PFSweb, Inc.

PFSweb Reports Fourth Quarter and Year-end 2009 Results

Thursday 25 March 2010

FOR IMMEDIATE RELEASE

PFSweb Reports Fourth Quarter and Year-end 2009 Results

- - -

New waves of growth seen in Fashion and Consumer Packaged Goods web markets

- - -

PLANO, Texas, March 25, 2010 -- PFSweb, Inc. (Nasdaq: PFSW), an international business process outsourcing services provider of end-to-end web commerce solutions and an online discount retailer, today announced its financial results for the fourth quarter and year ended December 31, 2009.

Summary of consolidated results for the quarter ended December 31, 2009:

PFSweb’s fourth quarter 2009 results were favorably impacted by new service fee client activities, increased seasonal volumes for certain clients and continued cost management across all business segments. However, revenue and Adjusted EBITDA results reflect a decrease as compared to the prior year primarily due to the global economic environment and changes to the company’s client mix, including the impact of the non-renewal of its agreement with its previously largest Service Fee business client earlier in 2009.

· Total revenue was $95.6 million compared to $112.8 million for the fourth quarter of 2008;

· Adjusted EBITDA (as defined) was $1.1 million versus $2.4 million for the fourth quarter of 2008;

· Net loss was $(0.9) million, or ($0.10) per basic and diluted share, compared to net loss of $(16.2) million, or $(1.63) per basic and diluted share, for the fourth quarter of 2008. The 2008 fourth quarter net loss results include a $16.3 million charge for goodwill and intangible asset impairment;

· Non-GAAP net loss (as defined) was $(0.8) million, or ($0.08) per basic and diluted share, compared to non-GAAP net income of $0.4 million or $0.04 per basic and diluted share, for the fourth quarter of 2008;

· Total cash, cash equivalents and restricted cash equaled $16.9 million as of December 31, 2009 compared to $18.1 million as of December 31, 2008.

Summary of consolidated results for the year ended December 31, 2009:

· Total revenue was $352.5 million, compared to $451.8 million for theyear ended December 31, 2008;

· Adjusted EBITDA (as defined) was $4.2 million versus $10.1 million for the year ended December 31, 2008;

· Net loss was $(4.6) million, or $(0.46) per basic and diluted share, compared to net loss of $(15.7) million, or $(1.58) per basic and diluted share, for the year ended December 31, 2008;

· Non-GAAP net loss (as defined) was $(4.1) million, or $(0.41) per basic and diluted share, compared to non-GAAP net income of $1.9 million, or $0.20 per basic and diluted share, for the year ended December 31, 2008;

· Cash flow from operating activities was $8.1 million compared to $9.5 million for the year ended December 31, 2008; and

· Free cash flow (as defined) was $3.7 million, consistent with $3.7 million for the year ended December 31, 2008.

“Coming off a strong year of new business activity, we believe PFSweb is firmly established as an eCommerce services leader in a number of exciting product segments. This includes several rapidly evolving market segments, including the Fashion Apparel and Accessories, Beauty and Fragrance and Consumer Packaged Goods (CPG) market segments, where we continue to see substantial new business activity,” stated Mark C. Layton, Chief Executive Officer of PFSweb. “Our success in generating new business activities, combined with a solid financial performance highlight, what I believe to be outstanding overall 2009 results considering the difficult economic environment and the non-renewal of a large U.S. Government agency client. Our ability to generate positive free cash flow of $3.7 million in 2009, speaks directly to the flexibility of our business model to quickly adjust spending levels to meet lower demand, while at the same time increasing new business activity.

“We believe the momentum we are seeing in new business will provide the seeds for improving growth trends in the future. We are also encouraged by the continuing improvement in our eCOST.com business where the fourth quarter of 2009 was the first positive net income quarterly result for this division since its acquisition in 2006.

“I am also pleased to announce that we have completed renewals of our financing facilities with IBM Global Finance, Comerica and Fortis through March 2011. Along with our other credit facilities, we believe we have the financing in place to support our current business needs,” Mr. Layton continued.

Summary of results by business segment:

Service Fee Business:

For the fourth quarter of 2009, Service Fee revenue was $16.0 million, compared with $21.7 million for the same period in 2008. The Service Fee business reported Adjusted EBITDA of $0.1 million for the fourth quarter of 2009, compared to Adjusted EBITDA of $1.9 million for the same period last year.

For the year ended December 31, 2009, Service Fee revenue was $58.6 million, compared with $85.4 million for the same period in 2008. Adjusted EBITDA for the Service Fee business was a loss of $(0.4)million for the year ended December 31, 2009, compared to $6.1 million for the same period last year. The quarter and year to date declines in revenue and Adjusted EBITDA compared to the same periods of the prior year were primarily due to the non-renewal of a U.S. Government agency client relationship partially offset by increased service fees generated from new service contract relationships.

Mike Willoughby, President of PFSweb’s Services division, commented, “The Service Fee revenue and operating results for the December 31, 2009 quarter reflect an improvement compared to the September 30, 2009 quarter. We have signed a number of new, exciting client agreements over the past several months, including the previously announced Procter & Gamble agreement. Based on current client projections, we believe these new client agreements should have a positive financial impact beginning in late 2010 and into 2011. As we have previously stated, our End2End eCommerce solution offering has been well received by the market, particularly in the Fashion Apparel and Accessories, Beauty and Fragrance and CPG market segments, resulting in a number of new client wins this year and a robust pipeline of potential new agreements.

“In February of 2010, we launched the beta site for the eStore with Procter & Gamble. The site features a wide range of P&G branded products and will serve as a learning laboratory for P&G brands to test and innovate concepts designed to grow the size of the web commerce market for Consumer Packaged Goods. The site is currently slated to go live in the U.S. later this spring.

“To support our new business efforts, we recently added an eCOST-based Retail Services capability to our End2End offering giving us the ability to function as the seller-of-record for our clients. This function allows us to be more competitive when selling our services where third party inventory ownership and retail sales management are critical client considerations. We see a strong and accelerating trend among major brand retailers and manufactures seeking a closer relationship with consumers through a direct web commerce presence. We believe the flexibility, economics and speed-to-market advantages of our End2End offering has the potential to firmly establish us into a dominant competitive position, particularly among companies who own multiple consumer brands,” continued Mr. Willoughby.

Supplies Distributors Business:

For the fourth quarter of 2009, Supplies Distributors revenue was $47.3 million, compared to $52.9 million for the same period last year. Adjusted EBITDA was $0.8 million for the fourth quarter of 2009, compared to $0.7 million for the same period last year.

For the year ended December 31, 2009, Supplies Distributors revenue was $183.0 million, compared to $230.7 million for the same period last year. Adjusted EBITDA was $5.4 million for the year-end period of 2009, compared to $5.9 million for the year-end period in 2008.

Mr. Willoughby concluded, “While the decline in activity for the Supplies Distributors business due to the overall global economic environment is disappointing, it continues to report solid bottom-line results. In addition, the Supplies Distributors business offers us increased scale, which benefits both the Service Fee business and eCOST.com.”

eCOST.com Business:

For the fourth quarter of 2009, eCOST.com revenue was $22.8 million, compared to $25.1 million for the same period in 2008. Adjusted EBITDA for eCOST.com in the quarter improved to $0.2 million, as compared to a loss of $(0.2) million for the same period last year. Net income for the 4^th quarter of 2009 was $34,000 and represents the first quarter of positive net income performance since its acquisition in 2006.

For the year ended December 2009, eCOST.com revenue was $84.6 million, compared to $99.8 million for the same period in 2008. Adjusted EBITDA for eCOST.com in the year ended December 31, 2009 improved to a loss of $(0.8) million, as compared to a loss of $(1.8) million for the same period last year.

“I am pleased by the fourth quarter results of our eCOST.com business and by the improving trends that eCOST.com demonstrated throughout 2009. While revenues were down in 2009, primarily due to the economy, we continue to drive forward with initiatives orientated towards improving gross margins in the consumer segment of eCOST.com. These actions, along with further streamlining of the eCOST.com operations that resulted in lower cost levels, have allowed us to improve the overall financial results of the business on lower overall revenues. We believe this bodes well for the future for eCOST.com in that we are well poised to add new growth in the years to come on top of this streamlined business process that has great leverage capabilities, resulting in an ability to grow with minimal incremental SG&A requirements,” stated Mr. Layton.

“In late 2009 we established a new division within eCOST.com called eStore Retail Services that formalizes the linkage between our PFSweb services segment and eCOST.com. This division allows PFSweb Services to offer certain interactive marketing, product procurement, rich content merchandising, customer acquisition methodologies and other web retail services that eCOST.com has developed and will continue to pioneer, innovate and mature,” concluded Mr. Layton.

Conference Call Information

Management will host a conference call at 10:00 am Central Time (11:00 am Eastern Time) on Thursday, March 25, 2010, to discuss the latest corporate developments and results. To listen to the call, please dial (888) 562-3356 and enter the pin number (61525599) at least five minutes before the scheduled start time. Investors can also access the call in a “listen only” mode via the Internet at the Company’s website, www.pfsweb.com. Please allow extra time prior to the call to visit the site and download any necessary audio software.

A digital replay of the conference call will be available through April 25, 2010 at (800) 642-1687, pin number (61525599). The replay also will be available at the Company’s website for a limited time.

Non-GAAP Financial Measures

This news release contains the non-GAAP measures free cash flow, non-GAAP net income (loss), Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA.

Free cash flow is defined as net cash provided by operating activities less capital expenditures.

Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, amortization of identifiable intangible assets and impairment of goodwill and identifiable intangible assets.

EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation and impairment of goodwill and identifiable intangible assets.

Free cash flow, non-GAAP net income (loss), EBITDA and Adjusted EBITDA are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. Free cash flow is used as a supplemental financial measure in our evaluation of liquidity and financial strength. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, amortization of intangible assets and impairment of goodwill and intangible assets and EBITDA and Adjusted EBITDA further eliminates the effect of financing, income taxes, and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance.

PFSweb believes these non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

About PFSweb, Inc.

PFSweb develops and deploys comprehensive end-to-end eCommerce solutions for Fortune 1000, Global 2000 and brand name companies, including interactive marketing services, global fulfillment and logistics and high-touch customer care. The company serves a multitude of industries and company types, including such clients as P&G, LEGO, AAFES, Riverbed, InfoPrint Solutions Company (a joint venture company owned by Ricoh and International Business Machines), Hawker Beechcraft Corp., Roots Canada Ltd. and Xerox.

Through its wholly owned eCOST.com subsidiary, PFSweb also serves as a leading multi-category online discount retailer of high-quality new, "close-out" and manufacturer recertified brand-name merchandise for consumers and small to medium size business buyers. The eCOST.com brand markets approximately 300,000 different products from leading manufacturers such as Sony, Hewlett-Packard, Denon, JVC, Canon, Nikon, Panasonic, Toshiba, Microsoft, Dyson, Kitchen Aid, Braun, Black & Decker, Cuisinart, Coleman, and Citizen primarily over the Internet and through direct marketing.

To find out more about PFSweb, Inc. (NASDAQ: PFSW), visit the company's websites at http://www.pfsweb.com and http://www.ecost.com.

The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFSweb's Annual Report on Form 10-K for the year ended December 31, 2008 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report and the Risk Factors described therein. These factors include: our ability to retain and expand relationships with existing clients and attract and implement new clients; our reliance on the fees generated by the transaction volume or product sales of our clients; our reliance on our clients' projections or transaction volume or product sales; our dependence upon our agreements with IBM and Infoprint Solutions; our dependence upon our agreements with our major clients; our client mix, their business volumes and the seasonality of their business; our ability to finalize pending contracts; the impact of strategic alliances and acquisitions; trends in the e-commerce, outsourcing, government regulation both foreign and domestic and the market for our services; whether we can continue and manage growth; increased competition; our ability to generate more revenue and achieve sustainable profitability; effects of changes in profit margins; the customer and supplier concentration of our business; the reliance on third-party subcontracted services; the unknown effects of possible system failures and rapid changes in technology; foreign currency risks and other risks of operating in foreign countries; potential litigation; our dependency on key personnel; the impact of new accounting standards and changes in existing accounting rules or the interpretations of those rules; our ability to raise additional capital or obtain additional financing; our ability and the ability of our subsidiaries to borrow under current financing arrangements and maintain compliance with debt covenants; relationship with and our guarantees of certain of the liabilities and indebtedness of our subsidiaries; taxation on the sale of our products; eCOST's ability to maintain existing and build new relationships with manufacturers and vendors and the success of its advertising and marketing efforts; eCOST's ability to increase its sales revenue and sales margin and improve operating efficiencies and eCOST’s ability to generate a profit and cash flows sufficient to cover the values of its intangible assets. PFSweb undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.

(Tables Follow)

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)

			Three Months Ended						Twelve Months Ended
			December 31,						December 31,
				2009			2008			2009			2008
REVENUES:
	Product revenue, net		$	70,093		$	78,036		$	267,615		$	330,532
	Service fee revenue			16,015			21,691			58,619			85,406
	Pass-thru revenue			9,517			13,054			26,265			35,905
		Total revenues		95,625			112,781			352,499			451,843

COSTS OF REVENUES:
	Cost of product revenue			64,526			71,615			245,272			305,090
	Cost of service fee revenue			11,492			14,723			41,898			58,009
	Cost of pass-thru revenue			9,517			13,054			26,265			35,905
	Total costs of revenues			85,535			99,392			313,435			399,004
		Gross profit		10,090			13,389			39,064			52,839
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES				10,713			12,675			41,995			49,073
AMORTIZATION OF IDENTIFIABLE INTANGIBLES				26			202			105			806
GOODWILL AND INTANGIBLE ASSET IMPAIRMENT				-			16,250			-			16,250
	Total operating expenses			10,739			29,127			42,100			66,129
	Income (loss) from operations			(649	)		(15,738	)		(3,036	)		(13,290	)
INTEREST EXPENSE, NET				237			437			1,205			1,560
	Income (loss) before income taxes			(886	)		(16,175	)		(4,241	)		(14,850	)
INCOME TAX PROVISION (BENEFIT)				61			(1	)		329			805
NET INCOME (LOSS)			$	(947	)	$	(16,174	)	$	(4,570	)	$	(15,655	)
NON-GAAP NET INCOME (LOSS)			$	(823	)	$	387		$	(4,058	)	$	1,948

NET INCOME (LOSS) PER SHARE:
	Basic and Diluted		$	(0.10	)	$	(1.63	)	$	(0.46	)	$	(1.58	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
	Basic and Diluted			9,934			9,916			9,929			9,905

EBITDA			$	1,012		$	(13,935	)	$	3,816		$	(6,668	)
ADJUSTED EBITDA			$	1,110		$	2,424		$	4,223		$	10,129

(A) The financial data above should be read in conjunction with the audited consolidated financial statements of PFSweb, Inc. included in its Form 10-K for the year ended December 31, 2008.

PFSweb, Inc. and Subsidiaries
Reconciliation of certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
			2009			2008			2009			2008
NET INCOME (LOSS)		$	(947	)	$	(16,174	)	$	(4,570	)	$	(15,655	)
	Income tax expense (benefit)		61			(1	)		329			805
	Interest expense		237			437			1,205			1,560
	Depreciation and amortization		1,661			1,803			6,852			6,622
EBITDA		$	1,012		$	(13,935	)	$	3,816		$	(6,668	)
	Stock-based compensation		98			109			407			547
	Goodwill and intangible asset impairment		-			16,250			-			16,250
ADJUSTED EBITDA		$	1,110		$	2,424		$	4,223		$	10,129


		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
			2009			2008			2009			2008

NET INCOME (LOSS)		$	(947	)	$	(16,174	)	$	(4,570	)	$	(15,655	)
	Stock-based compensation		98			109			407			547
	Amortization of identifiable intangible assets		26			202			105			806
	Goodwill and intangible asset impairment		-			16,250			-			16,250
NON-GAAP NET INCOME (LOSS)		$	(823	)	$	387		$	(4,058	)	$	1,948

NET INCOME (LOSS) PER SHARE:
	Basic and Diluted	$	(0.10	)	$	(1.63	)	$	(0.46	)	$	(1.58	)

NON-GAAP NET INCOME (LOSS) Per Share:
	Basic and Diluted	$	(0.08	)	$	0.04		$	(0.41	)	$	0.20


								Twelve Months Ended
								December 31,
									2009			2008
GAAP cash flow from operating activities								$	8,126		$	9,451
Capital expenditures									(4,440	)		(5,754	)
FREE CASH FLOW								$	3,686		$	3,697

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In Thousands, Except Share Data)


			December 31,			December 31,
			2009			2008
		ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	14,812		$	16,050
	Restricted cash			2,096			2,008
	Accounts receivable, net of allowance for doubtful accounts of $973 and
	$980 at December 31, 2009 and December 31, 2008, respectively			39,861			44,546
	Inventories, net of reserves of $2,016 and $2,124 at December 31, 2009 and
	December 31, 2008, respectively			37,949			47,186
	Other receivables			11,605			13,072
	Prepaid expenses and other current assets			4,170			3,802
		Total current assets		110,493			126,664

PROPERTY AND EQUIPMENT, net				10,314			12,106
IDENTIFIABLE INTANGIBLES				805			961
GOODWILL				3,602			3,602
OTHER ASSETS				2,555			1,188
		Total assets		127,769			144,521

	LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	19,179		$	22,251
	Trade accounts payable			53,642			61,988
	Deferred revenue			5,164			3,640
	Accrued expenses			13,180			17,414
		Total current liabilities		91,165			105,293

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				3,348			4,951
OTHER LIABILITIES				3,903			1,192
		Total liabilities		98,416			111,436


COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Preferred stock, $1.00 par value; 1,000,000 shares authorized; none issued
	and outstanding			-			-
	Common stock, $.001 par value; 35,000,000 shares authorized;
	9,952,164 and 9,935,095 shares issued at December 31, 2009 and
	December 31, 2008, respectively; and 9,933,803 and 9,916,734
	outstanding as of December 31, 2009 and December 31, 2008, respectively			10			10
	Additional paid-in capital			93,152			92,728
	Accumulated deficit			(65,963	)		(61,393	)
	Accumulated other comprehensive income			2,239			1,825
	Treasury stock at cost, 18,361 shares			(85	)		(85	)
		Total shareholders' equity		29,353			33,085
		Total liabilities and shareholders' equity	$	127,769		$	144,521

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended December 30, 2009
(In Thousands)

						Supplies
			PFSweb			Distributors		eCOST		Eliminations			Consolidated
REVENUES:
	Product revenue, net		$	-		$	47,288	$	22,805	$	-		$	70,093
	Service fee revenue			16,015			-		-		-			16,015
	Service fee revenue - affiliate			1,700			-		-		(1,700	)		-
	Pass-thru revenue			9,520			-		-		(3	)		9,517
		Total revenues		27,235			47,288		22,805		(1,703	)		95,625

COSTS OF REVENUES:
	Cost of product revenue			-			44,048		20,478		-			64,526
	Cost of service fee revenue			12,143			-		-		(651	)		11,492
	Cost of pass-thru revenue			9,520			-		-		(3	)		9,517
	Total costs of revenues			21,663			44,048		20,478		(654	)		85,535
		Gross profit		5,572			3,240		2,327		(1,049	)		10,090
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES				7,090			2,434		2,238		(1,049	)		10,713
AMORTIZATION OF IDENTIFIABLE INTANGIBLES				-			-		26		-			26
	Total operating expenses			7,090			2,434		2,264		(1,049	)		10,739
	Income (loss) from operations			(1,518	)		806		63		-			(649	)
INTEREST EXPENSE (INCOME), NET				(68	)		301		4		-			237
	Income (loss) before income taxes			(1,450	)		505		59		-			(886	)
INCOME TAX PROVISION (BENEFIT)				(146	)		182		25		-			61
NET INCOME (LOSS)			$	(1,304	)	$	323	$	34	$	-		$	(947	)
NON-GAAP NET INCOME (LOSS)			$	(1,206	)	$	323	$	60	$	-		$	(823	)

EBITDA			$	45		$	815	$	152	$	-		$	1,012
ADJUSTED EBITDA			$	143		$	815	$	152	$	-		$	1,110


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)			$	(1,304	)	$	323	$	34	$	-		$	(947	)
	Income tax expense (benefit)			(146	)		182		25		-			61
	Interest expense (income)			(68	)		301		4		-			237
	Depreciation and amortization			1,563			9		89		-			1,661
EBITDA			$	45		$	815	$	152	$	-		$	1,012
	Stock-based compensation			98			-		-		-			98
ADJUSTED EBITDA			$	143		$	815	$	152	$	-		$	1,110

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)			$	(1,304	)	$	323	$	34	$	-		$	(947	)
	Stock-based compensation			98			-		-		-			98
	Amortization of intangible assets			-			-		26		-			26
NON-GAAP NET INCOME (LOSS)			$	(1,206	)	$	323	$	60	$	-		$	(823	)

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Twelve Months Ended December 31, 2009
(In Thousands)

						Supplies
			PFSweb			Distributors		eCOST			Eliminations			Consolidated
REVENUES:
	Product revenue, net		$	-		$	183,008	$	84,607		$	-		$	267,615
	Service fee revenue			58,619			-		-			-			58,619
	Service fee revenue - affiliate			7,093			-		-			(7,093	)		-
	Pass-thru revenue			26,335			-		-			(70	)		26,265
		Total revenues		92,047			183,008		84,607			(7,163	)		352,499

COSTS OF REVENUES:
	Cost of product revenue			-			168,864		76,408			-			245,272
	Cost of service fee revenue			44,453			-		-			(2,555	)		41,898
	Cost of pass-thru revenue			26,335			-		-			(70	)		26,265
	Total costs of revenues			70,788			168,864		76,408			(2,625	)		313,435
		Gross profit		21,259			14,144		8,199			(4,538	)		39,064
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES				28,536			8,779		9,218			(4,538	)		41,995
AMORTIZATION OF IDENTIFIABLE INTANGIBLES				-			-		105			-			105
	Total operating expenses			28,536			8,779		9,323			(4,538	)		42,100
	Income (loss) from operations			(7,277	)		5,365		(1,124	)		-			(3,036	)
INTEREST EXPENSE (INCOME), NET				(202	)		1,388		19			-			1,205
	Income (loss) before income taxes			(7,075	)		3,977		(1,143	)		-			(4,241	)
INCOME TAX PROVISION (BENEFIT)				(769	)		1,055		43			-			329
NET INCOME (LOSS)			$	(6,306	)	$	2,922	$	(1,186	)	$	-		$	(4,570	)
NON-GAAP NET INCOME (LOSS)			$	(5,899	)	$	2,922	$	(1,081	)	$	-		$	(4,058	)

EBITDA			$	(804	)	$	5,400	$	(780	)	$	-		$	3,816
ADJUSTED EBITDA			$	(397	)	$	5,400	$	(780	)	$	-		$	4,223


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)			$	(6,306	)	$	2,922	$	(1,186	)	$	-		$	(4,570	)
	Income tax expense (benefit)			(769	)		1,055		43			-			329
	Interest expense (income)			(202	)		1,388		19			-			1,205
	Depreciation and amortization			6,473			35		344			-			6,852
EBITDA			$	(804	)	$	5,400	$	(780	)	$	-		$	3,816
	Stock-based compensation			407			-		-			-			407
ADJUSTED EBITDA			$	(397	)	$	5,400	$	(780	)	$	-		$	4,223

A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)			$	(6,306	)	$	2,922	$	(1,186	)	$	-		$	(4,570	)
	Stock-based compensation			407			-		-			-			407
	Amortization of intangible assets			-			-		105			-			105
NON-GAAP NET INCOME (LOSS)			$	(5,899	)	$	2,922	$	(1,081	)	$	-		$	(4,058	)

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2009
(In Thousands)


						Supplies
			PFSweb			Distributors		eCOST			Eliminations			Consolidated
		ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	9,698		$	2,628	$	2,486		$	-		$	14,812
	Restricted cash			732			1,137		227			-			2,096
	Accounts receivable, net			19,499			18,764		1,719			(121	)		39,861
	Inventories, net			-			33,577		4,372			-			37,949
	Other receivables			49			11,556		-			-			11,605
	Prepaid expenses and other current assets			2,515			1,575		80			-			4,170
		Total current assets		32,493			69,237		8,884			(121	)		110,493

PROPERTY AND EQUIPMENT, net				9,900			54		360			-			10,314
NOTES RECEIVABLE FROM AFFILIATES				20,845			-		-			(20,845	)		-
INVESTMENT IN AFFILIATES				(149	)		-		-			149			-
IDENTIFIABLE INTANGIBLES				383			-		422			-			805
GOODWILL				-			-		3,602			-			3,602
OTHER ASSETS				2,244			-		311			-			2,555
		Total assets		65,716			69,291		13,579			(20,817	)		127,769

	LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	8,770		$	10,374	$	35		$	-		$	19,179
	Trade accounts payable			8,396			38,753		6,614			(121	)		53,642
	Accrued expenses			10,994			4,701		2,649			-			18,344
		Total current liabilities		28,160			53,828		9,298			(121	)		91,165

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				3,208			-		140			-			3,348
NOTES PAYABLE TO AFFILIATES				-			5,005		15,840			(20,845	)		-
OTHER LIABILITIES				3,880			-		23			-			3,903
		Total liabilities		35,248			58,833		25,301			(20,966	)		98,416

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock			10			-		19			(19	)		10
	Capital contributions			-			1,000		-			(1,000	)		-
	Additional paid-in capital			93,152			-		28,059			(28,059	)		93,152
	Retained earnings (accumulated deficit)			(64,828	)		6,781		(39,805	)		31,889			(65,963	)
	Accumulated other comprehensive income			2,219			2,677		5			(2,662	)		2,239
	Treasury stock			(85	)		-		-			-			(85	)
		Total shareholders' equity		30,468			10,458		(11,722	)		149			29,353
		Total liabilities and shareholders' equity	$	65,716		$	69,291	$	13,579		$	(20,817	)	$	127,769

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended December 31, 2008
(In Thousands)

						Supplies
			PFSweb			Distributors			eCOST			Eliminations			Consolidated
REVENUES:
	Product revenue, net		$	-		$	52,915		$	25,121		$	-		$	78,036
	Service fee revenue			21,691			-			-			-			21,691
	Service fee revenue - affiliate			2,497			-			-			(2,497	)		-
	Pass-thru revenue			13,085			-			-			(31	)		13,054
		Total revenues		37,273			52,915			25,121			(2,528	)		112,781

COSTS OF REVENUES:
	Cost of product revenue			-			48,974			22,641			-			71,615
	Cost of service fee revenue			15,457			-			-			(734	)		14,723
	Cost of pass-thru revenue			13,085			-			-			(31	)		13,054
	Total costs of revenues			28,542			48,974			22,641			(765	)		99,392
		Gross profit		8,731			3,941			2,480			(1,763	)		13,389
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES				8,511			3,211			2,716			(1,763	)		12,675
AMORTIZATION OF IDENTIFIABLE INTANGIBLES				-			-			202			-			202
GOODWILL AND INTANGIBLE ASSET IMPAIRMENT				-			-			16,250			-			16,250
	Total operating expenses			8,511			3,211			19,168			(1,763	)		29,127
	Income (loss) from operations			220			730			(16,688	)		-			(15,738	)
INTEREST EXPENSE (INCOME), NET				(7	)		434			10			-			437
	Income (loss) before income taxes			227			296			(16,698	)		-			(16,175	)
INCOME TAX PROVISION (BENEFIT)				(399	)		398			-			-			(1	)
NET INCOME (LOSS)			$	626		$	(102	)	$	(16,698	)	$	-		$	(16,174	)
NON-GAAP NET INCOME (LOSS)			$	735		$	(102	)	$	(246	)	$	-		$	387


EBITDA			$	1,753		$	738		$	(16,426	)	$	-		$	(13,935	)
ADJUSTED EBITDA			$	1,862		$	738		$	(176	)	$	-		$	2,424


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)			$	626		$	(102	)	$	(16,698	)	$	-		$	(16,174	)
	Income tax expense (benefit)			(399	)		398			-			-			(1	)
	Interest expense (income)			(7	)		434			10			-			437
	Depreciation and amortization			1,533			8			262			-			1,803
EBITDA			$	1,753		$	738		$	(16,426	)	$	-		$	(13,935	)
	Stock-based compensation			109			-			-						109
	Goodwill and intangible asset impairment			-			-			16,250			-			16,250
ADJUSTED EBITDA			$	1,862		$	738		$	(176	)	$	-		$	2,424

A reconciliation of NET INCOME(LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)			$	626		$	(102	)	$	(16,698	)	$	-		$	(16,174	)
Stock-based compensation				109			-			-			-			109
Amortization of intangible assets				-			-			202			-			202
Goodwill and intangible asset impairment				-			-			16,250			-			16,250
NON-GAAP NET INCOME (LOSS)			$	735		$	(102	)	$	(246	)	$	-		$	387

PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Twelve Months Ended December 31, 2008
(In Thousands)

						Supplies
			PFSweb			Distributors		eCOST			Eliminations			Consolidated
REVENUES:
	Product revenue, net		$	-		$	230,710	$	99,822		$	-		$	330,532
	Service fee revenue			85,406			-		-			-			85,406
	Service fee revenue - affiliate			8,603			-		-			(8,603	)		-
	Pass-thru revenue			35,901			-		-			4			35,905
		Total revenues		129,910			230,710		99,822			(8,599	)		451,843

COSTS OF REVENUES:
	Cost of product revenue			-			214,077		91,013			-			305,090
	Cost of service fee revenue			60,793			-		-			(2,784	)		58,009
	Cost of pass-thru revenue			35,901			-		-			4			35,905
	Total costs of revenues			96,694			214,077		91,013			(2,780	)		399,004
		Gross profit		33,216			16,633		8,809			(5,819	)		52,839
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES				33,285			10,767		10,840			(5,819	)		49,073
AMORTIZATION OF IDENTIFIABLE INTANGIBLES				-			-		806			-			806
GOODWILL AND INTANGIBLE ASSET IMPAIRMENT				-			-		16,250			-			16,250
	Total operating expenses			33,285			10,767		27,896			(5,819	)		66,129
	Income (loss) from operations			(69	)		5,866		(19,087	)		-			(13,290	)
INTEREST EXPENSE (INCOME), NET				(117	)		1,650		27			-			1,560
	Income (loss) before income taxes			48			4,216		(19,114	)		-			(14,850	)
INCOME TAX PROVISION (BENEFIT)				(1,057	)		1,862		-			-			805
NET INCOME (LOSS)			$	1,105		$	2,354	$	(19,114	)	$	-		$	(15,655	)
NON-GAAP NET INCOME (LOSS)			$	1,652		$	2,354	$	(2,058	)	$	-		$	1,948


EBITDA			$	5,538		$	5,886	$	(18,092	)	$	-		$	(6,668	)
ADJUSTED EBITDA			$	6,085		$	5,886	$	(1,842	)	$	-		$	10,129


A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA follows:

NET INCOME (LOSS)			$	1,105		$	2,354	$	(19,114	)	$	-		$	(15,655	)
	Income tax expense (benefit)			(1,057	)		1,862		-			-			805
	Interest expense (income)			(117	)		1,650		27			-			1,560
	Depreciation and amortization			5,607			20		995			-			6,622
EBITDA			$	5,538		$	5,886	$	(18,092	)	$	-		$	(6,668	)
	Stock-based compensation			547			-		-			-			547
	Goodwill and intangible asset impairment			-			-		16,250			-			16,250
ADJUSTED EBITDA			$	6,085		$	5,886	$	(1,842	)	$	-		$	10,129

A reconciliation of NET INCOME(LOSS) to NON-GAAP NET INCOME (LOSS) follows:

NET INCOME (LOSS)			$	1,105		$	2,354	$	(19,114	)	$	-		$	(15,655	)
Stock-based compensation				547			-		-			-			547
Amortization of intangible assets				-			-		806			-			806
Goodwill and intangible asset impairment				-			-		16,250			-			16,250
NON-GAAP NET INCOME (LOSS)			$	1,652		$	2,354	$	(2,058	)	$	-		$	1,948

PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2008
(In Thousands)


						Supplies
			PFSweb			Distributors		eCOST			Eliminations			Consolidated
		ASSETS
CURRENT ASSETS:
	Cash and cash equivalents		$	11,570		$	3,870	$	610		$	-		$	16,050
	Restricted cash			1,550			242		216			-			2,008
	Accounts receivable, net			21,676			22,103		2,065			(1,298	)		44,546
	Inventories, net			-			41,382		5,804			-			47,186
	Other receivables			-			13,072		-			-			13,072
	Prepaid expenses and other current assets			2,222			1,526		54			-			3,802
		Total current assets		37,018			82,195		8,749			(1,298	)		126,664

PROPERTY AND EQUIPMENT, net				11,544			85		477			-			12,106
NOTES RECEIVABLE FROM AFFILIATES				20,845			-		-			(20,845	)		-
INVESTMENT IN AFFILIATES				37,541			-		-			(37,541	)		-
IDENTIFIABLE INTANGIBLES				434			-		527			-			961
GOODWILL				-			-		3,602			-			3,602
OTHER ASSETS				1,054			-		134			-			1,188
		Total assets		108,436			82,280		13,489			(59,684	)		144,521

	LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
	Current portion of long-term debt and capital lease obligations		$	9,045		$	13,206	$	-		$	-		$	22,251
	Trade accounts payable			9,063			48,640		5,583			(1,298	)		61,988
	Accrued expenses			12,665			5,434		2,955			-			21,054
		Total current liabilities		30,773			67,280		8,538			(1,298	)		105,293

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion				4,951			-		-			-			4,951
NOTES PAYABLE TO AFFILIATES				-			5,505		15,340			(20,845	)		-
OTHER LIABILITIES				1,029			-		163			-			1,192
		Total liabilities		36,753			72,785		24,041			(22,143	)		111,436

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
	Common stock			10			-		19			(19	)		10
	Capital contributions						1,000					(1,000	)		-
	Additional paid-in capital			92,728			-		28,059			(28,059	)		92,728
	Retained earnings (accumulated deficit)			(22,825	)		6,002		(38,618	)		(5,952	)		(61,393	)
	Accumulated other comprehensive income			1,855			2,493		(12	)		(2,511	)		1,825
	Treasury stock			(85	)		-		-			-			(85	)
		Total shareholders' equity		71,683			9,495		(10,552	)		(37,541	)		33,085
		Total liabilities and shareholders' equity	$	108,436		$	82,280	$	13,489		$	(59,684	)	$	144,521

eCOST.com, Inc.
Selected Operating Data

			Three Months Ended
			December 31,
			2009		2008

		Total Customers (1)		2,067,384		1,888,250

		Active Customers (2)		230,091		192,846

		New Customers (3)		60,695		48,426

		Number of Orders (4)		112,224		108,999

		Average Order Value (5)	$	199	$	223

		Advertising Expense (6)	$	269,483	$	309,836

		Cost to Acquire a New Customer (7)	$	4.44	$	4.74


(1)	Total customers have been calculated as the cumulative number of customers for
	which orders have been taken from eCOST.com's inception to the end of the
	reported period.

(2)	Active customers consist of the approximate number of customers who placed orders
	during the 12 months prior to the end of the reported period.

(3)	New Customers represent the number of persons that established a new account and
	placed an order during the reported period.

(4)	Number of orders represents the total number of orders shipped during the
	reported period (not reflecting returns).

(5)	Average order value has been calculated as gross sales divided by the total
	number of orders during the period presented. The impact of returns is not
	reflected in average order value.

(6)	Advertising expense includes the total dollars spent on advertising during the
	reported period, including internet, direct mail, print and e-mail advertising,
	as well as customer list enhancement services.

(7)	Catalog expense of $0 and $80,064 was not included in the 2009 and 2008
	calculation, respectively, as it is used for retention and not acquisition.

# # #

Contact:

Mark C. Layton Todd Fromer / Garth Russell

Senior Partner and Chief Executive Officer Investor Relations

or Thomas J. Madden KCSA Strategic Communications

Senior Partner and Chief Financial Officer (212) 896-1215 / (212) 896-1250

(972) 881-2900 tfromer@kcsa.com / grussell@kcsa.com