Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | Apr. 25, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'PCM, INC. | ' |
Entity Central Index Key | '0000937941 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 12,324,653 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $7,402 | $9,992 |
Accounts receivable, net of allowances of $826 and $1,413 | 177,381 | 196,078 |
Inventories | 71,647 | 116,961 |
Prepaid expenses and other current assets | 10,394 | 14,893 |
Deferred income taxes | 2,517 | 2,583 |
Total current assets | 269,341 | 340,507 |
Property and equipment, net | 64,749 | 56,607 |
Deferred income taxes | 172 | 225 |
Goodwill | 25,510 | 25,510 |
Intangible assets, net | 5,008 | 5,150 |
Other assets | 7,331 | 6,823 |
Total assets | 372,111 | 434,822 |
Current liabilities: | ' | ' |
Accounts payable | 82,978 | 131,030 |
Accrued expenses and other current liabilities | 29,069 | 30,760 |
Deferred revenue | 4,255 | 9,456 |
Line of credit | 90,314 | 110,499 |
Notes payable - current | 2,164 | 1,167 |
Total current liabilities | 208,780 | 282,912 |
Notes payable and other long-term liabilities | 23,704 | 18,247 |
Deferred income taxes | 7,876 | 7,901 |
Total liabilities | 240,360 | 309,060 |
Commitments and contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, $0.001 par value; 5,000,000 shares authorized; none issued and outstanding | ' | ' |
Common stock, $0.001 par value; 30,000,000 shares authorized; 15,587,046 and 15,053,067 shares issued; and 12,324,653 and 11,790,674 shares outstanding | 16 | 15 |
Additional paid-in capital | 119,281 | 115,801 |
Treasury stock, at cost: 3,262,393 shares | -15,321 | -15,321 |
Accumulated other comprehensive income | 1,437 | 1,816 |
Retained earnings | 26,338 | 23,451 |
Total stockholders' equity | 131,751 | 125,762 |
Total liabilities and stockholders' equity | $372,111 | $434,822 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ' | ' |
Accounts receivable, allowances (in dollars) | $826 | $1,413 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 15,587,046 | 15,053,067 |
Common stock, shares outstanding | 12,324,653 | 11,790,674 |
Treasury stock, shares | 3,262,393 | 3,262,393 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' |
Net sales | $339,054 | $337,169 |
Cost of goods sold | 288,427 | 290,215 |
Gross profit | 50,627 | 46,954 |
Selling, general and administrative expenses | 44,760 | 44,076 |
Operating profit | 5,867 | 2,878 |
Interest expense, net | 943 | 772 |
Income before income taxes | 4,924 | 2,106 |
Income tax expense | 2,037 | 870 |
Net income | $2,887 | $1,236 |
Basic and Diluted Earnings Per Common Share | ' | ' |
Basic (in dollars per share) | $0.24 | $0.11 |
Diluted (in dollars per share) | $0.23 | $0.11 |
Weighted average number of common shares outstanding: | ' | ' |
Basic (in shares) | 11,932 | 11,479 |
Diluted (in shares) | 12,715 | 11,698 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' |
Net income | $2,887 | $1,236 |
Other comprehensive loss: | ' | ' |
Foreign currency translation adjustments | -379 | -233 |
Total other comprehensive loss | -379 | -233 |
Comprehensive income | $2,508 | $1,003 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Cash Flows From Operating Activities | ' | ' |
Net income | $2,887 | $1,236 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 2,760 | 2,965 |
Provision for deferred income taxes | 130 | 830 |
Excess tax benefit related to stock option exercises | -205 | -27 |
Non-cash stock-based compensation | 331 | 366 |
Change in operating assets and liabilities: | ' | ' |
Accounts receivable | 18,697 | 2,143 |
Inventories | 45,314 | -1,309 |
Prepaid expenses and other current assets | 4,360 | 2,533 |
Other assets | -647 | -4,748 |
Accounts payable | -52,110 | 13,152 |
Accrued expenses and other current liabilities | 1,621 | -3,516 |
Deferred revenue | -5,201 | -1,519 |
Total adjustments | 15,050 | 10,870 |
Net cash provided by operating activities | 17,937 | 12,106 |
Cash Flows From Investing Activities | ' | ' |
Purchases of property and equipment | -3,973 | -2,200 |
Net cash used in investing activities | -3,973 | -2,200 |
Cash Flows From Financing Activities | ' | ' |
Net payments under line of credit | -20,185 | -12,075 |
Payments for deferred financing costs | ' | -480 |
Capital lease proceeds | ' | 62 |
Borrowings under notes payable | 73 | 2,393 |
Payments under notes payable | -322 | -203 |
Change in book overdraft | 1,471 | 1,198 |
Payments of obligations under capital lease | -798 | -680 |
Proceeds from stock issued under stock option plans | 3,151 | 734 |
Excess tax benefit related to stock option exercises | 205 | 27 |
Common shares repurchased and held in treasury | ' | -1,558 |
Net cash used in financing activities | -16,405 | -10,582 |
Effect of foreign currency on cash flow | -149 | 64 |
Net change in cash and cash equivalents | -2,590 | -612 |
Cash and cash equivalents at beginning of the period | 9,992 | 6,535 |
Cash and cash equivalents at end of the period | 7,402 | 5,923 |
Supplemental Cash Flow Information | ' | ' |
Interest paid | 937 | 855 |
Income taxes paid | 2,379 | 190 |
Supplemental Non-Cash Investing and Financing Activities | ' | ' |
Financed purchase of property and equipment | 6,813 | 184 |
Deferred financing costs | ' | $253 |
Basis_of_Presentation_and_Desc
Basis of Presentation and Description of Company | 3 Months Ended |
Mar. 31, 2014 | |
Basis of Presentation and Description of Company | ' |
Basis of Presentation and Description of Company | ' |
1. Basis of Presentation and Description of Company | |
PCM, Inc. is a leading multi-vendor provider of technology products, services and solutions offered through our dedicated sales force and field service teams, direct marketing channels and a limited number of retail stores. Since our founding in 1987, we have served our customers by offering products and services purchased from vendors such as Apple, Cisco, Dell, Ingram Micro, HP, Lenovo, Microsoft and Tech Data. We add additional value by incorporating products and services into comprehensive solutions. Our sales and marketing efforts allow our vendor partners to reach multiple customer segments including commercial businesses, state, local and federal governments, educational institutions and individual consumers. | |
We have prepared the unaudited condensed consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and in conformity with accounting principles generally accepted in the United States of America, or GAAP, which requires us to make estimates and assumptions that affect amounts reported herein. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, our actual results reported in future periods may be affected by changes in those estimates. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations for interim financial reporting. In the opinion of management, all adjustments, consisting only of normal recurring items which are necessary for a fair presentation, have been included. The results for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC on March 14, 2014 and all of our other periodic filings, including Current Reports on Form 8-K, filed with the SEC after the end of our 2013 fiscal year and through the date of this report. | |
We operate under three reportable operating segments - Commercial, Public Sector and MacMall. Our segments are primarily aligned based upon their respective customer base. We include corporate related expenses such as legal, accounting, information technology, product management and other administrative costs that are not otherwise included in our reportable operating segments in Corporate & Other. | |
We sell primarily to customers in the United States, and maintain offices throughout the United States, as well as in Montreal, Canada and Manila, Philippines. In the three months ended March 31, 2014, we generated approximately 74% of our revenue in our Commercial segment, 15% of our revenue in our MacMall segment and 11% of our revenue in our Public Sector segment. | |
Our Commercial segment sells complex products, services and solutions to commercial businesses in the United States, using multiple sales channels, including a field relationship-based selling model, an outbound phone based sales force, a field services organization and an online extranet. | |
Our Public Sector segment consists of sales made primarily to federal, state and local governments, as well as educational institutions. The Public Sector segment utilizes an outbound phone and field relationship-based selling model, as well as contract and bid business development teams and an online extranet. | |
Our MacMall segment consists of sales made under our MacMall brand name via telephone, the Internet and four retail stores to consumers, small businesses and creative professionals, and sales made under our OnSale and eCost brand names via the Internet and inbound phone-based sales forces. | |
Goodwill_and_Intangible_Assets
Goodwill and Intangible Assets | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||
2. Goodwill and Intangible Assets | ||||||||||||||||||||||
Goodwill | ||||||||||||||||||||||
There was no change in goodwill during the three months ended March 31, 2014. Goodwill totaled $25.5 million as of March 31, 2014 and December 31, 2013, all of which related to our Commercial segment. | ||||||||||||||||||||||
Intangible Assets | ||||||||||||||||||||||
The following table sets forth the amounts recorded for intangible assets as of the periods presented (in thousands): | ||||||||||||||||||||||
Weighted | At March 31, 2014 | At December 31, 2013 | ||||||||||||||||||||
Average | ||||||||||||||||||||||
Estimated | ||||||||||||||||||||||
Useful Lives | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||
(years) | Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||
Patent, trademarks & URLs | 8 | $ | 3,858 | -1 | $ | 632 | $ | 3,226 | $ | 3,858 | -1 | $ | 594 | $ | 3,264 | |||||||
Customer relationships | 9 | 3,050 | 1,280 | 1,770 | 3,050 | 1,191 | 1,859 | |||||||||||||||
Non-compete agreements | 4 | 250 | 238 | 12 | 250 | 223 | 27 | |||||||||||||||
Total intangible assets | $ | 7,158 | $ | 2,150 | $ | 5,008 | $ | 7,158 | $ | 2,008 | $ | 5,150 | ||||||||||
(1) Included in the gross amounts for “Patent, trademarks & URLs” at March 31, 2014 and December 31, 2013 are $2.9 million of trademarks with indefinite useful lives that are not amortized. | ||||||||||||||||||||||
Amortization expense for intangible assets was approximately $0.1 million and $0.5 million for the three months ended March 31, 2014 and 2013. Estimated amortization expense for intangible assets in each of the next five years and thereafter is as follows: $0.4 million in the remainder of 2014, $0.5 million in 2015, $0.3 million in 2016, $0.3 million in 2017, $0.3 million in 2018 and $0.4 million thereafter. | ||||||||||||||||||||||
Line_of_Credit_and_Notes_Payab
Line of Credit and Notes Payable | 3 Months Ended |
Mar. 31, 2014 | |
Line of Credit and Notes Payable | ' |
Line of Credit and Notes Payable | ' |
3. Line of Credit and Notes Payable | |
We maintain an asset-based revolving credit facility that provides for, among other things, (i) a credit limit of $200 million; (ii) LIBOR interest rate options that we can enter into with no limit on the maximum outstanding principal balance which may be subject to a LIBOR interest rate option; and (iii) a maturity date of September 30, 2017. The credit facility, which functions as a working capital line of credit with a borrowing base of inventory and accounts receivable, including certain credit card receivables, and a portion of the value of certain real estate, also includes a monthly unused line fee of 0.25% per year on the amount, if any, by which the Maximum Credit, as defined in the agreement, then in effect, exceeds the average daily principal balance of the outstanding borrowings during the immediately preceding month. | |
The credit facility is collateralized by substantially all of our assets. In addition to the security interest required by the credit facility, certain of our vendors have security interests in some of our assets related to their products. The credit facility has as its single financial covenant a minimum fixed charge coverage ratio (FCCR) requirement in the event an FCCR triggering event has occurred. An FCCR triggering event is comprised of maintaining certain specified daily and average excess availability thresholds. In the event the FCCR covenant applies, the fixed charge coverage ratio is 1.0 to 1.0 calculated on a trailing four-quarter basis as of the end of the last quarter immediately preceding such FCCR triggering event date. At March 31, 2014, we were in compliance with our financial covenant under the credit facility. | |
Loan availability under the line of credit fluctuates daily and is affected by many factors, including eligible assets on-hand, opportunistic purchases of inventory and availability and our utilization of early-pay discounts. At March 31, 2014, we had $90.3 million of net working capital advances outstanding under the line of credit. At March 31, 2014, the maximum credit line was $200 million and we had $25.9 million available to borrow for working capital advances under the line of credit. | |
In connection with, and as part of, our revolving credit facility, we maintain a term note with a principal balance of $4.34 million, payable in equal monthly principal installments, amortized over 84 months, beginning on April 1, 2013, plus interest at the prime rate with a LIBOR option. In the event of a default, termination or non-renewal of the revolving credit facility upon the maturity thereof, the term loan is payable in its entirety upon demand by the lenders. At March 31, 2014, we had $3.7 million outstanding under the term note. The remaining balance of our term note matures as follows: $465,000 in the reminder of 2014, $620,000 annually in each of the years 2015 through 2018, and $775,000 thereafter. | |
In May 2013, we completed the purchase of real property adjacent to the building we own in Santa Monica, California for $3.0 million and financed $1.7 million of the purchase price with a sub-line under our revolving credit facility. The loan bears the same interest terms as our revolving credit facility. However, the principal amount is amortized monthly over an 84 month period similar to our term note, with monthly principal amortization of approximately $24,000 beginning in July 2014. Accordingly, at March 31, 2014, $217,500 and $1.5 million was included in our “Notes Payable — current” and “Notes payable and other long-term liabilities” on our Consolidated Balance Sheets. | |
In June 2011, we entered into a credit agreement to finance the acquisition and improvement of the real property we purchased in March 2011 in El Segundo, California. The credit agreement provides for a five year term and a 25 year straight-line, monthly principal repayment amortization period with a balloon payment at maturity. Interest is variable, indexed to Prime plus a spread of 0.375% or LIBOR plus a spread of 2.375% at our option, payable monthly. At March 31, 2014, we had $9.2 million outstanding under this credit agreement, which matures as follows: $0.3 million in the remainder of 2014, $0.4 million in 2015 and $8.5 million in 2016. The loan is secured by the real property and contains financial covenants substantially similar to those of our existing asset-based credit facility. | |
In December 2012, we completed the purchase of 7.9 acres of land for approximately $1.1 million with the intent to commence construction on a new cloud data center that we currently expect to open in the latter part of the second quarter of 2014. The Tier III facility is strategically located in a data center-centric development in New Albany, Ohio. The new facility will complement our two existing data centers and a 24/7 Integrated Operations Center (IOC) located in Atlanta, Georgia, enhancing our managed service offerings, including cloud services, data center hosting and management, remote monitoring and disaster recovery. In July 2013, we entered into a loan agreement for up to $7.725 million to finance the build out of the new data center. The loan agreement provides for draws during a construction period subsequent to reaching certain expenditure thresholds. Any outstanding borrowing during the construction period will bear interest at the prime rate plus 0.25%, followed by a five year term and a 25 year straight-line, monthly principal repayment amortization period with a balloon payment at maturity. Interest during the amortization period is variable, indexed to LIBOR plus a spread of 2.25%. At March 31, 2014, we had $2.3 million outstanding under this loan agreement. | |
At March 31, 2014, our effective weighted average annual interest rate on outstanding amounts under the credit facility and term note was 2.09%. | |
The carrying amounts of our line of credit borrowings and notes payable approximate their fair value based upon the current rates offered to us for obligations of similar terms and remaining maturities. | |
Income_Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2014 | |
Income Taxes | ' |
Income Taxes | ' |
4. Income Taxes | |
Accounting for Uncertainty in Income Taxes | |
At March 31, 2014, we had no unrecognized tax positions. For the three months ended March 31, 2014 and 2013, we did not recognize any interest or penalties for uncertain tax positions. There were also no accrued interest and penalties at March 31, 2014 and 2013. We do not anticipate any significant increases in our unrecognized tax benefits within the next twelve months. Further, since we did not have any unrecognized tax benefits at March 31, 2014, we do not anticipate any significant decreases within the next twelve months. | |
We are subject to U.S. and foreign income tax examinations for years subsequent to 2009, and state income tax examinations for years following 2008. However, to the extent allowable by law, the tax authorities may have a right to examine prior periods when net operating losses or tax credits were generated and carried forward for subsequent utilization, and make adjustments up to the amount of the net operating losses or credit carryforwards. | |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2014 | |
Stockholders' Equity | ' |
Stockholders' Equity | ' |
5. Stockholders’ Equity | |
In September 2012, our Board of Directors approved a $10 million increase to our discretionary stock repurchase program, which was originally adopted in October 2008 with an initial authorized maximum of $10 million. Under the program, the shares may be repurchased from time to time at prevailing market prices, through open market or unsolicited negotiated transactions, depending on market conditions. We expect that the repurchase of our common stock under the program will be financed with existing working capital and amounts available under our existing credit facility. The repurchased shares are held as treasury stock. No limit was placed on the duration of the repurchase program. There is no guarantee as to the exact number of shares that we will repurchase. Subject to applicable securities laws, repurchases may be made at such times and in such amounts as our management deems appropriate. The program can also be discontinued at any time management feels additional purchases are not warranted. | |
We did not repurchase any shares during the three months ended March 31, 2014. At March 31, 2014, we had $5.7 million available in stock repurchases under the program, subject to any limitations that may apply from time to time under our existing credit facility. | |
We have never paid cash dividends on our capital stock and our credit facility prohibits us from paying any cash dividends on our capital stock. Therefore, we do not currently anticipate paying dividends; we intend to retain any earnings to finance the growth and development of our business. | |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Earnings Per Share | ' | |||||||||
Earnings Per Share | ' | |||||||||
6. Earnings Per Share | ||||||||||
Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the reported periods. Diluted EPS reflects the potential dilution that could occur under the treasury stock method if stock options and other commitments to issue common stock were exercised, except in loss periods where the effect would be antidilutive. For the three months ended March 31, 2014 and 2013, approximately 428,000 and 1,189,000 shares of common stock underlying stock options have been excluded from the calculation of diluted EPS because the effect of their inclusion would be antidilutive. | ||||||||||
The reconciliation of the amounts used in the basic and diluted EPS computation was as follows (in thousands, except per share amounts): | ||||||||||
Net | Shares | Per Share | ||||||||
Income | Amounts | |||||||||
Three Months Ended March 31, 2014: | ||||||||||
Basic EPS | ||||||||||
Net income | $ | 2,887 | 11,932 | $ | 0.24 | |||||
Effect of dilutive securities | ||||||||||
Dilutive effect of stock options | — | 783 | ||||||||
Diluted EPS | ||||||||||
Adjusted net income | $ | 2,887 | 12,715 | $ | 0.23 | |||||
Three Months Ended March 31, 2013: | ||||||||||
Basic EPS | ||||||||||
Net income | $ | 1,236 | 11,479 | $ | 0.11 | |||||
Effect of dilutive securities | ||||||||||
Dilutive effect of stock options | — | 219 | ||||||||
Diluted EPS | ||||||||||
Adjusted net income | $ | 1,236 | 11,698 | $ | 0.11 | |||||
Segment_Information
Segment Information | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
Segment Information | ' | ||||||||||||||||
7. Segment Information | |||||||||||||||||
Summarized segment information for our continuing operations for the periods presented is as follows (in thousands): | |||||||||||||||||
Commercial | Public | MacMall | Corporate & | Consolidated | |||||||||||||
Sector | Other | ||||||||||||||||
Three Months Ended March 31, 2014 | |||||||||||||||||
Net sales | $ | 252,121 | $ | 36,420 | $ | 50,515 | $ | (2 | ) | $ | 339,054 | ||||||
Gross profit | 41,534 | 3,542 | 5,553 | (2 | ) | 50,627 | |||||||||||
Depreciation and amortization expense(1) | 612 | 13 | 209 | 1,926 | 2,760 | ||||||||||||
Operating profit | 17,658 | 574 | 560 | (12,925 | ) | 5,867 | |||||||||||
Three Months Ended March 31, 2013 | |||||||||||||||||
Net sales | $ | 251,368 | $ | 31,026 | $ | 54,840 | $ | (65 | ) | $ | 337,169 | ||||||
Gross profit | 37,896 | 2,895 | 6,011 | 152 | 46,954 | ||||||||||||
Depreciation and amortization expense(1) | 1,045 | 15 | 214 | 1,691 | 2,965 | ||||||||||||
Operating profit | 14,767 | 124 | 426 | (12,439 | ) | 2,878 | |||||||||||
(1) Primary fixed assets relating to network and servers are managed by the Corporate headquarters. As such, depreciation expense relating to such assets is included as part of Corporate & Other. | |||||||||||||||||
As of March 31, 2014 and December 31, 2013, we had total consolidated assets of $372.1 million and $434.8 million. Our management does not have available to them and does not use total assets measured at the segment level in allocating resources. Therefore, such information relating to segment assets is not provided herein. | |||||||||||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments and Contingencies | ' |
Commitments and Contingencies | ' |
8. Commitments and Contingencies | |
Total rent expense under our operating leases, net of sublease income, was $1.3 million in each of the three month periods ended March 31, 2014 and 2013. Some of our leases contain renewal options and escalation clauses, and require us to pay taxes, insurance and maintenance costs. | |
Legal Proceedings | |
We are not currently a party to any material legal proceedings, other than ordinary routine litigation incidental to the business. From time to time, we receive claims of and become subject to consumer protection, employment, intellectual property and other litigation related to the conduct of our business. Any such litigation could be costly and time consuming and could divert our management and key personnel from our business operations. In connection with any such litigation, we may be subject to significant damages or equitable remedies relating to the operation of our business. Any such litigation may materially harm our business, results of operations and financial condition. | |
*** |
Goodwill_and_Intangible_Assets1
Goodwill and Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||||||||
Mar. 31, 2014 | ||||||||||||||||||||||
Goodwill and Intangible Assets | ' | |||||||||||||||||||||
Schedule of amounts recorded for intangible assets | ' | |||||||||||||||||||||
The following table sets forth the amounts recorded for intangible assets as of the periods presented (in thousands): | ||||||||||||||||||||||
Weighted | At March 31, 2014 | At December 31, 2013 | ||||||||||||||||||||
Average | ||||||||||||||||||||||
Estimated | ||||||||||||||||||||||
Useful Lives | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||||
(years) | Amount | Amortization | Amount | Amount | Amortization | Amount | ||||||||||||||||
Patent, trademarks & URLs | 8 | $ | 3,858 | -1 | $ | 632 | $ | 3,226 | $ | 3,858 | -1 | $ | 594 | $ | 3,264 | |||||||
Customer relationships | 9 | 3,050 | 1,280 | 1,770 | 3,050 | 1,191 | 1,859 | |||||||||||||||
Non-compete agreements | 4 | 250 | 238 | 12 | 250 | 223 | 27 | |||||||||||||||
Total intangible assets | $ | 7,158 | $ | 2,150 | $ | 5,008 | $ | 7,158 | $ | 2,008 | $ | 5,150 | ||||||||||
(1) Included in the gross amounts for “Patent, trademarks & URLs” at March 31, 2014 and December 31, 2013 are $2.9 million of trademarks with indefinite useful lives that are not amortized. | ||||||||||||||||||||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||||||
Mar. 31, 2014 | ||||||||||
Earnings Per Share | ' | |||||||||
Schedule of reconciliation of the amounts used in the basic and diluted EPS computation | ' | |||||||||
The reconciliation of the amounts used in the basic and diluted EPS computation was as follows (in thousands, except per share amounts): | ||||||||||
Net | Shares | Per Share | ||||||||
Income | Amounts | |||||||||
Three Months Ended March 31, 2014: | ||||||||||
Basic EPS | ||||||||||
Net income | $ | 2,887 | 11,932 | $ | 0.24 | |||||
Effect of dilutive securities | ||||||||||
Dilutive effect of stock options | — | 783 | ||||||||
Diluted EPS | ||||||||||
Adjusted net income | $ | 2,887 | 12,715 | $ | 0.23 | |||||
Three Months Ended March 31, 2013: | ||||||||||
Basic EPS | ||||||||||
Net income | $ | 1,236 | 11,479 | $ | 0.11 | |||||
Effect of dilutive securities | ||||||||||
Dilutive effect of stock options | — | 219 | ||||||||
Diluted EPS | ||||||||||
Adjusted net income | $ | 1,236 | 11,698 | $ | 0.11 |
Segment_Information_Tables
Segment Information (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
Schedule of segment information for the entity's continuing operations | ' | ||||||||||||||||
Summarized segment information for our continuing operations for the periods presented is as follows (in thousands): | |||||||||||||||||
Commercial | Public | MacMall | Corporate & | Consolidated | |||||||||||||
Sector | Other | ||||||||||||||||
Three Months Ended March 31, 2014 | |||||||||||||||||
Net sales | $ | 252,121 | $ | 36,420 | $ | 50,515 | $ | (2 | ) | $ | 339,054 | ||||||
Gross profit | 41,534 | 3,542 | 5,553 | (2 | ) | 50,627 | |||||||||||
Depreciation and amortization expense(1) | 612 | 13 | 209 | 1,926 | 2,760 | ||||||||||||
Operating profit | 17,658 | 574 | 560 | (12,925 | ) | 5,867 | |||||||||||
Three Months Ended March 31, 2013 | |||||||||||||||||
Net sales | $ | 251,368 | $ | 31,026 | $ | 54,840 | $ | (65 | ) | $ | 337,169 | ||||||
Gross profit | 37,896 | 2,895 | 6,011 | 152 | 46,954 | ||||||||||||
Depreciation and amortization expense(1) | 1,045 | 15 | 214 | 1,691 | 2,965 | ||||||||||||
Operating profit | 14,767 | 124 | 426 | (12,439 | ) | 2,878 | |||||||||||
(1) Primary fixed assets relating to network and servers are managed by the Corporate headquarters. As such, depreciation expense relating to such assets is included as part of Corporate & Other. |
Basis_of_Presentation_and_Desc1
Basis of Presentation and Description of Company (Details) | 3 Months Ended |
Mar. 31, 2014 | |
segment | |
Basis of Presentation and Description of Company | ' |
Number of reportable operating segments | 3 |
Commercial | ' |
Basis of Presentation and Description of Company | ' |
Revenue percentage | 74.00% |
MacMall | ' |
Basis of Presentation and Description of Company | ' |
Revenue percentage | 15.00% |
Number of retail stores | 4 |
Public Sector | ' |
Basis of Presentation and Description of Company | ' |
Revenue percentage | 11.00% |
Goodwill_and_Intangible_Assets2
Goodwill and Intangible Assets (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | |
Goodwill | ' | ' |
Change in goodwill | $0 | ' |
Goodwill totaled | 25,510,000 | 25,510,000 |
Commercial | ' | ' |
Goodwill | ' | ' |
Goodwill totaled | $25,500,000 | $25,500,000 |
Goodwill_and_Intangible_Assets3
Goodwill and Intangible Assets (Details 2) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2014 | Dec. 31, 2013 |
Intangible Assets | ' | ' |
Gross Amount | $7,158 | $7,158 |
Accumulated Amortization | 2,150 | 2,008 |
Net Amount | 5,008 | 5,150 |
Patent, trademarks & URLs | ' | ' |
Intangible Assets | ' | ' |
Weighted Average Estimated Useful Lives | '8 years | ' |
Gross Amount | 3,858 | 3,858 |
Accumulated Amortization | 632 | 594 |
Net Amount | 3,226 | 3,264 |
Customer relationships | ' | ' |
Intangible Assets | ' | ' |
Weighted Average Estimated Useful Lives | '9 years | ' |
Gross Amount | 3,050 | 3,050 |
Accumulated Amortization | 1,280 | 1,191 |
Net Amount | 1,770 | 1,859 |
Non-compete agreements | ' | ' |
Intangible Assets | ' | ' |
Weighted Average Estimated Useful Lives | '4 years | ' |
Gross Amount | 250 | 250 |
Accumulated Amortization | 238 | 223 |
Net Amount | $12 | $27 |
Goodwill_and_Intangible_Assets4
Goodwill and Intangible Assets (Details 3) (Trademarks, USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Trademarks | ' | ' |
Intangible assets | ' | ' |
Amount included in the total for Patents, trademarks and URLs | $2.90 | $2.90 |
Goodwill_and_Intangible_Assets5
Goodwill and Intangible Assets (Details 4) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Goodwill and Intangible Assets | ' | ' |
Total amortization expenses for intangible assets | $0.10 | $0.50 |
Estimated amortization expenses for intangible assets | ' | ' |
Remainder of 2014 | 0.4 | ' |
2015 | 0.5 | ' |
2016 | 0.3 | ' |
2017 | 0.3 | ' |
2018 | 0.3 | ' |
Thereafter | $0.40 | ' |
Line_of_Credit_and_Notes_Payab1
Line of Credit and Notes Payable (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | 31-May-13 | Dec. 31, 2012 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | Jun. 30, 2011 | Mar. 31, 2014 | Mar. 31, 2014 | Mar. 31, 2014 | 31-May-13 | Jul. 31, 2013 | Mar. 31, 2014 | Jul. 31, 2013 | Jul. 31, 2013 | Jul. 31, 2013 |
item | acre | Notes payable - current | Notes payable and other long-term liabilities | Asset-based revolving credit facility | Term note | Credit agreement | Credit agreement | Credit agreement | Credit agreement | Subline under revolving credit facility | Loan agreement to finance build out of new data center | Loan agreement to finance build out of new data center | Loan agreement to finance build out of new data center | Loan agreement to finance build out of new data center | Loan agreement to finance build out of new data center | |||
item | Prime rate | LIBOR | Maximum | Prime rate | LIBOR | |||||||||||||
Line of Credit and Notes Payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit limit | ' | ' | ' | ' | ' | ' | $200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unused line fee (as a percent) | ' | ' | ' | ' | ' | ' | 0.25% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fixed charge coverage ratio | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of trailing fiscal quarters used in calculating the fixed charge coverage ratio under debt covenants | ' | ' | ' | ' | ' | ' | 4 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net working capital advances outstanding | 90,314,000 | 110,499,000 | ' | ' | ' | ' | 90,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum credit line | ' | ' | ' | ' | ' | ' | 200,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount available to borrow for working capital advances | ' | ' | ' | ' | ' | ' | 25,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal balance of debt | ' | ' | ' | ' | ' | ' | ' | 4,340,000 | ' | ' | ' | ' | ' | ' | ' | 7,725,000 | ' | ' |
Principal repayment amortization period | ' | ' | ' | ' | ' | ' | ' | '84 months | '25 years | ' | ' | ' | '84 months | '25 years | ' | ' | ' | ' |
Outstanding amount of debt | ' | ' | ' | ' | ' | ' | ' | 3,700,000 | ' | ' | ' | ' | ' | ' | 2,300,000 | ' | ' | ' |
Maturities of remaining balance of term note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Remainder of 2014 | ' | ' | ' | ' | ' | ' | ' | 465,000 | ' | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' |
2015 | ' | ' | ' | ' | ' | ' | ' | 620,000 | ' | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' |
2016 | ' | ' | ' | ' | ' | ' | ' | 620,000 | ' | 8,500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
2017 | ' | ' | ' | ' | ' | ' | ' | 620,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
2018 | ' | ' | ' | ' | ' | ' | ' | 620,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Thereafter | ' | ' | ' | ' | ' | ' | ' | 775,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Additional disclosures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Purchase price of real property | ' | ' | 3,000,000 | 1,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Real property purchase amount financed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,700,000 | ' | ' | ' | ' | ' |
Monthly principal amortization amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 24,000 | ' | ' | ' | ' | ' |
Real property loan | ' | ' | ' | ' | 217,500 | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Borrowing term | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | '5 years | ' | ' | ' | ' |
Variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Prime | 'LIBOR | ' | ' | ' | ' | 'Prime | 'LIBOR |
Percentage points added to the reference rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.38% | 2.38% | ' | ' | ' | ' | 0.25% | 2.25% |
Amount outstanding under credit agreement | ' | ' | ' | ' | ' | ' | ' | ' | ' | $9,200,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Area of land purchased | ' | ' | ' | 7.9 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of existing data centers | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Effective weighted average annual interest rate (as a percent) | ' | ' | ' | ' | ' | ' | 2.09% | 2.09% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income_Taxes_Details
Income Taxes (Details) (USD $) | Mar. 31, 2014 | Mar. 31, 2013 |
In Millions, unless otherwise specified | ||
Operating loss carryforwards | ' | ' |
Unrecognized tax positions | $0 | ' |
Accrued interest and penalties | $0 | $0 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 1 Months Ended | 3 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2012 | Oct. 31, 2008 | Mar. 31, 2014 |
Stockholders' Equity | ' | ' | ' |
Increase in maximum amount approved under common stock repurchase program | $10 | ' | ' |
Maximum amount authorized under the common stock repurchase program | ' | 10 | ' |
Available authorized repurchase amount | ' | ' | $5.70 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Earnings Per Share | ' | ' |
Shares of common stock underlying stock options excluded from the calculation of diluted EPS | 428,000 | 1,189,000 |
Basic EPS - Net Income | ' | ' |
Net income | $2,887 | $1,236 |
Shares | 11,932,000 | 11,479,000 |
Per Share Amounts (in dollars per share) | $0.24 | $0.11 |
Effect of dilutive securities - Dilutive effect of stock options | ' | ' |
Shares | 783,000 | 219,000 |
Diluted EPS - Adjusted net income | ' | ' |
Adjusted net income | $2,887 | $1,236 |
Shares | 12,715,000 | 11,698,000 |
Per Share Amounts (in dollars per share) | $0.23 | $0.11 |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 |
Segment Information | ' | ' | ' |
Net sales | $339,054 | $337,169 | ' |
Gross profit | 50,627 | 46,954 | ' |
Depreciation and amortization expense | 2,760 | 2,965 | ' |
Operating profit | 5,867 | 2,878 | ' |
Total consolidated assets | 372,111 | ' | 434,822 |
Commercial | ' | ' | ' |
Segment Information | ' | ' | ' |
Net sales | 252,121 | 251,368 | ' |
Gross profit | 41,534 | 37,896 | ' |
Depreciation and amortization expense | 612 | 1,045 | ' |
Operating profit | 17,658 | 14,767 | ' |
Public Sector | ' | ' | ' |
Segment Information | ' | ' | ' |
Net sales | 36,420 | 31,026 | ' |
Gross profit | 3,542 | 2,895 | ' |
Depreciation and amortization expense | 13 | 15 | ' |
Operating profit | 574 | 124 | ' |
MacMall | ' | ' | ' |
Segment Information | ' | ' | ' |
Net sales | 50,515 | 54,840 | ' |
Gross profit | 5,553 | 6,011 | ' |
Depreciation and amortization expense | 209 | 214 | ' |
Operating profit | 560 | 426 | ' |
Corporate and Other | ' | ' | ' |
Segment Information | ' | ' | ' |
Net sales | -2 | -65 | ' |
Gross profit | -2 | 152 | ' |
Depreciation and amortization expense | 1,926 | 1,691 | ' |
Operating profit | ($12,925) | ($12,439) | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2013 |
Commitments and Contingencies | ' | ' |
Total rent expense under operating leases, net of sublease income | $1.30 | $1.30 |