What changed in this filing

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Item 9A. Controls and Procedures

2025-02-24 compared with 2024-03-07 · 197 added, 152 removed, 815 unchanged (30% 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, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

22 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated March 7, 2024 expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated February 24, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Boston, Massachusetts

March 7, 2024

February 24, 2025

Other information

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Directors, Executive Officers, and Corporate Governance

In addition to the information included below, the information required by this item, which is included under the headings “Election of Directors,” “Information Concerning Directors, Nominees, and Executive Officers,” “Delinquent Section 16(a) Reports,” “Code of Business Conduct and Ethics Policy,” “Director Candidates,” and “Board Committees – Audit Committee” in our definitive Proxy Statement for our 2024 Annual Meeting of Stockholders to be filed with the SEC, or Proxy Statement, is incorporated herein by reference.

In addition to the information included below, the information required by this item, which is included under the headings “Election of Directors,” “Information Concerning Directors, Nominees, and Executive Officers,” “Delinquent Section 16(a) Reports” (if applicable), “Director Candidates,” “Board Committees – Audit Committee,” and “Insider Trading Policy” in our definitive Proxy Statement for our 2025 Annual Meeting of Stockholders to be filed with the SEC, or Proxy Statement, is incorporated herein by reference.

With the exception of the foregoing information and other information specifically incorporated by reference into this Annual Report on Form 10-K, the Proxy Statement is not being filed as a part hereof.

Information about our Executive Officers

Our executive officers and their ages as of March 7, 2024 are as follows:

Our executive officers and their ages as of February 24, 2025 are as follows:

Patricia Gallup

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Executive Compensation

The information required by this item, which is included under the headings “Executive Compensation” and “Director Compensation” in the Proxy Statement is incorporated herein by reference.

The information required by this item (other than the information required by Item 402(v) of Regulation S-K), which is included under the headings “Executive Compensation” and “Information Concerning Directors, Nominees, and Executive Officers – Director Compensation” in the Proxy Statement is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

1 unchanged sentence

Certain Relationships and Related Transactions, and Director Independence

The information required by this item, which is included under the headings “Certain Relationships and Related Transactions,” “Policies and Procedures for Related Person Transactions” and “Director Independence” in the Proxy Statement is incorporated herein by reference.

The information required by this item, which is included under the headings “Certain Relationships and Related Transactions,” “Policies and Procedures for Related Person Transactions” and “Information Concerning Directors, Nominees, and Executive Officers – Director Independence” in the Proxy Statement is incorporated herein by reference.

Principal Accounting Fees and Services

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Amended and Restated 1997 Employee Stock Purchase Plan, as amended.

Form of Incentive Stock Option Agreement for 2007 Stock Incentive Plan.

Form of Nonstatutory Stock Option Agreement for 2007 Stock Incentive Plan.

Amended and Restated Form of Restricted Stock Agreement for Amended and Restated 2007 Stock Incentive Plan.

Form of Restricted Stock Unit Agreement for Amended and Restated 2007 Stock Incentive Plan.

Form of Stock Equivalent Unit Agreement for 2007 Amended and Restated Stock Incentive Plan.

Director Compensation and Executive Bonus Plan, as amended.

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1, dated April 16, 2015, to Lease Agreement between the Registrant and Wilmington Investors, LLC, dated August 27, 2014, for property located at 3336 Progress Way, Building 11, Wilmington, OH .

Amendment No.

2, dated August 29, 2019, to Lease Agreement between the Registrant and Wilmington Investors, LLC, dated August 27, 2014, for property located at 3336 Progress Way, Building 11, Wilmington, OH.

Form of Restricted Stock Units for 2020 Stock Incentive Plan .

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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.

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.

Insider Trading Policy.

Subsidiaries of Registrant.

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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 (333-63272) on Form S-4 filed under the Securities Act of 1933.

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

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

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

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

(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.

(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.

(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.

(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, filed on March 6, 2023.

(8) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, filed on August 10, 2007.

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

(10) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, filed on August 8, 2012.

(11) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, filed on May 4, 2023.

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

(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.

(8) 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.

(10) 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.

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

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

(17) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, filed on May 2, 2019.

(18) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, filed on October 30, 2019.

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

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

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

(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.

(14) 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.

(15) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on May 2, 2019.

(16) Incorporated by reference from exhibits filed with the Company's quarterly report on Form 10-Q, File Number 000-23827, filed on October 30, 2019.

(17) 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.

(19) 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.

(20) 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.

Management contract or compensatory plan or arrangement.

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PC CONNECTION, INC.

March 7, 2024

February 24, 2025

/s/ TIMOTHY J.

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President and Chief Executive Officer (Principal Executive Officer)

March 7, 2024

February 24, 2025

/s/ THOMAS C.

Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)

March 7, 2024

February 24, 2025

/s/ PATRICIA GALLUP

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Chairman of the Board

March 7, 2024

February 24, 2025

/s/ DAVID BEFFA-NEGRINI

David Beffa-Negrini

March 7, 2024

February 24, 2025

/s/ JAY BOTHWICK

March 7, 2024

February 24, 2025

/s/ BARBARA DUCKETT

Barbara Duckett

March 7, 2024

February 24, 2025

/s/ JACK FERGUSON

Jack Ferguson

March 7, 2024

February 24, 2025

/s/ GARY KINYON

March 7, 2024

February 24, 2025

PC CONNECTION, INC.

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 7, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

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The amount of revenue recognized by the Company is dependent upon whether the Company is the principal in the transaction whereby revenue is recorded on a gross basis or the agent whereby the revenue is reported net.

The Company applies judgement to determine if the Company is the principal or the agent in the transaction.

The Company applies judgment to determine if the Company is the principal or the agent in the transaction.

The Company has determined that in general they are the principal in providing hardware products and on-premise software products, and that they are the agent in providing cloud-based software products and maintenance products.

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Our principal audit procedures related to the Company's revenue recognition for these customer agreements included the following:

● We tested the effectiveness of controls over management’s principal versus agent determination for each performance obligation including those over the determination of the fulfillment type and on or off premise delivery.

● We evaluated management's significant accounting policies and judgements related to principal versus agent determinations.

● We selected a sample of transactions and related customer agreement and performed the following procedures:

● We tested the effectiveness of controls over the Company’s principal versus agent determination for each performance obligation including those over the determination of the fulfillment type and on or off premise delivery.

● We evaluated the Company’s significant accounting policies and judgments related to principal versus agent determinations.

● We selected a sample of transactions and related customer agreements and performed the following procedures:

o Obtained and read contract source documents for each selection, including master agreements, customer purchase orders, and other documents that were part of the agreement and evaluated the nature of the product or services.

o Assessed the terms in the customer agreement and evaluated the appropriateness of management's judgement, application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions including an evaluation of the Company’s determination of product fulfillment type, on or off premise determination and determination of principal versus agent.

o Assessed the terms in the customer agreement and evaluated the appropriateness of management's judgment, application of their accounting policies, along with their use of estimates, in the determination of revenue recognition conclusions including an evaluation of the Company’s determination of product fulfillment type, on or off premise determination and determination of principal versus agent.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

March 7, 2024

February 24, 2025

We have served as the Company’s auditor since 1984.

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Deferred income taxes

Noncurrent operating lease liabilities

Non-current operating lease liabilities

Other liabilities

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Income from operations

Other income, net

Interest income, net

Income before taxes

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Other comprehensive income:

Unrealized gains on available-for-sale investments, net of tax of $( 22 )

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

Comprehensive income

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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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Amortization of discount on short-term investments

Loss (gain) on disposal of fixed assets

Loss on disposal of fixed assets

Changes in assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Prepaid expenses, income tax receivable, and other current assets

Other non-current assets

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Purchases of short-term investments

Maturities of short-term investments

Purchases of equipment and capitalized software

Proceeds from sale of equipment

Proceeds from life insurance

Net cash used in investing activities

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Accrued capital expenditures

Accrued purchase of treasury shares

Accrued excise tax on treasury purchases

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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.

In 2023, the Company restructured and combined its Technology Solutions Group and Technical Sales Organization into one organization to be referred to as the Technology Solutions Organization, or TSO.

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

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In most instances, when several performance obligations are aggregated into one single transaction, these performance obligations are fulfilled at the same point in time.

The Company accounts for an arrangement when it has approval and commitment from both parties, the rights are

identified, the contract has commercial substance, and collectability of consideration is probable.

The Company generally obtains oral or written purchase authorizations from its customers for a specified amount of product at a specified price, which constitutes an arrangement.

The Company accounts for an arrangement when it has approval and commitment from both parties, the rights are identified, the contract has commercial substance, and collectability of consideration is probable.

The Company generally obtains oral or written purchase authorizations from its customers for a specified amount of product at a

specified price, which constitutes an arrangement.

Revenue is recognized at the amount expected to be collected, net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

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The Company records investments at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income on the consolidated balance sheets.

Included in other income, net on the consolidated statements of income is interest income on cash equivalents and short-term investments of $ 9,983 and $ 1,056 for the years ended December 31, 2023 and 2022, respectively.

Interest income on cash equivalents and short-term investments was less than $ 1 for the year ended December 31, 2021.

Included in interest income, net on the consolidated statements of income is interest income on cash equivalents and short-term investments of $ 18,838 , $ 9,983 , and $ 1,056 for the years ended December 31, 2024, 2023, and 2022, respectively.

Accounts Receivable

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Inventory quantities on hand are reviewed regularly, and allowances are maintained for obsolete, slow moving, and nonsalable inventory.

Advertising Costs and Vendor Consideration

Vendors have the ability to fund advertising activities for which the Company receives advertising consideration.

Marketing Costs and Vendor Consideration

Vendors have the ability to fund marketing activities for which the Company receives marketing consideration.

This vendor consideration, to the extent that it represents specific reimbursements of incremental and identifiable costs, is offset against selling, general and administrative, or SG&A, expenses.

Advertising consideration that cannot be associated with a specific program or that exceeds the fair value of advertising expense associated with that program is classified as an offset to cost of sales.

The Company’s vendor partners generally consolidate their funding of advertising and other marketing programs, and accordingly, the Company classifies substantially all vendor consideration as a reduction of cost of sales rather than a reduction of advertising expense.

Other advertising costs are expensed as incurred.

Advertising expense, which is classified as a component of SG&A expenses on the consolidated statements of income, totaled $ 22,400 , $ 20,155 , and $ 15,827 for the years ended December 31, 2023, 2022, and 2021, respectively.

Marketing consideration that cannot be associated with a specific program or that exceeds the fair value of marketing expense associated with that program is classified as an offset to cost of sales.

The Company’s vendor partners generally consolidate their funding of marketing and other marketing programs, and accordingly, the Company classifies substantially all vendor consideration as a reduction of cost of sales rather than a reduction of marketing expense.

Other marketing costs are expensed as incurred.

Marketing expense, which is classified as a component of SG&A expenses on the consolidated statements of income, totaled $ 25,091 , $ 22,400 , and $ 20,155 for the years ended December 31, 2024, 2023, and 2022, respectively.

Property and Equipment

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

Note 4 describes the annual impairment methodology that the Company uses each year in calculating the recoverability of goodwill and non-amortizing intangibles.

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.

This same impairment test is performed at other times during the course of a year should an event occur or circumstance change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

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No single customer accounted for 10% or more of total net sales in 2024, 2023, and 2022.

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 25 %, 23 %, and 11 %, respectively, of the Company’s total product purchases in 2024.

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 2023, 2022, and 2021.

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

No other singular vendor supplied more than 10% of the Company’s total product purchases in 2024, 2023, and 2022, 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.

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

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.

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.

No other singular product manufacturer produced more than 10% of our total product purchases in 2023, 2022, and 2021.

No other singular product manufacturer produced more than 10% of our total product purchases in 2024, 2023, and 2022, 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.

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Restructuring and Other charges

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

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.

The Company is currently evaluating additional restructuring activities for 2024 and beyond.

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

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Total restructuring and other charges

Included in accrued expenses and other liabilities on the consolidated balance sheets as of December 31, 2023 was $ 324 related to unpaid employee separation benefits.

Earnings Per Share

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For the years ended December 31, 2024, 2023, and 2022, the Company did no t exclude any outstanding nonvested stock units or stock options from the computation of diluted earnings per share because including them would have had an anti-dilutive effect.

Recently Issued Financial Accounting Standards

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848) :

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This guidance provides temporary optional expedients and exceptions to the U.S.

GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from the London Interbank Offered Rate, or LIBOR, and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate.

This ASU is applied prospectively and becomes effective immediately upon the transition from LIBOR.

The Company’s secured credit facility agreement references LIBOR, which is expected to be discontinued as a result of reference rate reform.

The amendments are effective as of March 12, 2020 through December

however, ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 has extended the effective date through December 31, 2024.

The Company adopted this standard for the fiscal year ended December 31, 2023.

The adoption of this ASU along with the related expedients did not have an impact to the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

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.

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

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):

1 unchanged sentence

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.

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.

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

Disaggregation of Income Statement Expenses .

This guidance is intended to provide more detailed disclosure about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expenses, and depreciation expense.

This ASU is effective for the Company’s annual reporting periods beginning January 1, 2027, and for 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 consolidated financial statements.

Nature of Products and Services

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Software maintenance conveys rights to updates, bug fixes and help desk support, and other support services transferred over the underlying contract period.

On-premise licenses are considered distinct performance obligations when sold with the

software maintenance, as the Company sells these items separately.

On-premise licenses are considered distinct performance obligations when sold with the software maintenance, as the Company sells these items separately.

The Company recognizes revenue related to the software maintenance as the agent in these transactions because it does not have control over the on-going software maintenance service.

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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 Company makes estimates of product returns based on significant historical experience.

The Company records its sales

return reserve as a reduction of revenues and either as reduction of accounts receivable or, for customers who have already paid, as accrued expenses and as a reduction of cost of sales and an associated right of return asset.

The Company records its sales return reserve as a reduction of revenues and either as reduction of accounts receivable or, for customers who have already paid, as accrued expenses and as a reduction of cost of sales and an associated right of return asset.

Description of Revenue

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Money market funds

Short-term investments:

Government treasury securities

Investments with maturities of 90 days or less from the date of purchase are classified as cash equivalents;

5 unchanged sentences

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:

24 unchanged sentences

Intangible Assets

At December 31, 2023, the Company’s intangible assets included a domain name for $ 450 , which has an indefinite life and is not subject to amortization.

At December 31, 2024 and 2023, the Company’s intangible assets included a domain name for $ 450 , which has an indefinite life and is not subject to amortization.

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.

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):

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

As of December 31, 2023, the Company had no leases that were classified as financing leases and there were no additional operating or financing leases that have not yet commenced.

As of December 31, 2024, 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):

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For the Years Ended December 31,

Related Parties

Imputed interest

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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 daily Bloomberg Short-Term Bank Yield Index, or BSBY Rate, plus a spread based on the Company’s funded debt ratio, or in the absence of BSBY Rate, the prime rate ( 8.50 % at December 31, 2023).

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.

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These borrowings for the years ended December 31, 2024 and 2023 totaled $ 26,051 and $ 88,198 , 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, 2023 or 2022, and accordingly, the entire $ 50,000 credit facility was available for borrowings on 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 as of December 31, 2024 or 2023, and accordingly, the entire $ 50,000 credit facility was available for borrowings on each such date.

STOCKHOLDERS’ EQUITY AND SHARE-BASED COMPENSATION

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In 2018, the Company’s Board approved a share repurchase program authorizing up to $ 25,000 in additional share repurchases.

In November 2022, the Company’s Board approved a $ 25,000 increase to the Company’s existing share repurchase authorization, bringing the aggregate size of the share repurchase program to $ 80,000 as of December 31, 2023.

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.

There is no fixed termination date for this repurchase program.

Purchases may be made in open-market transactions, block transactions on or off an

exchange, or in privately negotiated transactions.

Purchases may be made in open-market transactions, block transactions on or off an exchange, or in privately negotiated transactions.

The timing and amount of any share repurchases will be based on market conditions and other factors.

The Company repurchased 129 shares for $ 5,446 during the year ended December 31, 2023 under the Board-authorized repurchase program.

The Company repurchased 188 and 129 shares for $ 12,597 and $ 5,446 during the years ended December 31, 2024 and 2023, respectively, under the Board-authorized repurchase program.

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 years ended December 31, 2022 and 2021.

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

As of December 31, 2024, the Company has repurchased an aggregate of 2,916 shares for $ 60,315 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 $ 59,685 .

Dividend Payments

The following table summarizes the Company’s quarterly cash dividends declared during the year ended December 31, 2023 (in thousands, except per share data):

The following tables summarize the Company’s quarterly cash dividends declared during the years ended December 31, 2024 and 2023 (in thousands, except per share data):

Year Ended December 31, 2024

Dividend per Share

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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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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 .

For the year ended December 31, 2021, the Company declared a special cash dividend of $ 1.00 per share.

The total cash payment of $ 26,224 was made on December 3, 2021 to stockholders of record at the close of business on November 18, 2021 .

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

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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 2024 (shares in thousands):

Nonvested Stock Units

Weighted-Average

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The aggregate intrinsic value of the nonvested stock units at December 31, 2024, which is calculated based on the positive difference between the fair value of the Company’s stock on December 31, 2024 and the grant price of the underlying awards, was $ 31,493 .

Stock Equivalent Units

The Company has also previously issued stock equivalent units, or SEUs, which settle in cash and vest ratably over four years , to non-executive employees.

The fair value of these liability awards is based on the closing market price of the Company’s common stock and is remeasured at the end of each reporting period until the SEUs vest.

The Company reports the compensation as a component of SG&A expense on the consolidated statements of income and the related liability as accrued payroll on the consolidated balance sheets.

Compensation expense

ACCUMULATED OTHER COMPREHENSIVE INCOME

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):

December 31, 2024

Balance - December 31, 2023

Other comprehensive income before reclassifications, net of tax

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

Net other comprehensive income

Balance - December 31, 2024

December 31, 2023

Balance - December 31, 2022

Other comprehensive income before reclassifications, net of tax

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

Net other comprehensive income

Balance - December 31, 2023

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

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Operating lease liability

Unclaimed property reserve

Capitalized research and development

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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 $ 2 expiring in 2024, $ 30 expiring in 2025, $ 63 expiring in 2026, $ 9 expiring in 2027, $ 5 expiring in 2028, $ 909 expiring beyond 2028, and $ 174 with no

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 provided valuation allowances of $ 343 and $ 868 as of December 31, 2024 and 2023, respectively, against the state tax loss carryforwards, representing the portion of carryforward losses that the Company believes are not likely to be realized.

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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 $ 725 increase and a $ 110 decrease in 2023 and 2022, respectively.

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):

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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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The internal reporting structure used by the Company’s chief operating decision maker, or CODM, to assess performance and allocate resources determines the basis for the Company’s operating segments.

The Company’s CODM is its Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of operating income.

The Company’s operations are organized under three reporting segments—the Enterprise Solutions segment, which serves primarily medium-to-large corporations;

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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 group provides services in areas such as finance, human resources, IT, marketing, and product management.

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

The Company reports these charges to the operating segments as “Allocations.” Certain headquarters costs relating to executive oversight and other fiduciary functions that are not allocated to the operating segments are included under the heading of Headquarters/Other in the tables below.

In addition, 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.

The Company reports these charges to the operating segments as “Allocations”.

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).

Net sales presented below exclude inter-segment product revenues.

Segment information applicable to the Company’s operating segments for the years ended December 31, 2023, 2022, and 2021 is shown below (in thousands):

Years Ended December 31,

Enterprise Solutions

Business Solutions

Public Sector Solutions

Total net sales

Operating income (loss):

Enterprise Solutions

Business Solutions

Public Sector Solutions

Headquarters/Other

Total operating income

Other income, net

The CODM uses operating income for each segment in the annual budget, periodic forecasting, and quarterly results processes.

Segment information applicable to the Company’s operating segments and the related reconciliations to consolidated amounts for the years ended December 31, 2024, 2023, and 2022 are shown below (in thousands):

Year Ended December 31, 2024

Public Sector

Cost of sales

Personnel costs

Allocated corporate overhead

Depreciation and amortization

Other segment expenses 1

Operating income

Unallocated Headquarters/Other expenses

Interest income, net

Income before taxes

Selected operating expense:

Segment assets

Headquarters/Other assets

Consolidated assets

Year Ended December 31, 2023

Public Sector

Cost of sales

Personnel costs

Allocated corporate overhead

Depreciation and amortization

Enterprise Solutions

Business Solutions

Public Sector Solutions

Headquarters/Other

Total depreciation and amortization

Total assets:

Enterprise Solutions

Business Solutions

Public Sector Solutions

Headquarters/Other

Other segment expenses 1

Operating income

Unallocated Headquarters/Other expenses

Interest income, net

Income before taxes

Segment assets

Headquarters/Other assets

Consolidated assets

Year Ended December 31, 2022

Public Sector

Cost of sales

Personnel costs

Allocated corporate overhead

Depreciation and amortization

Other segment expenses 1

Operating income

Unallocated Headquarters/Other expenses

Interest income, net

Income before taxes

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.

The assets of the Company’s operating segments presented above consist primarily of accounts receivable, net intercompany receivable, goodwill, and other intangibles.

Goodwill of $ 66,236 and $ 7,366 is held by the Enterprise Solutions and Business Solutions segments, respectively, as of December 31, 2024.

Assets reported under the Headquarters/Other group are managed by corporate headquarters, including cash, inventory, property and equipment

and intercompany balance, net.

Total assets for the Headquarters/Other group are presented net of intercompany balances eliminations of $ 35,522 and $ 43,679 for the years ended December 31, 2023 and 2022, respectively.

Assets reported under the Headquarters/Other are managed by corporate headquarters, including cash, inventory, property and equipment and intercompany balance, net.

Total assets for the Headquarters/Other are presented net of intercompany balances eliminations of $ 69,695 and $ 35,522 for the years ended December 31, 2024 and 2023, respectively.

The Company’s capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade its management information systems.

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Year Ended December 31, 2024

Inventory Valuation Allowance

Year Ended December 31, 2022

Year Ended December 31, 2023

Year Ended December 31, 2024

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