PFSweb, Inc. and Subsidiaries
Notes to Unaudited Interim Consolidated Financial Statements
8. SEGMENT INFORMATION
The Company is currently organized into two primary operating segments, which generally align
with the corporate organization structure. In the first segment, PFS is an international provider
of various business process outsourcing solutions and operates as a service fee business. In the
second operating segment (“Business and Retail Connect”), subsidiaries of the Company purchase
inventory from clients and resell the inventory to client customers. In this segment, the Company
generally recognizes product revenue.
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenues (in thousands): |
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PFS |
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$ |
34,466 |
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$ |
25,729 |
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$ |
94,034 |
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$ |
74,551 |
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Business and Retail Connect |
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37,923 |
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39,316 |
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122,005 |
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128,592 |
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Eliminations |
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(1,518 |
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(1,485 |
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(4,771 |
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(4,941 |
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$ |
70,871 |
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$ |
63,560 |
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$ |
211,268 |
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$ |
198,202 |
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Income (loss) from continuing
operations (in thousands): |
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PFS |
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$ |
(2,031 |
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$ |
(2,015 |
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$ |
(5,794 |
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$ |
(5,027 |
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Business and Retail Connect |
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186 |
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432 |
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1,037 |
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1,186 |
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$ |
(1,845 |
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$ |
(1,583 |
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$ |
(4,757 |
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$ |
(3,841 |
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Depreciation and amortization (in
thousands): |
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PFS |
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$ |
1,529 |
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$ |
1,452 |
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$ |
4,553 |
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$ |
4,572 |
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Business and Retail Connect |
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8 |
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7 |
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22 |
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21 |
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$ |
1,537 |
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$ |
1,459 |
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$ |
4,575 |
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$ |
4,593 |
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Capital expenditures (in thousands): |
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PFS |
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$ |
2,981 |
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$ |
1,132 |
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$ |
6,977 |
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$ |
2,986 |
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Business and Retail Connect |
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17 |
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73 |
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37 |
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95 |
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$ |
2,998 |
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$ |
1,205 |
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$ |
7,014 |
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$ |
3,081 |
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September 30, |
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December 31, |
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2011 |
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2010 |
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Assets (in thousands): |
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PFS |
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$ |
70,905 |
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$ |
62,617 |
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Business and Retail Connect |
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75,397 |
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82,175 |
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Eliminations |
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(15,095 |
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(14,562 |
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$ |
131,207 |
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$ |
130,230 |
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9. COMMITMENTS AND CONTINGENCIES
The Company receives municipal tax abatements in certain locations. During 2004 the Company
received notice from a municipality that it did not satisfy certain criteria necessary to maintain
the abatements. In December 2006, the Company received notice that the municipal authority planned
to make an adjustment to the Company’s tax abatement. The Company disputed the adjustment and such
dispute has been settled with the municipality. However, the amount of additional property taxes
to be assessed against the Company and the timing of the related payments has not been finalized.
As of September 30, 2011, the Company believes it has adequately accrued for the expected
assessment.
In April 2010, a sales employee of eCOST was charged with violating various federal criminal
statutes in connection with the sales of eCOST products to certain customers, and approximately
$620,000 held in an eCOST deposit account was seized and turned over to the Office of the U.S.
Attorney in connection
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