Circuit City 1998 Annual Report Download

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SYSTEMAX INC
FORM 10-K
(Annual Report)
Filed 03/29/99 for the Period Ending 12/31/98
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
    ... 12/31/98 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 12/31 http://www.edgar-online.com © Copyright 2008, EDGAR Online, Inc. All...

  • Page 2
    ... YORK (Address of principal executive offices) 11-3262067 (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...

  • Page 3
    Documents incorporated by reference: The definitive Proxy Statement of Global DirectMail Corp relating to the 1999 Annual Meeting of Stockholders is incorporated by reference in Part III hereof.

  • Page 4
    ... OF CONTENTS Part I Item 1. Business...1 General...1 Recent Developments...2 Products...2 Sales and Marketing...3 Distribution Centers...5 Suppliers...6 Management Information Systems...6 Research and Development...7 Competition...7 Employees...9 Environmental Matters...9 Financial Information About...

  • Page 5
    ... computer related products accounted for 84% of the Company's net sales in 1998. Global markets its products through an integrated system of distinctively branded, full color direct mail catalogs, proprietary "e-commerce" Internet sites and personalized "relationship marketing" to business customers...

  • Page 6
    ... method of frequent catalog mailings generating inbound telephone sales has been complemented by more personalized "relationship marketing" to larger business customers and the availability of interactive Company web sites which allow customers to purchase products directly over the Internet...

  • Page 7
    ...in phone service. In addition to telephone orders, Global also receives orders by mail, by fax, EDI and on the Internet. When an order is entered into the system, it is submitted for credit or credit card approval, as applicable. Upon approval the order is electronically transmitted to the warehouse...

  • Page 8
    ..., England to direct their activities. The central office is responsible for marketing support, catalog production, financial reporting, logistics and computer programming support. In addition, each European branch has a full service sales and distribution center to process orders and reports to the...

  • Page 9
    ... 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 in eight European countries provides Global with the flexibility...

  • Page 10
    ... than a 10% market share. Office products are typically sold through one of three channels: retail outlets, contract stationers and direct mail. However, due to the rapid growth of the office products market, competition and consolidation in this market are increasing. The Company competes only on...

  • Page 11
    ...the Company's security holders. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock is traded on the New York Stock Exchange under the symbol "GML". The following table sets forth the high and low sales price of the Company's Common Stock...

  • Page 12
    ... for the years ended December 31, 1995 and 1994 are derived from the audited financial statements of interrelated predecessor companies of Global which are not included herein. INCOME STATEMENT DATA: (IN MILLIONS, EXCEPT PER COMMON SHARE DATA, NUMBER OF CATALOG TITLES AND NUMBER OF COUNTRIES) 1998...

  • Page 13
    ... account sales program, (ii) the inclusion of sales from Midwest Micro since its acquisition at the end of September 1997, (iii) an increase in the sales of brand name and private label PCs and notebook computers and (iv) an increased average order value resulting from increased offerings and sales...

  • Page 14
    ... to improved asset management, primarily related to accounts receivable and inventory. Net cash of $13.0 million was used in 1998 in investing activities for business acquisitions and additions to property, plant and equipment. These included capacity expansion at the Company's PC assembly factory...

  • Page 15
    ... even systems failures. The Company could be affected by this problem both as a user of computers and as a direct marketer and retail vendor of PCs and computer related products (including private label PCs assembled by its Midwest Micro subsidiary). In 1998 the Company established a Year 2000 Team...

  • Page 16
    ...software's expected useful life. Any system modification or maintenance costs necessary to make the Company's existing computer programs Y2K compliant have been and will be expensed as incurred. Based on the Company's current status of internal Y2K compliance review and other preliminary information...

  • Page 17
    ... the distribution and sale of such products, (vi) competition in the PC, notebook computer, computer related products, industrial products and office products markets from superstores, direct response (mail order) distributors, mass merchants, value added resellers, the Internet and other retailers...

  • Page 18
    ... 31,1998, the Company had no outstanding forward exchange contracts. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information required by Item 8 of Part II is incorporated herein by reference to the Consolidated Financial Statements filed with this report; see Item 14 of Part IV. ITEM...

  • Page 19
    3. Exhibits.

  • Page 20
    ...Chicago and Walsh, Higgins & Company (Naperville facility)(1) Lease Agreement dated September 17, 1998 between Tiger Direct, Inc. and Keystone Miami Property Holding Corp. (Miami facility)(5) Rent Guaranty dated as of October 14, 1992 by the Company to the Bank of New York(1) Royalty Agreement dated...

  • Page 21
    ... duly authorized in the City of New York, State of New York, on the 26th day of March, 1999. 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 22
    ... balance sheets of Global DirectMail Corp and its subsidiaries, (the "Company"), as of December 31, 1998 and 1997 and the related consolidated statements of net income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1998. These financial statements...

  • Page 23
    ... BALANCE SHEETS DECEMBER 31, 1998 AND 1997 (IN THOUSANDS) 1998 ---ASSETS CURRENT ASSETS: Cash and cash equivalents Short-term investments Accounts receivable, net Inventories Prepaid expenses and other current assets Deferred income tax benefit Total current assets PROPERTY, PLANT AND EQUIPMENT...

  • Page 24
    GLOBAL DIRECTMAIL CORP CONSOLIDATED STATEMENTS OF NET INCOME FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS) 1998 ---NET SALES COST OF SALES $ 1,435,654 1,147,098 ---------288,556 224,208 ---------64,348 (3,225) 497 ---------67,076 25,824 ...

  • Page 25
    ... YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 (IN THOUSANDS) COMMON STOCK NUMBER OF SHARES --------36,857 ADDITIONAL PAID-IN CAPITAL 138,470 RETAINED EARNINGS 14,688 BALANCES, JANUARY 1, 1996 Change in cumulative translation adjustment Net proceeds from sale of common shares Net income BALANCES...

  • Page 26
    ...Depreciation and amortization, net Charges associated with the impairment of certain long lived assets Provision 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...

  • Page 27
    ... entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for consolidated balance sheet items and average exchange rates for the consolidated statements of net income items. The translation differences are made directly to a separate component of shareholders...

  • Page 28
    ...of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. ACQUISITIONS The Company acquired two businesses in 1998 for $5.9 million in cash and three...

  • Page 29
    ... annum. The mortgage is secured by land and building with an aggregate net book value of 2.4 million Pounds Sterling at December 31, 1998. The mortgage contains certain covenants calling for timely reporting of financial information, restrictions on changes in ownership and employment levels by such...

  • Page 30
    ... share for 1998, 1997 and 1996 would have been $1.07, $0.99 and $1.11 respectively. The Company arrived at the fair value of stock grant at the date of the grant by using the Black-Scholes pricing option model with the following assumptions used for grants: risk-free interest rate of 5.9% (1998...

  • Page 31
    ... the market price of the common stock at such date. All other terms of these options remained unchanged. 7. INCOME TAXES The provision for income taxes consists of the following (in thousands): YEAR ENDED DECEMBER 31 Current: Federal State Foreign Deferred Change in valuation allowance Total 1998...

  • Page 32
    ... market prices. At December 31, 1998 and 1997, 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 33
    .... Products are marketed through an integrated system of direct mail catalogs, a network of major account sales representatives and proprietary ecommerce internet web-sites. Financial information relating to the Company's operations by geographic area was as follows: NET SALES (A 1998 1997 1996...

  • Page 34
    ... ADDWIN REALTY ASSOCIATES, a New York general partnership (hereinafter referred to as the "Landlord") and CONTINENTAL DYNAMICS CORPORATION, a New York corporation (hereinafter referred to as the "Tenant") with respect to premises located at 11 Harbor Park Drive, Port Washington, New York, is hereby...

  • Page 35
    ...Inc. (a New York corporation) d/b/a Global Computer Supplies (GA, CA, IL) d/b/a Global Occupational Safety (NY, GA) 2. Continental Dynamics Corp. (a New York corporation) d/b/a Global Computer Supplies (NY) d/b/a Global Industrial Equipment (NY, GA) d/b/a Global Business Furniture (NY, GA) 3. Dartek...

  • Page 36
    ... in Registration Statement No.'s 333-21489 and 333-21491 of Global DirectMail Corp on Form S-8 of our report dated February 4, 1999 appearing in this Annual Report on Form 10-K of Global DirectMail Corp for the year ended December 31, 1998. /s/ Deloitte & Touche LLP New York, New York March 26...

  • Page 37
    ... BALANCE SHEETS AT DECEMBER 31, 1998 AND THE AUDITED CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 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...