PC Mall Reports Third Quarter 2012 Results

  PC Mall Reports Third Quarter 2012 Results

Third Quarter Highlights (2012 compared to 2011):

  *Q3 net sales decreased $2.9 million, or 1%, to $364.6 million
  *Q3 gross profit decreased $1.8 million to $48.4 million
  *Q3 gross profit margin decreased to 13.3% from 13.7%
  *Q3 EBITDA increased 10% to $7.1 million and increased 22% to $7.8 million
    excluding severance and restructuring related costs
  *Q3 operating profit increased $0.1 million to $4.0 million
  *Diluted earnings per share (EPS) increased 7% to $0.15; adjusted EPS was
    $0.20 excluding severance and restructuring related costs
  *We repurchased 70,104 shares of our common stock in Q3 2012 at an average
    price of $5.96
  *We today formally announced that we will change our name to PCM, Inc. and
    our ticker symbol to PCMI effective January 1, 2013

Business Wire

EL SEGUNDO, Calif. -- November 08, 2012

PC Mall,Inc. (NASDAQ:MALL), a leading technology solutions provider, today
reported financial results for the third quarter of 2012. Consolidated net
sales for Q3 2012 were $364.6 million, a decrease of $2.9 million from $367.5
million in Q3 2011, and was impacted by a $6.3 million decrease in sales to
promotional companies under a vendor program change in Q4 2011 by a large
vendor. Excluding the effect of this program change, our sales grew $3.4
million, or 1% compared to Q3 2011. Consolidated gross profit for Q3 2012
decreased $1.8 million to $48.4 million from $50.2 million in Q3 2011.
Consolidated gross profit margin was 13.3% in Q3 2012 compared to 13.7% in Q3
2011. EBITDA (as defined below), which includes $0.7 million of severance and
restructuring related costs for Q3 2012, increased $0.7 million to $7.1
million from $6.4 million in Q3 2011. Consolidated operating profit for Q3
2012, which includes $1.0 million of severance and restructuring related
costs, increased $0.1 million to $4.0 million compared to $3.9 million for Q3
2011. Consolidated net income, which includes $0.6 million, net of tax, of
severance and restructuring related costs, remained flat at $1.8 million for
Q3 2012 compared to Q3 2011. Diluted EPS for Q3 2012 was $0.15 compared to
diluted EPS of $0.14 for Q3 2011. Excluding severance and restructuring
related costs, adjusted EPS was $0.20.

Commenting on the Company’s third quarter results, Frank Khulusi, Chairman,
President and CEO of PC Mall,Inc. said, “I am pleased that despite a demand
environment that was not as robust as expected, we were able to grow our sales
over last year, net of the impact a vendor program change had on our results.
Continuing economic uncertainties led customers to defer or scale back their
spending on IT, but our teams did a tremendous job being attentive to our
customers’ needs, and continued to focus on our growing services and solutions
business while building long term relationships with customers by helping them
to optimize their IT environments. Our services revenues grew 11% year over
year, a reflection of customers increasingly embracing outsourcing and our own
success in bringing these solutions to our customers. While we do not think
this slow-down in IT spending is permanent, we do expect that it will continue
for at least the next two quarters, and have continued reducing our fixed cost
structure. In the third quarter, we took actions we expect will result in $3.9
million of annualized cost savings, bringing the total actions we have taken
this year to $7.3 million of expected annualized cost savings. We currently
expect to take further actions in the fourth quarter that will result in at
least $1.3 million of additional expected annualized cost savings. We also
believe that our cost structure will benefit from the unification of our
commercial brands, which is discussed below. Our EBITDA, net of restructuring
costs, was $7.8 million in Q3, and for the 9 months ended September 30 our
EBITDA net of restructuring costs totaled approximately $18.8 million. We
intend to continue to reduce our overall cost structure, while we make
selective investments in our services capabilities, people and technologies.”

Khulusi concluded, “Based upon the current demand environment, we expect that
in Q4 we will see modest growth in revenues, gross profit and EBITDA
sequentially over Q3. Looking ahead into 2013, our current goal is to grow at
faster than market growth rates, and while we may see some degradation in
gross margin % as a result of a large contract win in the Federal Government
space, our current goal is to grow our overall EBITDA margin (excluding
severance and restructuring costs) on a year over year basis.”

Strategic Developments

Effective January 1, 2013, the Company will change the corporate name of PC
Mall to PCM, Inc. and combine its primary commercial subsidiaries PC Mall
Sales, Inc., Sarcom, Inc. and PC Mall Services, Inc. into a single subsidiary.
The combined subsidiary will operate under the unified commercial brand PCM
and will generally include our SMB, MME and portions of our Corporate & Other
segments. Additionally, in connection with the rebranding, our PC Mall Gov,
Inc. subsidiary will change its name to PCMG, Inc. and will operate under the
brand PCM-G. Coincident with the corporate name change, the Company intends to
change its ticker symbol on the NASDAQ Global Market to PCMI. The Company is
working with customers and partners to effectuate the changes to ensure a
seamless transition.

Commenting on the Company’s reorganization and rebranding initiative, Khulusi
said, “Over the past several years, our company has grown into approximately a
$1.5 billion enterprise in part through our acquisition and internal
cultivation of different brands. We have historically differentiated those
brands primarily based on the identity of the customers they serve. After
careful examination of the trends taking shape in the markets we serve, we
have determined that going forward, our commercial customers can benefit from
a more unified and streamlined brand strategy. We are reorganizing and
unifying these brands to effect what we believe are substantial cost
synergies, on both the top line and from an operating leverage perspective. We
are very excited about the expected impact these changes will have on our
current and prospective customers, employees and partners. For instance, we
will now be able to build brand equity in a combined commercial business by
investing and developing equity in a single name. Advertising and marketing
campaigns will be simplified and, we believe, more impactful as we more
effectively communicate and deliver our capabilities. In addition, as our
systems upgrades continue, we plan to consolidate additional functions onto
one platform, which we believe will lead to additional cost savings
opportunities.” Khulusi concluded, “We are proud of our accomplishments over
our 25 year history, and we are very excited about the opportunities that will
be available to us under this more unified structure. We believe the benefits
associated with these efforts can have a significant and positive impact on
our customers, employees, partners and shareholders, and will provide a brand
that better represents the value-added technology solutions provider we are
today.”

Segment Results

MME

Q3 2012 net sales for our MME segment were $137.1 million compared to $136.4
million in Q3 2011, an increase of $0.7 million, or 1%. This increase was
primarily due to an 11% increase in sales of services, primarily driven by
increased project consulting services, partially offset by a 2% decrease in
net sales of products in Q3 2012 compared to Q3 2011. The decrease in product
sales was primarily due a softening demand environment due to customers
delaying or reducing investments in Q3 2012. As a result, in Q3 2012, sales of
services increased to 21% of MME segment sales from 19% of sales in Q3 2011.

MME gross profit decreased by $0.6 million, or 3%, to $20.7 million in Q3 2012
compared to $21.3 million in Q3 2011, and MME gross profit margin decreased to
15.1% in Q3 2012 compared to 15.6% in Q3 2011. The decrease in MME gross
profit and gross profit margin was primarily due to a $0.6 million, or 42
basis point, decrease in vendor consideration as a percentage of sales. The
decrease in vendor consideration as a percentage of sales was due to lower
demand for certain product categories as compared to Q3 2011.

MME operating profit remained flat at $7.4 million in Q3 2012 and Q3 2011. MME
operating profit was affected by the decrease in MME gross profit discussed
above, primarily offset by a decrease in personnel costs of $0.7 million,
which was mainly related to a decrease in variable compensation costs.

SMB

Q3 2012 net sales for our SMB segment were $118.6 million compared to $119.8
million in Q3 2011, a decrease of $1.2 million, or 1%. This decrease was
primarily due to a $7.2 million decline in sales to promotional companies as a
result of the program change discussed above, partially offset by a $6.0
million, or 6%, increase in sales to customers outside that program. As we
indicated previously, we expect the effects of this program change to continue
to impact year over year comparisons for the remainder of 2012. In Q3 and Q4
2011, sales under this program were approximately $12.7 million and $8.8
million, respectively.

Q3 2012 SMB gross profit was $16.4 million compared to $16.5 million in Q3
2011, a decrease of $0.1 million. SMB gross profit margin remained flat at
13.8% in Q3 2012 compared to Q3 2011.

Q3 2012 SMB operating profit decreased by $0.3 million, or 4%, to $9.1 million
compared to $9.4 million in Q3 2011. This decrease resulted primarily from an
increase in personnel costs of $0.2 million and the decrease in SMB gross
profit discussed above.

Public Sector

Q3 2012 net sales for our Public Sector segment were $57.0 million compared to
$59.5 million in Q3 2011, a decrease of $2.5 million, or 4%. This decrease in
Public Sector net sales was due to a $2.2 million, or 7%, decrease in our
federal government business. Our state and local government and educational
institutions (SLED) business remained relatively flat in Q3 2012 compared to
Q3 2011.

Public Sector gross profit decreased by $0.5 million, or 8%, to $5.3 million
in Q3 2012 compared to $5.8 million in Q3 2011. Public Sector gross profit
margin decreased to 9.4% in Q2 2012 compared to 9.8% in Q2 2011. The decrease
in Public Sector gross profit and gross profit margin was primarily due to the
decrease in sales and product mix.

Public Sector operating profit increased by $0.3 million, or 24%, to $1.9
million in Q3 2012 compared to $1.6 million in Q3 2011. The increase in Public
Sector operating profit was primarily due to a $0.7 million decrease in
personnel costs, partially offset by a decrease in Public Sector gross profit
as discussed above.

MacMall/OnSale

Q3 2012 net sales for our MacMall/OnSale segment were $51.9 million compared
to $52.4 million in Q3 2011, a decrease of $0.5 million, or 1%. The decrease
in MacMall/OnSale net sales was primarily due to soft demand resulting from
market anticipation of major product releases which did not occur until Q4
2012, as compared to new product releases in the prior year which occurred in
Q3 2011.

MacMall/OnSale gross profit decreased by $0.7 million, or 11%, to $5.9 million
in Q3 2012 compared to $6.6 million in Q3 2011. MacMall/OnSale gross profit
margin decreased to 11.3% in Q3 2012 compared to 12.6% in Q3 2011, but was up
sequentially from 11.2% in Q2 2012. The decrease in MacMall/OnSale gross
profit and gross profit margin in Q3 2012 over the prior year was primarily
due to the significant sales of HP Touchpads in Q3 2011, which resulted from
an extraordinary market-wide price reduction of these tablets when HP
announced its exit from the category.

MacMall/OnSale operating profit increased by $0.4 million to $0.8 million in
Q3 2012 compared to $0.4 million in Q3 2011. This increase in MacMall/OnSale
operating profit was primarily due to a decrease in personnel costs of $0.7
million and small improvements in a number of components of selling, general
and administrative expenses, partially offset by a decrease in MacMall/OnSale
gross profit discussed above.

Corporate& Other

Corporate& Other operating expenses includes corporate related expenses such
as legal, accounting, information technology, product management and certain
professional and pre-sales support services and other administrative costs
that are not otherwise included in our reportable operating segments. Q3 2012
Corporate& Other operating expenses increased by $0.3 million, or 2%, to
$15.2 million from $14.9 million in Q3 2011. The increase in Q3 2012 was
primarily related to a $0.6 million increase in employee severance costs
associated with our restructuring efforts and a $0.3 million increase in
depreciation expense associated with the completed portions of our on-going
systems upgrades, partially offset by a $0.4 million decrease in litigation
costs.

Consolidated Balance Sheet

Accounts receivable at September30, 2012 was $199.2 million and decreased by
$8.8 million from December31, 2011. Inventory at September 30, 2012 was $65.6
million and decreased $13.9 million from December31, 2011, primarily
reflecting a sell-through of seasonal purchases made in late 2011. Accounts
payable at September30, 2012 was $117.3 million and decreased by $5.2 million
from December31, 2011. Capital expenditures during the nine months ended
September 30, 2012 were $6.8 million compared to capital expenditures of $21.9
million during the nine months ended September 30, 2011, with the decrease
primarily due to the purchase in Q1 2011 of our new headquarters building for
$9.6 million. Outstanding borrowings under our line of credit decreased by
$31.0 million to $60.8 million at September30, 2012 compared to December31,
2011. Working capital increased by $10.9 million as of September30, 2012
compared to December31, 2011.

Selected Segment Information

Selected information for our reportable operating segments is as follows (in
thousands, except headcount data):

                Three Months Ended                         Three Months Ended
                 September 30, 2012                          September 30, 2011
                                 Gross         Operating                     Gross         Operating
                 Net Sales      Profit      Profit        Net Sales      Profit       Profit
                                               (Loss)                                      (Loss)
MME              $ 137,069       $ 20,687      $  7,437      $ 136,447       $ 21,269      $  7,353
SMB              118,633         16,374        9,062         119,840         16,481        9,417
Public Sector    56,981          5,342         1,943         59,463          5,807         1,564
MacMall/OnSale   51,903          5,887         765           52,441          6,583         400
Corporate &      (3          )   102           (15,214   )   (644        )   61            (14,883   )
Other
Total            $ 364,583       $ 48,392      $  3,993      $ 367,547       $ 50,201      $  3,851
                                                                                                     
                 Nine Months Ended                           Nine Months Ended
                                                             September 30, 2011
                 September 30, 2012
                                 Gross         Operating                     Gross         Operating
                 Net Sales       Profit        Profit        Net Sales       Profit        Profit
                                               (Loss)                        (Loss)        (Loss)
MME              $ 423,450       $ 62,349      $  21,871     $ 375,580       $ 59,114      $  20,209
SMB              351,793         49,952        28,002        389,848         50,236        27,606
Public Sector    130,857         12,799        1,739         132,544         12,360        1,261
MacMall/OnSale   163,456         18,450        1,838         168,787         18,700        999
Corporate &      (34         )   120           (45,903   )   (1,364      )   (354        ) (41,728   )
Other
Total            $ 1,069,522     $ 143,670     $  7,547      $ 1,065,395     $ 140,056     $  8,347

Average Account Executive  Three Months Ended
                            September 30,
Headcount By Segment(1):    2012       2011
SMB                         375         377
MME                         108         111
Public Sector               114         129
MacMall/OnSale              142         150
Total                       739         767

_________________________________
(1) Headcount numbers are calculated based on an average of all sales
executives and trainees employed during the period.

                              
                                Three Months Ended
                                September 30,
                                                  Y/Y
                                                    Sales  
Product Sales Mix(1):           2012        2011     Growth
Software                        17      %   17     % 2      %
Notebooks                       17          15       17
Desktops                        9           10       (13    )
Delivered services              8           7        11
Networking                      7           7        —
Tablets                         6           6        13
Displays                        5           5        2
Storage                         5           5        (2     )
Servers                         3           4        (13    )
Manufacturer service/warranty   4           4        10
Accessories                     3           3        22
Input devices                   3           2        39
All other (2)                   13          15       (19    )
Total                           100     %   100    %

_________________________________________
(1) Derived from gross billed sales as currently reflected by our systems.
(2) All other includes power, printers, supplies, consumer electronics,
memory, iPod/MP3 and miscellaneous other items.

Non-GAAP Measure

We are presenting earnings before interest, taxes, depreciation and
amortization expenses (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 EPS removes the effect of restructuring expenses related to our
rebranding initiative. 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. 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. 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 November 8,
2012 at 4:30p.m. Eastern Time (1:30p.m. Pacific Time) to discuss third
quarter results. To listen to PC Mall management’s discussion of its third
quarter results live, access www.pcmall.com/investor.

The archived webcast can be accessed at www.pcmall.com/investor under
“Calendar of Events.” A replay of the conference call by phone will be
available from 6:30p.m. ET on November 8, 2012 until November 15, 2012 and
can be accessed by calling: (888)286-8010 and inputting pass code 79924296.

About PC Mall,Inc.

PC Mall,Inc., through its wholly-owned subsidiaries, is a leading technology
solutions provider to small and medium sized businesses, mid-market and
enterprise customers, government and educational institutions and individual
consumers.Our brands include:PC Mall, PC Mall Gov, Sarcom, MacMall, Abreon,
NSPI, eCost and OnSale.In the twelve months ended September 30, 2012, we
generated approximately $1.5 billion in revenue and now have approximately
2,900 employees, over 68% of which are in sales or service positions.For more
information please visit pcmall.com/investor 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 tostatements related to
strategic developments such as statements related to slowdown in IT spending,
expected cost savings and overall cost structure, selective investments in our
services capabilities, our positioning in the marketplace and for the future
success of our business, our reorganization, brand strategy and related
potential benefits, our IT systems upgrade and integration and related
benefits, or other statements or expectations or goals for sales growth, gross
profit, operating leverage or EBITDA. 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 IT infrastructure; the
relationship between the number of our account executives and productivity;
our ability to attract and retain key employees; our ability to receive
expected returns on strategic investments including without limit investments
in expanded business models; 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; availability
of key vendor incentives and other vendor assistance; possible discontinuance
of IT licenses 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 effect of
the our pricing strategy on our operating results; our ability to identify
suitable acquisition targets, to complete acquisitions of identified targets
(including the challenges and costs of closing the transaction), and our
ability to integrate companies we may acquire and our ability to achieve
synergies expected from such acquisitions; the impact of acquisitions on
relationships with key customers and vendors; potential decreases in sales
related to changes in our vendors products; the potential lack of availability
of government funding applicable to our PC Mall Gov contracts; the impact of
seasonality on our sales; availability of products from third party suppliers
at reasonable prices;business and other conditions in the Asia Pacific region
and the related effects on our Philippines operations; 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;risks related to foreign currency
fluctuations; warranties and indemnities we may be required to provide to
third parties through our commercial contracts;data security; litigation by
or against us; 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 June 30, 2012, 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.


PC MALL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
                                              
                       Three Months Ended        Nine Months Ended
                     
                       September 30,             September 30,
                      2012       2011       2012         2011
Net sales            $ 364,583    $ 367,547     $ 1,069,522    $ 1,065,395
Cost of goods sold     316,191       317,346       925,852         925,339
Gross profit           48,392        50,201        143,670         140,056
Selling, general
and administrative     44,331        46,350        136,230         132,509
expenses
Revaluation of         68            —             (107      )     (800      )
earnout liability
Operating profit       3,993         3,851         7,547           8,347
Interest expense,      967           823           2,807           2,381
net
Income before          3,026         3,028         4,740           5,966
income taxes
Income tax expense     (1,213  )     (1,266  )     (1,966    )     (2,441    )
Net income           $ 1,813       $ 1,762       $ 2,774         $ 3,525
                                                                             
Basic and Diluted
Earnings Per
Common Share
Basic                $ 0.15        $ 0.14        $ 0.23          $ 0.29
Diluted                0.15          0.14          0.23            0.28
                                                                             
Weighted average
number of common
shares
outstanding:
Basic                  12,039        12,249        12,024          12,295
Diluted                12,177        12,442        12,205          12,600
                                                                             

PC MALL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO
CONSOLIDATED OPERATING PROFIT AND DILUTED EPS
                                                    
                               Three Months Ended      Nine Months Ended

                               September 30,           September 30,
                               2012      2011       2012       2011
                                                                             
EBITDA(a):
Consolidated operating       $  3,993   $  3,851     $ 7,547      $ 8,347
profit
Add: Consolidated              2,361       2,028         7,130        5,567
depreciation expense
Consolidated amortization      755         558          2,288       1,638
expense
EBITDA                       $  7,109   $  6,437     $ 16,965     $ 15,552
                                                                             
Net income:
Consolidated income before   $ 3,026     $ 3,028       $ 4,740      $ 5,966
income taxes
Less: Income tax expense       1,213       1,266         1,966        2,441
Consolidated net income      $ 1,813     $ 1,762       $ 2,774      $ 3,525
                                                                             
Consolidated income before   $ 3,026     $ 3,028       $ 4,740      $ 5,966
income taxes
Add: Severance &
restructuring related          964         —             2,502        —
costs (b)
Adjusted income before         3,990       3,028         7,242        5,966
income taxes
Less: Adjusted income tax      (1,571    ) (1,266  )     (2,894 )     (2,441 )
expense
Non-GAAP net income          $ 2,419     $ 1,762       $ 4,348      $ 3,525
                                                                             
Diluted earnings per
share:
GAAP diluted EPS             $ 0.15      $ 0.14        $ 0.23       $ 0.28
Non-GAAP diluted EPS           0.20        0.14          0.36         0.28
Diluted weighted average
number of common shares        12,177      12,442        12,205       12,600
outstanding

______________________________________
(a) EBITDA — earnings before interest, taxes, depreciation and amortization.
(b) Relates to severance and restructuring related costs in connection with
our 2012 rebranding and cost savings initiatives.

                                            
PC MALL, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except per share amounts and share data)
                                                                             
                                              
                                              September 30,    December 31,
                                              2012              2011
ASSETS
Current assets:
Cash and cash equivalents                     $   6,465         $   9,484
Accounts receivable, net of allowances of     199,219           207,985
$1,185 and $1,642
Inventories, net                              65,563            79,456
Prepaid expenses and other current assets     13,848            9,681
Deferred income taxes                         3,419             3,937
Total current assets                          288,514           310,543
Property and equipment, net                   45,924            44,745
Deferred income taxes                         264               247
Goodwill                                      25,510            25,510
Intangible assets, net                        7,645             9,840
Other assets                                  2,087             2,387
Total assets                                  $   369,944       $   393,272
                                                                             
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                              $   117,349       $   122,523
Accrued expenses and other current            27,754            31,797
liabilities
Deferred revenue                              25,568            18,079
Line of credit                                60,809            91,852
Notes payable — current                       883               1,015
Total current liabilities                     232,363           265,266
Notes payable and other long-term             16,645            11,574
liabilities
Deferred income taxes                         5,671             5,606
Total liabilities                             254,679           282,446
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; 14,494,051 and             
14,368,888 shares issued; and 12,042,367                        14
and 11,995,704 shares outstanding,            14
respectively
Additional paid-in capital                    109,861           108,061
Treasury stock, at cost: 2,451,684 and        (10,198       )   (9,733       )
2,373,184 shares, respectively
Accumulated other comprehensive income        2,586             2,256
Retained earnings                             13,002            10,228
Total stockholders’ equity                    115,265           110,826
Total liabilities and stockholders’ equity    $   369,944       $   393,272
                                                                             

PC MALL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
                                                       
                                                         Nine Months Ended
                                                         September 30,
                                                         2012       2011
Cash Flows From Operating Activities
Net income                                               $ 2,774     $ 3,525
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization                            9,418       7,205
Provision for deferred income taxes                      2,514       2,157
Net tax benefit related to stock option exercises        92          1
Excess tax benefit related to stock option exercises     (141    )   (658    )
Non-cash stock-based compensation                        1,502       1,649
Decrease in earnout liability                            (107    )   (800    )
Gain on sale of fixed assets                             —           (15     )
Change in operating assets and liabilities:
Accounts receivable                                      6,873       (3,088  )
Inventories                                              13,893      5,542
Prepaid expenses and other current assets                (3,792  )   (2,685  )
Other assets                                             207         22
Accounts payable                                         (1,115  )   (15,986 )
Accrued expenses and other current liabilities           (5,026  )   (1,740  )
Deferred revenue                                         7,489       5,365
Total adjustments                                        31,807      (3,031  )
Net cash provided by operating activities                34,581      494
Cash Flows From Investing Activities
Purchase of El Segundo building                          —           (9,565  )
Purchases of property and equipment                      (6,765  )   (12,296 )
Acquisition of eCost                                     —           (2,284  )
Proceeds from sale of fixed assets                       —           23
Net cash used in investing activities                    (6,765  )   (24,122 )
Cash Flows From Financing Activities
Net (payments) borrowings under line of credit           (31,043 )   12,016
Capital lease proceeds                                   4,356       —
Borrowings under notes payable                           2,859       7,198
Payments under notes payable                             (813    )   (565    )
Change in book overdraft                                 (4,410  )   3,322
Payment of earnout liability                             —           (1,121  )
Payments of obligations under capital lease              (1,666  )   (870    )
Proceeds from stock issued under stock option plans      206         715
Payment for deferred financing costs                     —           (25     )
Excess tax benefit related to stock option exercises     141         658
Common shares repurchased and held in treasury           (420)       (2,260  )
Net cash (used in) provided by financing activities      (30,790 )   19,068
Effect of foreign currency on cash flow                  (45     )   58
Net change in cash and cash equivalents                  (3,019  )   (4,502  )
Cash and cash equivalents at beginning of the period     9,484       10,711
Cash and cash equivalents at end of the period           $ 6,465     $ 6,209
Supplemental Cash Flow Information
Interest paid                                            $ 2,459     $ 2,054
Income taxes paid                                        1,404       3,938
Supplemental Non-Cash Investing and Financing
Activities
Purchase of infrastructure system                        $ 858       $ 2,552
Deferred financing costs                                 —           346

Contact:

Genesis Select Corporation
Matt Selinger, Partner
(303) 415-0200
 
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