PFSweb Reports Second Quarter 2013 Results

  PFSweb Reports Second Quarter 2013 Results

  PFSweb Increases Fiscal 2013 Adjusted EBITDA Guidance to $9-$10.5 Million

Business Wire

ALLEN, Texas -- August 13, 2013

PFSweb, Inc. (Nasdaq: PFSW), an international provider of end-to-end eCommerce
solutions, today announced its financial results for the quarter ended June
30, 2013.

“We are pleased with our results for the June 2013 quarter. Higher than
expected service fee revenue activity, including project work, partially
offset the anticipated decline in revenue and profits related to client
transitions. In addition, we continue to make progress implementing
initiatives to drive operational efficiencies and reduce costs,” stated Mike
Willoughby, Chief Executive Officer of PFSweb. “We also continue to see a
number of opportunities to expand existing client engagements and sign new
customers. Based on client projections, our current business pipeline has
strengthened from last quarter to more than $55 million in average annual
contract value.

“Our strategic relationship with transcosmos inc. is beginning to yield
additional new business opportunities. In July, our management team traveled
to China and Japan, where we made a series of presentations to executives on
how to expand their eCommerce presence in the United States, Canada and
Western Europe. In conjunction with this activity and our new relationship
with transcosmos, several companies have already reached out to us to express
their interest in our eCommerce solutions, and we have recently delivered our
first proposal. In addition, PFSweb is in discussions with several of our
existing clients to provide assistance to them with expanding into Asia.
Overall, we are confident that these steps will drive growth and help unlock
the operating leverage inherent in our business.

“With the higher than anticipated second quarter results and our current
expectations of client volumes for the remainder of the year, including this
upcoming holiday season, we now believe our 2013 Service Fee Equivalent
Revenue will be toward the high end of the previously announced range of $110
million to $115 million, and we are increasing our Adjusted EBITDA target to a
range of $9 million to $10.5 million for the year,” added Mr. Willoughby.

Summary of consolidated results for the second quarter ended June 30, 2013:

  *Service Fee revenue decreased 7% to $26.5 million, compared to $28.4
    million for the same period in 2012; Service Fee Equivalent Revenue (as
    defined) decreased 8% to $28.0 million, compared to $30.5 million for the
    same period in 2012;
  *Total revenue decreased 13% to $58.2 million, compared to $67.1 million
    for the second quarter of 2012;
  *Adjusted EBITDA (as defined) decreased 11% to $2.5 million, compared to
    $2.8 million for the same period in 2012; Adjusted EBITDA for the second
    quarter of 2013 included an incremental benefit of approximately $0.4
    million applicable to certain client transition related agreements;
  *Net loss was $1.0 million, or $0.07 per basic and diluted share, compared
    to net loss of $0.5 million, or $0.04 per basic and diluted share, for the
    second quarter of 2012; Net loss for the second quarter of 2013 included
    $0.3 million of restructuring and other charges while net loss for the
    second quarter of 2012 included $0.3 million of move related expenses;
  *Non-GAAP net loss (as defined) was $0.4 million, or $0.03 per basic and
    diluted share, compared to non-GAAP net income of $0.2 million, or $0.01
    per basic and diluted share, for the quarter ended June 30, 2012.

Summary of consolidated results for the six months ended June 30, 2013:

  *Service Fee revenue decreased 4% to $54.5 million, compared to $56.8
    million for the same period in 2012; Service Fee Equivalent Revenue (as
    defined) decreased 6% to $58.0 million, compared to $61.8 million for the
    same period in 2012;
  *Total revenue decreased 13% to $121.3 million, compared to $139.8 million
    for the first six months of 2012;
  *Adjusted EBITDA (as defined) remained flat at $5.4 million in both the six
    months ended June 30, 2013 and 2012; Adjusted EBITDA in the 2013 period
    included an incremental benefit of approximately $1.0 million applicable
    to certain client transition related agreements;
  *Net loss was $3.5 million, or $0.26 per basic and diluted share, compared
    to net loss of $1.8 million, or $0.14 per basic and diluted share, for the
    same period in 2012; Net loss for the six months ended June 30, 2013
    included $2.5 million of restructuring and other charges while net loss
    for the same 2012 period included $0.9 million of move related expenses
    and $0.5 million of lease termination costs;
  *Non-GAAP net loss (as defined) was $0.4 million, or $0.03 per basic and
    diluted share, compared to non-GAAP net income of $0.2 million, or $0.02
    per basic and diluted share, for the 2012 period.

Mr. Willoughby continued, “As we expected, the financial results for the
second quarter reflect the partial impact of previously announced client
transitions and certain restructuring-related activities, minimized by higher
than expected client activity. We currently expect our third quarter results
to be more negatively impacted as the remaining client transitions will be
completed in the early part of the third quarter. We then expect to see a
sequential improvement in our fourth quarter as we realize increased benefits
from new and expanded client relationships, including potential new clients
from our transcosmos relationship, and seasonal client volumes. Overall, we
remain excited about the direction of our business and committed to enhancing
value for our shareholders. Given the ramp-up time required to contract and
implement new client solutions, we expect the benefits of these opportunities
will primarily be reflected in our results beginning in CY2014.”

Conference Call Information

Management will host a conference call at 11:00 am Eastern Time (10:00 am
Central Time) on Tuesday, August 13, 2013, to discuss the latest corporate
developments and results. To listen to the call, please dial (888) 562-3356
and enter pin number 20367798 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 September
13, 2013 at (855) 859-2056, pin number 20367798. 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, restructuring and other charges, lease termination costs
and certain move related expenses.

EBITDA represents earnings (or losses) before interest, income taxes,
depreciation, and amortization. Adjusted EBITDA further eliminates the effect
of stock-based compensation, restructuring and other charges, 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, restructuring and other
charges, 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, 2012 and the three months ended
March 31, 2013 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            Six Months Ended
                       June 30,                      June 30,
                       2013             2012         2013          2012
REVENUES:
   Product revenue,    $  22,985        $ 29,423     $ 48,467      $ 63,974
   net
   Service fee revenue    26,496          28,384       54,498        56,762
   Pass-thru revenue     8,704         9,264      18,361      19,103  
            Total        58,185        67,071     121,326     139,839 
            revenues
                                                                   
COSTS OF
REVENUES:
   Cost of product        21,479          27,263       44,994        58,945
   revenue
   Cost of service fee    17,811          20,698       37,069        42,353
   revenue
   Cost of pass-thru     8,704         9,264      18,361      19,103  
   revenue
            Total
            costs of     47,994        57,225     100,424     120,401 
            revenues
            Gross         10,191          9,846        20,902        19,438
            profit
SELLING, GENERAL AND
ADMINISTRATIVE           10,938        9,902      23,739      20,406  
EXPENSES
   Income (loss) from     (747    )       (56    )     (2,837  )     (968    )
   operations
INTEREST EXPENSE         184           258        402         522     
(INCOME), NET
   Income (loss)          (931    )       (314   )     (3,239  )     (1,490  )
   before income taxes
INCOME TAX PROVISION     24            194        291         303     
(BENEFIT)
NET INCOME (LOSS)      $  (955    )     $ (508   )   $ (3,530  )   $ (1,793  )
NON-GAAP INCOME (LOSS) $  (421    )     $ 152       $ (400    )   $ 229     
                                                                   
NET INCOME (LOSS) PER
SHARE:
   Basic               $  (0.07   )     $ (0.04  )   $ (0.26   )   $ (0.14   )
   Diluted             $  (0.07   )     $ (0.04  )   $ (0.26   )   $ (0.14   )
                                                                   
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING:
   Basic                 14,525        12,783     13,661      12,774  
   Diluted               14,525        12,783     13,661      12,774  
                                                                   
EBITDA                 $  1,941        $ 2,134     $ 2,259      $ 3,364   
ADJUSTED EBITDA        $  2,475        $ 2,794     $ 5,389      $ 5,386   
                                                                   
(A) The financial data above should be read in conjunction with
the audited consolidated financial statements of
PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2012.
                                                                   


PFSweb, Inc. and Subsidiaries
Reconciliation of certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)
                                                             
                         Three Months Ended          Six Months Ended
                         June 30,                    June 30,
                         2013          2012          2013          2012
NET INCOME (LOSS)        $ (955    )   $ (508    )   $ (3,530  )   $ (1,793  )
   Income tax expense      24            194           291           303
   Interest expense,       184           258           402           522
   net
   Depreciation and       2,688       2,190       5,096       4,332   
   amortization
EBITDA                   $ 1,941       $ 2,134       $ 2,259       $ 3,364
   Stock-based             282           366           585           706
   compensation
   Restructuring and       252           -             2,545         -
   other charges
   Lease terminations      -             -             -             450
   costs
   Move related           -           294         -           866     
   expenses
ADJUSTED EBITDA          $ 2,475      $ 2,794      $ 5,389      $ 5,386   
                                                                   
                                                                   
                         Three Months Ended          Six Months Ended
                         June 30,                    June 30,
                         2013          2012          2013          2012
                                                                   
NET INCOME (LOSS)        $ (955    )   $ (508    )   $ (3,530  )   $ (1,793  )
   Stock-based             282           366           585           706
   compensation
   Restructuring and       252           -             2,545         -
   other charges
   Lease terminations      -             -             -             450
   costs
   Move related           -           294         -           866     
   expenses
NON-GAAP INCOME (LOSS)   $ (421    )   $ 152        $ (400    )   $ 229     
                                                                   
NET INCOME (LOSS) PER
SHARE:
   Basic                 $ (0.07   )   $ (0.04   )   $ (0.26   )   $ (0.14   )
   Diluted               $ (0.07   )   $ (0.04   )   $ (0.26   )   $ (0.14   )
                                                                   
NON-GAAP INCOME (LOSS)
Per Share:
   Basic                 $ (0.03   )   $ 0.01       $ (0.03   )   $ 0.02    
   Diluted               $ (0.03   )   $ 0.01       $ (0.03   )   $ 0.02    
                                                                   
                                                                   
                                                                   
                         Three Months Ended          Six Months Ended
                         June 30,                    June 30,
                         2013          2012          2013          2012
                                                                   
TOTAL REVENUES           $ 58,185      $ 67,071      $ 121,326     $ 139,839
   Pass-thru revenue       (8,704  )     (9,264  )     (18,361 )     (19,103 )
   Cost of product        (21,479 )    (27,263 )    (44,994 )    (58,945 )
   revenue
SERVICE FEE EQUIVALENT   $ 28,002     $ 30,544     $ 57,971     $ 61,791  
REVENUE
                                                                   


PFSweb, Inc. and Subsidiaries
Preliminary Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)
                                                               
                                                                  
                                                    June 30,      December 31,
                                                    2013          2012
                    ASSETS              
CURRENT ASSETS:
       Cash and cash equivalents                    $ 21,638      $  19,626
       Restricted cash                                457            283
       Accounts receivable, net of allowance for
       doubtful accounts of $391 and
       $450 at June 30, 2013 and December 31, 2012,   37,873         45,684
       respectively
       Inventories, net of reserves of $1,753 and
       $1,789 at June 30, 2013 and
       December 31, 2012, respectively                17,822         24,654
       Other receivables                              6,984          7,675
       Prepaid expenses and other current assets     4,364        4,346   
                    Total current assets              89,138         102,268
                                                                  
PROPERTY AND EQUIPMENT, net                           26,611         27,917
OTHER ASSETS                                         2,887        3,286   
                    Total assets                     118,636      133,471 
                                                                  
       LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
       Current portion of long-term debt and        $ 8,940       $  16,660
       capital lease obligations
       Trade accounts payable                         26,760         40,493
       Deferred revenue                               7,870          6,648
       Accrued expenses                              18,981       23,097  
                    Total current liabilities         62,551         86,898
                                                                  
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less    4,224          5,400
current portion
DEFERRED REVENUE                                      7,343          7,562
DEFERRED RENT                                        5,237        5,560   
                    Total liabilities                79,355       105,420 
                                                                  
                                                                  
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;
       16,138,172 and 12,812,386 shares issued at
       June 30, 2013 and
       December 31, 2012, respectively; and
       16,104,705 and 12,778,919
       shares outstanding as of June 30, 2013 and     16             13
       December 31, 2012, respectively
       Additional paid-in capital                     120,915        106,018
       Accumulated deficit                            (82,939 )      (79,409 )
       Accumulated other comprehensive income         1,414          1,554
       Treasury stock at cost, 33,467 shares as of   (125    )     (125    )
       June 30, 2013 and December 31, 2012
                    Total shareholders' equity       39,281       28,051  
                    Total liabilities and           $ 118,636    $  133,471 
                    shareholders' equity
                                                                  


PFSweb, Inc. and Subsidiaries
Preliminary Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2013
(In Thousands)
                                                             
                                      Business &
                        PFSweb        Retail       Eliminations   Consolidated
                                      Connect
REVENUES:
       Product revenue, $  -          $ 22,985     $  -           $  22,985
       net
       Service fee         25,303       1,193         -              26,496
       revenue
       Service fee
       revenue -           1,915        435           (2,350  )      -
       affiliate
       Pass-thru          8,704      -           -            8,704   
       revenue
             Total        35,922     24,613      (2,350  )     58,185  
             revenues
                                                                  
COSTS OF REVENUES:
       Cost of product     -            21,479        -              21,479
       revenue
       Cost of service     18,401       1,433         (2,023  )      17,811
       fee revenue
       Cost of
       pass-thru          8,704      -           -            8,704   
       revenue
             Total
             costs of     27,105     22,912      (2,023  )     47,994  
             revenues
             Gross         8,817        1,701         (327    )      10,191
             profit
SELLING, GENERAL AND      9,600      1,665       (327    )     10,938  
ADMINISTRATIVE EXPENSES
       Income (loss)       (783   )     36            -              (747    )
       from operations
INTEREST EXPENSE          35         149         -            184     
(INCOME), NET
       Income (loss)
       before income       (818   )     (113   )      -              (931    )
       taxes
INCOME TAX PROVISION      23         1           -            24      
(BENEFIT)
NET INCOME (LOSS)       $  (841   )   $ (114   )   $  -          $  (955    )
NON-GAAP NET INCOME     $  (307   )   $ (114   )   $  -          $  (421    )
(LOSS)
                                                                  
EBITDA                  $  1,865     $ 76        $  -          $  1,941   
ADJUSTED EBITDA         $  2,399     $ 76        $  -          $  2,475   
                                                                  
                                                                  
A reconciliation of NET INCOME (LOSS) to EBITDA
and ADJUSTED EBITDA follows:
                                                                  
NET INCOME (LOSS)       $  (841   )   $ (114   )   $  -              (955    )
       Income tax
       expense             23           1             -              24
       (benefit)
       Interest expense    35           149           -              184
       (income), net
       Depreciation and   2,648      40          -            2,688   
       amortization
EBITDA                  $  1,865      $ 76         $  -           $  1,941
       Stock-based         282          -             -              282
       compensation
       Restructuring
       and other          252        -           -            252     
       charges
ADJUSTED EBITDA         $  2,399     $ 76        $  -          $  2,475   
                                                                  
A reconciliation of NET INCOME (LOSS) to
NON-GAAP NET INCOME (LOSS) follows:
                                                                  
NET INCOME (LOSS)       $  (841   )   $ (114   )   $  -           $  (955    )
       Stock-based         282          -             -              282
       compensation
       Restructuring
       and other          252        -           -            252     
       charges
NON-GAAP NET INCOME     $  (307   )   $ (114   )   $  -          $  (421    )
(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, Inc. and Subsidiaries
Preliminary Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2013
(In Thousands)
                                                             
                                        Business
                                        &
                           PFSweb       Retail     Eliminations   Consolidated
                                        Connect
REVENUES:
         Product           $ -          $ 48,467   $  -           $  48,467
         revenue, net
         Service fee         51,744       2,754       -              54,498
         revenue
         Service fee
         revenue -           4,269        797         (5,066  )      -
         affiliate
         Pass-thru          18,362     -          (1      )     18,361  
         revenue
              Total         74,375     52,018     (5,067  )     121,326 
              revenues
                                                                  
COSTS OF
REVENUES:
         Cost of
         product             -            44,994      -              44,994
         revenue
         Cost of service     38,181       3,080       (4,192  )      37,069
         fee revenue
         Cost of
         pass-thru          18,362     -          (1      )     18,361  
         revenue
              Total
              costs of      56,543     48,074     (4,193  )     100,424 
              revenues
              Gross          17,832       3,944       (874    )      20,902
              profit
SELLING, GENERAL AND        21,162     3,451      (874    )     23,739  
ADMINISTRATIVE EXPENSES
         Income (loss)       (3,330 )     493         -              (2,837  )
         from operations
INTEREST EXPENSE            101        301        -            402     
(INCOME), NET
         Income (loss)
         before income       (3,431 )     192         -              (3,239  )
         taxes
INCOME TAX PROVISION        143        148        -            291     
(BENEFIT)
NET INCOME                 $ (3,574 )   $ 44       $  -          $  (3,530  )
(LOSS)
NON-GAAP NET INCOME        $ (444   )   $ 44       $  -          $  (400    )
(LOSS)
                                                                  
EBITDA                     $ 1,688     $ 571      $  -          $  2,259   
ADJUSTED                   $ 4,818     $ 571      $  -          $  5,389   
EBITDA
                                                                  
                                                                  
A reconciliation of NET
INCOME (LOSS) to EBITDA
and ADJUSTED EBITDA
follows:
                                                                  
NET INCOME                 $ (3,574 )   $ 44       $  -              (3,530  )
(LOSS)
         Income tax
         expense             143          148         -              291
         (benefit)
         Interest
         expense             101          301         -              402
         (income), net
         Depreciation
         and                5,018      78         -            5,096   
         amortization
EBITDA                     $ 1,688      $ 571      $  -           $  2,259
         Stock-based         585          -           -              585
         compensation
         Restructuring
         and other          2,545      -          -            2,545   
         charges
ADJUSTED                   $ 4,818     $ 571      $  -          $  5,389   
EBITDA
                                                                  
A reconciliation of NET
INCOME (LOSS) to
NON-GAAP NET INCOME
(LOSS) follows:
                                                                  
NET INCOME                 $ (3,574 )   $ 44       $  -           $  (3,530  )
(LOSS)
         Stock-based         585          -           -              585
         compensation
         Restructuring
         and other          2,545      -          -            2,545   
         charges
NON-GAAP NET INCOME        $ (444   )   $ 44       $  -          $  (400    )
(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, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended June 30, 2012
(In Thousands)
                                                            
                                        Business
                                        &
                          PFSweb        Retail     Eliminations   Consolidated
                                        Connect
REVENUES:
       Product            $  -          $ 29,423   $  -           $  29,423
       revenue, net
       Service fee           28,384       -           -              28,384
       revenue
       Service fee
       revenue -             1,124        134         (1,258  )      -
       affiliate
       Pass-thru            9,264      -          -            9,264   
       revenue
            Total           38,772     29,557     (1,258  )     67,071  
            revenues
                                                                  
COSTS OF REVENUES:
       Cost of product       -            27,263      -              27,263
       revenue
       Cost of service       21,273       134         (709    )      20,698
       fee revenue
       Cost of
       pass-thru            9,264      -          -            9,264   
       revenue
            Total
            costs of        30,537     27,397     (709    )     57,225  
            revenues
            Gross            8,235        2,160       (549    )      9,846
            profit
SELLING, GENERAL AND
ADMINISTRATIVE              8,823      1,628      (549    )     9,902   
EXPENSES
       Income (loss)         (588   )     532         -              (56     )
       from operations
INTEREST EXPENSE            57         201        -            258     
(INCOME), NET
       Income (loss)
       before income         (645   )     331         -              (314    )
       taxes
INCOME TAX PROVISION        55         139        -            194     
(BENEFIT)
NET INCOME (LOSS)         $  (700   )   $ 192      $  -          $  (508    )
NON-GAAP NET INCOME       $  (40    )   $ 192      $  -          $  152     
(LOSS)
                                                                  
EBITDA                    $  1,578     $ 556      $  -          $  2,134   
ADJUSTED EBITDA           $  2,238     $ 556      $  -          $  2,794   
                                                                  
                                                                  
A reconciliation of NET INCOME (LOSS) to EBITDA
and ADJUSTED EBITDA follows:
                                                                  
NET INCOME (LOSS)         $  (700   )   $ 192      $  -              (508    )
       Income tax
       expense               55           139         -              194
       (benefit)
       Interest
       expense               57           201         -              258
       (income), net
       Depreciation
       and                  2,166      24         -            2,190   
       amortization
EBITDA                    $  1,578      $ 556      $  -           $  2,134
       Stock-based           366          -           -              366
       compensation
       Move related         294                                 294     
       expenses
ADJUSTED EBITDA           $  2,238     $ 556      $  -          $  2,794   
                                                                  
A reconciliation of NET INCOME (LOSS) to
NON-GAAP NET INCOME (LOSS) follows:
                                                                  
NET INCOME (LOSS)         $  (700   )   $ 192      $  -           $  (508    )
       Stock-based           366          -           -              366
       compensation
       Move related         294        -          -            294     
       expenses
NON-GAAP NET INCOME       $  (40    )   $ 192      $  -          $  152     
(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, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Six Months Ended June 30, 2012
(In Thousands)
                                                             
                                        Business
                                        &
                       PFSweb           Retail     Eliminations   Consolidated
                                        Connect
REVENUES:
       Product         $  -             $ 63,974   $  -           $  63,974
       revenue, net
       Service fee        56,762          -           -              56,762
       revenue
       Service fee
       revenue -          2,586           308         (2,894  )      -
       affiliate
       Pass-thru         19,103        -                        19,103  
       revenue
            Total        78,451        64,282     (2,894  )     139,839 
            revenues
                                                                  
COSTS OF REVENUES:
       Cost of product    -               58,945      -              58,945
       revenue
       Cost of service    43,543          308         (1,498  )      42,353
       fee revenue
       Cost of
       pass-thru         19,103        -          -            19,103  
       revenue
            Total
            costs of     62,646        59,253     (1,498  )     120,401 
            revenues
            Gross         15,805          5,029       (1,396  )      19,438
            profit
SELLING, GENERAL AND
ADMINISTRATIVE           18,133        3,669      (1,396  )     20,406  
EXPENSES
       Income (loss)      (2,328  )       1,360       -              (968    )
       from operations
INTEREST EXPENSE         91            431        -            522     
(INCOME), NET
       Income (loss)
       before income      (2,419  )       929         -              (1,490  )
       taxes
INCOME TAX PROVISION     (69     )      372        -            303     
(BENEFIT)
NET INCOME (LOSS)      $  (2,350  )     $ 557      $  -          $  (1,793  )
NON-GAAP NET INCOME    $  (328    )     $ 557      $  -          $  229     
(LOSS)
                                                                  
EBITDA                 $  1,964        $ 1,400    $  -          $  3,364   
ADJUSTED EBITDA        $  3,986        $ 1,400    $  -          $  5,386   
                                                                  
                                                                  
A reconciliation of NET INCOME (LOSS) to EBITDA
and ADJUSTED EBITDA follows:
                                                                  
NET INCOME (LOSS)      $  (2,350  )     $ 557      $  -              (1,793  )
       Income tax
       expense            (69     )       372         -              303
       (benefit)
       Interest
       expense            91              431         -              522
       (income), net
       Depreciation
       and               4,292         40         -            4,332   
       amortization
EBITDA                 $  1,964         $ 1,400    $  -           $  3,364
       Stock-based        706             -           -              706
       compensation
       Lease
       termination        450             -           -              450
       costs
       Move related      866                                    866     
       expenses
ADJUSTED EBITDA        $  3,986        $ 1,400    $  -          $  5,386   
                                                                  
A reconciliation of NET INCOME (LOSS) to
NON-GAAP NET INCOME (LOSS) follows:
                                                                  
NET INCOME (LOSS)      $  (2,350  )     $ 557      $  -           $  (1,793  )
       Stock-based        706             -           -              706
       compensation
       Lease
       termination        450             -           -              450
       costs
       Move related      866                                    866     
       expenses
NON-GAAP NET INCOME    $  (328    )     $ 557      $  -          $  229     
(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, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of June 30, 2013
(In Thousands)
                                                            
                                                                  
                                     Business &
                       PFSweb        Retail        Eliminations   Consolidated
                                     Connect
         ASSETS     
CURRENT ASSETS:
   Cash and cash       $ 15,967      $ 5,671       $  -           $  21,638
   equivalents
   Restricted cash       -             457            -              457
   Accounts              27,212        10,906         (245    )      37,873
   receivable, net
   Inventories, net      -             17,822         -              17,822
   Other                 -             6,984          -              6,984
   receivables
   Prepaid expenses
   and other current    2,928       1,436        -            4,364   
   assets
         Total current   46,107        43,276         (245    )      89,138
         assets
                                                                  
PROPERTY AND             26,392        219            -              26,611
EQUIPMENT, net
RECEIVABLE/INVESTMENT    13,775        -              (13,775 )      -
IN AFFILIATES
OTHER ASSETS            2,786       101          -            2,887   
         Total assets   89,060      43,596       (14,020 )     118,636 
                                                                  
   LIABILITIES AND
   SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
   Current portion of
   long-term debt and  $ 4,258       $ 4,682       $  -           $  8,940
   capital lease
   obligations
   Trade accounts        7,046         19,959         (245    )      26,760
   payable
   Deferred revenue      7,825         45             -              7,870
   Accrued expenses     13,760      5,221        -            18,981  
         Total current   32,889        29,907         (245    )      62,551
         liabilities
                                                                  
LONG-TERM DEBT AND
CAPITAL LEASE            4,224         -              -              4,224
OBLIGATIONS, less
current portion
PAYABLE TO AFFILIATES    -             23,045         (23,045 )      -
DEFERRED REVENUE         7,343         -              -              7,343
DEFERRED RENT           5,195       42           -            5,237   
         Total          49,651      52,994       (23,290 )     79,355  
         liabilities
                                                                  
COMMITMENTS AND
CONTINGENCIES
                                                                  
SHAREHOLDERS' EQUITY:
   Common stock          16            19             (19     )      16
   Capital               -             1,000          (1,000  )      -
   contributions
   Additional paid-in    120,915       28,060         (28,060 )      120,915
   capital
   Retained earnings
   (accumulated          (82,811 )     (40,562 )      40,434         (82,939 )
   deficit)
   Accumulated other
   comprehensive         1,414         2,085          (2,085  )      1,414
   income
   Treasury stock       (125    )    -            -            (125    )
         Total
         shareholders'  39,409      (9,398  )     9,270        39,281  
         equity
         Total
         liabilities
         and           $ 89,060     $ 43,596     $  (14,020 )   $  118,636 
         shareholders'
         equity
                                                                  


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               34,831        11,574         (721    )      45,684
   receivable, net
   Inventories,           -             24,654         -              24,654
   net
   Other receivables      -             7,675          -              7,675
   Prepaid expenses
   and other current     2,817       1,529        -            4,346   
   assets
        Total current    50,727      52,262       (721    )     102,268 
        assets
                                                                   
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               6,573         75             -              6,648
   revenue
   Accrued               16,743      6,354        -            23,097  
   expenses
        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            66,941      61,995       (23,516 )     105,420 
        liabilities
                                                                   
COMMITMENTS AND
CONTINGENCIES
                                                                   
SHAREHOLDERS' EQUITY:
   Common stock           13            19             (19     )      13
   Capital                -             1,000          (1,000  )      -
   contributions
   Additional paid-in     106,018       28,059         (28,059 )      106,018
   capital
   Retained earnings
   (accumulated           (79,461 )     (40,606 )      40,658         (79,409 )
   deficit)
   Accumulated other
   comprehensive          1,554         2,181          (2,181  )      1,554
   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
                                                                   

Contact:

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