SYX Systemax Inc

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 results for the second quarter and six months ended June 30, 2006. Net sales for the quarter increased 8.1% to $547.2 million compared to $506.1 million in the same quarter last year. North American sales increased 12.5% to $375.8 million compared to the same period last year. In Europe, sales totaled $171.4 million in reported U.S. dollars, essentially flat compared to last year. Income from operations increased more than three-fold to $10.6 million from $3.2 million in the second quarter last year. For the six months ended June 30, 2006, net sales increased 7.5% to $1.122 billion from $1.044 billion during the same period last year. Net income increased 493% to $24.7 million or $.67 per diluted share compared to $4.2 million or $.11 per diluted share a year-ago. Results for 2006 include an after tax gain of $4.3 million or $.12 per diluted share from the sale of a warehouse facility. Excluding this gain, net income would have been $20.4 million or $.56 per diluted share compared to $4.2 million or $.11 per diluted share in the same period last year. Richard Leeds, Chairman and Chief Executive Officer said, �I am very pleased with our strong operating performance in the second quarter, highlighted by an 8% sales increase and the continued benefits of the cost cutting, streamlining and restructuring actions that we have implemented over the last two years. We successfully maintained our selling, general and administrative expenses at the reduced levels resulting from all that we have done. Net income was $7.1 million or $.19 per diluted share compared to $1.5 million or $.04 per diluted share in the year ago period.� Gilbert Fiorentino, CEO of Tiger Direct, commented that the Company remains focused on controlling its costs and broadening our product offerings in order to grow the business across all the markets we serve. He noted, �The sales growth of North American computer products during the second quarter of 2006 was in large part via e-commerce and also reflects the success of our strategy of expanding product offerings. Industrial product sales were also strong, increasing 12% during the quarter. European sales increased 2% in constant dollars compared to the year-ago quarter.� Steven Goldschein, Chief Financial Officer, noted that the Company�s overall financial condition is solid as evidenced by its strong cash position and short-term borrowings only in certain European operations. In the second quarter, lower than anticipated accounts receivable write-offs enabled us to reverse previously provided allowances totaling $1.2 million which was offset by a $1.9 million reduction in revenue for returns and allowances related to prior periods. The Company continues to work diligently to become current in its financial reporting and intends to release third quarter results before the end of December 2006. Systemax Inc. (www.systemax.com) utilizes an integrated system of branded e-commerce web sites, direct mail catalogs and relationship marketers to sell PC hardware, related computer products and industrial products in North America and Europe. Systemax is a Fortune 1000 company. SYSTEMAX INC. Condensed Consolidated Statements of Operations � Unaudited (In thousands, except per share amounts) � Six Months Ended Three Months Ended June 30, June 30, 2006� 2005� 2006� 2005� Net sales $1,122,150� $1,044,050� $547,242� $506,142� Cost of sales 954,017� 892,910� 469,872� 434,777� Gross profit 168,133� 151,140� 77,370� 71,365� Selling, general and administrative expenses 136,681� 139,781� 66,796� 67,138� Restructuring and other charges -� 3,052� -� 1,077� Income from operations 31,452� 8,307� 10,574� 3,150� Interest and other (income) expense, net (6,768) 1,076� (145) 505� Income before income taxes 38,220� 7,231� 10,719� 2,645� Provision for income taxes 13,557� 3,071� 3,613� 1,123� Net income $24,663� $4,160� $7,106� $1,522� � Net income per common share: Basic $.71� $.12� $.20� $.04� Diluted $.67� $.11� $.19� $.04� � Weighted average common and common equivalent shares: Basic 34,802� 34,580� 35,229� 34,687� Diluted 36,563� 35,441� 36,981� 36,514� SYSTEMAX INC. Condensed Consolidated Balance Sheets (In thousands) � As of June 30, 2006 As of December 31, 2005 CURRENT ASSETS: Cash and cash equivalents $52,226� $70,925� Accounts receivable, net 148,320� 143,001� Inventories 217,528� 189,502� Prepaid expenses and other current assets 33,339� 27,704� Total Current Assets 451,413� 431,132� Property, plant and equipment, net 48,230� 57,259� Deferred income taxes and other assets 15,784� 16,153� TOTAL $515,427� $504,544� � LIABILITIES AND SHAREHOLDERS� EQUITY CURRENT LIABILITIES: Short-term borrowings including current portions of long-term debt 23,077� $26,773� Accounts payable and accrued expenses 225,557� 234,555� Total Current Liabilities 248,634� 261,328� Long-term debt 648� 8,028� Other liabilities 2,577� 2,346� � Shareholders� equity 263,568� 232,842� TOTAL $515,427� $504,544� 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 �Risk Factors� and the Forward Looking Statements sections contained in the Company�s Form 10-K for a more detailed explanation of the inherent limitations in such forward-looking statements. 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 results for the second quarter and six months ended June 30, 2006. Net sales for the quarter increased 8.1% to $547.2 million compared to $506.1 million in the same quarter last year. North American sales increased 12.5% to $375.8 million compared to the same period last year. In Europe, sales totaled $171.4 million in reported U.S. dollars, essentially flat compared to last year. Income from operations increased more than three-fold to $10.6 million from $3.2 million in the second quarter last year. For the six months ended June 30, 2006, net sales increased 7.5% to $1.122 billion from $1.044 billion during the same period last year. Net income increased 493% to $24.7 million or $.67 per diluted share compared to $4.2 million or $.11 per diluted share a year-ago. Results for 2006 include an after tax gain of $4.3 million or $.12 per diluted share from the sale of a warehouse facility. Excluding this gain, net income would have been $20.4 million or $.56 per diluted share compared to $4.2 million or $.11 per diluted share in the same period last year. Richard Leeds, Chairman and Chief Executive Officer said, "I am very pleased with our strong operating performance in the second quarter, highlighted by an 8% sales increase and the continued benefits of the cost cutting, streamlining and restructuring actions that we have implemented over the last two years. We successfully maintained our selling, general and administrative expenses at the reduced levels resulting from all that we have done. Net income was $7.1 million or $.19 per diluted share compared to $1.5 million or $.04 per diluted share in the year ago period." Gilbert Fiorentino, CEO of Tiger Direct, commented that the Company remains focused on controlling its costs and broadening our product offerings in order to grow the business across all the markets we serve. He noted, "The sales growth of North American computer products during the second quarter of 2006 was in large part via e-commerce and also reflects the success of our strategy of expanding product offerings. Industrial product sales were also strong, increasing 12% during the quarter. European sales increased 2% in constant dollars compared to the year-ago quarter." Steven Goldschein, Chief Financial Officer, noted that the Company's overall financial condition is solid as evidenced by its strong cash position and short-term borrowings only in certain European operations. In the second quarter, lower than anticipated accounts receivable write-offs enabled us to reverse previously provided allowances totaling $1.2 million which was offset by a $1.9 million reduction in revenue for returns and allowances related to prior periods. The Company continues to work diligently to become current in its financial reporting and intends to release third quarter results before the end of December 2006. Systemax Inc. (www.systemax.com) utilizes an integrated system of branded e-commerce web sites, direct mail catalogs and relationship marketers to sell PC hardware, related computer products and industrial products in North America and Europe. Systemax is a Fortune 1000 company. -0- *T SYSTEMAX INC. Condensed Consolidated Statements of Operations - Unaudited (In thousands, except per share amounts) Six Months Ended Three Months Ended June 30, June 30, ----------------------- ------------------- 2006 2005 2006 2005 ----------- ----------- --------- --------- Net sales $1,122,150 $1,044,050 $547,242 $506,142 Cost of sales 954,017 892,910 469,872 434,777 ----------- ----------- --------- --------- Gross profit 168,133 151,140 77,370 71,365 Selling, general and administrative expenses 136,681 139,781 66,796 67,138 Restructuring and other charges - 3,052 - 1,077 ----------- ----------- --------- --------- Income from operations 31,452 8,307 10,574 3,150 Interest and other (income) expense, net (6,768) 1,076 (145) 505 ----------- ----------- --------- --------- Income before income taxes 38,220 7,231 10,719 2,645 Provision for income taxes 13,557 3,071 3,613 1,123 ----------- ----------- --------- --------- Net income $24,663 $4,160 $7,106 $1,522 =========== =========== ========= ========= Net income per common share: Basic $.71 $.12 $.20 $.04 =========== =========== ========= ========= Diluted $.67 $.11 $.19 $.04 =========== =========== ========= ========= Weighted average common and common equivalent shares: Basic 34,802 34,580 35,229 34,687 =========== =========== ========= ========= Diluted 36,563 35,441 36,981 36,514 =========== =========== ========= ========= *T -0- *T SYSTEMAX INC. Condensed Consolidated Balance Sheets (In thousands) As of As of June 30, December 31, 2006 2005 ------------ ------------ CURRENT ASSETS: Cash and cash equivalents $52,226 $70,925 Accounts receivable, net 148,320 143,001 Inventories 217,528 189,502 Prepaid expenses and other current assets 33,339 27,704 ------------ ------------ Total Current Assets 451,413 431,132 Property, plant and equipment, net 48,230 57,259 Deferred income taxes and other assets 15,784 16,153 ------------ ------------ TOTAL $515,427 $504,544 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Short-term borrowings including current portions of long-term debt 23,077 $26,773 Accounts payable and accrued expenses 225,557 234,555 ------------ ------------ Total Current Liabilities 248,634 261,328 Long-term debt 648 8,028 Other liabilities 2,577 2,346 Shareholders' equity 263,568 232,842 ------------ ------------ TOTAL $515,427 $504,544 ============ ============ *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 "Risk Factors" and the Forward Looking Statements sections contained in the Company's Form 10-K for a more detailed explanation of the inherent limitations in such forward-looking statements.