CompUSA 2009 Annual Report Download - page 64

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Item 1. Business.
General
Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized in three reportable
business segments — Technology Products, Industrial Products and Software Solutions.
Our Technology Products segment sells computers, computer supplies and consumer electronics which are marketed in North
America and Europe. Except for certain personal computer (“PC”) and related products that we assemble ourselves and sell on a
private label basis, substantially all of our products are manufactured by other companies. Technology Products accounted for 94%,
92% and 92% of our net sales in 2009, 2008, and 2007, respectively.
Our Industrial Products segment sells a wide array of material handling equipment, storage equipment and consumable industrial
items 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 6%, 8% and 8% of
our net sales in 2009, 2008, and 2007, respectively.
In June, 2009, the Company announced plans to exit the Software Solutions segment as the result of economic conditions and
difficulties in marketing the segment’ s products successfully (See Note 7 to the Consolidated Financial Statements included in Item 15
of this Form 10-K.). Our Software Solutions segment participated in the emerging market for on-demand, web-based business
software applications through the marketing of our PCS ProfitCenter Software™application. As of December 31, 2009, substantially
all of the third party business activities of the Software Solutions segment had been ended.
See Note 10 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 1949. Our headquarters office is located at 11 Harbor Park Drive, Port Washington, New York.
Recent Developments
On September 18, 2009, the Company acquired WStore Europe SA and its subsidiaries, (“WStore”), a European supplier of business
IT products and software solutions with operations in France and the United Kingdom. The purchase price (after giving effect to the
conversion of Euros to U.S. dollars) was approximately $4.4 million in cash, $2.2 million of which was placed into an escrow account
for one year to secure the sellers’ indemnification obligations under the purchase agreement. This acquisition expands the Company’ s
business in France and, to a lesser extent, the United Kingdom.
On April 5, 2009, the Company acquired certain intellectual property and ecommerce assets owned Circuit City Stores, Inc. and
Circuit City Stores West Coast, Inc. (‘the Sellers”) for $14.0 million in cash. In addition, the Company will pay the Sellers a royalty
based on a percentage of sales over a thirty month period dependent upon levels of sales achieved from the acquired assets, with a
minimum payment of $3.0 million. This acquisition expands the Company’ s ecommerce market.
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.
Our computer product include desktops, laptops and notebooks and are primarily offerings of brand name original equipment
manufacturers, as well as our own private label brands. Computer supplies and consumer electronics related products include supplies
such as laser printer toner cartridges and ink jet printer cartridges; media such as flash memory, recordable disks and magnetic tape
cartridges; peripherals such as hard disks, CD-ROM and DVD drives, printers and scanners; memory upgrades; data communication
and networking equipment; monitors; digital cameras; plasma and LCD TVs; MP3 and DVD players; PDAs; and packaged software.
We assemble our private label PCs in our ISO-9001:2000 certified facility in Fletcher, Ohio. We purchase components and
subassemblies from suppliers in the United States as well as overseas. Certain parts and components for our PCs are obtained from a
limited group of suppliers. We also utilize licensed technology and computer software in the assembly of our PCs. For a discussion of
risks associated with these licenses and suppliers, see Item 1A, Risk Factors.
Our industrial products include material handling equipment, storage and shelving equipment, work benches, packaging supplies,
furniture and office products, food service equipment and supplies, janitorial and maintenance supplies, HVAC, electrical and
plumbing supplies and consumable industrial products such as first aid items, safety items, protective clothing and OSHA compliance
items.