Circuit City 2005 Annual Report Download - page 5

from those set forth in, contemplated by, or underlying the forward looking statements contained in this report.
Statements in this report, particularly in “Item 1. Business,” “Item 1A. Risk Factors,” “Item 3. Legal Proceedings,”
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Notes to
Consolidated Financial Statements describe certain factors, among others, that could contribute to or cause such
differences .
Item 1. Business.
General
Systemax is a direct marketer of brand name and private label products. Our operations are organized in two
primary reportable business segments – Computer Products and Industrial Products. Computer Products includes
personal desktop computers (“PCs”), notebook computers, computer related products and other consumer electronics
products which are marketed in North America and Europe. We assemble our own PCs and sell them under the
trademarks Systemax™ and Ultra™. In addition, we market and sell computers manufactured by other leading
companies. Computers and computer related products accounted for 92% of our net sales in 2005. Our Industrial
Products segment sells a wide array of material handling equipment, storage equipment and consumable industrial
items in North America. Industrial products accounted for 8% of our net sales in 2005. In both of these product groups
we offer our customers a broad selection of products, prompt order fulfillment and extensive customer service. We also
participate in the emerging market for on-demand, web-based business software applications through the marketing of
our PCS Profitability Suite™ of hosted software. See Note 12 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 Company was incorporated in Delaware in 1995. Certain predecessor businesses which now constitute part
of the Company have been in business since 1955. Our headquarters office is located at 11 Harbor Park Drive, Port
Washington, New York.
Recent Developments
Upgrade of Credit Facility
On October 27, 2005, we increased our committed revolving credit facility from $70 million to an aggregate
amount of up to $120 million. The enhanced facility is with a group of financial institutions and certain additional
lenders with JP Morgan Chase serving as Agent. This facility also replaced a £15 million United Kingdom facility and
a £5 million term loan in the United Kingdom. The facility has a five year maturity and will be available to the
Company, its domestic subsidiaries and its United Kingdom subsidiary. Borrowings under the facility are secured
principally by accounts receivable, inventory and certain other assets.
Change in Independent Registered Public Accountants
On November 7, 2005, our independent registered public accountants, Deloitte & Touche LLP, notified us that
they would not stand for re-appointment as the Company’s independent registered public accountant for the year ended
December 31, 2005. On December 9, 2005, the Company engaged Ernst & Young LLP as its independent registered
public accounting firm to audit the Company’
s consolidated financial statements as of and for the year ended December
31, 2005.
Restatement of Financial Statements
On May 11, 2005, we announced that we would restate our previously issued consolidated financial statements
for the year ended December 31, 2004 following the discovery of certain errors in accounting for inventory at our Tiger
Direct, Inc. subsidiary. In connection with this restatement, the Company filed an amended Form 10-K for the year
ended December 31, 2004 with the Securities and Exchange Commission on November 22, 2005. The consolidated
financial statements included herein and all related information for the periods affected have been restated to reflect the
corrections.