PC Connection (CNXN) 10-Q 8 May 17 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 01, 2017
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2,017
Document Fiscal Period Focus	Q1
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		26,761,076

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current Assets:
Cash and cash equivalents	$ 65,755	$ 49,180
Accounts receivable, net	378,453	411,883
Inventories	99,973	90,535
Prepaid expenses and other current assets	5,604	5,453
Income taxes receivable	953	2,120
Total current assets	550,738	559,171
Property and equipment, net	38,650	39,402
Goodwill	73,602	73,602
Other intangibles, net	12,151	12,586
Other assets	1,351	1,373
Total Assets	676,492	686,134
Current Liabilities:
Accounts payable	171,866	177,862
Accrued expenses and other liabilities	24,079	31,047
Accrued payroll	15,572	21,345
Total current liabilities	211,517	230,254
Deferred income taxes	19,640	19,602
Other liabilities	2,600	2,836
Total Liabilities	233,757	252,692
Stockholders' Equity:
Common stock	286	285
Additional paid-in capital	112,941	111,081
Retained earnings	345,370	337,938
Treasury stock, at cost	(15,862)	(15,862)
Total Stockholders' Equity	442,735	433,442
Total Liabilities and Stockholders' Equity	$ 676,492	$ 686,134

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Condensed Consolidated Statements of Income
Net sales	$ 670,594	$ 572,394
Cost of sales	583,861	490,201
Gross profit	86,733	82,193
Selling, general and administrative expenses	75,281	67,029
Income from operations	11,452	15,164
Interest income (expense)	19	(14)
Income before taxes	11,471	15,150
Income tax provision	(4,039)	(6,087)
Net income	$ 7,432	$ 9,063
Earnings per common share:
Basic	$ 0.28	$ 0.34
Diluted	$ 0.28	$ 0.34
Shares used in computation of earnings per common share:
Basic	26,697	26,499
Diluted	26,866	26,671

CONDENSED CONSOLIDATED STATEME4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash Flows from Operating Activities:
Net income	$ 7,432	$ 9,063
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,855	2,416
Provision for doubtful accounts	545	(103)
Stock-based compensation expense	183	289
Deferred income taxes	38	34
Excess tax benefit from exercise of equity awards		(32)
Changes in assets and liabilities:
Accounts receivable	32,885	67,942
Inventories	(9,438)	5,431
Prepaid expenses and other current assets	1,016	(1,928)
Other non-current assets	22	(128)
Accounts payable	(6,177)	(52,359)
Accrued expenses and other liabilities	(3,936)	(7,156)
Net cash provided by operating activities	25,425	23,469
Cash Flows from Investing Activities:
Purchases of property and equipment	(1,487)	(2,078)
Net cash used for investing activities	(1,487)	(2,078)
Cash Flows from Financing Activities:
Dividend payment	(9,041)	(10,591)
Exercise of stock options	1,678
Excess tax benefit from exercise of equity awards		32
Payment of payroll taxes on stock-based compensation through shares withheld		(40)
Net cash used for financing activities	(7,363)	(10,599)
Increase in cash and cash equivalents	16,575	10,792
Cash and cash equivalents, beginning of period	49,180	80,188
Cash and cash equivalents, end of period	65,755	90,980
Non-cash Investing and Financing Activities:
Accrued capital expenditures	291	578
Supplemental Cash Flow Information:
Income taxes paid	$ 1,546	$ 7,638

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2017
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, 2016, 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 months ended March 31, 2017 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2017. 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 On May 28, 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers,” which amends the existing accounting standards for revenue recognition. The core principle of the guidance is that an entity should recognize 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 July 2015, the FASB voted to amend ASU 2014-09 by approving a one-year deferral of the mandatory effective date as well as providing the option to early adopt the standard on the original effective date. Accordingly, the Company may adopt the standard in either its first quarter of 2017 or 2018. An entity may choose to adopt the new standard either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the new standard. We are in the process of determining the effect that the adoption will have on our consolidated financial statements. Based on our analysis to date, we have reached the following tentative conclusions regarding the new standard and how we expect it to affect our consolidated financial statements and related disclosures: · We expect to adopt the standard in the first quarter of 2018 and will not early adopt. · We expect to use the full retrospective method. Such method provides that upon applying the new standard, prior periods will be retrospectively adjusted and the cumulative effect of the change recognized in the opening retained earnings as of January 1, 2016. · We believe that since substantially all of our revenue is contractual, substantially all of our revenue falls within the scope of ASU No. 2014-09, as amended. · Our hardware and software revenue is generally recognized on a gross basis upon delivery. Upon adoption of the new standard, we do not expect this to change. However, we are continuing to analyze each of our revenue streams to determine any changes that may be required under the new standard. · We hold inventories not available for sale related to certain product sales transactions in which we are warehousing the product and will be deploying the product to our clients’ designated locations subsequent to period-end. We are currently evaluating the effect of the new standard on our inventories not available for sale to identify the differing performance obligations within the underlying contracts and to determine if a portion of revenue under the contracts should be recognized at an earlier point in time than we are recognizing under current accounting standards. · We expect that our disclosures in our notes to our consolidated financial statements related to revenue recognition will be significantly expanded under the new standard. Our analysis and evaluation of the new standard will continue through its effective date in the first quarter of 2018. A substantial amount of work remains to be completed due to the complexity of the new standard, the application of judgment, and the requirement for the use of estimates in applying the new standard, as well as the volume of our client portfolio and the related terms and conditions of our contracts that must be reviewed. 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. We are currently assessing the potential impact of the adoption of ASU 2016-02 on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment , which simplifies the accounting for goodwill impairments by eliminating step two from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. ASU 2017-04 also clarifies the requirements for excluding and allocating foreign currency translation adjustments to reporting units related to an entity's testing of reporting units for goodwill impairment and clarifies that an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. ASU 2017-04 is effective for us beginning January 1, 2020 for both interim and annual reporting periods. We are currently assessing the potential impact of the adoption of ASC 2017-04 on our 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 prior standards, the market amount required 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. The adoption of ASU 2015-11 did not have a material impact on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting . 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 primary impact of our adoption was the recognition of excess tax benefits related to equity compensation in our provision for income taxes rather than paid-in capital, which is a change required to be applied on a prospective basis in accordance with the new guidance. Accordingly, we recorded discrete income tax benefits in the consolidated statements of income of $656 during the three months ended March 31, 2017, for excess tax benefits related to equity compensation. The corresponding cash flows are reflected in cash provided by operating activities instead of financing activities, as was previously required. We adopted the cash flow presentation that requires presentation of excess tax benefits within operating activities on a prospective basis. Additionally, under ASU 2016-09, we have elected to continue to estimate equity award forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. Additional amendments to the accounting for income taxes and minimum statutory withholding tax requirements had no impact on our results of operations. The presentation requirements for cash flows related to employee taxes paid for withheld shares also had no impact to any of the periods presented in our condensed consolidated statements of cash flows since such cash flows have historically been presented as a financing activity.

EARNINGS PER SHARE

EARNINGS PER SHARE	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 2016 Numerator: Net income $ 7,432 $ 9,063 Denominator: Denominator for basic earnings per share 26,697 26,499 Dilutive effect of employee stock awards 169 172 Denominator for diluted earnings per share 26,866 26,671 Earnings per share: Basic $ 0.28 $ 0.34 Diluted $ 0.28 $ 0.34 For the three months ended March 31, 2017 and 2016, 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 March 31, 2017 2016 Employee stock based awards $ — $ 117

ACQUISITIONS

ACQUISITIONS	3 Months Ended
	Mar. 31, 2017
Acquisitions
Acquisitions	Note 3–Acquisitions Softmart Acquisition 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. The purchase of Softmart is consistent with our strategy to expand our software services capabilities. Under the terms of the asset purchase agreement, we paid $31,889, net of cash acquired, and 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. 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. This excess of purchase price over the aggregate fair values was recorded as goodwill. We incurred $357 of transaction costs in 2016 related to the acquisition which we reported in selling, general and administrative expenses in our consolidated statement of income for the year ended December 31, 2016. The operating results of Softmart have been included in the SMB and Large Accounts segments since the acquisition date. Softmart’s revenues and income from operations were not material to our consolidated results, and accordingly, we have not presented Softmart’s revenues or operating results on a pro forma basis. The following table reflects components of the net assets acquired and liabilities assumed at fair value as of the closing date. Purchase Price Allocation Current assets $ 22,812 Fixed assets 343 Goodwill 14,314 Customer relationships 11,300 Total assets acquired 48,769 Acquired liabilities (16,252) Net assets acquired 32,517 Less cash acquired (628) Purchase price at closing, net of cash acquired $ 31,889 We recorded goodwill of $7,366 and $6,948 in our SMB and Large Account segments, respectively, and the aggregate is expected to be fully deductible for tax purposes. GlobalServe Acquisition On October 11, 2016, we acquired the outstanding common shares of GlobalServe, Inc. (“GlobalServe”), which has developed an internet portal tool that simplifies customers’ global IT procurement. Under the terms of the stock purchase agreement, we paid $11,101, net of cash acquired. The purchase of GlobalServe allows us to service our customers’ global IT needs through their OneSource internet portal with consistent delivery, reporting, pricing, and logistics. 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. In 2016 we incurred $118 of transaction costs related to the acquisition which we reported in selling, general and administrative expenses in our consolidated statement of income for the year ended December 31, 2016. We have included the operating results of GlobalServe in the Large Account segment since the acquisition date. GlobalServe’s revenues and income from operations were not material to our consolidated results, and accordingly, we have not presented GlobalServe’s revenues or operating results on a pro forma basis. The following table reflects components of the net assets acquired and liabilities assumed at fair value as of the closing date. Purchase Price Allocation Current assets $ 1,486 Fixed assets 4,609 Goodwill 8,012 Customer relationships 900 Total assets acquired 15,007 Acquired liabilities (734) Deferred taxes, unrecognized tax benefits (2,390) Net assets acquired 11,883 Less cash acquired (782) Purchase price at closing, net of cash acquired $ 11,101 We recorded $8,012 of goodwill as a result of our acquisition of GlobalServe in our Large Account segment. None of the goodwill related to this acquisition will be deductible for tax purposes.

SEGMENT AND RELATED DISCLOSURES

SEGMENT AND RELATED DISCLOSURES	3 Months Ended
	Mar. 31, 2017
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 is our Chief Executive Officer, and he 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. In May 2016, we acquired Softmart, a global supplier of information technology and software services solutions. We have included the operating results of Softmart in our SMB and Large Account segments. In October 2016, we acquired GlobalServe, which has developed an industry-leading tool that simplifies customers’ global IT procurement. We have included the operating results for GlobalServe in our Large Account segment. The external sales and operating results of GlobalServe were immaterial to our consolidated results. Segment information applicable to our reportable operating segments for the three months ended March 31, 2017 and 2016 is shown below: Three Months Ended March 31, March 31, 2017 2016 Net sales: SMB $ 273,633 $ 261,246 Large Account 252,918 200,109 Public Sector 144,043 111,039 Total net sales $ 670,594 $ 572,394 Operating income (loss): SMB $ 8,607 $ 11,321 Large Account 9,057 7,190 Public Sector (2,613) (150) Headquarters/Other (3,599) (3,197) Total operating income 11,452 15,164 Interest income (expense) 19 (14) Income before taxes $ 11,471 $ 15,150 Selected operating expense: Depreciation and amortization: SMB $ 154 $ 9 Large Account 594 306 Public Sector 39 40 Headquarters/Other 2,068 2,061 Total depreciation and amortization $ 2,855 $ 2,416 Total assets: SMB $ 245,049 Large Account 376,478 Public Sector 69,504 Headquarters/Other (14,539) Total assets $ 676,492 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 $31,853 as of March 31, 2017. 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	3 Months Ended
	Mar. 31, 2017
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	3 Months Ended
	Mar. 31, 2017
Bank Borrowings 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 10, 2022. 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 (4.00% at March 31, 2017). The one-month LIBOR rate at March 31, 2017 was 0.98%. 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. Our bank line of credit does not include restrictions on future dividend payments. 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 March 31, 2017 or December 31, 2016, and accordingly, the entire $50,000 facility was available for borrowings under the credit facility. At March 31, 2017 and December 31, 2016, 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 $75,000. 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 March 31, 2017 and December 31, 2016, accounts payable included $24,239 and $33,061, respectively, owed to these financial institutions.

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	3 Months Ended
	Mar. 31, 2017
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 March 31, 2017 2016 Numerator: Net income $ 7,432 $ 9,063 Denominator: Denominator for basic earnings per share 26,697 26,499 Dilutive effect of employee stock awards 169 172 Denominator for diluted earnings per share 26,866 26,671 Earnings per share: Basic $ 0.28 $ 0.34 Diluted $ 0.28 $ 0.34
Schedule of outstanding nonvested stock units excluded from computation of diluted earnings per share	Three Months Ended March 31, 2017 2016 Employee stock based awards $ — $ 117

ACQUISITIONS (Tables)

ACQUISITIONS (Tables)	3 Months Ended
	Mar. 31, 2017
Softmart
Acquisitions
Components of the net assets acquired and liabilities assumed at fair value	Purchase Price Allocation Current assets $ 22,812 Fixed assets 343 Goodwill 14,314 Customer relationships 11,300 Total assets acquired 48,769 Acquired liabilities (16,252) Net assets acquired 32,517 Less cash acquired (628) Purchase price at closing, net of cash acquired $ 31,889
GlobalServe
Acquisitions
Components of the net assets acquired and liabilities assumed at fair value	Purchase Price Allocation Current assets $ 1,486 Fixed assets 4,609 Goodwill 8,012 Customer relationships 900 Total assets acquired 15,007 Acquired liabilities (734) Deferred taxes, unrecognized tax benefits (2,390) Net assets acquired 11,883 Less cash acquired (782) Purchase price at closing, net of cash acquired $ 11,101

SEGMENT AND RELATED DISCLOSUR13

SEGMENT AND RELATED DISCLOSURES (Tables)	3 Months Ended
	Mar. 31, 2017
Segment and Related Disclosures
Segment Information Applicable to Reportable Operating Segments	Segment information applicable to our reportable operating segments for the three months ended March 31, 2017 and 2016 is shown below: Three Months Ended March 31, March 31, 2017 2016 Net sales: SMB $ 273,633 $ 261,246 Large Account 252,918 200,109 Public Sector 144,043 111,039 Total net sales $ 670,594 $ 572,394 Operating income (loss): SMB $ 8,607 $ 11,321 Large Account 9,057 7,190 Public Sector (2,613) (150) Headquarters/Other (3,599) (3,197) Total operating income 11,452 15,164 Interest income (expense) 19 (14) Income before taxes $ 11,471 $ 15,150 Selected operating expense: Depreciation and amortization: SMB $ 154 $ 9 Large Account 594 306 Public Sector 39 40 Headquarters/Other 2,068 2,061 Total depreciation and amortization $ 2,855 $ 2,416 Total assets: SMB $ 245,049 Large Account 376,478 Public Sector 69,504 Headquarters/Other (14,539) Total assets $ 676,492

BASIS OF PRESENTATION (Details)

BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
New accounting pronouncements
Income tax benefits	$ (4,039)	$ (6,087)
ASU 2016-09
New accounting pronouncements
Income tax benefits	$ 656

EARNINGS PER SHARE (Details)

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Numerator:
Net income	$ 7,432	$ 9,063
Denominator:
Denominator for basic earnings per share	26,697	26,499
Dilutive effect of employee stock awards	169	172
Denominator for diluted earnings per share	26,866	26,671
Earnings per share:
Basic	$ 0.28	$ 0.34
Diluted	$ 0.28	$ 0.34
Additional Disclosure
Employee stock awards excluded from computation		$ 117

ACQUISITIONS - (Details)

ACQUISITIONS - (Details) - USD ($) $ in Thousands	Oct. 11, 2016	May 27, 2016	Mar. 31, 2017	Dec. 31, 2016
Components of purchase price:
Goodwill			$ 73,602	$ 73,602
Softmart
Components of purchase price:
Current assets		$ 22,812
Fixed assets		343
Goodwill		14,314
Total assets acquired		48,769
Acquired liabilities		(16,252)
Net assets acquired		32,517
Less cash acquired		(628)
Purchase price at closing, net of cash acquired		31,889
Softmart | Customer relationships
Components of purchase price:
Intangible asset		11,300
GlobalServe
Components of purchase price:
Current assets	$ 1,486
Fixed assets	4,609
Goodwill	8,012
Total assets acquired	15,007
Acquired liabilities	(734)
Deferred taxes, unrecognized tax benefits	(2,390)
Net assets acquired	11,883
Less cash acquired	(782)
Purchase price at closing, net of cash acquired	11,101
GlobalServe | Customer relationships
Components of purchase price:
Intangible asset	900
Selling, General and Administrative Expenses | Softmart
Acquisition
Transaction costs related to acquisition				357
Selling, General and Administrative Expenses | GlobalServe
Acquisition
Transaction costs related to acquisition				$ 118
Small and Medium Sized Businesses (SMB) | Softmart
Components of purchase price:
Goodwill related to acquisition deductible for tax purposes		7,366
Large Account | Softmart
Components of purchase price:
Goodwill related to acquisition deductible for tax purposes		$ 6,948
Large Account | GlobalServe
Components of purchase price:
Goodwill	8,012
Goodwill related to acquisition deductible for tax purposes	$ 0

SEGMENT AND RELATED DISCLOSUR17

SEGMENT AND RELATED DISCLOSURES - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)segment	Mar. 31, 2016USD ($)	Dec. 31, 2016USD ($)
Segment Reporting Information
Number of reportable segments | segment	3
Number of operating segments | segment	3
Net sales:
Net sales	$ 670,594	$ 572,394
Operating income (loss):
Operating income (loss)	11,452	15,164
Interest income (expense)	19	(14)
Income before taxes	11,471	15,150
Depreciation and amortization:
Depreciation and amortization	2,855	2,416
Total assets:
Total assets	676,492		$ 686,134
Operating Segments | Small and Medium Sized Businesses (SMB)
Net sales:
Net sales	273,633	261,246
Operating income (loss):
Operating income (loss)	8,607	11,321
Depreciation and amortization:
Depreciation and amortization	154	9
Total assets:
Total assets	245,049
Operating Segments | Large Account
Net sales:
Net sales	252,918	200,109
Operating income (loss):
Operating income (loss)	9,057	7,190
Depreciation and amortization:
Depreciation and amortization	594	306
Total assets:
Total assets	376,478
Operating Segments | Public Sector
Net sales:
Net sales	144,043	111,039
Operating income (loss):
Operating income (loss)	(2,613)	(150)
Depreciation and amortization:
Depreciation and amortization	39	40
Total assets:
Total assets	69,504
Headquarters/Other
Operating income (loss):
Operating income (loss)	(3,599)	(3,197)
Depreciation and amortization:
Depreciation and amortization	2,068	$ 2,061
Total assets:
Assets net of intercompany balance eliminations	(14,539)
Intersegment Elimination
Total assets:
Total assets	$ (31,853)

BANK BORROWINGS AND TRADE CREDI

BANK BORROWINGS AND TRADE CREDIT ARRANGEMENTS (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017USD ($)Institution	Dec. 31, 2016USD ($)Institution
Subordinated Borrowing
Line of credit, borrowing capacity	$ 50,000
Credit facility, expiration date	Feb. 10, 2022
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
Trade credit agreements
Number of financial institutions facilitating purchase of inventory | Institution	2	2
Prime Rate
Subordinated Borrowing
Debt instrument, interest rate	4.00%
One-month LIBOR rate
Subordinated Borrowing
Debt instrument, interest rate	0.98%
Accounts Payable
Trade credit agreements
Amount owed to financial institution for inventory financing	$ 24,239	$ 33,061
Maximum
Trade credit agreements
Amount owed to financial institution for inventory financing	$ 75,000	$ 75,000