What changed in this filing

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Item 9A. Controls and Procedures

2026-02-24 compared with 2025-02-24 · 179 added, 126 removed, 886 unchanged (26% of the section changed)

5 unchanged sentences

Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our disclosure controls and procedures are designed to provide reasonable assurance of

achieving their objectives as described above.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as described above.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

62 unchanged sentences

Thomas Baker has served as our Chief Financial Officer and as a member of our executive management team since he joined the Company in March 2019.

Prior to joining the Company, Mr.

Baker had served as Corporate Vice President and Chief Financial Officer for the New Markets and Service Group at Applied Materials, Inc., a semiconductor capital equipment company, since 2013.

Code of Business Conduct and Ethics

19 unchanged sentences

Consolidated Statements of Other Comprehensive Income

Consolidated Statement of Changes in Stockholders’ Equity

Consolidated Statements of Changes in Stockholders’ Equity

Consolidated Statements of Cash Flows

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Employment Agreement, dated as of May 12, 2008, between the Registrant and Timothy McGrath.

Third Amended and Restated Credit and Security Agreement, dated February 24, 2012, among Citizens Bank of Massachusetts, as lender and as agent, other financial institutions party thereto from time to time, as lenders, PC Connection, Inc., as borrower, GovConnection, Inc., PC Connection Sales Corporation, MoreDirect, Inc., and Professional Computer Center, Inc., each as guarantors.

First Amendment, dated December 24, 2013, to the Third Amended and Restated Credit and Security Agreement, among Citizens Bank of Massachusetts, as lender and as agent, other financial institutions party thereto from time to time, as lenders, PC Connection, Inc., as borrower, GovConnection, Inc., PC Connection Sales Corporation, MoreDirect, Inc., and Professional Computer Center, Inc., each as guarantors.

Second Amendment, dated February 10, 2017, to the Third Amended and Restated Credit and Security Agreement, among Citizens Bank of Massachusetts, as lender and as agent, other financial institutions party thereto from time to time, as lenders, PC Connection, Inc., as borrower, GovConnection, Inc., PC Connection Sales Corporation, MoreDirect, Inc., and Professional Computer Center, Inc., each as guarantors.

Lease Agreement between the Registrant and Wilmington Investors, LLC, dated August 27, 2014, for property located at 3188 Progress Way, Building 11, Wilmington, Ohio.

5 unchanged sentences

Form of Restricted Stock Units for 2020 Stock Incentive Plan.

Third Amendment, dated December 2, 2021, to the Third Amended and Restated Credit and Security Agreement, among Citizens Bank of Massachusetts, as lender and as agent, other financial institutions party thereto from time to time, as lenders, PC Connection, Inc., as borrower, GovConnection, Inc., PC Connection Sales Corporation, MoreDirect, Inc., and Professional Computer Center, Inc., each as guarantors.

Incentive and Retention agreement, dated as of May 3, 2022, by and between PC Connection, Inc.

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and Thomas Baker, as amended.

Fourth Amendment, dated June 13, 2023, to the Third Amended and Restated Credit and Security Agreement, among Citizens Bank of Massachusetts, as lender and as agent, other financial institutions party thereto from time to time, as lenders, PC Connection, Inc., as borrower, GovConnection, Inc., PC Connection Sales Corporation, MoreDirect, Inc., and Professional Computer Center, Inc., each as guarantors.

PC Connection, Inc.

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Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

(1) Incorporated by reference from the exhibits filed with the Company’s registration statement on Form S-4, File Number 333-63272, filed under the Securities Act of 1933.

(1) Incorporated by reference from the exhibits filed with the Company’s registration statement on Form S-4, File Number 333-63272, filed under the Securities Act of 1933 on June 19, 2001.

(2) Incorporated by reference from exhibits filed with the Company’s current report on Form 8-K, File Number 000-23827, filed on January 9, 2008.

(3) Incorporated by reference from the exhibits filed with the Company’s registration statement on Form S-1, as amended, File Number 333-41171, filed under the Securities Act of 1933.

(3) Incorporated by reference from the exhibits filed with the Company’s registration statement on Form S-1, as amended, File Number 333-41171, filed under the Securities Act of 1933 on February 23, 1998.

(4) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on February 6, 2020.

(5) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on August 2, 2023.

(5) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on July 30, 2025.

(6) Incorporated by reference from Appendix A filed with the Company’s proxy statement pursuant to Section 14(a), File Number 000-23827, filed on April 9, 2019.

(7) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on March 6, 2023.

(7) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on November 10, 2010.

(9) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on May 1, 2024.

(8) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on April 30, 2025.

(9) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on May 12, 2008.

(11) Incorporated by reference from exhibits filed with the Company’s annual report on Form 10-K, File Number 000-23827, filed on February 28, 2012.

(12) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on March 3, 2017.

(13) Incorporated by reference from exhibits filed with the Company’s current report on Form 8-K, File Number 000-23827, filed on February 16, 2017.

(10) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on October 31, 2014.

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(13) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on March 16, 2021.

(18) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on March 14, 2022.

(14) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on May 5, 2022.

(15) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on February 24, 2025.

(16) Incorporated by reference from exhibits filed with the Company's annual report on Form 10-K, File Number 000-23827, filed on March 7, 2024.

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Inventories, net

Income taxes receivable

Prepaid expenses and other current assets

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Total Liabilities

Commitments and Contingencies

Stockholders’ Equity:

Common Stock, $ .01 par value, 100,000 shares authorized, 29,390 and 29,262 issued, 26,300 and 26,360 outstanding at December 31, 2024 and 2023, respectively

Common stock, $ 0.01 par value, 100,000 shares authorized at December 31, 2025 and 2024;

29,525 issued and 25,221 outstanding at December 31, 2025 and 29,390 issued and 26,300 outstanding at December 31, 2024

Additional paid-in capital

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Selling, general and administrative expenses

Restructuring and other charges

Severance expenses and other charges

Income from operations

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Other comprehensive income:

Unrealized gains on available-for-sale investments, net of tax of $( 25 ), $( 22 ), and $ 0 for the years ended December 2024, 2023, and 2022, respectively

Unrealized (losses) gains on available-for-sale investments, net of tax of $ 26 , $( 25 ), and $( 22 ) for the years ended December 31, 2025, 2024, and 2023, respectively

Comprehensive income

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AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUIT Y

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUIT Y

(amounts in thousands)

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Shares withheld for taxes paid on stock awards

Repurchase of common stock for treasury

Issuance of common stock under Employee Stock Purchase Plan

Dividend declaration

Other comprehensive income, net of tax

Balance - December 31, 2023

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Dividend declaration

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

Balance - December 31, 2025

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Deferred income taxes

Amortization of discount on short-term investments

Amortization of discount on short-term investments, net

Gain on sale of short-term investments

Loss on disposal of fixed assets

1 unchanged sentence

Accounts receivable

Prepaid expenses, income tax receivable, and other current assets

Prepaid expenses and other current assets

Other non-current assets

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Net cash provided by operating activities

Cash Flows used in Investing Activities:

Cash Flows provided by (used in) Investing Activities:

Purchases of short-term investments

Proceeds from sale of short-term investments

Maturities of short-term investments

Purchases of equipment and capitalized software

Net cash used in investing activities

Purchases of property and equipment

Net cash provided by (used in) investing activities

Cash Flows used in Financing Activities:

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Purchase of treasury shares

Payments for excise tax on treasury purchases

Dividend payments

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Non-cash Investing and Financing Activities:

Accrued capital expenditures

Accrued purchases of property and equipment

Accrued purchase of treasury shares

Accrued excise tax on treasury purchases

Supplemental Cash Flow Information:

Income taxes paid

Interest paid

See notes to consolidated financial statements.

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PC Connection, Inc.

is a Fortune 1000 Global Solutions Provider that simplifies the information technology, or IT, customer experience, guiding the connection between people and technology.

is a Fortune 1000 Global Solutions Provider that simplifies information technology, or IT, guiding the connection between people and technology.

The Company’s dedicated account managers partner with customers to design, deploy, and support cutting-edge IT environments using the latest hardware, software, and services.

The Company provides a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, software and peripheral equipment, networking communications, and other products and accessories that the Company purchases from manufacturers, distributors, and other suppliers.

The Technology Solutions Organization, or TSO, and state-of-the-art Technology Integration and Distribution Center, with ISO 9001:2015 certified technical configuration lab, offer end-to-end services related to the design, configuration, and implementation of IT solutions.

The Company provides a wide range of IT solutions, from the desktop to the cloud—including computer systems, data center solutions, security, artificial intelligence, software and peripheral equipment, networking communications, and other products and accessories that the Company develops internally and secures from manufacturers, distributors, and other suppliers.

The Technology Solutions and Services Organization and state-of-the-art ISO 9001:2015 SOC 2 Type 2 certified Technology Integration and Distribution Center offer end-to-end services related to the design, configuration, and implementation of IT solutions.

The Company also provides a comprehensive portfolio of managed services and professional services.

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Amounts are charged against the allowance when it is determined that expected credit losses may occur.

The Company assesses collectability by reviewing account receivable on an aggregated basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with collectability issues, and if necessary, records a reserve against those receivables it determines may not be collectable.

The Company assesses collectability by reviewing accounts receivable on an aggregated basis where similar characteristics exist and on an individual basis when the Company identifies specific customers with collectability issues, and if necessary, records a reserve against those receivables it determines may not be collectable.

Trade receivables are written off in the period in which they are deemed uncollectible.

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No property and equipment impairment was recognized for each of the years ended December 31, 2025, 2024, and 2023.

Cloud Computing Arrangements

The Company enters into certain cloud-based software hosting arrangements for internal use that are accounted for as service contracts.

Costs incurred in implementing a cloud computing arrangement are deferred during the application development stage and presented within prepaid expenses and other current assets or other assets, as applicable, on the consolidated balance sheets.

Once a cloud computing arrangement is ready for its intended use, the implementation costs are amortized on a straight-line basis over an estimated useful life, taking into consideration the term of the cloud computing arrangement, including options to extend or terminate the cloud computing arrangement, and other economic factors.

Amortization expenses related to cloud computing arrangements are recognized within the same line item on the consolidated statements of income as the expense for fees applicable to the associated cloud computing arrangement.

Capitalized cloud computing arrangements and the related accumulated amortization totaled $ 7,925 and $ 779 , respectively, as of December 31, 2025.

Net balances of capitalized cloud computing arrangements of $ 1,757 and $ 5,389 were included in prepaid expense and other current assets and other assets, respectively, on the consolidated balance sheets.

Amortization expense related to cloud computing arrangements was $ 779 for the year ended December 31, 2025 and was included in SG&A expenses on the consolidated statements of income.

The Company enters into operating lease contracts, as assessed at contract inception, primarily for real estate and equipment.

1 unchanged sentence

In determining the present value of future lease payments, the Company utilized estimated rates that it would have incurred to borrow, over a similar term, the funds necessary to purchase the respective leased asset with cash.

The Company elects to apply the short-team lease exception to any leases with contractual obligations of one year or less.

The Company elects to apply the short-term lease exception to any leases with contractual obligations of one year or less.

These leases will not have right-of-use, or ROU, assets and associated lease liabilities on the balance sheet.

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(2) an Internet domain name, which is an indefinite-lived intangible asset not subject to amortization;

and (3) amortizing intangibles,

which consist of customer lists, trade names, and customer relationships, which are being amortized over their useful lives.

and (3) amortizing intangibles, which consist of customer lists, trade names, and customer relationships, which are being amortized over their useful lives.

Note 4, “Goodwill and Other Intangible Assets” to the consolidated financial statements describes the annual impairment methodology that the Company uses each year in calculating the recoverability of goodwill and non-amortizing intangibles.

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No single customer accounted for 10% or more of total net sales in 2025, 2024, and 2023.

Product purchases from TD Synnex Corporation, Ingram Micro, Inc., and Microsoft Corporation accounted for approximately 25 %, 21 %, and 13 %, respectively, of the Company’s total product purchases in 2025.

Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc.

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Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Microsoft Corporation accounted for approximately 21 %, 19 %, and 11 %, respectively, of the Company’s total product purchases in 2023.

Product purchases from Ingram Micro, Inc., TD Synnex Corporation, and Dell Inc.

accounted for approximately 23 %, 22 %, and 15 %, respectively, of the Company’s total product purchases in 2022.

No other singular vendor supplied more than 10% of the Company’s total product purchases in 2025, 2024, and 2023, as applicable.

The Company believes that, while it may experience some short-term disruption if products from Ingram Micro, Inc., TD Synnex Corporation, Dell Inc., Microsoft Corporation, or any of these vendors become unavailable to it, alternative sources are available.

The Company believes that, while it may experience some short-term disruption if products from TD Synnex Corporation, Ingram Micro, Inc., Microsoft Corporation, Dell Inc., or any of these vendors become unavailable to it, alternative sources are available.

Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc.

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represented approximately 15 %, 12 %, and 12 %, respectively, of our total product purchases in 2024.

Products manufactured by HP Inc., Dell Inc., Microsoft Corporation, and Lenovo represented approximately 14 %, 13 %, 12 %, and 11 % of our total product purchases in 2022.

Products manufactured by Microsoft Corporation, HP Inc., and Dell Inc.

represented approximately 15 %, 13 %, and 11 %, respectively, of our total product purchases in 2023.

No other singular product manufacturer produced more than 10% of our total product purchases in 2025, 2024, and 2023, as applicable.

In the event the Company experiences either a short-term or permanent disruption of supply of Microsoft Corporation, HP Inc., or Dell Inc.

In the event the Company experiences either

a short-term or permanent disruption of supply of Microsoft Corporation, HP Inc., or Dell Inc.

products, such disruption would likely have a material adverse effect on the Company’s results of operations and cash flows.

Restructuring and Other charges

The restructuring and other charges recorded for the years ended December 31, 2024 and 2023 were primarily related to an involuntary reduction in our headquarter workforce and included cash severance and other related termination benefits.

These costs will be paid within a year of termination and any unpaid balances are included in accrued expenses and other liabilities in the consolidated balance sheets as of December 31, 2024.

Costs incurred for restructuring and other chargers were as follows (in thousands):

Year Ended December 31,

Employee separations

Severance Expenses and Other Charges

The severance expenses and other charges recorded for the years ended December 31, 2025, 2024, and 2023 were primarily related to voluntary and involuntary reductions in the Company’s workforce to lower the Company’s cost structure.

Both the voluntary and involuntary reductions included cash severance and other related termination benefits.

The majority of each of these costs are expected to be paid within a year of termination.

Included in accrued payroll on the consolidated balance sheets as of December 31, 2025 was $ 3,763 related to unpaid severance expenses.

Costs incurred for severance expenses and other charges were as follows (in thousands):

Years Ended December 31,

Severance expenses

Other charges

Total restructuring and other charges

Total severance expenses and other charges

Earnings Per Share

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The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

Years Ended December 31,

Denominator for basic earnings per share

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Recently Adopted and Recently Issued Financial Accounting Standards

In November 2023, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

This guidance is intended to improve segment reporting disclosures on both an interim and annual basis, primarily through enhanced disclosures about significant segment expenses.

This ASU is effective for the Company’s annual reporting periods beginning January 1, 2024, and for interim reporting periods beginning January 1, 2025, with early adoption permitted.

The Company adopted this standard for the fiscal year ended December 31, 2024.

See Note 15, “Segment and Related Disclosures” to the Consolidated Financial Statements for more information on the effect of this ASU adoption.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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This guidance is intended to improve the transparency of income tax disclosures through, among other things, enhancement of the disclosure requirements within the rate reconciliation, as well as increased income tax disaggregation disclosures.

This ASU is effective for the Company’s annual reporting periods beginning January 1,

2025, with early adoption permitted.

The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statement disclosures.

This ASU is effective for the Company’s annual reporting periods beginning January 1, 2025, with early adoption permitted.

The Company adopted this standard for the fiscal year ended December 31, 2025 and applied the new disclosure requirements prospectively to the current annual period.

Prior period disclosures have not been adjusted to reflect the new disclosure requirements.

See Note 12, “Income Taxes” to the consolidated financial statements for more information on the effect of this ASU adoption.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

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The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets .

This guidance provides a practical expedient related to estimating expected credit losses for accounts receivable and contract assets by assuming that current conditions remain unchanged over the life of the asset.

This ASU is effective for the Company’s annual reporting periods beginning January 1, 2026, and for interim reporting periods beginning January 1, 2027, with early adoption permitted.

The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software .

This guidance was issued to establish new criteria to be considered for capitalization of software costs under Subtopic 350-40, as well as link the disclosure requirements of Subtopic 360-10 to capitalized costs accounted for under Subtopic 350-40.

This ASU is effective for the Company’s annual reporting periods beginning January 1, 2028, and for interim reporting periods beginning January 1, 2029, with early adoption permitted.

The Company is currently evaluating the impact of the adoption of this standard on its consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements .

This guidance is intended to improve the navigability of required interim disclosures and clarify when the guidance is applicable, as well as provide additional guidance on what disclosures should be provided in interim reporting periods.

This ASU is effective for the Company’s interim reporting periods beginning January 1, 2028, with early adoption permitted.

The Company is currently evaluating the impact of the adoption of this standard on its condensed consolidated financial statement disclosures.

Nature of Products and Services

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The Company is the principal in these transactions and recognizes revenue for the on-premise license at the point in time when the software is made available to the customer and the commencement of the term of the software license or when the renewal term begins, as applicable.

For certain on-premise licenses for security software, the customer derives substantially all of the benefit from these arrangements through the third-party delivered software maintenance, which provides software updates and other support services.

support services.

The Company does not have control over the delivery of these performance obligations, and accordingly the Company is the agent in these transactions.

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Under EAs, customers are considered to be compliant with applicable license requirements for the ensuing year, regardless of changes to their employee base.

Customers are charged an

annual true-up fee for changes in the number of users over the year.

Customers are charged an annual true-up fee for changes in the number of users over the year.

With most EAs, the Company’s vendors will transfer the license and bill the customer directly, paying resellers, such as the Company, an agency fee or commission on these sales.

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The following tables represent a disaggregation of revenue from arrangements with customers for the years ended December 31, 2025, 2024, and 2023, along with the segment for each category (in thousands).

For the Year Ended December 31, 2024

Year Ended December 31, 2025

Public Sector

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Total net sales

For the Year Ended December 31, 2023

Year Ended December 31, 2024

Public Sector

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Total net sales

For the Year Ended December 31, 2022

Year Ended December 31, 2023

Public Sector

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The Company measures certain financial assets at fair value.

Fair value is determined based upon the exit price that would be received to sell an asset in an orderly transaction between market participants, as determined by either the

principal market or the most advantageous market.

Fair value is determined based upon the exit price that would be received to sell an asset in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market.

Inputs used in the valuation techniques are classified based on a three-level hierarchy, as follows:

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In addition, in 2016 the Company acquired customer relationships from its Softmart and GlobalServe acquisitions, which are amortized on a straight-line basis over their estimated useful lives of 10 years .

The Company’s remaining intangible assets are amortized in proportion to the estimates of the future cash

flows underlying the valuation of the assets.

Intangible assets and related accumulated amortization are detailed below (in thousands):

The Company’s remaining intangible assets are amortized in proportion to the estimates of the future cash flows underlying the valuation of the assets.

Intangible assets and related accumulated amortization are detailed below (dollars in thousands):

December 31, 2025

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Property and equipment consisted of the following (in thousands):

Computer software, including licenses and internally-developed software

Furniture and equipment

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The Company leases certain facilities from a related party, which is affiliated with the Company through common ownership.

The costs for these leases are presented within short-term lease cost in the below table.

As of December 31, 2025, the Company had no leases that were classified as financing leases and there were no additional significant operating or financing leases that have not yet commenced.

Refer to the following table for quantitative information related to the Company’s leases for the year ended December 31, 2024 and 2023 (dollars in thousands):

Refer to the following table for quantitative information related to the Company’s leases for the years ended December 31, 2025 and 2024 (dollars in thousands):

Year Ended December 31, 2025

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As of December 31, 2025, the ROU asset had a balance of $ 1,569 .

The long-term lease liability was $ 1,552 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $ 1,805 .

The long-term lease liability was $ 498 and the short-term lease liability, which is included in accrued expenses and other liabilities on the consolidated balance sheets, was $ 1,290 .

As of December 31, 2024, the ROU asset had a balance of $ 3,077 .

The long-term lease liability was $ 3,181 and the short-term lease liability, which is included in accrued expenses and other liabilities in the consolidated balance sheets, was $ 1,733 .

The long-term lease liability was $ 1,552 and the short-term lease liability, which is included in accrued expenses and other liabilities on the consolidated balance sheets, was $ 1,805 .

ACCRUED EXPENSES AND OTHER LIABILITIES

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BANK BORROWINGS

The Company has a $ 50,000 credit facility collateralized by its account receivables that expires March 31, 2025 .

This facility can be increased, at the Company’s option, to $ 80,000 for permitted acquisitions or other uses authorized by the lender on substantially the same terms.

Amounts outstanding under this facility bear interest at the greatest of (i) the prime rate ( 7.50 % at December 31, 2024), (ii) the federal funds effective rate plus 0.50 % per annum, and (iii) the daily Secured Overnight Financing Rate, or SOFR, plus 1.00 % per annum, provided that the rate shall at no time be less than 1.00 % per annum.

The credit facility includes various customary financial ratios and operating covenants, including minimum net worth and maximum funded debt ratio requirements, and default acceleration provisions.

The credit facility does not include restrictions on future dividend payments.

Funded debt ratio is the ratio of average outstanding advances under the credit facility to Adjusted Earnings Before Interest Expense, Taxes, Depreciation, Amortization, and Special Charges, or Adjusted EBITDA.

The maximum allowable funded debt ratio under the agreement is 2.0 to 1.0.

Decreases in the Company’s consolidated twelve months Adjusted EBITDA could limit its potential borrowing capacity under the credit facility.

As of December 31, 2024, the Company was in compliance with the covenants of the credit facility.

Cash receipts are automatically applied against any outstanding borrowings.

The Company previously had a $ 50,000 credit facility collateralized by its account receivables that expired March 31, 2025 that the Company elected not to renew or replace.

Amounts outstanding under this facility bore interest at the greatest of (i) the prime rate ( 7.50 % at March 31, 2025), (ii) the federal funds effective rate plus 0.50 % per annum, and (iii) the daily Secured Overnight Financing Rate, or SOFR, plus 1.00 % per annum, but at no time less than 1.00 % per annum.

Cash paid for interest was $ 0 , $ 6 , and $ 24 for the years ended December 31, 2025, 2024, and 2023, respectively.

Cash receipts were automatically applied against any outstanding borrowings.

During the years ended December 31, 2025 and 2024, the Company borrowed incremental amounts that were each repaid in full.

These borrowings for the years ended December 31, 2025 and 2024 totaled $ 732 and $ 26,051 , respectively;

however, at no time were the

outstanding borrowings greater than the $ 50,000 limit under the credit facility.

The Company had no outstanding borrowings under the credit facility as of December 31, 2024 or 2023, and accordingly, the entire $ 50,000 credit facility was available for borrowings on each such date.

however, at no time were the outstanding borrowings greater than the $ 50,000 limit under the credit facility.

The Company had no outstanding borrowings under the credit facility immediately prior to the expiration of the credit facility, or as of December 31, 2024.

STOCKHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

Preferred Stock

The Company’s Amended and Restated Certificate of Incorporation (the “Restated Certificate”) authorizes the issuance of up to 10,000 shares of preferred stock, $ 0.01 par value per share (the “Preferred Stock”).

Under the terms of the Restated Certificate, the Board is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue by a unanimous vote such shares of Preferred Stock in one or more series.

The Company’s Amended and Restated Certificate of Incorporation, or the Restated Certificate, authorizes the issuance of up to 10,000 shares of preferred stock, $ 0.01 par value per share, or the Preferred Stock.

Under the terms of

the Restated Certificate, the Board is authorized, subject to any limitations prescribed by law, without stockholder approval, to issue by a unanimous vote such shares of Preferred Stock in one or more series.

Each such series of Preferred Stock shall have such rights, preferences, privileges, and restrictions, including voting rights, dividend rights, redemption privileges, and liquidation preferences, as shall be determined by the Board.

4 unchanged sentences

In November 2022, the Company’s Board approved a $ 25,000 increase to the Company’s existing share repurchase authorization.

In May 2024, the Company’s Board approved a $ 40,000 increase to the Company’s existing share repurchase authorization, bringing the aggregate size of the share repurchase program to $ 120,000 as of December 31, 2024.

In May 2024, the Company’s Board approved a $ 40,000 increase to the Company’s existing share repurchase authorization.

In April 2025, the Company’s Board approved a $ 50,000 increase to the Company’s existing share repurchase authorization, bringing the aggregate size of the share repurchase program to $ 170,000 as of December 31, 2025.

There is no fixed termination date for this repurchase program.

3 unchanged sentences

Such cost reflects the applicable one percent excise tax imposed by the Inflation Reduction Act of 2022 on the net value of certain stock repurchases made after December 31, 2022.

There were no share repurchases during the year ended December 31, 2022.

As of December 31, 2025, the Company has repurchased an aggregate of 4,130 shares for $ 136,398 under the Board-authorized repurchase program, and the maximum approximate dollar value of shares that may yet be purchased under the Company’s existing Board-authorized program is $ 33,602 .

On February 4, 2026, the Company announced that its Board of Directors authorized a $ 50,000 increase to the share repurchase program, which was incremental to the approximately $ 33,602 remaining as of December 31, 2025.

Dividend Payments

21 unchanged sentences

March 15, 2024

April 30, 2024

July 30, 2024

August 13, 2024

August 30, 2024

October 29, 2024

November 12, 2024

November 29, 2024

Year Ended December 31, 2023

Dividend per Share

Declaration Date

Total Dividend

February 9, 2023

February 21, 2023

March 10, 2023

August 2, 2023

August 15, 2023

September 1, 2023

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December 1, 2023

For the year ended December 31, 2022, the Company declared a special cash dividend of $ 0.34 per share.

The total cash payment of $ 8,948 was made on December 23, 2022 to stockholders of record at the close of business on December 5, 2022 .

Declaration of any future cash dividends will depend upon the Company’s financial position, strategic plans, and general business conditions.

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In 2007, the Board adopted and the Company’s stockholders approved the 2007 Stock Incentive Plan.

In 2010, the Board adopted and the stockholders approved the Amended and Restated 2007 Stock Incentive Plan (the “2007 Plan”), which, among other things, extended the term of the 2007 Plan to 2020.

In 2010, the Board adopted and the stockholders approved the Amended and Restated 2007 Stock Incentive Plan, or the 2007 Plan, which, among other things, extended the term of the 2007 Plan to 2020.

In May 2019, the Company’s stockholders approved an amendment to the 2007 Plan, which authorized the issuance of up to 1,900 shares of common stock.

Under the terms of the 2007 Plan, the Company is authorized, for a ten-year period, to grant options, stock appreciation rights, nonvested stock, nonvested stock units, and other stock-based awards to employees, officers, directors, and consultants.

In 2020, the Board adopted and the Company’s stockholders approved the 2020 Stock Incentive Plan (the “2020 Plan”), which replaces the Amended and Restated 2007 Stock Incentive Plan.

In May 2023, the Company’s stockholders approved an amendment to the 2020 Plan, which authorized the issuance of 1,253 shares of common stock.

In 2020, the Board adopted and the Company’s stockholders approved the 2020 Stock Incentive Plan, or the 2020 Plan, which replaces the Amended and Restated 2007 Stock Incentive Plan.

In May 2025, the Company’s stockholders approved an amendment to the 2020 Plan bringing the total amount authorized for issuance under the 2020 Plan to 1,653 shares of common stock.

As of December 31, 2025, there were 301 shares eligible for future grants under the 2020 Plan.

1997 Employee Stock Purchase Plan

In November 1997, the Board adopted and the Company’s stockholders approved the 1997 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”).

In November 1997, the Board adopted and the Company’s stockholders approved the 1997 Employee Stock Purchase Plan, or the Employee Stock Purchase Plan.

The Employee Stock Purchase Plan authorizes the issuance of common stock to participating employees.

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The Company values grants with multiple vesting periods as a single award, estimates expected forfeitures based upon historical patterns of employee turnover, and records share-based compensation as a component of SG&A expenses.

The following table summarizes the share-based compensation expenses included in the consolidated statements of income (in thousands):

The following table summarizes the share-based compensation expenses included on the consolidated statements of income (in thousands):

Years Ended December 31,

Pre-tax expense for nonvested units

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Recipients of nonvested stock units do not possess stockholder rights.

The fair value of nonvested stock

units is based on the end of day market value of the Company’s common stock on the grant date.

The fair value of nonvested stock units is based on the end of day market value of the Company’s common stock on the grant date.

The following table summarizes the Company’s nonvested stock unit activity in 2025 (shares in thousands):

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Accumulated other comprehensive income, which is included as a component of stockholders’ equity, is comprised of unrealized gains on short-term investments, net of tax.

The changes in accumulated other comprehensive income were as follows provision for income taxes consisted of the following (in thousands):

The changes in accumulated other comprehensive income were as follows (in thousands):

December 31, 2025

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Less amounts reclassified from accumulated other comprehensive income, net of tax

Net other comprehensive income

Net other comprehensive loss

Balance - December 31, 2025

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Balance - December 31, 2024

Included in amounts reclassified from accumulated other comprehensive income, net of tax for the year ended December 31, 2025 is $ 76 of realized gain, which is included in “Other income” on the consolidated statements of income.

There are no foreign amounts included in income before taxes on the consolidated statements of income.

The provision for income taxes consisted of the following (in thousands):

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Provision for income taxes

A reconciliation of the Company’s provision for income taxes to the amount computed by applying the 21 % statutory U.S.

federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows (dollars in thousands):

Year Ended December 31, 2025

Federal income taxes, at statutory tax rate

State and local income taxes, net of federal effect 1

Nondeductible expenses

Nondeductible compensation

Income tax provision

1) The state and local jurisdictions that make up the majority ( greater than 50% ) of the tax effect in this category are California, New York, Massachusetts, Florida, and New York City.

A reconciliation of the Company’s provision for income taxes to the amount computed by applying the 21 % statutory U.S.

federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows (in thousands):

Years Ended December 31,

Federal income taxes, at statutory tax rate

State income taxes, net of federal benefit

Nondeductible expenses

Income tax provision

The components of the deferred taxes as of December 31, 2025 and 2024 are as follows (in thousands):

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Property and equipment

Capitalized research and development

Right-of-use assets

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Net deferred tax liability

The Company has deferred tax assets from state net operating loss carryforwards aggregating $ 885 as of December 31, 2024 representing state tax benefits, net of federal taxes, of approximately $ 699 .

These loss carryforwards are subject

to three , five , fifteen , twenty-year , or indefinite carryforward periods, with $ 1 expiring in 2025, $ 0 expiring in 2026, $ 32 expiring in 2027, $ 0 expiring in 2028, $ 2 expiring in 2029, $ 679 expiring beyond 2029, and $ 171 with no expiration.

The Company has state net operating loss carryforwards aggregating $ 1,067 as of December 31, 2025 representing state tax benefits, net of federal taxes, of approximately $ 843 .

These loss carryforwards are subject to three , five , fifteen , twenty-year , or indefinite carryforward periods, with $ 29 expiring in 2026, $ 1 expiring in 2027, $ 2 expiring in 2028, $ 2 expiring in 2029, $ 86 expiring in 2030, $ 720 expiring beyond 2030, and $ 227 with no expiration.

The Company has provided valuation allowances of $ 363 and $ 343 as of December 31, 2025 and 2024, respectively, against the state tax loss carryforwards, representing the portion of carryforward losses that the Company believes are not likely to be realized.

The Company also has New Hampshire Business Enterprise credits of $ 1,159 .

These credits are subject to a ten-year carryforward period, with $ 1,159 expiring beyond 2029.

The Company has provided a valuation allowance of $ 1,159 as of December 31, 2024 against the New Hampshire Business Enterprise credit carryforwards.

The net change in the total valuation allowance reflects a $ 287 decrease and a $ 725 increase in 2024 and 2023, respectively.

A reconciliation of the Company’s 2024, 2023, and 2022 income tax provision to total income taxes at the statutory federal tax rate is as follows (in thousands):

Federal income taxes, at statutory tax rate

State income taxes, net of federal benefit

Nondeductible expenses

Income tax provision

The Company also has state tax credit carryforwards aggregating $ 1,998 as of December 31, 2025 representing state tax benefits, net of federal taxes, of approximately $ 1,578 .

These credit carryforwards are subject to five and ten-year carryforward periods, with $ 78 in 2029, $ 51 in 2030, and $ 1,869 expiring beyond 2030.

The Company has provided a valuation allowance of $ 1,476 and $ 1,159 as of December 31, 2025 and 2024, respectively, against the state tax loss carryforwards, representing the portion of credit carryforwards that the Company believes are not likely to be realized.

The net change in the total valuation allowance reflects a $ 337 increase and a $ 287 decrease in 2025 and 2024, respectively.

The Company files one consolidated U.S.

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state tax jurisdictions.

The tax years 2021-2023 remain open to examination by the major state taxing jurisdictions in which the Company files.

The tax years 2021-2023 remain open to examination by the Internal Revenue Service.

The tax years 2022-2024 remain open to examination by the Internal Revenue Service and the major state taxing jurisdictions in which the Company files.

Previously, the Company recognized interest and penalties related to unrecognized income tax benefits as a component of income tax expense, and the corresponding accrual was included as a component of the Company’s liability for unrecognized income tax benefits.

The Company did no t recognize any interest and penalties for the years ended December 31, 2024, 2023 or 2022.

The Company did no t recognize any unrecognized income tax benefits, interest, and penalties for the years ended December 31, 2025, 2024 or 2023.

Cash paid for income taxes, net of refunds for the year ended December 31, 2025 is as follows (in thousands):

Year Ended December 31, 2025

State and local

Total income taxes paid, net of refunds received

Cash paid for income taxes for the years ended December 31, 2024 and 2023 was $ 29,295 and $ 41,668 , respectively.

EMPLOYEE BENEFIT PLAN

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Significant judgment is required to determine both the likelihood of there being a loss and the estimated amount of such loss.

Until the final resolution of such matters, there may be an exposure to loss in excess of

the amount recorded, and such amounts could be material.

Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material.

The Company expenses legal fees in the period in which they are incurred.

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and the Public Sector Solutions segment, which serves primarily federal, state, and local government and educational institutions.

In addition, the Headquarters/Other provides services in areas such as finance, human resources, IT, marketing, and product management.

the Headquarters/Other provides services in areas such as finance, human resources, IT, marketing, and product management.

Most of the operating costs associated with the Headquarters/Other functions are charged to the operating segments based on their estimated usage of the underlying functions.

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Headquarters/Other amounts that are not allocated to the operating segments are shown as reconciling items in the tables below.

The Company’s CODM is its Chief Executive Officer, and he assesses the segments’ performance by using each segments’ operating income (which includes certain corporate overhead allocations attributable to each of the segments).

The Company’s CODM is its Chief Executive Officer, and he assesses the segments’ performance by using each segment’s operating income (which includes certain corporate overhead allocations attributable to each of the segments).

Net sales presented below exclude inter-segment product revenues.

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Other segment expenses 1

Operating income

Operating income (loss)

Unallocated Headquarters/Other expenses

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Consolidated assets

1) Other segment expenses for each of the reportable segments include service contracts/subscriptions, professional fees, facilities operations, credit card fees, and other miscellaneous expenses.

Year Ended December 31, 2024

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All of the Company’s assets as of December 31, 2025 and 2024 were located in the United States.

The Company’s primary target customers are SMBs, medium-to-large businesses, and federal, state, and local government agencies and educational institutions.

The Company’s

primary target customers are SMBs, medium-to-large businesses, and federal, state, and local government agencies and educational institutions.

SUPPLIER FINANCE PROGRAMS

The Company has agreements with third-party financial institutions, instituted by request of participating suppliers, that allow for the ability to finance payment obligations from the Company.

The third-party financial institutions have separate arrangements with the Company’s suppliers and provide them with the option to request early payment for invoices confirmed by the Company.

The Company does not determine the terms or conditions of the arrangements between the third-parties and its suppliers and receives no compensation from the third-party financial institutions.

The Company’s obligation to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to finance amounts under the arrangements.

The payment terms under these arrangements are typical with industry standards and range from 30 to 50 days .

The agreements with the financial institutions are collateralized by the inventory purchased through the financing agreements.

The Company’s outstanding payment obligations under the supplier finance programs, which are included in accounts payable on the consolidated balance sheets, were $ 58,563 and $ 47,763 at December 31, 2025 and 2024, respectively.

The rollforwards of the Company’s outstanding obligations confirmed as valid under the supplier finance programs for the years ended December 31, 2025 and 2024 are as follows (in thousands):

Confirmed obligations outstanding at December 31, 2024

Invoices confirmed

Confirmed invoices paid

Confirmed obligations outstanding at December 31, 2025

Confirmed obligations outstanding at December 31, 2023

Invoices confirmed

Confirmed invoices paid

Confirmed obligations outstanding at December 31, 2024

PC CONNECTION, INC.

15 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures