PC MALL INC - 10-Q Quarterly Report

Basic Earnings Per Share ("EPS") excludes dilution and is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reported periods. Diluted EPS reflects the potential dilution that could occur under the treasury stock method if stock options and other commitments to issue common stock were exercised. The computation of Basic and Diluted EPS is as follows (in thousands, except per share data):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2002		2001		2002		2001
Income before cumulative effect of change in accounting principle	$	764	$	493	$	1,576	$	2,310
Cumulative effect of change in accounting principle		-		-		(10,796)		-
Net income (loss)	$	764	$	493	$	(9,220)	$	2,310

Weighted average shares - Basic		10,759		10,419		10,630		10,419
Effect of dilutive stock options and warrants		315		217		469		53
Weighted average shares - Diluted		11,074		10,636		11,099		10,472

Net earnings (loss) per share - Basic
Income before cumulative effect of change in accounting principle	$	0.07	$	0.05	$	0.15	$	0.22
Cumulative effect of change in accounting principle		-		-		(1.02)		-
	$	0.07	$	0.05	$	(0.87)	$	0.22
Net earnings (loss) per share - Diluted
Income before cumulative effect of change in accounting principle	$	0.07	$	0.05	$	0.14	$	0.22
Cumulative effect of change in accounting principle		-		-		(0.97)		-
	$	0.07	$	0.05		(0.83)	$	0.22


Delaware		95-4518700
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)


		Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements		3
	Condensed Consolidated Balance Sheet	3
	Condensed Consolidated Statement of Operations	4
	Condensed Consolidated Statement of Cash Flows	5
	Condensed Notes to Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		10
Item 3. Quantitative and Qualitative Disclosures About Market Risk		15
Item 4. Controls and Procedures		15
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders		16
Item 6. Exhibits and Reports on Form 8-K		16
Signature		17

			September 30,		December 31,
			2002		2001
			(unaudited)
		Assets
Current assets:
	Cash and cash equivalents		$	9,200	$	9,972
	Accounts receivable, net of allowance for doubtful accounts			60,556		38,707
	Inventories			51,888		46,074
	Prepaid expenses and other current assets			2,929		2,096
	Deferred income taxes		1,840		1,840
		Total current assets		126,413		98,689
Property and equipment, net				8,807		11,304
Goodwill, net				1,251		10,796
Deferred income taxes				3,136		4,062
Other assets			2,268		954
			$	141,875	$	125,805
		Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	73,987	$	59,151
	Accrued expenses and other current liabilities			12,831		10,526
	Deferred revenue			9,531		8,744
	Line of credit			8,803		1,561
	Capital leases - current portion			234		437
	Notes payable - current portion		416		1,000
		Total current liabilities		105,802		81,419
Capital leases - long term				-		125
Notes payable - long term			-		250
		Total liabilities	105,802		81,794

Stockholders' equity:
	Preferred stock, $.001 par value, 5,000,000 shares authorized; none issued and outstanding			-		-
	Common stock, $.001 par value; 30,000,000 shares authorized; 10,782,322 and 10,443,616 shares issued and 10,722,622 and 10,428,616 outstanding, respectively			11		11
	Additional paid-in capital			75,820		74,418
	Treasury stock at cost: 59,700 and 15,000 shares, respectively			(211)		(91)
	Retained earnings (accumulated deficit)		(39,547)		(30,327)
		Total stockholders' equity	36,073		44,011
			$	141,875	$	125,805

			For the nine months ended September 30,
			2002		2001
Cash flows from operating activities:
	Net income (loss)		$	(9,220)	$	2,310
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Cumulative effect of change in accounting principle			10,796		-
	Depreciation and amortization			3,391		4,350
	Provision for deferred income taxes			926		1,358
	Loss on disposal of fixed assets			-		41
	Loss on sale of building			350		-
	Changes in assets and liabilities, net of effects of acquisitions:
		Accounts receivable		(11,280)		13,314
		Inventories		(3,097)		3,789
		Prepaid expenses and other current assets		(417)		512
		Other assets		(429)		(210)
		Accounts payable		11,501		(13,709)
		Accrued expenses and other current liabilities		(1,108)		(1,634)
		Deferred revenue		787		(1,454)
	Total adjustments			11,420		6,357

Net cash provided by operating activities				2,200		8,667

Cash flows from investing activities:
	Purchase of property and equipment			(2,492)		(989)
	Payments for costs incurred for acquisition of business			(10,351)		-
	Proceeds from sale of property and equipment			1,813		81
Net cash used in investing activities				(11,030)		(908)

Cash flows from financing activities:
	Payments for deferred financing costs			(179)		(697)
	Borrowings under notes payable			-		2,000
	Payments under notes payable			(834)		(647)
	Net borrowings/(payments) under line of credit			9,446		(13,736)
	Principal payments of obligations under capital leases			(328)		(430)
	Repurchase of common stock			(120)		-
	Proceeds from stock issued under stock option plans			73		-
Net cash provided by/(used in) financing activities				8,058		(13,510)

Net decrease in cash and cash equivalents				(772)		(5,751)
Cash and cash equivalents:
	Beginning of period			9,972		12,195
	End of period		$	9,200	$	6,444

Three months ended September 30, 2002		Core Business ⁽¹⁾		eCOST.com		eLinux		Consolidated
	Net sales	$	205,700	$	23,449	$	926	$	230,075
	Gross profit		22,472		2,055		78		24,605
	Income (loss) from operations		1,364		424		(265)		1,523

Three months ended September 30, 2001		Core Business		eCOST.com

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents