CompUSA 2015 Annual Report Download - page 23
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Management’sdiscussionandanalysisthatfollowswillincludeIPG,EMEA,NATGcontinuingoperationsandNATGdiscontinuedoperations.
Industrial Products
OurIndustrialProductssegmentsellsawidearrayofMROproductswhichare marketedinNorthAmerica.Mostoftheseproductsaremanufactured byother
companies;however, theCompanydoesoffer aselectionofproducts thataremanufacturedforour owndesignandmarketed underthetrademarksGlobal™ ,
GlobalIndustrial.com™ andNexel™ Relius™, Relius Elite™ and Hercules™, Paramount™ and Interion™. Industrialproductsaccountedfor38%,26%and2
4%ofourGAAPnet sales fromcontinuing operationsin 2015, 2014 and 2013, respectively. Inboth of these productgroups, we offer ourcustomers a broad
selectionofproducts,promptorderfulfillmentandextensivecustomerservice.
On January 30, 2015, the Company announced that its Industrial Products Group had completed its previously announced acquisition of the Plant Equipment
Group,abusiness-to-businessdirectmarketerofMROproducts,fromTAKKTAmericafor$25.9millionincash;post-closingworkingcapitaladjustmentswere
deminimis.Integrationofthisacquiredbusinessisinprocessandproceedingtimelyandefficiently.ThisacquisitionexpandstheCompany’sregionalfootprint
anditsmarketshare.
EMEA Technology Products Group
OurEMEATechnologyProductssegmentprimarilysellsICTandCEproducts.TheseproductsaremarketedinEurope.Mostoftheseproductsaremanufactured
byothercompanies.EMEATechnologyproductsaccountedfor57%,57%and56%ofourGAAPnetsalesfromcontinuingoperationsin2015,2014and2013,
respectively.
OnJune12,2014,theCompanyacquiredMiscoSolutions(f/k/aSCCServicesB.V.),asupplierofbusiness-to-businessITproductsandserviceswithoperationsin
theNetherlands.ThisacquisitionexpandedtheCompany’sbusinessintheNetherlands.
NATG Technology Products Group
Asdisclosedabove,theCompanysoldcertainB2BassetsofNATGinDecember2015andwillceaseitsoperationsin2016.TheNATGsegmentsoldprimarily
ICT and CE products. These products were marketed in the United States, Canada and Puerto Rico. Most of these products were manufactured by other
companies;howevertheCompanydidofferaselectionofproductsthatweremanufacturedtoourowndesignsandmarketedonaprivatelabelbasis.NATGsales
includedincontinuingoperationsaccountedfor5%,17%and20%ofourGAAPnetsalesfromcontinuingoperationsin2015,2014and2013,respectively.
Discontinued Operations
As disclosed above, the B2B and Ecommerce business and the three remaining retail stores in operation at the time of the sale to PCM are presented as
discontinuedoperationsintheaccompanyingfinancialstatements.TotalGAAPnetsalesforthediscontinuedoperationswere$1,053.4million,$1,338.6million
and$1,376.9millionfortheyearsended2015,2014and2013,respectively.SeeNote2and13totheConsolidatedFinancialStatementsincludedinItem15of
thisForm10-Kforadditionalfinancialinformationaboutourbusinesssegmentsaswellasinformationaboutourgeographicoperations.
Operating Conditions
TheNorthAmericanindustrialproductsmarketishighlyfragmentedandwecompeteagainstmultipledistributionchannels.
TheEMEAmarketforcomputerproductsandelectronicsissubjecttointensepricecompetitionandischaracterizedbynarrowgrossprofitmargins.Distributionis
workingcapitalintensive,requiringustoincursignificantcostsassociatedwiththewarehousingofmanyproducts,includingthecostsofmaintaininginventory,
leasing warehouse space, inventory management systems, and employing personnel to perform the associated tasks. We supplement our on-hand product
availabilitybymaintainingrelationshipswithmajordistributorsandmanufacturers,utilizingacombinationofstockanddrop-shipmentfulfillment.
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