CompUSA 2011 Annual Report Download - page 6

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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 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; however, we do offer a selection of products that are manufactured for us to our own
design and marketed on a private label basis. Technology Products accounted for 91%, 93% and 94% of our net sales in 2011, 2010 and 2009,
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 9%, 7%, and 6% of our net sales in 2011, 2010 and 2009, 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. 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 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 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 surveillance; car and GPS; cell phones; software; video games and toys; 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.
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