SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 10, 2002 ------------ PC CONNECTION, INC. (Exact name of registrant as specified in its charter) Delaware 0-23827 02-0513618 (State or other jurisdiction of (Commission File Number) (IRS Employer Identification No.) incorporation) Route 101A, 730 Milford Road, Merrimack, New Hampshire 03054 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (603) 423-2000 -------------- Not Applicable (Former name or former address, if changed since last report)
Item 5. Other Events On May 10, 2002, the Company is planning to participate in Baird's 2002 Growth Stock conference in Chicago, Illinois, and will be discussing its recent acquisition of MoreDirect, Inc., reported previously in the Company's 8-K filing, dated April 5, 2002. During the course of that discussion, certain limited pro forma combined financial information and comparative product mix information with respect to that acquisition will be presented to attendees of the Conference. This information is included in Item 7(c) below as an Exhibit. Complete financial information required by Item 7(a) and pro forma financial information required by Item 7(b) will be filed by amendment to the April 5 Form 8-K by June 21, 2002. Item 7. Financial Statements and Exhibits (c) 99.2 Pro forma Information for Investors' Conference
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: May 9, 2002 PC CONNECTION, INC. By: /s/ Mark A. Gavin -------------------------------- Name: Mark A. Gavin Title: Senior Vice President of Finance and Chief Financial Officer
EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.2 Investor Conference Presentation - Acquisition of MoreDirect, Inc.
PC CONNECTION Acquisition of MoreDirect, Inc.
MoreDirect TRANSACTION RATIONALE o Opportunistic o Addresses a gap in market coverage (Fortune 1000) o Possible middle market synergies o Attractive Internet-based e-procurement solution o High quality sales organization o Deal structure limits downside risk o Immediately accretive to earnings and operating metrics
MoreDirect "VALUE PROPOSITION" o Provides efficient IT hardware procurement system for large customers, saving them time and money o Knowledgeable, high-level sales account managers - Senior AM's average 10-20 years experience in IT hardware sales - Adept at product sourcing and negotiations with manufacturers o Supported by an easy to use Web-based system tailored for large organizations - Reduces time to research and source products * Manufacturer and distributor pricing and availability on line by location * Visibility into manufacturer special pricing by customer - Supports quotation, multiple vendor sourcing, order tracking, serial number capture, asset tracking, customer reporting, etc. - Can be integrated into corporate procurement systems, such as Ariba
MoreDirect TERMS Cash $22 million Cash escrow (2 yrs.) $10 million Contingent Consideration (3 yrs.) 41% to 65% of EBIT in excess of certain amounts Conversion feature Escrow and contingent consideration convertible into PCC common stock to aggregate of 1,394,000 shares
2001 PRO FORMA(1) COMBINED INCOME STATEMENT ($ in thousands, except per share data) Historical ---------- Pro Forma Pro Forma PC Connection MoreDirect Adjustments Combined ------------- ---------- ----------- --------- (3) (1) Net Sales $1,180,951 $219,003 $1,339,954 Gross Profit 131,152 23,370 154,522 Operating Income/2/ 13,644 11,521 $(1,000) 24,165 Net Income/2/ 8,539 7,027 (1,123) 14,442 EPS $0.34 $0.28 $(0.05) $0.58 (1) The pro forma information assumes the acquisition of MoreDirect had taken place January 1, 2001. (2) Before restructuring costs and other charges. (3) Based on preliminary estimates; subject to change.
COMPARATIVE PRODUCT MIX - Q1 2002 PC Connection MoreDirect - ------------- ---------- 15% Notebooks 12% 15% Desktops/Servers 24% 10% Storage Devices 12% 14% Software 4% 9% Networking Communications 7% 9% Printers 9% 10% Video & Monitors 13% 3% Memory 4% 15% Accessories & Other 15%
Q1 2002 PRO FORMA(1) COMBINED OPERATING DATA Transaction is accretive to earnings and operating metrics Historical ---------- Pro Forma PC Connection MoreDirect Combined ------------- ---------- --------- Gross Profit Margin 10.60% 11.13% 10.68% Operating Margin -1.40% 5.20% -0.03% Average Order Size $894 $2,826 $1,002 Inventory Turns 19 -- 23 Days Sales Outstanding 58 53 57 Days Sales Outstanding (Excluding Federal Govt.) 47 53 49 Number of Sales Representatives 516 61 567 Annualized Sales Productivity $1,831,000 $3,361,000 $1,992,000 (1) The pro forma information assumes the acquisition of MoreDirect had taken place January 1, 2002.