ 0.49	$ 1.32	$ 1.25
Shares used in computation of earnings per common share:
Basic	26,542	26,423	26,514	26,281
Diluted	26,736	26,622	26,699	26,514

CONDENSED CONSOLIDATED STATEME4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash Flows from Operating Activities:
Net income	$ 35,114	$ 33,214
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	7,504	6,597
Stock-based compensation expense	975	720
Provision for doubtful accounts	239	1,103
Deferred income taxes	165	56
Excess tax benefit from exercise of equity awards	(385)	(472)
Changes in assets and liabilities:
Accounts receivable	19,530	(39,262)
Inventories	954	(11,656)
Prepaid expenses and other current assets	506	79
Other non-current assets	(141)	(449)
Accounts payable	(20,922)	35,654
Accrued expenses and other liabilities	(3,757)	(279)
Net cash provided by operating activities	39,782	25,305
Cash Flows from Investing Activities:
Purchases of property and equipment	(8,746)	(10,069)
Purchase of Softmart	(33,983)
Net cash used for investing activities	(42,729)	(10,069)
Cash Flows from Financing Activities:
Dividend payment	(10,591)
Issuance of stock under Employee Stock Purchase Plan	473	435
Excess tax benefit from exercise of equity awards	385	472
Exercise of stock options		379
Payment of payroll taxes on stock-based compensation through shares withheld	(625)	(564)
Net cash (used for) provided by financing activities	(10,358)	722
(Decrease) increase in cash and cash equivalents	(13,305)	15,958
Cash and cash equivalents, beginning of period	80,188	60,909
Cash and cash equivalents, end of period	66,883	76,867
Non-cash Investing and Financing Activities:
Accrued capital expenditures	160	711
Supplemental Cash Flow Information:
Income taxes paid	$ 23,953	$ 23,360

BASIS OF PRESENTATION

BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2016
Basis of Presentation
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, 2015, 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 nine months ended September 30, 2016 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2016. 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 Standards In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , 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. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory , which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. This standard is effective for the Company prospectively beginning January 1, 2017, with early adoption permitted. The Company is currently assessing the potential impact of the adoption of ASU 2015-11 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases . The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes , to simplify the presentation of deferred income taxes. Under the new standard, both deferred tax liabilities and deferred tax assets are required to be classified as non-current on the consolidated balance sheet. ASU 2015-17 will become effective for fiscal years, and the interim periods within those years, beginning after December 15, 2016 with early adoption permitted. The Company elected to early adopt ASU 2015-17 on January 1, 2016, prospectively, as permitted, and reclassified $7,909 of current deferred tax assets to non-current liabilities on the accompanying consolidated balance sheet at September 30, 2016. The prior reporting period was not retroactively adjusted. The adoption of the guidance had no impact on the Company’s condensed consolidated statements of income and comprehensive income. In March 2016, the FASB issued ASU 2016-09, Compensation–Stock Compensation (Topic 718) . The new standard simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. This change eliminates the notion of the additional paid-in capital pool and reduces the complexity in accounting for excess tax benefits and tax deficiencies. The new standard is effective for public companies for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods, however, early adoption is allowed. The Company is currently assessing the potential impact of the adoption of ASU 2016-09 on its consolidated financial statements.

EARNINGS PER SHARE

EARNINGS PER SHARE	9 Months Ended
	Sep. 30, 2016
Earnings Per Share
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 Nine Months Ended September 30, 2016 2015 2016 2015 Numerator: Net income $ $ $ $ Denominator: Denominator for basic earnings per share Dilutive effect of employee stock awards Denominator for diluted earnings per share Earnings per share: Basic $ $ $ $ Diluted $ $ $ $ For the three and nine months ended September 30, 2016 and 2015, the following outstanding nonvested stock units were excluded from the computation of diluted earnings per share because including them would have had an anti-dilutive effect: Three Months Ended Nine Months Ended September 30, 2016 2015 2016 2015 Employee stock based awards $ — $ — $ $ —

ACQUISITION OF SOFTMART

ACQUISITION OF SOFTMART	9 Months Ended
	Sep. 30, 2016
Acquisition of Softmart
Acquisition of Softmart	Note 3–Acquisition of Softmart On May 27, 2016, we acquired substantially all of the assets of Softmart Inc. (“Softmart”), a global supplier of information technology and software services solutions. Under the terms of the asset purchase agreement, we paid $34,000 at closing, of which $4,250 was placed in escrow subject to a working capital adjustment as of the closing date. We expect to finalize the working capital adjustment prior to year-end. The purchase of Softmart will allow us to expand our software services capabilities, and the excess of the purchase price over the net assets acquired represents potential synergies from Softmart’s customer base and its assembled workforce of sales representatives and software service specialists that we acquired in the transaction. We allocated the total purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition and recorded the excess of purchase price over the aggregate fair values as goodwill. The initial allocation of the purchase price was based upon a preliminary valuation, and accordingly, our estimates and assumptions are subject to change as we obtain additional information during the measurement period and completion of the valuation of intangible assets. We incurred $357 of transaction costs in the nine months ended September 30, 2016 related to the acquisition. We have included the operating results of Softmart in the SMB segment since the acquisition date. Pro forma results of operations have not been presented because the effects of the business combination were not material to our condensed consolidated financial statements. The following table reflects components of the purchase price at fair value as of May 27, 2016. The fair values of the intangibles were determined through a third-party valuation using management estimates, which have not been finalized. Purchase Price Allocation Current assets $ Fixed assets Goodwill Customer relationships Total assets acquired Acquired liabilities Net assets acquired Less cash acquired Purchase price at closing, net of cash acquired $ We recorded $16,234 of goodwill as a result of our acquisition of Softmart in our SMB segment, and it is deductible for tax purposes. The intangible assets of Softmart were valued at the date of acquisition using third-party valuation specialists and will be amortized on a straight-line basis over its estimated useful life of 10 years. For the three-month periods ended September 30, 2016 and 2015, we recorded amortization expenses of $443 and $175, respectively, for intangible assets. Amortization expense in the third quarter of 2016 included $293 related to the acquired Softmart intangible assets. For the nine-month periods ended September 30, 2016 and 2015, we recorded amortization expenses of $826 and $560, respectively, for intangible assets. Amortization expense for the nine months ended September 30, 2016 included $377 related to the acquired Softmart intangible assets. The estimated amortization expense which includes all acquired intangible assets for each of the five succeeding years and thereafter is as follows: For the Years Ended December 31, 2016* $ 2017 2018 2019 2020 2021 and thereafter $ (*) Represents estimated amortization expense for the three months ending December 31, 2016.

SEGMENT AND RELATED DISCLOSURES

SEGMENT AND RELATED DISCLOSURES	9 Months Ended
	Sep. 30, 2016
Segment and Related Disclosures
Segment and Related Disclosures	Note 4–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 evaluates operations and allocates resources based on a measure of operating income. Our operations are organized under three reportable 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. 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. We report these charges to the operating segments as “Allocations.” 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. On May 27, 2016, we acquired Softmart, a global supplier of information technology and software services solutions. We have included the operating results of Softmart since the acquisition in our SMB segment, which also includes the operating results of our PC Connection Sales subsidiary. Segment information applicable to our reportable operating segments for the three and nine months ended September 30, 2016 and 2015 is shown below: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 Net sales: SMB $ $ $ $ Large Account Public Sector Total net sales $ $ $ $ Operating income (loss): SMB $ $ $ $ Large Account Public Sector Headquarters/Other Total operating income Interest expense Income before taxes $ $ $ $ Selected operating expense: Depreciation and amortization: SMB $ $ $ $ Large Account Public Sector Headquarters/Other Total depreciation and amortization $ $ $ $ Total assets: SMB $ Large Account Public Sector Headquarters/Other Total assets $ 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 balance eliminations of $24,019 as of September 30, 2016. Our capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade our management information systems. These information systems serve all of our segments, to varying degrees, and accordingly, our CODM does not evaluate capital expenditures on a segment basis.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
Commitments and Contingencies.
Commitments And Contingencies	Note 5–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 CREDIT

BANK BORROWING AND TRADE CREDIT ARRANGEMENTS	9 Months Ended
	Sep. 30, 2016
Bank Borrowing and Trade Credit Arrangements
Bank Borrowing and Trade Credit Arrangements	Note 6–Bank Borrowing and Trade Credit Arrangements We have a $50,000 credit facility collateralized by our accounts receivable 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. Negotiations with our current lender are in process, and we expect to renew the facility at 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 (3.50% at September 30, 2016). The one-month LIBOR rate at September 30, 2016 was 0.53%. 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 September 30, 2016 or December 31, 2015, and accordingly, the entire $50,000 facility was available for borrowings under the credit facility. At September 30, 2016 and December 31, 2015, 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 $65,000. 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 September 30, 2016 and December 31, 2015, accounts payable included $26,880 and $23,044, respectively, owed to these financial institutions.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2016
Subsequent Events
Subsequent Events	Note 7–Subsequent Events On October 11, 2016, we completed the acquisition of GlobalServe, Inc. a global IT procurement and service management company. Under the terms of the merger agreement, we paid $11,883 at closing for 100% of GlobalServe’s stock. We believe the acquisition of GlobalServe will provide our multinational customers access to a global supply chain platform that delivers greater flexibility, scalability, and efficiency.

BASIS OF PRESENTATION (Policies

BASIS OF PRESENTATION (Policies)	9 Months Ended
	Sep. 30, 2016
Basis of Presentation
Use of Estimates in the Preparation of Financial Statements	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	Comprehensive Income We had no items of comprehensive income, other than our net income for each of the periods presented.
Recently Issued Financial Accounting Standards	Recently Issued Financial Accounting Standards In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , 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. This guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory , which modifies existing requirements regarding measuring inventory at the lower of cost or market. Under existing standards, the market amount requires consideration of replacement cost, net realizable value (NRV), and NRV less an approximately normal profit margin. The new ASU replaces market with NRV, defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This eliminates the need to determine and consider replacement cost or NRV less an approximately normal profit margin when measuring inventory. This standard is effective for the Company prospectively beginning January 1, 2017, with early adoption permitted. The Company is currently assessing the potential impact of the adoption of ASU 2015-11 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases . The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes , to simplify the presentation of deferred income taxes. Under the new standard, both deferred tax liabilities and deferred tax assets are required to be classified as non-current on the consolidated balance sheet. ASU 2015-17 will become effective for fiscal years, and the interim periods within those years, beginning after December 15, 2016 with early adoption permitted. The Company elected to early adopt ASU 2015-17 on January 1, 2016, prospectively, as permitted, and reclassified $7,909 of current deferred tax assets to non-current liabilities on the accompanying consolidated balance sheet at September 30, 2016. The prior reporting period was not retroactively adjusted. The adoption of the guidance had no impact on the Company’s condensed consolidated statements of income and comprehensive income. In March 2016, the FASB issued ASU 2016-09, Compensation–Stock Compensation (Topic 718) . The new standard simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. Under this guidance, a company recognizes all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. This change eliminates the notion of the additional paid-in capital pool and reduces the complexity in accounting for excess tax benefits and tax deficiencies. The new standard is effective for public companies for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods, however, early adoption is allowed. The Company is currently assessing the potential impact of the adoption of ASU 2016-09 on its consolidated financial statements.

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	9 Months Ended
	Sep. 30, 2016
Earnings Per Share
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 Nine Months Ended September 30, 2016 2015 2016 2015 Numerator: Net income $ $ $ $ Denominator: Denominator for basic earnings per share Dilutive effect of employee stock awards Denominator for diluted earnings per share Earnings per share: Basic $ $ $ $ Diluted $ $ $ $
Schedule of outstanding nonvested stock units excluded from computation of diluted earnings per share	Three Months Ended Nine Months Ended September 30, 2016 2015 2016 2015 Employee stock based awards $ — $ — $ $ —

ACQUISITION OF SOFTMART (Tables

ACQUISITION OF SOFTMART (Tables)	9 Months Ended
	Sep. 30, 2016
Acquisition of Softmart
Schedule of components for the acquisition purchase price	Purchase Price Allocation Current assets $ Fixed assets Goodwill Customer relationships Total assets acquired Acquired liabilities Net assets acquired Less cash acquired Purchase price at closing, net of cash acquired $
Schedule of estimated amortization expense	For the Years Ended December 31, 2016* $ 2017 2018 2019 2020 2021 and thereafter $ (*) Represents estimated amortization expense for the three months ending December 31, 2016.

SEGMENT AND RELATED DISCLOSUR15

SEGMENT AND RELATED DISCLOSURES (Tables)	9 Months Ended
	Sep. 30, 2016
Segment and Related Disclosures
Segment Information Applicable to Reportable Operating Segments	Segment information applicable to our reportable operating segments for the three and nine months ended September 30, 2016 and 2015 is shown below: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2016 2015 2016 2015 Net sales: SMB $ $ $ $ Large Account Public Sector Total net sales $ $ $ $ Operating income (loss): SMB $ $ $ $ Large Account Public Sector Headquarters/Other Total operating income Interest expense Income before taxes $ $ $ $ Selected operating expense: Depreciation and amortization: SMB $ $ $ $ Large Account Public Sector Headquarters/Other Total depreciation and amortization $ $ $ $ Total assets: SMB $ Large Account Public Sector Headquarters/Other Total assets $

BASIS OF PRESENTATION (Details)

BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Basis of Presentation
Other comprehensive income	$ 0	$ 0
Current deferred tax assets			$ 7,909
ASU 2015-17 Deferred Income Taxes | New Accounting Pronouncement, Early Adoption, Effect
Basis of Presentation
Current deferred tax assets	(7,909)
Non-current liabilities	$ 7,909

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net income	$ 13,593	$ 13,001	$ 35,114	$ 33,214
Denominator:
Denominator for basic earnings per share	26,542	26,423	26,514	26,281
Dilutive effect of employee stock awards	194	199	185	233
Denominator for diluted earnings per share	26,736	26,622	26,699	26,514
Earnings per share:
Basic	$ 0.51	$ 0.49	$ 1.32	$ 1.26
Diluted	$ 0.51	$ 0.49	$ 1.32	$ 1.25
Additional Disclosure
Employee stock awards excluded from computation			$ 80

ACQUISITION OF SOFTMART - Acqui

ACQUISITION OF SOFTMART - Acquisition Components (Details) - USD ($) $ in Thousands	May 27, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Components of purchase price:
Goodwill		$ 67,510		$ 67,510		$ 51,276
Amortization expense		443	$ 175	826	$ 560
Softmart
Acquisition
Price paid at closing	$ 34,000
Escrow reserve for a working capital adjustment	4,250
Transaction costs related to acquisition		357		357
Components of purchase price:
Current assets	22,210
Fixed assets	343
Goodwill	16,234
Total assets acquired	50,087
Acquired liabilities	(16,087)
Net assets acquired	34,000
Less cash acquired	(17)
Purchase price at closing, net of cash acquired	33,983
Softmart | Customer relationships
Components of purchase price:
Intangible asset	$ 11,300
Estimated Useful Lives	10 years
Amortization expense		$ 293		$ 377

ACQUISITION OF SOFTMART - Estim

ACQUISITION OF SOFTMART - Estimated Amortization Expenses (Details) $ in Thousands	Sep. 30, 2016USD ($)
Goodwill and Intangible Assets Disclosure
2,016	$ 432
2,017	1,492
2,018	1,351
2,019	1,166
2,020	1,130
2021 and thereafter	6,121
Total	$ 11,692

SEGMENT AND RELATED DISCLOSUR20

SEGMENT AND RELATED DISCLOSURES - Segment Information Applicable to Reportable Operating Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Net sales:
Net sales	$ 708,485	$ 680,769	$ 1,957,044	$ 1,889,650
Operating income (loss):
Operating income (loss)	22,445	21,861	58,619	55,663
Interest expense	(27)	(29)	(53)	(67)
Income before taxes	22,418	21,832	58,566	55,596
Depreciation and amortization:
Depreciation and amortization	2,701	2,226	7,504	6,597
Total assets:
Total assets	647,733		647,733		$ 639,074
Small and Medium Sized Businesses segment
Net sales:
Net sales	302,410	268,720	844,470	777,940
Large Account Segment
Net sales:
Net sales	233,778	242,771	693,517	684,033
Public Sector
Net sales:
Net sales	172,297	169,278	419,057	427,677
Operating Segments | Small and Medium Sized Businesses segment
Operating income (loss):
Operating income (loss)	9,898	10,462	32,580	30,604
Depreciation and amortization:
Depreciation and amortization	359	5	479	16
Total assets:
Total assets	271,968		271,968
Operating Segments | Large Account Segment
Operating income (loss):
Operating income (loss)	11,923	11,007	30,712	30,916
Depreciation and amortization:
Depreciation and amortization	291	319	911	972
Total assets:
Total assets	321,735		321,735
Operating Segments | Public Sector
Operating income (loss):
Operating income (loss)	3,593	3,568	4,555	3,552
Depreciation and amortization:
Depreciation and amortization	40	39	121	118
Total assets:
Total assets	66,072		66,072
Headquarters/Other
Operating income (loss):
Operating income (loss)	(2,969)	(3,176)	(9,228)	(9,409)
Depreciation and amortization:
Depreciation and amortization	2,011	$ 1,863	5,993	$ 5,491
Total assets:
Assets net of intercompany balance eliminations	$ (12,042)		$ (12,042)

SEGMENT AND RELATED DISCLOSUR21

SEGMENT AND RELATED DISCLOSURES - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)segment	Dec. 31, 2015USD ($)
Segment Reporting Information
Number of reportable segments | segment	3
Number of operating segments | segment	3
Total assets | $	$ 647,733	$ 639,074
Intersegment Elimination
Segment Reporting Information
Total assets | $	$ (24,019)

BANK BORROWING AND TRADE CRED22

BANK BORROWING AND TRADE CREDIT ARRANGEMENTS (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2016USD ($)Institution	Dec. 31, 2015USD ($)Institution
Subordinated Borrowing
Line of credit, borrowing capacity	$ 50,000
Credit facility, expiration date	Feb. 24, 2017
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	$ 0
Line of credit, available for borrowing	$ 50,000	$ 50,000
Number of financial institutions facilitating purchase of inventory | Institution	2	2
Maximum
Subordinated Borrowing
Amount owed to financial institution for inventory financing	$ 65,000	$ 65,000
Accounts Payable
Subordinated Borrowing
Amount owed to financial institution for inventory financing	$ 26,880	$ 23,044
Prime Rate
Subordinated Borrowing
Debt instrument, interest rate	3.50%
One-month LIBOR rate
Subordinated Borrowing
Debt instrument, interest rate	0.53%

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - GlobalServe - Subsequent Event $ in Thousands	Oct. 11, 2016USD ($)
Acquisition
Price paid at closing	$ 11,883
Percentage of equity interest acquired	100.00%