Todd Fromer - Managing Partner Mark C. Layton - Former Chairman and Chief Executive Officer Michael C. Willoughby - Chief Executive Officer, President, Chief Information Officer and Director Thomas J. Madden - Chief Financial & Accounting Officer and Executive Vice President

Marco Rodriguez - Stonegate Securities Inc., Research Division George Walsh

Ladies and gentlemen, thank you for standing by, and welcome to the PFSweb Fourth Quarter and Year End 2012 Earnings Conference Call. [Operator Instructions] I will now turn the call over to Mr. Todd Fromer of KCSA Strategic Communications. Please go ahead, sir.

Thank you. Before I turn the call over to management, I'd like to make the following remarks concerning forward-looking statements. All statements in this conference call other than historical facts are forward-looking statements. The word anticipate, believe, estimate, expect, intend, will, guidance, confidence, target, project, and other similar expressions typically are used to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and involve and are subject to risks and uncertainties and other factors that may affect PFSweb's business, financial condition and operating results, which include, but are not limited to, the risk factors and other qualifications contained in PFSweb's annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by PFSweb with the Securities and Exchange Commission to which your attention is directed. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. PFSweb expressly disclaims any intent or obligation to update these forward-looking statements. During this call, we may also present certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, non-GAAP net income, Service Fee Equivalent revenue, merchandise sales and certain ratios that use these measures in our press release with financial tables issued earlier today, which is located on our website at pfsweb.com. You'll find our definitions of these non-GAAP financial measures, a reconciliation of these non-GAAP financial measures with the closest GAAP measures and a discussion about why we think these non-GAAP measures are relevant. These financial measures are included for the benefit of investors and should not be considered -- and should be considered in addition to and not instead of GAAP measures. At this time, it's now my pleasure to turn the floor over to Mark Layton of PFSweb. Mark, the floor is yours. Mark C. Layton: Thank you, Todd. Good morning, everyone. I'd like to welcome you to our fourth quarter and full year 2012 conference call. Representing the company today will be Mike Willoughby, our newly appointed CEO; and Tom Madden, our Chief Financial Officer. This morning, we'll provide an overview of the changes to the company's leadership, as well as our financial results for the fourth quarter and full year and after that, Mike and Tom will be available for questions. I wanted to start today's call by discussing briefly the management transition that was announced yesterday in the press release. After a lot of thought and consideration of many issues and things going on, I've decided that it's in not only mine, but the company's best interest for me to step out and pursue other business opportunities going forward. This is a tough decision, but I believe it is the right one. I've had the pleasure of working at PFS since its infancy. When a group of us saw the demand for services to support the burgeoning eCommerce industry and that vision came together to form the company that we now call PFSweb. I'm incredibly proud of the company's accomplishments during my tenure, and I'm proud that I was able to contribute to its growth. More importantly, I believe I'll leave PFSweb in very capable hands under the leadership of Mike Willoughby as our CEO. I've known Mike since 1988 and in that time, he has proven himself to be a great leader. He knows how to motivate our team, he possesses an intimate knowledge and understanding of the technologies and our industry and on how to grow and operate our business going forward. Also, as you saw last night, Jim Riley will take the role as Chairman of the Board. Jim has been a close adviser to me and the rest of the company since its inception, and his background in the investment banking area gives him the unique skill set that we believe will help unlock shareholder value as we move the business forward. To PFSweb's employees, our board, our shareholders, our clients, our suppliers, I want to thank you sincerely from my heart for the opportunity to work with each of you and to get to know you. We may have had differences along the way, but together, we've created a great company and I'm able to leave it very satisfied in everything we've been able to accomplish together. I wish all of you the best of luck in the future and I hope our paths cross again. And with that as a backdrop to this morning, I'd like to turn the call over to our new CEO, Mike Willoughby. Good day, everyone. Mike? Michael C. Willoughby: Thank you, Mark. And before I begin commenting on the results for the fourth quarter and the year end, I would like to say, on behalf of Jim Riley, our Chairman, and the entire Board of Directors, our management team, our employees and our clients, to Mark, thank you for your years of service at PFSweb and your leadership as founder of our company. You have been instrumental in establishing PFSweb as the leading provider of End2End eCommerce solutions in our marketplace and I sincerely wish you well as you pursue other opportunities. Now turning to the results that we reported this morning. As you have all noted, we ended 2012 on a high note as a strong holiday season drove solid fourth quarter performance. And coupled with our strong performance from earlier in the year, our overall calendar year 2012 results reflect record levels of Service Fee Equivalent activity, as well as adjusted EBITDA performance. Service fee equivalent revenue increased 7% in the fourth quarter of 2012 to a record level of $38 million compared to the same period in 2011. Meantime, our service fee gross margins rose 160 basis points versus last year to 26.2% from about 24.6% in the same period of 2011. Our success in growing the top line while increasing margins shows the operating leverage inherent in our service business. It also shows that the push we made to optimize this part of our business is paying off, resulting in improved financial performance. For the full year 2012, we generated adjusted EBITDA of $12 million, slightly above the high end of our previously communicated guidance. We are particularly pleased, not just with our financial performance, but also our operational performance during the very busy 2012 holiday season. I believe one of the keys to building a service business is to identify and eliminate all inefficiencies. As previously disclosed, we took proactive measures and made significant investments to further improve our best-in-class platform so that we're able to support the most current trends in eCommerce and address the specific challenges of our world-class client brand. Included in these challenges are the technology and operational considerations of supporting the hyper spikes in volume during the holiday selling season and wildly successful promotional events and flash sales that go viral and take off. The superior performance from our technology platform and throughout our operations during the 2012 holiday season, during a time when, once again, our client volumes were significantly above their forecast in the aggregate, gives us confidence that our solution will continue to scale the future growth and will deliver increasing financial leverage as we began to demonstrate with last year's results. Despite these financial operational improvements, we're not resting on our laurels. As part of my personal commitment to driving improved shareholder value, our management team is conducting a thorough review of our business to identify inefficiencies and cost reduction opportunities. From that review, we are developing a comprehensive plan that, we believe, will accelerate progress toward our objective to make PFSweb a consistently profitable company while we simultaneously adjust to the previous disclosed transition of certain clients out of our solution during the first half of 2012. Some of the initiatives that make up this plan are already underway within the organization and others are about to be implemented. They include: a reduction in professional headcount which was completed this week; and adjustments to operational headcount, which will continue as client transitions are completed. The reduction in operational headcount is expected to be moderated somewhat by the ramp-up of new clients during the year, also a targeted reduction of 25% in aggregate executive salaries as part of a more incentive-based compensation program. Our objective is to align the executive comp plan with industry best practice based on assistance from outside experts on executive compensation plans. Stock awards are expected to make up 50% or more of the incentive package, and we plan to implement a long-term equity incentive tied to share price appreciation. We recognize the clear trend, further evidenced by a Hay Group-sponsored article that I read in the Wall Street Journal last week, is toward lower base salaries with a short-term incentive component that's tightly aligned with near-term corporate financial objectives, and a long-term incentive component which together, increased the stock ownership position of the management group, creating inherent alignment between management and shareholders. We anticipate further details of this plan to be disclosed in the upcoming proxy statement. Also, a realignment of the leadership team and an organizational structure that's based on our business model, which consists of client service life cycle, our technology ecosystem, our operational centers of excellence and our agency services. We believe these organizational changes will have a measurable impact on our service levels, on our sales efforts, on overall client retention and will result in greater shareholder value through higher revenues, better aligned SG&A levels, and improved gross margins. I believe one of the key benefits of this evolved organization alignment is my ability to focus attention and resources on the fastest-growing and most attractive part of our business, which is our agency services. Having spent my career, including much of my tenure with PFSweb, managing and leading technology and professional services organizations, I believe this organizational approach creates greater accountability and will focus our resources on the areas of our business where we can consistently differentiate PFSweb from our competitors and where we can demonstrate the clearest, most robust value proposition to our clients and our perspective clients. Another initiative that we are now exploring is the way in which we present the financial results of our Supplies Distributors business. Having spent time over the past few years meeting existing and potential investors as part of our corporate communications efforts, it's very evident to me and other members of our Board and management team that the accounting treatment of this segment of our business masks the true value of our company and the tracks from the strong growth of our service business. Tom and I will explore ways to modify how we present these results while continuing to provide value to Retco [ph] and our other partners in this business segment. We're also making a commitment to increase our visibility with Wall Street and garner expanded research coverage and support through a reinvigorated investor relations effort. This will include a series of investor roadshows, increased publicity for our agency business and new customer wins, and a general shift toward greater transparency and overall communication with all of our stakeholders. We will also be evaluating every opportunity to accelerate growth and unlock shareholder value through targeted acquisitions, partnerships or joint ventures, particularly in the areas of international expansion and agency services. As part of our efforts to increase stock ownership of the management team and board, we will be establishing ownership targets and using purchases of PFSweb shares in the open market and/or exercising and holding vested option grants to further align the interest of our management team with our shareholders. Now with that recap of the actions that we are taking and the plans that we are making, I would like to provide you with an abbreviated new business update with highlights from the last 4 months. We'll provide more color on business development details during the May conference call, which is just a few weeks away, in May. As indicated in the earnings release this morning, during the past 4 months, we launched 6 End2End programs for new clients, including sites for BCBGMAXAZRIA, BCBGENERATION, HERVE LEGER BY MAX AZRIA, PANDORA and Diageo. We also launched new fulfillment programs for 2 health and beauty brands under a new master contract with a major consumer packaged goods or CPG company. In November, we announced the relaunch of PANDORA's U.K. eCommerce site on PFSweb's End2End eCommerce solution. And under that agreement, we will provide all facets of their European eCommerce operations today, including interactive marketing agency services. And we expect to support their expansion into additional European countries over the next 18 to 24 months. We also announced in January our new agreement with the BCBGMAXAZRIAGROUP, under which we have launched 3 unique standalone eCommerce sites for the 3 iconic designer's brands. And once again, those are BCBGMAXAZRIA, BCBGENERATION and HERVE LEGER BY MAX AZRIA. We're very excited about this addition to our fashion portfolio. And as the press release stated, we're now providing these brands with an iCommerce omni-channel solution that can support our clients' future store integration requirements. As today's consumers look for a more personalized shopping experience with their preferred brands, it's more important than ever for a retailer to have a customized, omni-channel commerce solution that reinforces the brand value proposition with every customer touchpoint. We look forward to leveraging our iCommerce capabilities to help the BCBGMAXAZRIAGROUP brand's growth. Also in January, we launched a new European End2End eCommerce solution for Diageo, the world's leading premium drinks business. Under the name Alexander & James, PFSweb worked with Diageo to create a luxury Direct to Consumer eCommerce experience for their collection of reserve brands, including Smirnoff, Baileys, Johnnie Walker, Guinness, Captain Morgan, Jose Cuervo and many other famous premium drinks. Paramount to this solution is the luxury gifting capabilities and the ultimate brand experience where people are able to learn about their spirits and receive expert advice for every occasion. It's a beautiful site and we're very excited to work with this iconic collection of brands, and we believe this new solution highlights our capabilities to provide exceptional customer experiences for high-touch and luxury brands. The new fulfillment programs I mentioned for 2 health and beauty brands under a new master contract with a major CPG company includes the potential for the engagement to evolve into an End2End eCommerce solution for these 2 brands, as well as for other brands in this client's brand portfolio. We also have an opportunity to assist this new client with a B2B or business-to-business opportunity. We believe this is yet another indicator of the appeal of our solution in CPG and our strong position as the leading eCommerce services provider to CPG manufacturers. In addition, all of these new programs brings our total to 79 total eCommerce client programs live around the world, with 32 of them being End2End programs. We also have 17 client programs in implementation and scheduled to go live periodically over the next 6 to 9 months. With regard to the 17 client programs in implementation, we also continue to be excited about the level and quality of current client program expansions. Since our last call, we expanded existing relationships with 3 of our current clients that included 4 new eCommerce programs currently in implementation and scheduled for launch later this year. One of these current client opportunities is the expansion of our Kraft relationship with a new brand program. This new brand will join the successful Gevalia and Tassimo End2End eCommerce programs in the beverage category. The new solution is scheduled to go live in Q2 2013. And it's this brand's first Direct to Consumer initiative. Another planned client expansion includes 2 additional brands being added to an already successful major health and beauty manufacturer portfolio for PFSweb. We will provide order management, fulfillment and customer care operations for these 2 additional brands, joining these portfolio brands for this manufacturer beginning in Q3 of 2013. These new programs are great examples of the leverage our clients are able to achieve from their PFSweb solution and an indicator of the organic growth potential of our growing client portfolio. I expect we will continue to see a significant component of our growth coming from -- assisting our current clients with international expansion and adding additional brands to their current solutions. Finally, as indicated in our earnings release, we continue to have a strong business pipeline with more than $45 million in average annual contract value based on client projections. Now with those comments, I'd like to turn the call over to Tom for a detailed review of our Q4 and our full year 2012 financial results. Tom? Thomas J. Madden: Thank you, Mike, and good morning, everyone. I will provide further insight into our financial results for the December quarter and full year 2012 reported earlier today, as well as further details on our outlook for 2013 and beyond. As Mike indicated, on an overall basis, we had a strong fourth quarter performance, primarily driven by record levels of eCommerce activity in support of our clients. We recognized, however, that from just an initial glance of total revenues on our income statement, it is hard to clearly see the exciting underlying growth that has occurred in our business. This is due to the year-over-year declines of our product revenue activity resulting from the restructuring activity of our largest client in this business, in Retail Connect business segment. As a result, in order to better communicate the overall growth story, we utilized a key metric in our business that we refer to as Service Fee Equivalent revenue activity. This metric is calculated by taking our service fee revenues, which is the primary business activity we perform on behalf of our client, and adding the growth margins on our product revenue business so that both businesses can be measured in a similar service fee basis. During our fourth quarter, we generated record Service Fee Equivalent activity of $38 million, a 7% increase over the prior year fourth quarter. In addition, for all of calendar year 2012, we reported record Service Fee Equivalent revenue of $130 million, a 21% increase over the prior year, which was in excess of our targeted 20% year-over-year growth. We have communicated a number of times in the past through our objectives to leveraging our existing infrastructure as we grew our business. And we felt that we needed to be somewhere above the $30 million per quarter run rate of service fee activity in order to really begin seeing benefit here. Calendar year 2012 was proof of our ability to do just that, as well as our Service Fee Equivalent activity grew a strong 21% for the year, our adjusted EBITDA grew at an even stronger rate, nearly doubling for the calendar year to $12 million. Here again, this was on the high end of our targeted adjusted EBITDA guidance previously provided. Our performance in 2012 has been driven by growth from both new service fee client activity, which grew $2.2 million during the quarter as compared to the prior year, as well as existing service fee clients who have been with us for over a year, which grew $0.7 million net of terminations as compared to the fourth quarter of 2011. Year-to-date growth of new service client fees -- or new service fee clients was $4.1 million while existing client growth was $21 million as compared to calendar year 2011. Growth of existing clients in the latter half of 2012 was impacted by the previously communicated transition of the distribution activity of one of our clients, Carter's, to an in-house solution earlier in the third quarter of 2012. Our consolidated growth profit for the fourth quarter 2012 increased to approximately $11.9 million or 18.7% of net revenues, excluding pass-through revenues as compared to $10.9 million or 14.9% of net revenue, excluding pass-through revenue in the fourth quarter of 2011. This improvement in gross margin was primarily due to business mix as we experienced growth from the higher gross margin service fee business at the same time we experienced a reduction in business level from our lower margin product revenue business. But even after taking into account the business mix matter, our underlying gross margin performance for both our service fee business and our product revenue business performed well during this fourth quarter. During the quarter, service fee gross margin rose to 26.2% as compared to 24.6% during the same period in 2011. Various investments that we have made in the business over the past 12 months have allowed us to gain improved efficiencies in the business. In addition, as we've mentioned in previous quarters, one of our goals has been to focus on higher margin service activity, such as interactive marketing services and other professional services support. We believe these incremental services help us lengthen the client life cycle as we engage in a broader fashion with our clients. This quarter's results, as well as our year-to-date results, demonstrate that those efforts are paying off. While our gross margin performance for the quarter was improved, we did experience an increase in our SG&A activity for the quarter, which increased by approximately $1.4 million to $10.8 million as compared to $9.4 million for the same period a year ago. The SG&A increase was primarily the result of incremental personnel and operational infrastructure costs incurred in preparation of and in support of our higher level of service fee activity and business-to-consumer product revenue activity, especially during the holiday season. In addition, we incurred higher-than-normal professional fees during the quarter. We expect our SG&A levels to decrease from this Q4 CY 2012 level as we look ahead into 2013. As a result of the above items, our adjusted EBITDA for the quarter was generally in line with last year's fourth quarter results, though EBIT and net income from continuing operations for the fourth quarter were somewhat lower than the prior year. For the full year, however, we experienced strong improvements in our EBIT and net loss as compared to the prior year and generated, in total for the year, a positive non-GAAP net income performance of over $1 million for 2012. Turning to the balance sheet. Our total cash and cash equivalents at the end of 2012 was approximately $20 million and our total debt was just over $22 million. Our accounts receivable and inventory turnover ratios were generally in line with our expectations, though our accounts payable was higher than normally expected due to the timing of various vendor and client reimbursement payments. This favorably impacted our cash and debt positions as of the end of the year. Our cash flow from operating activities was $28.6 million for the calendar year 2012. One key component of this was the reductions in working capital requirements to support our Business and Retail Connect businesses as a result of the decline in product revenue in that segment that I discussed earlier. In addition, our cash flow was favorably impacted by cash generated from continuing operations, deferred rent and as previously mentioned, timing of year-end vendor and client reimbursement payments. We did invest approximately $14.7 million during the year in purchases of property and equipment. In addition, we had $7.3 million of property acquired under debt and capital leases during 2012. We also used approximately $12.1 million in financing activities during the year, primarily to reduce balances due under various debt and capital lease instruments. As we look ahead into calendar year 2013 and beyond, as Mike alluded to, we continue to see strong growth opportunities for our service fee business, particularly in current client expansion, international markets and the omni-channel arena. We will be challenged by the previously disclosed transition of certain service fee client programs and by reduced product revenues forecasted for our Business and Retail Connect segments. As a result, we are currently targeting calendar year 2013 Service Fee Equivalent revenue to be in the range of $110 million to $115 million compared with the $130 million performance in 2012. We believe our business review and cost focus that Mike spoke of earlier will help us drive efficiencies and reduce operating cost to mitigate much of the impact of the revenue decline on our adjusted EBITDA. And we are now targeting the adjusted EBITDA to be in the range of $8 million to $10 million, excluding the impact of restructuring expenses, which are expected to be primarily recognized during our March 2013 quarter. And looking at our individual business units. For our services business, we are currently projecting service fee revenues to be in the $102 million to $108 million range for the year as compared to approximately $120 million for 2012. We believe the service fee revenue decline, as compared to 2012, will be most pronounced in the June and September quarters while we are most impacted by the client transitions and do not yet have the favorable impact of new and expanded client activities which are expected to occur later this year, along with the ramp-up of this 2013 holiday season. We do expect our gross margins in our service fee business to improve slightly during this year as compared to 2012 as we continue to target to generate increased fees from our higher margin business activities. From a product revenue standpoint, we currently estimate that our Business and Retail Connect segment will generate approximately $90 million to $95 million of product revenue in 2013 as compared to approximately $120 million in 2012. We continue to expect to generate gross margins in the 7% to 9% range for this Business and Retail Connect segment overall. We expect our ongoing SG&A levels, excluding restructuring-related expenses, to be in the range of approximately $10 million per quarter as we look at 2013, though this number could decrease during the year as we target further cost reductions. Total depreciation expense, which gets reflected as a component of both cost of services, the cost of service fees and SG&A, depending on the related asset that's being depreciated, is expected to be approximately $2.5 million per quarter or approximately $10 million for the year. On an overall basis, while we are currently estimating reduced revenue and profit performance for CY 2013 as compared to 2012, we believe this reduction is temporary, and we are very excited about the opportunities of our business as we look to the future. We believe that we will continue to have success in expanding existing client activity and winning new business relationships. In conjunction with Mike's new role as CEO, along with our renewed efforts to truly drive shareholder value, we do expect to increase our investor relations efforts as we move forward. Our goal here is to present our PFSweb investment thesis loudly and clearly to the investment community. We believe we have strong opportunities for growth as we look to the future and we are excited to be able to share our enthusiasm of the PFSweb story to others. Now I'd like to call -- place the call back over to Mike for some closing remarks. Mike? Michael C. Willoughby: Thank you, Tom. And before I provide my closing comments, I would like to read a prepared statement from Jim Riley, our Chairman of the Board, primarily regarding the governance changes that we announced earlier this morning. Jim says, in regard to the plans Mike and I have for moving forward, which Mike discussed previously, we have identified a number of opportunities to increase the revenue potential of PFSweb and to streamline enhance our operations to increase profitability. We are absolutely focused on the key metrics that drive shareholder value. And while there are many different ways to do this, our goal is to do so without disrupting the operation side of the business or its ability to capitalize on a rapidly-growing and changing eCommerce environment. One of the ways is by making certain changes to PFSweb's corporate governance practices, following an ongoing review by the board and some feedback from stockholders. In addition to the separation of the Chairman and CEO roles at this time, we are also announcing that we will be proposing 2 important governance initiatives to the stockholders at the 2013 annual meeting. The first is to declassify our Board. Our board has been classified since this company went public and we believe that the classified board structure has provided important benefits to the company over the years. But there are also good reasons why many public companies have moved to annual elections of directors. And as part of our ongoing review of corporate governance practices and given some feedback on some of our largest stockholders, our board has determined that it's in the company's best interest at this time to recommend to the stockholders that they adopt proposals to declassify the board. In addition, we will be submitting a proposal to our stockholders to provide for a majority voting standard in uncontested elections. Our Board has determined that it is an important time -- appropriate time to adopt this increasingly common governance initiative, and we'll recommend that stockholders approve the proposal. If the proposal is adopted, the bylaws would provide that incumbent directors who fail to receive a majority of the votes cast in an uncontested election will be required to submit a resignation to the board. The Chairman of the board would act on the resignation and then the board would act on the Chairman's recommendation. The board's rationale for accepting or declining to accept the resignation would then be disclosed. We believe both of these initiatives are very positive developments in our corporate governance, and we will advocate that stockholders adopt them at the annual meeting. One further announcement in the governance area is that our nominating committee has determined that it will add a sixth director to the board and will nominate a candidate for election. The nominating committee is in the process of identifying attractive candidates with relevant expertise, and we'll make a recommendation to the Board when it finds a suitable candidate. On the operating side of the business, we will be moving to a more incentive-based compensation scheme across the company, starting with the senior management. Mike will provide an overview and the details will be available in our proxy in several weeks, but the fundamental principles are to better align compensation and with the creation of shareholder value. Major components are expected to include a reduction in aggregate salaries for senior management, incentives for exceeding expectations, a much larger use of stock in compensation and an emphasis on increasing the stock ownership of management and the board. Having given those comments from Jim Riley, I'll provide these closing comments before we'll get to the Q&A section of the call. As I stated earlier, it is evident, when reviewing our 2012 financial results, that the company is now running very smoothly and with tremendous potential for growth. While we are excited about the opportunities ahead of us, there's still a period in our immediate future where we'll see a decline in total service fee revenue related to decisions by certain clients to transition their eCommerce business off our platform. As Tom previously mentioned, we expect a 2013 adjusted EBITDA to be in the range of $8 million to $10 million. While we have disclosed and expect a decline previously, this guidance reflects the financial performance improvements we are making with our restructuring, and I am committed to overcoming this slowdown in growth as quickly as possible. I have set a series of short-term, intermediate and long-term goals for our leadership team that, in addition to the plans outlined earlier, are targeted to put us on track to meet or exceed our 2013 guidance just provided. And then soon, return us to performance levels that are in-line with, or better than the performance, we just reported for 2012. That is our objective. I'd like to thank everyone that attended the call today, and I hope to be speaking with many of you over the next few days and weeks. I'm very excited to be in a position to lead this great organization forward and I'm fully committed to delivering the best possible returns for our shareholders and the highest levels of service and value for our world-class clients and their customers. This concludes our prepared remarks, and I would now like to open up the call for questions. Operator?

[Operator Instructions] Your first question comes from the line of Marco Rodriguez of Stonegate Securities. Marco Rodriguez - Stonegate Securities Inc., Research Division: I wanted to talk a little bit more about the initiatives that you're undertaking right now. You've had some head count reductions, you're going to have some more as time progresses, and you're evaluating some other initiatives. I'm just trying to get a better feel for quantifying what these things might mean. I mean, your SG&A guidance is about $10 million a quarter, which is pretty close to where you guys are at Q4. So I'm just trying to help -- just if you can try and help me understand what -- some of the moving parts that are there. Thomas J. Madden: Okay. So recognize that our cost structure is really presented in 2 areas in the -- in our income statement. We have cost of service fees, as well as the SG&A component. So as we look at these cost adjustments that are occurring, we expect them to show up in both components of the debt income statement categories. We expect to be able to hopefully drive some improved efficiency that will help us improve our gross margin, and then secondly, from an SG&A standpoint, adjust things as well. So the general guidance that we've provided earlier, we do have some of these adjustments, as Mike indicated, reflected in those, to the extent we're able to identify increased efficiencies. As they go through the year, we'll be able to overperform on those objectives. Marco Rodriguez - Stonegate Securities Inc., Research Division: Let me ask it this way. So on the service fee gross margin, you ended fiscal '12 at 26.8%. What sort of incremental increase you would be looking at then? Thomas J. Madden: As I indicated, I think that there's an opportunity to improve it somewhat. Our targeted range for gross margin is generally in the 25% to 30% range. So as indicated, we'd like to target for an improved performance over 2012 in 2013. And that will come from, hopefully, further efficiencies and as well as other -- selling of other higher-margin activities. I will, I guess, communicate though that the gross margins can be impacted by new client activities that come on board, especially to the extent that there's opportunities for large new clients that we may make decisions on, that committed a lower gross margin target than what I would have laid out. So things do change a little bit. But on an overall basis, right now, we are targeting an improvement from our gross margins performing safely like at last year. Marco Rodriguez - Stonegate Securities Inc., Research Division: Okay. And then looking at the Retail Connect business, you provided some guidance, I believe it was $90 million to $95 million for fiscal '13. How should we think about that as the quarters progress? Should it just be kind of a stair step down, if you will, or any particular quarters heavily weighted? Thomas J. Madden: Generally, that business, on a regular run-rate basis, has run relatively stable during the year, with a little bit of a slight downtick in the September quarter, a little bit of an uptick in the December quarter. If you look at it on an overall -- but this year, we do expect a little bit of further declines in one of the product categories that we're running, so I would expect a slight downward trend in that business as we look at 2013 on a quarterly basis. Marco Rodriguez - Stonegate Securities Inc., Research Division: Okay. And then, just trying to understand, obviously, there's a little bit of noise here on your service fee revenues in '13 in terms of growth rates. How should we, longer term, be thinking about what is a normalized growth rate for that business, on a topline perspective? Michael C. Willoughby: So Marco, in the past, we've described sort of our base expectation around the 20% annual growth rate. I think we were able to sustain and sort of demonstrate that prior to this year. As we look at this year, we've disclosed previously the client transitions which are, in the case of Carter's, driven by the plans that they had to onboard certain components of the program that were accelerated by the phenomenal success of the program as we were operating it. We also, as we've disclosed, I think influenced that decision to an extent with the challenges we had in 2011 holiday period. And our performance in 2012 during the holiday, which was very good, above service levels for our clients, and demonstrated, I guess, the scalability improvements that we made, give us confidence that we won't be influencing our clients in a negative way to make decisions to transition the business away. So we should expect to get back to those 20% to 25% growth rate expectations, and I certainly would target that expectation beginning next year.

[Operator Instructions] Your next question comes from the line of George Walsh of Gilford Securities.

Mike, you also have had the roles of President and CIO with the company. Are you going to continue in those roles or will there be new hires or a promotion within the company to fill those? Michael C. Willoughby: No. At this time, George, based on our plans for this year, the responsibilities I had as President, which were primarily in the demand generation side, the business development side of our business, as well as a certain component of the operational oversight, I will be transitioning to Cindy Almond in the business development side, and our Senior VP of Global Operations, Dave Reese, and some of the operational areas, clearly I will still have an important role within that transition. While I'm not going to retain the CIO title, I will continue to be very involved in the architectural and roadmap decisions of our technology platform. Our VP of IT, Mark Fuentes, is a very strong operator, is the -- improvements that we've made last year in our technology platform are largely due to his work and his staff. So I'm extremely confident in his ability to operate our technology platform going forward without a lot of assistance on my part. But I will be focused on what I believe are the most important aspects of our technology roadmap, which is in building out our iCommerce infrastructure, adding new omni-channel features and functionality, striking up new partnerships with important technology and agency service partners, looking for opportunities, perhaps even through joint ventures or acquisitions to build our capabilities, especially in the agency services and technology area. And then we'll see, as we move forward into coming years, as our organization expands and grows, what we need to do around adding additional executive positions, but at this time, we are going to distribute the work among the existing executives in order to operate the business.

Okay, great. Also, just -- is there any kind of quantification you can give at this point relative to the charges you're looking at that you mentioned you will be coming up for the first quarter? Thomas J. Madden: We're still kind of working through that, but I would expect that in the first quarter, it's probably a couple of million dollars or so.

Okay. And is the bulk of that severance? Thomas J. Madden: Yes.

Okay. Okay, and just I'm wondering if you can expand maybe a little bit more on, what you talked, where the alliances and joint ventures going forward. What's -- could you just go into more detail what's available out there or what type of things would that mean for the company? Would it be investments on the company's part or is it more marketing type of joint ventures? Michael C. Willoughby: So as we look at our roadmap and the growth that we perceive, the opportunities that we perceive, especially in international expansion and in broadening out our agency services offering, and I think we've discussed on prior conference calls that we believe the primary mechanism for us to expand internationally is in partnership with companies who already have a mature presence in the geography, particularly in the fulfillment logistics area. So while we have a number of our clients expressing active interest and us helping them to move from our established geographies of North America and Western Europe, into Asia Pacific, Australia, South America particularly right now, rather than us using our capital to invest in fixed infrastructure, particularly in fulfillment operations, which I believe has a relatively poor ROIC associated with it, we would look to have partnerships with companies that already have a mature presence in the market place. And that could include operational partnerships, it could include joint ventures that we create with companies as a presence in a certain marketplace. In the case of the joint venture, that may take the role of us investing in, certainly in the joint venture, potentially in the partner or vice versa. We're open to all possibilities. And in addition to the international expansion opportunity, which is certainly at the forefront of our consideration right now, we're looking at how do we, as aggressively as possible, build out the agency services area of our business. I'd categorize the opportunities there in 3 areas. The first is opportunities that we may have to partner with, create a joint venture with or invest in or acquire agency that looks like a typical source system integrator that has eCommerce development services. And we would be able to add to our bandwidth, and potentially bring on additional opportunities, additional geographies and even the ability to work with additional platforms in addition to our demand relationship. The second category I would say is in the area of marketing services, digital marketing services, and there are many small- and medium-sized agencies that are specializing in certain areas of the digital marketing arena. And whether we bring on through a partnership or an acquisition an agency that specializes an area such as social commerce or creative development or any of the other disciplines within the digital marketing area, we believe that could give us a jump start into moving into a new area or increasing our bandwidth and opportunities in that area. And then the third component within the agency services area falls into the technology area. And as we continue to build out our platform, primarily through partnering with best-of-breed technology providers, we will continue to look at opportunities to create partnerships, but maybe even tighter partnerships where there's a joint venture or an investment that's made one way or another or in both -- with both parties to add technology to our platform and do it in such a way that we obtain more exclusive access and rights to the intellectual property underneath that component and somewhat exclusive access to geography or sales region or something like that. So those are kinds of the 3 areas that are at the top of mind for me, right now, George.

Okay, that's good. If I could just ask that last component there, getting exclusive rights, is that a trend that's doable or -- are a lot of these companies or partners resistant to that? Michael C. Willoughby: Well, I think obviously, partners, as well as PFSweb, are resistant to locking out alternatives or sort of locking in ourselves to a -- instead of restrictions. However, sometimes, there are overwhelming benefits to doing that. While we do not have a contractual exclusive relationships with Demandware in North America, our strength and our position in the marketplace has sort of granted us that operational benefit. And we have continued to want to have that. But I think there are opportunities where our ability to take the technology partner further in the marketplace and our ability to create additional opportunities for a small agency would be worthwhile for them to hitch up to our wagon, so to speak, and in the process, become exclusive to us with -- either within our vertical markets or within the geography. I think it's possible.

At this time, there are no further questions. I will now return the call to Mike Willoughby for any closing comments. Michael C. Willoughby: Thank you, and I appreciate the comments. I appreciate your attention and encouragement. And as Tom said, we'll be looking forward to visiting with you in the coming days and weeks, either on the phone as you desire to call in and speak to Tom and I, or face to face, as we plan on visiting our current investors and prospective investors in roadshow-type events over the coming weeks and months. Tom and I are accessible. If you have any questions, feel free to contact us. And thank you for your interest in the story, and look forward to talking to you in a couple of months in the May conference call. Thomas J. Madden: Good morning.

Thank you. That does conclude that PFSweb Fourth Quarter and Year End 2012 Earnings Conference Call. You may now disconnect.