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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 2010, 2009 and
2008 and the selected balance sheet data as of December 2010 and 2009 are derived from the audited consolidated financial statements
which are included elsewhere in this report. The selected balance sheet data as of December 2008, 2007 and 2006 and the selected
statement of operations data for fiscal years 2007 and 2006 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)
2010 2009 2008 2007 2006
Statement of Operations Data:
Net sales
$ 3,590.0 $ 3,166.0 $ 3,033.0 $ 2,779.9 $ 2,345.2
Gross profit $ 495.9 $ 460.2 $ 458.6 $ 426.3 $ 342.9
Operating income $ 68.7 $ 73.6 $ 83.6 $ 94.2 $ 60.9
Net income
$ 42.6 $ 46.2 $ 52.8 $ 69.5 $ 45.14
Per Share Amounts:
Net income
— diluted $ 1.13 $ 1.24 $ 1.40 $ 1.84 $ 1.22
Weighted average common shares — diluted 37.6 37.3 37.7 37.8 36.9
Cash dividends declared per common share $
—
$ .75 $ 1.00 $ 1.00 $
—
Balance Sheet Data:
Working capital $ 300.9 $ 250.1 $ 253.1 $ 274.4 $ 229.4
Total assets $ 894.1 $ 816.9 $ 702.5 $ 677.6 $ 584.1
Long-term debt, excluding current portion $ 7.4 $ 1.2 $ 1.4 $ .3 $ .5
Shareholders’ equity $ 409.3 $ 364.7 $ 334.0 $ 335.8 $ 289.5
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 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, Puerto Rico 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 under
the trademarks Global™,GlobalIndustrial.com™and Nexel™.Industrial products accounted for 7%,6% and 8%, of our net sales in
2010, 2009 and 2008, respectively. In both of these product groups, we offer our customers a broad selection of products, prompt
order fulfillment and extensive customer service.
We announced plans to exit the Software Solutions segment during the second quarter of 2009. (See Note 7 to the Consolidated
Financial Statements included in Item 15 of this Form 10-K). Substantially all of the third party business activities of ProfitCenter
Software have ended. Current and prior year results for 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 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.
The primary component of our operating expenses historically has been employee related costs, which includes items such as wages,
commissions, bonuses, employee benefits and stock option expenses. We continually assess our operations to ensure that they are
efficient, aligned with market conditions and responsive to customer needs.