0001558370-22-007352 | 10-Q | XBRL Viewer

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2022	Apr. 29, 2022
Document And Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Mar. 31, 2022
Entity File Number	0-23827
Entity Registrant Name	PC CONNECTION, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	02-0513618
Entity Address, Address Line One	730 Milford Road
Entity Address, City or Town	Merrimack
Entity Address, State or Province	NH
Entity Address, Postal Zip Code	03054
City Area Code	603
Local Phone Number	683-2000
Title of 12(b) Security	Common Stock
Trading Symbol	CNXN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		26,267,049
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001050377
Amendment Flag	false

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current Assets:
Cash and cash equivalents	$ 67,409	$ 108,310
Accounts receivable, net	634,142	607,532
Inventories, net	234,601	206,555
Prepaid expenses and other current assets	14,588	10,016
Total current assets	950,740	932,413
Property and equipment, net	60,835	61,011
Right-of-use assets	9,201	9,579
Goodwill	73,602	73,602
Intangible assets, net	5,563	5,868
Other assets	878	910
Total Assets	1,100,819	1,083,383
Current Liabilities:
Accounts payable	271,411	281,836
Accrued payroll	26,839	30,966
Accrued expenses and other liabilities	71,553	61,830
Total current liabilities	369,803	374,632
Deferred income taxes	19,278	19,278
Noncurrent operating lease liabilities	6,077	6,789
Other liabilities	179	211
Total Liabilities	395,337	400,910
Stockholders' Equity:
Common stock	290	290
Additional paid-in capital	123,571	122,354
Retained earnings	627,558	605,766
Treasury stock, at cost	(45,937)	(45,937)
Total Stockholders' Equity	705,482	682,473
Total Liabilities and Stockholders' Equity	$ 1,100,819	$ 1,083,383

CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Consolidated Statements of Income
Net sales	$ 788,344	$ 636,892
Cost of sales	660,038	536,372
Gross profit	128,306	100,520
Selling, general and administrative expenses	98,172	86,400
Income from operations	30,134	14,120
Other expenses, net	(3)	(7)
Income before taxes	30,131	14,113
Income tax provision	(8,339)	(3,929)
Net income	$ 21,792	$ 10,184
Earnings per common share:
Basic	$ 0.83	$ 0.39
Diluted	$ 0.83	$ 0.39
Shares used in computation of earnings per common share:
Basic	26,255	26,172
Diluted	26,405	26,360

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Shares	Total
Balance at Dec. 31, 2020	$ 289	$ 119,891	$ 562,084	$ (45,937)	$ 636,327
Balance (in shares) at Dec. 31, 2020	28,943			(2,773)
Stock-based compensation expense		1,066			1,066
Restricted stock units vested (in shares)	5
Shares withheld for taxes paid on stock awards		(82)			(82)
Net income			10,184		10,184
Balance at Mar. 31, 2021	$ 289	120,875	572,268	$ (45,937)	647,495
Balance (in shares) at Mar. 31, 2021	28,948			(2,773)
Balance at Dec. 31, 2021	$ 290	122,354	605,766	$ (45,937)	682,473
Balance (in shares) at Dec. 31, 2021	29,025			(2,773)
Stock-based compensation expense		1,382			1,382
Restricted stock units vested (in shares)	9
Shares withheld for taxes paid on stock awards		(165)			(165)
Net income			21,792		21,792
Balance at Mar. 31, 2022	$ 290	$ 123,571	$ 627,558	$ (45,937)	$ 705,482
Balance (in shares) at Mar. 31, 2022	29,034			(2,773)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash Flows provided by Operating Activities:
Net income	$ 21,792	$ 10,184
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,991	3,165
Adjustments to credit losses reserve	567	(70)
Stock-based compensation expense	1,382	1,066
Loss on disposal of fixed assets	10
Changes in assets and liabilities:
Accounts receivable	(27,177)	54,895
Inventories	(28,046)	333
Prepaid expenses and other current assets	(4,572)	(3,927)
Other non-current assets	32	(356)
Accounts payable	(10,494)	(60,862)
Accrued expenses and other liabilities	5,230	1,534
Net cash (used in) provided by operating activities	(38,285)	5,962
Cash Flows used in Investing Activities:
Purchases of equipment and capitalized software	(2,451)	(2,403)
Proceeds from life insurance		1,500
Net cash used in investing activities	(2,451)	(903)
Cash Flows used in Financing Activities:
Proceeds from short-term borrowings	1,385
Repayment of short-term borrowings	(1,385)
Dividend payments		(8,375)
Payments of payroll taxes on stock-based compensation through shares withheld	(165)	(82)
Net cash used in financing activities	(165)	(8,457)
Decrease in cash and cash equivalents	(40,901)	(3,398)
Cash and cash equivalents, beginning of year	108,310	95,655
Cash and cash equivalents, end of year	67,409	92,257
Non-cash Investing and Financing Activities:
Accrued capital expenditures	266	714
Supplemental Cash Flow Information:
Income taxes paid	$ 287	$ 261

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2022

Basis of Presentation

Basis of Presentation

Note 1–Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting and in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Such principles were applied on a basis consistent with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods reported and of the Company’s financial condition as of the date of the interim balance sheet. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. The operating results for the three months ended March 31, 2022 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2022.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions.

Recently Issued Financial Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. This ASU is applied prospectively and becomes effective immediately upon the transition from LIBOR. The Company’s secured credit facility agreement references LIBOR, which is expected to be discontinued as a result of reference rate reform. The optional amendments are effective as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the effect of the adoption of this standard on the Company, but does not believe the adoption will have a material effect on its consolidated financial statements.

REVENUE

3 Months Ended

Mar. 31, 2022

Revenue

Revenue

Note 2–Revenue

The Company disaggregates revenue from its arrangements with customers by type of products and services, as it believes this method best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

The following tables represent a disaggregation of revenue from arrangements with customers for the three months ended March 31, 2022 and 2021, along with the reportable segment for each category.


	Three Months Ended March 31, 2022
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	130,434	$	121,339	$	56,850	$	308,623
Desktops		23,559		44,864		17,988		86,411
Software		34,908		21,010		5,269		61,187
Servers/Storage		22,164		15,371		9,630		47,165
Net/Com Products		22,627		22,191		8,027		52,845
Displays and Sound		32,824		37,079		13,423		83,326
Accessories		32,241		48,007		12,932		93,180
Other Hardware/Services		21,687		25,535		8,385		55,607
Total net sales	$	320,444	$	335,396	$	132,504	$	788,344


	Three Months Ended March 31, 2021
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	94,435	$	82,191	$	56,974	$	233,600
Desktops		21,159		30,351		7,850		59,360
Software		27,162		22,505		7,209		56,876
Servers/Storage		20,573		17,156		6,647		44,376
Net/Com Products		18,404		19,826		10,361		48,591
Displays and Sound		19,774		23,405		13,993		57,172
Accessories		25,847		43,876		10,821		80,544
Other Hardware/Services		18,980		25,975		11,418		56,373
Total net sales	$	246,334	$	265,285	$	125,273	$	636,892

Contract Balances

The following table provides information about contract liabilities from arrangements with customers as of March 31, 2022 and December 31, 2021.


	March 31, 2022		December 31, 2021
Contract liabilities, which are included in "Accrued expenses and other liabilities"	$	7,043	$	8,628

Changes in the contract liability balances during the three months ended March 31, 2022 and 2021 are as follows:


	2022
Balance at December 31, 2021	$	8,628
Cash received in advance and not recognized as revenue		3,870
Amounts recognized as revenue as performance obligations satisfied		(5,455)
Balance at March 31, 2022	$	7,043

	2021
Balance at December 31, 2020	$	3,509
Cash received in advance and not recognized as revenue		5,259
Amounts recognized as revenue as performance obligations satisfied		(2,500)
Balance at March 31, 2021	$	6,268

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

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+ Details

EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2022

Earnings Per Share

Earnings Per Share

Note 3-Earnings Per Share

Basic earnings per common share is computed using the weighted average number of shares outstanding. Diluted earnings per share is computed using the weighted average number of shares outstanding adjusted for the incremental shares attributable to non-vested stock units and stock options outstanding, if dilutive.

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended March 31 ,
	2022		2021
Numerator:
Net income	$	21,792	$	10,184
Denominator:
Denominator for basic earnings per share		26,255		26,172
Dilutive effect of employee stock awards		150		188
Denominator for diluted earnings per share		26,405		26,360
Earnings per share:
Basic	$	0.83	$	0.39
Diluted	$	0.83	$	0.39

For the three months ended March 31, 2022 and 2021, the Company had no outstanding non-vested stock units that were excluded from the computation of diluted earnings per share because including them would have had an anti-dilutive effect.

LEASES

3 Months Ended

Mar. 31, 2022

Leases

Leases

Note 4-Leases

The Company leases certain facilities from a related party, which is a company affiliated with us through common ownership. Included in the right-of-use asset (“ROU asset”) as of March 31, 2022 was $2,025 and a corresponding lease liability of $2,025 associated with related party leases.

As of March 31, 2022, there were no additional operating leases that have not yet commenced. Refer to the following table for quantitative information related to the Company’s leases for the three months ended March 31, 2022 and 2021:


	Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	313	$	709	$	1,022	$	313	$	777	$	1,090
Short-term lease cost		107		21		128		107		23		130
Total lease cost	$	420	$	730	$	1,150	$	420	$	800	$	1,220

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	313	$	687	$	1,000	$	313	$	770	$	1,083

Weighted-average remaining lease term (in years):
Capitalized operating leases		1.67		4.34		3.79		2.67		5.32		4.65

Weighted-average discount rate:
Capitalized operating leases		3.92%		3.91%		3.92%		3.92%		3.92%		3.92%

As of March 31, 2022, future lease payments over the remaining term of capitalized operating leases were as follows:


For the Years Ended December 31,		Related Parties		Others		Total
2022, excluding the three months ended March 31, 2022	$	940	$	2,159	$	3,099
2023		1,149		2,136		3,285
2024		—		1,644		1,644
2025		—		1,577		1,577
2026		—		888		888
Thereafter		—		1		1
	$	2,089	$	8,405	$	10,494

Imputed interest						(640)
Lease liability balance at March 31, 2022					$	9,854

As of March 31, 2022, the ROU asset had a balance of $9,201. The long-term lease liability was $6,077 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $3,777. As of March 31, 2021, the ROU asset had a balance of $11,857. The long-term lease liability was $8,792 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $3,812.

SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2022

Segment Information

Segment Information

Note 5–Segment Information

The internal reporting structure used by the Company’s chief operating decision maker (“CODM”) to assess performance and allocate resources determines the basis for the Company’s reportable operating segments. The Company’s CODM is its Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of operating income.

The Company’s operations are organized under three reportable segments—the Business Solutions segment, which serves primarily small- and medium-sized businesses; the Enterprise Solutions segment, which serves primarily medium-to-large corporations; and the Public Sector Solutions segment, which serves primarily federal, state, and local governmental and educational institutions. In addition, the Headquarters/Other group provides services in areas such as finance, human resources, information technology, marketing, and product management. Most of the operating costs associated with the Headquarters/Other group functions are charged to the operating segments based on their estimated usage of the underlying functions. The Company reports these charges to the operating segments as “Allocations.” Certain headquarters costs relating to executive oversight and other fiduciary functions that are not allocated to the operating segments are included under the heading of Headquarters/Other in the tables below.

Segment information applicable to the Company’s reportable operating segments for the three months ended March 31, 2022 and 2021 is shown below:


	Three Months Ended
	March 31,		March 31,
	2022		2021
Net sales:
Business Solutions	$	320,444	$	246,334
Enterprise Solutions		335,396		265,285
Public Sector Solutions		132,504		125,273
Total net sales	$	788,344	$	636,892
Operating income (loss):
Business Solutions	$	20,673	$	8,420
Enterprise Solutions		14,314		12,543
Public Sector Solutions		(1,126)		(2,753)
Headquarters/Other		(3,727)		(4,090)
Total operating income		30,134		14,120
Other expenses, net		(3)		(7)
Income before taxes	$	30,131	$	14,113
Selected operating expense:
Depreciation and amortization:
Business Solutions	$	167	$	159
Enterprise Solutions		534		716
Public Sector Solutions		20		14
Headquarters/Other		2,270		2,276
Total depreciation and amortization	$	2,991	$	3,165
Total assets:
Business Solutions	$	426,103	$	362,694
Enterprise Solutions		651,905		568,221
Public Sector Solutions		94,540		94,103
Headquarters/Other		(71,729)		(66,632)
Total assets	$	1,100,819	$	958,386

The assets of the Company’s three operating segments presented above consist primarily of accounts receivable, net intercompany receivable, goodwill, and other intangibles. Assets reported under the Headquarters/Other group are managed by corporate headquarters, including cash, inventory, property and equipment, ROU assets, and intercompany balance, net. As of March 31, 2022 and 2021, total assets for the Headquarters/Other group were presented net of intercompany balance eliminations of $50,234, and $48,026, respectively. The Company’s capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade our management information systems. These information systems serve all of the Company’s segments, to varying degrees, and accordingly, the CODM does not evaluate capital expenditures on a segment-by-segment basis.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies

Commitments and Contingencies

Note 6–Commitments and Contingencies

The Company is subject to various legal proceedings and claims, including patent infringement claims, which have arisen during the ordinary course of business. The outcome of such matters is not expected to have a material, adverse effect on the Company’s financial position, results of operations, and/or cash flows.

The Company is subject to audits by states on sales and income taxes, employment matters, and other assessments. Additional liabilities for these and other audits could be assessed, but such outcomes are not expected to have a material, adverse impact on the Company’s financial position, results of operations, and/or cash flows.

BANK BORROWINGS

3 Months Ended

Mar. 31, 2022

Bank Borrowings

Bank Borrowings

Note 7–Bank Borrowings

The Company has a $50,000 credit facility collateralized by its account receivables that expires March 31, 2025. This facility can be increased, at the Company’s option, to $80,000 for permitted acquisitions or other uses authorized by

the lender on substantially the same terms. Amounts outstanding under this facility bear interest at greatest of (i) the prime rate (3.50% on March 31, 2022), (ii) the federal funds effective rate plus 0.50% per annum and (iii) the one-month London Interbank Offered Rate, plus 1.00% per annum, provided that the Alternate Base Rate shall at no time be less than 0% per annum. The credit facility includes various customary financial ratios and operating covenants, including minimum net worth and maximum funded debt ratio requirements, and default acceleration provisions. The credit facility does not include restrictions on future dividend payments. Funded debt ratio is the ratio of average outstanding advances under the credit facility for a given quarter to consolidated trailing twelve months Adjusted Earnings Before Interest Expense, Taxes, Depreciation, Amortization, and Special Charges (Adjusted EBITDA). The maximum allowable funded debt ratio under the agreement is 2.0 to 1.0. Decreases in the Company’s consolidated trailing twelve months Adjusted EBITDA could limit its potential borrowing capacity under the credit facility. As of March 31, 2022, the Company was in compliance with all financial covenants contained in the agreement governing the credit facility.

On February 3, 2022, the Company borrowed $1,385 under the credit facility, which was fully repaid on February 4, 2022. The Company had no outstanding bank borrowings for the quarter ended March 31, 2022 or 2021, and accordingly, the entire $50,000 facility was available for borrowings under the credit facility on such date.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	Mar. 31, 2022
Basis of Presentation
Principles of Consolidation	The accompanying unaudited condensed consolidated financial statements of PC Connection, Inc. and its subsidiaries (the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting and in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). Such principles were applied on a basis consistent with the accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC. The accompanying condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods reported and of the Company’s financial condition as of the date of the interim balance sheet. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated through the date of issuance of these financial statements. The operating results for the three months ended March 31, 2022 may not be indicative of the results expected for any succeeding quarter or the entire year ending December 31, 2022.
Use of Estimates in the Preparation of Financial Statements	Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts and disclosures of assets and liabilities and the reported amounts and disclosures of revenue and expenses during the period. Management bases its estimates and judgments on the information available at the time and various other assumptions believed to be reasonable under the circumstances. By nature, estimates are subject to an inherent degree of uncertainty. Actual results could differ from those estimates and assumptions.
Recently Issued Financial Accounting Standards	Recently Issued Financial Accounting Standards In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This guidance provides temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate. This ASU is applied prospectively and becomes effective immediately upon the transition from LIBOR. The Company’s secured credit facility agreement references LIBOR, which is expected to be discontinued as a result of reference rate reform. The optional amendments are effective as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the effect of the adoption of this standard on the Company, but does not believe the adoption will have a material effect on its consolidated financial statements.

REVENUE (Tables)

3 Months Ended

Mar. 31, 2022

Revenue

Schedule of disaggregation of revenue from contracts with customers


	Three Months Ended March 31, 2022
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	130,434	$	121,339	$	56,850	$	308,623
Desktops		23,559		44,864		17,988		86,411
Software		34,908		21,010		5,269		61,187
Servers/Storage		22,164		15,371		9,630		47,165
Net/Com Products		22,627		22,191		8,027		52,845
Displays and Sound		32,824		37,079		13,423		83,326
Accessories		32,241		48,007		12,932		93,180
Other Hardware/Services		21,687		25,535		8,385		55,607
Total net sales	$	320,444	$	335,396	$	132,504	$	788,344


	Three Months Ended March 31, 2021
	Business Solutions		Enterprise Solutions		Public Sector Solutions		Total
Notebooks/Mobility	$	94,435	$	82,191	$	56,974	$	233,600
Desktops		21,159		30,351		7,850		59,360
Software		27,162		22,505		7,209		56,876
Servers/Storage		20,573		17,156		6,647		44,376
Net/Com Products		18,404		19,826		10,361		48,591
Displays and Sound		19,774		23,405		13,993		57,172
Accessories		25,847		43,876		10,821		80,544
Other Hardware/Services		18,980		25,975		11,418		56,373
Total net sales	$	246,334	$	265,285	$	125,273	$	636,892

Schedule of changes in contract liability balances


	March 31, 2022		December 31, 2021
Contract liabilities, which are included in "Accrued expenses and other liabilities"	$	7,043	$	8,628

Changes in the contract liability balances during the three months ended March 31, 2022 and 2021 are as follows:


	2022
Balance at December 31, 2021	$	8,628
Cash received in advance and not recognized as revenue		3,870
Amounts recognized as revenue as performance obligations satisfied		(5,455)
Balance at March 31, 2022	$	7,043

	2021
Balance at December 31, 2020	$	3,509
Cash received in advance and not recognized as revenue		5,259
Amounts recognized as revenue as performance obligations satisfied		(2,500)
Balance at March 31, 2021	$	6,268

EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share

Computation of basic and diluted earnings per share


	Three Months Ended March 31 ,
	2022		2021
Numerator:
Net income	$	21,792	$	10,184
Denominator:
Denominator for basic earnings per share		26,255		26,172
Dilutive effect of employee stock awards		150		188
Denominator for diluted earnings per share		26,405		26,360
Earnings per share:
Basic	$	0.83	$	0.39
Diluted	$	0.83	$	0.39

LEASES (Tables)

3 Months Ended

Mar. 31, 2022

Leases

Schedule of lease cost


	Three Months Ended March 31, 2022						Three Months Ended March 31, 2021
	Related Parties		Others		Total		Related Parties		Others		Total
Lease Cost
Capitalized operating lease cost	$	313	$	709	$	1,022	$	313	$	777	$	1,090
Short-term lease cost		107		21		128		107		23		130
Total lease cost	$	420	$	730	$	1,150	$	420	$	800	$	1,220

Other Information
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$	313	$	687	$	1,000	$	313	$	770	$	1,083

Weighted-average remaining lease term (in years):
Capitalized operating leases		1.67		4.34		3.79		2.67		5.32		4.65

Weighted-average discount rate:
Capitalized operating leases		3.92%		3.91%		3.92%		3.92%		3.92%		3.92%

As of March 31, 2022, future lease payments over the remaining term of capitalized operating leases were as follows:

Schedule of future lease payments on capitalized operating leases


For the Years Ended December 31,		Related Parties		Others		Total
2022, excluding the three months ended March 31, 2022	$	940	$	2,159	$	3,099
2023		1,149		2,136		3,285
2024		—		1,644		1,644
2025		—		1,577		1,577
2026		—		888		888
Thereafter		—		1		1
	$	2,089	$	8,405	$	10,494

Imputed interest						(640)
Lease liability balance at March 31, 2022					$	9,854

SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2022

Segment Information

Segment information applicable to reportable operating segments


	Three Months Ended
	March 31,		March 31,
	2022		2021
Net sales:
Business Solutions	$	320,444	$	246,334
Enterprise Solutions		335,396		265,285
Public Sector Solutions		132,504		125,273
Total net sales	$	788,344	$	636,892
Operating income (loss):
Business Solutions	$	20,673	$	8,420
Enterprise Solutions		14,314		12,543
Public Sector Solutions		(1,126)		(2,753)
Headquarters/Other		(3,727)		(4,090)
Total operating income		30,134		14,120
Other expenses, net		(3)		(7)
Income before taxes	$	30,131	$	14,113
Selected operating expense:
Depreciation and amortization:
Business Solutions	$	167	$	159
Enterprise Solutions		534		716
Public Sector Solutions		20		14
Headquarters/Other		2,270		2,276
Total depreciation and amortization	$	2,991	$	3,165
Total assets:
Business Solutions	$	426,103	$	362,694
Enterprise Solutions		651,905		568,221
Public Sector Solutions		94,540		94,103
Headquarters/Other		(71,729)		(66,632)
Total assets	$	1,100,819	$	958,386

REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of revenue
Net sales	$ 788,344	$ 636,892
Notebooks/Mobility
Disaggregation of revenue
Net sales	308,623	233,600
Desktops
Disaggregation of revenue
Net sales	86,411	59,360
Software
Disaggregation of revenue
Net sales	61,187	56,876
Servers/Storage
Disaggregation of revenue
Net sales	47,165	44,376
Net/Com Products
Disaggregation of revenue
Net sales	52,845	48,591
Displays and Sound
Disaggregation of revenue
Net sales	83,326	57,172
Accessories
Disaggregation of revenue
Net sales	93,180	80,544
Other Hardware/Services
Disaggregation of revenue
Net sales	55,607	56,373
Business Solutions
Disaggregation of revenue
Net sales	320,444	246,334
Business Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	130,434	94,435
Business Solutions \| Desktops
Disaggregation of revenue
Net sales	23,559	21,159
Business Solutions \| Software
Disaggregation of revenue
Net sales	34,908	27,162
Business Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	22,164	20,573
Business Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	22,627	18,404
Business Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	32,824	19,774
Business Solutions \| Accessories
Disaggregation of revenue
Net sales	32,241	25,847
Business Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	21,687	18,980
Enterprise Solutions
Disaggregation of revenue
Net sales	335,396	265,285
Enterprise Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	121,339	82,191
Enterprise Solutions \| Desktops
Disaggregation of revenue
Net sales	44,864	30,351
Enterprise Solutions \| Software
Disaggregation of revenue
Net sales	21,010	22,505
Enterprise Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	15,371	17,156
Enterprise Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	22,191	19,826
Enterprise Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	37,079	23,405
Enterprise Solutions \| Accessories
Disaggregation of revenue
Net sales	48,007	43,876
Enterprise Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	25,535	25,975
Public Sector Solutions
Disaggregation of revenue
Net sales	132,504	125,273
Public Sector Solutions \| Notebooks/Mobility
Disaggregation of revenue
Net sales	56,850	56,974
Public Sector Solutions \| Desktops
Disaggregation of revenue
Net sales	17,988	7,850
Public Sector Solutions \| Software
Disaggregation of revenue
Net sales	5,269	7,209
Public Sector Solutions \| Servers/Storage
Disaggregation of revenue
Net sales	9,630	6,647
Public Sector Solutions \| Net/Com Products
Disaggregation of revenue
Net sales	8,027	10,361
Public Sector Solutions \| Displays and Sound
Disaggregation of revenue
Net sales	13,423	13,993
Public Sector Solutions \| Accessories
Disaggregation of revenue
Net sales	12,932	10,821
Public Sector Solutions \| Other Hardware/Services
Disaggregation of revenue
Net sales	$ 8,385	$ 11,418

REVENUE - Contract Balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Change in contract liability
Beginning balance - Contract liability	$ 8,628	$ 3,509
Cash received in advance and not recognized as revenue	3,870	5,259
Amounts recognized as revenue as performance obligations satisfied	(5,455)	(2,500)
Ending balance - Contract liability	7,043	$ 6,268
Accrued expenses and other liabilities
Contract liabilities
Contract liabilities	$ 7,043		$ 8,628

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Numerator:
Net income	$ 21,792	$ 10,184
Denominator:
Denominator for basic earnings per share	26,255	26,172
Dilutive effect of unvested employee stock awards	150	188
Denominator for diluted earnings per share	26,405	26,360
Earnings per share:
Basic	$ 0.83	$ 0.39
Diluted	$ 0.83	$ 0.39
Additional Disclosure
Employee stock awards excluded from computation of diluted earnings per share	0	0

LEASES - Lease Cost and Other Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) lease	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)
Leases
Right-of-use assets	$ 9,201	$ 11,857	$ 9,579
Lease liability	$ 9,854
Number of additional operating or financing leases not yet commenced \| lease	0
Lease Cost
Capitalized operating lease cost	$ 1,022	1,090
Short-term lease cost	128	130
Total lease cost	1,150	1,220
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 1,000	$ 1,083
Weighted-average remaining lease term - Capitalized operating leases (in years)	3 years 9 months 14 days	4 years 7 months 24 days
Weighted-average discount rate - Capitalized operating leases	3.92%	3.92%
Related Parties
Leases
Right-of-use assets	$ 2,025
Lease liability	2,025
Lease Cost
Capitalized operating lease cost	313	$ 313
Short-term lease cost	107	107
Total lease cost	420	420
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 313	$ 313
Weighted-average remaining lease term - Capitalized operating leases (in years)	1 year 8 months 1 day	2 years 8 months 1 day
Weighted-average discount rate - Capitalized operating leases	3.92%	3.92%
Others
Lease Cost
Capitalized operating lease cost	$ 709	$ 777
Short-term lease cost	21	23
Total lease cost	730	800
Cash paid for amounts included in the measurement of lease liabilities and capitalized operating leases:
Operating cash flows	$ 687	$ 770
Weighted-average remaining lease term - Capitalized operating leases (in years)	4 years 4 months 2 days	5 years 3 months 25 days
Weighted-average discount rate - Capitalized operating leases	3.91%	3.92%

LEASES - Future Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021	Mar. 31, 2021
Future lease payments over the remaining term of capitalized operating leases
2022, excluding the three months ended March 31, 2022	$ 3,099
2023	3,285
2024	1,644
2025	1,577
2026	888
Thereafter	1
Total	10,494
Imputed interest	(640)
Lease liability balance	9,854
Right-of-use assets	9,201	$ 9,579	$ 11,857
Long-term lease liability	6,077	$ 6,789	8,792
Short-term lease liability	$ 3,777		$ 3,812
Current operating lease liability, Statement of Financial Position	Accrued expenses and other liabilities		Accrued expenses and other liabilities
Related Parties
Future lease payments over the remaining term of capitalized operating leases
2022, excluding the three months ended March 31, 2022	$ 940
2023	1,149
Total	2,089
Lease liability balance	2,025
Right-of-use assets	2,025
Others
Future lease payments over the remaining term of capitalized operating leases
2022, excluding the three months ended March 31, 2022	2,159
2023	2,136
2024	1,644
2025	1,577
2026	888
Thereafter	1
Total	$ 8,405

SEGMENT INFORMATION - Segment Information Applicable to Reportable Operating Segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) segment	Mar. 31, 2021 USD ($) segment	Dec. 31, 2021 USD ($)
Segment Reporting Information
Number of reportable segments \| segment	3	3
Number of operating segments \| segment	3	3
Net sales:
Net sales	$ 788,344	$ 636,892
Operating income (loss):
Operating income (loss)	30,134	14,120
Other expenses, net	(3)	(7)
Income before taxes	30,131	14,113
Depreciation and amortization:
Depreciation and amortization	2,991	3,165
Total assets:
Total assets	1,100,819	958,386	$ 1,083,383
Business Solutions
Net sales:
Net sales	320,444	246,334
Enterprise Solutions
Net sales:
Net sales	335,396	265,285
Public Sector Solutions
Net sales:
Net sales	132,504	125,273
Operating Segments \| Business Solutions
Net sales:
Net sales	320,444	246,334
Operating income (loss):
Operating income (loss)	20,673	8,420
Depreciation and amortization:
Depreciation and amortization	167	159
Total assets:
Total assets	426,103	362,694
Operating Segments \| Enterprise Solutions
Net sales:
Net sales	335,396	265,285
Operating income (loss):
Operating income (loss)	14,314	12,543
Depreciation and amortization:
Depreciation and amortization	534	716
Total assets:
Total assets	651,905	568,221
Operating Segments \| Public Sector Solutions
Net sales:
Net sales	132,504	125,273
Operating income (loss):
Operating income (loss)	(1,126)	(2,753)
Depreciation and amortization:
Depreciation and amortization	20	14
Total assets:
Total assets	94,540	94,103
Headquarters/Other
Operating income (loss):
Operating income (loss)	(3,727)	(4,090)
Depreciation and amortization:
Depreciation and amortization	2,270	2,276
Total assets:
Assets net of intercompany balance eliminations	(71,729)	(66,632)
Intersegment Elimination
Total assets:
Total assets	$ (50,234)	$ (48,026)

BANK BORROWINGS (Details) - USD ($) $ in Thousands		3 Months Ended
BANK BORROWINGS (Details) - USD ($) $ in Thousands	Feb. 03, 2022	Mar. 31, 2022	Mar. 31, 2021
Subordinated Borrowing
Line of credit, borrowing capacity		$ 50,000
Credit facility, expiration date		Mar. 31, 2025
Line of credit, maximum borrowing capacity		$ 80,000
Proceeds from short-term borrowings	$ 1,385	1,385
Line of credit, outstanding borrowing		0	$ 0
Line of credit, available for borrowing		$ 50,000	$ 50,000
Maximum
Subordinated Borrowing
Debt ratio		2.0
Alternate Base Rate \| Minimum
Subordinated Borrowing
Debt instrument, interest rate		0.00%
Prime Rate
Subordinated Borrowing
Debt instrument, interest rate		3.50%
One-month LIBOR Rate
Subordinated Borrowing
Debt instrument, variable rate spread		1.00%
Federal Funds Rate
Subordinated Borrowing
Debt instrument, variable rate spread		0.50%