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16
Item 6. Selected Financial Data.
The following selected financial information is qualified by reference to, and should be read in conjunction with, the Company’ s
Consolidated Financial Statements and the notes thereto, and “Management’ s Discussion and Analysis of Financial Condition and
Results of Operations” contained elsewhere in this report. The selected statement of operations data for fiscal years 2009, 2008 and
2007 and the selected balance sheet data as of December 2009 and 2008 are derived from the audited consolidated financial statements
which are included elsewhere in this report. The selected balance sheet data as of December 2007, 2006 and 2005 and the selected
statement of operations data for fiscal years 2006 and 2005 are derived from the audited consolidated financial statements of the
Company which are not included in this report.
Years Ended December 31,
(In millions, except per share data)
2009 2008 2007 2006 2005
Statement of Operations Data:
Net sales $ 3,166.0 $ 3,033.0 $ 2,779.9 $ 2,345.2 $ 2,115.5
Gross profit $ 460.2 $ 458.6 $ 426.3 $ 342.9 $ 307.3
Operating income $ 73.4 $ 83.4 $ 93.9 $ 60.7 $ 37.2
Net income $ 46.2 $ 52.8 $ 69.5 $ 45.1 $ 11.4
Per Share Amounts:
Net income — diluted (1) $ 1.24 $ 1.40 $ 1.84 $ 1.22 $ .31
Weighted average common shares — diluted 37.3 37.7 37.8 36.9 36.5
Cash dividends declared per common share $ .75 $ 1.00 $ 1.00 $
—
$
—
Balance Sheet Data:
Working capital $ 250.1 $ 253.1 $ 274.4 $ 229.4 $ 169.8
Total assets $ 816.9 $ 702.5 $ 677.6 $ 584.1 $ 504.5
Long-term debt, excluding current portion $ 1.2 $ 1.4 $ .3 $ .5 $ 8.0
Shareholders’ equity $ 364.7 $ 334.0 $ 335.8 $ 289.5 $ 232.8
(1) previous years have been restated in accordance with accounting guidance concerning participating securities
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
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, Puerto Rico and Europe. Except for certain 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. We also sell private label brands. 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 under the trademarks Global™,GlobalIndustrial.com™and Nexel™.Industrial
products accounted for 6%, 8% and 8%, of our net sales in 2009, 2008 and 2007, respectively. In both of these product groups, we
offer our customers a broad selection of products, prompt order fulfillment and extensive customer service.
The Company announced plans to exit the Software Solutions segment during the second quarter of 2009 as a 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). As of December 31, 2009 substantially all of the third party business activities of the
Software Solutions segments 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 market for computer products and consumer electronics is subject to intense price competition and is characterized by narrow
gross profit margins. The North American industrial products market is highly fragmented and we compete against companies
utilizing multiple distribution channels. Distribution is working capital intensive, requiring us to incur significant costs associated with
the warehousing of many products, including the costs of leasing warehouse space, maintaining inventory and inventory management
systems, and employing personnel to perform the associated tasks. We supplement our on-hand product availability by maintaining
relationships with major distributors and manufacturers, utilizing a combination of stocking and drop-shipment fulfillment.