Circuit City 1997 Annual Report Download

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SYSTEMAX INC
FORM 10-K
(Annual Report)
Filed 03/27/98 for the Period Ending 12/31/97
Address 11 HARBOR PARK DR
PORT WASHINGTON, NY 11050
Telephone 5166087000
CIK 0000945114
Symbol SYX
SIC Code 5961 - Catalog and Mail-Order Houses
Industry Retail (Catalog & Mail Order)
Sector Services
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2008, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ... INC FORM 10-K (Annual Report) Filed 03/27/98 for the Period Ending 12/31/97 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 11 HARBOR PARK DR PORT WASHINGTON, NY 11050 5166087000 0000945114 SYX 5961 - Catalog and Mail-Order Houses Retail (Catalog & Mail Order) Services 12...

  • Page 2
    ..., NEW YORK (Address of principal executive offices) (I.R.S. Employer Identification No.) 11050 (Zip Code) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 625-1555 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NAME OF EACH EXCHANGE ON WHICH REGISTERED New York Stock Exchange...

  • Page 3
    ... Part I Item 1. Business...1 General...1 Products...2 Sales and Marketing...3 Distribution Centers...5 Suppliers...5 Management Information Systems...6 Research and Development...7 Competition...7 Employees...9 Environmental Matters...9 Item 2. Properties...10 Item 3. Legal Proceedings...10 Item...

  • Page 4
    ... the Company acquired the assets of Infotel, Inc. ("Midwest Micro"), an assembler and direct marketer of private label build-to-order PCs and a direct marketer of brand name PCs, notebook computers and computer related products. See Footnote 3 to the Consolidated Financial Statements. PRODUCTS In...

  • Page 5
    ... sales include a wide array of build-to-order PCs complimented with offerings of the most popular brand named PCs and notebook computers. Office products include furniture, chairs, small office machines and related supplies. The Company's industrial product lines focus primarily on storage equipment...

  • Page 6
    ... sales to business customers. During 1997, the Company initiated Internet marketing with three build-to-order PC configurator websites. CUSTOMER SERVICE AND SUPPORT Order entry and fulfillment occurs at each of the Company's 15 locations. Global generally provides toll-free telephone number access...

  • Page 7
    ...office is responsible for marketing support, catalog production, financial reporting, logistics and computer programming support. In addition, each market has a full service sales and distribution center to process orders and reports to the respective country manager who has ultimate profit and loss...

  • Page 8
    ... served by contract stationers and VARs. They have also been able to capture sales volume and market share from the numerous small retail computer stores. In Europe, the Company's major competitors are regional or country-specific retail and direct-mail distribution companies. The Company's presence...

  • Page 9
    ... Information" contained in Footnote 10 to the financial statements. ITEM 2. PROPERTIES. The Company's primary facilities, which are leased except where otherwise indicated, are as follows: APPROX SQ. FT. EXPIRATION OF LEASE FACILITY LOCATION Headquarters, Sales and Distribution Center, Catalog...

  • Page 10
    ...1997, there were no matters submitted to a vote of the Company's security holders. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock has been traded on the New York Stock Exchange under the symbol "GML" since its initial public offering...

  • Page 11
    ... of sales from the Company's major account sales group which generally sells to larger customers at discounted prices, and (iii) increased shipping and other costs associated with the United Parcel Service labor action in August 1997. A significant portion of this decline in gross profit margin...

  • Page 12
    ... of catalogs mailed (including eight new catalog titles), an increase in revenue from the Company's major account sales program and an increased average order value resulting from increased offerings and sales of brand name products and (ii) the inclusion of a full year of sales from TigerDirect...

  • Page 13
    ...expenditures, statements regarding future operations, financing needs, compliance with financial covenants in loan agreements, plans for acquisition or sale of assets or businesses and consolidation of operations of newly acquired businesses, and plans relating to products or services of the Company...

  • Page 14
    ... retail industry, especially relating to the distribution and sale of such products, (vi) competition in the PC, notebook computer, computer related products, office products and industrial products markets from superstores, direct response (mail order) distributors, mass merchants, value added...

  • Page 15
    ...Company to the Bank of New York* Royalty Agreement dated June 30, 1986 between the Company and Richard Leeds, Bruce Leeds and Robert Leeds, and Addendum thereto* Consulting Agreement dated as of December 22, 1992 between the Company and Paul Leeds*+ Form of 1995 Stock Plan for Non-Employee Directors...

  • Page 16
    ... duly authorized in the City of New York, State of New York, on the 27th day of March, 1998. GLOBAL DIRECTMAIL CORP By: /s/ RICHARD LEEDS ...Richard Leeds Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below...

  • Page 17
    ...REPORT The Shareholders and Board of Directors of THE GLOBAL DIRECTMAIL CORP: We have audited the accompanying consolidated balance sheets of Global DirectMail Corp and its subsidiaries, (the "Company"), as of December 31, 1997 and 1996 and the related consolidated statements of income, shareholders...

  • Page 18
    ... BALANCE SHEETS DECEMBER 31, 1997 AND 1996 (IN THOUSANDS) 1997 ---ASSETS CURRENT ASSETS: Cash and cash equivalents Short term investments Accounts receivable, net Inventories Prepaid catalog expense Other prepaid expenses and current assets Deferred income tax benefit Total current assets...

  • Page 19
    GLOBAL DIRECTMAIL CORP STATEMENTS OF CONSOLIDATED INCOME FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995 (IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS) 1997 ---NET SALES COST OF SALES $1,145,388 879,846 ---------265,542 1996 ---$ 911,893 662,277 --------249,616 $ 1995 ---634,484 437,179 ...

  • Page 20
    ... SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 (IN THOUSANDS) Notes Receivable from Related PARTIES --------$ (10,273) Common SHARES -----BALANCES, JANUARY 1, 1995 Differences arising from translation of foreign statements Dividends paid Other Effect of exchange...

  • Page 21
    ..., net Charges associated with the impairment of certain long lived assets Benefit for deferred income taxes Provision for returns and doubtful accounts Changes in certain assets and liabilities: Accounts receivable Inventories Prepaid catalog and other prepaid expenses Accounts payable and accrued...

  • Page 22
    ... exchanged all of the outstanding capital stock for common shares of Global. That transaction was accounted for as a pooling of interests. DESCRIPTION OF BUSINESSES - The Company is involved in the marketing and sale of personal computers (PCs), notebook computers, computer related products, office...

  • Page 23
    ... 1997 the Company acquired the net assets of three businesses for a total of $50.8 million in cash, stock and purchase related costs with additional contingent cash consideration possible. These acquisitions are being accounted for as purchase transactions. The Company recorded the fair market value...

  • Page 24
    ...portion of retained earnings is restricted and not available for distribution to shareholders. Such amount at December 31, 1997 was not material. STOCK OPTION PLANS - The Company has two fixed option plans which reserve shares of common stock for issuance to key employees, directors, consultants and...

  • Page 25
    ... Had compensation costs of the plans been determined under a fair value alternative method as stated in Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensations", the Company would have prepared a fair value model for such options and recorded such amount in the...

  • Page 26
    ... under operating lease agreements for the rental of certain office and warehouse facilities and equipment which expire at various dates through October 2013. At December 31, 1997 future minimum annual lease payments for related and third-party leases were as follows (in thousands): YEAR ENDING...

  • Page 27
    ... market prices. At December 31, 1997 and 1996, the fair value of the Company's financial instruments approximated their carrying values. CONCENTRATION OF CREDIT RISK - Concentrations of credit risk with respect to trade account receivables are limited due to the large number of customers comprising...

  • Page 28
    ..., 1997 between the Company and South Bay Industrials Company (New Compton facility) Employment Agreement dated as of December 12, 1997 between the Company and Steven M. Goldschein Subsidiaries of the Registrant Consent of experts and counsel; Consent of Independent Public Accountants Financial Data...

  • Page 29
    ... FORM SINGLE TENANT INDUSTRIAL LEASE (NET) LANDLORD: South Bay Industrials Company, L.L.C., a Delaware limited liability company Systemax, Inc., a New York corporation, dba: Global Computer Supplies 921 West Artesia Boulevard Compton, California July 17, 1997 TENANT: PROJECT: CITY, STATE DATE...

  • Page 30
    .... Miscellaneous Provisions...26 RIDERS 1. Early Entry...R-1 2. Option to Extend...R-2 EXHIBITS [OMITTED] A. B. C. D. E. F. G. H. I. Depiction of Premises...A-1 Project Site Plan...B-1 Work Letter Agreement...C-1 Notice of Lease Term Dates...D-1 Tenant Estoppel Certificate...E-1 Rules and Regulations...

  • Page 31
    STANDARD INDUSTRIAL LEASE (NET) 1. BASIC LEASE TERM. a. DATE OF LEASE EXECUTION: July 17, 1997 b. TENANT: Trade Name Address (Leased Premises): City, State Zip Code: Building/Suite/Unit: Systemax, Inc., a New York corporation Global Computer Supplies 921 West Artesia Boulevard Compton, CA 90220 921 ...

  • Page 32
    ... and first monthly installment of Annual Basis Rent; (ii) executed copies of policies of insurance of certificates thereof as required under Paragraph 18 of this Lease; (iii) copies of all governmental permits and authorizations required in connection with Tenant's operation of its business upon the...

  • Page 33
    ...OF ANY PROCEEDING AND NOT RESULT IN ANY PECUNIARY LOSS TO LANDLORD. Tenant shall comply with all rules, orders, regulations and requirements of any insurance authority having jurisdiction over the Project or any present or future insurer relating to the Premises or the Project. Tenant shall promptly...

  • Page 34
    ...'s costs, expenses and actual attorney's fees with interest thereon at the maximum interest rate permitted by law from the date of Landlord's demand until payment. Any sign rights granted to Tenant under this Lease are personal to Tenant and may not be assigned, transferred or otherwise conveyed to...

  • Page 35
    ...parties shall within thirty (30) days thereafter make payment or allowance as necessary to adjust Tenant's estimated payments to the actual expenses as shown by applicable periodic statements submitted by Landlord. If Landlord shall determine at any time that the estimate of expenses for the current...

  • Page 36
    ..., shareholders, agents and representatives and the directors, officers, partners, employees, shareholders, agents and representatives of the partners of Landlord from (i) all claims, actions, liabilities, and proceedings arising from Tenant's use of the Premises or the conduct of its business or...

  • Page 37
    ... this Lease: (a) shall be issued by insurance companies authorized to do business in the state in which the Premises are located and holding a General Policyholders Rating of "A" and a Financial Rating of "X" or better, as set forth in the most recent edition of Best's Insurance Reports; (b) shall...

  • Page 38
    ... hereof, then Landlord may, in its sole discretion, terminate this Lease by delivery of notice to Tenant within 30 days of the date Landlord learns of the damage. IN THE EVENT ANY MORTGAGE OF THE BUILDING DOES NOT ALLOW THE APPLICATION OF INSURANCE PROCEEDS TO BE APPLIED TO REPAIR AND RESTORE THE...

  • Page 39
    ... Code of Civil procedures and any present or future law allowing either party to petition the Superior Court to terminate this Lease in the event of a partial taking of the Building or Premises. If the Premises are totally or partially taken by condemnation, Tenant shall not asset any claim...

  • Page 40
    ...-FIVE (45) DAYS FROM RECEIPT OF SUCH REQUEST AND ALL SUPPORTING DOCUMENTATION TO PAY SUCH COSTS TO TENANT. 23. ENTRY OF PREMISES AND PERFORMANCE BY TENANT. Landlord and its authorized representatives shall have the right to enter the Premises at all reasonable times DURING NORMAL BUSINESS HOURS AND...

  • Page 41
    ... certified fist class mail, return receipt requested, addressed as set forth in SUBPARAGRAPH 1(B) AND 1 (C). Either party may change its address by notification to the other party. NOTICES TO TENANT SHALL ALSO BE SENT TO GENERAL COUNSEL, 22 HARBOR PARK DRIVE, PORT WASHINGTON, NEW YORK 11050. Notice...

  • Page 42
    ... or advisor of Landlord shall be sued or named as a party in any suit or action (except as may be necessary to secure jurisdiction of the partnership); (c) No service of process shall be made against any partner, officer, director, owner, shareholder or advisor of Landlord (except as may be...

  • Page 43
    ... on the part of Landlord or Tenant until this Lease has been validly executed by, and delivered to, both Landlord and Tenant. 31. ESTOPPEL CERTIFICATE. (a) Within ten (10) BUSINESS days following any written request which Landlord may make from time to time, Tenant shall execute and deliver...

  • Page 44
    ..., the parties have executed this Lease as of the date first above written. LANDLORD: South Bay Industrials Company, L.L.C. a Delaware limited liability company By: Its: /S/ JAMES M. WALSH James M.Walsh Vice President Date: 9/4/97 TENANT: Systemax, Inc., a New York corporation dba: Global Computer...

  • Page 45
    ... COMPANY, L.L.C. AND SYSTEMAX, INC. DATED SEPTEMBER 3, 1997 1. To the fullest extend permitted by law, Landlord agrees to indemnify, defend (with counsel satisfactory to Tenant) and hold harmless Tenant,, its agents, successors in interest, directors, officers, partners, employees, shareholders...

  • Page 46
    ... general responsibility for managing the financial affairs of the Company, subject to the authority and direction of the Chief Executive Officer and the Board of Directors. The Employee shall perform his duties primarily at the Company's offices located in Port Washington, New York subject to travel...

  • Page 47
    ... of three days after receipt of notice to comply with any policies of the Company or any directions of the Board of Directors consistent with the Employee's duties hereunder (including the Employee's responsibility to devote his full working time and attention to the business of the Company), other...

  • Page 48
    ... out of Employee's duties under this Agreement and except as may be required by law, the Employee shall not, directly or indirectly, communicate or make available to anyone other than the Global Companies and their respective directors, officers, authorized agents or advisors, any trade secret or...

  • Page 49
    ... to file reports pursuant to the Securities Exchange Act of 1934; or (iv) directly or indirectly, hire, solicit or encourage to leave the employment of the Company, any employee or agent of the Company. (c) INVENTIONS. The Employee agrees that all processes, technologies and inventions including new...

  • Page 50
    ... party of any breach or non-performance of any provision or obligation of this Agreement shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year...

  • Page 51
    ... Computer Supplies (NY) d/b/a Global Industrial Equipment (NY, GA) d/b/a Global Business Furniture (NY, GA) 3. Arrow Star Inc. (a New York corporation) 4. Dartek Corp. (a Delaware corporation) 5. Nexel Industries (a New York corporation) 6. Misco America Inc. (a Delaware corporation) 7. Tiger Direct...

  • Page 52
    CONSENT OF INDEPENDENT ACCOUNTS We hereby consent to the incorporation by reference in Registration Nos. 333-21489 and 333-2149 on Forms S-8 of our report dated February 5, 1998, March 9 as to the second paragraph under Litigation of Note 9, appearing in this Annual Report on Form 10-K of Global ...

  • Page 53
    ... CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 OF GLOBAL DIRECTMAIL CORP AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. MULTIPLIER: 1,000 PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP...