Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 24, 2023 | Jun. 30, 2022 | |
Document And Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Entity File Number | 000-23827 | ||
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, $0.01 par value | ||
Trading Symbol | CNXN | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 495 | ||
Entity Common Stock, Shares Outstanding | 26,312,862 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001050377 | ||
Amendment Flag | false | ||
Auditor Name | Deloitte & Touche LLP | ||
Auditor Firm ID | 34 | ||
Auditor Location | Boston, Massachusetts |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 122,930 | $ 108,310 |
Accounts receivable, net | 610,280 | 607,532 |
Inventories, net | 208,682 | 206,555 |
Prepaid expenses and other current assets | 11,900 | 10,016 |
Total current assets | 953,792 | 932,413 |
Property and equipment, net | 59,171 | 61,011 |
Right-of-use assets | 7,558 | 9,579 |
Goodwill | 73,602 | 73,602 |
Intangible, net | 4,648 | 5,868 |
Other assets | 1,055 | 910 |
Total Assets | 1,099,826 | 1,083,383 |
Current Liabilities: | ||
Accounts payable | 232,638 | 281,836 |
Accrued payroll | 24,071 | 30,966 |
Accrued expenses and other liabilities | 53,808 | 61,830 |
Total current liabilities | 310,517 | 374,632 |
Deferred income taxes | 17,970 | 19,278 |
Noncurrent operating lease liabilities | 4,994 | 6,789 |
Other liabilities | 170 | 211 |
Total Liabilities | 333,651 | 400,910 |
Stockholders' Equity: | ||
Common Stock, $.01 par value, 100,000 shares authorized, 29,123 and 29,025 issued, 26,350 and 26,252 outstanding at December 31, 2022 and 2021, respectively | 291 | 290 |
Additional paid-in capital | 125,784 | 122,354 |
Retained earnings | 686,037 | 605,766 |
Treasury stock at cost, 2,773 and 2,773 shares at December 31, 2022 and 2021, respectively | (45,937) | (45,937) |
Total Stockholders' Equity | 766,175 | 682,473 |
Total Liabilities and Stockholders' Equity | $ 1,099,826 | $ 1,083,383 |
CONSOLIDATED BALANCE SHEETS (PA
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares shares in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 100,000 | 100,000 |
Common Stock, shares issued | 29,123 | 29,025 |
Common Stock, shares outstanding | 26,350 | 26,252 |
Treasury stock, shares | 2,773 | 2,773 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Income | |||
Net sales | $ 3,124,996 | $ 2,892,595 | $ 2,590,290 |
Cost of sales | 2,598,819 | 2,428,016 | 2,171,483 |
Gross profit | 526,177 | 464,579 | 418,807 |
Selling, general and administrative expenses | 405,625 | 368,062 | 345,741 |
Restructuring and other charges | 0 | 0 | 992 |
Income from operations | 120,552 | 96,517 | 72,074 |
Other income, net | 1,083 | 5 | 1,122 |
Income before taxes | 121,635 | 96,522 | 73,196 |
Income tax provision | (32,416) | (26,616) | (17,431) |
Net income | $ 89,219 | $ 69,906 | $ 55,765 |
Earnings per common share: | |||
Basic | $ 3.40 | $ 2.67 | $ 2.13 |
Diluted | $ 3.37 | $ 2.65 | $ 2.12 |
Shares used in computation of earnings per common share: | |||
Basic | 26,279 | 26,196 | 26,157 |
Diluted | 26,443 | 26,364 | 26,336 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Shares | Total |
Balance at Dec. 31, 2019 | $ 288 | $ 118,045 | $ 514,694 | $ (35,715) | $ 597,312 |
Balance (in shares) at Dec. 31, 2019 | 28,870 | ||||
Balance - Treasury Shares (in shares) at Dec. 31, 2019 | (2,526) | ||||
Issuance of common stock under Employee Stock Purchase Plan | 536 | 536 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 12 | ||||
Stock-based compensation expense | 2,668 | 2,668 | |||
Restricted stock units vested | $ 1 | (1) | |||
Restricted stock units vested (in shares) | 61 | ||||
Shares withheld for taxes paid on stock awards | (1,357) | (1,357) | |||
Repurchase of common stock for treasury | $ (10,222) | (10,222) | |||
Repurchase of common stock for treasury (in shares) | (247) | ||||
Dividend declaration | (8,375) | (8,375) | |||
Net income | 55,765 | 55,765 | |||
Balance at Dec. 31, 2020 | $ 289 | 119,891 | 562,084 | $ (45,937) | 636,327 |
Balance (in shares) at Dec. 31, 2020 | 28,943 | ||||
Balance - Treasury Shares (in shares) at Dec. 31, 2020 | (2,773) | ||||
Stock-based compensation expense | 4,231 | 4,231 | |||
Restricted stock units vested | $ 1 | (1) | |||
Restricted stock units vested (in shares) | 82 | ||||
Shares withheld for taxes paid on stock awards | (1,767) | (1,767) | |||
Dividend declaration | (26,224) | (26,224) | |||
Net income | 69,906 | 69,906 | |||
Balance at Dec. 31, 2021 | $ 290 | 122,354 | 605,766 | $ (45,937) | $ 682,473 |
Balance (in shares) at Dec. 31, 2021 | 29,025 | 29,025 | |||
Balance - Treasury Shares (in shares) at Dec. 31, 2021 | (2,773) | (2,773) | |||
Stock-based compensation expense | 5,675 | $ 5,675 | |||
Restricted stock units vested | $ 1 | (1) | |||
Restricted stock units vested (in shares) | 98 | ||||
Shares withheld for taxes paid on stock awards | (2,244) | (2,244) | |||
Dividend declaration | (8,948) | (8,948) | |||
Net income | 89,219 | 89,219 | |||
Balance at Dec. 31, 2022 | $ 291 | $ 125,784 | $ 686,037 | $ (45,937) | $ 766,175 |
Balance (in shares) at Dec. 31, 2022 | 29,123 | 29,123 | |||
Balance - Treasury Shares (in shares) at Dec. 31, 2022 | (2,773) | (2,773) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash Flows provided by Operating Activities: | |||
Net income | $ 89,219 | $ 69,906 | $ 55,765 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 11,978 | 12,202 | 13,603 |
Adjustments to credit losses reserve | 3,252 | 3,307 | 3,316 |
Stock-based compensation expense | 5,675 | 4,231 | 2,668 |
Deferred income taxes | (1,308) | 753 | (1,645) |
Gain from life insurance | (1,061) | ||
Loss (gain) on disposal of fixed assets | 17 | (36) | 28 |
Changes in assets and liabilities: | |||
Accounts receivable | (6,000) | (1,318) | (63,650) |
Inventories | (2,127) | (65,688) | (16,201) |
Prepaid expenses and other current assets | (1,884) | 1,421 | 622 |
Other non-current assets | (145) | 435 | (398) |
Accounts payable | (49,056) | 14,814 | 32,515 |
Accrued expenses and other liabilities | (14,732) | 17,727 | 10,536 |
Net cash provided by operating activities | 34,889 | 57,754 | 36,098 |
Cash Flows used in Investing Activities: | |||
Purchases of equipment and capitalized software | (9,077) | (10,302) | (11,033) |
Proceeds from sale of equipment | 69 | ||
Proceeds from life insurance | 1,500 | ||
Net cash used in investing activities | (9,077) | (8,733) | (11,033) |
Cash Flows used in Financing Activities: | |||
Proceeds from short-term borrowings | 36,463 | ||
Repayment of short-term borrowings | (36,463) | ||
Purchase of treasury shares | (10,222) | ||
Dividend payments | (8,948) | (34,599) | (8,427) |
Issuance of stock under Employee Stock Purchase Plan | 536 | ||
Payments of payroll taxes on stock-based compensation through shares withheld | (2,244) | (1,767) | (1,357) |
Net cash used in financing activities | (11,192) | (36,366) | (19,470) |
Increase (decrease) in cash and cash equivalents | 14,620 | 12,655 | 5,595 |
Cash and cash equivalents, beginning of year | 108,310 | 95,655 | 90,060 |
Cash and cash equivalents, end of period | 122,930 | 108,310 | 95,655 |
Non-cash Investing and Financing Activities: | |||
Accrued capital expenditures | 192 | 334 | 442 |
Dividend declarations | 8,375 | ||
Life insurance recorded as accounts receivable | 1,500 | ||
Supplemental Cash Flow Information: | |||
Income taxes paid | 33,687 | $ 21,465 | $ 19,441 |
Interest paid | $ 4 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | PC CONNECTION, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share data) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PC Connection, Inc. is a Fortune 1000 Global Solutions Provider that simplifies the IT customer experience, guiding the connection between people and technology. The Company’s dedicated Account Managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services. The Company provides a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, software and peripheral equipment, networking communications, and other products and accessories that the Company purchases from manufacturers, distributors, and other suppliers. The Company also offers comprehensive portfolio of managed services and professional services. These services are performed by the Company’s personnel and by third-party providers. The Company’s GlobalServe offering ensures worldwide coverage for the Company’s multinational customers, delivering global procurement solutions through the Company’s network of in-country suppliers in over 150 countries. The Company operates through three operating segments: ● Connection Enterprise Solutions – serving large enterprise customers ● Connection Business Solutions – serving SMBs ● Connection Public Sector Solutions – serving federal, state, and local government and educational institutions The following is a summary of the Company’s significant accounting policies: Principles of Consolidation The consolidated financial statements include the accounts of PC Connection, Inc. and its subsidiaries, all of which are wholly-owned. Intercompany transactions and balances are eliminated in consolidation. 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 reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions. Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In most instances, when several performance obligations are aggregated into one single transaction, these performance obligations are fulfilled at the same point in time. The Company accounts for an arrangement when it has approval and commitment from both parties, the rights are identified, the contract has commercial substance, and collectability of consideration is probable. The Company generally obtains oral or written purchase authorizations from its customers for a specified amount of product at a specified price, which constitutes an arrangement. Revenue is recognized at the amount expected to be collected, net of any taxes collected from customers, which are subsequently remitted to governmental authorities. The Company generally invoices for its products at the time of shipping, and accordingly there is not a significant financing component included in its arrangements. Cost of Sales and Certain Other Costs Cost of sales includes the invoice cost of the product, direct employee and third-party cost of services, direct costs of packaging, inbound and outbound freight, and provisions for inventory obsolescence, adjusted for discounts, rebates, and other vendor allowances. Cash and Cash Equivalents The Company considers all highly liquid short-term investments with original maturities of 90 days or less to be cash equivalents. The carrying value of the Company’s cash equivalents approximates fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting guidance includes a fair value hierarchy that priorities the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows: ● Level 1: Quoted prices for identical assets or liabilities in active markets; ● Level 2: Observable inputs other than those described as Level 1; and ● Level 3: Unobservable inputs that are supportable by little or no market activities and are based on significant assumptions and estimates. The Company’s money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. It is included as cash equivalents within the Company’s consolidated balance sheet and is categorized as a level 1 measurement. The majority of payments due from credit card processors and banks for third-party credit card and debit card transactions process within one to five business days. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents. Amounts due from banks for credit card transactions classified as cash equivalents totaled $6,862 and $4,748 at December 31, 2022 and 2021, respectively. Accounts Receivable Accounts receivable are recorded at the invoice amount, net of allowances. Customers are evaluated for their credit worthiness at the time of contract inception and the Company performs ongoing credit evaluations of its customers and adjusts credit limits based on payment history and customer creditworthiness. Based on the results of the credit assessments, the Company will extend credit under its standard payment terms or may request alternative early payment actions. The Company determines the required allowance for expected credit losses using information such as its customer credit history and financial condition, industry and market segment information, credit reports, and economic trends and conditions. Allowances can be affected by changes in the industry, customer credit issues or customer bankruptcies or expectations of any such events in a future period when reasonable and supportable. Historical information is utilized beyond reasonable and supportable forecast periods. Amounts are charged against the allowance when it is determined that expected credit losses may occur. The Company assesses collectability by reviewing account receivable on an aggregated basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with collectability issues, and if necessary, records a reserve against those receivables it determines may not be collectable. Trade receivables are written off in the period in which they are deemed uncollectible. Recoveries of trade receivables previously charged are recorded when received. Inventories Inventories (all finished goods) are stated at cost (which approximates the first-in, first-out method) or net realizable value, whichever is lower. Inventory quantities on hand are reviewed regularly, and allowances are maintained for obsolete, slow moving, and nonsalable inventory. Advertising Costs and Vendor Consideration Vendors have the ability to fund advertising activities for which the Company receives advertising consideration. This vendor consideration, to the extent that it represents specific reimbursements of incremental and identifiable costs, is offset against SG&A expenses. Advertising consideration that cannot be associated with a specific program or that exceeds the fair value of advertising expense associated with that program is classified as an offset to cost of sales. The Company’s vendor partners generally consolidate their funding of advertising and other marketing programs, and accordingly, the Company classifies substantially all vendor consideration as a reduction of cost of sales rather than a reduction of advertising expense. Other advertising costs are expensed as incurred. Advertising expense, which is classified as a component of SG&A expenses, totaled $20,155, $15,827, and $14,021 for the years ended December 31, 2022, 2021, and 2020, respectively. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. The estimated useful lives of the assets range from three three Costs incurred to develop internal-use software during the application development stage are recorded in property and equipment at cost. External direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll-related costs for employees developing internal-use computer software projects, to the extent of their time spent directly on the project and specific to application development, are capitalized. When events or circumstances indicate a potential impairment, the Company evaluates the carrying value of property and equipment based upon current and anticipated undiscounted cash flows. The Company recognizes impairment when it is probable that such estimated future cash flows will be less than the asset carrying value. No property and equipment impairment was recognized for each of the years ended December 31, 2022, 2021 and 2020. Leases The Company enters into operating lease contracts, as assessed at contract inception, primarily for real estate and equipment. On the lease commencement date, the Company records operating lease liabilities based on the present value of the future lease payments. In determining the present value of future lease payments, the Company utilized estimated rates that it would have incurred to borrow, over a similar term, the funds necessary to purchase the respective leased asset with cash. The Company elects to apply the short-team lease exception to any leases with contractual obligations of one year or less. These leases will not have right-of-use, or ROU, assets and associated lease liabilities on the balance sheet. Instead, rent will be recognized on a straight-line basis. Goodwill and Other Intangible Assets The Company’s intangible assets consist of (1) goodwill, which is not subject to amortization; (2) an internet domain name, which is an indefinite-lived intangible asset not subject to amortization; and (3) amortizing intangibles, which consist of customer lists, trade names, and customer relationships, which are being amortized over their useful lives. Note 3 describes the annual impairment methodology that the Company uses each year in calculating the recoverability of goodwill and non-amortizing intangibles. This same impairment test is performed at other times during the course of a year should an event occur or circumstance change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Recoverability of amortizing intangible assets is assessed only when events have occurred that may give rise to impairment. When a potential impairment has been identified, forecasted undiscounted net cash flows of the operations to which the asset relates are compared to the current carrying value of the long-lived assets present in that operation. If such cash flows are less than such carrying amounts, long-lived assets including such intangibles, are written down to their respective fair values. No intangible assets impairment was recognized for each of the years ended December 31, 2022, 2021 and 2020. Concentrations Concentrations of credit risk with respect to trade account receivables are limited due to the large number of customers comprising the Company’s customer base. No single customer accounted for more than 4% of total net sales in 2022, 2021, and 2020. Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc. accounted for approximately 23%, 22% and 15% respectively, of the Company’s total product purchases in 2022. Product purchases from Ingram Micro, Inc., TD Synnex Corporation and Dell Inc. accounted for approximately 23%, 23% and 12% respectively, of the Company’s total product purchases in 2021. Product purchases from Ingram Micro, Inc., TD Synnex Corporation and HP Inc. accounted for approximately 21%, 15% and 12% respectively, of the Company’s total product purchases in 2020. No other singular vendor supplied more than 10% of the Company’s total product purchases in 2022, 2021 and 2020. The Company believes that, while it may experience some short-term disruption if products from Ingram Micro, Inc., TD Synnex Corporation, Dell Inc., and HP Inc., or any of these vendors become unavailable to it, alternative sources are available. Products manufactured by HP Inc. collectively represented approximately 14%, 15% and 18% of the Company’s net sales in 2022, 2021 and 2020, respectively. In the event the Company experiences either a short-term or permanent disruption of supply of HP products, such disruption would likely have a material adverse effect on the Company’s results of operations and cash flows. Restructuring and Other charges Restructuring and other charges are presented separately from SG&A expenses. In the year ended December 31, 2020, the Company undertook actions across the business to lower its cost structure and align its business in an effort to improve its ability to execute its strategy. In connection with these restructuring initiatives, the Company incurred restructuring and related costs of $1.0 million for the year ended December 31, 2020. There were no restructuring related costs incurred for the years ended December 31, 2022 or 2021. 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 (in thousands, except per share data): 2022 2021 2020 Numerator: Net income $ 89,219 $ 69,906 $ 55,765 Denominator: Denominator for basic earnings per share 26,279 26,196 26,157 Dilutive effect of employee stock awards 164 168 179 Denominator for diluted earnings per share 26,443 26,364 26,336 Earnings per share: Basic $ 3.40 $ 2.67 $ 2.13 Diluted $ 3.37 $ 2.65 $ 2.12 For the years ended December 31, 2022, 2021, and 2020, the Company did not exclude any outstanding nonvested stock units or stock options from the computation of diluted earnings per share because including them would have had an anti-dilutive effect. Recently Issued Financial Accounting Standards In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2022 | |
Revenue | |
Revenue | 2. REVENUE Nature of Products and Services IT products typically represent a distinct performance obligation, and revenue is recognized at the point in time when control is transferred to the customer which is generally upon delivery to the customer. The Company recognizes revenue as the principal in the transaction with the customer (i.e., on a gross basis), as it controls the product prior to delivery to the customer and derives the economic benefits from the sales transaction given the Company’s control over customer pricing. The Company does not recognize revenue for goods that remain in its physical possession before the customer has the ability to direct the use of, and obtain substantially all of the remaining benefits from the products, the goods are ready for physical transfer to and identified as belonging to the customer, and when the Company has no ability to use the product or to direct it to another customer. Licenses for on-premise software provide the customer with a right to take possession of the software. Customers may purchase perpetual licenses or enter into subscriptions to the licensed software. The Company is the principal in these transactions and recognizes revenue for the on-premise license at the point in time when the software is made available to the customer and the commencement of the term of the software license or when the renewal term begins, as applicable. For certain on-premise licenses for security software, the customer derives substantially all of the benefit from these arrangements through the third-party delivered software maintenance, which provides software updates and other support services. The Company does not have control over the delivery of these performance obligations, and accordingly the Company is the agent in these transactions. The Company recognizes revenue for security software net of the related costs of sales at the point in time when its vendor and customer accept the terms and conditions in the sales arrangement. Cloud products allow customers to use hosted software over the contractual period without taking possession of the software and are provided on a subscription basis. The Company does not exercise control over these products or services and therefore is an agent in these transactions. The Company recognizes revenue for cloud products net of the related costs of sales at the point in time when its vendor and customer accept the terms and conditions in the sales arrangements. Certain software sales include on-premise licenses that are combined with software maintenance. Software maintenance conveys rights to updates, bug fixes and help desk support, and other support services transferred over the underlying contract period. On-premise licenses are considered distinct performance obligations when sold with the software maintenance, as the Company sells these items separately. The Company recognizes revenue related to the software maintenance as the agent in these transactions because it does not have control over the on-going software maintenance service. Revenue allocated to software maintenance is recognized at the point in time when the Company’s vendor and customer accept the terms and conditions in the sales arrangements. Certain of the Company’s larger customers are offered the opportunity by vendors to purchase software licenses and maintenance under EAs. Under EAs, customers are considered to be compliant with applicable license requirements for the ensuing year, regardless of changes to their employee base. Customers are charged an annual true-up fee for changes in the number of users over the year. With most EAs, the Company’s vendors will transfer the license and bill the customer directly, paying resellers, such as the Company, an agency fee or commission on these sales. The Company records these agency fees as a component of net sales as earned and there is no corresponding cost of sales amount. In certain instances, the Company invoices the customer directly under an EA and accounts for the individual items sold based on the nature of each item. The Company’s vendors typically dictate how the EA will be sold to the customer. The Company also offers ESPs on IT products, both as part of the initial arrangement and separately from the IT products. The Company recognizes revenue related to ESPs as the agent in the transaction because it does not have control over the on-going ESPs service and does not provide any service after the sale. Revenue allocated to ESPs is recognized at the point in time when the Company’s vendor and customer accept the terms and conditions in the sales arrangement. The Company uses its own engineering personnel to assist in projects involving the design and installation of systems and networks, and also engages third-party service providers to perform warranty maintenance, implementations, asset disposal, and other services. Service revenue is recognized in general over time as the Company performs the underlying services and satisfies its performance obligations. The Company evaluates such engagements to determine whether it is the principal or the agent in each transaction. For those transactions in which the Company does not control the service, the Company acts as an agent and recognizes the transaction revenue on a net basis at a point in time when the vendor and customer accept the terms and conditions in the sales arrangement. All amounts billed to a customer in a sales transaction related to shipping and handling, if any, represent revenues earned for the goods provided, and these amounts have been included in net sales. Costs related to shipping and handling billing are classified as cost of sales. Sales are reported net of sales, use, or other transaction taxes that are collected from customers and remitted to taxing authorities. Significant Judgments The Company’s contracts with customers often include promises to transfer multiple products or services to a customer. Determining whether the Company is the agent or the principal and whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company estimates the SSP for each distinct performance obligation when a single arrangement contains multiple performance obligations and the fulfillment occurs at different points of times. The Company maximizes the use of observable inputs in the determination of the estimate for SSP for the items that it does not sell separately, including on-premise licenses sold with software maintenance, and IT products sold with ESPs. In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, the Company determines the SSP using information that may include market conditions and other observable inputs. The Company provides its customers with a limited thirty-day right of return, which is generally limited to defective merchandise, and gives rise to variable consideration. Revenue is recognized based on the most likely amount to which it is expected to be entitled. The estimated variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once the uncertainty is resolved. The Company makes estimates of product returns based on significant historical experience. The Company records its sales return reserve as a reduction of revenues and either as reduction of accounts receivable or, for customers who have already paid, as accrued expenses and as a reduction of cost of sales and an associated right of return asset. Description of 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 years ended December 31, 2022, 2021 and 2020, along with the segment for each category (in thousands). For the Year Ended December 31, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 473,375 $ 462,152 $ 221,363 $ 1,156,890 Desktops 88,127 165,509 56,804 310,440 Software 147,792 108,243 36,071 292,106 Servers/Storage 103,711 64,622 44,588 212,921 Net/Com Products 98,672 85,611 32,548 216,831 Displays and Sound 118,753 132,269 67,860 318,882 Accessories 133,017 202,452 58,413 393,882 Other Hardware/Services 81,863 103,504 37,677 223,044 Total net sales $ 1,245,310 $ 1,324,362 $ 555,324 $ 3,124,996 For the Year Ended December 31, 2021 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 426,022 $ 428,868 $ 241,146 $ 1,096,036 Desktops 87,822 140,468 45,989 274,279 Software 120,104 119,423 39,611 279,138 Servers/Storage 92,922 66,027 37,081 196,030 Net/Com Products 81,681 86,454 34,336 202,471 Displays and Sound 99,474 125,610 59,153 284,237 Accessories 115,048 179,249 44,104 338,401 Other Hardware/Services 75,423 103,360 43,220 222,003 Total net sales $ 1,098,496 $ 1,249,459 $ 544,640 $ 2,892,595 For the Year Ended December 31, 2020 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 319,046 $ 303,471 $ 203,090 $ 825,607 Desktops 89,828 129,011 36,744 255,583 Software 124,681 115,596 42,793 283,070 Servers/Storage 93,535 76,107 42,694 212,336 Net/Com Products 75,141 96,203 47,930 219,274 Displays and Sound 85,769 78,312 51,502 215,583 Accessories 113,402 201,562 47,504 362,468 Other Hardware/Services 64,630 115,307 36,432 216,369 Total net sales $ 966,032 $ 1,115,569 $ 508,689 $ 2,590,290 Contract Balances The following table provides information about contract liabilities from arrangements with customers as of December 31, 2022 and December 31, 2021 (in thousands): December 31, 2022 December 31, 2021 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 4,266 $ 8,628 Changes in the contract liability balances during the years ended December 31, 2022 and 2021 are as follows (in thousands): 2022 Balance at December 31, 2021 $ 8,628 Cash received in advance and not recognized as revenue 20,626 Amounts recognized as revenue as performance obligations satisfied (24,988) Balance at December 31, 2022 $ 4,266 2021 Balance at December 31, 2020 $ 3,509 Cash received in advance and not recognized as revenue 28,114 Amounts recognized as revenue as performance obligations satisfied (22,995) Balance at December 31, 2021 $ 8,628 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure | |
Goodwill and Other Intangible Assets | 3. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Goodwill is held by the Company’s Business Solutions and Enterprise Solutions segments. Goodwill and intangible assets with indefinite lives are subject to an annual impairment test as of November 30 and tested more frequently if events or circumstances occur that would indicate a potential decline in fair value. In 2022 and 2021, the Company performed a qualitative “step 0” analysis. ASC 350— Intangible Goodwill and Other Based on the above qualitative analysis, the Company determined goodwill was not impaired as of December 31, 2022 and 2021. The carrying amount of goodwill for the periods presented is detailed below (in thousands): Balance at December 31, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Goodwill, gross $ 8,539 $ 66,236 $ 7,634 $ 82,409 Accumulated impairment losses (1,173) ─ (7,634) (8,807) Net balance $ 7,366 $ 66,236 $ — $ 73,602 Balance at December 31, 2021 Business Solutions Enterprise Solutions Public Sector Solutions Total Goodwill, gross $ 8,539 $ 66,236 $ 7,634 $ 82,409 Accumulated impairment losses (1,173) ─ (7,634) (8,807) Net balance $ 7,366 $ 66,236 $ — $ 73,602 Intangible Assets At December 31, 2022, the Company’s intangible assets included a domain name for $450, which has an indefinite life and is not subject to amortization. In addition, in 2016 the Company acquired customer relationships from its Softmart and GlobalServe acquisitions, which are amortized on a straight-line basis over their estimated useful lives of 10 years. The Company’s remaining intangible assets are amortized in proportion to the estimates of the future cash flows underlying the valuation of the assets. Intangible assets and related accumulated amortization are detailed below (in thousands): December 31, 2022 December 31, 2021 Estimated Gross Accumulated Net Gross Accumulated Net Useful Lives Amount Amortization Amount Amount Amortization Amount Customer list 8 $ 3,400 $ 3,400 $ — $ 3,400 $ 3,400 $ — Tradename 5 1,190 1,190 — 1,190 1,190 — Customer relationships 10 12,200 8,002 4,198 12,200 6,782 5,418 Total intangible assets $ 16,790 $ 12,592 $ 4,198 $ 16,790 $ 11,372 $ 5,418 In 2022, 2021, and 2020, the Company recorded amortization expense of $1,220, $1,220, and $1,220, respectively. The estimated amortization expense relating to intangible assets in each of the five succeeding years and thereafter is as follows (in thousands): For the Years Ended December 31, 2023 $ 1,220 2024 1,220 2025 1,220 2026 538 2027 and thereafter — $ 4,198 . |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable | |
Accounts Receivable | 4. ACCOUNTS RECEIVABLE Accounts receivable consisted of the following (in thousands): December 31, 2022 2021 Trade $ 561,857 $ 568,964 Vendor consideration, returns and other 57,388 47,506 Due from employees 108 105 Total gross accounts receivable 619,353 616,575 Allowances for: Sales returns (3,806) (4,218) Credit losses (5,267) (4,825) Accounts receivable, net $ 610,280 $ 607,532 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Property and Equipment | 5. PROPERTY AND EQUIPMENT Property and equipment consisted of the following (in thousands): December 31, 2022 2021 Computer software, including licenses and internally-developed software $ 87,645 $ 96,264 Furniture and equipment 39,316 37,040 Leasehold improvements 8,964 8,668 Total 135,925 141,972 Accumulated depreciation and amortization (76,754) (80,961) Property and equipment, net $ 59,171 $ 61,011 The Company recorded depreciation and amortization expense for property and equipment of $10,758, $10,982, and $12,383 in 2022, 2021, and 2020, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 6. LEASES The Company leases certain facilities from a related party, which is affiliated with the Company through common ownership. Included in the right-of-use assets as of December 31, 2022 was $1,130 and a corresponding lease liability of $1,130 associated with related party leases. As of December 31, 2022, the Company had no leases that were classified as financing leases and there were no additional operating or financing leases that have not yet commenced. Refer to the following table for quantitative information related to the Company’s leases for the year ended December 31, 2022 and 2021 (dollars in thousands): Year Ended December 31, 2022 Related Parties Others Total Lease Cost Capitalized operating lease cost $ 1,253 $ 2,821 $ 4,074 Short-term lease cost 428 121 549 Total lease cost $ 1,681 $ 2,942 $ 4,623 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 1,253 $ 2,846 $ 4,099 Weighted-average remaining lease term (in years): Capitalized operating leases 0.92 4.03 3.60 Weighted-average discount rate: Capitalized operating leases 3.92% 4.05% 4.03% Year Ended December 31, 2021 Related Parties Others Total Lease Cost Capitalized operating lease cost $ 1,253 $ 3,021 $ 4,274 Short-term lease cost 426 92 518 Total lease cost $ 1,679 $ 3,113 $ 4,792 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 1,253 $ 3,128 $ 4,381 Weighted-average remaining lease term (in years): Capitalized operating leases 1.92 4.46 3.89 Weighted-average discount rate: Capitalized operating leases 3.92% 3.92% 3.92% As of December 31, 2022, future lease payments over the remaining term of capitalized operating leases were as follows (in thousands): For the Years Ended December 31, Related Parties Others Total 2023 $ 1,312 $ 2,097 $ 3,409 2024 163 1,697 1,860 2025 163 1,635 1,798 2026 163 952 1,115 2027 1 232 233 Thereafter — 342 342 $ 1,802 $ 6,955 $ 8,757 Imputed interest (593) Lease liability balance at December 31, 2022 $ 8,164 As of December 31, 2022, the ROU asset had a balance of $7,558. The long-term lease liability was $4,994 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $3,170. As of December 31, 2021, the ROU asset had a balance of $9,579. The long-term lease liability was $6,789 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $3,422 . |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Liabilities | |
Accrued Expenses and Other Liabilities | 7. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consisted of the following (in thousands): December 31, 2022 2021 Customer and vendor deposits $ 32,594 $ 33,429 Sales tax 2,816 10,471 Short term lease liability 3,170 3,422 Other 15,228 14,508 Accrued expenses and other liabilities $ 53,808 $ 61,830 |
GAIN OF LIFE INSURANCE
GAIN OF LIFE INSURANCE | 12 Months Ended |
Dec. 31, 2022 | |
Gain on Life Insurance | |
Gain on Life Insurance Proceeds | 8. GAIN ON LIFE INSURANCE The Company owns and is the beneficiary of one life insurance policy on Patricia Gallup, the Company’s Chair and Chief Administrative Officer. This policy had a total cash value recorded as “Other assets” on the Company’s balance sheet of approximately $274 and $200 as of December 31, 2022 and December 31, 2021 respectively. On November 14, 2020, David Hall, one of the Company co-founders and a member of the Company’s Board of Directors passed away. The Company owned and was the beneficiary of two life insurance policies on Mr. Hall. After the death of Mr. Hall, $1,500 was recorded as receivable on the Company’s balance sheet in 2020. The difference between the total insurance proceeds and the cash surrender value of the policies was $1,061, which was recorded as non-operating income for the year ended December 31, 2020. The life insurance proceeds were received in 2021, which are not subject to federal or state income taxes. |
BANK BORROWINGS
BANK BORROWINGS | 12 Months Ended |
Dec. 31, 2022 | |
Bank Borrowings | |
Bank Borrowings | 9. BANK BORROWINGS The Company has a $50,000 credit facility collateralized by its account receivables that expires March 31, 2025. This facility can be increased, at the Company’s 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 LIBOR, plus a spread based on the Company’s funded debt ratio, or in the absence of LIBOR, the prime rate (7.50% at December 31, 2022). 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 Adjusted Earnings Before Interest Expense, Taxes, Depreciation, Amortization, and Special Charges, or Adjusted EBITDA. The maximum allowable funded debt ratio under the agreement is 2.0 to 1.0. Decreases in the Company’s consolidated Adjusted EBITDA could limit its potential borrowing capacity under the credit facility. During 2022, the Company borrowed an aggregate of $36,463 under the credit facility during the year ended December 31, 2022, which was fully repaid prior to December 31, 2022. The Company had no outstanding bank borrowings as of December 31, 2022 or 2021, and accordingly, the entire $50,000 facility was available for borrowings under the credit facility. As of December 31, 2022, the Company was in compliance with all financial covenants contained in the agreement governing the credit facility. |
STOCKHOLDERS' EQUITY AND SHARE-
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity and Share-Based Compensation | |
Stockholders' Equity and Share-Based Compensation | 10. STOCKHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION Preferred Stock The Company’s Amended and Restated Certificate of Incorporation (the “Restated Certificate”) authorizes the issuance of up to 10,000 shares of preferred stock, $.01 par value per share (the “Preferred Stock”). Under the terms of the Restated Certificate, the Board is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue by a unanimous vote such shares of Preferred Stock in one or more series. Each such series of Preferred Stock shall have such rights, preferences, privileges, and restrictions, including voting rights, dividend rights, redemption privileges, and liquidation preferences, as shall be determined by the Board. There were no preferred shares outstanding as of December 31, 2022 or 2021. Share Repurchase Authorization As of December 31, 2017, there was $30.0 million authorized for share repurchase. In 2018, the Company’s Board approved a share repurchase program authorizing up to $25.0 million in additional share repurchases. In November 2022, the Company’s Board approved a $25.0 million increase to the Company’s existing share repurchase authorization, bringing the aggregate size of the share repurchase program to $80.0 million as of December 31, 2022. There is no fixed termination date for this repurchase program. Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions. The timing and amount of any share repurchases will be based on market conditions and other factors. There were no share repurchases during the years ended December 31, 2022 and 2021. The Company repurchased 247 shares for $10.2 million during the year ended December 31, 2020 under Board-authorized repurchase programs. As of December 31, 2022, the Company has repurchased an aggregate of 2,599 shares for $42.3 million under Board-authorized repurchase programs, and the maximum approximate dollar value of shares that may yet be purchased under the Company’s existing Board-authorized program is $37.7 million. Dividend Payments The following table summarizes the Company’s special cash dividends declared in the years ended December 31, 2022, 2021 and 2020 (in thousands, except per share data): 2022 2021 2020 Dividend per share $ 0.34 $ 1.00 $ 0.32 Stockholder record date 12/05/2022 11/18/2021 1/12/2021 Total dividend $ 8,948 $ 26,224 $ 8,375 Payment date 12/23/2022 12/03/2021 1/29/2021 Declaration of any future cash dividends will depend upon the Company’s financial position, strategic plans, and general business conditions. Equity Compensation Plan Descriptions In 2007, the Board adopted and the Company’s stockholders approved the 2007 Stock Incentive Plan. In 2010, the Board adopted and the stockholders approved the Amended and Restated 2007 Stock Incentive Plan (the “2007 Plan”), which, among other things, extended the term of the 2007 Plan to 2020. In May 2019, the Company’s stockholders approved an amendment to the 2007 Plan, which authorized the issuance of up to 1,900 shares of common stock. Under the terms of the 2007 Plan, the Company is authorized, for a ten-year period, to grant options, stock appreciation rights, nonvested stock, nonvested stock units, and other stock-based awards to employees, officers, directors, and consultants. In 2020, the Board adopted and the Company’s stockholders approved the 2020 Stock Incentive Plan (the “2020 plan”), which replaces the Amended and Restated 2007 Stock Incentive Plan. In May 2022, the Company’s stockholders approved an amendment to the 2020 Plan, which authorized the issuance of 1,003 shares of common stock. As of December 31, 2022, there were 119 shares eligible for future grants under the 2020 Plan. 1997 Employee Stock Purchase Plan In November 1997, the Board adopted and the Company’s stockholders approved the 1997 Employee Stock Purchase Plan (the “Purchase Plan”). The Purchase Plan authorizes the issuance of common stock to participating employees. Under the Purchase Plan, as amended, employees are eligible to purchase Company stock at 95% of the purchase price as of the last business day of each six-month offering period. In May 2022, the Board adopted and the Company’s stockholders approved an amendment to the Purchase Plan, which reserved an aggregate of 1,303 shares of common stock for issuance under the Purchase Plan, of which 1,200 shares have been purchased as of December 31, 2022. Accounting for Share-Based Compensation The Company measures the grant date fair value of equity awards given to employees and recognizes that cost, adjusted for forfeitures, over the period that services are performed. The Company values grants with multiple vesting periods as a single award, estimates expected forfeitures based upon historical patterns of employee turnover, and records share-based compensation as a component of SG&A expenses. The following table summarizes the share-based compensation expenses included in the consolidated statements of net income (in thousands): 2022 2021 2020 Pre-tax expense for nonvested units $ 5,675 $ 4,231 $ 2,668 Tax benefit (1,512) (1,167) (635) Net effect on net income $ 4,163 $ 3,064 $ 2,033 In 2022, 2021, and 2020, the Company issued nonvested stock units that settle in stock and vest over periods of up to four years. Recipients of nonvested stock units do not possess stockholder rights. The fair value of nonvested stock units is based on the end of day market value of the Company’s common stock on the grant date. The following table summarizes the Company’s nonvested stock unit activity in 2022 (shares in thousands): Nonvested Stock Units Weighted-Average Grant Date Shares Fair Value Nonvested at January 1, 2022 509 $ 36.98 Granted 184 53.50 Vested (142) 37.28 Canceled (16) 41.99 Nonvested at December 31, 2022 535 42.44 The weighted-average grant-date fair value of nonvested stock units granted in 2022, 2021 and 2020 was $53.50, $46.02 and $44.31, respectively. The total fair value of nonvested stock units that vested in 2022, 2021, and 2020 was $7,202, $5,529, and $4,044, respectively. Unearned compensation cost related to the nonvested portion of outstanding nonvested stock units was $20,914 as of December 31, 2022, and is expected to be recognized over a weighted-average period of approximately 3.3 years. The aggregate intrinsic value of the nonvested stock units at December 31, 2022, which is calculated based on the positive difference between the fair value of the Company’s stock on December 31, 2022 and the grant price of the underlying awards, was $25,093. Stock Equivalent Units The Company has also previously issued stock equivalent units, or SEUs, which settle in cash and vest ratably over four years, to non-executive employees. The fair value of these liability awards is based on the closing market price of the Company’s common stock and is remeasured at the end of each reporting period until the SEUs vest. The Company reports the compensation as a component of SG&A expense and the related liability as accrued payroll on the consolidated balance sheets. 2022 2021 2020 Units issued — — — Compensation expense $ — $ 425 $ 840 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 11. INCOME TAXES The provision for income taxes consisted of the following (in thousands): Years Ended December 31, 2022 2021 2020 Current: Federal $ 25,483 $ 18,450 $ 13,350 State 8,200 7,413 5,726 Total current 33,683 25,863 19,076 Deferred: Federal (743) 655 (1,108) State (524) 98 (537) Total deferred (1,267) 753 (1,645) Provision for income taxes $ 32,416 $ 26,616 $ 17,431 The components of the deferred taxes as of December 31, 2022 and 2021 are as follows (in thousands): 2022 2021 Deferred tax assets: Allowance for credit losses $ 1,349 $ 1,266 Inventory costs capitalized for tax purposes 227 254 Inventory valuation reserves 57 402 Sales return reserves 140 164 Deductible expenses, primarily employee-benefit related 79 18 Accrued compensation 2,249 2,792 Operating lease liability 2,084 2,668 Other 632 1,399 Qualified research expenses 598 — Compensation under non-statutory stock option agreements 1,281 866 State tax loss carryforwards 1,151 1,411 Total gross deferred tax assets 9,847 11,240 Less: Valuation allowance (1,064) (1,174) Net deferred tax assets 8,783 10,066 Deferred tax liabilities: Goodwill and other intangibles (13,990) (14,243) Property and equipment (10,572) (12,552) Right-of-use assets (1,930) (2,503) Prepaid expenses (261) (46) Total gross deferred tax liabilities (26,753) (29,344) Net deferred tax liability $ (17,970) $ (19,278) Current deferred tax assets $ — $ — Noncurrent deferred tax liability (17,970) (19,278) Net deferred tax liability $ (17,970) $ (19,278) The Company has deferred tax assets from state net operating loss carryforwards aggregating $1,457 as of December 31, 2022 representing state tax benefits, net of federal taxes, of approximately $1,151. These loss carryforwards are subject to five fifteen A reconciliation of the Company’s 2022, 2021, and 2020 income tax provision to total income taxes at the statutory federal tax rate is as follows (in thousands): 2022 2021 2020 Federal income taxes, at statutory tax rate $ 25,543 $ 20,270 $ 15,378 State income taxes, net of federal benefit 5,954 5,954 3,987 Nondeductible expenses 928 645 365 Tax credits — — (2,093) Other, net (9) (253) (206) Income tax provision $ 32,416 $ 26,616 $ 17,431 The Company files one consolidated U.S. Federal income tax return that includes all of its subsidiaries as well as several consolidated, combined, and separate Company returns in many U.S. state tax jurisdictions. The tax years 2018 2019-2021 Previously, the Company recognized interest and penalties related to unrecognized income tax benefits as a component of income tax expense, and the corresponding accrual was included as a component of the Company’s liability for unrecognized income tax benefits. The Company did not recognize any interest and penalties for the years ended December 31, 2022, 2021 or 2020. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit Plan | |
Employee Benefit Plan | 12. EMPLOYEE BENEFIT PLAN The Company has a contributory profit-sharing and employee savings plan covering all qualified employees. No contributions to the profit-sharing element of the plan were made by the Company in 2022, 2021, and 2020. The Company made matching contributions to the employee savings element of such plan of $6,517, $5,951, and $5,656 in 2022, 2021, and 2020, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13. COMMITMENTS AND CONTINGENCIES Contingencies The Company is subject to various legal proceedings and claims, which have arisen during the ordinary course of business. In the opinion of the Company’s management, the outcome of such matters is not expected to have a material effect on the Company’s business, financial position, results of operations, or cash flows. The Company records a liability when it believes that a loss is both probable and reasonably estimable. On a quarterly basis, the Company reviews each of these legal proceedings to determine whether it is probable, reasonably possible, or remote that a liability has been incurred and, if it is at least reasonably possible, whether a range of loss can be reasonably estimated. Significant judgment is required to determine both the likelihood of there being a loss and the estimated amount of such loss. Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material. The Company expenses legal fees in the period in which they are incurred. 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, and such outcomes could have a material negative impact on the Company’s financial position, results of operations, and cash flows. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Segment Information | 14. SEGMENT AND RELATED DISCLOSURES The internal reporting structure used by the Company’s chief operating decision maker, or CODM, to assess performance and allocate resources determines the basis for the Company’s 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 reporting segments—the Business Solutions segment, which serves primarily SMBs; the Enterprise Solutions segment, which serves primarily medium-to-large corporations; and the Public Sector Solutions segment, which serves primarily federal, state, and local government and educational institutions. In addition, the Headquarters/Other group provides services in areas such as finance, human resources, IT, 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. Net sales presented below exclude inter-segment product revenues. Segment information applicable to the Company’s operating segments for the years ended December 31, 2022, 2021, and 2020 is shown below (in thousands): Years Ended December 31, 2022 2021 2020 Net sales: Business Solutions $ 1,245,311 $ 1,098,496 $ 966,032 Enterprise Solutions 1,324,361 1,249,459 1,115,569 Public Sector Solutions 555,324 544,640 508,689 Total net sales $ 3,124,996 $ 2,892,595 $ 2,590,290 Operating income (loss): Business Solutions $ 79,475 $ 43,783 $ 32,351 Enterprise Solutions 53,477 74,653 59,382 Public Sector Solutions 1,105 (4,928) (2,763) Headquarters/Other (13,505) (16,991) (16,896) Total operating income 120,552 96,517 72,074 Other income, net 1,083 5 1,122 Income before taxes $ 121,635 $ 96,522 $ 73,196 Selected operating expense: Depreciation and amortization: Business Solutions $ 661 $ 655 $ 636 Enterprise Solutions 1,992 2,408 2,771 Public Sector Solutions 78 62 60 Headquarters/Other 9,247 9,077 10,136 Total depreciation and amortization $ 11,978 $ 12,202 $ 13,603 Total assets: Business Solutions $ 445,698 $ 401,624 Enterprise Solutions 660,374 645,938 Public Sector Solutions 84,939 84,787 Headquarters/Other (91,185) (48,966) Total assets $ 1,099,826 $ 1,083,383 The assets of the Company’s operating segments presented above consist primarily of accounts receivable, net intercompany receivable, goodwill, and other intangibles. Goodwill of $66,236 and $7,366 is held by the Enterprise Solutions and Business Solutions segments, respectively, as of December 31, 2022. Assets reported under the Headquarters/Other group are managed by corporate headquarters, including cash, inventory, property and equipment and intercompany balance, net. Total assets for the Headquarters/Other group are presented net of intercompany balances eliminations of $43,679 and $39,390 for the years ended December 31, 2022 and 2021, respectively. The Company’s capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade its management information systems. These systems serve all of the Company’s subsidiaries, to varying degrees, and as a result, the CODM does not evaluate capital expenditures on a segment basis. Substantially all of the Company’s sales in 2022, 2021, and 2020 were made to customers located in the United States. Shipments to customers located in foreign countries were not more than 2% of total net sales in 2022, 2021, and 2020. All of the Company’s assets as of December 31, 2022 and 2021 were located in the United States. The Company’s primary target customers are SMBs, medium-to-large businesses, and federal, state, and local government agencies and educational institutions. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2022 | |
Schedule II - Valuation and Qualifying Accounts | |
Schedule II-Valuation And Qualifying Accounts | SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (amounts in thousands) Balance at Charged to Balance at Beginning Costs and Deductions/ End of of Period Expenses Write-Offs Period Description Allowance for Sales Returns Year Ended December 31, 2020 $ 3,466 29,435 (28,887) $ 4,014 Year Ended December 31, 2021 $ 4,014 32,635 (32,431) $ 4,218 Year Ended December 31, 2022 $ 4,218 35,161 (35,573) $ 3,806 Allowance for Credit Losses Year Ended December 31, 2020 $ 2,202 3,316 (110) $ 5,408 Year Ended December 31, 2021 $ 5,408 3,307 (3,890) $ 4,825 Year Ended December 31, 2022 $ 4,825 3,252 (2,810) $ 5,267 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of PC Connection, Inc. and its subsidiaries, all of which are wholly-owned. Intercompany transactions and balances are eliminated in consolidation. |
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 reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions. |
Revenue Recognition | Revenue Recognition Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In most instances, when several performance obligations are aggregated into one single transaction, these performance obligations are fulfilled at the same point in time. The Company accounts for an arrangement when it has approval and commitment from both parties, the rights are identified, the contract has commercial substance, and collectability of consideration is probable. The Company generally obtains oral or written purchase authorizations from its customers for a specified amount of product at a specified price, which constitutes an arrangement. Revenue is recognized at the amount expected to be collected, net of any taxes collected from customers, which are subsequently remitted to governmental authorities. The Company generally invoices for its products at the time of shipping, and accordingly there is not a significant financing component included in its arrangements. |
Cost of Sales and Certain Other Costs | Cost of Sales and Certain Other Costs Cost of sales includes the invoice cost of the product, direct employee and third-party cost of services, direct costs of packaging, inbound and outbound freight, and provisions for inventory obsolescence, adjusted for discounts, rebates, and other vendor allowances. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid short-term investments with original maturities of 90 days or less to be cash equivalents. The carrying value of the Company’s cash equivalents approximates fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting guidance includes a fair value hierarchy that priorities the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows: ● Level 1: Quoted prices for identical assets or liabilities in active markets; ● Level 2: Observable inputs other than those described as Level 1; and ● Level 3: Unobservable inputs that are supportable by little or no market activities and are based on significant assumptions and estimates. The Company’s money market funds are valued at the closing price reported by the fund sponsor from an actively traded exchange. It is included as cash equivalents within the Company’s consolidated balance sheet and is categorized as a level 1 measurement. The majority of payments due from credit card processors and banks for third-party credit card and debit card transactions process within one to five business days. All credit card and debit card transactions that process in less than seven days are classified as cash and cash equivalents. Amounts due from banks for credit card transactions classified as cash equivalents totaled $6,862 and $4,748 at December 31, 2022 and 2021, respectively. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoice amount, net of allowances. Customers are evaluated for their credit worthiness at the time of contract inception and the Company performs ongoing credit evaluations of its customers and adjusts credit limits based on payment history and customer creditworthiness. Based on the results of the credit assessments, the Company will extend credit under its standard payment terms or may request alternative early payment actions. The Company determines the required allowance for expected credit losses using information such as its customer credit history and financial condition, industry and market segment information, credit reports, and economic trends and conditions. Allowances can be affected by changes in the industry, customer credit issues or customer bankruptcies or expectations of any such events in a future period when reasonable and supportable. Historical information is utilized beyond reasonable and supportable forecast periods. Amounts are charged against the allowance when it is determined that expected credit losses may occur. The Company assesses collectability by reviewing account receivable on an aggregated basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with collectability issues, and if necessary, records a reserve against those receivables it determines may not be collectable. Trade receivables are written off in the period in which they are deemed uncollectible. Recoveries of trade receivables previously charged are recorded when received. |
Inventories | Inventories Inventories (all finished goods) are stated at cost (which approximates the first-in, first-out method) or net realizable value, whichever is lower. Inventory quantities on hand are reviewed regularly, and allowances are maintained for obsolete, slow moving, and nonsalable inventory. |
Advertising Costs and Vendor consideration | Advertising Costs and Vendor Consideration Vendors have the ability to fund advertising activities for which the Company receives advertising consideration. This vendor consideration, to the extent that it represents specific reimbursements of incremental and identifiable costs, is offset against SG&A expenses. Advertising consideration that cannot be associated with a specific program or that exceeds the fair value of advertising expense associated with that program is classified as an offset to cost of sales. The Company’s vendor partners generally consolidate their funding of advertising and other marketing programs, and accordingly, the Company classifies substantially all vendor consideration as a reduction of cost of sales rather than a reduction of advertising expense. Other advertising costs are expensed as incurred. Advertising expense, which is classified as a component of SG&A expenses, totaled $20,155, $15,827, and $14,021 for the years ended December 31, 2022, 2021, and 2020, respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. The estimated useful lives of the assets range from three three Costs incurred to develop internal-use software during the application development stage are recorded in property and equipment at cost. External direct costs of materials and services consumed in developing or obtaining internal-use computer software and payroll-related costs for employees developing internal-use computer software projects, to the extent of their time spent directly on the project and specific to application development, are capitalized. When events or circumstances indicate a potential impairment, the Company evaluates the carrying value of property and equipment based upon current and anticipated undiscounted cash flows. The Company recognizes impairment when it is probable that such estimated future cash flows will be less than the asset carrying value. No property and equipment impairment was recognized for each of the years ended December 31, 2022, 2021 and 2020. |
Leases | Leases The Company enters into operating lease contracts, as assessed at contract inception, primarily for real estate and equipment. On the lease commencement date, the Company records operating lease liabilities based on the present value of the future lease payments. In determining the present value of future lease payments, the Company utilized estimated rates that it would have incurred to borrow, over a similar term, the funds necessary to purchase the respective leased asset with cash. The Company elects to apply the short-team lease exception to any leases with contractual obligations of one year or less. These leases will not have right-of-use, or ROU, assets and associated lease liabilities on the balance sheet. Instead, rent will be recognized on a straight-line basis. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The Company’s intangible assets consist of (1) goodwill, which is not subject to amortization; (2) an internet domain name, which is an indefinite-lived intangible asset not subject to amortization; and (3) amortizing intangibles, which consist of customer lists, trade names, and customer relationships, which are being amortized over their useful lives. Note 3 describes the annual impairment methodology that the Company uses each year in calculating the recoverability of goodwill and non-amortizing intangibles. This same impairment test is performed at other times during the course of a year should an event occur or circumstance change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Recoverability of amortizing intangible assets is assessed only when events have occurred that may give rise to impairment. When a potential impairment has been identified, forecasted undiscounted net cash flows of the operations to which the asset relates are compared to the current carrying value of the long-lived assets present in that operation. If such cash flows are less than such carrying amounts, long-lived assets including such intangibles, are written down to their respective fair values. No intangible assets impairment was recognized for each of the years ended December 31, 2022, 2021 and 2020. |
Concentrations | Concentrations Concentrations of credit risk with respect to trade account receivables are limited due to the large number of customers comprising the Company’s customer base. No single customer accounted for more than 4% of total net sales in 2022, 2021, and 2020. Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc. accounted for approximately 23%, 22% and 15% respectively, of the Company’s total product purchases in 2022. Product purchases from Ingram Micro, Inc., TD Synnex Corporation and Dell Inc. accounted for approximately 23%, 23% and 12% respectively, of the Company’s total product purchases in 2021. Product purchases from Ingram Micro, Inc., TD Synnex Corporation and HP Inc. accounted for approximately 21%, 15% and 12% respectively, of the Company’s total product purchases in 2020. No other singular vendor supplied more than 10% of the Company’s total product purchases in 2022, 2021 and 2020. The Company believes that, while it may experience some short-term disruption if products from Ingram Micro, Inc., TD Synnex Corporation, Dell Inc., and HP Inc., or any of these vendors become unavailable to it, alternative sources are available. Products manufactured by HP Inc. collectively represented approximately 14%, 15% and 18% of the Company’s net sales in 2022, 2021 and 2020, respectively. In the event the Company experiences either a short-term or permanent disruption of supply of HP products, such disruption would likely have a material adverse effect on the Company’s results of operations and cash flows. |
Restructuring and other charges | Restructuring and Other charges Restructuring and other charges are presented separately from SG&A expenses. In the year ended December 31, 2020, the Company undertook actions across the business to lower its cost structure and align its business in an effort to improve its ability to execute its strategy. In connection with these restructuring initiatives, the Company incurred restructuring and related costs of $1.0 million for the year ended December 31, 2020. There were no restructuring related costs incurred for the years ended December 31, 2022 or 2021. |
Earnings Per Share | 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 (in thousands, except per share data): 2022 2021 2020 Numerator: Net income $ 89,219 $ 69,906 $ 55,765 Denominator: Denominator for basic earnings per share 26,279 26,196 26,157 Dilutive effect of employee stock awards 164 168 179 Denominator for diluted earnings per share 26,443 26,364 26,336 Earnings per share: Basic $ 3.40 $ 2.67 $ 2.13 Diluted $ 3.37 $ 2.65 $ 2.12 For the years ended December 31, 2022, 2021, and 2020, the Company did not exclude any outstanding nonvested stock units or stock options from the computation of diluted earnings per share because including them would have had an anti-dilutive effect. |
Recently Issued Financial Accounting Standards | Recently Issued Financial Accounting Standards In March 2020, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Computation of basic and diluted earnings per share | 2022 2021 2020 Numerator: Net income $ 89,219 $ 69,906 $ 55,765 Denominator: Denominator for basic earnings per share 26,279 26,196 26,157 Dilutive effect of employee stock awards 164 168 179 Denominator for diluted earnings per share 26,443 26,364 26,336 Earnings per share: Basic $ 3.40 $ 2.67 $ 2.13 Diluted $ 3.37 $ 2.65 $ 2.12 |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue | |
Schedule of disaggregation of revenue from contracts with customers | For the Year Ended December 31, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 473,375 $ 462,152 $ 221,363 $ 1,156,890 Desktops 88,127 165,509 56,804 310,440 Software 147,792 108,243 36,071 292,106 Servers/Storage 103,711 64,622 44,588 212,921 Net/Com Products 98,672 85,611 32,548 216,831 Displays and Sound 118,753 132,269 67,860 318,882 Accessories 133,017 202,452 58,413 393,882 Other Hardware/Services 81,863 103,504 37,677 223,044 Total net sales $ 1,245,310 $ 1,324,362 $ 555,324 $ 3,124,996 For the Year Ended December 31, 2021 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 426,022 $ 428,868 $ 241,146 $ 1,096,036 Desktops 87,822 140,468 45,989 274,279 Software 120,104 119,423 39,611 279,138 Servers/Storage 92,922 66,027 37,081 196,030 Net/Com Products 81,681 86,454 34,336 202,471 Displays and Sound 99,474 125,610 59,153 284,237 Accessories 115,048 179,249 44,104 338,401 Other Hardware/Services 75,423 103,360 43,220 222,003 Total net sales $ 1,098,496 $ 1,249,459 $ 544,640 $ 2,892,595 For the Year Ended December 31, 2020 Business Solutions Enterprise Solutions Public Sector Solutions Total Notebooks/Mobility $ 319,046 $ 303,471 $ 203,090 $ 825,607 Desktops 89,828 129,011 36,744 255,583 Software 124,681 115,596 42,793 283,070 Servers/Storage 93,535 76,107 42,694 212,336 Net/Com Products 75,141 96,203 47,930 219,274 Displays and Sound 85,769 78,312 51,502 215,583 Accessories 113,402 201,562 47,504 362,468 Other Hardware/Services 64,630 115,307 36,432 216,369 Total net sales $ 966,032 $ 1,115,569 $ 508,689 $ 2,590,290 |
Schedule of changes in contract liability balances | The following table provides information about contract liabilities from arrangements with customers as of December 31, 2022 and December 31, 2021 (in thousands): December 31, 2022 December 31, 2021 Contract liabilities, which are included in "Accrued expenses and other liabilities" $ 4,266 $ 8,628 Changes in the contract liability balances during the years ended December 31, 2022 and 2021 are as follows (in thousands): 2022 Balance at December 31, 2021 $ 8,628 Cash received in advance and not recognized as revenue 20,626 Amounts recognized as revenue as performance obligations satisfied (24,988) Balance at December 31, 2022 $ 4,266 2021 Balance at December 31, 2020 $ 3,509 Cash received in advance and not recognized as revenue 28,114 Amounts recognized as revenue as performance obligations satisfied (22,995) Balance at December 31, 2021 $ 8,628 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure | |
Carrying Amount of Goodwill | Balance at December 31, 2022 Business Solutions Enterprise Solutions Public Sector Solutions Total Goodwill, gross $ 8,539 $ 66,236 $ 7,634 $ 82,409 Accumulated impairment losses (1,173) ─ (7,634) (8,807) Net balance $ 7,366 $ 66,236 $ — $ 73,602 Balance at December 31, 2021 Business Solutions Enterprise Solutions Public Sector Solutions Total Goodwill, gross $ 8,539 $ 66,236 $ 7,634 $ 82,409 Accumulated impairment losses (1,173) ─ (7,634) (8,807) Net balance $ 7,366 $ 66,236 $ — $ 73,602 |
Intangible Assets and Related Accumulated Amortization | December 31, 2022 December 31, 2021 Estimated Gross Accumulated Net Gross Accumulated Net Useful Lives Amount Amortization Amount Amount Amortization Amount Customer list 8 $ 3,400 $ 3,400 $ — $ 3,400 $ 3,400 $ — Tradename 5 1,190 1,190 — 1,190 1,190 — Customer relationships 10 12,200 8,002 4,198 12,200 6,782 5,418 Total intangible assets $ 16,790 $ 12,592 $ 4,198 $ 16,790 $ 11,372 $ 5,418 |
Estimated Amortization Expense | For the Years Ended December 31, 2023 $ 1,220 2024 1,220 2025 1,220 2026 538 2027 and thereafter — $ 4,198 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable | |
Accounts Receivable | December 31, 2022 2021 Trade $ 561,857 $ 568,964 Vendor consideration, returns and other 57,388 47,506 Due from employees 108 105 Total gross accounts receivable 619,353 616,575 Allowances for: Sales returns (3,806) (4,218) Credit losses (5,267) (4,825) Accounts receivable, net $ 610,280 $ 607,532 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Property and Equipment | December 31, 2022 2021 Computer software, including licenses and internally-developed software $ 87,645 $ 96,264 Furniture and equipment 39,316 37,040 Leasehold improvements 8,964 8,668 Total 135,925 141,972 Accumulated depreciation and amortization (76,754) (80,961) Property and equipment, net $ 59,171 $ 61,011 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of lease cost | Year Ended December 31, 2022 Related Parties Others Total Lease Cost Capitalized operating lease cost $ 1,253 $ 2,821 $ 4,074 Short-term lease cost 428 121 549 Total lease cost $ 1,681 $ 2,942 $ 4,623 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 1,253 $ 2,846 $ 4,099 Weighted-average remaining lease term (in years): Capitalized operating leases 0.92 4.03 3.60 Weighted-average discount rate: Capitalized operating leases 3.92% 4.05% 4.03% Year Ended December 31, 2021 Related Parties Others Total Lease Cost Capitalized operating lease cost $ 1,253 $ 3,021 $ 4,274 Short-term lease cost 426 92 518 Total lease cost $ 1,679 $ 3,113 $ 4,792 Other Information Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: Operating cash flows $ 1,253 $ 3,128 $ 4,381 Weighted-average remaining lease term (in years): Capitalized operating leases 1.92 4.46 3.89 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 2023 $ 1,312 $ 2,097 $ 3,409 2024 163 1,697 1,860 2025 163 1,635 1,798 2026 163 952 1,115 2027 1 232 233 Thereafter — 342 342 $ 1,802 $ 6,955 $ 8,757 Imputed interest (593) Lease liability balance at December 31, 2022 $ 8,164 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Liabilities | |
Schedule of Accrued Expenses and Other Liabilities | December 31, 2022 2021 Customer and vendor deposits $ 32,594 $ 33,429 Sales tax 2,816 10,471 Short term lease liability 3,170 3,422 Other 15,228 14,508 Accrued expenses and other liabilities $ 53,808 $ 61,830 |
STOCKHOLDERS' EQUITY AND SHAR_2
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Dividend declared | 2022 2021 2020 Dividend per share $ 0.34 $ 1.00 $ 0.32 Stockholder record date 12/05/2022 11/18/2021 1/12/2021 Total dividend $ 8,948 $ 26,224 $ 8,375 Payment date 12/23/2022 12/03/2021 1/29/2021 |
Components of Share-Based Compensation Recorded as Expense | 2022 2021 2020 Pre-tax expense for nonvested units $ 5,675 $ 4,231 $ 2,668 Tax benefit (1,512) (1,167) (635) Net effect on net income $ 4,163 $ 3,064 $ 2,033 |
Nonvested Stock Unit Activity | Nonvested Stock Units Weighted-Average Grant Date Shares Fair Value Nonvested at January 1, 2022 509 $ 36.98 Granted 184 53.50 Vested (142) 37.28 Canceled (16) 41.99 Nonvested at December 31, 2022 535 42.44 |
PhantomShareUnitsPSUsMember | |
Stock Equivalent Units | 2022 2021 2020 Units issued — — — Compensation expense $ — $ 425 $ 840 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Provision for Income Taxes | Years Ended December 31, 2022 2021 2020 Current: Federal $ 25,483 $ 18,450 $ 13,350 State 8,200 7,413 5,726 Total current 33,683 25,863 19,076 Deferred: Federal (743) 655 (1,108) State (524) 98 (537) Total deferred (1,267) 753 (1,645) Provision for income taxes $ 32,416 $ 26,616 $ 17,431 |
Components of Deferred Taxes | 2022 2021 Deferred tax assets: Allowance for credit losses $ 1,349 $ 1,266 Inventory costs capitalized for tax purposes 227 254 Inventory valuation reserves 57 402 Sales return reserves 140 164 Deductible expenses, primarily employee-benefit related 79 18 Accrued compensation 2,249 2,792 Operating lease liability 2,084 2,668 Other 632 1,399 Qualified research expenses 598 — Compensation under non-statutory stock option agreements 1,281 866 State tax loss carryforwards 1,151 1,411 Total gross deferred tax assets 9,847 11,240 Less: Valuation allowance (1,064) (1,174) Net deferred tax assets 8,783 10,066 Deferred tax liabilities: Goodwill and other intangibles (13,990) (14,243) Property and equipment (10,572) (12,552) Right-of-use assets (1,930) (2,503) Prepaid expenses (261) (46) Total gross deferred tax liabilities (26,753) (29,344) Net deferred tax liability $ (17,970) $ (19,278) Current deferred tax assets $ — $ — Noncurrent deferred tax liability (17,970) (19,278) Net deferred tax liability $ (17,970) $ (19,278) |
Reconciliation of Income Tax Provision to Total Income Taxes at Statutory Federal Tax Rate | 2022 2021 2020 Federal income taxes, at statutory tax rate $ 25,543 $ 20,270 $ 15,378 State income taxes, net of federal benefit 5,954 5,954 3,987 Nondeductible expenses 928 645 365 Tax credits — — (2,093) Other, net (9) (253) (206) Income tax provision $ 32,416 $ 26,616 $ 17,431 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Information | |
Segment information applicable to reportable operating segments | Years Ended December 31, 2022 2021 2020 Net sales: Business Solutions $ 1,245,311 $ 1,098,496 $ 966,032 Enterprise Solutions 1,324,361 1,249,459 1,115,569 Public Sector Solutions 555,324 544,640 508,689 Total net sales $ 3,124,996 $ 2,892,595 $ 2,590,290 Operating income (loss): Business Solutions $ 79,475 $ 43,783 $ 32,351 Enterprise Solutions 53,477 74,653 59,382 Public Sector Solutions 1,105 (4,928) (2,763) Headquarters/Other (13,505) (16,991) (16,896) Total operating income 120,552 96,517 72,074 Other income, net 1,083 5 1,122 Income before taxes $ 121,635 $ 96,522 $ 73,196 Selected operating expense: Depreciation and amortization: Business Solutions $ 661 $ 655 $ 636 Enterprise Solutions 1,992 2,408 2,771 Public Sector Solutions 78 62 60 Headquarters/Other 9,247 9,077 10,136 Total depreciation and amortization $ 11,978 $ 12,202 $ 13,603 Total assets: Business Solutions $ 445,698 $ 401,624 Enterprise Solutions 660,374 645,938 Public Sector Solutions 84,939 84,787 Headquarters/Other (91,185) (48,966) Total assets $ 1,099,826 $ 1,083,383 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Number of operating segments | segment | 3 | ||
Amounts due from banks for credit card transactions, classified as cash equivalents | $ 6,862 | $ 4,748 | |
Impairment of property and equipment | 0 | 0 | $ 0 |
Impairment of intangible assets | $ 0 | 0 | 0 |
Minimum | |||
Property and equipment, estimated useful lives | 3 years | ||
Maximum | |||
Property and equipment, estimated useful lives | 7 years | ||
Computer software | Minimum | |||
Estimated useful lives | 3 years | ||
Computer software | Maximum | |||
Estimated useful lives | 10 years | ||
Selling, General and Administrative Expenses | |||
Advertising expense | $ 20,155 | $ 15,827 | $ 14,021 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Concentration Risk (Details) - Net Sales | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Customer | Single Customer | Maximum | |||
Concentration risk | |||
Percentage of total net sales | 4% | 4% | 4% |
Supplier | Ingram Micro Inc. | |||
Concentration risk | |||
Percentage of product purchases | 23% | 23% | 21% |
Supplier | TD Synnex Corporation | |||
Concentration risk | |||
Percentage of product purchases | 22% | 23% | 15% |
Supplier | HP, Inc. | |||
Concentration risk | |||
Percentage of product purchases | 15% | 12% | 12% |
Products manufactured by HP as a percentage of net sales | 14% | 15% | 18% |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Restructuring and Other Charges (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies | |||
Restructuring and other charges | $ 0 | $ 0 | $ 992 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net income | $ 89,219 | $ 69,906 | $ 55,765 |
Denominator: | |||
Denominator for basic earnings per share | 26,279 | 26,196 | 26,157 |
Dilutive effect of employee stock awards | 164 | 168 | 179 |
Denominator for diluted earnings per share | 26,443 | 26,364 | 26,336 |
Earnings per share: | |||
Basic | $ 3.40 | $ 2.67 | $ 2.13 |
Diluted | $ 3.37 | $ 2.65 | $ 2.12 |
Additional Disclosure | |||
Employee stock awards excluded from computation of diluted earnings per share | $ 0 | $ 0 | $ 0 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of revenue | |||
Net sales | $ 3,124,996 | $ 2,892,595 | $ 2,590,290 |
Notebooks/Mobility | |||
Disaggregation of revenue | |||
Net sales | 1,156,890 | 1,096,036 | 825,607 |
Desktops | |||
Disaggregation of revenue | |||
Net sales | 310,440 | 274,279 | 255,583 |
Software | |||
Disaggregation of revenue | |||
Net sales | 292,106 | 279,138 | 283,070 |
Servers/Storage | |||
Disaggregation of revenue | |||
Net sales | 212,921 | 196,030 | 212,336 |
Net/Com Products | |||
Disaggregation of revenue | |||
Net sales | 216,831 | 202,471 | 219,274 |
Displays and Sound | |||
Disaggregation of revenue | |||
Net sales | 318,882 | 284,237 | 215,583 |
Accessories | |||
Disaggregation of revenue | |||
Net sales | 393,882 | 338,401 | 362,468 |
Other Hardware/Services | |||
Disaggregation of revenue | |||
Net sales | 223,044 | 222,003 | 216,369 |
Business Solutions | |||
Disaggregation of revenue | |||
Net sales | 1,245,310 | 1,098,496 | 966,032 |
Business Solutions | Notebooks/Mobility | |||
Disaggregation of revenue | |||
Net sales | 473,375 | 426,022 | 319,046 |
Business Solutions | Desktops | |||
Disaggregation of revenue | |||
Net sales | 88,127 | 87,822 | 89,828 |
Business Solutions | Software | |||
Disaggregation of revenue | |||
Net sales | 147,792 | 120,104 | 124,681 |
Business Solutions | Servers/Storage | |||
Disaggregation of revenue | |||
Net sales | 103,711 | 92,922 | 93,535 |
Business Solutions | Net/Com Products | |||
Disaggregation of revenue | |||
Net sales | 98,672 | 81,681 | 75,141 |
Business Solutions | Displays and Sound | |||
Disaggregation of revenue | |||
Net sales | 118,753 | 99,474 | 85,769 |
Business Solutions | Accessories | |||
Disaggregation of revenue | |||
Net sales | 133,017 | 115,048 | 113,402 |
Business Solutions | Other Hardware/Services | |||
Disaggregation of revenue | |||
Net sales | 81,863 | 75,423 | 64,630 |
Enterprise Solutions | |||
Disaggregation of revenue | |||
Net sales | 1,324,362 | 1,249,459 | 1,115,569 |
Enterprise Solutions | Notebooks/Mobility | |||
Disaggregation of revenue | |||
Net sales | 462,152 | 428,868 | 303,471 |
Enterprise Solutions | Desktops | |||
Disaggregation of revenue | |||
Net sales | 165,509 | 140,468 | 129,011 |
Enterprise Solutions | Software | |||
Disaggregation of revenue | |||
Net sales | 108,243 | 119,423 | 115,596 |
Enterprise Solutions | Servers/Storage | |||
Disaggregation of revenue | |||
Net sales | 64,622 | 66,027 | 76,107 |
Enterprise Solutions | Net/Com Products | |||
Disaggregation of revenue | |||
Net sales | 85,611 | 86,454 | 96,203 |
Enterprise Solutions | Displays and Sound | |||
Disaggregation of revenue | |||
Net sales | 132,269 | 125,610 | 78,312 |
Enterprise Solutions | Accessories | |||
Disaggregation of revenue | |||
Net sales | 202,452 | 179,249 | 201,562 |
Enterprise Solutions | Other Hardware/Services | |||
Disaggregation of revenue | |||
Net sales | 103,504 | 103,360 | 115,307 |
Public Sector Solutions | |||
Disaggregation of revenue | |||
Net sales | 555,324 | 544,640 | 508,689 |
Public Sector Solutions | Notebooks/Mobility | |||
Disaggregation of revenue | |||
Net sales | 221,363 | 241,146 | 203,090 |
Public Sector Solutions | Desktops | |||
Disaggregation of revenue | |||
Net sales | 56,804 | 45,989 | 36,744 |
Public Sector Solutions | Software | |||
Disaggregation of revenue | |||
Net sales | 36,071 | 39,611 | 42,793 |
Public Sector Solutions | Servers/Storage | |||
Disaggregation of revenue | |||
Net sales | 44,588 | 37,081 | 42,694 |
Public Sector Solutions | Net/Com Products | |||
Disaggregation of revenue | |||
Net sales | 32,548 | 34,336 | 47,930 |
Public Sector Solutions | Displays and Sound | |||
Disaggregation of revenue | |||
Net sales | 67,860 | 59,153 | 51,502 |
Public Sector Solutions | Accessories | |||
Disaggregation of revenue | |||
Net sales | 58,413 | 44,104 | 47,504 |
Public Sector Solutions | Other Hardware/Services | |||
Disaggregation of revenue | |||
Net sales | $ 37,677 | $ 43,220 | $ 36,432 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Change in contract liability | ||
Beginning balance - Contract liability | $ 8,628 | $ 3,509 |
Cash received in advance and not recognized as revenue | 20,626 | 28,114 |
Amounts recognized as revenue as performance obligations satisfied | (24,988) | (22,995) |
Ending balance - Contract liability | 4,266 | 8,628 |
Accrued expenses and other liabilities | ||
Contract liabilities | ||
Contract liabilities | $ 4,266 | $ 8,628 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill | ||
Goodwill, gross | $ 82,409 | $ 82,409 |
Accumulated impairment losses | (8,807) | (8,807) |
Net balance | 73,602 | 73,602 |
Business Solutions | ||
Goodwill | ||
Goodwill, gross | 8,539 | 8,539 |
Accumulated impairment losses | (1,173) | (1,173) |
Net balance | 7,366 | 7,366 |
Enterprise Solutions | ||
Goodwill | ||
Goodwill, gross | 66,236 | 66,236 |
Net balance | 66,236 | 66,236 |
Public Sector Segment | ||
Goodwill | ||
Goodwill, gross | 7,634 | 7,634 |
Accumulated impairment losses | $ (7,634) | $ (7,634) |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Amortizable Intangible Assets and Related Accumulated Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2016 | |
Intangible Assets | ||||
Indefinite-lived intangible assets | $ 450 | |||
Gross Amount | 16,790 | $ 16,790 | ||
Accumulated Amortization | 12,592 | 11,372 | ||
Net Amount | 4,198 | 5,418 | ||
Amortization expense | $ 1,220 | 1,220 | $ 1,220 | |
Customer List | ||||
Intangible Assets | ||||
Estimated useful lives | 8 years | |||
Gross Amount | $ 3,400 | 3,400 | ||
Accumulated Amortization | $ 3,400 | 3,400 | ||
Tradename | ||||
Intangible Assets | ||||
Estimated useful lives | 5 years | |||
Gross Amount | $ 1,190 | 1,190 | ||
Accumulated Amortization | $ 1,190 | 1,190 | ||
Customer relationships | ||||
Intangible Assets | ||||
Acquired estimated useful lives | 10 years | |||
Estimated useful lives | 10 years | |||
Gross Amount | $ 12,200 | 12,200 | ||
Accumulated Amortization | 8,002 | 6,782 | ||
Net Amount | $ 4,198 | $ 5,418 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Estimated Amortization Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure | ||
2023 | $ 1,220 | |
2024 | 1,220 | |
2025 | 1,220 | |
2026 | 538 | |
Net Amount | $ 4,198 | $ 5,418 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||
Trade | $ 561,857 | $ 568,964 |
Vendor consideration, returns and other | 57,388 | 47,506 |
Due from employees | 108 | 105 |
Total gross accounts receivable | 619,353 | 616,575 |
Sales returns | (3,806) | (4,218) |
Credit losses | (5,267) | (4,825) |
Accounts receivable, net | $ 610,280 | $ 607,532 |
PROPERTY AND EQUIPMENT - Summar
PROPERTY AND EQUIPMENT - Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property and Equipment | ||
Computer software, including licenses and internally-developed software | $ 87,645 | $ 96,264 |
Furniture and equipment | 39,316 | 37,040 |
Leasehold improvements | 8,964 | 8,668 |
Total | 135,925 | 141,972 |
Accumulated depreciation and amortization | (76,754) | (80,961) |
Property and equipment, net | $ 59,171 | $ 61,011 |
PROPERTY AND EQUIPMENT - Deprec
PROPERTY AND EQUIPMENT - Depreciation and Amortization Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | |||
Depreciation and amortization | $ 10,758 | $ 10,982 | $ 12,383 |
LEASES - Lease Cost and Other I
LEASES - Lease Cost and Other Information (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) lease | Dec. 31, 2021 USD ($) | |
Leases | ||
Right-of-use assets | $ 7,558 | $ 9,579 |
Lease liability | $ 8,164 | |
Number of financing leases | lease | 0 | |
Number of additional operating or financing leases not yet commenced | lease | 0 | |
Lease Cost | ||
Capitalized operating lease cost | $ 4,074 | 4,274 |
Short-term lease cost | 549 | 518 |
Total lease cost | 4,623 | 4,792 |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | ||
Operating cash flows | $ 4,099 | $ 4,381 |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 3 years 7 months 6 days | 3 years 10 months 20 days |
Weighted-average discount rate - Capitalized operating leases | 4.03% | 3.92% |
Related Parties | ||
Leases | ||
Right-of-use assets | $ 1,130 | |
Lease liability | 1,130 | |
Lease Cost | ||
Capitalized operating lease cost | 1,253 | $ 1,253 |
Short-term lease cost | 428 | 426 |
Total lease cost | 1,681 | 1,679 |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | ||
Operating cash flows | $ 1,253 | $ 1,253 |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 11 months 1 day | 1 year 11 months 1 day |
Weighted-average discount rate - Capitalized operating leases | 3.92% | 3.92% |
Others | ||
Lease Cost | ||
Capitalized operating lease cost | $ 2,821 | $ 3,021 |
Short-term lease cost | 121 | 92 |
Total lease cost | 2,942 | 3,113 |
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases: | ||
Operating cash flows | $ 2,846 | $ 3,128 |
Weighted-average remaining lease term - Capitalized operating leases (in years) | 4 years 10 days | 4 years 5 months 15 days |
Weighted-average discount rate - Capitalized operating leases | 4.05% | 3.92% |
LEASES - Future Lease Payments
LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Future lease payments over the remaining term of capitalized operating leases | ||
2023 | $ 3,409 | |
2024 | 1,860 | |
2025 | 1,798 | |
2026 | 1,115 | |
2027 | 233 | |
Thereafter | 342 | |
Total | 8,757 | |
Imputed interest | (593) | |
Lease liability balance | 8,164 | |
Right-of-use assets | 7,558 | $ 9,579 |
Long-term lease liability | 4,994 | 6,789 |
Short-term lease liability | $ 3,170 | $ 3,422 |
Current operating lease liability, Statement of Financial Position | Accrued expenses and other liabilities | Accrued expenses and other liabilities |
Related Parties | ||
Future lease payments over the remaining term of capitalized operating leases | ||
2023 | $ 1,312 | |
2024 | 163 | |
2025 | 163 | |
2026 | 163 | |
2027 | 1 | |
Total | 1,802 | |
Lease liability balance | 1,130 | |
Right-of-use assets | 1,130 | |
Others | ||
Future lease payments over the remaining term of capitalized operating leases | ||
2023 | 2,097 | |
2024 | 1,697 | |
2025 | 1,635 | |
2026 | 952 | |
2027 | 232 | |
Thereafter | 342 | |
Total | $ 6,955 |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Liabilities | ||
Customer and vendor deposits | $ 32,594 | $ 33,429 |
Sales taxes | 2,816 | 10,471 |
Short-term lease liability | 3,170 | 3,422 |
Other | 15,228 | 14,508 |
Accrued expenses and other liabilities | $ 53,808 | $ 61,830 |
GAIN OF LIFE INSURANCE (Details
GAIN OF LIFE INSURANCE (Details) $ in Thousands | 12 Months Ended | |||
Nov. 14, 2020 item | Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) item | Dec. 31, 2020 USD ($) item | |
David Hall, Co-founder and Director | ||||
Number of Company co-founders who passed away during the period | item | 1 | |||
Number of company-owned life insurance policies | item | 2 | |||
Receivable for life insurance settlement proceeds due | $ | $ 1,500 | |||
Gain recognized on life insurance settlement | $ | $ 1,061 | |||
Patricia Gallup, Chairman of the Board and CAO | ||||
Number of company-owned life insurance policies | item | 1 | 1 | ||
Patricia Gallup, Chairman of the Board and CAO | Other assets | ||||
Cash surrender value of life insurance | $ | $ 274 | $ 200 |
BANK BORROWINGS (Details)
BANK BORROWINGS (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Subordinated Borrowing | ||
Line of credit, borrowing capacity | $ 50,000 | |
Credit facility, expiration date | Mar. 31, 2025 | |
Line of credit, maximum borrowing capacity | $ 80,000 | |
Proceeds from short-term borrowings | 36,463 | |
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 | 7.50% |
STOCKHOLDERS' EQUITY AND SHAR_3
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Nov. 30, 2022 | May 31, 2022 | May 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Stockholders' equity and share-based compensation | ||||||||
Preferred Stock, shares authorized | 10,000 | 10,000 | ||||||
Preferred Stock, par value | $ 0.01 | $ 0.01 | ||||||
Preferred Stock, shares outstanding | 0 | 0 | ||||||
Repurchase of common stock, authorized amount | $ 25,000 | $ 25,000 | $ 30,000 | |||||
Shares repurchased, value | $ 10,222 | |||||||
Aggregate shares repurchased | 2,773 | 2,773 | ||||||
2007 Stock Incentive Plan | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Term of approved stock-based compensation plan | 10 years | |||||||
2020 Stock Incentive Plan | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Shares authorized for issuance under stock incentive plan | 1,003 | |||||||
Shares available for future grant | 119 | |||||||
1997 Employee Stock Purchase Plan | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Purchase price under employee stock purchase plan as a percentage of price as of the last day of each six month offering period | 95% | |||||||
Common stock reserved for issuance | 1,303 | |||||||
Share purchased under employee stock purchase plan | 1,200 | |||||||
Nonvested Stock Units | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Granted | 184 | |||||||
Weighted-average grant-date fair values of nonvested stock awards granted | $ 53.50 | $ 46.02 | $ 44.31 | |||||
Total fair values of nonvested stock awards that vested | $ 7,202 | $ 5,529 | $ 4,044 | |||||
Unearned compensation cost | $ 20,914 | |||||||
Unrecognized compensation costs, weighted average period of recognition | 3 years 3 months 18 days | |||||||
Aggregate intrinsic value | $ 25,093 | |||||||
Stock Equivalent Units (SEUs) | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Vesting period | 4 years | |||||||
Share repurchase program, aggregate | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Repurchase of common stock, authorized amount | $ 80,000 | |||||||
Number of share repurchased | 0 | 0 | 247 | |||||
Shares repurchased, value | $ 10,200 | |||||||
Aggregate shares repurchased | 2,599 | |||||||
Aggregate number of shares repurchased | $ 42,300 | |||||||
Maximum | 2007 Stock Incentive Plan | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Shares authorized for issuance under stock incentive plan | 1,900 | |||||||
Maximum | Nonvested Stock Units | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Vesting period | 4 years | 4 years | 4 years | |||||
Maximum | Share repurchase program, aggregate | ||||||||
Stockholders' equity and share-based compensation | ||||||||
Approximate dollar value of shares that may yet be purchased | $ 37,700 |
STOCKHOLDERS' EQUITY AND SHAR_4
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION - Dividend Payments (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share | |||
Dividend per share | $ 0.34 | $ 1 | $ 0.32 |
Stockholder record date | Dec. 05, 2022 | Nov. 18, 2021 | Jan. 12, 2021 |
Total dividend | $ 8,948 | $ 26,224 | $ 8,375 |
Payment date | Dec. 23, 2022 | Dec. 03, 2021 | Jan. 29, 2021 |
STOCKHOLDERS' EQUITY AND SHAR_5
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION - Components of Share-Based Compensation Recorded as Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stockholders' equity and share-based compensation | |||
Tax benefit | $ (1,512) | $ (1,167) | $ (635) |
Net effect on net income | 4,163 | 3,064 | 2,033 |
Nonvested shares/units | |||
Stockholders' equity and share-based compensation | |||
Pre-tax expense for nonvested units | $ 5,675 | $ 4,231 | $ 2,668 |
STOCKHOLDERS' EQUITY AND SHAR_6
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION - Nonvested Stock Award and Unit Activity (Details) - Nonvested Stock Units - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Shares | |||
Nonvested shares beginning balance | 509 | ||
Granted | 184 | ||
Vested | (142) | ||
Canceled | (16) | ||
Nonvested shares ending balance | 535 | 509 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested shares beginning balance | $ 36.98 | ||
Granted | 53.50 | $ 46.02 | $ 44.31 |
Vested | 37.28 | ||
Canceled | 41.99 | ||
Nonvested shares ending balance | $ 42.44 | $ 36.98 |
STOCKHOLDERS' EQUITY AND SHAR_7
STOCKHOLDERS' EQUITY AND SHARE-BASED COMPENSATION - Stock Equivalent Units (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
PhantomShareUnitsPSUsMember | ||
Stockholders' equity and share-based compensation | ||
Compensation expense | $ 425 | $ 840 |
INCOME TAXES - Provision for In
INCOME TAXES - Provision for Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
Federal | $ 25,483 | $ 18,450 | $ 13,350 |
State | 8,200 | 7,413 | 5,726 |
Total current | 33,683 | 25,863 | 19,076 |
Deferred: | |||
Federal | (743) | 655 | (1,108) |
State | (524) | 98 | (537) |
Total deferred | (1,267) | 753 | (1,645) |
Income tax provision | $ 32,416 | $ 26,616 | $ 17,431 |
INCOME TAXES - Components of De
INCOME TAXES - Components of Deferred Taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Allowance for credit losses | $ 1,349 | $ 1,266 |
Inventory costs capitalized for tax purposes | 227 | 254 |
Inventory valuation reserves | 57 | 402 |
Sales return reserves | 140 | 164 |
Deductible expenses, primarily employee-benefit related | 79 | 18 |
Accrued compensation | 2,249 | 2,792 |
Operating lease liability | 2,084 | 2,668 |
Other | 632 | 1,399 |
Qualified research expenses | 598 | |
Compensation under non-statutory stock option agreements | 1,281 | 866 |
State tax loss carryforwards | 1,151 | 1,411 |
Total gross deferred tax assets | 9,847 | 11,240 |
Less: Valuation allowance | (1,064) | (1,174) |
Net deferred tax assets | 8,783 | 10,066 |
Deferred tax liabilities: | ||
Goodwill and other intangibles | (13,990) | (14,243) |
Property and equipment | (10,572) | (12,552) |
Right-of-use assets | (1,930) | (2,503) |
Prepaid expenses | (261) | (46) |
Total gross deferred tax liabilities. | (26,753) | (29,344) |
Net deferred tax liability | (17,970) | (19,278) |
Noncurrent deferred tax liability | (17,970) | (19,278) |
Net deferred tax liability | $ (17,970) | $ (19,278) |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax | |||
State net operating loss carryforwards | $ 1,457 | ||
Operating loss carryforwards, state tax benefits net of federal taxes | 1,151 | $ 1,411 | |
State tax credit and state tax loss carryforwards, valuation allowance | 1,064 | 1,174 | |
Net change in the valuation allowance related to utilization and expiration of tax carryforwards | (110) | 232 | |
Unrecognized income tax benefits, interest and penalties recognized | $ 0 | $ 0 | $ 0 |
State Jurisdiction | |||
Income Tax | |||
Tax years remain open to examination | 2018 2019 2020 2021 | ||
Internal Revenue Service (IRS) | |||
Income Tax | |||
Tax years remain open to examination | 2019 2020 2021 | ||
Expire in 2023 | |||
Income Tax | |||
State net operating loss carryforwards | $ 2 | ||
Expire in 2024 | |||
Income Tax | |||
State net operating loss carryforwards | 4 | ||
Expire in 2025 | |||
Income Tax | |||
State net operating loss carryforwards | 4 | ||
Expire in 2026 | |||
Income Tax | |||
State net operating loss carryforwards | 33 | ||
Expire in 2027 | |||
Income Tax | |||
State net operating loss carryforwards | 7 | ||
Expire beyond 2027 | |||
Income Tax | |||
State net operating loss carryforwards | 1,210 | ||
No Expiration | |||
Income Tax | |||
State net operating loss carryforwards | $ 197 | ||
Period 1 | |||
Income Tax | |||
State net operating loss carryforwards, expiration period | 5 years | ||
Period 2 | |||
Income Tax | |||
State net operating loss carryforwards, expiration period | 15 years | ||
Period 3 | |||
Income Tax | |||
State net operating loss carryforwards, expiration period | 20 years |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Income Tax Provision To Total Income Taxes At Statutory Federal Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
Federal income taxes, at statutory tax rate | $ 25,543 | $ 20,270 | $ 15,378 |
State income taxes, net of federal benefit | 5,954 | 5,954 | 3,987 |
Nondeductible expenses | 928 | 645 | 365 |
Tax credits | (2,093) | ||
Other, net | (9) | (253) | (206) |
Income tax provision | $ 32,416 | $ 26,616 | $ 17,431 |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Compensation and Retirement | |||
Employer matching contributions to employee savings | $ 6,517 | $ 5,951 | $ 5,656 |
Employer matching contributions to employee profit sharing plan | $ 0 | $ 0 | $ 0 |
SEGMENT INFORMATION - Segment I
SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Reporting Information | |||
Number of reportable segments | segment | 3 | ||
Number of operating segments | segment | 3 | ||
Net sales: | |||
Net sales | $ 3,124,996 | $ 2,892,595 | $ 2,590,290 |
Operating income (loss): | |||
Operating income (loss) | 120,552 | 96,517 | 72,074 |
Other expenses, net | 1,083 | 5 | 1,122 |
Income before taxes | 121,635 | 96,522 | 73,196 |
Depreciation and amortization: | |||
Depreciation and amortization | 11,978 | 12,202 | 13,603 |
Total assets: | |||
Total assets | 1,099,826 | 1,083,383 | |
Goodwill | 73,602 | 73,602 | |
Business Solutions | |||
Net sales: | |||
Net sales | 1,245,310 | 1,098,496 | 966,032 |
Total assets: | |||
Goodwill | 7,366 | 7,366 | |
Enterprise Solutions | |||
Net sales: | |||
Net sales | 1,324,362 | 1,249,459 | 1,115,569 |
Total assets: | |||
Goodwill | 66,236 | 66,236 | |
Public Sector Solutions | |||
Net sales: | |||
Net sales | 555,324 | 544,640 | 508,689 |
Operating Segments | Business Solutions | |||
Net sales: | |||
Net sales | 1,245,311 | 1,098,496 | 966,032 |
Operating income (loss): | |||
Operating income (loss) | 79,475 | 43,783 | 32,351 |
Depreciation and amortization: | |||
Depreciation and amortization | 661 | 655 | 636 |
Total assets: | |||
Total assets | 445,698 | 401,624 | |
Goodwill | 7,366 | ||
Operating Segments | Enterprise Solutions | |||
Net sales: | |||
Net sales | 1,324,361 | 1,249,459 | 1,115,569 |
Operating income (loss): | |||
Operating income (loss) | 53,477 | 74,653 | 59,382 |
Depreciation and amortization: | |||
Depreciation and amortization | 1,992 | 2,408 | 2,771 |
Total assets: | |||
Total assets | 660,374 | 645,938 | |
Goodwill | 66,236 | ||
Operating Segments | Public Sector Solutions | |||
Net sales: | |||
Net sales | 555,324 | 544,640 | 508,689 |
Operating income (loss): | |||
Operating income (loss) | 1,105 | (4,928) | (2,763) |
Depreciation and amortization: | |||
Depreciation and amortization | 78 | 62 | 60 |
Total assets: | |||
Total assets | 84,939 | 84,787 | |
Headquarters/Other | |||
Operating income (loss): | |||
Operating income (loss) | (13,505) | (16,991) | (16,896) |
Depreciation and amortization: | |||
Depreciation and amortization | 9,247 | 9,077 | $ 10,136 |
Total assets: | |||
Assets net of intercompany balance eliminations | (91,185) | (48,966) | |
Intersegment Elimination | |||
Total assets: | |||
Total assets | $ (43,679) | $ (39,390) |
SEGMENT INFORMATION - Concentra
SEGMENT INFORMATION - Concentration Risk (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net Sales | Geographic Concentration Risk | Foreign | Maximum | |||
Segment Reporting Information | |||
Percentage of sales by segment | 2% | 2% | 2% |
SCHEDULE II - VALUATION AND Q_2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Valuation and Qualifying Accounts | |||
Beginning Balance | $ 4,218 | ||
Ending Balance | 3,806 | $ 4,218 | |
Allowance for Sales Returns | |||
Valuation and Qualifying Accounts | |||
Beginning Balance | 4,218 | 4,014 | $ 3,466 |
Charged to Costs and Expenses | 35,161 | 32,635 | 29,435 |
Deductions/Write-Offs | (35,573) | (32,431) | (28,887) |
Ending Balance | 3,806 | 4,218 | 4,014 |
Allowance for Credit Losses | |||
Valuation and Qualifying Accounts | |||
Beginning Balance | 4,825 | 5,408 | 2,202 |
Charged to Costs and Expenses | 3,252 | 3,307 | 3,316 |
Deductions/Write-Offs | (2,810) | (3,890) | (110) |
Ending Balance | $ 5,267 | $ 4,825 | $ 5,408 |