PFSweb, Inc. and Subsidiaries
Notes to Unaudited Interim Consolidated Financial Statements
and equipment and certain contract termination costs and may incur additional costs, including
excess facility costs. In December 2010, the Company recorded a non-cash goodwill impairment charge
of approximately $2.8 million as a result of this sale. For all periods presented, the Company has
reported the operating results of the eCOST discount retailer business unit, excluding costs
expected to continue to occur in the future, as discontinued operations. The remaining assets and
business operations of eCOST will be conducted under the name PFSweb Retail Connect and will
continue to provide certain services, primarily under a product ownership based model, to certain
of the Companys client relationships on an ongoing basis.
Basis of Presentation
The unaudited interim condensed consolidated financial statements as of September 30, 2011,
and for the three and nine months ended September 30, 2011 and 2010, have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission (SEC) and are unaudited.
Certain information and note disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of America have been
condensed or omitted pursuant to the rules and regulations promulgated by the SEC. In the opinion
of management and subject to the foregoing, the unaudited interim consolidated financial statements
of the Company include all adjustments necessary for a fair presentation of the Companys financial
position as of September 30, 2011, its results of operations for the three and nine months ended
September 30, 2011 and 2010 and its cash flows for the nine months ended September 30, 2011 and
2010. Results of the Companys operations for interim periods may not be indicative of results for
the full fiscal year.
Certain prior period data has been reclassified to conform to the current period presentation.
These reclassifications had no effect on previously reported net income (loss) or total
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements and related disclosures in conformity
with generally accepted accounting principles requires management to make judgments, estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and
disclosure of contingent assets and liabilities. The recognition and allocation of certain revenues
and selling, general and administrative expenses in these consolidated financial statements also
require management estimates and assumptions.
Estimates and assumptions about future events and their effects cannot be determined with
certainty. The Company bases its estimates on historical experience and on various other
assumptions believed to be applicable and reasonable under the circumstances. These estimates may
change as new events occur, as additional information is obtained and as the operating environment
changes. These changes have been included in the consolidated financial statements as soon as they became known. In addition,
management is periodically faced with uncertainties, the outcomes of which are not within its
control and will not be known for prolonged periods of time. These uncertainties are discussed in
this report and in the Companys Annual Report on Form 10-K for the year ended December 31, 2010 in
the section entitled Risk Factors. Based on a critical assessment of accounting policies and the
underlying judgments and uncertainties affecting the application of those policies, management
believes the Companys consolidated financial statements are fairly stated in accordance with
generally accepted accounting principles in the United States of America, and provide a fair
presentation of the Companys financial position and results of operations.