UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

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): July 25, 2018

 

 

PCM, Inc.

(Exact name of registrant as specified in its charter)

 

Delaware	000-25790	95-4518700
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

 

1940 E. Mariposa Avenue

El Segundo, California 90245

(Address of principal executive offices)(zip code)

 

(310) 354-5600

(Registrant’s telephone number, including area code)

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

 

[  ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On July 25, 2018, PCM, Inc. (the “Company”) issued an earnings release announcing its financial results for the quarter ended June 30, 2018. The release did not include certain financial statements, related notes and certain other financial information that will be filed with the Securities and Exchange Commission (“SEC”) as part of the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2018. A copy of the press release, relating to such announcement, dated July 25, 2018, is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

99.1

Press Release dated July 25, 2018 (furnished pursuant to Item 2.02 of Form 8-K)

 

 

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.

 

	PCM, INC.
	By:	/s/ Brandon H. LaVerne
	Name:	Brandon H. LaVerne
	Title:	Chief Financial Officer
Dated: July 25, 2018

 

 

EXHIBIT 99.1

 

Investor Relations:

Kim Rogers

Hayden IR

(385) 831-7337

[email protected]

 

PCM REPORTS RECORD SECOND QUARTER 2018 RESULTS AND

RAISES GROSS MARGIN AND NON-GAAP EARNINGS GUIDANCE

 

Gross Profit Margin Increased 120 Basis Points to 16.5%

Operating Profit Margin Increased 140 Basis Points to 2.4%

Non-GAAP EBITDA Margin Increased 130 Basis Points to 3.5%

Diluted EPS Increased 256% to $0.64

Non-GAAP Adjusted EPS Increased 116% to $0.82

 

El Segundo, California — July 25, 2018 — PCM, Inc. (NASDAQ: PCMI), a leading technology solutions provider, today reported financial results for the second quarter of 2018.

 

Second Quarter Consolidated Financial Summary

 

		Three Months Ended June 30,
(in millions, except per share data)		2018				2017				% Change
Net Sales		$	546.4			$	556.1				(2	)
Gross Profit			90.4				85.1				6
Gross Profit Margin			16.5	%			15.3	%			120	bp
Consolidated SG&A		$	77.2			$	79.7				(3	)
Operating Profit			13.2				5.4				144
Net Income			7.9				2.4				233
Non-GAAP Net Income			10.0				5.2				94
EBITDA			16.6				8.9				86
Adjusted EBITDA			19.0				12.2				56
Diluted Earnings per Share			0.64				0.18				256
Adjusted Diluted Earnings per Share			0.82				0.38				116

 

Frank Khulusi, Chairman and CEO of PCM, Inc., stated, “Coming on the heels of a great Q1, I am very pleased with our fantastic results in the second quarter. We achieved record gross profit, gross margin and adjusted EPS through solid execution in our strategic areas of focus and investment. During the quarter we increased our focus on higher margin sales such as managed services, advanced technologies, cloud, and security solutions, and in some cases walked away from some low-margin volume business we identified as unprofitable. These moves helped us achieve our highest ever gross margin of 16.5%, 120 basis points higher than the same quarter last year, and resulted in a slight reduction in sales, an outcome we’re happy with as our gross profit increased 6% from the same quarter last year. Reflecting strong expense discipline, consolidated SG&A expenses declined by 3% despite the 6% increase in gross profit. All of this resulted in us reaching on a non-GAAP basis adjusted EBITDA of $19 million, an adjusted EBITDA margin of 3.5%, and adjusted EPS of $0.82, all significant bottom line achievements we’re proud of. Additionally, this increased profitability combined with our focus on working capital management resulted in approximately $33 million of increased operating cash flow and nearly $36 million in further reductions in our net debt, which has now declined by nearly $69 million since the end of 2017. I would like to thank all my fellow co-workers at PCM for their hard work, die-hard dedication, and significant contribution to these record results.”

 

Commenting on PCM’s outlook, Mr. Khulusi concluded, “Due to our strong performance year to date as well as having a solid outlook for the rest of the year, we are increasing our 2018 guidance for non-GAAP earnings per share by $0.20 to a range of $2.20 - $2.30. We are also increasing our gross margin guidance for the year to a new range of 15.60% to 15.85% on revised sales growth guidance of low single digits, reflecting our focus on more profitable sales.”

 

 

New Accounting Standard

 

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, replaced 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. We adopted the guidance on January 1, 2018 using the full retrospective method, which resulted in adjustments to our consolidated statement of operations for the three and six months ended June 30, 2017, and our consolidated statement of cash flows for the six months ended June 30, 2017 presented herein.

 

Second Quarter Segment Sales Summary

 

		Three Months Ended June 30,
		2018								2017
(in thousands)		Net Sales				Percentage of Total Net Sales				Net Sales				Percentage of Total Net Sales				Dollar Change				Percent Change
Commercial		$	410,950				75	%		$	435,893				78	%		$	(24,943	)			(6	)%
Public Sector			74,712				14				76,427				14				(1,715	)			(2	)
Canada			47,416				9				43,579				8				3,837				9
United Kingdom			13,512				2				362				—				13,150				NM	(1)
Corporate & Other			(160	)			—				(179	)			—				19				NM	(1)
Consolidated		$	546,430				100	%		$	556,082				100	%		$	(9,652	)			(2	)%

 

(1)	Not meaningful.

 

Results of Operations

 

Net Sales

 

Consolidated net sales were $546.4 million in the three months ended June 30, 2018 compared to $556.1 million in the three months ended June 30, 2017, a decrease of $9.7 million or 2%. Consolidated sales of services were $42.9 million in the three months ended June 30, 2018 compared to $40.8 million in the three months ended June 30, 2017, an increase of $2.1 million, or 5%, and represented 8% and 7% of consolidated net sales in the three months ended June 30, 2018 and 2017, respectively.

 

Commercial net sales were $411.0 million in the three months ended June 30, 2018 compared to $435.9 million in the three months ended June 30, 2017, a decrease of $24.9 million or 6%. Sales of services in our Commercial segment were $29.4 million in the three months ended June 30, 2018 compared to $27.6 million in the three months ended June 30, 2017, an increase of $1.8 million or 7%, and represented 7% and 6% of Commercial net sales in the three months ended June 30, 2018 and 2017, respectively. The decrease in our Commercial segment net sales in the three months ended June 30, 2018 was impacted by a large, low-margin enterprise customer project in the prior year that did not reoccur, as well as a several specific customer deals we elected not to pursue based on our focus on profitable growth.

 

Public Sector net sales were $74.7 million in the three months ended June 30, 2018 compared to $76.4 million in the three months ended June 30, 2017, a decrease of $1.7 million or 2%, primarily due to a 22% decrease in our federal sales, partially offset by a 5% increase in our state and local government and educational institution (“SLED”) sales. Sales of services in our Public Sector segment were $4.8 million in the three months ended June 30, 2018 compared to $5.8 million in the three months ended June 30, 2017, a decrease of $1.0 million or 18%, and represented 6% and 8% of Public Sector net sales in the three months ended June 30, 2018 and 2017, respectively. Our federal business net sales were negatively impacted in the quarter by the loss of a Federal contract, which we were unwilling to rebid at a loss as we stated over the last few quarters.

 

Canada net sales were $47.4 million in the three months ended June 30, 2018 compared to $43.6 million in the three months ended June 30, 2017, an increase of $3.8 million, or 9%. Sales of services in our Canada segment were $7.5 million in the three months ended June 30, 2018 compared to $7.4 million in the three months ended June 30, 2017, and represented 16% and 17% of Canada net sales in the three months ended June 30, 2018 and 2017, respectively.

 

 

Our United Kingdom segment, which officially launched in the second quarter of 2017, generated net sales of $13.5 million in the three months ended June 30, 2018 compared to $0.4 million in the three months ended June 30, 2017, an increase of $13.1 million.

 

Gross Profit and Gross Profit Margin

 

Consolidated gross profit was $90.4 million in the three months ended June 30, 2018 compared to $85.1 million in the three months ended June 30, 2017, an increase of $5.3 million, or 6%. Consolidated gross profit margin increased to 16.5% in the three months ended June 30, 2018 from 15.3% in the same period last year. The increase in consolidated gross profit and gross profit margin was primarily due to a shift in mix toward higher margin solutions and service sales.

 

Selling, General & Administrative Expenses

 

Consolidated SG&A expenses were $77.2 million in the three months ended June 30, 2018 compared to $79.7 million in the three months ended June 30, 2017, a decrease of $2.5 million or 3%. Consolidated SG&A expenses as a percentage of net sales decreased to 14.1% in the three months ended June 30, 2018 from 14.3% in the same period last year. The decrease in consolidated SG&A expenses was primarily related to a $2.0 million decrease in outside service costs primarily related to the termination of the Pakistani BPO service contract, and a $1.0 million decrease in telecommunication costs, partially offset by an increase in personnel costs of $1.2 million, which was primarily due to our new United Kingdom segment.

 

Operating Profit

 

Consolidated operating profit increased 144% to $13.2 million compared to $5.4 million in the prior year, due to the increase in gross profit and reduction in SG&A expenses for the reasons discussed above.

 

Income Taxes

 

Income tax expense was $3.1 million in the three months ended June 30, 2018 compared to $1.2 million in the three months ended June 30, 2017. Our effective tax rate was 28.4% compared to 33.4% in the prior year. Income taxes in the three months ended June 30, 2018 reflected the new lower Federal income tax rate and other factors within tax reform, while income taxes in the three months ended June 30, 2017 benefited from $0.4 million in excess tax benefits associated with stock based compensation.

 

Net Income

 

Net income for the three months ended June 30, 2018 was $7.9 million compared to $2.4 million for the three months ended June 30, 2017. Diluted earnings per share was $0.64 compared to $0.18 in the prior year.

 

Adjusted EPS

 

Non-GAAP EPS (adjusted EPS) was $0.82 for the three months ended June 30, 2018 compared to $0.38 in the three months ended June 30, 2017.

 

Consolidated Balance Sheet and Cash Flow

 

We had cash and cash equivalents of $11.5 million at June 30, 2018 compared to $9.1 million at December 31, 2017. We had $72.4 million of net cash provided by operating activities during the six months ended June 30, 2018 compared to $6.3 million in the six months ended June 30, 2017.

 

Accounts receivable at June 30, 2018 was $522.1 million, an increase of $82.4 million from December 31, 2017, primarily the result of seasonally strong sales toward the end of the second quarter. Inventory at June 30, 2018 was $78.5 million, a decrease of $25.0 million from December 31, 2017, primarily related to the sell through of certain purchases made in the fourth quarter of 2017. Accounts payable at June 30, 2018 was $393.9 million, an increase of $104.7 million from December 31, 2017, also primarily the result of seasonally strong sales and related purchase volume toward the end of the second quarter.

 

Cash used in investing activities during the three months ended June 30, 2018 totaled $2.5 million compared to $9.1 million during the six months ended June 30, 2017. Investing activities for the six months ended June 30, 2018 were primarily related to expenditures relating to investments in our IT infrastructure. Investing activities for the six months ended June 30, 2017 were primarily related to a purchase of real property in Woodridge, Illinois for $3.1 million, expenditures relating to investments in our IT infrastructure, and leasehold improvements.

 

 

Within cash flows from financing activities, we paid earnout payments totaling $2.2 million in the six months ended June 30, 2018, compared to $6.5 million in the six months ended June 30, 2017. The earnout period ended as of March 31, 2018.

 

Our outstanding borrowings under our line of credit was $149.3 million at June 30, 2018, a $64.5 million decline compared to $213.8 million at December 31, 2017 as a result of the cash flow generated from our earnings combined with our focus on working capital management during the first half of 2018.

 

Sales Mix

 

The following table sets forth our gross billed sales (net of returns) by major categories as a percentage of total gross billed sales (net of returns) for the periods presented, determined based upon our internal product code classifications:

 

		Three Months Ended June 30,								Y/Y Sales
		2018				2017				Growth
Software (1)			29	%			31	%			(10	)%
Notebooks and tablets			17				18				(8	)
Desktops			8				6				18
Delivered services			8				7				5
Networking			7				6				9
Manufacturer service and warranties (1)			6				6				9
Servers			4				3				28
Storage			4				3				18
Display			4				4				4
Accessories			4				4				(17	)
Input Devices			2				2				12
Printers			2				2				(13	)
Other (2)			5				8				(20	)
Total			100	%			100	%

 

(1)	Software, including software licenses, maintenance and enterprise agreements, and manufacturer service and warranties are shown, for purposes of this table, on a gross sales billed to customers basis, net of returns and do not reflect the net down impact related to revenue recognition for sales of such products.
(2)	Other includes power, supplies, consumer electronics, memory, iPod/MP3 and miscellaneous other items.

 

Non-GAAP Measures

 

We are presenting earnings before interest, taxes, depreciation and amortization expenses (EBITDA), adjusted EBITDA and non-GAAP EPS (adjusted EPS), which are financial measures that are not determined in accordance with accounting principles generally accepted in the United States of America, or GAAP. Adjusted EBITDA and adjusted EPS remove the effect of severance and restructuring related expenses related to our cost reduction initiatives and stock-based compensation, as well as uncommon, non-recurring or special items. Adjusted EPS also removes the effect of amortization of intangibles acquired in acquisitions. Depreciation and amortization expenses primarily represent an allocation to current expense of the cost of historical capital expenditures and for acquired intangible assets resulting from prior business acquisitions. EBITDA, adjusted EBITDA and adjusted EPS should be used in conjunction with other GAAP financial measures and are not presented as an alternative measure of operating results, as determined in accordance with GAAP. We believe that these non-GAAP financial measures allow a more meaningful comparison of our operating performance trends to both management and investors that is more indicative of our consolidated operating results across reporting periods. We believe that adjusted EBITDA and adjusted EPS provide a better understanding of our company’s operating performance and cash flows. A reconciliation of the non-GAAP consolidated financial measures is included in a table below.

 

 

Conference Call

 

Management will hold a conference call, which will be webcast, on July 25, 2018 at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time) to discuss its second quarter results. To listen to PCM management’s discussion of its second quarter results live, access http://investor.pcm.com/events-presentations.

 

The archived webcast can be accessed at http://investor.pcm.com under “Events & Presentations.” A replay of the conference call by phone will be available from 7:30 p.m. ET on July 25, 2018 until August 1, 2018 and can be accessed by calling (855) 859-2056 (International (404) 537-3406) and inputting code 5475015.

 

About PCM, Inc.

 

PCM, Inc., through its wholly-owned subsidiaries, is a leading multi-vendor provider of technology solutions, including hardware, software and services to small, medium and enterprise businesses, state, local and federal governments and educational institutions across the United States, Canada and the UK. We generated net sales of $2.2 billion in the twelve months ended June 30, 2018. For more information, please visit investor.pcm.com or call (310) 354-5600.

 

Forward-looking Statements

 

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements regarding our expectations, hopes or intentions regarding the future, including but not limited to, statements related to expectations of reaping the benefits of our investments in security, cloud, hybrid data center, managed services and advanced technologies; expectations of financial performance, opportunities, expectations or intentions for growth in top or bottom line operating results; expectations for non-GAAP earnings per share; expectations for gross margins; and expectations for the full year 2018 sales growth. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause our actual results to differ materially include without limitation risks and uncertainties related to the following: our ability to attract and retain key employees; our ability to receive expected returns on changes in our sales and services organizations or strategic investments, including without limit, investments in security, cloud, hybrid data center, advanced technology solutions and services, our call centers and our international expansion; risks associated with our ability to integrate our acquisitions; availability of key vendor incentives and other vendor assistance; our IT infrastructure; risks associated with cyber and data security including compliance with related regulatory requirements such as the European Union General Data Protection Regulation; the relationship between the number of our account executives and productivity; decreased sales related to any of our segments, including but not limited to, potential decreases in sales resulting from the loss of or a reduction in purchases from significant customers; the effect of any failure by us to continue to successfully transition outsourced BPO services historically provided to our En Pointe business under a service agreement we acquired in connection with our En Pointe acquisition; possible discontinuance of IT licenses or authorizations used to operate our business which are provided by vendors; increased competition, including, but not limited to, increased competition from direct sales by some of our largest vendors and increased pricing pressures which affect our pricing strategy in any given period; the misappropriation or unauthorized use of our proprietary or confidential information by competitors or others; our loss of personnel to competitors; the effect of our pricing strategy on our operating results; potential decreases in sales related to changes in our vendors products; the potential lack of availability of government funding applicable to our Public Sector business; the impact of seasonality on our sales; availability of products from third party suppliers at reasonable prices; business and other conditions in Canada, the UK and Europe and the Asia Pacific region and the related effects on our Canadian, UK and our Asia-Pacific operations, including without limitation our executive management’s lack of experience operating in some of these markets; increased expenses, including, but not limited to, interest expense, foreign currency transaction gains/losses and other expenses which may increase as a result of future inflationary pressures; our advertising, marketing and promotional efforts may be costly and may not achieve desired results; shifts in market demand or price erosion of owned inventory; other risks related to foreign currency fluctuations; warranties and indemnities we may be required to provide to third parties through our commercial contracts; litigation by or against us, including without limitation the litigation and other actions related to our En Pointe acquisition; and availability of financing, including availability under our existing credit lines. Additional factors that could cause our actual results to differ are discussed under the heading “Risk Factors” in Item 1A, Part II of our Form 10-Q for the period ended March 31, 2018, on file with the Securities and Exchange Commission, and in our other reports filed from time to time with the SEC. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statements.

 

-Financial Tables Follow-

 

 

PCM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2018				2017				2018				2017
Net sales		$	546,430			$	556,082			$	1,089,262			$	1,078,842
Cost of goods sold			456,013				470,937				915,249				915,199
Gross profit			90,417				85,145				174,013				163,643
Selling, general and administrative expenses			77,222				79,741				154,576				153,528
Operating profit			13,195				5,404				19,437				10,115
Interest expense, net			2,315				1,986				4,777				3,639
Equity income from unconsolidated affiliate			129				135				304				273
Income before income taxes			11,009				3,553				14,964				6,749
Income tax expense			3,126				1,187				4,270				211
Net income		$	7,883			$	2,366			$	10,694			$	6,538
Basic and Diluted Earnings Per Common Share
Basic		$	0.66			$	0.19			$	0.90			$	0.52
Diluted			0.64				0.18				0.88				0.48
Weighted average number of common shares outstanding:
Basic			11,912				12,574				11,878				12,477
Diluted			12,259				13,486				12,145				13,483

 

 

PCM, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(unaudited, in thousands, except per share amounts)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2018				2017				2018				2017
EBITDA(a):
Consolidated operating profit		$	13,195			$	5,404			$	19,437			$	10,115
Add: Consolidated depreciation expense			2,618				2,418				5,331				4,858
Consolidated amortization expense			690				973				1,582				2,055
Equity income from unconsolidated affiliate(b)			129				135				304				273
EBITDA		$	16,632			$	8,930			$	26,654			$	17,301
EBITDA Adjustments:
Stock-based compensation		$	760			$	708			$	1,432			$	1,223
M&A and related litigation costs and fees(c)			899				1,370				1,139				1,540
Severance and restructuring related costs(d)			252				1,165				564				1,781
Foreign exchange loss			417				8				187				34
Total EBITDA adjustments		$	2,328			$	3,251			$	3,322			$	4,578
Adjusted EBITDA
EBITDA		$	16,632			$	8,930			$	26,654			$	17,301
Add: EBITDA Adjustments			2,328				3,251				3,322				4,578
Adjusted EBITDA		$	18,960			$	12,181			$	29,976			$	21,879
Net income:
Income before income taxes		$	11,009			$	3,553			$	14,964			$	6,749
Less: Income tax expense			3,126				1,187				4,270				211
Net income		$	7,883			$	2,366			$	10,694			$	6,538
Income before income taxes		$	11,009			$	3,553			$	14,964			$	6,749
Add: EBITDA Adjustments			2,328				3,251				3,322				4,578
Amortization of purchased intangibles(e)			686				969				1,574				2,047
One-time interest charge(f)			—				321				—				321
Adjusted income before income taxes			14,023				8,094				19,860				13,695
Less: Adjusted income tax expense(g)			3,997				2,914				5,660				4,930
Non-GAAP net income		$	10,026			$	5,180			$	14,200			$	8,765
Diluted earnings per share:
GAAP diluted EPS		$	0.64			$	0.18			$	0.88			$	0.48
Non-GAAP diluted EPS			0.82				0.38				1.17				0.65
Diluted weighted average number of common shares outstanding			12,259				13,486				12,145				13,483

 

(a)	EBITDA — earnings from continuing operations before interest, taxes, depreciation and amortization.
(b)	Represents our equity income resulting from our 49% ownership interest in the NCE.
(c)	Includes litigation costs and fees related to our acquisitions.
(d)	Includes employee severance related costs related to our cost reduction initiatives, lease vacancy costs and other restructuring related costs.
(e)	Includes amortization expense for acquisition-related intangible assets, which include trademarks, trade names, non-compete agreements and customer relationships.
(f)	Represents interest expense levied against the company for unclaimed property reports for periods dating back to 2003.
(g)	The 2018 adjusted income tax expense assumes an estimated annual effective tax rate of 28.5%. The 2017 adjusted income tax expense assumes an estimated annual effective tax rate of 36.0%.

 

 

PCM, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except per share amounts and share data)

 

		June 30,				December 31,
		2018				2017
ASSETS
Current assets:
Cash and cash equivalents		$	11,503			$	9,113
Accounts receivable, net of allowances of $1,908 and $2,181			522,072				439,658
Inventories			78,491				103,471
Prepaid expenses and other current assets			9,198				9,333
Total current assets			621,264				561,575
Property and equipment, net			69,707				71,551
Goodwill			87,616				87,768
Intangible assets, net			9,443				11,090
Deferred income taxes			1,495				1,759
Investment and other assets			5,193				6,509
Total assets		$	794,718			$	740,252
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	393,890			$	289,201
Accrued expenses and other current liabilities			54,413				55,040
Deferred revenue			12,204				7,913
Line of credit			149,300				213,778
Notes payable — current			3,459				3,362
Note payable related to asset held for sale			—				—
Total current liabilities			613,266				569,294
Notes payable			31,151				32,892
Other long-term liabilities			7,710				7,338
Deferred income taxes			3,836				3,102
Total liabilities			655,963				612,626
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; 17,285,019 and 17,170,273 shares issued; 11,894,367 and 11,779,621 shares outstanding			17				17
Additional paid-in capital			135,899				134,646
Treasury stock, at cost: 5,390,652 shares			(38,536	)			(38,536	)
Accumulated other comprehensive income			(567	)			251
Retained earnings			41,942				31,248
Total stockholders’ equity			138,755				127,626
Total liabilities and stockholders’ equity		$	794,718			$	740,252

 

 

PCM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

		Six Months Ended June 30,
		2018				2017
Cash Flows From Operating Activities
Net income		$	10,694			$	6,538
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			6,913				6,913
Equity income from unconsolidated affiliate			(304	)			(273	)
Distribution from equity method investee			162				—
Provision for deferred income taxes			984				171
Non-cash stock-based compensation			1,432				1,223
Change in operating assets and liabilities:
Accounts receivable			(82,414	)			(83,825	)
Inventories			24,980				5,988
Prepaid expenses and other current assets			135				1,784
Other assets			1,571				1,294
Accounts payable			102,681				74,311
Accrued expenses and other current liabilities			1,247				(4,363	)
Deferred revenue			4,291				(3,453	)
Total adjustments			61,678				(230	)
Net cash provided by operating activities			72,372				6,308
Cash Flows From Investing Activities
Purchases of property and equipment			(2,358	)			(9,056	)
Acquisition of Stack Technology			(166	)			—
Net cash used in investing activities			(2,524	)			(9,056	)
Cash Flows From Financing Activities
Net payments under line of credit			(64,478	)			(86	)
Borrowing under note payable			—				3,139
Payments under notes payable			(1,638	)			(1,992	)
Change in book overdraft			1,952				5,038
Payments of earn-out liability			(2,199	)			(6,523	)
Payments of obligations under capital lease			(349	)			(860	)
Proceeds from capital lease obligations			—				587
Proceeds from stock issued under stock option plans			261				4,722
Payment for deferred financing costs			(43	)			(635	)
Payment of taxes related to net-settled stock awards			(450	)			(783	)
Net cash provided by (used in) financing activities			(66,944	)			2,607
Effect of foreign currency on cash flow			(514	)			274
Net change in cash and cash equivalents			2,390				133
Cash and cash equivalents at beginning of the period			9,113				7,172
Cash and cash equivalents at end of the period		$	11,503			$	7,305
Supplemental Cash Flow Information
Interest paid		$	4,579			$	3,263
Income taxes (refund) paid, net			(1,558	)			3,314
Supplemental Non-Cash Investing and Financing Activities
Financed and accrued purchases of property and equipment			1,134				14

 

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