PFSweb Reports Fourth Quarter and Year-End 2012 Results

  PFSweb Reports Fourth Quarter and Year-End 2012 Results

  Full Year 2012 Adjusted EBITDA Nearly Doubles to $12.0 Million Compared to
                                     2011

Business Wire

ALLEN, Texas -- March 27, 2013

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

      The financial data above should be read in conjunction with the audited
(A)  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             $ 652         $ 760         $ (1,511   )   $ (4,566   )
(LOSS)
Loss from
discontinued             -             323           -              892
operations, net
of tax
Income tax               187           93            644            380
expense
Interest                 230           316           988            1,085
expense, net
Depreciation and        2,413       1,769       9,248        6,344    
amortization
EBITDA                 $ 3,482       $ 3,261       $ 9,369        $ 4,135
Stock-based              311           347           1,325          1,402
compensation
Lease
terminations             -             -             450            -
costs
Move related            -           244         866          548      
expenses
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             $ 652         $ 760         $ (1,511   )   $ (4,566   )
(LOSS)
Loss from
discontinued             -             323           -              892
operations, net
of tax
Stock-based              311           347           1,325          1,402
compensation
Lease
terminations             -             -             450            -
costs
Move related            -           244         866          548      
expenses
NON-GAAP INCOME        $ 963        $ 1,674      $ 1,130       $ (1,724   )
(LOSS)
                                                                  
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                (13,269 )     (14,530 )     (41,390  )     (40,974  )
revenue
Cost of product         (25,700 )    (37,557 )    (110,183 )    (150,738 )
revenue
SERVICE FEE
EQUIVALENT             $ 38,001     $ 35,411     $ 129,990     $ 107,054  
REVENUE
                                                                  


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,            45,684         52,679
2011, respectively
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              $  16,660      $  23,939
capital lease obligations
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                      5,400          3,583
OBLIGATIONS, less current portion
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            13             13
and December 31, 2011, respectively
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        Eliminations   Consolidated
                                     Connect
REVENUES:
Product revenue,          $ -        $   28,290    $  -           $   28,290
net
Service fee revenue         35,411       -            -               35,411
Service fee revenue         1,776        229          (2,005  )       -
- affiliate
Pass-thru revenue          13,269      -           -             13,269
Total revenues             50,456      28,519      (2,005  )      76,970
                                                                  
COSTS OF REVENUES:
Cost of product             -            25,700       -               25,700
revenue
Cost of service fee         26,866       229          (976    )       26,119
revenue
Cost of pass-thru          13,269      -           -             13,269
revenue
Total costs of             40,135      25,929      (976    )      65,088
revenues
Gross profit                10,321       2,590        (1,029  )       11,882
SELLING, GENERAL
AND ADMINISTRATIVE         9,456       2,386       (1,029  )      10,813
EXPENSES
Income from                 865          204          -               1,069
operations
INTEREST EXPENSE,          63          167         -             230
NET
Income before               802          37           -               839
income taxes
INCOME TAX                 174         13          -             187
PROVISION
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 ,          63           167          -               230
net
Depreciation and           2,378       35          -             2,413
amortization
EBITDA                    $ 3,243    $   239       $  -           $   3,482
Stock-based                311         -           -             311
compensation
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                311         -           -             311
compensation
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        Eliminations   Consolidated
                                     Connect
REVENUES:
Product revenue,       $ -           $  119,740    $  -           $  119,740
net
Service fee              120,433        -             -              120,433
revenue
Service fee
revenue -                5,397          679           (6,076  )      -
affiliate
Pass-thru               41,390       -            -            41,390  
revenue
Total revenues          167,220      120,419      (6,076  )     281,563 
                                                                  
COSTS OF
REVENUES:
Cost of product          -              110,183       -              110,183
revenue
Cost of service          92,196         679           (3,626  )      89,249
fee revenue
Cost of
pass-thru               41,390       -            -            41,390  
revenue
Total costs of          133,586      110,862      (3,626  )     240,822 
revenues
Gross profit             33,634         9,557         (2,450  )      40,741
SELLING, GENERAL
AND                     35,664       7,406        (2,450  )     40,620  
ADMINISTRATIVE
EXPENSES
Income (loss)            (2,030  )      2,151         -              121
from operations
INTEREST                203          785          -            988     
EXPENSE, NET
Income (loss)
before income            (2,233  )      1,366         -              (867    )
taxes
INCOME TAX              82           562          -            644     
PROVISION
NET INCOME              (2,315  )     804          -            (1,511  )
(LOSS)
NON-GAAP NET           $ 326        $  804        $  -          $  1,130   
INCOME
                                                                  
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             $ (2,315  )   $  804        $  -              (1,511  )
(LOSS)
Income tax               82             562           -              644
expense
Interest                 203            785           -              988
expense, net
Depreciation and        9,147        101          -            9,248   
amortization
EBITDA                 $ 7,117       $  2,252      $  -           $  9,369
Stock-based              1,325          -             -              1,325
compensation
Lease
termination              450            -             -              450
costs
Move related            866          -            -            866     
expenses
ADJUSTED EBITDA        $ 9,758      $  2,252      $  -          $  12,010  
                                                                  
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME follows:
                                                                  
NET INCOME             $ (2,315  )   $  804        $  -           $  (1,511  )
(LOSS)
Stock-based              1,325          -             -              1,325
compensation
Lease
termination              450            -             -              450
costs
Move related            866          -            -            866     
expenses
NON-GAAP NET           $ 326        $  804        $  -          $  1,130   
INCOME
                                                                  

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     eCOST      Eliminations   Consolidated
                                  Connect
REVENUES:
Product              $ -          $ 40,442   $ -        $  -           $  40,442
revenue, net
Service fee            32,526       -          -           -              32,526
revenue
Service fee
revenue -              1,732        -          -           (1,732  )      -
affiliate
Pass-thru             14,530     -         -         -            14,530  
revenue
Total revenues        48,788     40,442    -         (1,732  )     87,498  
                                                                       
COSTS OF
REVENUES:
Cost of
product                -            37,557     -           -              37,557
revenue
Cost of
service fee            25,463       -          -           (953    )      24,510
revenue
Cost of
pass-thru             14,530     -         -         -            14,530  
revenue
Total costs of        39,993     37,557    -         (953    )     76,597  
revenues
Gross profit           8,795        2,885      -           (779    )      10,901
SELLING,
GENERAL AND           7,918      2,270     -         (779    )     9,409   
ADMINISTRATIVE
EXPENSES
Income from            877          615        -           -              1,492
operations
INTEREST              6          310       -         -            316     
EXPENSE, NET
Income before          871          305        -           -              1,176
income taxes
INCOME TAX
PROVISION             (51    )    144       -         -            93      
(BENEFIT)
INCOME FROM
CONTINUING             922          161        -           -              1,083
OPERATIONS
LOSS FROM
DISCONTINUED          -          -         (323 )                   (323    )
OPERATIONS,
NET OF TAX
NET INCOME           $ 922       $ 161      $ (323 )   $  -          $  760     
(LOSS)
NON-GAAP NET         $ 1,513     $ 161      $ -       $  -          $  1,674   
INCOME
                                                                       
EBITDA               $ 2,629     $ 632      $ -       $  -          $  3,261   
ADJUSTED             $ 3,220     $ 632      $ -       $  -          $  3,852   
EBITDA
                                                                       
                                                                       
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
                                                                       
NET INCOME           $ 922        $ 161      $ (323 )   $  -              760
(LOSS)
Loss from
discontinued           -            -          323         -              323
operations,
net of tax
Income tax
expense                (51    )     144        -           -              93
(benefit)
Interest               6            310        -           -              316
expense, net
Depreciation
and                   1,752      17        -         -            1,769   
amortization
EBITDA               $ 2,629      $ 632      $ -        $  -           $  3,261
Stock-based            347          -          -           -              347
compensation
Move related          244                                           244     
expenses
ADJUSTED             $ 3,220     $ 632      $ -       $  -          $  3,852   
EBITDA
                                                                       
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME follows:
                                                                       
NET INCOME           $ 922        $ 161      $ (323 )   $  -           $  760
(LOSS)
Loss from
discontinued           -            -          323         -              323
operations,
net of tax
Stock-based            347          -          -           -              347
compensation
Move related          244        -         -         -            244     
expenses
NON-GAAP NET         $ 1,513     $ 161      $ -       $  -          $  1,674   
INCOME
                                                                       

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 Twelve Months Ended December 31, 2011
(In Thousands)
                                                                 
                                   Business
                                   &
                     PFSweb        Retail      eCOST      Eliminations   Consolidated
                                   Connect
REVENUES:
Product              $ -           $ 162,447   $ -        $  -           $  162,447
revenue, net
Service fee            95,345        -           -           -              95,345
revenue
Service fee
revenue -              6,501         -           -           (6,501  )      -
affiliate
Pass-thru             40,976      -          -         (2      )     40,974  
revenue
Total revenues        142,822     162,447    -         (6,503  )     298,766 
                                                                         
COSTS OF
REVENUES:
Cost of
product                -             150,738     -           -              150,738
revenue
Cost of
service fee            74,367        -           -           (2,616  )      71,751
revenue
Cost of
pass-thru             40,976      -          -         (2      )     40,974  
revenue
Total costs of        115,343     150,738    -         (2,618  )     263,463 
revenues
Gross profit           27,479        11,709      -           (3,885  )      35,303
SELLING,
GENERAL AND           32,892      8,505      -         (3,885  )     37,512  
ADMINISTRATIVE
EXPENSES
Income (loss)
from                   (5,413  )     3,204       -           -              (2,209  )
operations
INTEREST
EXPENSE               (140    )    1,225      -         -            1,085   
(INCOME), NET
Income (loss)
before income          (5,273  )     1,979       -           -              (3,294  )
taxes
INCOME TAX
PROVISION             (401    )    781        -         -            380     
(BENEFIT)
INCOME (LOSS)
FROM                   (4,872  )     1,198       -           -              (3,674  )
CONTINUING
OPERATIONS
LOSS FROM
DISCONTINUED          -           -          (892 )                   (892    )
OPERATIONS,
NET OF TAX
NET INCOME           $ (4,872  )   $ 1,198     $ (892 )   $  -          $  (4,566  )
(LOSS)
NON-GAAP NET         $ (2,922  )   $ 1,198     $ -       $  -          $  (1,724  )
INCOME (LOSS)
                                                                         
EBITDA               $ 892        $ 3,243     $ -       $  -          $  4,135   
ADJUSTED             $ 2,842      $ 3,243     $ -       $  -          $  6,085   
EBITDA
                                                                         
                                                                         
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:
                                                                         
NET INCOME           $ (4,872  )   $ 1,198     $ (892 )   $  -              (4,566  )
(LOSS)
Loss from
discontinued           -             -           892         -              892
operations,
net of tax
Income tax
expense                (401    )     781         -           -              380
(benefit)
Interest
expense                (140    )     1,225       -           -              1,085
(income), net
Depreciation
and                   6,305       39         -         -            6,344   
amortization
EBITDA               $ 892         $ 3,243     $ -        $  -           $  4,135
Stock-based            1,402         -           -           -              1,402
compensation
Move related          548                                             548     
expenses
ADJUSTED             $ 2,842      $ 3,243     $ -       $  -          $  6,085   
EBITDA
                                                                         
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:
                                                                         
NET INCOME           $ (4,872  )   $ 1,198     $ (892 )   $  -           $  (4,566  )
(LOSS)
Loss from
discontinued           -             -           892         -              892
operations,
net of tax
Stock-based            1,402         -           -           -              1,402
compensation
Move related          548                                             548     
expenses
NON-GAAP NET         $ (2,922  )   $ 1,198     $ -       $  -          $  (1,724  )
INCOME (LOSS)
                                                                         

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 Condensed Consolidating Balance Sheets
as of December 31, 2012
(In Thousands)
                                                                
                                                                       
                                          Business &
                            PFSweb        Retail        Eliminations   Consolidated
                                          Connect
ASSETS
CURRENT ASSETS:
Cash and cash               $ 13,079      $ 6,547       $  -           $  19,626
equivalents
Restricted cash               -             283            -              283
Accounts receivable,          34,831        11,574         (721    )      45,684
net
Inventories, net              -             24,654         -              24,654
Other receivables             -             7,676          -              7,676
Prepaid expenses and         2,817       1,528        -            4,345   
other current assets
Total current assets         50,727      52,262       (721    )     102,268 
                                                                       
PROPERTY AND                  27,651        266            -              27,917
EQUIPMENT, net
RECEIVABLE/INVESTMENT         13,396        -              (13,396 )      -
IN AFFILIATES
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          $ 13,072      $ 3,588       $  -           $  16,660
capital lease
obligations
Trade accounts                12,109        29,105         (721    )      40,493
payable
Deferred revenue              6,573         75             -              6,648
Accrued expenses             16,743      6,354        -            23,097  
Total current                 48,497        39,122         (721    )      86,898
liabilities
                                                                       
LONG-TERM DEBT AND
CAPITAL LEASE                 5,400         -              -              5,400
OBLIGATIONS, less
current portion
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            106,018       28,059         (28,059 )      106,018
capital
Retained earnings             (79,461 )     (40,606 )      40,658         (79,409 )
(accumulated deficit)
Accumulated other             1,554         2,181          (2,181  )      1,554
comprehensive income
Treasury stock               (125    )    -            -            (125    )
Total shareholders'          27,999      (9,347  )     9,399        28,051  
equity
Total liabilities and       $ 94,940     $ 52,648     $  (14,117 )   $  133,471 
shareholders' equity
                                                                                  


PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2011
(In Thousands)
                                                                
                                                                       
                                          Business &
                            PFSweb        Retail        Eliminations   Consolidated
                                          Connect
ASSETS
CURRENT ASSETS:
Cash and cash               $ 12,818      $ 4,877       $  -           $  17,695
equivalents
Restricted cash               138           689            -              827
Accounts receivable,          35,881        17,133         (335    )      52,679
net
Inventories, net              -             30,487         -              30,487
Other receivables             -             11,915         -              11,915
Prepaid expenses and         3,273       1,424        -            4,697   
other current assets
Total current assets         52,110      66,525       (335    )     118,300 
                                                                       
PROPERTY AND                  14,884        61             -              14,945
EQUIPMENT, net
RECEIVABLE/INVESTMENT         13,130        -              (13,130 )      -
IN AFFILIATES
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          $ 13,918      $ 10,021      $  -           $  23,939
capital lease
obligations
Trade accounts                12,089        36,790         (335    )      48,544
payable
Deferred revenue              6,749         17             -              6,766
Accrued expenses             11,998      6,659        -            18,657  
Total current                 44,754        53,487         (335    )      97,906
liabilities
                                                                       
LONG-TERM DEBT AND
CAPITAL LEASE                 3,513         70             -              3,583
OBLIGATIONS, less
current portion
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            104,645       28,059         (28,059 )      104,645
capital
Retained earnings             (77,950 )     (40,446 )      40,498         (77,898 )
(accumulated deficit)
Accumulated other             1,398         2,056          (2,055  )      1,399
comprehensive income
Treasury stock               (85     )    -            -            (85     )
Total shareholders'          28,021      (9,312  )     9,365        28,074  
equity
Total liabilities and       $ 83,097     $ 66,740     $  (13,465 )   $  136,372 
shareholders' equity

Contact:

PFSweb, Inc.
Mike Willoughby, Chief Executive Officer
Thomas J. Madden, Chief Financial Officer
972-881-2900
or
Investor Relations
KCSA Strategic Communications
Todd Fromer / Garth Russell
212-896-1215 / 212-896-1250
tfromer@kcsa.com / grussell@kcsa.com
 
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