Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 04, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | PCM, INC. | |
Entity Central Index Key | 937,941 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 12,536,229 | |
Trading Symbol | PCMI | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 7,771 | $ 7,172 |
Accounts receivable, net of allowances of $900 and $832 | 354,301 | 358,949 |
Inventories | 66,417 | 80,872 |
Prepaid expenses and other current assets | 12,301 | 16,250 |
Asset held for sale | 5,812 | 5,812 |
Total current assets | 446,602 | 469,055 |
Property and equipment, net | 59,982 | 56,352 |
Goodwill | 83,432 | 83,388 |
Intangible assets, net | 14,023 | 15,074 |
Deferred income taxes | 919 | 947 |
Investment and other assets | 6,087 | 4,994 |
Total assets | 611,045 | 629,810 |
Current liabilities: | ||
Accounts payable | 241,470 | 276,524 |
Accrued expenses and other current liabilities | 64,722 | 63,403 |
Deferred revenue | 5,114 | 10,960 |
Line of credit | 120,634 | 107,396 |
Notes payable - current | 10,514 | 11,168 |
Note payable related to asset held for sale | 4,552 | 4,601 |
Total current liabilities | 447,006 | 474,052 |
Notes payable | 21,331 | 18,750 |
Other long-term liabilities | 3,805 | 7,039 |
Deferred income taxes | 1,556 | 1,498 |
Total liabilities | 473,698 | 501,339 |
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; 17,034,594 and 16,465,567 shares issued; 12,536,229 and 11,967,202 shares outstanding | 17 | 16 |
Additional paid-in capital | 132,611 | 127,777 |
Treasury stock, at cost: 4,498,365 shares | (26,934) | (26,934) |
Accumulated other comprehensive loss | (531) | (639) |
Retained earnings | 32,184 | 28,251 |
Total stockholders' equity | 137,347 | 128,471 |
Total liabilities and stockholders' equity | $ 611,045 | $ 629,810 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 900 | $ 832 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 17,034,594 | 16,465,567 |
Common stock, shares outstanding | 12,536,229 | 11,967,202 |
Treasury stock, shares | 4,498,365 | 4,498,365 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Net sales | $ 524,399 | $ 498,029 |
Cost of goods sold | 446,194 | 427,722 |
Gross profit | 78,205 | 70,307 |
Selling, general and administrative expenses | 73,732 | 68,788 |
Operating profit | 4,473 | 1,519 |
Interest expense, net | 1,653 | 1,474 |
Equity income from unconsolidated affiliate | 138 | |
Income before income taxes | 2,958 | 45 |
Income tax benefit | 1,069 | 111 |
Net income | $ 4,027 | $ 156 |
Basic and Diluted Earnings Per Common Share | ||
Basic | $ 0.33 | $ 0.01 |
Diluted | $ 0.30 | $ 0.01 |
Weighted average number of common shares outstanding: | ||
Basic | 12,356,000 | 11,871,000 |
Diluted | 13,452,000 | 12,261,000 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 4,027 | $ 156 |
Other comprehensive income: | ||
Foreign currency translation adjustments | 108 | 622 |
Total other comprehensive income | 108 | 622 |
Comprehensive income | $ 4,135 | $ 778 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash Flows From Operating Activities | ||
Net income | $ 4,027 | $ 156 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 3,522 | 4,072 |
Equity income from unconsolidated affiliate | (138) | |
Provision for deferred income taxes | (387) | (69) |
Non-cash stock-based compensation | 515 | 511 |
Change in operating assets and liabilities: | ||
Accounts receivable | 4,648 | (3,545) |
Inventories | 14,455 | (1,270) |
Prepaid expenses and other current assets | 3,967 | 6,631 |
Other assets | (367) | (493) |
Accounts payable | (38,704) | 41,242 |
Accrued expenses and other current liabilities | 784 | 4,177 |
Deferred revenue | (5,846) | (7,272) |
Total adjustments | (17,551) | 43,984 |
Net cash provided by (used in) operating activities | (13,524) | 44,140 |
Cash Flows From Investing Activities | ||
Purchases of property and equipment | (6,033) | (785) |
Acquisition of Acrodex, net of cash acquired | (171) | |
Acquisition of assets of Systemax | (400) | |
Net cash used in investing activities | (6,033) | (1,356) |
Cash Flows From Financing Activities | ||
Net borrowings (payments) under line of credit | 13,238 | (28,588) |
Borrowing under note payable | 3,139 | |
Payments under notes payable | (1,261) | (1,242) |
Change in book overdraft | 3,648 | (9,723) |
Payments of earn-out liability | (2,813) | (2,887) |
Payments of obligations under capital lease | (521) | (598) |
Proceeds from capital lease obligations | 587 | |
Proceeds from stock issued under stock option plans | 4,428 | 212 |
Payment for deferred financing costs | (597) | (403) |
Payment of taxes related to net-settled stock awards | (81) | |
Common shares repurchased and held in treasury | (1,721) | |
Net cash provided by (used in) financing activities | 19,767 | (44,950) |
Effect of foreign currency on cash flow | 389 | 123 |
Net change in cash and cash equivalents | 599 | (2,043) |
Cash and cash equivalents at beginning of the period | 7,172 | 11,176 |
Cash and cash equivalents at end of the period | 7,771 | 9,133 |
Supplemental Cash Flow Information | ||
Interest paid | 1,341 | 1,253 |
Income taxes paid (refund), net | 2,346 | (558) |
Supplemental Non-Cash Investing and Financing Activities | ||
Financed and accrued purchases of property and equipment | $ 44 | $ 582 |
Basis of Presentation and Descr
Basis of Presentation and Description of Company | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
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 solutions, including hardware products, software and services, offered through our dedicated sales force and field service teams and direct marketing channels. Since our founding in 1987, we have served our customers by offering products and services from vendors such as Apple, Cisco, Dell, Hewlett Packard Enterprise, HP Inc., Ingram Micro, 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 small, medium and enterprise businesses, state, local and federal governments and educational institutions. 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, 2016 filed with the SEC. In connection with our entrance into the United Kingdom (“UK”) market in the first quarter of 2017, we formed a new operating segment called United Kingdom. As a result, we currently operate in four reportable segments: Commercial, Public Sector, Canada and United Kingdom. Our reportable operating segments are primarily aligned based upon our reporting of results as used by our chief operating decision maker in evaluating the operating results and performance of our company. 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 Canada, and maintain offices in the United States and Canada, as well as in the Philippines and the United Kingdom. In the three months ended March 31, 2017, we generated approximately 78% of our revenue in our Commercial segment, 13% of our revenue in our Public Sector segment and 9% of our revenue in our Canada segment. Our United Kingdom segment did not have sales transactions in the three months ended March 31, 2017. Our Commercial segment sells complex technology 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 online extranets. 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 Canada segment consists of sales made to customers in the Canadian market beginning as of the respective dates of our acquisition of Acrodex and certain assets of Systemax in October and December 2015, respectively. Our United Kingdom segment consists of results of our new subsidiary, PCM Technology Solutions UK, Ltd. (“PCM UK”), which serves as our hub for the UK and the rest of Europe. In connection with our En Pointe transaction, we have been required to transfer certain contracts, based on various supplier diversity policies and requirements of certain customers, to partners which qualify for certification from third party diversity organizations as minority or women owned businesses. We have transferred these contracts to a partner in which we hold a 49% passive equity interest. We have accounted for our investment in this entity using the equity method of accounting beginning in the first quarter of 2017. We refer to this entity as the non-controlled entity or NCE. As a result, our financial results starting in the first quarter of 2017 do not consolidate the financial results of sales made under such customer contracts which we purchased in the En Pointe acquisition. We record our results from our 49% equity interest in the NCE’s operations as “Equity income from unconsolidated affiliate” in our consolidated statement of operations. |
New Accounting Standards
New Accounting Standards | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
New Accounting Standards | 2. New Accounting Standards In March, 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation (Topic 718) - Improvements to Employee Share-Based Accounting,” which simplifies several aspects of accounting for employee share-based payment transactions, including the accounting for income taxes, the calculation of diluted earnings per share, forfeitures, and statutory state tax withholding requirements, as wells as classification in statement of cash flows. We adopted ASU 2016-09 effective January 1, 2017 using the prospective method to recognize excess tax benefits and deficits in our consolidated statements of operations, and using the retrospective method relating to classification of excess tax benefits on our consolidated statements of cash flows. Also, we made an accounting policy election, on a modified prospective basis, to recognize forfeitures as they occur and cease estimating expected forfeitures. As a result of adopting ASU 2016-09, we recorded a credit to income tax expense of $2.3 million related to the excess tax benefits associated with the exercise of stock options on our consolidated statement of operations for the three months ended March 31, 2017, and we reclassified $14,000 from cash flows from financing activities to cash flows from operating activities for the three months ended March 31, 2016 to conform to our current period presentation. Also, we recorded a $94,000 cumulative effect adjustment to retained earnings as of January 1, 2017 as a result of our accounting policy election relating to forfeitures. We anticipate ongoing income tax expense volatility as a result of the adoption of this standard. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” which requires lessees to recognize right-of-use assets and lease liability, initially measured at present value of the lease payments, on its balance sheet for leases with terms longer than 12 months and classified as either financing or operating leases. ASU 2016-02 requires a modified retrospective transition approach for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, and provides certain practical expedients that companies may elect. ASU 2016-02 is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently evaluating the effects that the adoption of ASU 2016-02 will have on our consolidated financial statements. In November 2015, the FASB issued ASU No. 2015-17, “Balance Sheet Classification of Deferred Taxes,” which requires all deferred tax assets and liabilities, and any related valuation allowance, to be classified as non-current on the balance sheet. The classification change for all deferred taxes as non-current simplifies entities’ processes as it eliminates the need to separately identify the net current and net non-current deferred tax asset or liability in each jurisdiction and allocate valuation allowances. We adopted ASU 2015-17 effective January 1, 2017 on a retrospective basis. As a result of the adoption, we reclassified current deferred tax assets of $3.6 million and current deferred tax liabilities of $0.6 million included in our balance sheet as of December 31, 2016 to noncurrent. There was no impact on our results of operations or our cash flows as a result of the adoption of ASU 2015-17. In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330) - Simplifying the Measurement of Inventory,” which requires that inventory within the scope of the guidance be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 applies to inventory that is measured using first-in, first-out (FIFO) or average cost. We adopted ASU 2015-11 effective January 1, 2017 and it did not have a material effect on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which, along with amendments issued in 2015 and 2016, will replace most existing revenue recognition guidance under GAAP and eliminate industry specific guidance. The core principle of the new guidance is that an entity should recognize revenue for the transfer of goods and services equal to an amount it expects to be entitled to receive for those goods and services. The ASU, as amended, will be effective beginning in the first quarter of 2018, and allows for early adoption in the first quarter of 2017. The new guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively by recognizing the cumulative effect of initially applying the guidance to all contracts existing at the date of initial application (the modified retrospective method). We are currently assessing all potential impacts of the standard on our contract portfolio by reviewing the current accounting policies and practices utilized to identify potential differences that would result from applying the requirements of the new standard to our various contracts. We will adopt the guidance on January 1, 2018 and will not early adopt. We currently prefer to adopt the standard using the full retrospective method; however, our ability to do so is dependent on many factors, including the completion of our analysis of information necessary to recast prior period financial statements. Based on these and other factors, we may decide to use the cumulative catch-up transition method. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | 3. Acquisitions Stratiform On December 29, 2016, we completed the acquisition of Stratiform, Inc. for C$2.1 million in cash (or $1.6 million). Stratiform is an industry-leading provider of cloud IT solutions that include consulting, professional and managed services to clients across Canada. As part of the Stratiform acquisition, we agreed to pay certain contingent earn-out consideration related to years ending December 31, 2017, 2018 and 2019 (each year the “measurement period”), and payable 90 days in arrears following each measurement period. We have accrued approximately $0.7 million of contingent earn-out consideration, of which we have included $0.3 million in each of “Accrued expenses and other current liabilities” and “Other long-term liabilities” on our Condensed Consolidated Balance Sheet as of March 31, 2017. Systemax On December 1, 2015, we completed the acquisition of certain Business to Business (B2B) assets of Systemax’s North American Technology Group (NATG) for $14 million in cash. In January 2016, we exercised an option in our purchase agreement and paid $0.4 million related to our purchase of additional customer list information, which was recorded as an increase to goodwill associated with the Systemax assets acquisition. Acrodex On October 26, 2015, PCM Sales Canada, Inc., a wholly-owned subsidiary of PCM, Inc., completed the acquisition of all the outstanding common stock of Acrodex, Inc. (“Acrodex”) for a total purchase price of approximately C$16.7 million (or $13.6 million, net of cash acquired). In March 2016, we paid an additional $0.2 million related to adjustments to the net asset value as defined in the agreement, which was recorded as an increase to goodwill resulting from the Acrodex acquisition. En Pointe On April 1, 2015, we completed the acquisition of certain assets of En Pointe, one of the nation’s largest independent IT solutions providers, headquartered in Southern California. En Pointe is our largest acquisition to date based on revenues, and is expected to significantly enhance our relationships with several key vendor partners, provide incremental advanced technical certifications and operational expertise in key practice areas, and bring the consolidated business significantly increased scale . |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment In January 2017, we completed the purchase of real property in Woodridge, Illinois for approximately $3.1 million in cash. The real property includes approximately 29,344 square feet of office space. In September 2015, we listed our real property located in Irvine, California (the “Irvine Property”) for sale. Under a broker agreement, the Irvine Property is available for immediate sale in its present condition. As a result, we classified $5.8 million related to the Irvine Property, stated at lower of cost or fair value, as “Property held for sale” and $4.6 million related to the mortgage on the Irvine Property as “Note payable related to asset held for sale” on our Condensed Consolidated Balance Sheet as of March 31, 2017. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 5. Goodwill and Intangible Assets Goodwill The change in the carrying amounts of indefinite-lived goodwill was as follows (in thousands) by segment: Commercial Public Sector Canada Total Balance at December 31, 2016 $ 69,735 $ 8,322 $ 5,331 $ 83,388 Foreign currency translation — — 44 44 Balance at March 31, 2017 $ 69,735 $ 8,322 $ 5,375 $ 83,432 Intangible Assets The following table sets forth the amounts recorded for intangible assets (in thousands): Weighted Average Estimated Useful At March 31, 2017 At December 31, 2016 Lives (years) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Patent, trademarks, trade names & URLs 4 $ 7,706 (1) $ 2,218 $ 5,488 $ 7,691 (1) $ 1,901 $ 5,790 Customer relationships 15 13,389 6,100 7,289 13,369 5,480 7,889 Non-compete agreements 4 2,363 1,117 1,246 2,361 966 1,395 Total intangible assets $ 23,458 $ 9,435 $ 14,023 $ 23,421 $ 8,347 $ 15,074 (1) Includes $2.9 million of trademarks with indefinite useful lives that are not amortized. Amortization expense for intangible assets was approximately $1.1 million and $1.5 million for the three months ended March 31, 2017 and 2016. Estimated amortization expense for intangible assets in each of the next five years and thereafter is as follows: $3.0 million in the remainder of 2017, $2.9 million in 2018, $1.8 million in 2019, $1.3 million in 2020, $0.5 million in 2021 and $1.6 million thereafter. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt The following table sets forth our outstanding debt as of the periods presented (in thousands): March 31, December 31, 2017 2016 Revolving credit facility, LIBOR plus 1.50%, maturing in March 2021 $ 120,634 $ 107,396 Note payable, LIBOR plus 1.50%, maturing in March 2021 — 8,293 Note payable, LIBOR plus 1.50%, maturing in March 2021 12,374 1,392 Note payable, greater of 2% or LIBOR plus 2.15%, maturing in April 2022 4,552 (1) 4,601 (1) Note payable, LIBOR plus 2.25%, maturing in January 2022 4,079 4,137 Notes payable, 4.12%, 4.33% and 4.60%, maturing in March 2017 — 525 Note payable, LIBOR plus 2.25%, maturing in January 2020 7,030 7,107 Note payable, Prime plus 0.375% or LIBOR plus 2.375%, maturing in November 2017 8,012 8,113 Other note payable, maturing in August 2018 350 351 Total 157,031 141,915 Less: Total current debt 135,700 123,165 Total non-current debt $ 21,331 $ 18,750 (1) This note payable, related to the Irvine Property, has been presented on our Condensed Consolidated Balance Sheet as “Note payable related to asset held for sale” and is included as current debt. See Note 4 above for more information regarding the Irvine Property. The following table sets forth the maturities of our outstanding debt balance as of March 31, 2017 (in thousands): Remainder of 2017 2018 2019 2020 2021 Thereafter Total Total long-term debt obligations $ 14,660 $ 2,327 $ 8,507 $ 2,018 $ 5,011 $ 3,874 $ 36,397 Revolving credit facility 120,634 — — — — — 120,634 Total $ 135,294 $ 2,327 $ 8,507 $ 2,018 $ 5,011 $ 3,874 $ 157,031 Line of Credit and Related Notes We maintain a 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. On January 19, 2016, we entered into a Fourth Amended and Restated Loan and Security Agreement (the “Fourth Amended Loan Agreement”) with certain lenders and Wells Fargo Capital Finance, LLC as administrative and collateral agent (the “Lenders”). On July 7, 2016, we entered into a First Amendment to the Fourth Amended Loan Agreement (the “First Amendment”) with the Lenders and on February 24, 2017, we entered into a Second Amendment to the Fourth Amended Loan Agreement (the “Second Amendment”) with the Lenders. As amended to date, the terms of our credit facility provide for (i) a Maximum Credit, as defined in the credit facility, of $345,000,000; (ii) a sub-line of up to C$40,000,000 as the Canadian Maximum Credit ((i) and (ii) collectively the “Revolving Line”); (iii) a Maturity Date of March 19, 2021; (iv) interest on outstanding balance under the Canadian Maximum Credit based on the Canadian Base Rate (calculated as the greater of CDOR plus one percentage point and the “prime rate” for Canadian Dollar commercial loans, as further defined in the Fourth Amended Loan Agreement) or at the election of the Borrowers, based on the CDOR Rate, plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; and (v) interest on outstanding balance under the Maximum Credit based on the Eurodollar Rate plus a margin, depending on average excess availability under the revolving line, ranging from 1.50% to 1.75%. 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, 2017, 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, 2017, we had $115.5 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 sub-line with a limit of $12.5 million secured by our properties located in Santa Monica, California and has a monthly principal amortization of $149,083. Also on July 7, 2016, we entered into a Credit Agreement with Castle Pines Capital LLC (“Castle Pines”), which provides for a credit facility (“Channel Finance Facility”) to finance the purchase of inventory from a list of approved vendors. The aggregate availability under the Channel Finance Facility is variable and discretionary, but has initially been set at $35 million. Each advance under the Channel Finance Facility will be made directly to an approved vendor and must be repaid on the earlier of (i) the payment due date as set by Castle Pines or (ii) the date (if any) when the inventory is lost, stolen or damaged. No interest accrues on advances paid on or prior to payment due date. The Channel Finance Facility is secured by a lien on certain of our assets, subject to an intercreditor arrangement with the Lenders. The Channel Finance Facility has an initial term of one year, but shall be automatically renewed for one year periods from year to year thereafter unless terminated earlier by either party within reasonable notice periods. Other Notes Payable In March 2015, we completed the purchase of real property in Irvine, California for approximately $5.8 million and financed $4.9 million with a long-term note. The loan agreement provides for a seven-year term and a 25 year straight-line, monthly principal repayment amortization period that began on May 1, 2015 with a balloon payment at maturity in April 2022. The loan is secured by the real property and contains financial covenants substantially similar to those of our existing asset-based credit facility. In September 2015, we listed the Irvine Property for sale. In January 2015, we completed the purchase of certain real property in Lewis Center, Ohio for approximately $6.6 million and financed $4.575 million with a long-term note. The $4.575 million term note provides for a seven-year term and a 25 year straight-line, monthly principal repayment amortization period that began in February 2015 with a balloon payment at maturity in January 2022. The loan is secured by the real property and contains financial covenants substantially similar to those of our existing asset-based credit facility. Throughout 2014, we entered into three financing arrangements with a bank to finance the costs of equipment, software and professional services related to our ERP upgrade. The total amount financed was $5.6 million, with a quarterly repayment schedule which matured in March 2017. In December 2012, we completed the purchase of 7.9 acres of land for approximately $1.1 million and have incurred additional costs of $12.2 million through December 31, 2014 towards the construction of a new cloud data center that we opened in June 2014. In July 2013, we entered into a loan agreement for with a bank for draws up to $7.725 million to finance the build out of the new data center. The loan agreement provides for a five-year term and a 25 year straight-line, monthly principal repayment amortization period with a balloon payment at maturity in January 2020. The loan is secured by the real property and contains financial covenants substantially similar to those of our existing asset-based credit facility. In June 2011, we entered into a credit agreement to finance a total of $10.1 million of the acquisition and improvement costs for 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 in September 2016. In August 2016, we entered into an amendment with the lender extending the term of the loan to November 30, 2017. The loan is secured by the real property and contains financial covenants substantially similar to those of our existing asset-based credit facility. At March 31, 2017, the effective weighted average annual interest rate on our outstanding amounts under the credit facility, term note and variable interest rate notes payable was 2.58%. 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, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes We determine our interim income tax provision by applying our effective income tax rate expected to be applicable for the full fiscal year to pre-tax income (loss) for the interim periods, adjusting the result for any discrete items which occurred during the interim period. Accounting for Uncertainty in Income Taxes At March 31, 2017 and December 31, 2016, we had unrecognized tax benefits of $0.5 million and $0.5 million, respectively, related to research credits. For the three months ended March 31, 2017 and 2016, we did not recognize any interest or penalties for uncertain tax positions, nor were there any interest or penalties accrued at March 31, 2017 and December 31, 2016. We do not anticipate any significant increases or decreases in our unrecognized tax benefits within the next twelve months. We are subject to U.S. and foreign income tax examinations for years subsequent to 2012, and state income tax examinations for years subsequent to 2011. 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, 2017 | |
Equity [Abstract] | |
Stockholders' Equity | 8. Stockholders’ Equity We have a board approved discretionary stock repurchase program under which shares may be repurchased from time to time at prevailing market prices, through open market or unsolicited negotiated transactions, depending on market conditions. Our Board of Directors originally adopted the plan in October 2008 with an initial authorized maximum of $10 million. The plan was amended in September 2012 and increased to $20 million, and again amended in April 2015 and increased to a total of $30 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 of our common stock under this program during the three months ended March 31, 2017. From the inception of the program in October 2008 through March 31, 2017, we have repurchased an aggregate of 4,081,687 shares of our common stock for a total cost of $25.9 million. At March 31, 2017, we had $4.1 million available in stock repurchases under the program, subject to any limitations that may apply from time to time under our existing credit facility. We have never paid cash dividends on our capital stock and our credit facility prohibits us from paying any cash dividends on our capital stock. Therefore, we do not currently anticipate paying dividends; we intend to retain any earnings to finance the growth and development of our business. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Basic and Diluted Earnings Per Common Share | |
Earnings (Loss) Per Share | 9. Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income by the weighted average number of common shares outstanding during the reported periods. Diluted EPS reflects the potential dilution that could occur under the treasury stock method if stock options and other commitments to issue common stock were exercised, except in loss periods where the effect would be antidilutive. For the three months ended March 31, 2017 and 2016, approximately 87,000 and 919,000 common shares, respectively, have been excluded from the calculation of diluted EPS because the effect of their inclusion would have been antidilutive. The reconciliation of the amounts used in the basic and diluted EPS computation was as follows (in thousands, except per share amounts): Amount ($) Shares Per Share Amounts ($) Three Months Ended March 31, 2017: Basic EPS Net income $ 4,027 12,356 $ 0.33 Effect of dilutive securities Dilutive effect of stock options — 1,096 Diluted EPS Adjusted net income $ 4,027 13,452 $ 0.30 Three Months Ended March 31, 2016: Basic EPS Net income $ 156 11,871 $ 0.01 Effect of dilutive securities Dilutive effect of stock options — 390 Diluted EPS Adjusted net income $ 156 12,261 $ 0.01 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 10. Segment Information Summarized segment information for our continuing operations for the periods presented is as follows (in thousands): Commercial Public Sector Canada United Kingdom Corporate & Other Consolidated Three Months Ended March 31, 2017 Net sales $ 408,473 $ 67,268 $ 48,684 $ — $ (26 ) $ 524,399 Gross profit 63,824 6,895 7,542 — (56 ) 78,205 Depreciation and amortization expense(1) 1,394 207 307 — 1,614 3,522 Operating profit (loss) 18,210 1,394 1,224 (152 ) (16,203 ) 4,473 Three Months Ended March 31, 2016 Net sales $ 384,405 $ 72,463 $ 41,162 $ — $ (1 ) $ 498,029 Gross profit 58,093 6,015 6,202 — (3 ) 70,307 Depreciation and amortization expense(1) 1,634 290 338 — 1,810 4,072 Operating profit (loss) 16,228 1,447 1,679 — (17,835 ) 1,519 (1) As of March 31, 2017 and December 31, 2016, we had total consolidated assets of $611.0 million and $629.8 million, respectively. 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, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies Total rent expense under our operating leases, net of sublease income, was $1.5 million in each of the three month periods ended March 31, 2017 and 2016. Some of our leases contain renewal options and escalation clauses, and require us to pay taxes, insurance and maintenance costs. Legal Proceedings 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 result in a material amount of legal or related expenses and be 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. On December 5, 2016, Collab9, Inc. (formerly, En Pointe Technologies Sales, Inc.) filed an action against PCM, Inc. and its subsidiary, En Pointe Technologies Sales, LLC, in the Superior Court of Delaware in New Castle County, Delaware. The action arises out of a March 12, 2015 Asset Purchase Agreement (“APA”) pursuant to which the Company acquired assets of Collab9’s information technology solutions business. Collab9’s complaint alleges that the Company breached the APA by failing to pay Collab9 the full amount of the periodic “earn-out” payments to which Collab9 is entitled under the APA. The complaint also alleges that the Company breached an obligation to cooperate with Collab9’s evaluation of its claim for breach of the APA’s earn-out provisions. The complaint does not specify the amount of damages Collab9 is seeking, but asserts that the amount of underpayment is “millions of dollars.” On February 8, 2017, the Company filed an answer to Collab9’s complaint in which the Company denied that it breached the APA and asserted that there is no merit in Collab9’s claim. The court has not yet established a schedule for pretrial proceedings or for trial on the merits of Collab9’s claim. The Company believes the claims are speculative and wholly without merit, and intends to vigorously defend the claims. However, the outcome of this matter is uncertain and, as a result, the Company cannot reasonably estimate the loss or range of loss that could result in the event of an unfavorable outcome. Accordingly, no amounts have been accrued for any liability that may result from the resolution of this matter. On April 11, 2017, the Company amended its answer to include counterclaims against the sellers in the Collab 9 transaction, including Collab9. These counterclaims assert claims for breach of contract, tortious interference, and intentional misrepresentation. The counterclaims include allegations that the sellers intentionally breached their representations and warranties concerning the financial statements of the business whose assets the Company acquired under the APA, and the need for minority business certifications which were required for certain acquired contracts under the APA. The counterclaims also include allegations that the sellers failed to disclose related party interests or retained control over a third party operation in Pakistan that provided support functions for the acquired business. At this time, the outcome of this matter is uncertain. On January 13, 2017, Collab9 also filed an action against PCM, Inc. and its subsidiary, En Pointe Technologies Sales, LLC, in the Superior Court of California for the County of Los Angeles. The complaint alleges that, in connection with the Company’s processing of transactions with certain customers whose contracts the Company purchased the rights to under the APA following the closing of the APA, the Company, without authorization, accessed and altered electronically stored data of which Collab9 claims to have retained ownership. It further alleges that, although Collab9 authorized the Company to access the data in question during a post-closing transition period, the Company continued to access and alter the data Collab9 claims to own after an alleged termination of such authorization, and, in so doing, violated California’s Computer Data Access and Fraud Act. The Company believes the claims are wholly without merit, and intends to vigorously defend the claims. On February 21, 2017, the Company moved to dismiss the case on the ground that the APA governs this dispute and contains a provision designating New Castle County, Delaware as the exclusive forum in which claims arising out of or relating to the APA may be brought. A hearing on the motion is scheduled for July 14, 2017. No other pretrial activities have been conducted or scheduled. However, the outcome of this matter is uncertain and, as a result, the Company cannot reasonably estimate the loss or range of loss that could result in the event of an unfavorable outcome. Accordingly, no amounts have been accrued for any liability that may result from the resolution of this matter. On May 3, 2017, a purported securities class action was filed in the United States District Court for the Central District of California, entitled Miller v. PCM Inc., Case No. 2:17-cv-03364 (C.D. Cal. filed May 3, 2017). In this action, plaintiff, purportedly on behalf of a putative class of purchasers of PCM securities from June 17, 2015 through May 2, 2017, alleges that the Company and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b), 78t(a), and Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder, by intentionally or recklessly making false and/or misleading statements and/or failing to disclose that the financial statements of En Pointe, a company PCM acquired in 2015, materially overstated the profitability of En Pointe’s business. The complaint has not yet been served. The Company believes that the allegations lack merit and intends to defend against this action vigorously. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Carrying Amounts of Indefinite-Lived Goodwill | The change in the carrying amounts of indefinite-lived goodwill was as follows (in thousands) by segment: Commercial Public Sector Canada Total Balance at December 31, 2016 $ 69,735 $ 8,322 $ 5,331 $ 83,388 Foreign currency translation — — 44 44 Balance at March 31, 2017 $ 69,735 $ 8,322 $ 5,375 $ 83,432 |
Schedule of Amounts Recorded for Intangible Assets | The following table sets forth the amounts recorded for intangible assets (in thousands): Weighted Average Estimated Useful At March 31, 2017 At December 31, 2016 Lives (years) Gross Amount Accumulated Amortization Net Amount Gross Amount Accumulated Amortization Net Amount Patent, trademarks, trade names & URLs 4 $ 7,706 (1) $ 2,218 $ 5,488 $ 7,691 (1) $ 1,901 $ 5,790 Customer relationships 15 13,389 6,100 7,289 13,369 5,480 7,889 Non-compete agreements 4 2,363 1,117 1,246 2,361 966 1,395 Total intangible assets $ 23,458 $ 9,435 $ 14,023 $ 23,421 $ 8,347 $ 15,074 (1) Includes $2.9 million of trademarks with indefinite useful lives that are not amortized. |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt | The following table sets forth our outstanding debt as of the periods presented (in thousands): March 31, December 31, 2017 2016 Revolving credit facility, LIBOR plus 1.50%, maturing in March 2021 $ 120,634 $ 107,396 Note payable, LIBOR plus 1.50%, maturing in March 2021 — 8,293 Note payable, LIBOR plus 1.50%, maturing in March 2021 12,374 1,392 Note payable, greater of 2% or LIBOR plus 2.15%, maturing in April 2022 4,552 (1) 4,601 (1) Note payable, LIBOR plus 2.25%, maturing in January 2022 4,079 4,137 Notes payable, 4.12%, 4.33% and 4.60%, maturing in March 2017 — 525 Note payable, LIBOR plus 2.25%, maturing in January 2020 7,030 7,107 Note payable, Prime plus 0.375% or LIBOR plus 2.375%, maturing in November 2017 8,012 8,113 Other note payable, maturing in August 2018 350 351 Total 157,031 141,915 Less: Total current debt 135,700 123,165 Total non-current debt $ 21,331 $ 18,750 (1) This note payable, related to the Irvine Property, has been presented on our Condensed Consolidated Balance Sheet as “Note payable related to asset held for sale” and is included as current debt. See Note 4 above for more information regarding the Irvine Property. |
Schedule of Maturities of Outstanding Debt | The following table sets forth the maturities of our outstanding debt balance as of March 31, 2017 (in thousands): Remainder of 2017 2018 2019 2020 2021 Thereafter Total Total long-term debt obligations $ 14,660 $ 2,327 $ 8,507 $ 2,018 $ 5,011 $ 3,874 $ 36,397 Revolving credit facility 120,634 — — — — — 120,634 Total $ 135,294 $ 2,327 $ 8,507 $ 2,018 $ 5,011 $ 3,874 $ 157,031 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Basic and Diluted Earnings Per Common Share | |
Schedule of Reconciliation of Amounts Used in 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): Amount ($) Shares Per Share Amounts ($) Three Months Ended March 31, 2017: Basic EPS Net income $ 4,027 12,356 $ 0.33 Effect of dilutive securities Dilutive effect of stock options — 1,096 Diluted EPS Adjusted net income $ 4,027 13,452 $ 0.30 Three Months Ended March 31, 2016: Basic EPS Net income $ 156 11,871 $ 0.01 Effect of dilutive securities Dilutive effect of stock options — 390 Diluted EPS Adjusted net income $ 156 12,261 $ 0.01 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of Segment Information for Entity's Continuing Operations | Summarized segment information for our continuing operations for the periods presented is as follows (in thousands): Commercial Public Sector Canada United Kingdom Corporate & Other Consolidated Three Months Ended March 31, 2017 Net sales $ 408,473 $ 67,268 $ 48,684 $ — $ (26 ) $ 524,399 Gross profit 63,824 6,895 7,542 — (56 ) 78,205 Depreciation and amortization expense(1) 1,394 207 307 — 1,614 3,522 Operating profit (loss) 18,210 1,394 1,224 (152 ) (16,203 ) 4,473 Three Months Ended March 31, 2016 Net sales $ 384,405 $ 72,463 $ 41,162 $ — $ (1 ) $ 498,029 Gross profit 58,093 6,015 6,202 — (3 ) 70,307 Depreciation and amortization expense(1) 1,634 290 338 — 1,810 4,072 Operating profit (loss) 16,228 1,447 1,679 — (17,835 ) 1,519 (1) |
Basis of Presentation and Des22
Basis of Presentation and Description of Company (Details Narrative) | 3 Months Ended |
Mar. 31, 2017Segment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 4 |
Percentage of equity interest | 49.00% |
Commercial Segment [Member] | |
Segment Reporting Information [Line Items] | |
Revenue percentage | 78.00% |
Public Sector Segment [Member] | |
Segment Reporting Information [Line Items] | |
Revenue percentage | 13.00% |
Canada Segment [Member] | |
Segment Reporting Information [Line Items] | |
Revenue percentage | 9.00% |
New Accounting Standards (Detai
New Accounting Standards (Details Narrative) - USD ($) $ in Thousands | Jan. 02, 2017 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
Accounting Policies [Abstract] | ||||
Excess tax benefits associated with exercise of stock options | $ 2,300 | |||
Excess tax benefits reclassified from financing activities to cash flows from operating activities | $ 14 | |||
Cumulative effect adjustment to retained earnings | $ 94 | |||
Deferred tax assets current | $ 3,600 | |||
Deferred tax liabilities current | $ 600 |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) CAD in Thousands, $ in Thousands | Dec. 29, 2016USD ($) | Dec. 29, 2016CAD | Dec. 01, 2015USD ($) | Oct. 26, 2015USD ($) | Oct. 26, 2015CAD | Apr. 02, 2015USD ($) | Mar. 31, 2016USD ($) | Jan. 31, 2016USD ($) | Mar. 31, 2017USD ($)integer | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Contingent consideration to be paid throughout the earn out period | $ 32,500 | |||||||||||
Accrued earn-out liability included in other long-term liabilities | $ 3,805 | $ 7,039 | ||||||||||
Maximum [Member] | ||||||||||||
Contingent consideration to be paid throughout the earn out period | $ 38,600 | |||||||||||
March 31, 2018 [Member] | ||||||||||||
Contingent consideration to be paid throughout the earn out period | 38,600 | |||||||||||
Stratiform, Inc [Member] | ||||||||||||
Initial purchase price | $ 1,600 | |||||||||||
Contingent consideration to be paid throughout the earn out period | 700 | |||||||||||
Accrued earn-out liability included in accrued expenses and other current liabilities | 300 | |||||||||||
Accrued earn-out liability included in other long-term liabilities | 300 | |||||||||||
Stratiform, Inc [Member] | Canadian Dollar [Member] | ||||||||||||
Initial purchase price | CAD | CAD 2,100 | |||||||||||
Systemax's North American Technology Group [Member] | ||||||||||||
Initial purchase price | $ 14,000 | |||||||||||
Option exercised | $ 400 | |||||||||||
Acrodex, Inc. [Member] | ||||||||||||
Initial purchase price | $ 13,600 | $ 200 | ||||||||||
Acrodex, Inc. [Member] | Canadian Dollar [Member] | ||||||||||||
Initial purchase price | CAD | CAD 16,700 | |||||||||||
En Pointe Technologies Sales Inc [Member] | ||||||||||||
Initial purchase price | $ 15,000 | |||||||||||
Accrued earn-out liability included in accrued expenses and other current liabilities | 13,800 | |||||||||||
Percentage of future adjusted gross profit | 22.50% | |||||||||||
Percentage of future service revenue | 10.00% | |||||||||||
Monthly earn-out payments | $ 24,800 | |||||||||||
Number of monthly earn-out payments | integer | 23 | |||||||||||
Payment of earn-out liability | $ 2,800 | $ 2,900 | ||||||||||
En Pointe Technologies Sales Inc [Member] | Inventory [Member] | ||||||||||||
Initial purchase price | $ 2,300 |
Property and Equipment (Details
Property and Equipment (Details Narrative) $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jan. 31, 2017USD ($)ft² | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | |
Purchases of property and equipment | $ (6,033) | $ (785) | ||
Assets held for sale | 5,812 | $ 5,812 | ||
Liability held for sale | $ 4,552 | $ 4,601 | ||
Woodridge, Illinois [Member] | ||||
Purchases of property and equipment | $ 3,100 | |||
Real property | ft² | 29,344 |
Goodwill and Intangible Asset26
Goodwill and Intangible Assets (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expenses for intangible assets | $ 1,100 | $ 1,500 |
Estimated amortization expenses for intangible assets remainder of 2017 | 3,000 | |
Estimated amortization expenses for intangible assets 2018 | 2,900 | |
Estimated amortization expenses for intangible assets 2019 | 1,800 | |
Estimated amortization expenses for intangible assets 2020 | 1,300 | |
Estimated amortization expenses for intangible assets 2021 | 500 | |
Estimated amortization expenses for intangible assets thereafter | $ 1,600 |
Goodwill and Intangible Asset27
Goodwill and Intangible Assets - Schedule of Carrying Amounts of Indefinite-Lived Goodwill (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Balance beginning period | $ 83,388 |
Foreign currency translation | 44 |
Balance ending period | 83,432 |
Commercial [Member] | |
Balance beginning period | 69,735 |
Foreign currency translation | |
Balance ending period | 69,735 |
Public Sector [Member] | |
Balance beginning period | 8,322 |
Foreign currency translation | |
Balance ending period | 8,322 |
Canada [Member] | |
Balance beginning period | 5,331 |
Foreign currency translation | 44 |
Balance ending period | $ 5,375 |
Goodwill and Intangible Asset28
Goodwill and Intangible Assets - Schedule of Amounts Recorded for Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Dec. 31, 2016 | ||
Gross Amount | $ 23,458 | $ 23,421 | |
Accumulated Amortization | 9,435 | 8,347 | |
Net Amount | $ 14,023 | 15,074 | |
Patent Trademarks Tradenames And URLs [Member] | |||
Weighted Average Estimated Useful Lives (Years) | 4 years | ||
Gross Amount | [1] | $ 7,706 | 7,691 |
Accumulated Amortization | 2,218 | 1,901 | |
Net Amount | $ 5,488 | 5,790 | |
Customer Relationships [Member] | |||
Weighted Average Estimated Useful Lives (Years) | 15 years | ||
Gross Amount | $ 13,389 | 13,369 | |
Accumulated Amortization | 6,100 | 5,480 | |
Net Amount | $ 7,289 | 7,889 | |
Non-Compete Agreements [Member] | |||
Weighted Average Estimated Useful Lives (Years) | 4 years | ||
Gross Amount | $ 2,363 | 2,361 | |
Accumulated Amortization | 1,117 | 966 | |
Net Amount | $ 1,246 | $ 1,395 | |
[1] | Includes $2.9 million of trademarks with indefinite useful lives that are not amortized. |
Goodwill and Intangible Asset29
Goodwill and Intangible Assets - Schedule of Amounts Recorded for Intangible Assets (Details) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Trademarks [Member] | ||
Patents, trademarks and URLs of gross amount | $ 2,900 | $ 2,900 |
Debt (Details Narrative)
Debt (Details Narrative) | Jul. 07, 2016CAD | Aug. 31, 2016 | Mar. 31, 2015USD ($)ft² | Jan. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Jul. 31, 2013USD ($) | Jun. 30, 2011USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($) | Jul. 07, 2016USD ($) | Dec. 31, 2012USD ($)a |
Long term note | $ 157,031,000 | $ 141,915,000 | ||||||||||
Line of Credit [Member] | ||||||||||||
Line of credit available to borrow | $ 115,500,000 | |||||||||||
Channel Finance Facility [Member] | ||||||||||||
Initial amount available under the credit agreement | $ 35,000,000 | |||||||||||
Revolving Credit Facility [Member] | ||||||||||||
Note payable variable interest rate basis | 2.58% | |||||||||||
Purchase price of real property | $ 6,600,000 | $ 1,100,000 | ||||||||||
Long term note | $ 4,575,000 | $ 120,634,000 | ||||||||||
Debt term | 7 years | |||||||||||
Debt straight line term | 25 years | |||||||||||
Note balloon payment maturity date | January 2,022 | |||||||||||
Area of land purchased | a | 7.9 | |||||||||||
Additional costs incurred for construction of a new cloud data center | $ 12,200,000 | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | ||||||||||||
Maximum credit limit | $ 345,000,000 | |||||||||||
Debt maturity date | Mar. 19, 2021 | |||||||||||
Interest rate description of Canadian Maximum Credit | interest on outstanding balance under the Canadian Maximum Credit based on the Canadian Base Rate (calculated as the greater of CDOR plus one percentage point and the prime rate for Canadian Dollar commercial loans, as further defined in the Fourth Amended Loan Agreement) or at the election of the Borrowers, based on the CDOR Rate, plus a margin, depending on average excess availability under the Revolving Line, ranging from 1.50% to 1.75%; and (v) interest on outstanding balance under the Maximum Credit based on the Eurodollar Rate plus a margin, depending on average excess availability under the revolving line, ranging from 1.50% to 1.75%. The credit facility also includes a monthly unused line fee of 0.25% per year on the amount, if any, by which the Maximum Credit, then in effect, exceeds the average daily principal balance of outstanding borrowings during the immediately preceding month. | |||||||||||
Percentage of unused line fee | 0.25% | |||||||||||
Fixed charge coverage ratio | 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. | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | Santa Monica Real Properties [Member] | ||||||||||||
Sub-lines revolving credit facility | 12,500,000 | |||||||||||
Principal amortization value | $ 149,083 | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | Eurodollar [Member] | Minimum [Member] | ||||||||||||
Note payable variable interest rate basis | 1.50% | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | Eurodollar [Member] | Maximum [Member] | ||||||||||||
Note payable variable interest rate basis | 1.75% | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | Canadian Dollar [Member] | ||||||||||||
Increase our maximum credit limit of the borrowers based on certain conditions | CAD | CAD 40,000,000 | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | Canadian Dollar [Member] | Minimum [Member] | ||||||||||||
Note payable variable interest rate basis | 1.50% | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | Canadian Dollar [Member] | Maximum [Member] | ||||||||||||
Note payable variable interest rate basis | 1.75% | |||||||||||
Revolving Credit Facility [Member] | First Amendment To Fourth Amended Loan Agreement [Member] | Canadian Dollar [Member] | Prime Rate [Member] | ||||||||||||
Note payable variable interest rate basis | 1.00% | |||||||||||
Revolving Credit Facility [Member] | Loan Agreement [Member] | ||||||||||||
Purchase price of real property | $ 5,800,000 | |||||||||||
Long term note | $ 4,900,000 | |||||||||||
Debt term | 7 years | 5 years | ||||||||||
Debt straight line term | 25 years | 25 years | ||||||||||
Note balloon payment maturity date | April 2,022 | January 2,020 | ||||||||||
Real property purchase amount financed | $ 7,725,000 | |||||||||||
Area of land purchased | ft² | 60,000 | |||||||||||
Revolving Credit Facility [Member] | Three Financing Arrangements [Member] | ||||||||||||
Note balloon payment maturity date | March 2,017 | |||||||||||
Real property purchase amount financed | $ 5,600,000 | |||||||||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | ||||||||||||
Debt maturity date | Nov. 30, 2017 | Nov. 30, 2017 | ||||||||||
Long term note | $ 10,100,000 | |||||||||||
Debt term | 5 years | |||||||||||
Debt straight line term | 25 years | |||||||||||
Note balloon payment maturity date | September 2,016 |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Total | $ 157,031 | $ 141,915 | |
Less: Total current debt | 135,700 | 123,165 | |
Total non-current debt | 21,331 | 18,750 | |
Revolving Credit Facility, Libor Plus 1.50%, Maturing In March 2021 [Member] | |||
Total | 120,634 | 107,396 | |
Note Payable, Libor Plus 1.50%, Maturing In March 2021 [Member] | |||
Total | 8,293 | ||
Note Payable, Libor Plus 1.50%, Maturing In March 2021 [Member] | |||
Total | 12,374 | 1,392 | |
Note Payable, Greater Of 2% Or Libor Plus 2.15%, Maturing In April 2022 [Member] | |||
Total | [1] | 4,552 | 4,601 |
Note Payable, Libor Plus 2.25%, Maturing In January 2022 [Member] | |||
Total | 4,079 | 4,137 | |
Notes Payable, 4.12%, 4.33% And 4.60%, Maturing In March 2017 [Member] | |||
Total | 525 | ||
Note Payable, Libor Plus 2.25%, Maturing In January 2020 [Member] | |||
Total | 7,030 | 7,107 | |
Note Payable, Prime Plus 0.375% Or Libor Plus 2.375%, Maturing In November 2017 [Member] | |||
Total | 8,012 | 8,113 | |
Other Note Payable, Maturing In August 2018 [Member] | |||
Total | $ 350 | $ 351 | |
[1] | This note payable, related to the Irvine Property, has been presented on our Condensed Consolidated Balance Sheet as “Note payable related to asset held for sale” and is included as current debt. See Note 4 above for more information regarding the Irvine Property. |
Debt - Schedule of Outstandin32
Debt - Schedule of Outstanding Debt (Details) (Parenthetical) | 3 Months Ended |
Mar. 31, 2017 | |
Revolving Credit Facility, Libor Plus 1.50%, Maturing In March 2021 [Member] | LIBOR and Prime Rate [Member] | |
Note payable variable interest rate basis | 1.50% |
Note payable maturity date | March 2,021 |
Note Payable, Libor Plus 1.50%, Maturing In March 2021 [Member] | LIBOR and Prime Rate [Member] | |
Note payable variable interest rate basis | 1.50% |
Note payable maturity date | March 2,021 |
Note Payable, Libor Plus 1.50%, Maturing In March 2021 [Member] | LIBOR and Prime Rate [Member] | |
Note payable variable interest rate basis | 1.50% |
Note payable maturity date | March 2,021 |
Note Payable, Greater Of 2% Or Libor Plus 2.15%, Maturing In April 2022 [Member] | Maximum [Member] | |
Note payable variable interest rate basis | 2.00% |
Note payable maturity date | April 2,022 |
Note Payable, Greater Of 2% Or Libor Plus 2.15%, Maturing In April 2022 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.15% |
Note payable maturity date | April 2,022 |
Note Payable, Libor Plus 2.25%, Maturing In January 2022 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.25% |
Note payable maturity date | January 2,022 |
Notes Payable, 4.12%, 4.33% And 4.60%, Maturing In March 2017 [Member] | |
Note payable variable interest rate basis | 4.12% |
Note payable maturity date | March 2,017 |
Notes Payable, 4.12%, 4.33% And 4.60%, Maturing In March 2017 One [Member] | |
Note payable variable interest rate basis | 4.33% |
Note payable maturity date | March 2,017 |
Notes Payable, 4.12%, 4.33% And 4.60%, Maturing In March 2017 Two [Member] | |
Note payable variable interest rate basis | 4.60% |
Note payable maturity date | March 2,017 |
Note Payable, Libor Plus 2.25%, Maturing In January 2020 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.25% |
Note payable maturity date | January 2,020 |
Note Payable, Prime Plus 0.375% Or Libor Plus 2.375%, Maturing In November 2017 [Member] | LIBOR Rate [Member] | |
Note payable variable interest rate basis | 2.375% |
Note payable maturity date | November 2,017 |
Note Payable, Prime Plus 0.375% Or Libor Plus 2.375%, Maturing In November 2017 [Member] | Prime Rate [Member] | |
Note payable variable interest rate basis | 0.375% |
Note payable maturity date | November 2,017 |
Other Note Payable, Maturing In August 2018 [Member] | |
Note payable maturity date | August 2,018 |
Debt - Schedule of Maturities o
Debt - Schedule of Maturities of Outstanding Debt (Details) - USD ($) | Mar. 31, 2017 | Dec. 31, 2016 | Jan. 31, 2015 |
Remainder of 2017 | $ 135,294,000 | ||
2,018 | 2,327,000 | ||
2,019 | 8,507,000 | ||
2,020 | 2,018,000 | ||
2,021 | 5,011,000 | ||
Thereafter | 3,874,000 | ||
Total | 157,031,000 | $ 141,915,000 | |
Total Long-Term Debt Obligations [Member] | |||
Remainder of 2017 | 14,660,000 | ||
2,018 | 2,327,000 | ||
2,019 | 8,507,000 | ||
2,020 | 2,018,000 | ||
2,021 | 5,011,000 | ||
Thereafter | 3,874,000 | ||
Total | 36,397,000 | ||
Revolving Credit Facility [Member] | |||
Remainder of 2017 | 120,634,000 | ||
2,018 | |||
2,019 | |||
2,020 | |||
2,021 | |||
Thereafter | |||
Total | $ 120,634,000 | $ 4,575,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 500 | $ 500 |
Unrecognized interest or penalties | ||
Accrued interest and penalties |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands | 1 Months Ended | 99 Months Ended | ||
Apr. 30, 2015 | Sep. 30, 2012 | Mar. 31, 2017 | Oct. 31, 2008 | |
Equity [Abstract] | ||||
Maximum amount authorized under the common stock repurchase program | $ 10,000 | |||
Increase value of discretionary stock repurchase program | $ 30,000 | $ 20,000 | ||
Number of common stock shares repurchased during period | 4,081,687 | |||
Shares repurchased during period, value | $ 25,900 | |||
Amount available to repurchase the stock | $ 4,100 |
Earnings Per Share (Details Nar
Earnings Per Share (Details Narrative) - shares | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Basic and Diluted Earnings Per Common Share | ||
Common stock excluded from the calculation of diluted EPS | 87,000 | 919,000 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Reconciliation of Amounts Used in Basic and Diluted EPS Computation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Basic and Diluted Earnings Per Common Share | ||
Net income | $ 4,027 | $ 156 |
Shares outstanding | 12,356,000 | 11,871,000 |
Per share amount | $ 0.33 | $ 0.01 |
Shares outstanding dilutive effect of stock options | 1,096,000 | 390,000 |
Income from Adjusted net income | $ 4,027 | $ 156 |
Shares outstanding adjusted income | 13,452,000 | 12,261,000 |
Per share amount adjusted income | $ 0.30 | $ 0.01 |
Segment Information (Details Na
Segment Information (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Segment Reporting [Abstract] | ||
Total assets | $ 611,045 | $ 629,810 |
Segment Information - Schedule
Segment Information - Schedule of Segment Information for Entity's Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Segment Reporting Information [Line Items] | |||
Net sales | $ 524,399 | $ 498,029 | |
Gross profit | 78,205 | 70,307 | |
Depreciation and amortization expense | [1] | 3,522 | 4,072 |
Operating profit (loss) | 4,473 | 1,519 | |
Commercial [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 408,473 | 384,405 | |
Gross profit | 63,824 | 58,093 | |
Depreciation and amortization expense | [1] | 1,394 | 1,634 |
Operating profit (loss) | 18,210 | 16,228 | |
Public Sector [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 67,268 | 72,463 | |
Gross profit | 6,895 | 6,015 | |
Depreciation and amortization expense | [1] | 207 | 290 |
Operating profit (loss) | 1,394 | 1,447 | |
Canada [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | 48,684 | 41,162 | |
Gross profit | 7,542 | 6,202 | |
Depreciation and amortization expense | [1] | 307 | 338 |
Operating profit (loss) | 1,224 | 1,679 | |
United Kingdom [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | |||
Gross profit | |||
Depreciation and amortization expense | [1] | ||
Operating profit (loss) | (152) | ||
Corporate And Other [Member] | |||
Segment Reporting Information [Line Items] | |||
Net sales | (26) | (1) | |
Gross profit | (56) | (3) | |
Depreciation and amortization expense | [1] | 1,614 | 1,810 |
Operating profit (loss) | $ (16,203) | $ (17,835) | |
[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. |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense, net of sublease income | $ 1,500 | $ 1,500 |