Systemax Inc. (NYSE:SYX), a leading distributor and manufacturer of
PC hardware, related computer products and industrial products in
North America and Europe, today announced its restated results for
the year ended December 31, 2004, including each of the four
quarters of 2004, and the restatement of opening retained earnings.
Net income for the year ended December 31, 2004 decreased by $2.0
million from $12.6 million ($.36 per diluted share) as originally
reported to $10.6 million ($.30 per diluted share). On May 11, 2005
the Company reported the discovery of errors in accounting for
inventory at its Tiger Direct, Inc. subsidiary which affected the
Company's previously issued consolidated financial statements for
the year ended December 31, 2004. The Company immediately commenced
and has now completed an internal review of its accounting for the
year ended December 31, 2004, resulting in the restatement. The
Company also determined during its internal review of its 2004
results that, in addition to the corrections for errors in
accounting for inventory, revenue that had been recognized at time
of shipment based upon FOB shipping point terms should have been
recognized at time of receipt by customers, when title and risk of
loss both transferred. The effect of this correction is included in
the restated results. The Company is currently in the process of
preparing an amended Form 10-K to reflect the restated results.
Following issuance of the amended Form 10-K, the Company will
commence preparation of its Forms 10-Q for the first and second
quarters of 2005. The tables below set forth the restated and the
applicable original results for each of the periods and balance
sheet as of December 31, 2004. -0- *T Consolidated Statements of
Operations (In thousands, except Year Ended Quarter Quarter Quarter
Quarter per common share Dec. 31, 1 2 3 4 amounts) 2004 2004 2004
2004 2004 ----------------------------------------------- As
restated: Net sales $1,926,523 $482,883 $433,267 $457,984 $552,389
Cost of sales 1,639,439 405,825 365,740 386,735 481,139
----------------------------------------------- Gross profit
287,084 77,058 67,527 71,249 71,250 Selling, general &
administrative expenses 267,467 69,617 65,074 67,442 65,334
----------------------------------------------- Income from
operations 19,617 7,441 2,453 3,807 5,916 Interest and other
expense, net 2,443 647 426 715 655
----------------------------------------------- Income before
provision for income taxes 17,174 6,794 2,027 3,092 5,261 Provision
for income taxes 6,601 2,719 1,965 1,759 158
----------------------------------------------- Net income $10,573
$4,075 $62 $1,333 $5,103
=============================================== Net income per
common share - diluted $.30 $.12 $.00 $.04 $.14
=============================================== As originally
reported: Net sales $1,927,835 $485,736 $430,990 $460,271 $550,838
Cost of sales 1,637,452 411,597 363,854 387,786 474,215
----------------------------------------------- Gross profit
290,383 74,139 67,136 72,485 76,623 Selling, general &
administrative expenses 267,467 69,617 65,074 67,442 65,334
----------------------------------------------- Income from
operations 22,916 4,522 2,062 5,043 11,289 Interest and other
expense, net 2,443 647 426 715 655
----------------------------------------------- Income before
provision for income taxes 20,473 3,875 1,636 4,328 10,634
Provision for income taxes 7,923 1,940 1,441 2,155 2,387
----------------------------------------------- Net income $12,550
$1,935 $195 $2,173 $8,247
=============================================== Net income per
common share - diluted $.35 $.05 $.01 $.06 $.23
=============================================== *T -0- *T
Consolidated Balance Sheet - December 31, 2004 (In thousands)
ASSETS As As ------ originally restated reported ----------
--------- CURRENT ASSETS Cash, and cash equivalents $ 36,257 $
36,257 Accounts receivable, net 153,724 137,706 Inventories, net
176,227 188,006 Prepaid expenses and other current assets 24,888
24,888 Deferred tax assets - current 8,812 9,590 ---------
--------- Total Current Assets 399,908 396,447 PROPERTY AND
EQUIPMENT , net 65,563 65,563 DEFERRED TAX ASSETS - NON CURRENT
18,268 18,645 OTHER ASSETS 561 561 --------- --------- TOTAL ASSETS
$ 484,300 $ 481,216 --------- --------- LIABILITIES AND
SHAREHOLDERS' EQUITY ------------------------------------ CURRENT
LIABILITIES: Current portion of long-term debt and notes payable to
bank $ 16,560 $ 16,560 Accounts payable 161,864 163,786 Accrued
expenses and other current liabilities 53,242 53,242 Accrued taxes
payable 7,514 6,397 --------- --------- Total Current Liabilities
239,180 239,985 --------- --------- LONG-TERM DEBT 17,099 17,099
--------- --------- OTHER NON-CURRENT LIABILITIES 1,505 1,505
--------- --------- SHAREHOLDERS' EQUITY: Common stock 382 382
Treasury stock (44,630) (44,630) Additional paid-in capital 180,530
180,640 Retained earnings (1) 91,307 87,479 Accumulated other
comprehensive income, net of tax 4,093 3,922 Unearned restricted
stock compensation (5,166) (5,166) --------- --------- Total
Shareholders' Equity 226,516 222,627 --------- --------- TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY $ 484,300 $ 481,216 ---------
--------- NOTE: (1) Includes the impact of the restatement for the
correction related to the timing of revenue recognition which
decreased opening retained earnings by $1.8 million. *T
Forward-Looking Statements This press release contains
forward-looking statements about the Company's performance. These
statements are based on management's estimates, assumptions and
projections and are not guarantees of future performance. The
Company assumes no obligation to update these statements. Actual
results may differ materially from results expressed or implied in
these statements as the result of risks, uncertainties and other
factors including, but not limited to: (a) unanticipated variations
in sales volume, (b) economic conditions and exchange rates, (c)
actions by competitors, (d) the continuation of key vendor
relationships, (e) the ability to maintain satisfactory loan
agreements with lenders, (f) risks associated with the delivery of
merchandise to customers utilizing common carriers, (g) the
operation of the Company's management information systems, and (h)
unanticipated legal and administrative proceedings. Please refer to
the Forward Looking Statements section contained in Item 7 of the
Company's Form 10-K for a more detailed explanation of the inherent
limitations in such forward-looking statements.
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