CompUSA 2008 Annual Report Download

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Proxy Statement and
2008 Annual Report to Stockholders
Dear Fellow Stockholders,
When I wrote to you a year ago, we had just completed the greatest year in our Company’s history. Our core business
segments – Technology Products and Industrial Products – both reported all-time records during 2007 in both revenues
and operating income. We had just completed the CompUSA acquisition and were hard at work on integration. Our
significant investment since the early 2000s in the Hosted Software business appeared to be on the verge of paying off
with anticipated go-lives of several large external customers. We had some concerns about the macro economic climate,
but the storm clouds appeared to be distant and not too dark. Now, a year later, things look very different – in both our
internal business segments and the external macroeconomic climate, which quite frankly is unlike anything we could have
reasonably foreseen. While we believe the current business environment is the most challenging in several generations,
we also believe it is presenting our Company with unprecedented growth opportunities. I will outline below some of the
key accomplishments and disappointments in each of our business segments below.
Consolidated Company
During 2008, our revenues grew by 9% to over $3.0 billion; our operating income was $83 million; our net income was
$53 million, or $1.41 per diluted share; our operating cash flow was $82 million and we paid our second special dividend
of $1.00 per share. As of December 31, 2008, our working capital was over $250 million; we had no debt outstanding
other than small capitalized leases; our $120 million credit facility was undrawn; and our stockholders’ equity was $334
million. We remain a profitable company and our balance sheet is strong and liquid. Although our 2008 final results fell
short of our expectations, I am extremely proud of our financial performance (in light of the economy); our strategic
accomplishments; the strength of our balance sheet and our overall strategic positioning in our industries.
Technology Pro d u c t s
The major event during 2008 was the CompUSA acquisition. We acquired the ecommerce business (compusa.com URL,
trademarks and tradenames, customer names/addresses and miscellaneous other intangible assets) and closed on the
acquisition during January. We immediately launched our new compusa.com website with our new products, content and
approach to ecommerce. We assumed leases on 16 of old CompUSA’s over 200 brick and mortar retail store locations
during February and March. Upon receiving the keys to the stores, we cleaned them up, filled them with inventory from
our distribution center, installed point of sale equipment, and hired and trained hundreds of associates from the local
markets to work in and manage the stores. We opened the stores generally one to two weeks after receiving the keys from
old CompUSA and steadily have increased customer traffic since then. We also conceptualized our revolutionary Retail
2.0 merchandising approach and deployed it successfully to our flagship Dadeland location. The combined CompUSA
ecommerce and retail operations generated significant sales revenue during 2008 and were profitable, but they are not yet
at the levels they are capable of producing. During 2009, we are rebranding all existing TigerDirect retail stores in the
U.S. under the CompUSA brand; opening “B2B” call centers in Texas, Idaho and South Dakota; continuing the rollout of
Retail 2.0 to more stores, and implementing a new point of sale solution for all of our retail stores to improve operating
e ff i c i e n c y.
In our TigerDirect business, we saw mixed results during the year in our various sales channels. Our core Ti g e r D i r e c t . c o m
“B2C” web business continued to grow successfully, and it continues as one of the top rated ecommerce sites for
computers and consumer electronics in the United States. Our TigerDirect “B2B” business had mixed results, impacted
by a general slowdown in corporate purchasing late in the year. Our TigerDirect retail stores continued to show strong
growth and profitability.

Table of contents

  • Page 1
    ... locations during February and March. Upon receiving the keys to the stores, we cleaned them up, filled them with inventory from our distribution center, installed point of sale equipment, and hired and trained hundreds of associates from the local markets to work in and manage the stores. We opened...

  • Page 2
    ... direct marketing companies in a hosted environment. We have successfully taken a number of relatively small external customers live on the product over the past several years. However, we have struggled managing the costs of development, implementation, and hosting at a commercial service...

  • Page 3
    ... AND ADDRESS CHANGES TO: American Stock Transfer & Trust Company 59 Maiden Lane New York, NY 10038 STOCK EXCHANGE: The Company's shares are traded on the New York Stock Exchange under the symbol SYX. CORPORATE GOVERNANCE Copies of the Company's 2008 Annual Report on Form 10-K, Proxy Statement for...

  • Page 4
    ... under Rule 14a-12 Systemax Inc. (Name of Registrant as Specified in Its Charter Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): |x| |_| No fee required Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and...

  • Page 5
    ...invited to attend the 2009 Annual Meeting of Stockholders of Systemax Inc. (the "Company") which will be held at the Company' s corporate offices, located at 11 Harbor Park Drive, Port Washington, New York at 2:00 p.m. on Friday, June 12, 2009. Your Board of Directors looks forward to greeting those...

  • Page 6
    ...LLP as the Company' s independent registered public accountants; and To transact such other business as may properly come before the meeting and any and all adjournments or postponements thereof. 3. The Board of Directors has fixed the close of business on April 22, 2009 as the record date for the...

  • Page 7
    IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 12, 2009. Our Proxy Statement and Annual Report are available online at: www.proxyvote.com 4 KL2 2600873.8

  • Page 8
    ...of Directors (the "Board") of Systemax Inc., a Delaware corporation (the "Company"), for the 2009 Annual Meeting of Stockholders of the Company to be held on June 12, 2009 (the "Annual Meeting"). The Company has made the proxy materials available to stockholders of record as of the close of business...

  • Page 9
    ... instructions on the notice or on the website referred to in the notice. The proxy statement and annual report on Form 10-K for fiscal year 2008 are available at www.proxyvote.com. If you own shares of common stock in more than one account-for example, in a joint account with your spouse and in your...

  • Page 10
    ... of the Company Chief Executive of the Company' s Technology Products Group Executive Vice President and Chief Financial Officer of the Company Chairman and Chief Executive Officer of First Long Island Investors LLC Managing Director of Rothschild Inc. Retired President of Myron Corporation Age 49...

  • Page 11
    ... PROPOSAL NO. 1. CORPORATE GOVERNANCE Independence of Directors In connection with its annual review of director independence, the Board has determined that each of the following Directors or nominees of the Company meets the standards for independence required by the New York Stock Exchange and SEC...

  • Page 12
    ... the prompt reporting of Policy violations. The Company' s Corporate Ethics Policy is available on the Company' s website (www.systemax.com). A copy can also be obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY 11050...

  • Page 13
    ... 2009. A copy of the Audit Committee Charter is available on the Company' s website, www.systemax.com, or can be obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY 11050. The current members of the Audit Committee are...

  • Page 14
    ... Compensation Committee Charter is available on the Company' s website (www.systemax.com) or can be obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY 11050. Executive Committee The Executive Committee consists of the...

  • Page 15
    ... audit of the Company' s consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) and for issuance of a report thereon; they also perform limited reviews of the Company' s unaudited quarterly financial statements. The Audit...

  • Page 16
    ... Name Richard Leeds Bruce Leeds Robert Leeds Gilbert Fiorentino Lawrence P. Reinhold Thomas Axmacher Curt S. Rush Age 49 53 53 49 49 49 55 Office Chairman and Chief Executive Officer; Director Vice Chairman; Director Vice Chairman; Director Chief Executive of the Company' s Technology Products Group...

  • Page 17
    .... Mr. Leeds' mailing address is Robert Leeds, c/o Systemax Inc., 11 Harbor Park Drive, Port Washington, NY 11050. (4) Includes options to acquire 500,003 shares that are currently exercisable pursuant to the terms of the Company' s 1995 and 1999 Long-Term Stock Incentive Plan. (5) Includes options...

  • Page 18
    ...-Employee Directors. (8) Includes options to acquire 62,500 shares that are currently exercisable pursuant to the terms of the Company' s 1999 Long-Term Stock Incentive Plan. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires the Company' s executive...

  • Page 19
    ... are minority owners of a wholesale business that sells certain products to mass merchant customers. These products are, in some instances, similar to the type of products sold by the Company. In 2008, the Company subleased office space to this business at an annual rent of approximately $24,000...

  • Page 20
    ... integrity and good corporate governance, and motivating executive officers to manage the Company in a manner that will enhance the Company' s growth and financial performance for the benefit of our stockholders, customers and employees. Compensation of the Company' s named executive officers is...

  • Page 21
    ..., Gilbert Fiorentino (Chief Executive - Technology Products Group) has received stock-based compensation in the past; however, he did not receive new equity compensation grants in 2007 or 2008. Benefits, Perquisites and Other Compensation - The Company provides various employee benefit programs to...

  • Page 22
    ... the Chief Financial Officer and Chief Executive of the Technology Products Group), (a) the annual compensation of the other executive officers of the Company, (b) the annual compensation of certain subsidiary managers, and (c) all individual stock incentive grants to other executive officers. The...

  • Page 23
    ... of CompUSA and in excess of $20 million to stock inventory in new stores, all in the most challenging economic environment in generations. The Compensation Committee also considered the Company' s improved controls over internal accounting and financial reporting during 2008, as disclosed...

  • Page 24
    ... criteria previously established from time to time by the Executive Committee of the Board of Systemax. He is also eligible for an additional bonus, in the discretion of the Board. In 2008, Mr. Fiorentino, received $476,875 in annual salary and a non-equity incentive plan payment of $1,400,000. In...

  • Page 25
    ... Mr. Fiorentino would be entitled to receive cash bonuses for 2009 based on (i) the Company' s Technology Products Group achieving certain earnings targets and (ii) the Company successfully implementing technology enhancements in certain of our retail stores. In addition, each of the named executive...

  • Page 26
    ... for fiscal year 2008 were Ann R. Leven, Robert D. Rosenthal and Stacy S. Dick. The Company employs no member of the Compensation Committee. In addition, none of our directors has any interlocking relationship with our Board, Compensation Committee or executive officers that requires disclosure...

  • Page 27
    ...and 2008: Name and Principal Position Richard Leeds Chairman and Chief Executive Officer Lawrence P. Reinhold Vice President and Chief Financial Officer Bruce Leeds Vice Chairman Robert Leeds Vice Chairman Gilbert Fiorentino Chief Executive - Technology Products Group Year Salary ($) Bonus ($) Stock...

  • Page 28
    ... named executive officers in respect of 2008 performance. All Other Option Awards: Number of Exercise or Grant Date Securities Base Price Fair Value of Underlying of Option Stock and Options Awards Option (#) ($/Sh) Awards ($) (1) Estimated Future Payouts Under Non-Equity Incentive Name Plan Awards...

  • Page 29
    ... fiscal year 2008. The market value of the stock award is based on the closing price of one share of our common stock as of January 2, 2009, which was $10.87. Name (a) Lawrence P. Reinhold Gilbert Fiorentino Option Awards Number of Number of Securities Securities Underlying Underlying Unexercised...

  • Page 30
    ... sets forth information regarding exercise of options to purchase shares of the Company' s common stock and vesting of restricted stock by the named executive officers that exercised options or whose restricted stock vested during fiscal year 2008: Option Awards Name Number of Shares Acquired on...

  • Page 31
    ... the closing price of our common stock on that date. These amounts are estimates and the actual amounts to be paid can only be determined at the time of the termination of the officer' s employment. Value of Accelerated Vesting of Stock Awards ($) 1,087,000 (2) - Name Gilbert Fiorentino Lawrence...

  • Page 32
    ... to the Company' s 2006 Stock Incentive Plan for Non-Employee Directors, which was approved by the Company' s stockholders at the 2006 Annual Stockholders' Meeting. DIRECTOR COMPENSATION FOR FISCAL YEAR 2008 The following table sets forth compensation on information regarding payments in 2008 to our...

  • Page 33
    ... consolidated financial statements and its internal control over financial reporting for fiscal year 2007 and its interim reviews of the financial statements included in the Company' s Forms 10-Q for that fiscal year. Tax Fees Tax fees included services for international tax compliance, planning and...

  • Page 34
    ... information on the Company' s web site or any report the Company files with, or furnishes to, the SEC is not part of this proxy statement. The Board has adopted the following corporate governance documents (the "Corporate Governance Documents"): ï,· Corporate Ethics Policy for officers, Directors...

  • Page 35
    ... of the New York Stock Exchange, each of the Corporate Governance Documents is available on the Company' s Company web site (www.systemax.com) or can be obtained by writing to Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY 11050. 26...

  • Page 36
    ... ] Systemax Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 11 Harbor Park Drive Port Washington, New York 11050 (Address of principal executive offices, including zip code) Registrant's telephone number, including...

  • Page 37
    ... Accounting and Financial Disclosure .29 Item 9A. Controls and Procedures ...29 Item 9B. Other Information ...30 Part III Item 10. Directors, Executive Officers and Corporate Governance...31 Item 11. Executive Compensation ...31 Item 12. Security Ownership of Certain Beneficial Owners and Management...

  • Page 38
    ... distribution and sale of such products timely availability of existing and new products risks involved with e-commerce, including possible loss of business and customer dissatisfaction if outages or other computer-related problems should preclude customer access to us risks associated with delivery...

  • Page 39
    ... part of the Company have been in business since 1955. Our headquarter office is located at 11 Harbor Park Drive, Port Washington, New York. Recent Developments On January 5, 2008 the Company entered into an asset purchase agreement with CompUSA Inc. Under the agreement the Company acquired CompUSA...

  • Page 40
    ... of business applications in 2004. PCS ProfitCenter Softwareâ„¢ is a web-based application which is delivered as an on-demand service over the internet. The product helps companies automate and manage their entire customer life-cycle across multiple sales channels (internet, call centers, outside...

  • Page 41
    ... computer and industrial products than our printed catalogs. Our customers have around-the-clock, on-line access to purchase products and we have the ability to create targeted promotions for our customers' interests. Many of our internet sites also permit customers to purchase "build to order" PCs...

  • Page 42
    ... in phone service. In addition to telephone orders, we also receive orders by mail, fax, electronic data interchange and through the internet. A large number of our products are carried in stock, and orders for such products are fulfilled on a timely basis directly from our distribution centers...

  • Page 43
    ... industrial products market, customer purchasing decisions are primarily based on price, product selection, product availability, level of service and convenience. We believe that direct marketing via catalog, the internet and sales representatives is an effective and convenient distribution method...

  • Page 44
    ... environmental matters in the future. Financial Information About Foreign and Domestic Operations We conduct our business in North America (the United States, Puerto Rico and Canada) and Europe. Approximately 37.9% of our net sales during 2008 were made by subsidiaries located outside of the United...

  • Page 45
    ...the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company web site (www.systemax.com) and can be obtained upon request by writing to Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor Park Drive, Port Washington, NY 11050. Item 1A...

  • Page 46
    ... include price, availability, service and support. We compete with a wide variety of other resellers and retailers, as well as manufacturers. Many of our competitors are larger companies with greater financial, marketing and product development resources than ours. In addition, new competitors...

  • Page 47
    ... is no assurance that parts and supplies will be available in a timely manner and at reasonable prices. Any loss of, or interruption of, supply from key suppliers may require us to find new suppliers. This could result in production or development delays while new suppliers are located, which could...

  • Page 48
    ...currency exchange rates Difficulties with staffing and managing international operations Unexpected changes in regulatory requirements For example, we currently have operations located in numerous countries outside the United States, and non-U.S. sales (Europe, Canada and Puerto Rico) accounted for...

  • Page 49
    ...acquisition of CompUSA in 2008 added 16 retail stores, more than double the then existing number of stores. The addition of these stores requires the Company to effectively manage its cost structure in order to maintain profitability including the additional inventory needs, retail point of sales IT...

  • Page 50
    ... adopted by the New York Stock Exchange in response to SarbanesOxley, have required changes in corporate governance practices of public companies. These developments have substantially increased our legal compliance, auditing and financial reporting costs and made them more time consuming. These...

  • Page 51
    failure to implement effective general and application controls errors or security flaws in our product technical difficulties which we can not resolve on a timely or cost-effective basis inability to provide the level of service commitment inability to deliver product upgrades and enhancements ...

  • Page 52
    ...22,719 2012 (1) For information about this facility, leased from related parties, see Item 13 --Certain Relationships and Related Transactions and Director Independence. We also lease space for other smaller offices and retail stores in the United States, Canada, Puerto Rico and Europe and certain...

  • Page 53
    ...of business, including those involving commercial, employment, tax and intellectual property related claims, none of which, in management' s opinion, is anticipated to have a material adverse effect on our consolidated financial statements. Item 4. Submission of Matters to a Vote of Security Holders...

  • Page 54
    ....60 17.95 On January 3, 2009, the last reported sale price of our common stock on the New York Stock Exchange was $10.87 per share. As of January 3, 2009, we had 230 shareholders of record. On March 3, 2008, the Company' s Board of Directors declared a special dividend of $1.00 per share payable on...

  • Page 55
    ...compensation plans and a performance graph relating to the Company' s common stock is set forth in the Company' s Proxy Statement relating to the 2009 annual meeting of shareholders and is incorporated by reference herein. Item 6. Selected Financial Data. The following selected financial information...

  • Page 56
    ... marketed under the trademarks Globalâ„¢, GlobalIndustrial.comâ„¢ and Nexelâ„¢. Industrial products accounted for 8% of our net sales in 2008. In both of these product groups, we offer our customers a broad selection of products, prompt order fulfillment and extensive customer service. Our Software...

  • Page 57
    ...and customer rebate reserves, and other vendor and employee related costs. While we believe that these estimates are reasonable, any significant deviation of actual costs as compared to these estimates could have a material impact on the Company' s consolidated financial statements. Income Taxes. We...

  • Page 58
    ... of this FSP may have on the Company' s consolidated financial statements. In June 2008, the FASB issued FASB Staff Position No. EITF 03-6-1 "Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities". This FSP was issued to clarify that instruments...

  • Page 59
    ... and information about how certain accounting principles and estimates affect the consolidated financial statements. This discussion should be read in conjunction with the consolidated financial statements included herein Sales increase of 9% in 2008 over 2007 CompUSA.com and CompUSA retail...

  • Page 60
    ... rate benefits, European sales would have been flat. Sales increased in all three reporting business segments and in both geographies during 2008 over 2007. The Technology Products sales increase was driven by increased internet and retail store sales as the result of the acquisition of the CompUSA...

  • Page 61
    ... $2.6 million annually. Sales increased in all three reporting business segments and in both geographies during 2007 over 2006. The growth in Technology Products sales was driven primarily by increased internet and retail store sales, private label product sales and expanded product offerings. The...

  • Page 62
    ...during the second and third quarters as a result of lower business activity during those months. The 2008 amounts were impacted by the CompUSA acquisition. The following table sets forth the net sales, gross profit and income from operations for each of the quarters since January 1, 2006 (amounts in...

  • Page 63
    ... million cash for the purchase of certain CompUSA assets, payment of $37.1 million for a special dividend, stock repurchases of $5.8 million and an increase in inventory, primarily related to purchasing inventory for the 16 CompUSA retail stores. Accounts payable balances increased by approximately...

  • Page 64
    ... activities for 2006. Repayment of short and long-term borrowings used approximately $24.8 million of cash and proceeds from stock option exercises and excess tax benefits from stock option exercises provided approximately $2.6 million of cash. We have a $120.0 million secured revolving credit...

  • Page 65
    ... in Port Washington, NY from Addwin Realty Associates, an entity owned by Richard Leeds, Bruce Leeds, and Robert Leeds, Directors of the Company and the Company' s three senior executive officers and principal stockholders. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We...

  • Page 66
    ... directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company' s assets that could have a material effect on the Company' s financial statements. Management, including the Company' s Chief Executive Officer...

  • Page 67
    ... have been no changes in the Company' s internal controls over financial reporting during the quarter ended December 31, 2008 that have materially affected, or are reasonably likely to materially affect, the Company' s internal control over financial reporting. Item 9B. Other Information. None. 32

  • Page 68
    PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by Item 10 of Part III is hereby incorporated by reference to the Company' s Proxy Statement for the 2009 Annual Meeting of Stockholders. (the "Proxy Statement"). Item 11. Executive Compensation. The ...

  • Page 69
    ... statement on Form S-1) (Registration No. 333-1852) Form of 1999 Long-Term Stock Incentive Plan as amended * (incorporated by reference to the Company' s report on Form 8-K dated May 20, 2003) Lease Agreement dated September 20, 1988 between the Company and Addwin Realty Associates (Port Washington...

  • Page 70
    ... of 2005 Employee Stock Purchase Plan* (incorporated by reference to the Company' s annual report on Form 10-K for the year ended December 31, 2006). Second Amendment to Lease Agreement dated September 20, 1988 between the Company and Addwin Realty Associates (Port Washington facility) (incorporated...

  • Page 71
    ..., 2007). Amendment to Asset Purchase Agreement between the Company and CompUSA dated February 14, 2008 (incorporated by reference to the Company' s annual report on Form 10-K for the year ended December 31, 2007). Corporate Ethics Policy for Officers, Directors and Employees (revised as of March 30...

  • Page 72
    ... Accounting Officer) Chief Executive, Technology Products Group March 18, 2009 March 18, 2009 /s/ LAWRENCE P. REINHOLD Lawrence P. Reinhold /s/ THOMAS AXMACHER Thomas Axmacher March 18, 2009 March 18, 2009 /s/ GILBERT FIORENTINO Gilbert Fiorentino and Director Director Director Director...

  • Page 73
    ... for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109 as of January 1, 2007. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Systemax Inc.' s internal control over financial reporting as of December 31...

  • Page 74
    ... assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors...

  • Page 75
    SYSTEMAX INC. CONSOLIDATED BALANCE SHEETS (in thousands, except for share data) December 31, 2008 ASSETS: Current assets: Cash and cash equivalents Accounts receivable, net of allowances of $9,146 and $12,122 Inventories Prepaid expenses and other current assets Deferred income taxes Total current ...

  • Page 76
    SYSTEMAX INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Year Ended December 31, 2008 Net sales Cost of sales Gross profit Selling, general and administrative expenses Operating income Foreign currency exchange loss (gain) Interest and other income, net Interest ...

  • Page 77
    ...Proceeds (repayments) of long-term debt and capital lease obligations Dividends paid Proceeds from issuance of common stock, net of repurchases Purchase of treasury stock Excess tax benefit from exercises of stock options Net cash used in by financing activities EFFECTS OF EXCHANGE RATES ON CASH NET...

  • Page 78
    SYSTEMAX INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands) Common Stock Number of Shares Outstanding Accumulated Other Comprehensive Income (Loss), Net of Tax Unearned Restricted Stock Compensation Amount Additional Paid-in Capital Treasury Stock, At Cost Retained Earnings ...

  • Page 79
    ... business targeted for disposal. The Company' s identifiable intangible assets consist of trademarks, trade and domain names, retail leases and customer lists (See Note 2). Accruals - Management makes estimates and assumptions that affect amounts reported in the consolidated financial statements and...

  • Page 80
    ...the Company' s effective tax rate in a given financial statement period may be affected. Revenue Recognition and Accounts Receivable - The Company recognizes sales of products, including shipping revenue, when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price...

  • Page 81
    ... in cash and cash equivalents, trade accounts receivable, accounts payable and debt obligations. The Company estimates the fair value of financial instruments based on interest rates available to the Company and by comparison to quoted market prices. At December 31, 2008 and 2007, the carrying...

  • Page 82
    ... the Company' s planned expansion into the retail market place in North America and Puerto Rico. A final purchase price allocation based on the fair market value of acquired assets has been completed and the Company has recorded assets of approximately $17.0 million for Trademarks and Trade Names...

  • Page 83
    ... The borrowings are secured by all of the domestic and United Kingdom accounts receivable, the domestic inventories of the Company, the Company' s United Kingdom headquarters building and the Company' s shares of stock in its domestic and United Kingdom subsidiaries. The credit facility expires and...

  • Page 84
    ...of December 31, 2008. The 2006 Stock Incentive Plan For Non-Employee Directors - This plan, adopted by the Company' s stockholders on October 11, 2006, replaces the 1995 Stock Option Plan for Non-Employee Directors. The Company adopted the plan so that it could offer directors of the Company who are...

  • Page 85
    ...the difference between the closing stock price on the last day of trading in 2008 and the exercise price) that would have been received by the option holders had all options been exercised on December 31, 2008. This value will change based on the fair market value of the Company' s common stock. 50

  • Page 86
    ... stock units under the 1999 Plan to a key employee who is also a Company director. A restricted stock unit represents the right to receive a share of the Company' s common stock. The restricted stock units have none of the rights as other shares of common stock until common stock is distributed...

  • Page 87
    ... rate State and local income taxes and changes in valuation allowances, net of federal tax benefit Foreign taxes at rates different from the U.S. rate Changes in valuation allowances for foreign deferred tax assets Tax credits Refunds- prior years Non-deductible items Adjustment for prior year taxes...

  • Page 88
    ... its headquarters office/warehouse facility in New York from an entity owned by the Company' s three principal shareholders and senior executive officers. The Company believes that these payments were no higher than would be paid to an unrelated lessor for comparable space. The Company also acquires...

  • Page 89
    ...financial statements. 10. SEGMENT AND RELATED INFORMATION The Company operates and is internally managed in three operating segments, Technology Products, Industrial Products and Software Solutions. The Company' s chief operating decision-maker is the Company' s Chief Executive Officer. The Company...

  • Page 90
    ...291,342 $584,161 Financial information relating to the Company' s operations by geographic area was as follows (in thousands): 2008 Net Sales: United States: Technology Products Industrial Products Software Solutions United States total Other North America Products) Europe Consolidated Year Ended...

  • Page 91
    ...$687,317 $110,653 $17,644 $.49 $.47 $769,334 $119,656 $24,180 $.67 $.64 (1) During the fourth quarter of 2007 the Company recorded a write down of certain assets in Europe of approximately $6.7 million and a reversal of certain liabilities in a domestic location of approximately $3.9 million. 56

  • Page 92
    SYSTEMAX INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS For the years ended December: (in thousands) Balance at Beginning of Period $12,122 $11,585 $12,686 Description Allowance for sales returns and doubtful accounts 2008 2007 2006 Allowance for deferred tax assets 2008 Current Noncurrent ...

  • Page 93
    ...OF CHIEF EXECUTIVE OFFICER I, Richard Leeds, Chief Executive Officer of Systemax Inc., certify that: 1. I have reviewed this annual report on Form 10-K of Systemax Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 94
    ... FINANCIAL OFFICER I, Lawrence P. Reinhold, Chief Financial Officer of Systemax Inc., certify that: 1. I have reviewed this annual report on Form 10-K of Systemax Inc. (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state...

  • Page 95
    ... Exchange Act of 1934 (15 U.S.C. 78m or 78 (o)(d)) and that the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Systemax Inc. Dated: March 18, 2009 /s/ RICHARD LEEDS _____ Richard Leeds, Chief Executive Officer...

  • Page 96
    ... Port Washington, NY 11050 516- 608-7000 ext. 7181 Email: [email protected] Web Site: http://www.systemax.com STOCK EXCHANGE: The Company's shares are traded on the New York Stock Exchange under the symbol SYX. INDEPENDENT AUDITORS: ERNST & YOUNG LLP New York, NY CORPORATE EXECUTIVE OFFICERS...

  • Page 97
    ... statements in this Annual Report constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include known and unknown risks, uncertainties and other factors as set forth within the Form 10K forming a part...

  • Page 98
    2008 Annual Report