CompUSA 2010 Annual Report Download

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Proxy Statement and
2010 Annual Report to Stockholders
Dear Fellow Stockholders,
In 2010 Systemax delivered record sales as we managed through the challenging economic and consumer
environments. Our performance reflects our prudent operating approach and ability to execute on our strategic plan.
We have built Systemax into a diversified multi-channel retailer with operations in North America and Western
Europe that target consumers and businesses across e-Commerce, retail, direct sales and catalog channels. Our
diversity sets us apart and mitigates any dependency on a specific geographic region, customer group, or distribution
channel. Our multi channel approach is supported by our strong brand awareness, loyal customer base, expanding
sales force, deep management team and strong balance sheet.
Results for the year were led by our business-to-business (“B2B”) operations, which are continuing to benefit from
the information technology refresh cycle. Our B2B business generated double digit revenue increases in 2010 and
represented half of our total revenue. We had strong performance across all markets – the U.S., Canada and in
Europe, where we benefited from the strategic addition of WStore in late 2009. Revenue for our consumer business
was up for the year, but more modestly than B2B, reflecting the difficult consumer environment and the price
sensitivity of the web, our largest consumer channel. While on an overall basis we were pleased with these results
and our strategic progress in 2010, we were not content with our bottom line performance, which remains a key focus
area for our management team. We have taken a number of steps to improve margins by controlling costs and driving
efficiencies across our operations and will continue to do so in 2011.
During the year we executed on a number of operating and strategic initiatives that will strengthen our competitive
position and improve our ability to capitalize on our growth opportunities.
• WStore Integration: We completed the integration of WStore with our existing operations in France and the
United Kingdom and were very pleased with the results. We are well positioned to improve our top and bottom
line performance in these markets.
• Retail Store Footprint: We opened seven retail stores in 2010, bringing our year-end total to 41 stores. We will
continue to take a very prudent approach to our retail expansion, with a strategic focus on markets where we
can leverage our existing infrastructure and advertising budgets.
• Distribution Center Opening: In September, we shipped the first products from our new Technology Products
distribution center in Georgia. This facility which will improve our logistical efficiencies as it ramps up its
operations and provides us with the necessary capacity to accommodate future growth.
• B2B Sales Force Investment: Our sales force is a key driver of our B2B success and worldwide we added more
than 150 sales agents in 2010. We will continue to make investments in our sales teams in the year ahead.
• Retail Store Co-Branding: In the middle of 2010 we made the strategic decision to co-brand our core retail
brands in the United States, CompUSA and TigerDirect. We believe this shift has resulted in a better multi-
channel strategy for our retail and web businesses, by enabling us to cross promote the brands to their
combined customer bases and more efficiently utilize our advertising dollars.
• Industrial Products Group Expansion: The significant expansion of Global Industrial’s SKU count and
introduction of new product categories helped drive strong double digit revenue growth in 2010. We continue
to expand the product lines and 2011 will benefit not only from more products to sell but also from the
December 2010 launch of GlobalIndusrial.ca, our Canadian website.

Table of contents

  • Page 1
    Proxy Statement and 2010 Annual Report to Stockholders Dear Fellow Stockholders, In 2010 Systemax delivered record sales as we managed through the challenging economic and consumer environments. Our performance reflects our prudent operating approach and ability to execute on our strategic plan. We ...

  • Page 2
    ...and our customers for continuing to place their confidence in our ability to provide them with the products and services they want at the prices they want, which has provided Systemax with more than 60 years of success and growth. Sincerely, Richard Leeds Chairman and Chief Executive Officer April...

  • Page 3
    ... the New York Stock Exchange under the symbol SYX. CORPORATE GOVERNANCE Copies of the Company's 2010 Annual Report on Form 10-K, Proxy Statement for the 2011 Annual Meeting, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission are available...

  • Page 4
    ... 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 0-11 (1) Title of each class of securities to which transaction applies _____ (2) Aggregate number of securities...

  • Page 5
    ...invited to attend the 2011 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 10, 2011. Your Board of Directors looks forward to greeting those...

  • Page 6
    ... LLP as the Company' s independent registered public accountants; and 5. To transact such other business as may properly come before the meeting and any and all adjournments or postponements thereof. The Board of Directors has fixed the close of business on April 15, 2010 as the record date for the...

  • Page 7
    ...11 Corporate Ethics Policy ...12 Communications with Directors ...12 Director Attendance at Annual Meetings ...12 Board Meetings ...13 Committees of the Board ...13 Board Leadership Structure ...15 Risk Oversight ...16 REPORT OF THE AUDIT COMMITTEE* ...18 EXECUTIVE OFFICERS ...19 SECURITY OWNERSHIP...

  • Page 8
    IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 10, 2011 Our Proxy Statement and Annual Report are available online at: www.proxyvote.com 5

  • Page 9
    ...11 Harbor Park Drive Port Washington, New York 11050 _____ PROXY STATEMENT _____ This proxy statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the "Board") of Systemax Inc., a Delaware corporation (the "Company"), for the 2011 Annual Meeting of...

  • Page 10
    ...voting of your shares. A list of stockholders of the Company satisfying the requirements of Section 219 of the Delaware General Corporation Law shall be available for inspection for any purpose germane to the Annual Meeting during normal business hours at the offices of the Company at least ten days...

  • Page 11
    ... of internet availability of proxy materials. How can I find voting results of the Annual Meeting? We will announce preliminary voting results at the Annual Meeting and we will publicly disclose the results on a Form 8-K within four business days of the Annual Meeting, as required by Securities and...

  • Page 12
    ... public company in 1995. Mr. Leeds was selected to serve as a director on our Board due to his experience and depth of knowledge of the Company and the direct marketing, computer and industrial products industries, his role in developing and managing the Company' s business strategies and operations...

  • Page 13
    ... becoming a public company in 1995. Mr. Leeds was selected to serve as a director on our Board because of his experience and depth of knowledge of the Company and the direct marketing, computer and industrial products industries, his role in developing and managing the Company' s business strategies...

  • Page 14
    ...Management Directors The New York Stock Exchange requires the "non-management directors" or independent directors of a NYSE-listed company to meet at regularly scheduled executive sessions without management and to disclose in their annual proxy statements (1) the name of the non-management director...

  • Page 15
    ... accurate disclosure of information requiring public disclosure and the prompt reporting of Policy violations. The Company' s Corporate Ethics Policy is available on the Company' s website (www.systemax.com ). We intend to disclose on our website, in accordance with applicable laws and regulations...

  • Page 16
    ... registered public accountants, who audit the Company' s financial statements, and to prepare the Audit Committee report that the Securities and Exchange Commission requires to be included in the Company' s Annual Proxy Statement. (See "Report of the Audit Committee" below.) As part of its...

  • Page 17
    ... Charter is available on the Company' s website (www.systemax.com). Stockholder Nominations for Director Stockholders may propose candidates for Board membership by writing to Systemax Inc., Attention: Nominating/Corporate Governance Committee, 11 Harbor Park Drive, Port Washington, NY 11050 so...

  • Page 18
    ... employees in the context of how such policies affect and promote the Company' s risk management goals and objectives. The Compensation Committee Charter was last amended in April 2010. The Compensation Committee Charter is available on the Company' s website (www.systemax.com). Executive Committee...

  • Page 19
    ... Director may specifically request the inclusion of certain material; (d) recommend to the Chairman the retention of consultants who report directly to the Board; (e) assist the Board and the Company' s officers in assuring compliance with and implementation of the corporate governance policies...

  • Page 20
    ...and addressing potential risks that may exist at the enterprise, strategic, financial, operational, compliance and reporting levels. The Internal Auditor reports directly to our Chief Financial Officer and Audit Committee quarterly, and the Audit Committee considers risk management issues as part of...

  • Page 21
    ... Registered Public Accounting Firm, to the Committee, the Audit Committee recommended to the Board that the financial statements of the Company for fiscal year 2010 as audited by Ernst & Young LLP be included in the Company' s Annual Report on Form 10-K filed with the Securities and Exchange...

  • Page 22
    ..., where he was Director of Internal Controls and Compliance. Prior to that, he was a Senior Manager in the public accounting firm of Ernst & Young. Mr. White has over 15 years of internal and external audit experience. Gilbert Fiorentino joined the Company in 1995 as President of Tiger Direct, Inc...

  • Page 23
    as a director on our Board due to his business acumen and his management and marketing experience in the technology products business, including computer and consumer electronic product sales, as well as his retail sales experience, including direct marketing via online, catalogs and B2B ...

  • Page 24
    ... Park Drive, Port Washington, NY 11050. (2) Includes 2,137,166 shares owned by Mr. Leeds directly, 1,615,716 shares owned by the Bruce Leeds 2010 1 Mr. Fiorentino is on administrative leave from his position with the Company. See "Employment Arrangements of the Named Executive Officers- Gilbert...

  • Page 25
    ... reporting persons, the Company believes its executive officers, Directors and ten-percent stockholders complied with all such filing requirements for fiscal year 2010. TRANSACTIONS WITH RELATED PERSONS Under the Company' s Corporate Ethics Policy, all officers, Directors and employees (collectively...

  • Page 26
    ...benefits as a result of his or her position in the Company. Company Representatives cannot allow any consideration such as the receipt of gifts or financial interests in other businesses... regarding timing and number of Shares that the Company register under the Securities Act all or part of the...

  • Page 27
    EQUITY COMPENSATION PLAN INFORMATION Information for our equity compensation plans in effect as of the end of fiscal year 2010 is as follows: (a) (b) (c) Number of securities remaining available for future Weighted- issuance under equity average compensation exercise price of plans outstanding (...

  • Page 28
    ... portion of its financial statements. In addition, the Board may recapture 3 Mr. Fiorentino is on administrative leave from his position with the Company. See "Employment Arrangements of the Named Executive Officers- Gilbert Fiorentino" at page 33 and "Potential Payments Upon Termination or Change...

  • Page 29
    ...based on industry, revenues, number of employees, location and similar factors) in the Company' s geographic region. Such reports do not identify the component companies. Each of Mr. Reinhold' s and Mr. Fiorentino' s minimum salary is set pursuant to his respective employment agreement. Cash Bonuses...

  • Page 30
    ..., our 2010 NEO Cash Bonus Plan and our 2011 NEO Cash Bonus Plan. Stock-Based Incentives - Stock-based incentives, at the present time consisting of (a) stock options granted at 100% of the stock' s fair market value on the grant date (based on the NYSE closing price of the Company' s common stock on...

  • Page 31
    ..., the Board of Directors approved, and the stockholders of the Company approved at the 2010 Annual Meeting,, the 2010 Long Term Incentive Plan in order to promote the interests of the Company and its stockholders by (i) attracting and retaining exceptional executive personnel and other key employees...

  • Page 32
    .... To the extent applicable, the measures used in performance goals set under the 2010 Long Term Incentive Plan are determined in a manner consistent with the methods used in the Company' s Forms 10-K and 10-Q, except that adjustments will be made for certain items, including special, unusual or non...

  • Page 33
    ...of our named executive officers. The 2010 Bonus Plan imposed a cap on the total bonus that could be payable to any executive at 200% of the target base case bonus. The Compensation Committee has the discretion to adjust financial targets based on such events as acquisitions or other one time charges...

  • Page 34
    ... the 2009 Bonus Plan was based on (i) the Company' s Technology Products Group achieving certain earnings targets; (ii) the Company successfully implementing technology enhancements in certain retail stores; and (iii) the successful implementation of certain management financial reporting technology...

  • Page 35
    ... corporate governance non-financial goals, the Company did not achieve its 2010 minimum adjusted operating income and return on invested capital financial goals. Accordingly, pursuant to the 2010 Bonus Plan formulas, 2010 non-equity incentive plan/bonus compensation for each named executive officer...

  • Page 36
    ... the Company entered into an employment agreement with Gilbert Fiorentino. The agreement was effective as of June 1, 2004 and expires on December 31, 2013 unless terminated sooner under the terms of the agreement. Mr. Fiorentino' s compensation consists of a base salary at the initial annual rate of...

  • Page 37
    ... determined under the 2010 Bonus Plan as a specified percentage of the worldwide EBIT of the Company' s technology products business, and also took into account achievement of the retail store and technology enhancement and information technology goals, for which he is responsible in order to most...

  • Page 38
    ... to enhancing our management and business information systems, and implementing distribution/warehouse system improvements. The Compensation Committee believes these initiatives will enhance the Company' s operational infrastructure and efficiency. Corporate Governance Goals for 2010 (three specific...

  • Page 39
    ... unforeseen circumstances, that can skew normal operating results. Targets and bonuses are also subject to adjustment to prevent unreasonable results in the strict application of these formulas. Executives must generally be employed with the Company at the time the bonuses are paid out to receive...

  • Page 40
    ..., these amounts are reported in the Non-Equity Incentive Plan column. 7 Mr. Fiorentino is on administrative leave from his position with the Company. See "Employment Arrangements of the Named Executive Officers- Gilbert Fiorentino" at page 33 and "Potential Payments Upon Termination or Change...

  • Page 41
    ... at the applicable level. The restricted stock award granted to Mr. Reinhold in August 2010 vests in ten equal installments annually, commencing on May 15, 2010. 8 See "Employment Arrangements of the Named Executive Officers- Gilbert Fiorentino" at page 33 and "Potential Payments Upon Termination...

  • Page 42
    ... on the closing price of one share of our common stock as of December 31, 2010, which was $14.10. Option Awards Stock Awards Market Value of Shares or Units of Stock That Have Not Vested ($) (h) (2) $2,168,250 (4) $4,230,000 Name (a) Lawrence Reinhold Number of Securities Underlying Unexercised...

  • Page 43
    ... by (a) the Company other than for cause or (b) the employee for "good reason" (as defined) or after the expiration of the agreement at its scheduled termination 10 See "Employment Arrangements of the Named Executive Officers- Gilbert Fiorentino" at page 33 for additional information. 40

  • Page 44
    ...the last day of the Company' s fiscal year 2010, and using the closing price of our common stock on December 31, 2010. 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. Cash Compensation (Salary and Bonus...

  • Page 45
    .... Mr. Fiorentino is on administrative leave from his position with the Company. See "Employment Arrangements of the Named Executive Officers- Gilbert Fiorentino" at page 33 and "Potential Payments Upon Termination or Change of Control- Gilbert Fiorentino" at page 40 for additional information. 42...

  • Page 46
    ... audited consolidated financial statements, included in our Annual Report on Form 10-K for fiscal year 2010. The following table presents the aggregate number of outstanding stock awards and stock option awards held by each of our non-employee Directors at the end of fiscal year 2010: Name : Marie...

  • Page 47
    ..., design and practices. Proxies submitted without direction pursuant to this solicitation will be voted "FOR" the approval of the compensation of the Company' s named executives, as disclosed in this proxy statement. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR...

  • Page 48
    ...compensation of its named executives included in the Company' s proxy statement; if no option receives a majority vote, the Compensation Committee, in line with the Board' s recommendation, will follow the "EVERY THREE YEARS"' OPTION. Proxies submitted without direction pursuant to this solicitation...

  • Page 49
    ... LLP as the Company' s independent registered public accountants is not required by the Company' s By-Laws or other applicable legal requirement. However, the Board is submitting the selection of Ernst & Young LLP to the stockholders for ratification as a matter of good corporate practice. If the...

  • Page 50
    ... website referred to in the notice. The proxy statement and annual report on Form 10-K for fiscal year 2010 are available at www.proxyvote.com. The cost of soliciting proxies for the Annual Meeting will be borne by the Company. In addition to solicitation by mail and over the internet, solicitations...

  • Page 51
    ... Nominating/Corporate Governance Committee of the Board; and Corporate Governance Guidelines and Principles. In accordance with the corporate governance rules of the New York Stock Exchange, each of the Corporate Governance Documents is available on the Company' s Company web site (www.systemax.com...

  • Page 52
    ..., New York 11050 (Address of principal executive offices, including zip code) Registrant' s telephone number, including area code: (516) 608-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered 11-3262067 (I.R.S. Employer...

  • Page 53
    ...10. Item 11. Item 12. Item 13. Item 14. Part IV Item 15. Business General Products Sales and Marketing Customer Service, Order Fulfillment and Support Suppliers Competition and Other Market Factors Employees Environmental Matters Financial Information About Foreign and Domestic Operations Available...

  • Page 54
    ...to accept credit cards significant changes in the computer products retail industry, especially relating to the distribution and sale of such products timely availability of existing and new products risks associated with delivery of merchandise to customers by utilizing common delivery services the...

  • Page 55
    ... in 1995. Certain predecessor businesses which now constitute part of the Company have been in business since 1949. Our headquarters office is located at 11 Harbor Park Drive, Port Washington, New York. Products We offer hundreds of thousands of brand name and private label products. We endeavor to...

  • Page 56
    ... marketers are prompted with product suggestions to expand customer order values. In certain countries, we also have the ability to provide such customers with electronic data interchange ("EDI") ordering and customized billing services, customer savings reports and stocking of specialty items...

  • Page 57
    ...computer and office supply superstores. Timely introduction of new products or product features are critical elements to remaining competitive. Other competitive factors include product performance, quality and reliability, technical support and customer service, marketing and distribution and price...

  • Page 58
    .... Financial Information About Foreign and Domestic Operations We conduct our business in North America (the United States, Puerto Rico and Canada) and Europe. Approximately 35.9%, 33.5% and 37.9% of our net sales during 2010, 2009 and 2008, respectively were made by subsidiaries located outside...

  • Page 59
    ... of the Board of Directors Corporate Governance Guidelines and Principles In accordance with the listing standards of the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company website (www.systemax.com). Item 1A. Risk Factors. There are a number of factors...

  • Page 60
    ... distribution, internet-based resellers, large warehouse stores and retail outlets. We also face competition from manufacturers' own sales representatives, who sell industrial equipment directly to customers, and from regional or local distributors. In addition, new competitors may enter our markets...

  • Page 61
    ... 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 62
    ...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 63
    ... card information records. In processing our sales orders we often collect personal information and credit card information from our customers. The Company has privacy and data security policies in place which are designed to prevent security breaches, however, if a third party or a rogue employee...

  • Page 64
    ... Item 1B. Unresolved Staff Comments. None. Item 2. Properties. We operate our business from numerous facilities in North America and Europe. These facilities include our headquarters location, administrative offices, telephone call centers, distribution centers, computer assembly and retail stores...

  • Page 65
    ... feet and is owned by the Company. The following table summarizes the geographic location of our North America stores at the end of 2010: Location Stores Open - 12/31/09 Store Openings Stores Open - 12/31/10 Delaware Florida Georgia Illinois North Carolina Puerto Rico Texas Ontario, Canada 1 18...

  • Page 66
    ... of Equity Securities Systemax common stock is traded on the NYSE Euronext Exchange under the symbol "SYX." The following table sets forth the high and low closing sales price of our common stock as reported on the New York Stock Exchange for the periods indicated. High Low 2010 First Quarter...

  • Page 67
    ... in "Corporate and other". See Note 11 to the Consolidated Financial Statements included in Item 15 of this Form 10-K for additional financial information about our business segments as well as information about our geographic operations. The market for computer products and consumer electronics is...

  • Page 68
    ... sales made direct to other businesses through managed business relationships, outbound call centers and extranets. Sales in the Industrial Products segment and Corporate and other are considered to be business to business sales. Consumer channel sales are sales from retail stores, consumer websites...

  • Page 69
    ... of operations. Recently Adopted and Newly Issued Accounting Pronouncements Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board ("FASB") and the Securities and Exchange Commission...

  • Page 70
    ..., the expansion of the number of retail stores in the United States and Canada and the continuing sales contribution from our Circuit City and WStore Europe SA ("WStore") acquisitions in 2009. On a constant currency basis, translating 2010 foreign results at 2009 exchange rates, and excluding the...

  • Page 71
    ... increased 14.3% in 2009 compared to 2008 benefiting from the opening of five retail stores and the Circuit City acquisition. On a constant currency basis, translating 2009 Other North America results at 2008 exchange rates, North American technology products sales would have grown to 15.2%. The...

  • Page 72
    ... cost management. Industrial products operating margin decreased 30 basis points in 2009 versus 2008 due to the slowdown in sales coupled with additional information technology staffing and other costs for the support of the new products added and the newly launched e-commerce website. Corporate and...

  • Page 73
    ... is the result of increased retail store inventory in 2010 and the opening of a new distribution facility for Technology Products in the third quarter of 2010. Accounts receivable balances increased as the result of growth in open account business to business customers, the WStore acquisition and...

  • Page 74
    ... on the Bonds is calculated at the rate of 4.15% per annum and principal and interest payments are due monthly. The proceeds of the Bonds are used to finance or repay the costs of capital equipment purchased for the Company' s distribution facility located in Jefferson, Georgia. The purchase and...

  • Page 75
    ... infrastructure, opening of new retail stores, and in building out and expanding our distribution center facilities and inventory systems. These expenses and capital expenditures will require significant levels of liquidity, which we believe can be adequately funded from our currently available cash...

  • Page 76
    ... 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 77
    ... registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of the Company' s internal control over financial reporting as of December 31, 2010, a copy of which is included in this report. Changes in Internal Control Over Financial Reporting There...

  • Page 78
    .... PART IV Item 15. Exhibits and Financial Statement Schedules. (a) 1. Consolidated Financial Statements of Systemax Inc. Reports of Ernst & Young LLP Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2010 and 2009 Consolidated Statements of Operations for...

  • Page 79
    ...20, 2003) Form of 2006 Stock Incentive Plan for Non-Employee Directors* (incorporated by reference to the Company' s annual report on Form 10-K for the year ended December 31, 2006) Form of 2005 Employee Stock Purchase Plan* (incorporated by reference to the Company' s annual report on Form 10-K for...

  • Page 80
    ...Proxy Statement filed April 29,2010). 14 Corporate Ethics Policy for Officers, Directors and Employees (revised as of March, 2010) 21 Subsidiaries of the Registrant (filed herewith) 23 Consent of Independent Registered Public Accounting Firm (filed herewith) 31.1 Certification of the Chief Executive...

  • Page 81
    ..., Chief Financial Officer and Director (Principal Financial Officer) Vice President and Controller (Principal Accounting Officer) Chief Executive, Technology Products Group and Director Director March 17, 2011 /s/ THOMAS AXMACHER Thomas Axmacher /s/ GILBERT FIORENTINO Gilbert Fiorentino /s/ ROBERT...

  • Page 82
    Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders of Systemax Inc. We have audited the accompanying consolidated balance sheets of Systemax Inc. (the "Company") as of December 31, 2010 and 2009, and the related consolidated statements of operations, ...

  • Page 83
    ... 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 of the company; and...

  • Page 84
    SYSTEMAX INC. CONSOLIDATED BALANCE SHEETS (in thousands, except for share data) December 31, 2010 2009 ASSETS: Current assets: Cash Accounts receivable, net of allowances of $17,881 and $22,532 Inventories Prepaid expenses and other current assets Deferred income taxes...stock... financial statements....

  • Page 85
    SYSTEMAX INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) 2010 Year Ended December 31, 2009 2008 Net sales Cost of sales Gross profit Selling, general and administrative expenses Reorganization and other charges Operating income Foreign currency exchange loss ...

  • Page 86
    ... income taxes Provision for returns and doubtful accounts Compensation expense related to equity compensation plans Excess tax benefit from exercises of stock options Loss on dispositions and abandonment Changes in operating assets and liabilities: Accounts receivable Inventories Prepaid expenses...

  • Page 87
    ... compensation expense Issuance of restricted stock Restricted stock withheld for employee taxes Exercise of stock options Income tax benefit on stock-based compensation Change in cumulative translation adjustment Net income Total comprehensive income Balances, December 31, 2010 36,092 104 503 (475...

  • Page 88
    ...currency. The financial statements of the Company' s foreign entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for assets and liabilities, average exchange rates for the statement of operations items and historical rates for equity accounts. Translation...

  • Page 89
    ...for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, 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...

  • Page 90
    ...consist primarily of investments in cash, trade accounts receivable debt and accounts payable. 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, 2010 and 2009, the carrying amounts...

  • Page 91
    2. GOODWILL AND INTANGIBLES Goodwill: The following table provides information related to the carrying value of goodwill (in thousands): 2010 Balance January 1 Deferred tax adjustment Adjustments to finalize purchase price allocation Balance December 31 $ $ 930 1,350 1,000 3,280 Indefinite-...

  • Page 92
    ... and there were no outstanding advances. The Company' s Inmac WStore subsidiary maintains a secured revolving credit agreement with a financial institution in France which is secured by WStore Europe SA accounts receivable balances. Available amounts for borrowing under this facility includes all...

  • Page 93
    ... on the Bonds is calculated at the rate of 4.15% per annum and principal and interest payments are due monthly. The proceeds of the Bonds are used to finance or repay the costs of capital equipment purchased for the Company' s distribution facility located in Jefferson, Georgia. The purchase and...

  • Page 94
    ... awards reduce stock options otherwise available for future grant. A total of 1,307,372 options and 300,000 restricted stock units were outstanding under this plan as of December 31, 2010. The 2006 Stock Incentive Plan For Non-Employee Directors - This plan, adopted by the Company' s stockholders on...

  • Page 95
    ...the difference between the closing stock price on the last day of trading in 2010 and the exercise price) that would have been received by the option holders had all options been exercised on December 31, 2010. This value will change based on the fair market value of the Company' s common stock. 44

  • Page 96
    ... based on the market price of the Company' s stock at the date of the award. Compensation expense related to the restricted stock award was approximately $0.3 million for the year ended December 31, 2010. Share repurchase plan In May 2008, the Company' s Board of Directors authorized the repurchase...

  • Page 97
    ... by each foreign entity in accordance with applicable local regulations. A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as follows (in thousands): 2010 Year Ended December 31, 2009 2008 Income...

  • Page 98
    ... to pay amounts in excess of accruals, our effective tax rate in a given financial statement period could be affected. There were no accrued interest or penalty charges related to unrecognized tax benefits recorded in income tax expense in 2010 or 2009. As of December 31, 2010 the Company had...

  • Page 99
    ... at various dates through October 2026. The Company currently leases 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...

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    ... policies of the segments are the same as those of the Company described in Note 1. Financial information relating to the Company' s operations by reportable segment was as follows (in thousands): 2010 Year Ended December 31, 2009 2008 Net Sales: Technology Products Industrial Products Corporate...

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    12. QUARTERLY FINANCIAL DATA (UNAUDITED) Quarterly financial data is as follows (in thousands, except for per share amounts): First Quarter Second Quarter Third Quarter Fourth Quarter 2010: Net sales Gross profit Net income Net income per common share: Basic Diluted 2009: Net sales Gross profit Net...

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    ...22,074 $ $ 1,605 27,671 1,507 28,326 - 8,377 $ $ $ $ $ 1,996 (96) $ (846) $ (1)(2) WStore opening balance sheet adjustment. (3) Included in other is allowances recorded for deferred tax assets and net operating losses acquired in the WStore Europe SA acquisition (4) Charges to expense are net...

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    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant' s ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have...

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    ... design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant' s ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have...

  • Page 105
    ... the Securities 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 17, 2011 /s/ RICHARD LEEDS Richard Leeds, Chief Executive...

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    ...00 p.m. at Systemax Inc. 11 Harbor Park Drive Port Washington, NY 11050 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 DIRECTORS Richard Leeds Chairman and Chief Executive Officer Bruce Leeds...

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    ... 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...

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    2010 Annual Report