PFSweb Reports Fourth Quarter and Year-End 2012 Results

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PFSweb Reports Fourth Quarter and Year-End 2012 Results

PFSweb Reports Fourth Quarter and Year-End 2012 Results 13 KB

PFSweb Reports Fourth Quarter and Year-End 2012 ResultsPFSweb, Inc. (Nasdaq: PFSW), an international provider of end-to-end eCommerce solutions, today announced its financial results for the fourth quarter and year ended December 31, 2012.

Mike Willoughby, Chief Executive Officer of PFSweb, stated, “Driven by strong overall eCommerce activity with our existing and new client relationships, PFSweb reported record Service Fee Equivalent Revenue for both the December quarter and calendar year 2012. Meanwhile, we continued to execute on our strategy to achieve scale in our business while increasing operational efficiencies. Those efforts paid off, resulting in the Company nearly doubling its Adjusted EBITDA to $12.0 million for the year ended December 31, 2012, compared to $6.1 million in the year prior.

“During the past four months, we launched six End2End programs for new clients, including sites for BCBGMAXAZRIA, BCBGENERATION, HERVÉ LÉGER BY MAX AZRIA, Pandora and Diageo. We also launched new fulfillment programs for two health and beauty brands under a new master contract with a major consumer packaged goods company. In addition, we continue to have a strong business pipeline with more than $45 million in average annual contract value based on client projections. As a result of the capital investments we made in 2012 to improve the scalability and efficiency of our warehouse, distribution and technology capabilities to handle holiday peak seasons, our operational performance during our fourth quarter was very strong. With our recent holiday success behind us, we are poised to not just meet, but exceed, our clients’ expectations while demonstrating that we can deploy best-in-class eCommerce solutions for our clients and drive value for shareholders,” added Mr. Willoughby.

Summary of consolidated results for the fourth quarter ended December 31, 2012:

Service Fee revenue increased 9% to a record level of $35.4 million, compared to $32.5 million for the same period in 2011; Service Fee Equivalent Revenue (as defined) increased 7% to a record level of $38.0 million, compared to $35.4 million for the same period in 2011;
Total revenue decreased 12% to $77.0 million, compared to $87.5 million for the fourth quarter of 2011;
Adjusted EBITDA (as defined) decreased 2% to $3.8 million, compared to $3.9 million for the same period in 2011;
Net income was $0.7 million, or $0.05 per basic and diluted share, compared to net income of $0.8 million, or $0.06 per basic and diluted share, for the fourth quarter of 2011;
Non-GAAP net income (as defined) was $1.0 million, or $0.08 and $0.07 per basic and diluted share, respectively, compared to non-GAAP net income of $1.7 million, or $0.13 per basic and diluted share, for the quarter ended December 31, 2011.

Summary of consolidated results for the year ended December 31, 2012:

Service Fee revenue increased 26% to a record level of $120.4 million, compared to $95.3 million for the year ended December 31, 2011; Service Fee Equivalent Revenue (as defined) increased 21% to a record level of $130.0 million, compared to $107.1 million for the year ended December 31, 2011;
Total revenue decreased 6% to $281.6 million compared to $298.8 million for the year ended December 31, 2011;
Adjusted EBITDA (as defined) was $12.0 million compared to $6.1 million for year ended December 31, 2011;
Net loss was $1.5 million, or $0.12 per basic and diluted share, compared to a net loss of $4.6 million or $0.36 per basic and diluted share, for year ended December 31, 2011. Net loss for 2012 included approximately $0.9 million of move related expenses and $0.5 million of lease termination costs. Net loss for 2011 included approximately $0.5 million of move related expenses and a $0.9 million loss from discontinued operations related to eCOST.com;
Non-GAAP net income (as defined) was $1.1 million, or $0.09 per basic and diluted share, compared to a non-GAAP net loss of $1.7 million, or $0.14 per basic and diluted share, for the year ended December 31, 2011.

Mr. Willoughby continued, “As we announced yesterday, I have assumed the role of CEO from Mark Layton, who is leaving the company to pursue other business opportunities. As part of the transition, the management team and I began a comprehensive review of our business and we have begun implementing a set of new initiatives, including headcount reductions and organizational realignment, new internal systems and procedures to improve operating efficiency, and investing in our agency services business that provides high value to our clients and generates higher margins. We will continue this review to find ways to capture additional profitable revenue and further reduce operating costs throughout the Company. We believe these activities will help ensure PFSweb becomes a sustainably profitable, growing company.”

“I am very pleased with our strong performance to close out 2012. While we are excited by the opportunities we see in 2013, particularly in current client expansion, international markets and the omni-channel arena, we will be challenged by the previously disclosed transition of certain service fee client programs and by reduced product revenues in our Business & Retail Connect Segment. As a result, we are currently targeting calendar year 2013 Service Fee Equivalent Revenue to be in the range of $110 million to $115 million, compared with $130 million in 2012. The initiatives discussed above have enabled us to mitigate much of the impact of this revenue decline on Adjusted EBITDA, which we expect will be in the range of $8 million to $10 million, excluding the impact of any restructuring expenses, which are expected to be primarily recognized in our March 2013 quarter. We further expect the impact of the revenue decline to be primarily focused in our June and September quarters, as we expect to launch new client engagements in the next few months which will positively impact our fourth quarter. With these new clients and the anticipated expansion of several existing clients, we believe we are well positioned for a strong resurgence in calendar year 2014,” Mr. Willoughby concluded.

Conference Call Information

Management will host a conference call at 11:00 am Eastern Time (10:00 am Central Time) on Wednesday, March 27, 2013, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter pin number 22248664 at least five minutes before the scheduled start time. Investors can also access the call in a “listen only” mode via the Internet at the Company’s website, www.pfsweb.com or www.kcsa.com. Please allow extra time prior to the call to visit the site and download any necessary audio software.

A digital replay of the conference call will be available through April 29, 2013 at (855) 859-2056, pin number 22248664. The replay also will be available at the Company’s website for a limited time.

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, loss from discontinued operations, lease termination costs and certain move related expenses.

EBITDA represents earnings (or losses) before loss from discontinued operations, interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, 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, loss from discontinued operations, 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 excluding certain expenses that may not be indicative of its core operating 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.

About PFSweb, Inc.

PFSweb is engaged by iconic brands to enable and manage customized eCommerce and omni-channel commerce initiatives. PFSweb’s iCommerce Hub(SM) technology ecosystem offers retailers a multi-channel order management system that allows partner/client data integration and international payment processing. PFSweb’s iCommerce Professional Service(SM) provides interactive marketing services, eCommerce web site development and support services, IT development services, content management, customer intelligence and relationship and account management services. PFSweb’s iCommerce Centers of Excellence(SM) provides global fulfillment and logistics, high-touch customer care, client financial services and technology hosting.

Together, PFSweb’s iCommerce Solutions allows for international reach and expertise in both direct-to-consumer and business-to-business initiatives. PFSweb supports organizations across multiple industries including Procter & Gamble, L’Oreal, LEGO, Columbia Sportswear, Sorel, Carter’s, AAFES, Riverbed, Ricoh, Hawker Beechcraft Corp, Roots Canada Ltd., Diageo, BCBGMAXAZRIA, BCBGENERATION and HERVÉ LÉGER BY MAX AZRIA. PFSweb is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Canada, Belgium, and the Philippines.

To find out more about PFSweb (NASDAQ: PFSW), visit the company’s website at http://www.PFSweb.com.

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, 2011 and Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2012 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 review the Annual and Quarterly Reports 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.

(Financial Tables Below)


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,
		2012		2011			2012			2011
REVENUES:
Product revenue, net	$	28,290	$	40,442		$	119,740		$	162,447
Service fee revenue		35,411		32,526			120,433			95,345
Pass-thru revenue		13,269		14,530			41,390			40,974
Total revenues		76,970		87,498			281,563			298,766

COSTS OF REVENUES:
Cost of product revenue		25,700		37,557			110,183			150,738
Cost of service fee revenue		26,119		24,510			89,249			71,751
Cost of pass-thru revenue		13,269		14,530			41,390			40,974
Total costs of revenues		65,088		76,597			240,822			263,463
Gross profit		11,882		10,901			40,741			35,303
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		10,813		9,409			40,620			37,512
Income (loss) from operations		1,069		1,492			121			(2,209	)
INTEREST EXPENSE, NET		230		316			988			1,085
Income (loss) before income taxes		839		1,176			(867	)		(3,294	)
INCOME TAX PROVISION		187		93			644			380
INCOME (LOSS) FROM CONTINUING OPERATIONS		652		1,083			(1,511	)		(3,674	)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		-		(323	)		-			(892	)
NET INCOME (LOSS)	$	652	$	760		$	(1,511	)	$	(4,566	)
NON-GAAP INCOME (LOSS)	$	963	$	1,674		$	1,130		$	(1,724	)

NET INCOME (LOSS) PER SHARE:
Basic	$	0.05	$	0.06		$	(0.12	)	$	(0.36	)
Diluted	$	0.05	$	0.06		$	(0.12	)	$	(0.36	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Basic		12,779		12,764			12,777			12,574
Diluted		12,907		12,909			12,777			12,574

EBITDA	$	3,482	$	3,261		$	9,369		$	4,135
ADJUSTED EBITDA	$	3,793	$	3,852		$	12,010		$	6,085

(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, 2011.


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,
		2012			2011			2012			2011
NET INCOME (LOSS)	$	652		$	760		$	(1,511	)	$	(4,566	)
Loss from discontinued operations, net of tax		-			323			-			892
Income tax expense		187			93			644			380
Interest expense, net		230			316			988			1,085
Depreciation and amortization		2,413			1,769			9,248			6,344
EBITDA	$	3,482		$	3,261		$	9,369		$	4,135
Stock-based compensation		311			347			1,325			1,402
Lease terminations costs		-			-			450			-
Move related expenses		-			244			866			548
ADJUSTED EBITDA	$	3,793		$	3,852		$	12,010		$	6,085


	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2012			2011			2012			2011

NET INCOME (LOSS)	$	652		$	760		$	(1,511	)	$	(4,566	)
Loss from discontinued operations, net of tax		-			323			-			892
Stock-based compensation		311			347			1,325			1,402
Lease terminations costs		-			-			450			-
Move related expenses		-			244			866			548
NON-GAAP INCOME (LOSS)	$	963		$	1,674		$	1,130		$	(1,724	)

NET INCOME (LOSS) PER SHARE:
Basic	$	0.05		$	0.06		$	(0.12	)	$	(0.36	)
Diluted	$	0.05		$	0.06		$	(0.12	)	$	(0.36	)

NON-GAAP INCOME (LOSS) Per Share:
Basic	$	0.08		$	0.13		$	0.09		$	(0.14	)
Diluted	$	0.07		$	0.13		$	0.09		$	(0.14	)



	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2012			2011			2012			2011

TOTAL REVENUES	$	76,970		$	87,498		$	281,563		$	298,766
Pass-thru revenue		(13,269	)		(14,530	)		(41,390	)		(40,974	)
Cost of product revenue		(25,700	)		(37,557	)		(110,183	)		(150,738	)
SERVICE FEE EQUIVALENT REVENUE	$	38,001		$	35,411		$	129,990		$	107,054


PFSweb, Inc. and Subsidiaries
Preliminary Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)


	December 31,			December 31,
		2012			2011
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	19,626		$	17,695
Restricted cash		283			827
Accounts receivable, net of allowance for doubtful accounts of $450 and
$663 at December 31, 2012 and December 31, 2011, respectively		45,684			52,679
Inventories, net of reserves of $1,789 and $1,555 at December 31, 2012 and
December 31, 2011, respectively		24,654			30,487
Other receivables		7,676			11,915
Prepaid expenses and other current assets		4,345			4,697
Total current assets		102,268			118,300

PROPERTY AND EQUIPMENT, net		27,917			14,945
OTHER ASSETS		3,286			3,127
Total assets		133,471			136,372

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations	$	16,660		$	23,939
Trade accounts payable		40,493			48,544
Deferred revenue		6,648			6,766
Accrued expenses		23,097			18,657
Total current liabilities		86,898			97,906

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion		5,400			3,583
DEFERRED REVENUE		7,562			5,908
DEFERRED RENT		5,560			901
Total liabilities		105,420			108,298


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;
12,812,386 and 12,782,907 shares issued at December 31, 2012 and
December 31, 2011, respectively; and 12,778,919 and 12,764,546
shares outstanding as of December 31, 2012 and December 31, 2011, respectively		13			13
Additional paid-in capital		106,018			104,645
Accumulated deficit		(79,409	)		(77,898	)
Accumulated other comprehensive income		1,554			1,399
Treasury stock at cost, 33,467 and 18,361 shares as of December 31, 2012
and December 31, 2011, respectively		(125	)		(85	)
Total shareholders' equity		28,051			28,074
Total liabilities and shareholders' equity	$	133,471		$	136,372


PFSweb, Inc. and Subsidiaries
Preliminary 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 from operations		865		204		-			1,069
INTEREST EXPENSE, NET		63		167		-			230
Income before income taxes		802		37		-			839
INCOME TAX PROVISION		174		13		-			187
NET INCOME	$	628	$	24	$	-		$	652
NON-GAAP NET INCOME	$	939	$	24	$	-		$	963

EBITDA	$	3,243	$	239	$	-		$	3,482
ADJUSTED EBITDA	$	3,554	$	239	$	-		$	3,793


A reconciliation of NET INCOME to EBITDA and ADJUSTED EBITDA follows:

NET INCOME	$	628	$	24	$	-			652
Income tax expense		174		13		-			187
Interest expense , 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 to NON-GAAP NET INCOME follows:

NET INCOME	$	628	$	24	$	-		$	652
Stock-based compensation		311		-		-			311
NON-GAAP NET INCOME	$	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.


PFSweb, Inc. and Subsidiaries
Preliminary 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, NET		203			785		-			988
Income (loss) before income taxes		(2,233	)		1,366		-			(867	)
INCOME TAX PROVISION		82			562		-			644
NET INCOME (LOSS)		(2,315	)		804		-			(1,511	)
NON-GAAP NET INCOME	$	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		82			562		-			644
Interest expense, 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 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	$	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. PFSweb and PFSweb Retail Connect include certain ongoing activity formerly reported as eCOST.


PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended December 31, 2011
(In Thousands)

				Business &
	PFSweb			Retail Connect		eCOST			Eliminations			Consolidated
REVENUES:
Product revenue, net	$	-		$	40,442	$	-		$	-		$	40,442
Service fee revenue		32,526			-		-			-			32,526
Service fee revenue - affiliate		1,732			-		-			(1,732	)		-
Pass-thru revenue		14,530			-		-			-			14,530
Total revenues		48,788			40,442		-			(1,732	)		87,498

COSTS OF REVENUES:
Cost of product revenue		-			37,557		-			-			37,557
Cost of service fee revenue		25,463			-		-			(953	)		24,510
Cost of pass-thru revenue		14,530			-		-			-			14,530
Total costs of revenues		39,993			37,557		-			(953	)		76,597
Gross profit		8,795			2,885		-			(779	)		10,901
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		7,918			2,270		-			(779	)		9,409
Income from operations		877			615		-			-			1,492
INTEREST EXPENSE, NET		6			310		-			-			316
Income before income taxes		871			305		-			-			1,176
INCOME TAX PROVISION (BENEFIT)		(51	)		144		-			-			93
INCOME FROM CONTINUING OPERATIONS		922			161		-			-			1,083
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		-			-		(323	)					(323	)
NET INCOME (LOSS)	$	922		$	161	$	(323	)	$	-		$	760
NON-GAAP NET INCOME	$	1,513		$	161	$	-		$	-		$	1,674

EBITDA	$	2,629		$	632	$	-		$	-		$	3,261
ADJUSTED EBITDA	$	3,220		$	632	$	-		$	-		$	3,852


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)	$	922		$	161	$	(323	)	$	-			760
Loss from discontinued operations, net of tax		-			-		323			-			323
Income tax expense (benefit)		(51	)		144		-			-			93
Interest expense, net		6			310		-			-			316
Depreciation and amortization		1,752			17		-			-			1,769
EBITDA	$	2,629		$	632	$	-		$	-		$	3,261
Stock-based compensation		347			-		-			-			347
Move related expenses		244											244
ADJUSTED EBITDA	$	3,220		$	632	$	-		$	-		$	3,852

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME follows:

NET INCOME (LOSS)	$	922		$	161	$	(323	)	$	-		$	760
Loss from discontinued operations, net of tax		-			-		323			-			323
Stock-based compensation		347			-		-			-			347
Move related expenses		244			-		-			-			244
NON-GAAP NET INCOME	$	1,513		$	161	$	-		$	-		$	1,674


PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Twelve Months Ended December 31, 2011
(In Thousands)

				Business &
	PFSweb			Retail Connect		eCOST			Eliminations			Consolidated
REVENUES:
Product revenue, net	$	-		$	162,447	$	-		$	-		$	162,447
Service fee revenue		95,345			-		-			-			95,345
Service fee revenue - affiliate		6,501			-		-			(6,501	)		-
Pass-thru revenue		40,976			-		-			(2	)		40,974
Total revenues		142,822			162,447		-			(6,503	)		298,766

COSTS OF REVENUES:
Cost of product revenue		-			150,738		-			-			150,738
Cost of service fee revenue		74,367			-		-			(2,616	)		71,751
Cost of pass-thru revenue		40,976			-		-			(2	)		40,974
Total costs of revenues		115,343			150,738		-			(2,618	)		263,463
Gross profit		27,479			11,709		-			(3,885	)		35,303
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		32,892			8,505		-			(3,885	)		37,512
Income (loss) from operations		(5,413	)		3,204		-			-			(2,209	)
INTEREST EXPENSE (INCOME), NET		(140	)		1,225		-			-			1,085
Income (loss) before income taxes		(5,273	)		1,979		-			-			(3,294	)
INCOME TAX PROVISION (BENEFIT)		(401	)		781		-			-			380
INCOME (LOSS) FROM CONTINUING OPERATIONS		(4,872	)		1,198		-			-			(3,674	)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX		-			-		(892	)					(892	)
NET INCOME (LOSS)	$	(4,872	)	$	1,198	$	(892	)	$	-		$	(4,566	)
NON-GAAP NET INCOME (LOSS)	$	(2,922	)	$	1,198	$	-		$	-		$	(1,724	)

EBITDA	$	892		$	3,243	$	-		$	-		$	4,135
ADJUSTED EBITDA	$	2,842		$	3,243	$	-		$	-		$	6,085


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)	$	(4,872	)	$	1,198	$	(892	)	$	-			(4,566	)
Loss from discontinued operations, net of tax		-			-		892			-			892
Income tax expense (benefit)		(401	)		781		-			-			380
Interest expense (income), net		(140	)		1,225		-			-			1,085
Depreciation and amortization		6,305			39		-			-			6,344
EBITDA	$	892		$	3,243	$	-		$	-		$	4,135
Stock-based compensation		1,402			-		-			-			1,402
Move related expenses		548											548
ADJUSTED EBITDA	$	2,842		$	3,243	$	-		$	-		$	6,085

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)	$	(4,872	)	$	1,198	$	(892	)	$	-		$	(4,566	)
Loss from discontinued operations, net of tax		-			-		892			-			892
Stock-based compensation		1,402			-		-			-			1,402
Move related expenses		548											548
NON-GAAP NET INCOME (LOSS)	$	(2,922	)	$	1,198	$	-		$	-		$	(1,724	)


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		-			7,676			-			7,676
Prepaid expenses and other current assets		2,817			1,528			-			4,345
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


PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2011
(In Thousands)


				Business &
	PFSweb			Retail Connect			Eliminations			Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	12,818		$	4,877		$	-		$	17,695
Restricted cash		138			689			-			827
Accounts receivable, net		35,881			17,133			(335	)		52,679
Inventories, net		-			30,487			-			30,487
Other receivables		-			11,915			-			11,915
Prepaid expenses and other current assets		3,273			1,424			-			4,697
Total current assets		52,110			66,525			(335	)		118,300

PROPERTY AND EQUIPMENT, net		14,884			61			-			14,945
RECEIVABLE/INVESTMENT IN AFFILIATES		13,130			-			(13,130	)		-
OTHER ASSETS		2,973			154			-			3,127
Total assets		83,097			66,740			(13,465	)		136,372

LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations	$	13,918		$	10,021		$	-		$	23,939
Trade accounts payable		12,089			36,790			(335	)		48,544
Deferred revenue		6,749			17			-			6,766
Accrued expenses		11,998			6,659			-			18,657
Total current liabilities		44,754			53,487			(335	)		97,906

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion		3,513			70			-			3,583
PAYABLE TO AFFILIATES		-			22,495			(22,495	)		-
DEFERRED REVENUE		5,908			-			-			5,908
DEFERRED RENT		901			-			-			901
Total liabilities		55,076			76,052			(22,830	)		108,298

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Common stock		13			19			(19	)		13
Capital contributions		-			1,000			(1,000	)		-
Additional paid-in capital		104,645			28,059			(28,059	)		104,645
Retained earnings (accumulated deficit)		(77,950	)		(40,446	)		40,498			(77,898	)
Accumulated other comprehensive income		1,398			2,056			(2,055	)		1,399
Treasury stock		(85	)		-			-			(85	)
Total shareholders' equity		28,021			(9,312	)		9,365			28,074
Total liabilities and shareholders' equity	$	83,097		$	66,740		$	(13,465	)	$	136,372

Press Release

PFSweb Reports Fourth Quarter and Year-End 2012 Results

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