PFSweb, Inc. and Subsidiaries
Notes to Unaudited Interim Condensed Consolidated Financial Statements
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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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2008 |
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2007 |
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2008 |
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2007 |
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Capital expenditures (in thousands): |
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PFSweb |
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$ |
2,987 |
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$ |
818 |
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$ |
4,467 |
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$ |
2,667 |
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Supplies Distributors |
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— |
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— |
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77 |
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7 |
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eCOST |
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96 |
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115 |
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194 |
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250 |
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Eliminations |
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$ |
3,083 |
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$ |
933 |
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$ |
4,738 |
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$ |
2,924 |
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September 30, |
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December 31, |
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2008 |
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2007 |
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Assets (in thousands): |
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PFSweb |
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$ |
103,759 |
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$ |
102,950 |
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Supplies Distributors |
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83,134 |
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79,446 |
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eCOST |
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30,856 |
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33,615 |
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Eliminations |
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(59,827 |
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(57,838 |
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$ |
157,922 |
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$ |
158,173 |
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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 has disputed the adjustment, but
if the dispute is not resolved favorably, additional taxes of approximately $1.7 million could be
assessed against the Company.
On July 25, 2007 a purported class action lawsuit entitled Darral Frank and Joseph F. Keeley,
Jr.. v. PC Mall, Inc. dba eCOST.com and eCOST.com, Inc. was filed in the Superior Court of
California, Los Angeles County. The purported class consists of all of current and former sales
representatives who worked for the defendants in California from July 24, 2003 through July 24,
2007. The lawsuit alleges that the defendants failed to pay overtime compensation and interest
thereon, failed to timely pay compensation to terminated employees and failed to provide meal and
rest periods, all in violation of the California Labor Code and Business and Professions Code. An
order granting preliminary approval of a settlement of the matter for $0.1 million has been entered
and final approval is expected in December 2008.
The Company is subject to claims in the ordinary course of business, including claims of
alleged infringement by the Company or its subsidiaries of the patents, trademarks and other
intellectual property rights of third parties. If the party asserting such claims commences
litigation, the Company could be required to defend itself or its customers. Except as disclosed
herein, the Company is not aware of any such litigation.
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