Table of Contents
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 16, 2004
PFSWEB, INC.
| DELAWARE | 000-28275 | 75-2837058 | ||
| (State or other | (Commission File | (I.R.S. Employer | ||
| jurisdiction of | Number) | Identification Number) | ||
| incorporation) |
500 NORTH CENTRAL EXPRESSWAY
PLANO, TX 75074
(972) 881-2900
NONE
| ITEM 12. Results of Operations and Financial Condition | ||||||||
| SIGNATURE | ||||||||
| Press Release | ||||||||
Table of Contents
ITEM 12. Results of Operations and Financial Condition
On August 16, 2004, PFSweb, Inc. issued a press release announcing its financial results for the quarter ended June 30, 2004. Attached to this current report on Form 8-K is a copy of the related press release dated August 16, 2004. The information in this Report on Form 8-K, and the exhibit hereto, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section.
| Exhibit No. |
Description |
|
99.1
|
Press Release Issued August 16, 2004 |
Table of Contents
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| PFSweb, Inc. |
||||
| Dated: August 16, 2004 | By: | /s/ THOMAS J. MADDEN | ||
| Thomas J. Madden | ||||
| Executive Vice President, Chief Financial and Accounting Officer |
||||
Exhibit 99.1 Press Release Dated August 16, 2004
For Immediate Release
Contact: Mark C. Layton
|
Preston F. Kirk, APR | |
Senior Partner and Chief Executive Officer
|
Michael A. Burns & Associates | |
or Thomas J. Madden
|
(830) 693-4447 | |
Senior Partner and Chief Financial Officer
|
kirk@281.com | |
(972) 881-2900 |
PFSweb Reports Positive Second Quarter Results
Record Revenues, Income, and New Client Additions Highlight Quarter
PLANO, TEXAS (August 16, 2004) – PFSweb, Inc. (NASDAQ: PFSW), a global provider of integrated business process outsourcing (BPO) solutions, today reported its results for the quarter ended June 30, 2004. “The results for the quarter are the best results from ongoing operations we have reported since PFSweb went public”, said Mark C. Layton, Senior Partner and Chief Executive Officer of PFSweb.
PFSweb’s consolidated results for the June 2004 quarter include total net revenues of $76.2 million, net income before interest, taxes and depreciation and amortization of $2.2 million, and net income of $479,000, or $0.02 per share. The consolidated balance sheet as of June 30, 2004, reflects $114.8 million in total assets, including $16.8 million in cash, of which $1.3 million is restricted, and shareholders’ equity of $26.9 million, or $1.27 per share.
“We are highly energized about the progress we continue to make in developing our business,” continued Layton. “It is truly gratifying to see so many aspects of our business beginning to blossom.
“The June quarter is traditionally our strongest quarter due primarily to the seasonality of our largest service fee client relationship. In addition to seasonality, we also benefited this quarter from several incremental projects with both existing and new clients,” he said.
“In additional to the record financial results, PFSweb also experienced outstanding success in new client additions. During the past three months, we gained many new client relationships, including Raytheon Aircraft Company, FLAVIA® Beverage Systems and Brillian Corporation, further broadening the industries we serve. We are currently actively involved in the implementation efforts applicable to many of our recent client wins. Due to the time period estimated to fully implement these contracts, we expect to realize the majority of the financial benefit of these new contracts beginning in calendar year 2005.
“Our sales proposal pipeline, which currently includes more than $25 million in annual service fees with both new and existing clients, continues to be robust. We are in the contracting stage for certain of these proposals and we continue to work hard to close additional new business opportunities to further fuel our growth,” Layton emphasized.
“PFSweb’s financial foundation continues to be solid,” stated Tom Madden, Senior Partner and Chief Financial Officer of PFSweb. “The gross margin percentage for our service fee business during the June 2004 quarter was higher as a result of the seasonality of our largest service fee client and certain incremental client projects. Cash
generated from operating activities during the quarter offset cash used to fund this quarter’s capital expenditures and lease and debt payments, enabling us to maintain our strong cash position at $16.8 million as of June 30, 2004. We are keenly aware of the impact that monitoring and controlling our costs has on our cash balance, and we constantly review our operating expenses to ensure they align with our targeted growth levels.
“As for our near-term outlook,” Madden continued, “we reiterate that the June quarter is traditionally our strongest quarter and the March quarter is traditionally our lowest due to the seasonality of our largest service fee client relationship. With recent wins from certain clients that are already operational and the current projections for our existing clients, we expect that our results for the September 2004 quarter will be moderately better than the September 2003 quarter.”
CONFERENCE CALL INFO:
PFSweb will hold a conference call Monday, August 16, 2004 at 10:00 a.m. Central Time. To ensure attendance on the call, plan to dial in by 9:50 a.m. to 973-582-2741. Ask to be placed on the PFSweb Earnings Release Conference Call. Two hours after the conference, a recorded playback can be heard for 14 days at 973-341-3080, using the confirmation number 5035610. Check www.pfsweb.com and our August 3, 2004 investor conference call press release for more details on the call.
About PFSweb, Inc.
When the world’s brand names need proven, fast and secure business infrastructure to enable traditional and e-commerce strategies, they choose PFSweb for comprehensive outsourcing solutions. The PFSweb team of experts designs diverse solutions for clients around a flexible core business infrastructure. PFSweb provides solutions that include: professional consulting services, order management, web-enabled customer contact centers, customer relationship management, international distribution services, kitting and assembly services, managed web hosting and site design, billing and collection services and ERP information interfacing utilizing the Entente Suite(SM).
Our services are provided to a multitude of industries and company types, including such clients as Adaptec (NASDAQ: ADPT), Brillian (NASDAQ: BRLC), Dupont Fluoroproducts, FLAVIA Beverage Systems, Hewlett-Packard (NYSE: HPQ), iGo/Mobility Electronics (NASDAQ: MOBE), International Business Machines (NYSE: IBM), Lancôme, a cosmetics division of L’Oreal International (ADR: LORLY), Nokia (NYSE: NOK), Pfizer, Inc. (NYSE: PFE), Raytheon Aircraft Company, Roots, Inc., Shell Energy Services Company, Smithsonian Institution and Xerox (NYSE: XRX).
The matters discussed in this news release (except for historical information) and, in particular, information regarding estimates, future revenue, earnings and business plans and goals, consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and are subject to and involve risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, our ability to retain and expand relationships with existing clients and attract new clients; our dependence upon our agreements with IBM; our reliance on the fees generated by the transaction volume or product sales of our clients; our reliance on our clients’ projections or transaction volume or product sales; our client mix and the seasonality of their business; our ability to finalize pending contracts; the impact of strategic alliances and acquisitions; trends in the market for our services; trends in e-commerce; whether we can continue and manage growth; changes in the trend toward outsourcing; increased competition; our ability to generate more revenue and achieve sustainable profitability; effects of changes in profit margins; the customer concentration of our business; the unknown effects of possible system failures and rapid changes in technology; trends in government regulation both foreign and domestic; foreign currency risks and other risks of operating in foreign countries; potential litigation involving our e-commerce intellectual property rights; our dependency on key personnel; our ability to raise additional capital or obtain additional financing; our relationship with and our guarantees of the working capital indebtedness of our subsidiary, Supplies Distributors; and our ability or the ability of our subsidiaries to borrow under current financing arrangements and
maintain compliance with debt covenants; and whether warrants sold in the private placement will be exercised in the future. A description of these factors, as well as other factors, which could affect the Company’s business, is set forth in the Company’s Form 10-K for the year ended December 31, 2003.
In addition, some forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Therefore, actual outcomes and results may differ materially from what is expected or forecasted in such forward-looking statements. We undertake 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.
To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit our Web site at www.pfsweb.com. The PFSweb web site is not part of this release. PFSweb and GlobalMerchant CommerceWareTM are registered trademarks of PFSweb, Inc. IBM is a registered trademark of International Business Machines Corp. All rights reserved.
– financial statements follow –
Exhibit A
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
Revenues: |
||||||||||||||||
Product revenue, net |
$ | 65,304 | $ | 63,137 | $ | 133,874 | $ | 122,856 | ||||||||
Service fee revenue |
14,550 | 11,279 | 23,293 | 18,527 | ||||||||||||
Total gross revenues |
79,854 | 74,416 | 157,167 | 141,383 | ||||||||||||
Less pass-through charges |
3,685 | 798 | 5,466 | 1,438 | ||||||||||||
Net revenues |
76,169 | 73,618 | 151,701 | 139,945 | ||||||||||||
Costs of revenues: |
||||||||||||||||
Cost of product revenue |
61,723 | 59,585 | 126,176 | 115,992 | ||||||||||||
Cost of net service fee revenue |
6,650 | 6,414 | 11,843 | 11,327 | ||||||||||||
Total costs of revenues |
68,373 | 65,999 | 138,019 | 127,319 | ||||||||||||
Gross profit |
7,796 | 7,619 | 13,682 | 12,626 | ||||||||||||
Selling, general and administrative expenses |
6,805 | 6,443 | 13,828 | 12,555 | ||||||||||||
Income (loss) from operations |
991 | 1,176 | (146 | ) | 71 | |||||||||||
Interest expense, net |
324 | 506 | 752 | 1,114 | ||||||||||||
Income (loss) before income taxes |
667 | 670 | (898 | ) | (1,043 | ) | ||||||||||
Income tax provision |
188 | 203 | 390 | 264 | ||||||||||||
Net income (loss) |
$ | 479 | $ | 467 | $ | (1,288 | ) | $ | (1,307 | ) | ||||||
Net income (loss) per share: |
||||||||||||||||
Basic |
$ | 0.02 | $ | 0.03 | $ | (0.06 | ) | $ | (0.07 | ) | ||||||
Diluted |
$ | 0.02 | $ | 0.03 | $ | (0.06 | ) | $ | (0.07 | ) | ||||||
Weighted average number of shares outstanding: |
||||||||||||||||
Basic |
21,239 | 18,429 | 21,212 | 18,422 | ||||||||||||
Diluted |
23,129 | 18,605 | 21,212 | 18,422 | ||||||||||||
EBITDA (LBITDA) (B) |
$ | 2,201 | $ | 2,342 | $ | 2,190 | $ | 2,426 | ||||||||
| (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, 2003. | |
| (B) | “EBITDA (LBITDA),” or earnings (loss) before interest, taxes, depreciation, and amortization, and excluding equity in earnings of affiliate, is widely used by analysts, investors and other interested parties. We present EBITDA (LBITDA) because we believe it is useful in evaluating our operating performance compared to that of other companies in our industry, as the calculation of EBITDA eliminates 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. EBITDA (LBITDA) is not a financial measure determined by generally accepted accounting principles and should not be considered as an alternative to net loss as a measure of operating results or to cash flows as a measure of funds available for discretionary or other liquidity purposes. EBITDA (LBITDA) may not be comparably calculated from one company to another. A reconciliation of Net income (loss) to EBITDA (LBITDA) is as follows: |
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
Net income (loss) |
$ | 479 | $ | 467 | $ | (1,288 | ) | $ | (1,307 | ) | ||||||
Income tax provision |
188 | 203 | 390 | 264 | ||||||||||||
Interest expense, net |
324 | 506 | 752 | 1,114 | ||||||||||||
Depreciation and amortization |
1,210 | 1,166 | 2,336 | 2,355 | ||||||||||||
EBITDA (LBITDA) |
$ | 2,201 | $ | 2,342 | $ | 2,190 | $ | 2,426 | ||||||||
Exhibit A (continued)
PFSweb, Inc. and Subsidiaries
Consolidated Balance Sheets
(In Thousands, Except Share Data)
| June 30, | December 31, | |||||||
| 2004 |
2003 |
|||||||
| (Unaudited) | ||||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ | 15,487 | $ | 14,743 | ||||
Restricted cash |
605 | 1,091 | ||||||
Accounts receivable, net of allowance
for doubtful accounts of $483 and $339
at June 30, 2004 and December 31, 2003,
respectively |
37,602 | 31,658 | ||||||
Inventories, net |
42,716 | 44,589 | ||||||
Other receivables |
4,763 | 3,091 | ||||||
Prepaid expenses and other current assets |
2,608 | 2,417 | ||||||
Total current assets |
103,781 | 97,589 | ||||||
PROPERTY AND EQUIPMENT, net |
9,988 | 9,589 | ||||||
RESTRICTED CASH |
675 | 900 | ||||||
OTHER ASSETS |
319 | 281 | ||||||
Total assets |
$ | 114,763 | $ | 108,359 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Current portion of long-term debt and capital lease obligations |
$ | 55,376 | $ | 57,085 | ||||
Trade accounts payable |
20,003 | 11,996 | ||||||
Accrued expenses |
8,403 | 7,101 | ||||||
Total current liabilities |
83,782 | 76,182 | ||||||
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current
portion |
3,287 | 2,762 | ||||||
OTHER LIABILITIES |
799 | 998 | ||||||
COMMITMENTS AND CONTINGENCIES |
||||||||
SHAREHOLDERS’ EQUITY: |
||||||||
Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued and outstanding |
— | — | ||||||
Common stock, $0.001 par value; 40,000,000 shares authorized;
21,342,092 and 21,247,941 shares issued at June 30, 2004
and December 31, 2003, respectively; and 21,255,792 and
21,161,641 outstanding at June 30, 2004 and December 31,
2003, respectively |
21 | 21 | ||||||
Additional paid-in capital |
56,294 | 56,156 | ||||||
Accumulated deficit |
(30,591 | ) | (29,303 | ) | ||||
Accumulated other comprehensive income |
1,256 | 1,628 | ||||||
Treasury stock at cost, 86,300 shares |
(85 | ) | (85 | ) | ||||
Total shareholders’ equity |
26,895 | 28,417 | ||||||
Total liabilities and shareholders’ equity |
$ | 114,763 | $ | 108,359 | ||||
Exhibit B
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations for the Three Months Ended
June 30, 2004
(In Thousands)
| Business | ||||||||||||||||
| Supplies | ||||||||||||||||
| Distributors | ||||||||||||||||
| PFSweb, Inc. |
Holdings, LLC |
Eliminations |
Consolidated |
|||||||||||||
REVENUES: |
||||||||||||||||
Product revenue, net |
$ | — | $ | 65,304 | $ | — | $ | 65,304 | ||||||||
Service fee revenue |
14,550 | — | — | 14,550 | ||||||||||||
Service fee revenue, affiliate |
2,127 | — | (2,127 | ) | — | |||||||||||
Total gross revenues |
16,677 | 65,304 | (2,127 | ) | 79,854 | |||||||||||
Less pass-through charges |
3,710 | — | (25 | ) | 3,685 | |||||||||||
Net revenues |
12,967 | 65,304 | (2,102 | ) | 76,169 | |||||||||||
COSTS OF REVENUES: |
||||||||||||||||
Cost of product revenue |
— | 61,723 | — | 61,723 | ||||||||||||
Cost of service fee revenue |
7,208 | — | (558 | ) | 6,650 | |||||||||||
Total costs of revenues |
7,208 | 61,723 | (558 | ) | 68,373 | |||||||||||
Gross profit |
5,759 | 3,581 | (1,544 | ) | 7,796 | |||||||||||
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES |
5,995 | 2,354 | (1,544 | ) | 6,805 | |||||||||||
Income (loss) from operations |
(236 | ) | 1,227 | — | 991 | |||||||||||
EQUITY IN EARNINGS OF AFFILIATE |
519 | — | (519 | ) | — | |||||||||||
INTEREST EXPENSE (INCOME), NET |
(111 | ) | 435 | — | 324 | |||||||||||
Income (loss) before income taxes |
394 | 792 | (519 | ) | 667 | |||||||||||
INCOME TAX PROVISION (BENEFIT) |
(85 | ) | 273 | — | 188 | |||||||||||
NET INCOME (LOSS) |
$ | 479 | $ | 519 | $ | (519 | ) | $ | 479 | |||||||
A reconciliation of Net income (loss) to EBITDA (LBITDA) follows: |
||||||||||||||||
Net income (loss) |
$ | 479 | $ | 519 | $ | (519 | ) | $ | 479 | |||||||
Income tax expense (benefit) |
(85 | ) | 273 | — | 188 | |||||||||||
Interest expense (income) |
(111 | ) | 435 | — | 324 | |||||||||||
Equity in earnings of affiliate |
(519 | ) | — | 519 | — | |||||||||||
Depreciation and amortization |
1,210 | — | — | 1,210 | ||||||||||||
EBITDA (B) |
$ | 974 | $ | 1,227 | $ | — | $ | 2,201 | ||||||||
| (B) | See Exhibit A for description and discussion of EBITDA (LBITDA) |
Exhibit B (continued)
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets as of June 30, 2004
(In Thousands)
| Business | ||||||||||||||||
| Supplies | ||||||||||||||||
| Distributors | ||||||||||||||||
| PFSweb, Inc. |
Holdings, LLC |
Eliminations |
Consolidated |
|||||||||||||
ASSETS |
||||||||||||||||
CURRENT ASSETS: |
||||||||||||||||
Cash and cash equivalents |
$ | 13,455 | $ | 2,032 | $ | — | $ | 15,487 | ||||||||
Restricted cash |
225 | 380 | — | 605 | ||||||||||||
Accounts and other receivables, net |
9,128 | 28,683 | (209 | ) | 37,602 | |||||||||||
Inventories, net |
— | 42,716 | — | 42,716 | ||||||||||||
Prepaid expenses and other current assets |
634 | 6,737 | — | 7,371 | ||||||||||||
Total current assets |
23,442 | 80,548 | (209 | ) | 103,781 | |||||||||||
PROPERTY AND EQUIPMENT, net |
9,988 | — | — | 9,988 | ||||||||||||
NOTE RECEIVABLE FROM AFFILIATE |
7,005 | — | (7,005 | ) | — | |||||||||||
RESTRICTED CASH |
675 | — | — | 675 | ||||||||||||
INVESTMENT IN AFFILIATE |
6,001 | — | (6,001 | ) | — | |||||||||||
OTHER ASSETS |
319 | — | — | 319 | ||||||||||||
Total assets |
$ | 47,430 | $ | 80,548 | $ | (13,215 | ) | $ | 114,763 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||||||||||
CURRENT LIABILITIES: |
||||||||||||||||
Current portion of long-term debt and capital lease
obligations |
$ | 4,073 | $ | 51,303 | $ | — | $ | 55,376 | ||||||||
Trade accounts payable |
6,940 | 13,272 | (209 | ) | 20,003 | |||||||||||
Accrued expenses |
5,490 | 2,913 | — | 8,403 | ||||||||||||
Total current liabilities |
16,503 | 67,488 | (209 | ) | 83,782 | |||||||||||
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less
current portion |
3,287 | — | — | 3,287 | ||||||||||||
NOTE PAYABLE TO AFFILIATE |
— | 7,005 | (7,005 | ) | — | |||||||||||
OTHER LIABILITIES |
799 | — | — | 799 | ||||||||||||
COMMITMENTS AND CONTINGENCIES |
||||||||||||||||
SHAREHOLDERS’ EQUITY: |
||||||||||||||||
Common stock |
21 | — | — | 21 | ||||||||||||
Capital contributions |
— | 1,000 | (1,000 | ) | — | |||||||||||
Additional paid-in capital |
56,294 | — | — | 56,294 | ||||||||||||
Retained earnings (accumulated deficit) |
(30,645 | ) | 3,536 | (3,482 | ) | (30,591 | ) | |||||||||
Accumulated other comprehensive income |
1,256 | 1,519 | (1,519 | ) | 1,256 | |||||||||||
Treasury stock |
(85 | ) | — | — | (85 | ) | ||||||||||
Total shareholders’ equity |
26,841 | 6,055 | (6,001 | ) | 26,895 | |||||||||||
Total liabilities and shareholders’ equity |
$ | 47,430 | $ | 80,548 | $ | (13,215 | ) | $ | 114,763 | |||||||