Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 07, 2020 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2020 | |
Entity File Number | 0-23827 | |
Entity Registrant Name | PC CONNECTION, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 02-0513618 | |
Entity Address, Address Line One | 730 Milford Road | |
Entity Address, City or Town | Merrimack | |
Entity Address, State or Province | NH | |
Entity Address, Postal Zip Code | 03054 | |
City Area Code | 603 | |
Local Phone Number | 683-2000 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | CNXN | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 26,125,678 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Entity Central Index Key | 0001050377 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 165,943 | $ 90,060 |
Accounts receivable, net | 446,716 | 549,626 |
Inventories, net | 165,632 | 124,666 |
Income taxes receivable | 1,388 | |
Prepaid expenses and other current assets | 13,450 | 10,671 |
Total current assets | 791,741 | 776,411 |
Property and equipment, net | 65,387 | 64,226 |
Right-of-use assets | 14,755 | 13,842 |
Goodwill | 73,602 | 73,602 |
Intangible assets, net | 7,698 | 8,307 |
Other assets | 1,157 | 947 |
Total Assets | 954,340 | 937,335 |
Current Liabilities: | ||
Accounts payable | 247,005 | 235,641 |
Accrued payroll | 20,409 | 28,050 |
Accrued expenses and other liabilities | 40,793 | 45,232 |
Total current liabilities | 308,207 | 308,923 |
Deferred income taxes | 20,170 | 20,170 |
Noncurrent operating lease liabilities | 11,566 | 10,330 |
Other liabilities | 3,184 | 600 |
Total Liabilities | 343,127 | 340,023 |
Stockholders' Equity: | ||
Common stock | 289 | 288 |
Additional paid-in capital | 119,628 | 118,045 |
Retained earnings | 537,233 | 514,694 |
Treasury stock, at cost | (45,937) | (35,715) |
Total Stockholders' Equity | 611,213 | 597,312 |
Total Liabilities and Stockholders' Equity | $ 954,340 | $ 937,335 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Condensed Consolidated Statements of Income | ||||
Net sales | $ 550,002 | $ 741,076 | $ 1,261,852 | $ 1,373,997 |
Cost of sales | 461,002 | 624,089 | 1,059,734 | 1,157,663 |
Gross profit | 89,000 | 116,987 | 202,118 | 216,334 |
Selling, general and administrative expenses | 77,420 | 84,664 | 169,887 | 165,899 |
Restructuring and other charges | 992 | 992 | 703 | |
Income from operations | 10,588 | 32,323 | 31,239 | 49,732 |
Interest income, net | 5 | 184 | 96 | 382 |
Income before taxes | 10,593 | 32,507 | 31,335 | 50,114 |
Income tax provision | (2,950) | (8,839) | (8,796) | (13,719) |
Net income | $ 7,643 | $ 23,668 | $ 22,539 | $ 36,395 |
Earnings per common share: | ||||
Basic | $ 0.29 | $ 0.90 | $ 0.86 | $ 1.38 |
Diluted | $ 0.29 | $ 0.89 | $ 0.86 | $ 1.37 |
Shares used in computation of earnings per common share: | ||||
Basic | 26,107 | 26,337 | 26,172 | 26,348 |
Diluted | 26,279 | 26,494 | 26,350 | 26,506 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total |
Balance at Dec. 31, 2018 | $ 288 | $ 115,842 | $ 441,010 | $ (31,237) | $ 525,903 |
Balance (in shares) at Dec. 31, 2018 | 28,787 | (2,391) | |||
Stock-based compensation expense | 833 | 833 | |||
Restricted stock units vested (in shares) | 12 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 609 | 609 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 19 | ||||
Shares withheld for taxes paid on stock awards | (72) | (72) | |||
Repurchase of common stock for treasury | $ (3,501) | (3,501) | |||
Repurchase of common stock for treasury (in shares) | (109) | ||||
Net income | 36,395 | 36,395 | |||
Balance at Jun. 30, 2019 | $ 288 | 117,212 | 477,405 | $ (34,738) | 560,167 |
Balance (in shares) at Jun. 30, 2019 | 28,818 | (2,500) | |||
Balance at Mar. 31, 2019 | $ 288 | 116,098 | 453,737 | $ (32,531) | 537,592 |
Balance (in shares) at Mar. 31, 2019 | 28,790 | (2,434) | |||
Stock-based compensation expense | 564 | 564 | |||
Restricted stock units vested (in shares) | 9 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 622 | 622 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 19 | ||||
Shares withheld for taxes paid on stock awards | (72) | (72) | |||
Repurchase of common stock for treasury | $ (2,207) | (2,207) | |||
Repurchase of common stock for treasury (in shares) | (66) | ||||
Net income | 23,668 | 23,668 | |||
Balance at Jun. 30, 2019 | $ 288 | 117,212 | 477,405 | $ (34,738) | 560,167 |
Balance (in shares) at Jun. 30, 2019 | 28,818 | (2,500) | |||
Balance at Dec. 31, 2019 | $ 288 | 118,045 | 514,694 | $ (35,715) | 597,312 |
Balance (in shares) at Dec. 31, 2019 | 28,870 | (2,526) | |||
Stock-based compensation expense | 1,248 | 1,248 | |||
Restricted stock units vested | $ 1 | 1 | |||
Restricted stock units vested (in shares) | 10 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 536 | 536 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 12 | ||||
Shares withheld for taxes paid on stock awards | (201) | (201) | |||
Repurchase of common stock for treasury | $ (10,222) | (10,222) | |||
Repurchase of common stock for treasury (in shares) | (247) | ||||
Net income | 22,539 | 22,539 | |||
Balance at Jun. 30, 2020 | $ 289 | 119,628 | 537,233 | $ (45,937) | 611,213 |
Balance (in shares) at Jun. 30, 2020 | 28,892 | (2,773) | |||
Balance at Mar. 31, 2020 | $ 289 | 118,620 | 529,590 | $ (45,937) | 602,562 |
Balance (in shares) at Mar. 31, 2020 | 28,874 | (2,773) | |||
Stock-based compensation expense | 624 | 624 | |||
Restricted stock units vested (in shares) | 6 | ||||
Issuance of common stock under Employee Stock Purchase Plan | 536 | 536 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 12 | ||||
Shares withheld for taxes paid on stock awards | (152) | (152) | |||
Net income | 7,643 | 7,643 | |||
Balance at Jun. 30, 2020 | $ 289 | $ 119,628 | $ 537,233 | $ (45,937) | $ 611,213 |
Balance (in shares) at Jun. 30, 2020 | 28,892 | (2,773) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash Flows provided by Operating Activities: | ||
Net income | $ 22,539 | $ 36,395 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 6,502 | 7,077 |
Provision for doubtful accounts | 3,627 | (346) |
Stock-based compensation expense | 1,248 | 833 |
Deferred income taxes | 10 | |
Loss on disposal of fixed assets | 13 | 118 |
Changes in assets and liabilities: | ||
Accounts receivable | 99,283 | (52,868) |
Inventories | (40,966) | (56,709) |
Prepaid expenses, income tax receivables and other current assets | (1,391) | 3,473 |
Other non-current assets | (180) | 231 |
Accounts payable | 12,500 | 58,181 |
Accrued expenses and other liabilities | (764) | 6,934 |
Net cash provided by operating activities | 102,411 | 3,329 |
Cash Flows used in Investing Activities: | ||
Purchases of equipment | (8,214) | (13,877) |
Net cash used in investing activities | (8,214) | (13,877) |
Cash Flows used in Financing Activities: | ||
Purchase of treasury shares | (10,222) | (3,501) |
Dividend payments | (8,427) | (8,452) |
Issuance of stock under Employee Stock Purchase Plan | 536 | 609 |
Payments of payroll taxes on stock-based compensation through shares withheld | (201) | (72) |
Net cash used in financing activities | (18,314) | (11,416) |
Increase (decrease) in cash and cash equivalents | 75,883 | (21,964) |
Cash and cash equivalents, beginning of period | 90,060 | 91,703 |
Cash and cash equivalents, end of period | 165,943 | 69,739 |
Non-cash Investing and Financing Activities: | ||
Accrued capital expenditures | 327 | 2,081 |
Supplemental Cash Flow Information: | ||
Income taxes paid | $ 1,082 | $ 11,962 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2020 | |
Basis of Presentation | |
Basis of Presentation | Note 1–Basis of Presentation The accompanying unaudited condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting and 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”). The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s 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, 2020 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2020. 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. The Company’s operations and financial performance in certain areas of its business were negatively impacted by the coronavirus pandemic (“COVID-19”) in the six months ended June 30, 2020. The extent to which the COVID-19 pandemic impacts the Company’s financial results and operations for the remainder of 2020 and beyond will depend on future developments that are highly uncertain and cannot be predicted at this time. The Company updated its estimates and judgements in response to the economic uncertainty associated with COVID-19, which were reflected in the amounts reported in the accompanying condensed consolidated financial statements. The Company has experienced, and may continue to experience, delays in collecting amounts owed to it, and in some cases, may experience inabilities to collect altogether. As a result, the Company increased its customer allowance for doubtful accounts by $3,250 in the six months ended June 30, 2020 compared with the same period a year ago. The Company has also evaluated the potential impact of the pandemic on the carrying values of its goodwill and intangible assets, and based on the assessment, did not identify any indications to suggest that an impairment may exist. These estimates may change as new events occur and actual results could differ materially from these estimates. Restructuring and other charges The restructuring and other charges recorded in the second quarter of 2020 were related to an involuntary reduction in workforce across our business segments and included cash severance and other related termination benefits. These costs will be paid within a year of termination and any unpaid balances are included in accrued expenses at June 30, 2020. All currently planned restructuring and other charges were incurred as of June 30, 2020, and as of the date of this report, the Company has no ongoing restructuring plans. The restructuring and other charges recorded in 2019 were related to a reduction in workforce in the Company’s Headquarters/Other group and included cash severance payments and other related benefits. Also included were exit costs incurred associated with the closing of one of our office facilities, which were expensed as incurred. Restructuring and other charges are presented separately from SG&A expenses. Costs incurred were as follows: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Employee separations $ 992 $ — $ 992 $ 553 Lease termination costs — — — 150 Total restructuring and other charges $ 992 $ — $ 992 $ 703 Included in accrued expenses as of June 30, 2020 and 2019 were $549 and $373, respectively, related to unpaid termination benefits. Adoption of Recently Issued Financial Accounting Standards In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses Recently Issued Financial Accounting Standards In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
REVENUE
REVENUE | 6 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Revenue | Note 2–Revenue The Company disaggregates revenue from its arrangements with customers by type of products and services, as it believes this method best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following tables represent a disaggregation of revenue from arrangements with customers for the three months ended June 30, 2020 and 2019, along with the reportable segment for each category. Three Months Ended June 30, 2020 Business Enterprise Public Sector Total Notebooks/Mobility $ 62,652 $ 79,730 $ 50,308 $ 192,690 Desktops 14,500 27,014 9,107 50,621 Software 24,251 24,876 8,347 57,474 Servers/Storage 23,646 22,976 8,020 54,642 Net/Com Products 14,764 19,285 7,444 41,493 Displays and Sound 19,231 18,524 9,686 47,441 Accessories 19,486 32,673 12,622 64,781 Other Hardware/Services 12,559 21,681 6,620 40,860 Total net sales $ 191,089 $ 246,759 $ 112,154 $ 550,002 Three Months Ended June 30, 2019 Business Enterprise Public Sector Total Notebooks/Mobility $ 80,422 $ 96,842 $ 34,691 $ 211,955 Desktops 34,787 39,277 18,688 92,752 Software 39,259 35,739 20,885 95,883 Servers/Storage 29,383 14,737 20,157 64,277 Net/Com Products 23,367 12,572 15,079 51,018 Displays and Sound 20,866 26,236 14,291 61,393 Accessories 23,677 59,540 10,922 94,139 Other Hardware/Services 19,291 33,096 17,272 69,659 Total net sales $ 271,052 $ 318,039 $ 151,985 $ 741,076 The following table represents a disaggregation of revenue from arrangements with customers for the six months ended June 30, 2020 and 2019, along with the reportable segment for each category. Six Months Ended June 30, 2020 Business Enterprise Public Sector Total Notebooks/Mobility $ 154,265 $ 159,046 $ 79,274 $ 392,585 Desktops 47,794 61,223 19,579 128,596 Software 60,649 51,058 15,642 127,349 Servers/Storage 49,476 39,210 19,766 108,452 Net/Com Products 35,776 44,231 17,254 97,261 Displays and Sound 43,177 42,092 21,129 106,398 Accessories 47,507 123,647 21,431 192,585 Other Hardware/Services 31,230 59,670 17,726 108,626 Total net sales $ 469,874 $ 580,177 $ 211,801 $ 1,261,852 Six Months Ended June 30, 2019 Business Enterprise Public Sector Total Notebooks/Mobility 161,357 $ 163,407 $ 62,066 $ 386,830 Desktops 61,571 75,246 29,575 166,392 Software 73,947 63,515 30,157 167,619 Servers/Storage 55,100 32,162 32,573 119,835 Net/Com Products 45,606 27,200 25,223 98,029 Displays and Sound 41,198 53,171 24,170 118,539 Accessories 45,730 116,055 20,567 182,352 Other Hardware/Services 39,475 62,918 32,008 134,401 Total net sales $ 523,984 $ 593,674 $ 256,339 $ 1,373,997 Contract Balances The following table provides information about contract liabilities from arrangements with customers as of June 30, 2020 and December 31, 2019. June 30, 2020 December 31, 2019 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 2,190 $ 5,942 Changes in the contract liability balances during the six months ended June 30, 2020 and 2019 are as follows (in thousands): 2019 Balances at December 31, 2018 $ 2,679 Cash received in advance and not recognized as revenue 7,168 Amounts recognized as revenue as performance obligations satisfied (5,123) Balances at June 30, 2019 $ 4,724 2020 Balances at December 31, 2019 $ 5,942 Cash received in advance and not recognized as revenue 6,297 Amounts recognized as revenue as performance obligations satisfied (10,049) Balances at June 30, 2020 $ 2,190 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share | |
Earnings Per Share | Note 3–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 non-vested 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 June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net income $ 7,643 $ 23,668 $ 22,539 $ 36,395 Denominator: Denominator for basic earnings per share 26,107 26,337 26,172 26,348 Dilutive effect of unvested employee stock awards 172 157 178 158 Denominator for diluted earnings per share 26,279 26,494 26,350 26,506 Earnings per share: Basic $ 0.29 $ 0.90 $ 0.86 $ 1.38 Diluted $ 0.29 $ 0.89 $ 0.86 $ 1.37 For the three and six months ended June 30, 2020 and 2019, the Company had no outstanding non-vested stock units that were excluded from the computation of diluted earnings per share because including them would have had an anti-dilutive effect. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Leases | Note 4—Leases The Company leases certain facilities from a related party, which is a company affiliated with us through common ownership. Included in the right-of-use asset as of June 30, 2020 was $4,014 and a corresponding lease liability of $4,014 associated with related party leases. As of June 30, 2020, there were no additional operating leases that have not yet commenced. Refer to the following table for quantitative information related to the Company’s leases for the three and six months ended June 30, 2020 and 2019: Three months ended June 30, 2020 Six months ended June 30, 2020 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 379 $ 798 $ 1,177 $ 758 $ 1,581 $ 2,339 Short-term lease cost 41 2 43 82 4 86 Total lease cost $ 420 $ 800 $ 1,220 $ 840 $ 1,585 $ 2,425 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 379 $ 827 $ 1,206 $ 758 $ 1,608 $ 2,366 Weighted-average remaining lease term (in years): Capitalized operating leases 3.42 6.05 5.37 Weighted-average discount rate: Capitalized operating leases 3.92% 3.92% 3.92% Three months ended June 30, 2019 Six months ended June 30, 2019 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 379 $ 792 $ 1,171 $ 758 $ 1,623 $ 2,381 Short-term lease cost 41 2 43 82 4 86 Total lease cost $ 420 $ 794 $ 1,214 $ 840 $ 1,627 $ 2,467 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 379 $ 870 $ 1,249 $ 758 $ 1,754 $ 2,512 Weighted-average remaining lease term (in years): Capitalized operating leases 4.35 10.69 8.58 Weighted-average discount rate: Capitalized operating leases 3.92% 3.92% 3.92% As of June 30, 2020, future lease payments over the remaining term of capitalized operating leases were as follows: For the Years Ended December 31, Related Parties Others Total 2020, excluding the six months ended June 30, 2020 $ 627 $ 1,664 $ 2,291 2021 1,253 3,092 4,345 2022 1,253 2,111 3,364 2023 1,149 1,675 2,824 2024 — 1,699 1,699 2025 — 1,594 1,594 Thereafter — 888 888 4,282 12,723 17,005 Imputed interest (1,440) Lease liability balance at June 30, 2020 $ 15,565 As of June 30, 2020, the ROU asset had a balance of $14,755. The long-term lease liability was $11,566 and the short-term lease liability . |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2020 | |
Segment Information | |
Segment Information | Note 5–Segment Information The internal reporting structure used by the Company’s chief operating decision maker (“CODM”) to assess performance and allocate resources determines the basis for our reportable operating segments. The Company’s CODM is its Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of operating income. The Company’s operations are organized under three reportable segments—the Business Solutions segment, which serves primarily small- and medium-sized businesses; the Enterprise Solutions segment, which serves primarily medium-to-large corporations; and the Public Sector Solutions 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. The Company reports 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. Segment information applicable to our reportable operating segments for the three and six months ended June 30, 2020 and 2019 is shown below: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net sales: Business Solutions $ 191,089 $ 271,052 $ 469,874 $ 523,984 Enterprise Solutions 246,759 318,039 580,177 593,674 Public Sector Solutions 112,154 151,985 211,801 256,339 Total net sales $ 550,002 $ 741,076 $ 1,261,852 $ 1,373,997 Operating income (loss): Business Solutions $ 1,452 $ 16,211 $ 12,752 $ 24,976 Enterprise Solutions 13,667 19,108 30,390 34,581 Public Sector Solutions (1,807) 661 (5,130) (2,405) Headquarters/Other (2,724) (3,657) (6,773) (7,420) Total operating income 10,588 32,323 31,239 49,732 Interest income, net 5 184 96 382 Income before taxes $ 10,593 $ 32,507 $ 31,335 $ 50,114 Selected operating expense: Depreciation and amortization: Business Solutions $ 159 $ 148 $ 318 $ 298 Enterprise Solutions 679 606 1,361 1,245 Public Sector Solutions 15 25 30 46 Headquarters/Other 2,502 2,589 4,793 5,488 Total depreciation and amortization $ 3,355 $ 3,368 $ 6,502 $ 7,077 Total assets: Business Solutions $ 326,748 $ 291,912 Enterprise Solutions 538,994 506,086 Public Sector Solutions 73,885 80,461 Headquarters/Other 14,713 33,343 Total assets $ 954,340 $ 911,802 The assets of our three operating segments presented above consist primarily of accounts receivable, net intercompany receivable, goodwill, and other intangibles. Assets reported under the Headquarters/Other group are managed by corporate headquarters, including cash, inventory, property and equipment, right-of-use assets, and intercompany balance, net. As of June 30, 2020 and 2019, total assets for the Headquarters/Other group are presented net of intercompany balance eliminations of $29,100 and $25,093 , respectively. 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-by-segment basis. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | Note 6–Commitments and Contingencies The Company is 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, adverse effect on our financial position, results of operations, and/or cash flows. The Company is subject to audits by states on sales and income taxes, employment matters, and other assessments. Additional liabilities for these and other audits could be assessed, but such outcomes are not expected to have a material, adverse impact on our financial position, results of operations, and/or cash flows. |
BANK BORROWINGS
BANK BORROWINGS | 6 Months Ended |
Jun. 30, 2020 | |
Bank Borrowings | |
Bank Borrowings | Note 7–Bank Borrowings The Company has a $50,000 credit facility collateralized by our account receivables that expires February 10, 2022 . This facility can be increased, at our option, to $80,000 for permitted 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 (“ LIBOR ”) (0.16% at June 30, 2020), plus a spread based on our funded debt ratio, or in the absence of LIBOR, the prime rate (3.25% at June 30, 2020). 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. The credit facility does not include restrictions on future dividend payments. Funded debt ratio is the ratio of average outstanding advances under the credit facility to trailing twelve months 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 trailing twelve months Adjusted EBITDA could limit our potential borrowing capacity under the credit facility. The Company had no outstanding bank borrowings at June 30, 2020 or 2019, and accordingly, the entire $50,000 facility was available for borrowings under the credit facility. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Basis of Presentation | |
Principles of Consolidation | The accompanying unaudited condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting and 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 the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”). The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s 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, 2020 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2020. |
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. The Company’s operations and financial performance in certain areas of its business were negatively impacted by the coronavirus pandemic (“COVID-19”) in the six months ended June 30, 2020. The extent to which the COVID-19 pandemic impacts the Company’s financial results and operations for the remainder of 2020 and beyond will depend on future developments that are highly uncertain and cannot be predicted at this time. The Company updated its estimates and judgements in response to the economic uncertainty associated with COVID-19, which were reflected in the amounts reported in the accompanying condensed consolidated financial statements. The Company has experienced, and may continue to experience, delays in collecting amounts owed to it, and in some cases, may experience inabilities to collect altogether. As a result, the Company increased its customer allowance for doubtful accounts by $3,250 in the six months ended June 30, 2020 compared with the same period a year ago. The Company has also evaluated the potential impact of the pandemic on the carrying values of its goodwill and intangible assets, and based on the assessment, did not identify any indications to suggest that an impairment may exist. These estimates may change as new events occur and actual results could differ materially from these estimates. |
Restructuring and other charges | Restructuring and other charges The restructuring and other charges recorded in the second quarter of 2020 were related to an involuntary reduction in workforce across our business segments and included cash severance and other related termination benefits. These costs will be paid within a year of termination and any unpaid balances are included in accrued expenses at June 30, 2020. All currently planned restructuring and other charges were incurred as of June 30, 2020, and as of the date of this report, the Company has no ongoing restructuring plans. The restructuring and other charges recorded in 2019 were related to a reduction in workforce in the Company’s Headquarters/Other group and included cash severance payments and other related benefits. Also included were exit costs incurred associated with the closing of one of our office facilities, which were expensed as incurred. Restructuring and other charges are presented separately from SG&A expenses. Costs incurred were as follows: Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Employee separations $ 992 $ — $ 992 $ 553 Lease termination costs — — — 150 Total restructuring and other charges $ 992 $ — $ 992 $ 703 Included in accrued expenses as of June 30, 2020 and 2019 were $549 and $373, respectively, related to unpaid termination benefits. |
Adoption of Recently Issued Financial Accounting Standards and Recently Issued Financial Accounting Standards | Adoption of Recently Issued Financial Accounting Standards In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses Recently Issued Financial Accounting Standards In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
BASIS OF PRESENTATION (Tables)
BASIS OF PRESENTATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Basis of Presentation | |
Schedule of restructuring and other charges | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Employee separations $ 992 $ — $ 992 $ 553 Lease termination costs — — — 150 Total restructuring and other charges $ 992 $ — $ 992 $ 703 |
REVENUE (Tables)
REVENUE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue | |
Schedule of disaggregation of revenue from contracts with customers | Three Months Ended June 30, 2020 Business Enterprise Public Sector Total Notebooks/Mobility $ 62,652 $ 79,730 $ 50,308 $ 192,690 Desktops 14,500 27,014 9,107 50,621 Software 24,251 24,876 8,347 57,474 Servers/Storage 23,646 22,976 8,020 54,642 Net/Com Products 14,764 19,285 7,444 41,493 Displays and Sound 19,231 18,524 9,686 47,441 Accessories 19,486 32,673 12,622 64,781 Other Hardware/Services 12,559 21,681 6,620 40,860 Total net sales $ 191,089 $ 246,759 $ 112,154 $ 550,002 Three Months Ended June 30, 2019 Business Enterprise Public Sector Total Notebooks/Mobility $ 80,422 $ 96,842 $ 34,691 $ 211,955 Desktops 34,787 39,277 18,688 92,752 Software 39,259 35,739 20,885 95,883 Servers/Storage 29,383 14,737 20,157 64,277 Net/Com Products 23,367 12,572 15,079 51,018 Displays and Sound 20,866 26,236 14,291 61,393 Accessories 23,677 59,540 10,922 94,139 Other Hardware/Services 19,291 33,096 17,272 69,659 Total net sales $ 271,052 $ 318,039 $ 151,985 $ 741,076 Six Months Ended June 30, 2020 Business Enterprise Public Sector Total Notebooks/Mobility $ 154,265 $ 159,046 $ 79,274 $ 392,585 Desktops 47,794 61,223 19,579 128,596 Software 60,649 51,058 15,642 127,349 Servers/Storage 49,476 39,210 19,766 108,452 Net/Com Products 35,776 44,231 17,254 97,261 Displays and Sound 43,177 42,092 21,129 106,398 Accessories 47,507 123,647 21,431 192,585 Other Hardware/Services 31,230 59,670 17,726 108,626 Total net sales $ 469,874 $ 580,177 $ 211,801 $ 1,261,852 Six Months Ended June 30, 2019 Business Enterprise Public Sector Total Notebooks/Mobility 161,357 $ 163,407 $ 62,066 $ 386,830 Desktops 61,571 75,246 29,575 166,392 Software 73,947 63,515 30,157 167,619 Servers/Storage 55,100 32,162 32,573 119,835 Net/Com Products 45,606 27,200 25,223 98,029 Displays and Sound 41,198 53,171 24,170 118,539 Accessories 45,730 116,055 20,567 182,352 Other Hardware/Services 39,475 62,918 32,008 134,401 Total net sales $ 523,984 $ 593,674 $ 256,339 $ 1,373,997 |
Schedule of information on contract liability | June 30, 2020 December 31, 2019 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 2,190 $ 5,942 Changes in the contract liability balances during the six months ended June 30, 2020 and 2019 are as follows (in thousands): 2019 Balances at December 31, 2018 $ 2,679 Cash received in advance and not recognized as revenue 7,168 Amounts recognized as revenue as performance obligations satisfied (5,123) Balances at June 30, 2019 $ 4,724 2020 Balances at December 31, 2019 $ 5,942 Cash received in advance and not recognized as revenue 6,297 Amounts recognized as revenue as performance obligations satisfied (10,049) Balances at June 30, 2020 $ 2,190 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share | |
Computation of basic and diluted earnings per share | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net income $ 7,643 $ 23,668 $ 22,539 $ 36,395 Denominator: Denominator for basic earnings per share 26,107 26,337 26,172 26,348 Dilutive effect of unvested employee stock awards 172 157 178 158 Denominator for diluted earnings per share 26,279 26,494 26,350 26,506 Earnings per share: Basic $ 0.29 $ 0.90 $ 0.86 $ 1.38 Diluted $ 0.29 $ 0.89 $ 0.86 $ 1.37 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases | |
Schedule of lease cost | Three months ended June 30, 2020 Six months ended June 30, 2020 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 379 $ 798 $ 1,177 $ 758 $ 1,581 $ 2,339 Short-term lease cost 41 2 43 82 4 86 Total lease cost $ 420 $ 800 $ 1,220 $ 840 $ 1,585 $ 2,425 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 379 $ 827 $ 1,206 $ 758 $ 1,608 $ 2,366 Weighted-average remaining lease term (in years): Capitalized operating leases 3.42 6.05 5.37 Weighted-average discount rate: Capitalized operating leases 3.92% 3.92% 3.92% Three months ended June 30, 2019 Six months ended June 30, 2019 Related Parties Others Total Related Parties Others Total Lease Cost Capitalized operating lease cost $ 379 $ 792 $ 1,171 $ 758 $ 1,623 $ 2,381 Short-term lease cost 41 2 43 82 4 86 Total lease cost $ 420 $ 794 $ 1,214 $ 840 $ 1,627 $ 2,467 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 379 $ 870 $ 1,249 $ 758 $ 1,754 $ 2,512 Weighted-average remaining lease term (in years): Capitalized operating leases 4.35 10.69 8.58 Weighted-average discount rate: Capitalized operating leases 3.92% 3.92% 3.92% |
Schedule of future lease payments on capitalized operating leases | For the Years Ended December 31, Related Parties Others Total 2020, excluding the six months ended June 30, 2020 $ 627 $ 1,664 $ 2,291 2021 1,253 3,092 4,345 2022 1,253 2,111 3,364 2023 1,149 1,675 2,824 2024 — 1,699 1,699 2025 — 1,594 1,594 Thereafter — 888 888 4,282 12,723 17,005 Imputed interest (1,440) Lease liability balance at June 30, 2020 $ 15,565 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Information | |
Segment information applicable to reportable operating segments | Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net sales: Business Solutions $ 191,089 $ 271,052 $ 469,874 $ 523,984 Enterprise Solutions 246,759 318,039 580,177 593,674 Public Sector Solutions 112,154 151,985 211,801 256,339 Total net sales $ 550,002 $ 741,076 $ 1,261,852 $ 1,373,997 Operating income (loss): Business Solutions $ 1,452 $ 16,211 $ 12,752 $ 24,976 Enterprise Solutions 13,667 19,108 30,390 34,581 Public Sector Solutions (1,807) 661 (5,130) (2,405) Headquarters/Other (2,724) (3,657) (6,773) (7,420) Total operating income 10,588 32,323 31,239 49,732 Interest income, net 5 184 96 382 Income before taxes $ 10,593 $ 32,507 $ 31,335 $ 50,114 Selected operating expense: Depreciation and amortization: Business Solutions $ 159 $ 148 $ 318 $ 298 Enterprise Solutions 679 606 1,361 1,245 Public Sector Solutions 15 25 30 46 Headquarters/Other 2,502 2,589 4,793 5,488 Total depreciation and amortization $ 3,355 $ 3,368 $ 6,502 $ 7,077 Total assets: Business Solutions $ 326,748 $ 291,912 Enterprise Solutions 538,994 506,086 Public Sector Solutions 73,885 80,461 Headquarters/Other 14,713 33,343 Total assets $ 954,340 $ 911,802 |
BASIS OF PRESENTATION - Restruc
BASIS OF PRESENTATION - Restructuring and Other Charges (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2019facility | |
Restructuring and other charges | ||||
Number of office facilities closed | facility | 1 | |||
Restructuring and other charges | $ 992 | $ 992 | $ 703 | |
Accrued employee termination benefits | 549 | 549 | 373 | |
Customer allowance for doubtful accounts | ||||
Increase in customer allowance for doubtful accounts due to COVID-19 | 3,250 | |||
Employee separations | ||||
Restructuring and other charges | ||||
Restructuring and other charges | $ 992 | $ 992 | 553 | |
Lease termination costs | ||||
Restructuring and other charges | ||||
Restructuring and other charges | $ 150 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Disaggregation of revenue | ||||
Net sales | $ 550,002 | $ 741,076 | $ 1,261,852 | $ 1,373,997 |
Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 192,690 | 211,955 | 392,585 | 386,830 |
Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 50,621 | 92,752 | 128,596 | 166,392 |
Software | ||||
Disaggregation of revenue | ||||
Net sales | 57,474 | 95,883 | 127,349 | 167,619 |
Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 54,642 | 64,277 | 108,452 | 119,835 |
Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 41,493 | 51,018 | 97,261 | 98,029 |
Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 47,441 | 61,393 | 106,398 | 118,539 |
Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 64,781 | 94,139 | 192,585 | 182,352 |
Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 40,860 | 69,659 | 108,626 | 134,401 |
Business Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 191,089 | 271,052 | 469,874 | 523,984 |
Business Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 62,652 | 80,422 | 154,265 | 161,357 |
Business Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 14,500 | 34,787 | 47,794 | 61,571 |
Business Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 24,251 | 39,259 | 60,649 | 73,947 |
Business Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 23,646 | 29,383 | 49,476 | 55,100 |
Business Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 14,764 | 23,367 | 35,776 | 45,606 |
Business Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 19,231 | 20,866 | 43,177 | 41,198 |
Business Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 19,486 | 23,677 | 47,507 | 45,730 |
Business Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 12,559 | 19,291 | 31,230 | 39,475 |
Enterprise Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 246,759 | 318,039 | 580,177 | 593,674 |
Enterprise Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 79,730 | 96,842 | 159,046 | 163,407 |
Enterprise Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 27,014 | 39,277 | 61,223 | 75,246 |
Enterprise Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 24,876 | 35,739 | 51,058 | 63,515 |
Enterprise Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 22,976 | 14,737 | 39,210 | 32,162 |
Enterprise Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 19,285 | 12,572 | 44,231 | 27,200 |
Enterprise Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 18,524 | 26,236 | 42,092 | 53,171 |
Enterprise Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 32,673 | 59,540 | 123,647 | 116,055 |
Enterprise Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | 21,681 | 33,096 | 59,670 | 62,918 |
Public Sector Solutions | ||||
Disaggregation of revenue | ||||
Net sales | 112,154 | 151,985 | 211,801 | 256,339 |
Public Sector Solutions | Notebooks/Mobility | ||||
Disaggregation of revenue | ||||
Net sales | 50,308 | 34,691 | 79,274 | 62,066 |
Public Sector Solutions | Desktops | ||||
Disaggregation of revenue | ||||
Net sales | 9,107 | 18,688 | 19,579 | 29,575 |
Public Sector Solutions | Software | ||||
Disaggregation of revenue | ||||
Net sales | 8,347 | 20,885 | 15,642 | 30,157 |
Public Sector Solutions | Servers/Storage | ||||
Disaggregation of revenue | ||||
Net sales | 8,020 | 20,157 | 19,766 | 32,573 |
Public Sector Solutions | Net/Com Products | ||||
Disaggregation of revenue | ||||
Net sales | 7,444 | 15,079 | 17,254 | 25,223 |
Public Sector Solutions | Displays and Sound | ||||
Disaggregation of revenue | ||||
Net sales | 9,686 | 14,291 | 21,129 | 24,170 |
Public Sector Solutions | Accessories | ||||
Disaggregation of revenue | ||||
Net sales | 12,622 | 10,922 | 21,431 | 20,567 |
Public Sector Solutions | Other Hardware/Services | ||||
Disaggregation of revenue | ||||
Net sales | $ 6,620 | $ 17,272 | $ 17,726 | $ 32,008 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Change in contract liability | |||
Beginning balance - Contract liability | $ 5,942 | $ 2,679 | |
Cash received in advance and not recognized as revenue | 6,297 | 7,168 | |
Amounts recognized as revenue as performance obligations satisfied | (10,049) | (5,123) | |
Ending balance - Contract liability | 2,190 | $ 4,724 | |
Accrued expenses and other liabilities | |||
Contract liabilities | |||
Contract liabilities | $ 2,190 | $ 5,942 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||||
Net income | $ 7,643 | $ 23,668 | $ 22,539 | $ 36,395 |
Denominator: | ||||
Denominator for basic earnings per share | 26,107 | 26,337 | 26,172 | 26,348 |
Dilutive effect of unvested employee stock awards | 172 | 157 | 178 | 158 |
Denominator for diluted earnings per share | 26,279 | 26,494 | 26,350 | 26,506 |
Earnings per share: | ||||
Basic | $ 0.29 | $ 0.90 | $ 0.86 | $ 1.38 |
Diluted | $ 0.29 | $ 0.89 | $ 0.86 | $ 1.37 |
Additional Disclosure | ||||
Employee stock awards excluded from computation of diluted earnings per share | 0 | 0 | 0 | 0 |
LEASES - Lease Cost and Other I
LEASES - Lease Cost and Other Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)lease | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Leases | |||||
Right-of-use assets | $ 14,755 | $ 14,755 | $ 13,842 | ||
Lease liability | 15,565 | $ 15,565 | |||
Number of additional operating or financing leases not yet commenced | lease | 0 | ||||
Lease Cost | |||||
Capitalized operating lease cost | 1,177 | $ 1,171 | $ 2,339 | $ 2,381 | |
Short-term lease cost | 43 | 43 | 86 | 86 | |
Total lease cost | 1,220 | 1,214 | 2,425 | 2,467 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||||
Operating cash flows | $ 1,206 | $ 1,249 | $ 2,366 | $ 2,512 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 5 years 4 months 13 days | 8 years 6 months 29 days | 5 years 4 months 13 days | 8 years 6 months 29 days | |
Weighted-average discount rate - Capitalized operating leases | 3.92% | 3.92% | 3.92% | 3.92% | |
Related Parties | |||||
Leases | |||||
Right-of-use assets | $ 4,014 | $ 4,014 | |||
Lease liability | 4,014 | 4,014 | |||
Lease Cost | |||||
Capitalized operating lease cost | 379 | $ 379 | 758 | $ 758 | |
Short-term lease cost | 41 | 41 | 82 | 82 | |
Total lease cost | 420 | 420 | 840 | 840 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||||
Operating cash flows | $ 379 | $ 379 | $ 758 | $ 758 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 3 years 5 months 1 day | 4 years 4 months 6 days | 3 years 5 months 1 day | 4 years 4 months 6 days | |
Weighted-average discount rate - Capitalized operating leases | 3.92% | 3.92% | 3.92% | 3.92% | |
Others | |||||
Lease Cost | |||||
Capitalized operating lease cost | $ 798 | $ 792 | $ 1,581 | $ 1,623 | |
Short-term lease cost | 2 | 2 | 4 | 4 | |
Total lease cost | 800 | 794 | 1,585 | 1,627 | |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | |||||
Operating cash flows | $ 827 | $ 870 | $ 1,608 | $ 1,754 | |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 6 years 18 days | 10 years 8 months 8 days | 6 years 18 days | 10 years 8 months 8 days | |
Weighted-average discount rate - Capitalized operating leases | 3.92% | 3.92% | 3.92% | 3.92% |
LEASES - Future Lease Payments
LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Future lease payments over the remaining term of capitalized operating leases | ||
2020, excluding the six months ended June 30, 2020 | $ 2,291 | |
2021 | 4,345 | |
2022 | 3,364 | |
2023 | 2,824 | |
2024 | 1,699 | |
2025 | 1,594 | |
Thereafter | 888 | |
Total | 17,005 | |
Imputed interest | (1,440) | |
Lease liability balance | 15,565 | |
Right-of-use assets | 14,755 | $ 13,842 |
Long-term lease liability | 11,566 | $ 10,330 |
Short-term lease liability | $ 3,999 | |
Current operating lease liability, Statement of Financial Position | us-gaap:AccruedLiabilitiesAndOtherLiabilities | |
Related Parties | ||
Future lease payments over the remaining term of capitalized operating leases | ||
2020, excluding the six months ended June 30, 2020 | $ 627 | |
2021 | 1,253 | |
2022 | 1,253 | |
2023 | 1,149 | |
Total | 4,282 | |
Lease liability balance | 4,014 | |
Right-of-use assets | 4,014 | |
Others | ||
Future lease payments over the remaining term of capitalized operating leases | ||
2020, excluding the six months ended June 30, 2020 | 1,664 | |
2021 | 3,092 | |
2022 | 2,111 | |
2023 | 1,675 | |
2024 | 1,699 | |
2025 | 1,594 | |
Thereafter | 888 | |
Total | $ 12,723 |
SEGMENT INFORMATION - Segment I
SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Segment Reporting Information | |||||
Number of reportable segments | segment | 3 | ||||
Number of operating segments | segment | 3 | ||||
Net sales: | |||||
Net sales | $ 550,002 | $ 741,076 | $ 1,261,852 | $ 1,373,997 | |
Operating income (loss): | |||||
Operating income (loss) | 10,588 | 32,323 | 31,239 | 49,732 | |
Interest income, net | 5 | 184 | 96 | 382 | |
Income before taxes | 10,593 | 32,507 | 31,335 | 50,114 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 3,355 | 3,368 | 6,502 | 7,077 | |
Total assets: | |||||
Total assets | 954,340 | 911,802 | 954,340 | 911,802 | $ 937,335 |
Goodwill | 73,602 | 73,602 | $ 73,602 | ||
Business Solutions | |||||
Net sales: | |||||
Net sales | 191,089 | 271,052 | 469,874 | 523,984 | |
Enterprise Solutions | |||||
Net sales: | |||||
Net sales | 246,759 | 318,039 | 580,177 | 593,674 | |
Public Sector Solutions | |||||
Net sales: | |||||
Net sales | 112,154 | 151,985 | 211,801 | 256,339 | |
Operating Segments | Business Solutions | |||||
Net sales: | |||||
Net sales | 191,089 | 271,052 | 469,874 | 523,984 | |
Operating income (loss): | |||||
Operating income (loss) | 1,452 | 16,211 | 12,752 | 24,976 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 159 | 148 | 318 | 298 | |
Total assets: | |||||
Total assets | 326,748 | 291,912 | 326,748 | 291,912 | |
Operating Segments | Enterprise Solutions | |||||
Net sales: | |||||
Net sales | 246,759 | 318,039 | 580,177 | 593,674 | |
Operating income (loss): | |||||
Operating income (loss) | 13,667 | 19,108 | 30,390 | 34,581 | |
Depreciation and amortization: | |||||
Depreciation and amortization | 679 | 606 | 1,361 | 1,245 | |
Total assets: | |||||
Total assets | 538,994 | 506,086 | 538,994 | 506,086 | |
Operating Segments | Public Sector Solutions | |||||
Net sales: | |||||
Net sales | 112,154 | 151,985 | 211,801 | 256,339 | |
Operating income (loss): | |||||
Operating income (loss) | (1,807) | 661 | (5,130) | (2,405) | |
Depreciation and amortization: | |||||
Depreciation and amortization | 15 | 25 | 30 | 46 | |
Total assets: | |||||
Total assets | 73,885 | 80,461 | 73,885 | 80,461 | |
Headquarters/Other | |||||
Operating income (loss): | |||||
Operating income (loss) | (2,724) | (3,657) | (6,773) | (7,420) | |
Depreciation and amortization: | |||||
Depreciation and amortization | 2,502 | 2,589 | 4,793 | 5,488 | |
Total assets: | |||||
Assets net of intercompany balance eliminations | 14,713 | 33,343 | 14,713 | 33,343 | |
Intersegment Elimination | |||||
Total assets: | |||||
Total assets | $ (29,100) | $ (25,093) | $ (29,100) | $ (25,093) |
BANK BORROWINGS (Details)
BANK BORROWINGS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
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 | |
Line of credit, outstanding borrowing | $ 0 | $ 0 |
Line of credit, available for borrowing | $ 50,000 | $ 50,000 |
Maximum | ||
Subordinated Borrowing | ||
Debt ratio | 2 | |
Prime Rate | ||
Subordinated Borrowing | ||
Debt instrument, interest rate | 3.25% | |
One-month LIBOR rate | ||
Subordinated Borrowing | ||
Debt instrument, interest rate | 0.16% |