Exhibit 99.1

 

PFSweb Reports Fourth Quarter and Full Year 2013 Results

- 2013 Service Fee Equivalent Revenue of $118.7 Million Drives Adj. EBITDA of $10.7 Million -

- Service Fee Equivalent Revenue in 2014 Expected to Increase 7%-12% to $127-$133 Million,

with Adj. EBITDA Increasing 12%-31% to $12-$14 Million -

Allen, TX – March 6, 2014 – PFSweb, Inc. (NASDAQ: PFSW), an international provider of end-to-end eCommerce solutions, reported financial results for the fourth quarter and full year ended December 31, 2013 and provided its financial outlook for 2014.

Fourth Quarter 2013 Financial Highlights

 

•

Service fee equivalent revenue (a non-GAAP measure defined and discussed below) decreased to $35.6 million compared to $38.0 million in the same period in 2012.

 

•

Service fee gross margin increased 410 basis points to 30.3% compared to 26.2% in the same period in 2012.

 

•

Adjusted EBITDA (a non-GAAP measure defined and discussed below) increased to $3.9 million versus $3.8 million in the same period in 2012.

 

•

Cash and cash equivalents totaled $22.4 million compared to $19.6 million as of December 31, 2012.

 

•

Debt totaled $11.1 million, declining 50% from December 31, 2012.

Fourth Quarter 2013 Financial Results

Total revenues in the fourth quarter totaled $66.7 million compared to $77.0 million in the same period in 2012. The decrease in total revenues was primarily due to the expected decline in product revenue to $21.3 million compared to $28.3 million in the same period in 2012 as a result of restructuring activities by the company’s largest client in this segment. Service fee revenue in the fourth quarter of 2013 totaled $34.3 million compared to $35.4 million the same period in 2012.

Service fee equivalent revenue was $35.6 million compared to $38.0 million in the same period in 2012. This decrease, which was primarily due to previously announced client transitions earlier in the year, was partially offset by revenues generated from new and expanded client relationships as well as higher seasonal client volumes.

Service fee gross margin in the fourth quarter increased 410 basis points to 30.3% compared to 26.2% in the same period in 2012. This increase resulted primarily from a change in the client mix, an increased level of higher margin professional and technology services, including project activity, and improved operating efficiencies.

Adjusted EBITDA increased to $3.9 million compared to $3.8 million in the same period in 2012, despite reduced revenue levels.

Net loss in the fourth quarter of 2013 was $0.4 million, or $(0.03) per diluted share, compared to net income of $0.7 million, or $0.05 per diluted share, in the same period in 2012. Net loss in the fourth quarter of 2013 included approximately $1.4 million in stock-based compensation expense. Net loss in the fourth quarter of 2012 included approximately $0.3 million in stock-based compensation expense.

---

 

Non-GAAP net income (a non-GAAP measure defined and discussed below) in the fourth quarter of 2013 was $1.0 million, or $0.06 per diluted share, compared to non-GAAP net income of $1.0 million, or $0.07 per diluted share, for the fourth quarter of 2012.

At December 31, 2013, the company’s cash and cash equivalents increased $2.8 million to $22.4 million compared to $19.6 million at December 31, 2012. Total debt at December 31, 2013 was reduced by 50% to $11.1 million compared to $22.1 million at December 31, 2012. The decrease in debt primarily resulted from the inflow of cash proceeds from the company’s May 2013 equity offering.

Full Year 2013 Financial Results

Total revenues decreased to $241.6 million in 2013 compared to $281.6 million in 2012. Product revenue decreased to $91.0 million in 2013 compared to $119.7 million in 2012. Service fee revenue in 2013 decreased to $113.0 million compared to $120.4 million in 2012. Service fee equivalent revenue was $118.7 million compared to $130.0 million in 2012.

Service fee gross margin in 2013 increased 580 basis points to 31.7% compared to 25.9% in 2012.

Adjusted EBITDA was $10.7 million in 2013 compared to $12.0 million in 2012.

Net loss in 2013 was $5.9 million, or $(0.39) per diluted share, compared to a net loss of $1.5 million, or $(0.12) per diluted share, in 2012. Net loss in 2013 included approximately $2.6 million in stock-based compensation expense and $2.5 million in restructuring charges. Net loss in 2012 included approximately $1.3 million in stock-based compensation expense, $0.9 million in move related expenses and $0.5 million in lease termination costs.

Non-GAAP net loss in 2013 was $0.8 million, or $(0.05) per diluted share, compared to non-GAAP net income of $1.1 million, or $0.09 per diluted share, in 2012.

Management Commentary

“2013 was a pivotal year as we refocused our operations on expanding our higher-margin service business and improving overall operating efficiencies,” said Michael Willoughby, CEO of PFSweb. “As expected during the fourth quarter, the continued year-over-year decline in our lower-margin product revenue segment and transition of certain previously announced client programs weighed on our top line. However, we generated stronger than anticipated service fee equivalent revenue, the metric we use to measure our primary business activity. This was largely the result of robust client sales experienced throughout the U.S. and Europe during the all-important holiday season. Additionally, our cost initiatives implemented throughout the year helped expand service fee revenue gross margin and Adjusted EBITDA as compared to the prior year, despite reduced revenue levels.”

 

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Willoughby concluded: “As we move into 2014, we remain very excited about our opportunities for growth in revenue and profitability through new and expanded client relationships and a continued emphasis on controlling costs. In addition to the strong U.S. ecommerce market, we are pleased to see increased opportunities in Europe and Canada, as well as through our strategic relationship with transcosmos. While our new client activity and existing client growth in the first half of 2014 is expected to be more than offset by the remaining impact of client transitions that occurred in 2013, we expect to exit 2014 as a much stronger company, especially given the expected rollout of the U.S. Mint and other recent client wins in the second half of the year.”

2014 Outlook

PFSweb is currently targeting 2014 service fee equivalent revenue to range between $127 million to $133 million, increasing 7% to 12% from 2013. The company is also targeting Adjusted EBITDA in 2014 to range between $12 million and $14 million, representing an increase of 12% to 31% from 2013.

Conference Call

PFSweb will conduct a conference call today at 11:00 a.m. Eastern time to discuss its results for the fourth quarter and full year ended December 31, 2013.

The company’s CEO Mike Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.

Date: Thursday, March 6, 2014

Time: 11:00 a.m. Eastern time (10:00 a.m. Central time)

Dial-in number: 1-877-941-4774

International number: 1-480-629-9760

Conference ID: 4670781

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=108042 and via the investor relations section at www.pfsweb.com.

A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through March 20, 2014.

Toll-free replay number: 1-877-870-5176

International replay number: 1-858-384-5517

Replay ID: 4670781

About PFSweb Inc.

PFSweb, Inc. (NASDAQ: PFSW) is an international business process outsourcing provider of end-to-end eCommerce solutions. The company provides these solutions and services to major brand names and other companies seeking to optimize their supply chain and enhance their traditional and online business channels, which include both direct-to-consumer and business-to-business sales channels. PFSweb supports organizations across various industries, including Procter & Gamble, L’Oreal, LEGO,

 

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Columbia Sportswear, Riverbed, Ricoh, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, T.J. Maxx, the United States Mint, and many more. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Canada, Belgium, and the Philippines. For more information, please visit www.pfsweb.com.

Non-GAAP Financial Measures

This news release may contain certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and service fee equivalent revenue.

Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, restructuring and other charges, lease termination costs and certain move related expenses.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, restructuring and other charges, lease termination costs and certain move related expenses.

Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue.

Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, restructuring and other charges, lease termination costs and certain move related expenses and EBITDA and adjusted EBITDA further eliminate the effect of financing, income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.

PFSweb believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

Forward-Looking Statements

The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb’s Annual Report on Form 10-K for the year ended December 31, 2012 and Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2013 identify certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to

 

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review the Annual and Quarterly Reports of the Company and the Risk Factors described therein. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.

 

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PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Condensed Consolidated Balance Sheets (A)

(In Thousands, Except Share Data)

 

		December 31,				December 31,
		2013				2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	22,418			$	19,626
Restricted cash			130				283
Accounts receivable, net of allowance for doubtful accounts of $382 and $450 at December 31, 2013 and December 31, 2012, respectively			55,292				45,684
Inventories, net of reserves of $962 and $1,789 at December 31, 2013 and December 31, 2012, respectively			14,169				24,654
Other receivables			5,241				7,675
Prepaid expenses and other current assets			4,713				4,346
Total current assets			101,963				102,268
PROPERTY AND EQUIPMENT, net			27,190				27,917
OTHER ASSETS			2,883				3,286
Total assets			132,036				133,471
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations		$	8,231			$	16,660
Trade accounts payable			34,096				40,493
Deferred revenue			8,181				6,648
Accrued expenses			25,045				23,097
Total current liabilities			75,553				86,898
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion			2,876				5,400
DEFERRED REVENUE			7,491				7,562
DEFERRED RENT			5,191				5,560
Total liabilities			91,111				105,420
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued and outstanding			—				—
Common stock, $.001 par value; 35,000,000 shares authorized; 16,540,904 and 12,812,386 shares issued at December 31, 2013 and December 31, 2012, respectively; and 16,507,437 and 12,778,919 shares outstanding as of December 31, 2013 and December 31, 2012, respectively			17				13
Additional paid-in capital			124,522				106,018
Accumulated deficit			(85,300	)			(79,409	)
Accumulated other comprehensive income			1,811				1,554
Treasury stock at cost, 33,467 shares			(125	)			(125	)
Total shareholders’ equity			40,925				28,051
Total liabilities and shareholders’ equity		$	132,036			$	133,471

 

(A)	The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2012.

 

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PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Condensed Consolidated Statements of Operations (A)

(In Thousands, Except Per Share Data)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2013				2012				2013				2012
REVENUES:
Product revenue, net		$	21,322			$	28,290			$	90,982			$	119,740
Service fee revenue			34,269				35,411				112,977				120,433
Pass-thru revenue			11,133				13,269				37,644				41,390
Total revenues			66,724				76,970				241,603				281,563
COSTS OF REVENUES:
Cost of product revenue			20,022				25,700				85,237				110,183
Cost of service fee revenue			23,895				26,119				77,160				89,249
Cost of pass-thru revenue			11,133				13,269				37,644				41,390
Total costs of revenues			55,050				65,088				200,041				240,822
Gross profit			11,674				11,882				41,562				40,741
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			11,840				10,813				46,235				40,620
Income (loss) from operations			(166	)			1,069				(4,673	)			121
INTEREST EXPENSE (INCOME), NET			115				230				679				988
Income (loss) before income taxes			(281	)			839				(5,352	)			(867	)
INCOME TAX PROVISION (BENEFIT)			128				187				539				644
NET INCOME (LOSS)		$	(409	)		$	652			$	(5,891	)		$	(1,511	)
NON-GAAP NET INCOME (LOSS)		$	970			$	963			$	(772	)		$	1,130
NET INCOME (LOSS) PER SHARE:
Basic		$	(0.03	)		$	0.05			$	(0.39	)		$	(0.12	)
Diluted		$	(0.03	)		$	0.05			$	(0.39	)		$	(0.12	)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic			16,345				12,779				14,957				12,777
Diluted			16,345				12,907				14,957				12,777
EBITDA		$	2,511			$	3,482			$	5,537			$	9,369
ADJUSTED EBITDA		$	3,890			$	3,793			$	10,656			$	12,010

 

(A)	The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2012.

 

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PFSweb, Inc. and Subsidiaries

Reconciliation of certain Non-GAAP Items to GAAP

(In Thousands, Except Per Share Data)

 

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2013				2012				2013				2012
NET INCOME (LOSS)		$	(409	)		$	652			$	(5,891	)		$	(1,511	)
Income tax expense			128				187				539				644
Interest expense, net			115				230				679				988
Depreciation and amortization			2,677				2,413				10,210				9,248
EBITDA		$	2,511			$	3,482			$	5,537			$	9,369
Stock-based compensation			1,379				311				2,574				1,325
Restructuring and other charges			—				—				2,545				—
Lease terminations costs			—				—				—				450
Move related expenses			—				—				—				866
ADJUSTED EBITDA		$	3,890			$	3,793			$	10,656			$	12,010
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2013				2012				2013				2012
NET INCOME (LOSS)		$	(409	)		$	652			$	(5,891	)		$	(1,511	)
Stock-based compensation			1,379				311				2,574				1,325
Restructuring and other charges			—				—				2,545				—
Lease terminations costs			—				—				—				450
Move related expenses			—				—				—				866
NON-GAAP NET INCOME (LOSS)		$	970			$	963			$	(772	)		$	1,130
NET INCOME (LOSS) PER SHARE:
Basic		$	(0.03	)		$	0.05			$	(0.39	)		$	(0.12	)
Diluted		$	(0.03	)		$	0.05			$	(0.39	)		$	(0.12	)
NON-GAAP NET INCOME (LOSS) Per Share:
Basic		$	0.06			$	0.08			$	(0.05	)		$	0.09
Diluted		$	0.06			$	0.07			$	(0.05	)		$	0.09
		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2013				2012				2013				2012
TOTAL REVENUES		$	66,724			$	76,970			$	241,603			$	281,563
Pass-thru revenue			(11,133	)			(13,269	)			(37,644	)			(41,390	)
Cost of product revenue			(20,022	)			(25,700	)			(85,237	)			(110,183	)
SERVICE FEE EQUIVALENT REVENUE		$	35,569			$	38,001			$	118,722			$	129,990

 

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PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Consolidating Statements of Operations

For the Three Months Ended December 31, 2013

(In Thousands)

 

						Business &
		PFSweb				Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	21,322			$	—			$	21,322
Service fee revenue			30,580				3,689				—				34,269
Service fee revenue—affiliate			3,779				338				(4,117	)			—
Pass-thru revenue			11,133				—				—				11,133
Total revenues			45,492				25,349				(4,117	)			66,724
COSTS OF REVENUES:
Cost of product revenue			—				20,022				—				20,022
Cost of service fee revenue			24,028				3,547				(3,680	)			23,895
Cost of pass-thru revenue			11,133				—				—				11,133
Total costs of revenues			35,161				23,569				(3,680	)			55,050
Gross profit			10,331				1,780				(437	)			11,674
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			11,036				1,241				(437	)			11,840
Income (loss) from operations			(705	)			539				—				(166	)
INTEREST EXPENSE (INCOME), NET			(29	)			144				—				115
Income (loss) before income taxes			(676	)			395				—				(281	)
INCOME TAX PROVISION (BENEFIT)			(15	)			143								128
NET INCOME (LOSS)		$	(661	)		$	252			$	—			$	(409	)
NON-GAAP NET INCOME (LOSS)		$	718			$	252			$	—			$	970
EBITDA		$	1,929			$	582			$	—			$	2,511
ADJUSTED EBITDA		$	3,308			$	582			$	—			$	3,890
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	(661	)		$	252			$	—				(409	)
Income tax expense (benefit)			(15	)			143				—				128
Interest expense (income), net			(29	)			144				—				115
Depreciation and amortization			2,634				43				—				2,677
EBITDA		$	1,929			$	582			$	—			$	2,511
Stock-based compensation			1,379				—				—				1,379
ADJUSTED EBITDA		$	3,308			$	582			$	—			$	3,890
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	(661	)		$	252			$	—			$	(409	)
Stock-based compensation			1,379				—				—				1,379
NON-GAAP NET INCOME (LOSS)		$	718			$	252			$	—			$	970

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.

 

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PFSweb, Inc. and Subsidiaries

Preliminary Unaudited Consolidating Statements of Operations

For the Twelve Months Ended December 31, 2013

(In Thousands)

 

						Business &
		PFSweb				Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	90,982			$	—			$	90,982
Service fee revenue			104,448				8,529				—				112,977
Service fee revenue—affiliate			10,246				1,448				(11,694	)			—
Pass-thru revenue			37,644				—				—				37,644
Total revenues			152,338				100,959				(11,694	)			241,603
COSTS OF REVENUES:
Cost of product revenue			—				85,237				—				85,237
Cost of service fee revenue			78,843				8,708				(10,391	)			77,160
Cost of pass-thru revenue			37,644				—				—				37,644
Total costs of revenues			116,487				93,945				(10,391	)			200,041
Gross profit			35,851				7,014				(1,303	)			41,562
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			41,709				5,829				(1,303	)			46,235
Income (loss) from operations			(5,858	)			1,185				—				(4,673	)
INTEREST EXPENSE (INCOME), NET			84				595				—				679
Income (loss) before income taxes			(5,942	)			590				—				(5,352	)
INCOME TAX PROVISION (BENEFIT)			185				354				—				539
NET INCOME (LOSS)		$	(6,127	)		$	236			$	—			$	(5,891	)
NON-GAAP NET INCOME (LOSS)		$	(1,008	)		$	236			$	—			$	(772	)
EBITDA		$	4,193			$	1,344			$	—			$	5,537
ADJUSTED EBITDA		$	9,312			$	1,344			$	—			$	10,656
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	(6,127	)		$	236			$	—				(5,891	)
Income tax expense (benefit)			185				354				—				539
Interest expense (income), net			84				595				—				679
Depreciation and amortization			10,051				159				—				10,210
EBITDA		$	4,193			$	1,344			$	—			$	5,537
Stock-based compensation			2,574				—				—				2,574
Restructuring and other charges			2,545				—				—				2,545
ADJUSTED EBITDA		$	9,312			$	1,344			$	—			$	10,656
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	(6,127	)		$	236			$	—			$	(5,891	)
Stock-based compensation			2,574				—				—				2,574
Restructuring and other charges			2,545				—				—				2,545
NON-GAAP NET INCOME (LOSS)		$	(1,008	)		$	236			$	—			$	(772	)

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.

 

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PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations

For the Three Months Ended December 31, 2012

(In Thousands)

 

						Business &
		PFSweb				Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	28,290			$	—			$	28,290
Service fee revenue			35,411				—				—				35,411
Service fee revenue—affiliate			1,776				229				(2,005	)			—
Pass-thru revenue			13,269				—				—				13,269
Total revenues			50,456				28,519				(2,005	)			76,970
COSTS OF REVENUES:
Cost of product revenue			—				25,700				—				25,700
Cost of service fee revenue			26,866				229				(976	)			26,119
Cost of pass-thru revenue			13,269				—				—				13,269
Total costs of revenues			40,135				25,929				(976	)			65,088
Gross profit			10,321				2,590				(1,029	)			11,882
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			9,456				2,386				(1,029	)			10,813
Income (loss) from operations			865				204				—				1,069
INTEREST EXPENSE (INCOME), NET			63				167				—				230
Income (loss) before income taxes			802				37				—				839
INCOME TAX PROVISION (BENEFIT)			174				13				—				187
NET INCOME (LOSS)		$	628			$	24			$	—			$	652
NON-GAAP NET INCOME (LOSS)		$	939			$	24			$	—			$	963
EBITDA		$	3,243			$	239			$	—			$	3,482
ADJUSTED EBITDA		$	3,554			$	239			$	—			$	3,793
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	628			$	24			$	—				652
Income tax expense (benefit)			174				13				—				187
Interest expense (income), net			63				167				—				230
Depreciation and amortization			2,378				35				—				2,413
EBITDA		$	3,243			$	239			$	—			$	3,482
Stock-based compensation			311				—				—				311
ADJUSTED EBITDA		$	3,554			$	239			$	—			$	3,793
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	628			$	24			$	—			$	652
Stock-based compensation			311				—				—				311
NON-GAAP NET INCOME (LOSS)		$	939			$	24			$	—			$	963

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.

 

Page 11 of 15

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PFSweb, Inc. and Subsidiaries

Unaudited Consolidating Statements of Operations

For the Twelve Months Ended December 31, 2012

(In Thousands)

 

						Business &
		PFSweb				Retail Connect				Eliminations				Consolidated
REVENUES:
Product revenue, net		$	—			$	119,740			$	—			$	119,740
Service fee revenue			120,433				—				—				120,433
Service fee revenue—affiliate			5,397				679				(6,076	)			—
Pass-thru revenue			41,390				—								41,390
Total revenues			167,220				120,419				(6,076	)			281,563
COSTS OF REVENUES:
Cost of product revenue			—				110,183				—				110,183
Cost of service fee revenue			92,196				679				(3,626	)			89,249
Cost of pass-thru revenue			41,390				—				—				41,390
Total costs of revenues			133,586				110,862				(3,626	)			240,822
Gross profit			33,634				9,557				(2,450	)			40,741
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES			35,664				7,406				(2,450	)			40,620
Income (loss) from operations			(2,030	)			2,151				—				121
INTEREST EXPENSE (INCOME), NET			203				785				—				988
Income (loss) before income taxes			(2,233	)			1,366				—				(867	)
INCOME TAX PROVISION (BENEFIT)			82				562				—				644
NET INCOME (LOSS)		$	(2,315	)		$	804			$	—			$	(1,511	)
NON-GAAP NET INCOME (LOSS)		$	326			$	804			$	—			$	1,130
EBITDA		$	7,117			$	2,252			$	—			$	9,369
ADJUSTED EBITDA		$	9,758			$	2,252			$	—			$	12,010
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
NET INCOME (LOSS)		$	(2,315	)		$	804			$	—				(1,511	)
Income tax expense (benefit)			82				562				—				644
Interest expense (income), net			203				785				—				988
Depreciation and amortization			9,147				101				—				9,248
EBITDA		$	7,117			$	2,252			$	—			$	9,369
Stock-based compensation			1,325				—				—				1,325
Lease termination costs			450				—				—				450
Move related expenses			866				—				—				866
ADJUSTED EBITDA		$	9,758			$	2,252			$	—			$	12,010
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
NET INCOME (LOSS)		$	(2,315	)		$	804			$	—			$	(1,511	)
Stock-based compensation			1,325				—				—				1,325
Lease termination costs			450				—				—				450
Move related expenses			866				—				—				866
NON-GAAP NET INCOME (LOSS)		$	326			$	804			$	—			$	1,130

Note: Business and Retail Connect includes our Supplies Distributors and PFSweb Retail Connect operations, which operate similar financial models on behalf of our client relationships.

 

Page 12 of 15

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PFSweb, Inc. and Subsidiaries

Unaudited Condensed Consolidating Balance Sheets

as of December 31, 2013

(In Thousands)

 

						Business &
		PFSweb				Retail Connect				Eliminations				Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	15,028			$	7,390			$	—			$	22,418
Restricted cash			—				130				—				130
Accounts receivable, net			37,857				18,697				(1,262	)			55,292
Inventories, net			—				14,169				—				14,169
Other receivables			—				5,241				—				5,241
Prepaid expenses and other current assets			3,552				1,161				—				4,713
Total current assets			56,437				46,788				(1,262	)			101,963
PROPERTY AND EQUIPMENT, net			26,945				245				—				27,190
RECEIVABLE/INVESTMENT IN AFFILIATES			12,777				—				(12,777	)			—
OTHER ASSETS			2,800				83				—				2,883
Total assets			98,959				47,116				(14,039	)			132,036
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations		$	4,419			$	3,812			$	—			$	8,231
Trade accounts payable			11,602				23,756				(1,262	)			34,096
Deferred revenue			8,181				—				—				8,181
Accrued expenses			18,114				6,931				—				25,045
Total current liabilities			42,316				34,499				(1,262	)			75,553
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion			2,876				—				—				2,876
PAYABLE TO AFFILIATES			—				23,045				(23,045	)			—
DEFERRED REVENUE			7,491				—				—				7,491
DEFERRED RENT			5,191				—				—				5,191
Total liabilities			57,874				57,544				(24,307	)			91,111
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock			17				19				(19	)			17
Capital contributions			—				1,000				(1,000	)			—
Additional paid-in capital			124,522				28,060				(28,060	)			124,522
Retained earnings (accumulated deficit)			(85,146	)			(41,850	)			41,696				(85,300	)
Accumulated other comprehensive income			1,817				2,343				(2,349	)			1,811
Treasury stock			(125	)			—				—				(125	)
Total shareholders’ equity			41,085				(10,428	)			10,268				40,925
Total liabilities and shareholders’ equity		$	98,959			$	47,116			$	(14,039	)		$	132,036

 

Page 13 of 15

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PFSweb, Inc. and Subsidiaries

Unaudited Condensed Consolidating Balance Sheets

as of December 31, 2012

(In Thousands)

 

						Business &
		PFSweb				Retail Connect				Eliminations				Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	13,079			$	6,547			$	—			$	19,626
Restricted cash			—				283				—				283
Accounts receivable, net			34,831				11,574				(721	)			45,684
Inventories, net			—				24,654				—				24,654
Other receivables			—				7,675				—				7,675
Prepaid expenses and other current assets			2,817				1,529				—				4,346
Total current assets			50,727				52,262				(721	)			102,268
PROPERTY AND EQUIPMENT, net			27,651				266				—				27,917
RECEIVABLE/INVESTMENT IN AFFILIATES			13,396				—				(13,396	)			—
OTHER ASSETS			3,166				120				—				3,286
Total assets			94,940				52,648				(14,117	)			133,471
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations		$	13,072			$	3,588			$	—			$	16,660
Trade accounts payable			12,109				29,105				(721	)			40,493
Deferred revenue			6,573				75				—				6,648
Accrued expenses			16,743				6,354				—				23,097
Total current liabilities			48,497				39,122				(721	)			86,898
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion			5,400				—				—				5,400
PAYABLE TO AFFILIATES			—				22,795				(22,795	)			—
DEFERRED REVENUE			7,562				—				—				7,562
DEFERRED RENT			5,482				78				—				5,560
Total liabilities			66,941				61,995				(23,516	)			105,420
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock			13				19				(19	)			13
Capital contributions			—				1,000				(1,000	)			—
Additional paid-in capital			106,018				28,059				(28,059	)			106,018
Retained earnings (accumulated deficit)			(79,461	)			(40,606	)			40,658				(79,409	)
Accumulated other comprehensive income			1,554				2,181				(2,181	)			1,554
Treasury stock			(125	)			—				—				(125	)
Total shareholders’ equity			27,999				(9,347	)			9,399				28,051
Total liabilities and shareholders’ equity		$	94,940			$	52,648			$	(14,117	)		$	133,471

 

Page 14 of 15

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Company Contact:

Michael C. Willoughby

Chief Executive Officer

or

Thomas J. Madden

Chief Financial Officer

Tel 972-881-2900

Investor Relations:

Liolios Group Inc.

Cody Slach or Greg Falesnik

Tel 949-574-3860

PFSW@liolios.com

 

Page 15 of 15