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):   November 2, 2010

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 November 2, 2010, PC Connection, Inc. announced its financial results for the quarter ended September 30, 2010.  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 November 2, 2010.	

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:	November 2, 2010	PC CONNECTION, INC.	
 	 	 	
 	 	By:	/s/ Jack Ferguson	
 	 	 	Jack Ferguson	
 	 	 	Executive Vice President, Treasurer, and	
 	 	 	Chief Financial Officer	

EXHIBIT INDEX

Exhibit No.	Description	
 	 	
99.1	Press release issued by PC Connection, Inc. on November 2, 2010.	

Exhibit 99.1

PC Connection, Inc. Reports Third Quarter Results

Company Announces Record Sales; Earnings Nearly Triple

MERRIMACK, N.H.--(BUSINESS WIRE)--November 2, 2010--PC Connection, Inc. (NASDAQ: PCCC)

THIRD QUARTER SUMMARY:
Q3 net sales: $532.8 million, up 32% year over year
SG&A: 8.9% of net sales, improved from 10.2% last year
Operating income: $14.3 million, or 2.7% of net sales
Diluted earnings per share: $0.32 per share

PC Connection, Inc. (NASDAQ: PCCC), a leading direct marketer of information technology (IT) products and services, today announced results for the quarter ended September 30, 2010. Net sales for the third quarter were $532.8 million, an increase of $129.7 million or 32.2%, compared to $403.1 million for the three months ended September 30, 2009. The strong net sales for the quarter resulted primarily from double digit year-over-year growth achieved by each of our three major business segments. Net income for the three months ended September 30, 2010 was $8.6 million, or $0.32 per share, compared to net income of $2.9 million, or $0.11 per share, for the corresponding prior year period. Earnings this quarter were almost 200% higher than the third quarter of 2009.

Net sales for the nine months ended September 30, 2010 were $1,418.6 million, an increase of $312.1 million or 28.2%, compared to $1,106.5 million for the nine months ended September 30, 2009. Net income for the nine months ended September 30, 2010 was $16.1 million, or $0.59 per share, compared to net loss of $5.2 million, or $0.19 per share, for the nine months ended September 30, 2009. The nine-month period ended September 30, 2009 included special charges that reduced earnings and earnings per share. Pro forma net income, excluding these special charges, for the nine months ended September 30, 2009 was $3.0 million, or $0.11 per share. The Company did not record any special charges for the nine months ended September 30, 2010. A reconciliation between net loss on a GAAP basis and pro forma net income for the nine months ended September 30, 2009 is provided in a table below immediately following the Consolidated Statements of Operations.

As previously announced, the Company formed a new sales company, PC Connection Express, Inc., to focus on the specialized requirements of the consumer and small office/home office (“SOHO”) markets. Prior to its formation, consumer and SOHO sales were reported within the Company’s small- and medium-sized business (SMB) segment. In order to facilitate comparison with current period results, 2009 revenues for the SMB segment have been restated on a pro forma basis to exclude consumer and SOHO sales.

Quarterly Sales by Segment:
Net sales for the SMB business segment increased by 27.3% to $208.7 million compared to the third quarter pro forma sales of 2009. Sales to small- and medium-sized businesses experienced significant growth across most product lines and market sectors as the B2B demand environment remained strong over the last three quarters.
Net sales for MoreDirect, Inc., the Company’s Large Account segment, increased year over year by 53.6% to $159.6 million, topping the previous record for its largest quarterly sales performance. Large account/enterprise customers have increased their IT spending due to the release of pent-up IT demand and PC refresh. New customer acquisitions also contributed to the year-over-year increase.
Net sales to government and education customers (Public Sector segment) increased year over year by 24.9% to $145.6 million. This segment also posted its largest quarterly sales performance, topping the previous net sales record. Contract sales made to the federal government and higher education customers have driven strong net sales growth for six straight quarters.
Net sales to consumers and SOHO customers by PC Connection Express were $18.8 million in the third quarter of 2010, up slightly from the $18.6 million of comparable sales in the third quarter of 2009.

Quarterly Sales by Product Mix:
Notebook and PDA sales, the Company’s largest product category, increased by 50% year over year and accounted for 17% of net sales in the third quarter of 2010 compared to 15% of net sales for the third quarter of 2009. A 44% increase in unit sales for the quarter as well as a slight increase in average selling prices, or ASPs, drove the robust year-over-year growth.
Software sales increased by 49% year over year, accounting for 15% of net sales in the third quarter of 2010 compared to 14% of net sales for the third quarter of 2009. A large public sector order contributed to this product line’s year-over-year revenue growth.
Desktop/server sales increased by 45% year over year, accounting for 15% of net sales in the third quarter of 2010 compared to 14% of net sales for the third quarter of 2009. Desktop sales grew as a result of a 79% year-over-year increase in unit sales in the third quarter. The gains associated with the increased demand were partially offset by a decrease in average selling prices. Server sales grew as a result of a 32% increase in unit sales year over year and a slight increase in ASPs.
Memory and system enhancement sales grew 83% year over year and accounted for 5% of net sales in the third quarter of 2010 compared to 3% of net sales for the third quarter 2009. The large increase was driven substantially by the year-over-year increase in desktop and notebook sales experienced in the third quarter of 2010.

Overall gross profit dollars increased by $15.6 million, or 33.7%, to $62.0 million in the third quarter of 2010 compared to the prior year quarter primarily due to higher revenues. Consolidated gross margin, as a percentage of net sales, was 11.6% in the third quarter of 2010 compared to 11.5% in the prior year quarter. Both the SMB and the Public Sector segments improved gross margins in the third quarter compared to the prior year period. Higher agency revenues and product margins in the SMB and Public Sector segments offset lower product margins in the Large Account segment in the quarter.

Overall annualized sales productivity increased by 35% in the third quarter of 2010 compared to the third quarter of 2009. Sales productivity in the Large Account, Public Sector, and SMB segments increased by 60%, 30%, and 27%, respectively, in the third quarter of 2010 compared to the prior year period primarily due to the year-over-year revenue increases. On a consolidated basis, the total number of sales representatives was 595 at September 30, 2010, compared to 601 at September 30, 2009, and 588 at June 30, 2010.

Total selling, general and administrative expenses for the quarter increased year over year by $6.4 million, or 15.5%, but decreased as a percentage of net sales to 8.9% for the third quarter of 2010, from 10.2% for the third quarter of 2009. The year-over-year dollar increase was primarily attributable to increased variable compensation associated with increased operating results. The year-over-year decrease in SG&A as a percentage of net sales was due to the higher level of sales in the third quarter of 2010 and improved expense management.

“We are pleased with our record-setting revenue and strong earnings performance this quarter,” said Patricia Gallup, Chairman and Chief Executive Officer. “We achieved the largest revenue quarter in the Company’s history, and at the same time experienced a 182% increase in operating income, nearly tripling our earnings per share. We believe our strong management team and core business strategies position us well for future success.”

About PC Connection, Inc.

PC Connection, Inc., a Fortune 1000 company, operates through four sales companies: PC Connection Sales Corporation, MoreDirect, Inc., GovConnection, Inc., and PC Connection Express, Inc., headquartered in Merrimack, NH, Boca Raton, FL, Rockville, MD, and Portsmouth, NH, respectively. All four companies can deliver custom-configured computer systems overnight from PC Connection Services’ ISO 9001:2000 certified technical configuration lab at its 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 the small- and medium-sized business sector, is a rapid-response provider of IT products and services. It offers more than 180,000 brand-name products through its staff of technically trained sales account managers and catalog telesales representatives, catalogs, and publications, and its website at  www.pcconnection.com .

MoreDirect, Inc. (561-237-3300), www.moredirect.com, provides corporate technology buyers with a comprehensive web-based e-procurement solution and in-depth IT supply-chain expertise, serving as a one-stop source by aggregating more than 300,000 products from the inventories of leading IT wholesale distributors and manufacturers. MoreDirect’s TRAXX™ system is a seamless end-to-end interface that empowers clients to electronically source, evaluate, compare prices, and track related technology product purchases in real-time.

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 .

PC Connection Express, Inc. (888-800-0323) is a rapid-response provider of computer products and consumer electronics to home, home office, and small office users. Customers can purchase the best-known brands in the industry online at  www.pcconnectionexpress.com  or order by calling a trained sales specialist. The subsidiary includes the MacConnection brand (800-800-2222), one of Apple’s largest authorized online resellers at www.macconnection.com .

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 Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission for the quarter ended June 30, 2010. More specifically, the statements in this release concerning the Company’s outlook for 2010 and other statements of a non-historical basis (including statements regarding the Company’s ability to grow its business and increase market 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, and the ability of the Company to hire and retain qualified sales representatives and other essential personnel. The Company assumes no 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 September 30,	 	2010	 	2009	 	 	 	
 	 	 	 	% of
Net Sales	 	 	 	% of
Net Sales	 	%
Change	 	 	
(Dollars and shares in thousands, except operating data, price/earnings ratio, and per share data)	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating Data:	 	 	 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	532,827	 	 	 	 	$	403,052	 	 	 	 	32	%	 	 	
Diluted earnings per share	 	$	0.32	 	 	 	 	$	0.11	 	 	 	 	191	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross margin	 	 	11.6	%	 	 	 	 	11.5	%	 	 	 	 	 	 	
Operating margin	 	 	2.7	%	 	 	 	 	1.3	%	 	 	 	 	 	 	
Return on equity (1)	 	 	14.1	%	 	 	 	 	5.1	%	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Catalogs distributed	 	 	2,042,000	 	 	 	 	 	2,555,000	 	 	 	 	(20	)%	 	 	
Orders entered (2)	 	 	345,300	 	 	 	 	 	332,900	 	 	 	 	4	%	 	 	
Average order size (2)	 	$	1,942	 	 	 	 	$	1,603	 	 	 	 	21	%	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Inventory turns (1)	 	 	26	 	 	 	 	 	24	 	 	 	 	 	 	 	
Days sales outstanding	 	 	49	 	 	 	 	 	45	 	 	 	 	 	 	 	

Product Mix:	 	 	 	 	 	 	 	 	 	 	 	 	
Notebook & PDA	 	$	92,451	 	 	17	%	 	$	61,679	 	 	15	%	 	50	%	 	 	
Software	 	 	82,748	 	 	15	 	 	 	55,582	 	 	14	 	 	49	 	 	 	
Desktop/Server	 	 	82,222	 	 	15	 	 	 	56,714	 	 	14	 	 	45	 	 	 	
Net/Com Product	 	 	54,606	 	 	10	 	 	 	42,930	 	 	11	 	 	27	 	 	 	
Video, Imaging & Sound	 	 	50,840	 	 	10	 	 	 	53,672	 	 	13	 	 	(5	)	 	 	
Printer & Printer Supplies	 	 	40,379	 	 	8	 	 	 	35,188	 	 	9	 	 	15	 	 	 	
Storage Device	 	 	35,986	 	 	7	 	 	 	31,762	 	 	8	 	 	13	 	 	 	
Memory & System Enhancement	 	 	25,171	 	 	5	 	 	 	13,760	 	 	3	 	 	83	 	 	 	
Accessories/Other	 	 	68,424	 	 	13	 	 	 	51,765	 	 	13	 	 	32	 	 	 	
 	 	$	532,827	 	 	100	%	 	$	403,052	 	 	100	%	 	32	%	 	 	

Net Sales of Enterprise Server and Networking Products (included in the above Product Mix):	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	200,367	 	 	38	%	 	$	149,035	 	 	37	%	 	34	%	 	 	

Stock Performance Indicators:	 	 	 	 	 	 	 	 	 	 	 	 	
Actual common shares outstanding	 	 	26,544	 	 	 	 	 	26,848	 	 	 	 	 	 	 	
Total book value per share	 	$	9.40	 	 	 	 	$	8.60	 	 	 	 	 	 	 	
Tangible book value per share	 	$	7.52	 	 	 	 	$	6.76	 	 	 	 	 	 	 	
Closing price	 	$	6.83	 	 	 	 	$	5.44	 	 	 	 	 	 	 	
Market capitalization	 	$	181,296	 	 	 	 	$	146,053	 	 	 	 	 	 	 	
Pro forma trailing price/earnings ratio (3)	 	 	9	 	 	 	 	 	26	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
(1) Annualized	 	 	
(2) Does not reflect cancellations or returns	 	 	
(3) Earnings calculation represents trailing four quarters and excludes special charges.	 	 	

REVENUE AND MARGIN INFORMATION	 	 	 	 	 	 	 	 	
For the Three Months Ended September 30,	 	2010	 	2009	
 	 	Net	 	Gross	 	Net	 	Gross	
(Dollars in thousands)	 	Sales	 	Margin (%)	 	Sales	 	Margin (%)	
 	 	 	 	 	 	 	 	 	
PC Connection Sales Corporation (SMB) (1)	 	$	208,733	 	14.2	%	 	$	163,985	 	13.8	%	
MoreDirect (Large Account)	 	 	159,641	 	10.1	 	 	 	103,921	 	10.6	 	
GovConnection (Public Sector)	 	 	145,615	 	10.2	 	 	 	116,567	 	9.0	 	
PC Connection Express (Consumer/SOHO) (1)	 	 	18,838	 	7.4	 	 	 	18,579	 	11.7	 	
Total	 	$	532,827	 	11.6	%	 	$	403,052	 	11.5	%	
 	 	 	 	 	 	 	 	 	
(1) 2009 results are pro forma due to the launch in early 2010 of new Consumer/SOHO sales company.	

 	 	 	 	 	 	 	 	 	 	
CONSOLIDATED STATEMENTS OF OPERATIONS	 	 	 	 	 	 	 	 	 	
Three Months Ended September 30,	 	2010	 	 	2009	
(amounts in thousands, except per share data)	 	Amount	 	% of Net Sales	 	 	Amount	 	% of Net Sales	
 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	532,827	 	 	 	100.0	%	 	 	$	403,052	 	 	 	100.0	%	
Cost of sales	 	 	470,856	 	 	 	88.4	 	 	 	 	356,708	 	 	 	88.5	 	
Gross profit	 	 	61,971	 	 	 	11.6	 	 	 	 	46,344	 	 	 	11.5	 	
 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	47,640	 	 	 	8.9	 	 	 	 	41,263	 	 	 	10.2	 	
Income from operations	 	 	14,331	 	 	 	2.7	 	 	 	 	5,081	 	 	 	1.3	 	
 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	(111	)	 	 	-	 	 	 	 	(99	)	 	 	-	 	
Other, net	 	 	49	 	 	 	-	 	 	 	 	93	 	 	 	-	 	
Income tax provision	 	 	(5,643	)	 	 	(1.1	)	 	 	 	(2,186	)	 	 	(0.6	)	
Net income	 	$	8,626	 	 	 	1.6	%	 	 	$	2,889	 	 	 	0.7	%	

Earnings per common share:	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.32	 	 	 	 	 	$	0.11	 	 	 	
Diluted	 	$	0.32	 	 	 	 	 	$	0.11	 	 	 	
 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding:	 	 	 	 	 	 	 	 	 	
Basic	 	 	26,939	 	 	 	 	 	 	27,078	 	 	 	
Diluted	 	 	26,977	 	 	 	 	 	 	27,095	 	 	 	

 	 	 	 	 	 	 	 	 	 	

CONSOLIDATED STATEMENTS OF OPERATIONS	 	 	 	 	 	 	 	 	 	
Nine Months Ended September 30,	 	2010	 	 	2009	
(amounts in thousands, except per share data)	 	Amount	 	% of Net Sales	 	 	Amount	 	% of Net Sales	
 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	1,418,635	 	 	 	100.0	%	 	 	$	1,106,535	 	 	 	100.0	%	
Cost of sales	 	 	1,252,031	 	 	 	88.3	 	 	 	 	974,238	 	 	 	88.0	 	
Gross profit	 	 	166,604	 	 	 	11.7	 	 	 	 	132,297	 	 	 	12.0	 	
 	 	 	 	 	 	 	 	 	 	
Selling, general and administrative expenses	 	 	139,615	 	 	 	9.8	 	 	 	 	126,670	 	 	 	11.5	 	
Special charges	 	 	-	 	 	 	-	 	 	 	 	12,955	 	 	 	1.2	 	
Income (loss) from operations	 	 	26,989	 	 	 	1.9	 	 	 	 	(7,328	)	 	 	(0.7	)	
 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	(305	)	 	 	-	 	 	 	 	(385	)	 	 	-	 	
Other, net	 	 	159	 	 	 	-	 	 	 	 	452	 	 	 	-	 	
Income tax (provision) benefit	 	 	(10,760	)	 	 	(0.8	)	 	 	 	2,072	 	 	 	0.2	 	
Net income (loss)	 	$	16,083	 	 	 	1.1	%	 	 	 	($5,189	)	 	 	(0.5	)	

Earnings (loss) per common share:	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.59	 	 	 	 	 	$	(0.19	)	 	 	
Diluted	 	$	0.59	 	 	 	 	 	$	(0.19	)	 	 	
 	 	 	 	 	 	 	 	 	 	
Weighted average common shares outstanding:	 	 	 	 	 	 	 	 	 	
Basic	 	 	27,070	 	 	 	 	 	 	27,017	 	 	 	
Diluted	 	 	27,108	 	 	 	 	 	 	27,017	 	 	 	

 	 	 	 	 	 	 	 	 	 	
 	 	`	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
A RECONCILIATION BETWEEN GAAP AND PRO FORMA RESULTS	
This information is being provided so as to allow for a comparison of our operating results without special charges.	
 	
September 30,	 	Three Months Ended	 	 	Nine Months Ended	
(amounts in thousands)	 	2010	 	2009	 	 	2010	 	2009	
 	 	 	 	 	 	 	 	 	 	
GAAP net income (loss)	 	$	8,626	 	 	$	2,889	 	 	 	$	16,083	 	 	 	($5,189	)	
Special charges (after tax):	 	 	 	 	 	 	 	 	 	
Software development write-off and related charges	 	 	-	 	 	 	-	 	 	 	 	-	 	 	 	7,378	 	
Management restructuring	 	 	-	 	 	 	-	 	 	 	 	-	 	 	 	771	 	
Total special charges (after tax)	 	 	-	 	 	 	-	 	 	 	 	-	 	 	 	8,149	 	
 	 	 	 	 	 	 	 	 	 	
Pro forma net income	 	$	8,626	 	 	$	2,889	 	 	 	$	16,083	 	 	$	2,960	 	

 	 	 	 	 	
CONSOLIDATED BALANCE SHEETS	 	September 30,	 	December 31,	
(amounts in thousands)	 	2010	 	2009	
 	 	 	 	 	 	
ASSETS	 	 	 	 	 	
Current Assets:	 	 	 	 	 	
Cash and cash equivalents	 	$	40,535	 	 	 	$	46,297	 	
Accounts receivable, net	 	 	256,706	 	 	 	 	218,095	 	
Inventories	 	 	81,426	 	 	 	 	67,391	 	
Deferred income taxes	 	 	3,758	 	 	 	 	3,386	 	
Income taxes receivable	 	 	904	 	 	 	 	935	 	
Prepaid expenses and other current assets	 	 	4,248	 	 	 	 	2,750	 	
Total current assets	 	 	387,577	 	 	 	 	338,854	 	
Property and equipment, net	 	 	13,818	 	 	 	 	12,420	 	
Goodwill	 	 	48,060	 	 	 	 	48,060	 	
Other intangibles, net	 	 	1,821	 	 	 	 	1,279	 	
Other assets	 	 	411	 	 	 	 	482	 	
Total Assets	 	$	451,687	 	 	 	$	401,095	 	

LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	 	 	
Current Liabilities:	 	 	 	 	 	
Current maturities of capital lease obligation to affiliate	 	$	847	 	 	 	$	780	 	
Accounts payable	 	 	152,749	 	 	 	 	125,120	 	
Accrued expenses and other liabilities	 	 	25,076	 	 	 	 	20,441	 	
Accrued payroll	 	 	12,453	 	 	 	 	8,843	 	
Total current liabilities	 	 	191,125	 	 	 	 	155,184	 	
Deferred income taxes	 	 	5,477	 	 	 	 	3,849	 	
Capital lease obligation to affiliate, less current maturities	 	 	2,187	 	 	 	 	2,830	 	
Other liabilities	 	 	3,397	 	 	 	 	3,966	 	
Total Liabilities	 	 	202,186	 	 	 	 	165,829	 	
Stockholders’ Equity:	 	 	 	 	 	
Common stock	 	 	274	 	 	 	 	274	 	
Additional paid-in capital	 	 	97,612	 	 	 	 	97,213	 	
Retained earnings	 	 	157,197	 	 	 	 	141,114	 	
Treasury stock at cost	 	 	(5,582	)	 	 	 	(3,335	)	
Total Stockholders’ Equity	 	 	249,501	 	 	 	 	235,266	 	
Total Liabilities and Stockholders’ Equity	 	$	451,687	 	 	 	$	401,095	 	

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY	
Nine Months Ended September 30, 2010 (amounts in thousands)	
 	 	Common Stock	 	Additional	 	Retained	 	Treasury Stock	 	 	 	
 	 	Shares	 	Amount	 	Paid-In Capital	 	Earnings	 	Shares	 	 	Amount	 	Total	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance – December 31, 2009	 	27,375	 	$	274	 	$	97,213	 	 	$	141,114	 	(527	)	 	 	 	($3,335	)	 	$	235,266	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stock-based compensation expense	 	-	 	 	-	 	 	1,102	 	 	 	-	 	-	 	 	 	 	-	 	 	 	1,102	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repurchase of common stock for treasury	 	-	 	 	-	 	 	-	 	 	 	-	 	(455	)	 	 	 	(3,067	)	 	 	(3,067	)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Nonvested stock awards	 	-	 	 	-	 	 	(820	)	 	 	-	 	128	 	 	 	 	820	 	 	 	-	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuance of common stock under Employee Stock Purchase Plan	 	23	 	 	-	 	 	135	 	 	 	-	 	-	 	 	 	 	-	 	 	 	135	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Tax shortfall from stock-based compensation	 	-	 	 	-	 	 	(18	)	 	 	-	 	-	 	 	 	 	-	 	 	 	(18	)	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income and comprehensive income	 	-	 	 	-	 	 	-	 	 	 	16,083	 	-	 	 	 	 	-	 	 	 	16,083	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance – September 30, 2010	 	27,398	 	$	274	 	$	97,612	 	 	$	157,197	 	(854	)	 	 	$	(5,582	)	 	$	249,501	 	 	

 	 	 	 	 	 	
CONSOLIDATED STATEMENTS OF CASH FLOWS	 	 	 	 	 	
Nine Months Ended September 30, (amounts in thousands)	 	2010	 	2009	 	
 	 	 	 	 	 	
Cash Flows from Operating Activities:	 	 	 	 	 	
 	 	 	 	 	 	
Net income (loss)	 	$	16,083	 	 	$	(5,189	)	 	
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	 	 	 	 	 	
 	 	 	 	 	 	
Non-cash portion of special charges	 	 	-	 	 	 	11,625	 	 	
Depreciation and amortization	 	 	4,152	 	 	 	5,221	 	 	
Provision for doubtful accounts	 	 	1,737	 	 	 	1,771	 	 	
Deferred income taxes	 	 	1,256	 	 	 	(1,692	)	 	
Stock-based compensation expense	 	 	1,102	 	 	 	952	 	 	
Income tax deficiency from stock-based compensation	 	 	(18	)	 	 	(103	)	 	
Loss on disposal of fixed assets	 	 	6	 	 	 	15	 	 	
 	 	 	 	 	 	
Changes in assets and liabilities:	 	 	 	 	 	
Accounts receivable	 	 	(40,348	)	 	 	3,236	 	 	
Inventories	 	 	(14,035	)	 	 	834	 	 	
Prepaid expenses and other current assets	 	 	(1,467	)	 	 	(1,111	)	 	
Other non-current assets	 	 	71	 	 	 	(95	)	 	
Accounts payable	 	 	24,675	 	 	 	7,243	 	 	
Accrued expenses and other liabilities	 	 	7,676	 	 	 	1,656	 	 	
Net cash provided by operating activities	 	 	890	 	 	 	24,363	 	 	

Cash Flows from Investing Activities:	 	 	 	 	 	
 	 	 	 	 	 	
Purchases of property and equipment	 	 	(2,350	)	 	 	(5,012	)	 	
Purchase of an intangible asset	 	 	(800	)	 	 	-	 	 	
Proceeds from sale of property and equipment	 	 	6	 	 	 	2	 	 	
Net cash used for investing activities	 	 	(3,144	)	 	 	(5,010	)	 	

Cash Flows from Financing Activities:	 	 	 	 	 	
 	 	 	 	 	 	
Purchase of treasury shares	 	 	(3,067	)	 	 	(297	)	 	
Repayment of capital lease obligation	 	 	(576	)	 	 	(517	)	 	
Issuance of stock under Employee Stock Purchase Plan	 	 	135	 	 	 	138	 	 	
Proceeds from short-term borrowings	 	 	-	 	 	 	22,055	 	 	
Repayment of short-term borrowings	 	 	-	 	 	 	(22,055	)	 	
Net cash used for financing activities	 	 	(3,508	)	 	 	(676	)	 	
(Decrease) increase in cash and cash equivalents	 	 	(5,762	)	 	 	18,677	 	 	
Cash and cash equivalents, beginning of period	 	 	46,297	 	 	 	47,003	 	 	
Cash and cash equivalents, end of period	 	$	40,535	 	 	$	65,680	 	 	

CONTACT:
PC Connection, Inc.
Stephen Baldridge, 603-683-2322
Sr. Vice President of Finance & Corporate Controller