PC MALL INC - 10-Q Quarterly Report

PC MALL, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share data)


	Three months ended				Six months ended
	June 30,				June 30,
	2003		2002		2003			2002
Net sales	$	218,862	$	204,945	$	453,659	$	396,450
Cost of goods sold		188,160		182,452		394,092		354,087
Gross profit		30,702		22,493		59,567		42,363
Selling, general and administrative expenses		23,095		20,275		47,116		38,919
Advertising expense (see Note 2)		5,773		941		9,965		1,408
Loss on sale of building		-		350		-		350
Income from operations		1,834		927		2,486		1,686
Interest expense, net		331		202		519		397
Income before income taxes		1,503		725		1,967		1,289
Income tax provision		556		269		728		477
Income before cumulative effect of change in accounting principle		947		456		1,239		812
Cumulative effect of change in accounting principle		-		-		-		(6,801)
Net income (loss)	$	947	$	456	$	1,239	$	(5,989)

Earnings (loss) per share:
Income before cumulative effect of change in accounting principle	$	0.09	$	0.04	$	0.12	$	0.08
Cumulative effect of change in accounting principle		-		-		-		(0.64)
	$	0.09	$	0.04	$	0.12	$	(0.56)

Diluted Earnings (loss) per share:
Income before cumulative effect of change in accounting principle	$	0.09	$	0.04	$	0.11	$	0.07
Cumulative effect of change in accounting principle		-		-		-		(0.60)
	$	0.09	$	0.04	$	0.11	$	(0.53)
Basic weighted average number of shares outstanding		10,535		10,716		10,566		10,680
Diluted weighted average number of common and common equivalent shares outstanding		11,115		11,263		11,119		11,199

PC Mall, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)

			For the six months ended June 30,
			2003		2002
Cash flows from operating activities:
	Net income (loss)		$	1,239	$	(5,989)
	Adjustments to reconcile net income (loss) to net cash used in operating activities:
	Cumulative effect of change in accounting principle			-		6,801
	Depreciation and amortization			2,090		1,989
	Provision for deferred income taxes			728		477
	Gain on sale of fixed assets			(64)		-
	Loss on sale of building			-		350
	Changes in assets and liabilities, net of acquisitions:
		Accounts receivable		(7,107)		(8,526)
		Inventories		(1,632)		1,469
		Prepaid expenses and other current assets		824		(411)
		Other assets		(106)		(693)
		Accounts payable		(1,816)		(16,439)
		Accrued expenses and other current liabilities		(2,492)		(56)
		Deferred revenue		(2,467)		(685)
		Total adjustments		(12,042)		(15,724)

Net cash used in operating activities				(10,803)		(21,713)

Cash flows from investing activities:
	Purchase of property and equipment			(2,255)		(1,453)
	Payments for costs incurred for acquisition of business			-		(109)

Net cash used in investing activities				(2,255)		(1,562)

Cash flows from financing activities:
	Payments for deferred financing costs			(440)		(179)
	Borrowings under notes payable			2,000		-
	Payments under notes payable			(417)		(500)
	Net borrowings under line of credit			12,867		5,586
	Increase (decrease) in book overdraft			(8,040)		14,683
	Principal payments of obligations under capital leases			(124)		(218)
	Repurchase of common stock			(459)		-
	Proceeds from stock issued under stock option plans			12		69
Net cash provided by financing activities				5,399		19,441

Net decrease in cash and cash equivalents				(7,659)		(3,834)
Cash and cash equivalents:
	Beginning of period			11,422		9,972
	End of period		$	3,763	$	6,138


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 2. Changes in Securities and Use of Proceeds									16
Item 4. Submission of Matters to a Vote of Security Holders									16
Item 6. Exhibits and Reports on Form 8-K									16
Signature									17

				June 30, 2003 (unaudited)		December 31, 2002
		Assets
Current assets:
	Cash and cash equivalents		$	3,763	$	11,422
	Accounts receivable, net of allowance for doubtful accounts			61,854		54,747
	Inventories			56,867		55,235
	Prepaid expenses and other current assets			2,214		3,038
	Deferred income taxes			2,657		2,657
		Total current assets		127,355		127,099

Property and equipment, net				9,726		9,214
Goodwill, net				861		804
Deferred income taxes				9,990		10,718
Other assets				1,788		1,525
			$	149,720	$	149,360
		Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	52,063	$	61,865
	Accrued expenses and other current liabilities			11,577		14,066
	Deferred revenue			8,065		10,532
	Line of credit			30,364		17,497
	Capital leases - current			-		124
	Notes payable - current			1,750		167
		Total current liabilities		103,819		104,251

		Total liabilities		103,819		104,251

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; 10,795,997 and 10,789,947 shares issued; and 10,501,997 and 10,632,347 shares outstanding, respectively			11		11
	Additional paid-in capital			75,845		75,833
	Treasury stock at cost: 294,200 and 157,600 shares, respectively			(1,015)		(556)
	Retained earnings (accumulated deficit)			(28,940)		(30,179)
	Total stockholders' equity			45,901		45,109
			$	149,720	$	149,360

Three months ended June 30, 2003		Core Business ⁽¹⁾		eCOST.com		Consolidated
	Net sales	$	194,793	$	24,069	$	218,862
	Gross profit		27,832		2,870		30,702
	Income from operations		1,601		233		1,834

Three months ended June 30, 2002</

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