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Readers are cautioned not to place undue reliance on any forward looking statements contained in this report, which speak only as of the date of
this report. We undertake no obligation to publicly release the result of any revisions to these forward looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events.
Item 1. Business.
General
Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized in two reportable business
segments — Technology Products and Industrial Products.
Our Technology Products segment sells computers, computer supplies and consumer electronics which are marketed in North America and
Europe. Most of these products are manufactured by other companies; however, we do offer a selection of products that are manufactured for us
to our own design and marketed on a private label basis. Technology Products accounted for 89%, 91% and 93% of our net sales in 2012, 2011
and 2010, respectively.
Our Industrial Products segment sells a wide array of industrial products and supplies which are marketed in North America. Most of these
products are manufactured by other companies. Some products are manufactured for us to our own design and marketed on a private label basis
.
Industrial products accounted for 11%, 9%, and 7% of our net sales in 2012, 2011 and 2010, respectively.
Recent developments
The Company conducted an evaluation of its Technology Products multi-
brand United States consumer strategy and the intangible assets used in
that strategy and concluded that the Company’
s future North American consumer business would be optimized by consolidating its United States
consumer operations under TigerDirect, its leading and largest brand. This brand consolidation was effected in the fourth quarter of 2012
resulting in a write off of the intangible assets and goodwill of CompUSA and Circuit City of approximately $35.3 million.
The Company exited the PC manufacturing business during the fourth quarter of 2012 after conducting an evaluation of its operations and
concluded that the Company’s North American technology results will be enhanced by exiting the computer manufacturing business. The exit
resulted in a fourth quarter of 2012 asset write down of the carrying cost of the Company’s computer manufacturing facilities, related equipment
and inventory of approximately $4.6 million.
The Company is opening a shared services center in Budapest, Hungary in 2013 to facilitate the continued growth of its European Technology
business. This new facility will provide certain administrative and back office services for the existing European business and will help drive
operational efficiencies and better serve the Company’s pan-European operating strategy and will serve as the sales location for future business
in Eastern Europe. Exit, severance and startup costs to implement the facility together with other cost reduction initiatives in Europe, aggregated
$4.7 million in the fourth quarter of 2012.
The Company exited the Software Solutions segment in June 2009. One customer remained being served by the Company until the second
quarter of 2012. The termination of this customer has resulted in all current and prior period results for this business segment being classified as
discontinued operations. Balance sheet amounts reflecting this change are not shown due to their immateriality.
See Note 12 to the Consolidated Financial Statements included in Item 15 of this Form 10-K for additional financial information about our
business s as well as information about our geographic operations.
The Company was incorporated in Delaware 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 expand and keep current the breadth of our product
offerings in order to fulfill the increasingly wide range of product needs of our customers.
Products offered by our Technology Products segment include individual technology products in the following categories: computers; computer
parts; Tablets; TV and video; audio; cameras and surveillance; car and GPS; cell phones; software; video games and toys; home and electronics
accessories.
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