PFSweb, Inc. (Nasdaq:PFSW), a global provider of business process
outsourcing (BPO) solutions and web commerce retailer, today
announced financial results for the three and six-month periods
ended June 30, 2006. Total reported revenue for the three months
ending June 30, 2006 totaled $109.3 million, compared to $84.9
million for the same period last year. Service Fee revenue in the
second quarter of 2006 was $16.2 million compared to $16.3 million
for the second quarter of 2005. Supplies Distributors revenue was
$60.9 million in the second quarter of 2006, compared to $63.4
million for the second quarter of 2005. Revenue from the company's
recently acquired wholly owned subsidiary, eCOST.com, was $28.8
million in the second quarter of 2006. eCOST.com reported $41.0
million of revenue for the same period last year prior to the
merger. On a pro forma basis total revenues including eCOST.com for
the same period last year was $125.9 million. Additional
consolidated financial information for PFSweb for the three months
ending June 30, 2006 compared to the year-earlier period includes:
-0- *T -- Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) was $(0.7) million versus $1.6 million in the
prior year. EBITDA for the 2006 second quarter included $(4.0)
million applicable to eCOST.com. Excluding eCOST.com, EBITDA for
the Service Fee and Supplies Distributors businesses was $3.3
million, an increase of $1.7 million over the same period last
year. -- Net loss for the 2006 second quarter was $3.2 million, or
$0.07 per basic and diluted share, compared to a net loss of $0.5
million, or $0.02 per basic and diluted share for the prior year's
period. Net loss in the current year included a net loss of $4.3
million applicable to eCOST. Excluding eCOST.com, net income for
the Service Fee and Supplies Distributors businesses was $1.1
million, an increase of $1.6 million over the second quarter of
last year. -- EBITDA and net loss for the three months ended June
30, 2006 included the following: -- Stock option compensation
expense of $0.2 million in conjunction with Financial Accounting
Standards Board Statement No. 123R. -- Integration related costs
applicable to eCOST of approximately $0.4 million. -- Additionally,
net loss for the period ended June 30, 2006 included the
amortization of identifiable intangible assets of $0.2 million
applicable to valuation of assets assigned in conjunction with the
purchase of eCOST.com. -- Excluding the impact of the items
identified above, EBITDA, net loss and net loss per basic and
diluted share for the period ended June 30,2006 would have been $3
thousand, $2.3 million and $0.05, respectively. -- Merchandise
sales totaled approximately $662 million during the June 2006
quarter. -- Cash and cash equivalents and restricted cash totaled
$19.0 million as of June 30, 2006. *T Mark Layton, Chief Executive
Officer of PFSweb, said, "We are pleased by the continued improved
profitability of our Service Fee and Supplies Distributors
businesses. This improvement included (1) improved gross margin
performance, including the favorable impact of contracts that
became operational in calendar year 2005 and experienced
incremental startup related expenses in that year, and (2) reduced
selling, general and administrative expenses, including the impact
of ongoing cost controls and favorable exchange rates. We continue
to experience improved results in the current year in winning new
Service Fee business relationships, including the expansion of
existing client relationships. During 2006, we have signed new
contracts with estimated ongoing annual service fees of
approximately $7 million, based on client projections, plus special
projects of approximately $1 million. Our solid pipeline of
potential new business, including pending proposals, remains a
robust $40 million in annual service fees. We are targeting to
maintain our steady stream of new business activity and strengthen
our existing client relationships going forward." Consolidated
reported revenue for the six months ending June 30, 2006 totaled
$220.0 million, compared to $166.7 million for the same period last
year, an increase of more than 30%. Service Fee revenue rose 5.7%
for the six months ended June 30, 2006 to $32.1 million from $30.4
million for the same period in 2005. Supplies Distributors revenue
increased 1.7% to $129.3 million in the six months ended June 30,
2006, compared to $127.1 million for the same period last year.
eCOST.com revenue, including $12.9 million of revenue for the month
of January 2006, prior to the merger, was $63.5 million in the
first six months of 2006. eCOST.com reported $96.1 million of
revenue for the same period of 2005. On a pro forma basis total
revenues including eCOST.com for the same period last year was
$262.8 million. PFSweb's consolidated financials for the six months
ending June 30, 2006 only reflect five months of operations for
eCOST.com, as the merger closed on February 1, 2006. For additional
information on PFSweb's consolidated results for the six months
ending June 30, 2006, please refer to the financial tables below.
Layton continued, "We have experienced challenges in achieving our
plans to improve the service and financial performance of the
eCOST.com business segment since the merger. The time and effort
needed to meet certain quality and service targets for eCOST.com
has been greater than we expected and has also contributed to lower
than targeted revenue and gross profit margins during the June 2006
quarter and this is expected to continue into the September 2006
quarter. In addition, we experienced a significantly higher than
normal level of fraudulent credit card activity in June and July,
2006 due in part to problems experienced in the ERP systems
conversion. We believe that these system issues have now been
resolved. We remain focused on the turnaround of eCOST.com,
including the integration of our operations and driving improved
financial and service level performance in the future. Profit, not
revenue, will be our near term focus with an emphasis on stronger
gross profit performance, controlling costs and improving quality
of our operations and customer service. Once we achieve that goal,
we can then turn our attention towards revenue growth and increased
scale and begin to focus on the many exciting opportunities in
product and international expansion we see for this business." "We
are making progress in the turnaround of eCOST.com and plan to
complete our integration in the fall of 2006, in time for the
holiday season," Layton added. "Over the past several months, we
have made significant improvements in eCOST's infrastructure, which
we believe will increase operating efficiencies and enhance
long-term performance. As previously discussed, we anticipate our
merger with eCOST.com to produce total cost savings of
approximately $4 - $5 million on an annual basis once our
integration efforts are fully implemented." Recent highlights for
eCOST.com and related merger with PFSweb include: -- The relocation
of eCOST.com's headquarters to El Segundo, CA in a move expected to
generate cost savings of approximately $20,000 per month. -- The
relocation of eCOST.com's warehouse facility into an existing
PFSweb warehouse to improve performance and reduce costs. --
eCOST.com's early adoption of Google Checkout, a new service from
Google that offers a more convenient and secure online shopping
experience. -- The appointment of ExactTarget to assist in
eCOST.com's direct marketing campaign, providing the ability to
send personalized emails to subscribers using list segmentation and
unique content features as well as advanced reporting functions. --
Nearing the completion of eCOST.com's transition to PFSweb's
advanced ERP platform from its legacy ERP technology platform.
Layton concluded, "We remain confident in our ability to transform
eCOST.com into a premier Internet retailer based on our world-class
technology and operational infrastructure. Once our integration
plan is complete, we expect to leverage our global platform and
deliver sustainable growth within the $79 billion web commerce
marketplace." For eCOST.com's selected operating data for the three
and six-month periods ended June 30, 2006 and 2005, please see the
table below. Conference Call Information Management will host a
conference call at 10:00 a.m. Central Time (11:00 a.m. Eastern
Time) on August 14, 2006 to discuss the latest corporate
developments and results. To listen to the call, please dial
888-338-6760 and enter the pin number (7710682) 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. 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
August 28th at 877-519-4471 pin number (7710682). The replay also
will be available at the company's web site for a limited time.
Non-GAAP Financial Measures This news release contains the non-GAAP
measures EBITDA and adjusted EBITDA. EBITDA represents earnings (or
losses) before interest, taxes, depreciation, and amortization.
Adjusted EBITDA further eliminates the effect of stock based
compensation expense, merger integration related expenses and a
loss on sales transaction. EBITDA and adjusted EBITDA is used by
management, analysts, investors and other interested parties in
evaluating our operating performance compared to that of other
companies in our industry, as the calculation of EBITDA and
adjusted EBITDA eliminates the effect of financing, income taxes,
the accounting effects of capital spending, stock-based
compensation expense and merger related expenses which items may
vary from different companies for reasons unrelated to overall
operating performance. Merchandise Sales 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 Adaptec, Chiasso,
FLAVIA(R) Beverage Systems, Hewlett-Packard, International Business
Machines, Nokia, Pfizer, Inc., Raytheon Aircraft Company, Rene
Furterer USA, Roots Canada Ltd., The Smithsonian Institution 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 refurbished brand-name
merchandise for consumers and small business buyers. The eCOST.com
brand markets more than 100,000 different products from leading
manufacturers such as Apple, Canon, Citizen, Denon,
Hewlett-Packard, Nikon, Onkyo, Seiko, Sony, and Toshiba primarily
over the Internet and through direct marketing. To find out more
about PFSweb, Inc. (NASDAQ: PFSW), visit the company's websites at
http://www.pfsweb.com and http://www.ecost.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 and 10-K/A for the year ended
December 31, 2005 identifies 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 Report and the Risk Factors described therein. These
factors include: our ability to retain and expand relationships
with existing clients and attract and implement new clients; our
reliance on the fees generated by the transaction volume or product
sales of our clients; our reliance on our clients' projections or
transaction volume or product sales; our dependence upon our
agreements with IBM; our dependence upon our agreements with our
major clients; our client mix, their business volumes and the
seasonality of their business; our ability to finalize pending
contracts; the impact of strategic alliances and acquisitions;
trends in the market for our services; trends in e-commerce;
whether we can continue and manage growth; changes in the trend
toward outsourcing; increased competition; our ability to generate
more revenue and achieve sustainable profitability; effects of
changes in profit margins; the customer and supplier concentration
of our business; the unknown effects of possible system failures
and rapid changes in technology; trends in government regulation
both foreign and domestic; foreign currency risks and other risks
of operating in foreign countries; potential litigation; our
dependency on key personnel; the impact of new accounting standards
and rules regarding revenue recognition, stock options and other
matters; changes in accounting rules or the interpretations of
those rules; our ability to raise additional capital or obtain
additional financing; our ability and the ability of our
subsidiaries to borrow under current financing arrangements and
maintain compliance with debt covenants; relationship with and our
guarantees of certain of the liabilities and indebtedness of our
subsidiaries; whether outstanding warrants issued in a prior
private placement will be exercised in the future; the transition
costs resulting from our merger with eCOST; our ability to
successfully integrate eCOST into our business to achieve the
anticipated benefits of the merger: eCOST's potential
indemnification obligations to its former parent; eCOST's ability
to maintain existing and build new relationships with manufacturers
and vendors and the success of its advertising and marketing
efforts; and eCOST's ability to increase its sales revenue and
sales margin and improve operating efficiencies. 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.
-0- *T PFSweb, Inc. and Subsidiaries Unaudited Condensed
Consolidated Statements of Operations (A) (In Thousands, Except Per
Share Data) Three Months Ended Six Months Ended JUNE 30, JUNE 30,
------------------ ------------------- 2006 2005 2006 2005
--------- -------- --------- --------- Revenues: Product revenue,
net $ 89,650 $63,438 $179,854 $127,068 Service fee revenue 16,209
16,298 32,128 30,383 Pass-through revenue 3,445 5,134 7,990 9,284
--------- -------- --------- --------- Total revenues 109,304
84,870 219,972 166,735 --------- -------- --------- --------- Costs
of revenues: Cost of product revenue 84,486 59,613 168,809 119,250
Cost of service fee revenue 11,366 12,102 22,745 22,870
Pass-through cost of revenue 3,445 5,134 7,990 9,284 ---------
-------- --------- --------- Total costs of revenues 99,297 76,849
199,544 151,404 --------- -------- --------- --------- Gross profit
10,007 8,021 20,428 15,331 Selling, general and administrative
expenses 12,531 7,952 23,892 14,918 --------- -------- ---------
--------- Income (loss) from operations (2,524) 69 (3,464) 413
Interest expense, net 517 474 948 793 --------- -------- ---------
--------- Loss before income taxes (3,041) (405) (4,412) (380)
Income tax provision 143 141 359 380 --------- -------- ---------
--------- Net loss $ (3,184) $ (546) $ (4,771) $ (760) =========
======== ========= ========= Net loss per share: Basic $ (0.07) $
(0.02) $ (0.12) $ (0.03) ========= ======== ========= =========
Diluted $ (0.07) $ (0.02) $ (0.12) $ (0.03) ========= ========
========= ========= Weighted average number of shares outstanding:
Basic 43,072 22,419 39,011 22,278 ========= ======== =========
========= Diluted 43,072 22,419 39,011 22,278 ========= ========
========= ========= EBITDA (B) $ (687) $ 1,579 $ 125 $ 3,425
========= ======== ========= ========= Adjusted EBITDA (B) $ 3 $
1,579 $ 1,636 $ 3,425 ========= ======== ========= ========= (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 AND 10-K/A FOR THE YEAR ENDED DECEMBER 31, 2005.
(B) A RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA IS
AS FOLLOWS: Three Months Ended Six Months Ended JUNE 30, JUNE 30,
------------------ ------------------ 2006 2005 2006 2005 ---------
-------- --------- -------- Net loss $ (3,184) $ (546) $ (4,771) $
(760) Income tax provision 143 141 359 380 Interest expense, net
517 474 948 793 Depreciation and amortization 1,837 1,510 3,589
3,012 --------- -------- --------- -------- EBITDA $ (687) $ 1,579
$ 125 $ 3,425 Stock-based compensation 241 - 480 - Loss on sales
transaction to former eCOST customer - - 389 - Merger related
integration expenses 449 - 642 - --------- -------- ---------
-------- Adjusted EBITDA $ 3 $ 1,579 $ 1,636 $ 3,425 =========
======== ========= ======== PFSWEB, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (In Thousands, Except Share Data) June
30, December 31, 2006 2005 ------------- ------------- ASSETS
(UNAUDITED) ------------------------------------------ CURRENT
ASSETS: Cash and cash equivalents $ 17,553 $ 13,683 Restricted cash
1,406 2,077 Accounts receivable, net of allowance for doubtful
accounts of $1,875 and $484 at June 30, 2006 and December 31, 2005,
respectively 48,538 44,556 Inventories, net 57,519 43,654 Other
receivables 9,816 9,866 Prepaid expenses and other current assets
3,223 3,213 ------------- ------------- Total current assets
138,055 117,049 ------------- ------------- PROPERTY AND EQUIPMENT,
net 13,525 13,040 RESTRICTED CASH -- 150 IDENTIFIABLE INTANGIBLES
7,316 -- GOODWILL 18,545 -- OTHER ASSETS 836 1,487 -------------
------------- Total assets $ 178,277 $ 131,726 =============
============= LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------------ CURRENT LIABILITIES:
Current portion of long-term debt and capital lease obligations $
27,709 $ 21,626 Trade accounts payable 70,718 60,053 Accrued
expenses 18,667 12,011 ------------- ------------- Total current
liabilities 117,094 93,690 ------------- ------------- LONG-TERM
DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion 1,892
6,289 OTHER LIABILITIES 1,432 1,813 COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY: Preferred stock, $1.00 par value; 1,000,000
shares authorized; none issued and outstanding -- -- Common stock,
$0.001 par value; 75,000,000 shares authorized; 46,526,100 and
22,613,314 shares issued at June 30, 2006 and December 31, 2005,
respectively; and 46,439,800 and 22,527,014 outstanding at June 30,
2006 and December 31, 2005, respectively 47 23 Additional paid-in
capital 90,858 58,736 Accumulated deficit (34,595) (29,824)
Accumulated other comprehensive income 1,634 1,084 Treasury stock
at cost, 86,300 shares (85) (85) ------------- ------------- Total
shareholders' equity 57,859 29,934 ------------- -------------
Total liabilities and shareholders' equity $ 178,277 $ 131,726
============= ============= PFSweb, Inc. and Subsidiaries Unaudited
Consolidating Statements of Operations for the Three Months Ended
June 30, 2006 (In Thousands) PFSWEB SUPPLIES ECOST DISTRIBUTORS
---------- ------------- --------- REVENUES: Product revenue, net $
- $ 60,867 $ 28,783 Service fee revenue 16,209 - - Service fee
revenue, affiliate 2,075 - - Pass-through revenue 3,575 - -
---------- ------------- --------- Total revenues 21,859 60,867
28,783 COSTS OF REVENUES: Cost of product revenue - 56,776 27,721
Cost of service fee revenue 11,996 - - Pass-through cost of revenue
3,575 - - ---------- ------------- --------- Total costs of
revenues 15,571 56,776 27,721 ---------- ------------- ---------
Gross profit 6,288 4,091 1,062 SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 5,827 2,542 4,702 STOCK BASED COMPENSATION EXPENSE 241 - -
MERGER INTEGRATION EXPENSE - - 449 AMORTIZATION OF IDENTIFIABLE
INTANGIBLES - - 204 ---------- ------------- --------- Income
(loss) from operations 220 1,549 (4,293) INTEREST EXPENSE (INCOME),
NET (30) 538 9 ---------- ------------- --------- Income (loss)
before income taxes 250 1,011 (4,302) INCOME TAX PROVISION
(BENEFIT) (200) 343 - ---------- ------------- --------- NET INCOME
(LOSS) $ 450 $ 668 $ (4,302) ========== ============= =========
EBITDA $ 1,765 $ 1,552 $ (4,004) ========== ============= =========
Adjusted EBITDA $ 2,006 $ 1,552 $ (3,555) ========== =============
========= A reconciliation of net income (loss) to EBITDA and
Adjusted EBITDA follows: Net income (loss) $ 450 $ 668 $ (4,302)
Income tax expense (benefit) (200) 343 - Interest expense (income)
(30) 538 9 Depreciation and amortization 1,545 3 289 ----------
------------- --------- EBITDA $ 1,765 $ 1,552 $ (4,004)
Stock-based compensation 241 - - Merger integration related
expenses - - 449 ---------- ------------- --------- Adjusted EBITDA
$ 2,006 $ 1,552 $ (3,555) ========== ============= =========
ELIMINATIONS CONSOLIDATED -------------- ------------ REVENUES:
Product revenue, net $ - $ 89,650 Service fee revenue - 16,209
Service fee revenue, affiliate (2,075) - Pass-through revenue (130)
3,445 -------------- ------------ Total revenues (2,205) 109,304
COSTS OF REVENUES: Cost of product revenue (11) 84,486 Cost of
service fee revenue (630) 11,366 Pass-through cost of revenue (130)
3,445 -------------- ------------ Total costs of revenues (771)
99,297 -------------- ------------ Gross profit (1,434) 10,007
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (1,434) 11,637 STOCK
BASED COMPENSATION EXPENSE - 241 MERGER INTEGRATION EXPENSE - 449
AMORTIZATION OF IDENTIFIABLE INTANGIBLES - 204 --------------
------------ Income (loss) from operations - (2,524) INTEREST
EXPENSE (INCOME), NET - 517 -------------- ------------ Income
(loss) before income taxes - (3,041) INCOME TAX PROVISION (BENEFIT)
- 143 -------------- ------------ NET INCOME (LOSS) $ - $ (3,184)
============== ============ EBITDA $ - $ (687) ==============
============ Adjusted EBITDA $ - $ 3 ============== ============ A
reconciliation of net income (loss) to EBITDA and Adjusted EBITDA
follows: Net income (loss) $ - $ (3,184) Income tax expense
(benefit) - 143 Interest expense (income) - 517 Depreciation and
amortization - 1,837 -------------- ------------ EBITDA $ - $ (687)
Stock-based compensation - 241 Merger integration related expenses
- 449 -------------- ------------ Adjusted EBITDA $ - $ 3
============== ============ PFSweb, Inc. and Subsidiaries Unaudited
Condensed Consolidating Balance Sheets as of June 30, 2006 (In
Thousands) SUPPLIES PFSWEB, INC. DISTRIBUTORS ECOST ------------
------------ ---------- ASSETS CURRENT ASSETS: Cash and cash
equivalents $ 15,161 $ 2,392 $ - Restricted cash 340 893 173
Accounts receivables, net 16,182 29,323 4,614 Inventories, net -
47,623 9,896 Other receivables - 9,816 - Prepaid expenses and other
current assets 1,898 1,262 63 ------------ ------------ ----------
Total current assets 33,581 91,309 14,746 ------------ ------------
---------- PROPERTY AND EQUIPMENT, net 12,826 44 655 NOTE
RECEIVABLE FROM AFFILIATE 12,505 - - INVESTMENT IN AFFILIATE 36,602
- - IDENTIFIABLE INTANGIBLES - - 7,316 GOODWILL - - 18,545 OTHER
ASSETS 662 - 174 ------------ ------------ ---------- Total assets
$ 96,176 $ 91,353 $ 41,436 ============ ============ ==========
LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current
portion of long-term debt and capital lease obligations $ 12,801 $
14,891 $ 17 Trade accounts payable 7,006 56,876 8,417 Accrued
expenses 8,760 4,503 5,404 ------------ ------------ ----------
Total current liabilities 28,567 76,270 13,838 ------------
------------ ---------- LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, less current portion 1,892 - - NOTE PAYABLE TO
AFFILIATE - 6,505 6,000 OTHER LIABILITIES 1,432 - - COMMITMENTS AND
CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock 47 - 19 Capital
contributions - 1,000 - Additional paid-in capital 90,858 - 28,059
Retained earnings (accumulated deficit) (28,169) 5,499 (6,480)
Accumulated other comprehensive income 1,634 2,079 - Treasury stock
(85) - - ------------ ------------ ---------- Total shareholders'
equity 64,285 8,578 21,598 ------------ ------------ ----------
Total liabilities and shareholders' equity $ 96,176 $ 91,353 $
41,436 ============ ============ ========== ELIMINATIONS
CONSOLIDATED ------------ -------------- ASSETS CURRENT ASSETS:
Cash and cash equivalents $ - $ 17,553 Restricted cash - 1,406
Accounts receivables, net (1,581) 48,538 Inventories, net - 57,519
Other receivables - 9,816 Prepaid expenses and other current assets
- 3,223 ------------ -------------- Total current assets (1,581)
138,055 ------------ -------------- PROPERTY AND EQUIPMENT, net -
13,525 NOTE RECEIVABLE FROM AFFILIATE (12,505) - INVESTMENT IN
AFFILIATE (36,602) - IDENTIFIABLE INTANGIBLES - 7,316 GOODWILL -
18,545 OTHER ASSETS - 836 ------------ -------------- Total assets
$ (50,688) $ 178,277 ============ ============== LIABILITIES AND
SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of
long-term debt and capital lease obligations $ - $ 27,709 Trade
accounts payable (1,581) 70,718 Accrued expenses - 18,667
------------ -------------- Total current liabilities (1,581)
117,094 ------------ -------------- LONG-TERM DEBT AND CAPITAL
LEASE OBLIGATIONS, less current portion - 1,892 NOTE PAYABLE TO
AFFILIATE (12,505) - OTHER LIABILITIES - 1,432 COMMITMENTS AND
CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock (19) 47 Capital
contributions (1,000) - Additional paid-in capital (28,059) 90,858
Retained earnings (accumulated deficit) (5,445) (34,595)
Accumulated other comprehensive income (2,079) 1,634 Treasury stock
- (85) ------------ -------------- Total shareholders' equity
(36,602) 57,859 ------------ -------------- Total liabilities and
shareholders' equity $ (50,688) $ 178,277 ============
============== eCOST.com, Inc. Selected Operating Data Three Months
Ended June 30, ----------------------- 2006 2005 -----------
----------- Total customers (1) 1,581,606 1,287,321 Active
customers (2) 351,157 536,172 New customers (3) 70,590 75,202
Number of orders (4) 89,898 122,753 Average order value (5) $ 340 $
352 Advertising expense (6) $ 986,293 $1,467,000 Cost to acquire a
new customer $ 13.97 $ 19.51 (1) TOTAL CUSTOMERS HAVE BEEN
CALCULATED AS THE CUMULATIVE NUMBER OF CUSTOMERS FOR WHICH ORDERS
HAVE BEEN TAKEN FROM ECOST.COM'S INCEPTION TO THE END OF THE
REPORTED PERIOD. (2) ACTIVE CUSTOMERS CONSIST OF THE NUMBER OF
CUSTOMERS WHO PLACED ORDERS DURING THE 12 MONTHS PRIOR TO THE END
OF THE REPORTED PERIOD. (3) NEW CUSTOMERS REPRESENT THE NUMBER OF
PERSONS THAT ESTABLISHED A NEW ACCOUNT AND PLACED AN ORDER DURING
THE REPORTED PERIOD. (4) NUMBER OF ORDERS REPRESENTS THE TOTAL
NUMBER OF ORDERS SHIPPED DURING THE REPORTED PERIOD (NOT REFLECTING
RETURNS). (5) AVERAGE ORDER VALUE HAS BEEN CALCULATED AS GROSS
SALES DIVIDED BY THE TOTAL NUMBER OF ORDERS DURING THE PERIOD
PRESENTED. THE IMPACT OF RETURNS IS NOT REFLECTED IN AVERAGE ORDER
VALUE. (6) ADVERTISING EXPENSE INCLUDES THE TOTAL DOLLARS SPENT ON
ADVERTISING DURING THE REPORTED PERIOD, INCLUDING INTERNET, DIRECT
MAIL, PRINT AND E-MAIL ADVERTISING, AS WELL AS CUSTOMER LIST
ENHANCEMENT SERVICES. *T
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