EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and
amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, merger
integration related expenses and impairment of goodwill and identifiable intangible assets.
Free cash flow is defined as net cash provided by (used in) operating activities less capital
Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and free cash flow 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, amortization of intangible assets and impairment
of goodwill and intangible assets and EBITDA and Adjusted EBITDA further eliminates the effect of
financing, income taxes, the accounting effects of capital spending and certain other merger
related expenses, which items may vary from different companies for reasons unrelated to overall
operating performance. Free cash flow is used as a supplemental financial measure in our
evaluation of liquidity and financial strength.
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. These non-GAAP measures included
in this press release have been reconciled to the GAAP results in the attached tables.
Merchandise sales represent the estimated value of all fulfillment activity that flows through
PFSweb including whether or not PFSweb is the seller of the merchandise or records the full amount
of such sales on its financial statements, excluding service fee revenues that PFSweb might
recognize for the underlying sales transactions. PFSweb uses merchandise sales as an operating
metric to allow investors to gain a more thorough understanding of its business and business
volume, in addition to GAAP net revenue.
About PFSweb, Inc.
PFSweb develops and deploys integrated business infrastructure solutions and fulfillment services
for Fortune 1000, Global 2000 and brand name companies, including third party logistics, call
center support and e-commerce services. The company serves a multitude of industries and company
types, including such clients as LEGO, Discovery Commerce, Riverbed, Hewlett-Packard, International
Business Machines, Hawker Beechcraft Corp., Rene Furterer USA, Roots Canada Ltd. and Xerox.
Through its wholly owned eCOST.com subsidiary, PFSweb also serves as a leading multi-category
online discount retailer of high-quality new, close-out and manufacturer recertified brand-name
merchandise for consumers and small to medium size business buyers. The eCOST.com brand markets
approximately 200,000 different products from leading manufacturers such as Sony, Hewlett-Packard,
Onkyo, Denon, JVC, Canon, Nikon, Panasonic, Toshiba, Microsoft, Dyson, Kitchen Aid, Braun, Black &
Decker, Cuisinart, Coleman, and Citizen primarily over the Internet and through direct marketing.
To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit the companys websites at
http://www.pfsweb.com and http://www.ecost.com.