UNITED STATES
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 3, 2012

PC Connection, Inc.	
(Exact name of registrant as specified in charter)	

Delaware	0-23827	02-0513618	
(State or other juris-
diction of incorporation)	(Commission
File Number)	(IRS Employer
Identification No.)	

Rt. 101A, 730 Milford Road
Merrimack, NH	03054	
(Address of principal executive offices)	(Zip Code)	

Registrant’s telephone number, including area code:   (603) 683-2000

N/A	
(Former name or former address, if changed since last report)	

⃞  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.	Results of Operations and Financial Condition	
On May 3, 2012, PC Connection, Inc. announced its financial results for the quarter ended March 31, 2012.  The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.  

The information in this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01.	Financial Statements and Exhibits	

(d)	 	Exhibits	
 	
 	 	The following exhibit relating to Item 2.02 shall be deemed to be furnished, and not filed:	
 	
 	 	99.1                     Press Release issued by PC Connection, Inc. on May 3, 2012.	

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:	May 3, 2012	PC CONNECTION, INC.	
 	 	 	
 	 	By:	/s/ Joseph Driscoll	
 	 	 	Joseph Driscoll	
 	 	 	Senior Vice President, Treasurer, and	
 	 	 	Chief Financial Officer	

EXHIBIT INDEX

Exhibit No.	Description	
 	 	
99.1	Press release issued by PC Connection, Inc. on May 3, 2012.	

Exhibit 99.1

PC Connection, Inc. Reports First Quarter Results
Net sales: $498.8 million, up 8% year over year
Gross profit: 13.4% of net sales, up 62 basis points y/y
Diluted earnings per share: $0.21, up 24% y/y
Pro forma diluted EPS (before special charges): $0.23, up 35% y/y
Cash balance increased to $49.8 million, from $4.6 million at 12/31/2011

MERRIMACK, N.H.--(BUSINESS WIRE)--May 3, 2012--PC Connection, Inc. (NASDAQ: PCCC), a provider of a full range of information technology (IT) solutions to business, government, and education markets, today announced results for the quarter ended March 31, 2012. Net sales for the first quarter of 2012 were $498.8 million, an 8.0% increase compared to $461.9 million for the first quarter of 2011. Net income for the quarter ended March 31, 2012 was $5.5 million, or $0.21 per share, compared to net income of $4.5 million, or $0.17 per share, for the corresponding prior year quarter.

Included in the results for the quarter ended March 31, 2012 were pre-tax charges of $1.1 million related to awards granted upon the retirement of a former executive officer, as well as workforce reductions. Excluding these special charges, pro forma net income for the quarter ended March 31, 2012 would have been $6.2 million, or $0.23 per share, representing 35% growth over prior year. We did not record any special charges for the first quarter of 2011. Earnings before interest, taxes, depreciation and amortization, stock-based compensation expense, and special charges (“Adjusted EBITDA”) totaled $57.4 million for the twelve months ended March 31, 2012, as compared to $48.9 million for the twelve months ended March 31, 2011.

During the first quarter of 2012, we combined our consumer and small office/home office (“SOHO”) sales company with our small- and medium-sized business (SMB) segment. In order to facilitate comparison with current period results, 2011 revenues and gross margins for the SMB segment have been restated on a pro forma basis to include consumer and SOHO sales.

Quarterly Sales by Segment:
Net sales for the SMB segment increased only nominally in the quarter to $225.3 million, compared to net sales in the first quarter of 2011. The increase in net sales to our SMB customers was partially offset by lower consumer and SOHO sales in 2012. Excluding sales to these customers, SMB sales would have increased by 4.0% year over year. Software and net/com sales increased year over year with double-digit growth due to our investment in solution sales capabilities.
Net sales for the Large Account segment increased by 23.5% to $181.3 million compared to net sales in the first quarter of 2011. This segment includes the operating results for ValCom Technology, a provider of infrastructure management and onsite managed services to medium-to-large corporations, which we acquired late in the first quarter of 2011. Excluding ValCom Technology’s sales for the quarter, Large Account sales would have increased year over year by 17.1% as demand continued to be strong for enterprise solutions.
Net sales to government and education customers (Public Sector segment) increased year over year by 2.0% to $92.2 million. Sales to state and local government and educational institutions were relatively unchanged compared to last year, while sales to the federal government increased by 5.5% year over year.

Quarterly Sales by Product Mix:
Notebook sales, the Company’s largest product category, increased by 2% year over year and accounted for 17% of net sales in the first quarter of 2012 compared to 18% of net sales in the first quarter of 2011. Notebook unit sales increased by 7% year over year and offset a decline in average selling prices.
Desktop/server sales increased by 16% year over year, accounting for 17% of net sales in the first quarter of 2012 compared to 15% of net sales in the first quarter of 2011. Desktop/server sales increased due to strong demand from our large account and public sector customers.
Software sales increased by 15% year over year, accounting for 14% of net sales in the first quarter of 2012 and 2011. All three segments contributed to the overall sales growth with double-digit increases compared to the prior year quarter.
Net/com products continued to grow with an increase of 12% year over year, accounting for 10% of net sales in the first quarter of 2012 compared to 9% of net sales in the first quarter of 2011. All three segments achieved double-digit sales growth in this product category.

Overall gross profit dollars increased by $7.8 million, or 13%, to $66.6 million in the first quarter of 2012 compared to the prior year quarter. Consolidated gross margin, as a percentage of net sales, increased to 13.4% in the first quarter of 2012 compared to 12.7% in the prior year quarter with each segment contributing to the margin improvement. Consolidated gross margin has improved year over year for seven straight quarters due to strategies designed to increase sales of higher margin products and services. We expect the gross margin rate will be below Q1 levels for each of the next three quarters due to an increased mix of public sector sales.

Total selling, general and administrative expenses increased year over year by $5.2 million to $56.5 million and increased as a percentage of net sales to 11.3% for the first quarter of 2012, from 11.1% for the first quarter of 2011. The dollar and percentage increases were attributable to the acquisition of ValCom Technology and investments in significant internal systems projects targeted to improve operational efficiencies. In addition, variable compensation increased due to the improvement in gross profits. We expect that total SG&A will be at least $57.0 million for each of the next three quarters.

The Company generated significant positive cash flow in the quarter ended March 31, 2012. Total cash was $49.8 million compared to $4.6 million at December 31, 2011. In addition, there were no amounts outstanding on the Company’s line of credit at March 31, 2012, compared to $5.3 million outstanding at December 31, 2011. Days sales outstanding were 43 days at March 31, 2012, and inventory was reduced to $62.5 million from $77.4 million at December 31, 2011.

“I am pleased with our results this quarter. Our team continues to execute well. We generated solid sales growth and increased our pro forma earnings per share by 35%. In addition, we strengthened our balance sheet and generated significant positive cash flow,” said Timothy McGrath, President and Chief Executive Officer. “We believe the strategies we have put in place will position us well to gain market share and enhance long-term shareholder value.”

Non-GAAP Financial Information

Adjusted EBITDA, pro forma net income, and pro forma earnings per share are non-GAAP financial measures. This information is included to provide information with respect to the Company’s operating performance and earnings. Reconciliations of Adjusted EBITDA, pro forma net income, and pro forma earnings per share to GAAP net income are provided in tables immediately following the Condensed Consolidated Statements of Income.

About PC Connection, Inc.

PC Connection, Inc., a Fortune 1000 company, has four sales companies: PC Connection Sales Corporation, MoreDirect, Inc., GovConnection, Inc., and Professional Computer Center, Inc. d/b/a ValCom Technology, headquartered in Merrimack, NH, Boca Raton, FL, Rockville, MD, and Itasca, IL, respectively. All four companies can deliver custom-configured computer systems overnight from our ISO 9001:2008 certified technical configuration lab at our distribution center in Wilmington, OH. Investors and media can find more information about PC Connection, Inc. at  http://ir.pcconnection.com .

PC Connection Sales Corporation (800-800-5555), the original business of PC Connection, Inc. serving primarily the small- and medium-sized business sector, is a rapid-response provider of IT products and services. It offers more than 300,000 brand-name products through its staff of technically trained sales account managers and telesales specialists, catalogs, publications, and its website at  www.pcconnection.com . This company also serves the consumer and small office users under its PC Connection Express brand (888-800-0323) at  www.pcconnectionexpress.com  and is, under its MacConnection brand (800-800-2222), one of Apple’s largest authorized online resellers at  www.macconnection.com .

MoreDirect, Inc. (561-237-3300), www.moredirect.com, provides corporate technology buyers with best-in-class IT solutions, in-depth IT supply-chain expertise, and access to over 300,000 products and 1,600 vendors through TRAXX™, a cloud-based eProcurement system. Backed by over 500 technical certifications, MoreDirect’s team of engineers, software licensing specialists, and project managers help reduce the cost and complexity of buying hardware, software, and services throughout the entire IT lifecycle.

GovConnection, Inc. (800-800-0019) is a rapid-response provider of IT products and services to federal, state, and local government agencies and educational institutions through specialized account managers, catalogs, and publications, and online at  www.govconnection.com .

Professional Computer Center, Inc. d/b/a ValCom Technology (630-285-0500), www.valcomtechnology.com, provides technology services to medium-to-large corporate organizations utilizing its proprietary cloud-based IT service management software, WebSPOC™. Through its experienced technical service personnel, ValCom Technology provides network, server, storage, mission-critical onsite support, installation, and hosting of lifecycle services.

pccc-g

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the impact of changes in market demand and the overall level of economic activity and environment, or in the level of business investment in information technology products, competitive products and pricing, product availability and market acceptance, new products, fluctuations in operating results, and the ability of the Company to manage personnel levels in response to fluctuations in revenue, and other risks that could cause actual results to differ materially from those detailed under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2011. More specifically, the statements in this release concerning the Company’s outlook for gross margin and selling, general, and administrative expenses in 2012 and other statements of a non-historical basis (including statements regarding the Company’s ability to grow revenues, improve gross margins, increase market share, and increase earnings per share) are forward-looking statements that involve certain risks and uncertainties. Such risks and uncertainties include the ability to realize market demand for and competitive pricing pressures on the products and services marketed by the Company, the continued acceptance of the Company's distribution channel by vendors and customers, continuation of key vendor and customer relationships and support programs, the ability of the Company to integrate the operations of ValCom Technology, the ability of the Company to gain or maintain market share, and the ability of the Company to hire and retain qualified sales representatives and other essential personnel. The Company disclaims any obligation to update the information in this press release or revise any forward-looking statements, whether as a result of any new information, future events, or otherwise.

 	
 	
CONSOLIDATED SELECTED FINANCIAL INFORMATION	
At or for the Three Months Ended March 31,	 	 	 	 	2012	 	 	 	2011	 	 	 	 	
(Dollars and shares in thousands, except operating data, P/E ratio, and per share data)	 	 	 	 	 	 	% of	 	 	 	 	% of	 	 	%	 	
 	 	 	 	 	 	 	Net Sales	 	 	 	 	Net Sales	 	 	Change	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Data:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	 	 	 	$	498,763	 	 	 	 	 	$	461,926	 	 	 	 	 	8	%	
Diluted earnings per share	 	 	 	 	$	0.21	 	 	 	 	 	$	0.17	 	 	 	 	 	24	%	
Pro forma diluted earnings per share	 	 	 	 	$	0.23	 	 	 	 	 	$	0.17	 	 	 	 	 	35	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross margin	 	 	 	 	 	13.4	%	 	 	 	 	 	12.7	%	 	 	 	 	 	
Operating margin	 	 	 	 	 	1.8	%	 	 	 	 	 	1.6	%	 	 	 	 	 	
Return on equity (1)	 	 	 	 	 	8.0	%	 	 	 	 	 	6.9	%	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Orders entered (2)	 	 	 	 	 	339,000	 	 	 	 	 	 	346,000	 	 	 	 	 	(2	%)	
Average order size (2)	 	 	 	 	$	1,765	 	 	 	 	 	$	1,606	 	 	 	 	 	10	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Inventory turns (1)	 	 	 	 	 	25	 	 	 	 	 	 	24	 	 	 	 	 	 	
Days sales outstanding	 	 	 	 	 	43	 	 	 	 	 	 	41	 	 	 	 	 	 	

Product Mix:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Notebook	 	 	 	 	$	84,699	 	 	17	%	 	 	$	83,283	 	 	18	%	 	 	2	%	
Desktop/Server	 	 	 	 	 	82,443	 	 	17	 	 	 	 	70,998	 	 	15	 	 	 	16	%	
Software	 	 	 	 	 	72,286	 	 	14	 	 	 	 	62,846	 	 	14	 	 	 	15	%	
Video, Imaging & Sound	 	 	 	 	 	48,203	 	 	10	 	 	 	 	48,669	 	 	10	 	 	 	(1	%)	
Net/Com Product	 	 	 	 	 	48,351	 	 	10	 	 	 	 	43,285	 	 	9	 	 	 	12	%	
Storage Device	 	 	 	 	 	36,033	 	 	7	 	 	 	 	39,329	 	 	9	 	 	 	(8	%)	
Printer & Printer Supplies	 	 	 	 	 	37,171	 	 	7	 	 	 	 	36,224	 	 	8	 	 	 	3	%	
Memory & System Enhancement	 	 	 	 	 	17,073	 	 	3	 	 	 	 	18,679	 	 	4	 	 	 	(9	%)	
Accessory/Other	 	 	 	 	 	72,504	 	 	15	 	 	 	 	58,613	 	 	13	 	 	 	24	%	
Total Net Sales	 	 	 	 	$	498,763	 	 	100	%	 	 	$	461,926	 	 	100	%	 	 	8	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net Sales of Enterprise Server and Networking Products (included in the above Product Mix):	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	$	186,634	 	 	37	%	 	 	$	161,733	 	 	35	%	 	 	15	%	

Stock Performance Indicators:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Actual shares outstanding	 	 	 	 	 	26,276	 	 	 	 	 	 	26,673	 	 	 	 	 	 	
Total book value per share	 	 	 	 	$	10.59	 	 	 	 	 	$	9.84	 	 	 	 	 	 	
Tangible book value per share	 	 	 	 	$	8.45	 	 	 	 	 	$	7.72	 	 	 	 	 	 	
Closing price	 	 	 	 	$	8.22	 	 	 	 	 	$	8.86	 	 	 	 	 	 	
Market capitalization	 	 	 	 	$	215,989	 	 	 	 	 	$	236,323	 	 	 	 	 	 	
Trailing price/earnings ratio	 	 	 	 	 	7.3	 	 	 	 	 	 	9.5	 	 	 	 	 	 	
LTM Adjusted EBITDA (3)	 	 	 	 	$	57,402	 	 	 	 	 	$	48,877	 	 	 	 	 	 	
Market capitalization/LTM EBITDA	 	 	 	 	 	3.8	 	 	 	 	 	 	4.8	 	 	 	 	 	 	
(1) Annualized
(2) Does not reflect cancellations or returns
(3) Adjusted EBITDA is defined as EBITDA (earnings before interest, taxes, depreciation and amortization) adjusted for stock-based compensation and special charges.
 	 	 	 	 	 	 	 	 	 	 	 	 	
REVENUE AND MARGIN INFORMATION	 	 	 	 	 	 	 	 	 	 	 	 	
For the Three Months Ended March 31,	 	 	 	 	2012	 	 	 	2011	 	
 	 	 	 	 	Net	 	Gross	 	 	Net	 	Gross	
(Dollars in thousands)	 	 	 	 	Sales	 	Margin	 	 	Sales	 	Margin	
 	 	 	 	 	 	 	 	 	 	 	 	 	
SMB	 	 	 	 	$	225,295	 	15.2	%	 	 	$	224,734	 	14.1	%	
Large Account	 	 	 	 	 	181,316	 	11.8	 	 	 	 	146,847	 	11.4	 	
Public Sector	 	 	 	 	 	92,152	 	11.9	 	 	 	 	90,345	 	11.5	 	
Total	 	 	 	 	$	498,763	 	13.4	%	 	 	$	461,926	 	12.7	%	

 	
 	
CONDENSED CONSOLIDATED STATEMENTS OF INCOME	
Three Months Ended March 31,	 	 	 	 	2012	 	 	 	2011	 	
(amounts in thousands, except per share data)	 	 	 	 	Amount	 	% of Net Sales	 	 	Amount	 	% of Net Sales	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	 	 	 	$	498,763	 	 	100.0	%	 	 	$	461,926	 	 	 	100.0	%	
Cost of sales	 	 	 	 	 	432,152	 	 	86.6	 	 	 	 	403,107	 	 	 	87.3	 	
Gross profit	 	 	 	 	 	66,611	 	 	13.4	 	 	 	 	58,819	 	 	 	12.7	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	 	 	 	56,450	 	 	11.3	 	 	 	 	51,290	 	 	 	11.1	 	
Special charges	 	 	 	 	 	1,135	 	 	0.3	 	 	 	 	-	 	 	 	-	 	
Income from operations	 	 	 	 	 	9,026	 	 	1.8	 	 	 	 	7,529	 	 	 	1.6	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	 	 	 	-	 	 	-	 	 	 	 	(41	)	 	 	-	 	
Other, net	 	 	 	 	 	46	 	 	-	 	 	 	 	65	 	 	 	-	 	
Income tax provision	 	 	 	 	 	(3,597	)	 	(0.7	)	 	 	 	(3,059	)	 	 	0.6	 	
Net income	 	 	 	 	$	5,475	 	 	1.1	%	 	 	$	4,494	 	 	 	1.0	%	

Earnings per common share:	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	 	 	$	0.21	 	 	 	 	 	$	0.17	 	 	 	
Diluted	 	 	 	 	$	0.21	 	 	 	 	 	$	0.17	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding:	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	 	 	 	 	26,439	 	 	 	 	 	 	26,901	 	 	 	
Diluted	 	 	 	 	 	26,586	 	 	 	 	 	 	26,986	 	 	 	

A RECONCILIATION BETWEEN GAAP AND PRO FORMA NET INCOME	
Three Months Ended March 31,	
Provided for comparison of our operating results without special charges. (amounts in thousands)	 	 	2012	 	 	 	2011	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
GAAP net income	 	 	 	 	 	 	 	 	 	$	5,475	 	 	$	4,494	 	
Special charges (after tax)	 	 	 	 	 	 	 	 	 	 	681	 	 	 	-	 	
Pro forma net income	 	 	 	 	 	 	 	 	 	$	6,156	 	 	$	4,494	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Pro forma diluted earnings per common share	 	 	 	 	 	 	 	 	 	$	0.23	 	 	$	0.17	 	

CONDENSED CONSOLIDATED BALANCE SHEETS	 	 	 	 	 	 	 	 	 	March 31,	 	December 31,	
(amounts in thousands)	 	 	 	 	 	 	 	 	 	 	2012	 	 	 	2011	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
ASSETS	 	 	 	 	 	 	 	 	 	 	 	 	
Current Assets:	 	 	 	 	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	 	 	 	 	 	 	 	 	$	49,752	 	 	$	4,615	 	
Accounts receivable, net	 	 	 	 	 	 	 	 	 	 	242,403	 	 	 	295,188	 	
Inventories	 	 	 	 	 	 	 	 	 	 	62,528	 	 	 	77,437	 	
Prepaid expenses and other current assets	 	 	 	 	 	 	 	 	 	 	5,250	 	 	 	4,713	 	
Deferred income taxes	 	 	 	 	 	 	 	 	 	 	3,398	 	 	 	4,436	 	
Income taxes receivable	 	 	 	 	 	 	 	 	 	 	3,229	 	 	 	1,927	 	
Total current assets	 	 	 	 	 	 	 	 	 	 	366,560	 	 	 	388,316	 	
Property and equipment, net	 	 	 	 	 	 	 	 	 	 	24,088	 	 	 	22,570	 	
Goodwill	 	 	 	 	 	 	 	 	 	 	51,276	 	 	 	51,276	 	
Other intangibles, net	 	 	 	 	 	 	 	 	 	 	4,971	 	 	 	5,205	 	
Other assets	 	 	 	 	 	 	 	 	 	 	720	 	 	 	652	 	
Total Assets	 	 	 	 	 	 	 	 	 	$	447,615	 	 	$	468,019	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	 	 	 	 	 	 	 	
Current Liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	
Current maturities of capital lease obligation to affiliate	 	 	 	 	 	 	 	 	 	$	998	 	 	$	971	 	
Borrowings under bank line of credit	 	 	 	 	 	 	 	 	 	 	-	 	 	 	5,267	 	
Accounts payable	 	 	 	 	 	 	 	 	 	 	111,949	 	 	 	130,900	 	
Accrued expenses and other liabilities	 	 	 	 	 	 	 	 	 	 	30,513	 	 	 	30,902	 	
Accrued payroll	 	 	 	 	 	 	 	 	 	 	12,213	 	 	 	12,964	 	
Total current liabilities	 	 	 	 	 	 	 	 	 	 	155,673	 	 	 	181,004	 	
Deferred income taxes	 	 	 	 	 	 	 	 	 	 	9,882	 	 	 	9,026	 	
Other liabilities	 	 	 	 	 	 	 	 	 	 	2,975	 	 	 	3,471	 	
Capital lease obligation to affiliate, less current maturities	 	 	 	 	 	 	 	 	 	 	729	 	 	 	989	 	
Total Liabilities	 	 	 	 	 	 	 	 	 	 	169,259	 	 	 	194,490	 	
Stockholders’ Equity:	 	 	 	 	 	 	 	 	 	 	 	 	
Common stock	 	 	 	 	 	 	 	 	 	 	276	 	 	 	276	 	
Additional paid-in capital	 	 	 	 	 	 	 	 	 	 	100,284	 	 	 	99,957	 	
Retained earnings	 	 	 	 	 	 	 	 	 	 	187,749	 	 	 	182,274	 	
Treasury stock at cost	 	 	 	 	 	 	 	 	 	 	(9,953	)	 	 	(8,978	)	
Total Stockholders’ Equity	 	 	 	 	 	 	 	 	 	 	278,356	 	 	 	273,529	 	
Total Liabilities and Stockholders’ Equity	 	 	 	 	 	 	 	 	 	$	447,615	 	 	$	468,019	 	

 	
 	
EBITDA AND ADJUSTED EBITDA	
 	
A reconciliation of EBITDA and Adjusted EBITDA is detailed below. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA means EBITDA adjusted for certain items which are described in the table below. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. We believe that EBITDA and Adjusted EBITDA provide helpful information with respect to our operating performance including our ability to fund our future capital expenditures and working capital requirements. Adjusted EBITDA also provides helpful information as it is the primary measure used in certain financial covenants contained in our credit agreements.	

(amounts in thousands)	 	 	 	 	Three Months Ended March 31,	 	LTM Ended March 31, (1)	
 	 	 	 	 	 	2012	 	 	2011	 	% Change	 	 	2012	 	 	2011	 	% Change	
Net income	 	 	 	 	$	5,475	 	$	4,494	 	 	 	$	29,768	 	$	25,021	 	 	
Depreciation and amortization	 	 	 	 	 	1,558	 	 	1,344	 	 	 	 	6,165	 	 	5,202	 	 	
Income tax expense	 	 	 	 	 	3,597	 	 	3,059	 	 	 	 	19,182	 	 	16,769	 	 	
Interest expense, net	 	 	 	 	 	-	 	 	41	 	 	 	 	328	 	 	432	 	 	
EBITDA	 	 	 	 	 	10,630	 	 	8,938	 	 	 	 	55,443	 	 	47,424	 	 	
Stock-based compensation	 	 	 	 	 	1,047	 	 	205	 	 	 	 	1,666	 	 	1,453	 	 	
Other special charges	 	 	 	 	 	293	 	 	-	 	 	 	 	293	 	 	-	 	 	
Adjusted EBITDA	 	 	 	 	$	11,970	 	$	9,143	 	31%	 	$	57,402	 	$	48,877	 	17%	
(1) LTM: Last twelve months

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	 	 	 	 	 	 	 	 	
Three Months Ended March 31, (amounts in thousands)	 	 	 	 	 	2012	 	 	 	 	2011	 	
 	 	 	 	 	 	 	 	 	
Cash Flows from Operating Activities:	 	 	 	 	 	 	 	 	
Net income	 	 	 	 	$	5,475	 	 	 	$	4,494	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	 	 	 	1,558	 	 	 	 	1,344	 	
Provision for doubtful accounts	 	 	 	 	 	99	 	 	 	 	414	 	
Deferred income taxes	 	 	 	 	 	1,894	 	 	 	 	571	 	
Stock-based compensation expense	 	 	 	 	 	1,047	 	 	 	 	205	 	
Loss on disposal of fixed assets	 	 	 	 	 	71	 	 	 	 	3	 	
Income tax benefit from stock-based compensation	 	 	 	 	 	6	 	 	 	 	-	 	
Fair value adjustment to contingent consideration	 	 	 	 	 	10	 	 	 	 	-	 	
 	 	 	 	 	 	 	 	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	 	 	 	52,686	 	 	 	 	23,072	 	
Inventories	 	 	 	 	 	14,909	 	 	 	 	6,889	 	
Prepaid expenses and other current assets	 	 	 	 	 	(1,839	)	 	 	 	(712	)	
Other non-current assets	 	 	 	 	 	(68	)	 	 	 	(104	)	
Accounts payable	 	 	 	 	 	(19,041	)	 	 	 	(5,205	)	
Accrued expenses and other liabilities	 	 	 	 	 	(1,646	)	 	 	 	(1,842	)	
Net cash provided by operating activities	 	 	 	 	 	55,161	 	 	 	 	29,129	 	
 	 	 	 	 	 	 	 	 	
Cash Flows from Investing Activities:	 	 	 	 	 	 	 	 	
Purchases of property and equipment	 	 	 	 	 	(2,823	)	 	 	 	(2,120	)	
Acquisition of ValCom Technology, net of cash acquired	 	 	 	 	 	-	 	 	 	 	(3,745	)	
Net cash used for investing activities	 	 	 	 	 	(2,823	)	 	 	 	(5,865	)	
 	 	 	 	 	 	 	 	 	
Cash Flows from Financing Activities:	 	 	 	 	 	 	 	 	
Repayment of short-term borrowings	 	 	 	 	 	(12,471	)	 	 	 	-	 	
Proceeds from short-term borrowings	 	 	 	 	 	7,204	 	 	 	 	-	 	
Purchase of treasury shares	 	 	 	 	 	(1,715	)	 	 	 	-	 	
Repayment of capital lease obligation to affiliate	 	 	 	 	 	(233	)	 	 	 	(209	)	
Exercise of stock options	 	 	 	 	 	14	 	 	 	 	131	 	
Net cash used for financing activities	 	 	 	 	 	(7,201	)	 	 	 	(78	)	
Increase in cash and cash equivalents	 	 	 	 	 	45,137	 	 	 	 	23,186	 	
Cash and cash equivalents, beginning of period	 	 	 	 	 	4,615	 	 	 	 	35,374	 	
Cash and cash equivalents, end of period	 	 	 	 	$	49,752	 	 	 	$	58,560	 	
 	 	 	 	 	 	 	 	 	
Non-cash Investing and Financing Activities:	 	 	 	 	 	 	 	 	
Issuance of nonvested stock from treasury	 	 	 	 	$	740	 	 	 	$	-	 	
Accrued capital expenditures	 	 	 	 	 	520	 	 	 	 	1,707	 	
Contingent consideration recorded in accrued expenses and other liabilities	 	 	 	 	 	-	 	 	 	 	2,880	 	

CONTACT:
PC Connection, Inc.
Joseph Driscoll, 603-683-2322
Senior Vice President, CFO and Treasurer