CompUSA 2010 Annual Report Download - page 55

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4
Item 1. Business.
General
Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized in two reportable
business segments — Technology Products and Industrial Products.
Our Technology Products segment sells computers, computer supplies and consumer electronics which are marketed in North
America and Europe. 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. Technology Products accounted for 93%, 94% and 92% of our net sales in 2010,
2009 and 2008, respectively.
Our Industrial Products segment sells a wide array of industrial products and supplies 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 7%, 6% and 8% of our net sales in 2010, 2009 and 2008, respectively.
The Company announced plans to exit its Software Solutions segment in June 2009 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.). The Software Solutions segment participated in the emerging market for on-demand, web-based business
software applications through the marketing of its PCS ProfitCenter Software™application. Substantially all of the third party
business activities of the Software Solutions segment have ended. Current and prior year results of Software Solutions are now
included in “Corporate and other”.
See Note 11 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.
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.
Products offered by our Technology Products segment include individual technology products in the following categories: computers;
computer parts; TV and video; audio; cameras and camcorders; car and GPS; cell phones; software; video games; home and office;
and other products.
We assemble our private label PCs in our ISO-9001:2008 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.
Products offered by our Industrial Products segment include individual industrial products in the following categories: material
handling; storage and shelving; workbench & shop desks; packaging and supplies; furniture and office; foodservice and appliances;
janitorial and maintenance; tools and instruments; fasteners and hardware; motors and power transmission; HVAC/R and fans;
electrical and bulbs; plumbing supplies; and safety and medical items.
Sales and Marketing
We market our products to both individual consumers and business customers. Our business customers include for-profit businesses,
educational organizations and government entities. We have developed numerous proprietary customer and prospect databases.
To reach our individual consumer customers, we use online methods such as website campaigns, banner ads and e-mail campaigns.
We are able to monitor and evaluate the results of our various advertising campaigns to enable us to execute them in the most cost-
effective manner. We combine our use of e-commerce initiatives with catalog mailings, which generate online orders and calls to
inbound sales representatives. These sales representatives use our information and distribution systems to fulfill orders and explore
additional customer product needs. Sales to individual consumers are generally fulfilled from our own stock, requiring us to carry
more inventory than we would for our business customers. We also periodically take advantage of attractive product pricing by
making opportunistic bulk inventory purchases with the objective of turning them quickly into sales. We have also successfully
increased our sales to individual consumers by using retail outlet stores. Over the past several years, the Company has expanded its
brick and mortar retail operations through the CompUSA acquisition and by opening new stores.