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): September 17, 2002 --------------------- PC CONNECTION, INC. ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware ------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-23827 02-0513618 ----------------------------- -------------------------------------- (Commission File Number) (IRS Employer Identification No.) Rt. 101A, 730 Milford Road, Merrimack, New Hampshire 03054 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (603) 423-2000 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Not Applicable - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events. ------------ On September 17 and 18, 2002, PC Connection, Inc., a Delaware corporation ("PCC"), is planning to participate in various investor meetings, and will be discussing various aspects of its business. During the course of those discussions, certain limited financial information and other limited facts of its business will be presented to investors. This information is included in Item 7(c) below as an Exhibit. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------ (c) Exhibits. -------- 99.1 Information for Investor Meetings. - 2 -
SIGNATURE 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: September 16, 2002 REGISTRANT PC CONNECTION, INC. By: /s/ Mark A. Gavin ------------------------------------ Mark A. Gavin Senior Vice President of Finance and Chief Financial Officer - 3 -
EXHIBIT INDEX Exhibit Number Description - -------------- ----------- 99.1 Information for Investor Meetings. - 4 -
Exhibit 99.1 ----------------------- GovConnection, Inc.(TM) ----------------------- GovConnection, Inc. (Public Sector) - (Cont'd.) [_] Seasonality of business: Q1 Q2 Q3 Q4 Total -- -- -- -- ----- ..Federal 15% 17% 33% 35% 100% ..Education 19 29 31 21 100 ..State and Local 20 31 26 23 100 [_] Number of sales representatives - 110 (as of June 20, 2002) [_] 2001 annual sales - $289.7 million - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
PURSUING LARGE MARKET OPPORTUNITIES - -------------------------------------------------------------------------------- Pro Forma Company Market/(1)/ Net Sales Market Company Segments Opportunity 2001/(2)/ Share - -------------------------------------------------------------------------------- Small- and Medium-Sized Businesses $100,000 $ 891 0.89% - -------------------------------------------------------------------------------- Government & Education 50,000 290 0.58% - -------------------------------------------------------------------------------- Large Corporate Accounts 100,000 219 0.22% - -------------------------------------------------------------------------------- $250,000 $1,400 0.56% - -------------------------------------------------------------------------------- /(1)/ IDC and PC Connection estimates /(2)/ The pro forma net sales assumes the acquisition of MoreDirect had taken place January 1, 2001 - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
CONSOLIDATED SALES MIX BY SEGMENT ($ in thousands) 2002 - ------------------------------------------------------------------------- Sequential Q2 Q1 % Change - ------------------------------------------------------------------------- SMB $173,871 $185,552 (6.3)% Public Sector 64,468 50,608 27.4% Large Account/(1)/ 57,101 51,258 11.4% - ----------------------------------------------------------------------- Total $295,440 $287,418 2.8% - ----------------------------------------------------------------------- /(1)/ Assumes MoreDirect was acquired as of January 1, 2002 - ------------------------------------------------------------------------- PC Connection - -------------------------------------------------------------------------
- --------------------------------------------------------------- GovConnection(TM) - --------------------------------------------------------------- SALES MIX BY SECTOR ($ in thousands) 2002 - --------------------------------------------------------------- Sequential Q2 Q1 % Change ------------------------------------- Federal $26,868 $24,119 11.4% Education 30,453 21,182 43.8% State & Local 7,147 5,307 34.7% - --------------------------------------------------------------- Total $64,468 $50,608 27.4% - --------------------------------------------------------------- - --------------------------------------------------------------- PC Connection - ---------------------------------------------------------------
CONSOLIDATED PRODUCT MIX /(1):/ - --------------------------------------------------------------------------------------------------------------------------- ($ in thousands) 2002 - --------------------------------------------------------------------------------------------------------------------------- % of Net % of Net % Sequential Q2 Sales Q1 Sales Change - --------------------------------------------------------------------------------------------------------------------------- Notebooks $44,686 15.13% $42,962 14.95% 4.01% Desktops 46,013 15.57 46,253 16.09 (0.52) Storage Devices 28,437 9.63 30,485 10.61 (6.7) Software 41,265 13.97 36,192 12.59 14.02 Networking Communications 24,743 8.38 24,599 8.56 0.59 Printers 27,386 9.27 25,203 8.77 8.66 Videos & Monitors 28,210 9.55 29,611 10.30 4.73 Memory 10,419 3.52 9,698 3.37 7.43 Accessories/Other 44,281 14.98 42,415 14.76 4.40 ------------------------------------------------------------------------------------------- $295,440 100.00% $287,418 100.00% 2.79% - --------------------------------------------------------------------------------------------------------------------------- (1) Assumes MoreDirect was acquired as of January 1, 2002 - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
IMPROVE SALES PRODUCTIVITY ($ in thousands) Average Productivity -------------------- Pro Forma Sales Net Sales Reps Annual Company Segments 2001 Annual 2001 /(1)/ Target - ------------------------------------------------------------------------------- Small- and Medium-Sized Businesses $ 891,233 425 $2,097 $3,000 Government & Education 289,718 88 3,292 3,500 Large Corporate Accounts 219,002 63 3,476 4,000 - ------------------------------------------------------------------------------- Total/Average $1,399,953 576 2,430 3,200 - ------------------------------------------------------------------------------- /(1)/ The pro forma information assumes the acquisition of MoreDirect had taken place January 1, 2001 - ------------------------------------------------------------------------------- PC Connection - -------------------------------------------------------------------------------
2001 PRO FORMA/(1)/ COMBINED INCOME STATEMENT ($ in thousands, except per share data) - ---------------------------------------------------------------------------------------------------- Historical - ---------------------------------------------------------------------------------------------------- Pro Forma Pro Forma Adjustments Combined PC Connection MoreDirect /(3)/ /(1)/ --------------------------------------------------------------------- Net Sales $1,180,951 $219,002 $1,399,953 Gross Profit 131,152 23,370 154,522 Operating Income/(2)/ 13,644 11,522 $ 630 24,536 Net Income/(2)/ 8,538 10,704 4,080 15,162 EPS $ 0.34 $ 0.43 $ 0.16 $ 0.61 - ---------------------------------------------------------------------------------------------------- /(1)/ The pro forma information assumes the acquisition of MoreDirect had taken place January 1, 2001. /(2)/ Before restructuring costs and other charges, including stock-based compensation expense for MoreDirect, Inc. /(3)/ Based on preliminary estimates; subject to change. - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
CONSOLIDATED KEY RATIOS ($ in thousands) - -------------------------------------------------------- 2002 - -------------------------------------------------------- Q2 Q1 ------------------- Inventory Turns 27.4 18.9 Inventory Days 12.0 15.9 Days Sales Outstanding 51.7 58.0 Days Payables Outstanding 31.2 25.5 Working Capital Days 20.9 29.5 Operating Cash Flow $18,295 $8,830 - -------------------------------------------------------- - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
PROFIT IMPROVEMENT INITIATIVES - RECENT RESULTS - ----------------------------------------------------------------------------- (Aug. YTD) 2001 2002 ------------------------------- [_]Freight Contracts/Cost Reductions $2,680,000 $200,000 [_]Telecommunications 930,000 164,000 [_]Facilities 575,000 514,000 [_]Advertising/Catalogs 1,150,000 125,000 [_]Supply Chain and Distribution 440,000 379,000 [_]Process Change/Staff Reductions 410,000 1,529,000 [_]Other 345,000 400,000 - ----------------------------------------------------------------------------- TOTAL $6,530,000 $3,311,000 - ----------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
SG&A AS A PERCENTAGE OF SALES (% Margin) 1997 10.1%* 1998 9.1% 1999 8.5% 2000 8.6% 2001 10.0%* Q1 02 11.6% Q2 02 10.5%* * Excludes special charges - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
HEADCOUNT - NON-ACCOUNT MANAGERS SMB - Non-Account MD - Non Account GovC - Non-Account Managers Managers Managers Q4 01 790 57 847 Q1 02 758 69 827 Q2 02 727 46 73 846 July-02 710 45 73 828 - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
HEADCOUNT - ACCOUNT MANAGERS SMB - Account GovC - Account MD - Account Managers Managers Managers Q4 01 376 88 464 Q1 02 350 118 468 Q2 02 339 110 72 521 July-02 334 111 70 515 - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
PROFIT IMPROVEMENT TARGETS - ---------------------------------------------------- $ Current Initiatives Opportunity - ---------------------------------------------------- Further staff reduction $1,500,000 - ---------------------------------------------------- Inbound freight management 150,000 - ---------------------------------------------------- Ohio workers comp 100,000 - ---------------------------------------------------- Packaging/labeling 100,000 - ---------------------------------------------------- Telecommunications 75,000 - ---------------------------------------------------- - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------
PROFIT IMPROVEMENT TARGETS - Cont'd. - -------------------------------------------------------------------------------- $ Current Initiatives Opportunity - -------------------------------------------------------------------------------- Facilities (Marlboro/Dover - sublease and/or space reduction) $500,000 - -------------------------------------------------------------------------------- Negotiate paper /processing contract 150,000 - -------------------------------------------------------------------------------- Serial number masking 150,000 - -------------------------------------------------------------------------------- AP recovery audit 100,000 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PC Connection - --------------------------------------------------------------------------------