Current Report
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 9, 2005
(Exact Name of Registrant as Specified in Charter)
|
Delaware
(State or Other Jurisdiction of Incorporation) |
1-13792
(Commission File Number) |
11-3262067
(IRS Employer Identification No.) |
11 Harbor Park Drive
Port Washington, New York 11050
(Address of Principal Executive offices, including Zip Code)
Registrant's telephone number, including area code: (516) 608-7000
N.A.
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions ( see General Instruction A.2 below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CRF 240.13e-4(c))
ITEM 4.01 Changes in Registrant’s Certifying Accountants .
On December 9, 2005, the Company engaged Ernst & Young LLP as its independent registered public accounting firm to audit the Company’s consolidated financial statements. The Company did not, during the two most recent fiscal years and any subsequent interim period prior to engaging Ernst & Young, consult with Ernst & Young regarding any matters referred to in either paragraph 304(2)(i) or (ii) of Item 304 of Regulation S-K.
ITEM 2.02 Results of Operations and Financial Condition
A press release regarding First Quarter 2005 financial results was issued by the Company on December 9, 2005, a copy of which is filed as an exhibit.
Item 9.01. Financial Statements and Exhibits.
| (a) | Financial Statements of Business Acquired - not applicable |
| (b) | Pro Forma Financial Information - not applicable |
| (c) | Exhibits |
| 99.1 | Press Release of Systemax Inc., dated December 9, 2005 regarding new auditors |
| 99.2 | Press Release of Systemax Inc., dated December 9, 2005 regarding financial results for the First Quarter of 2005 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
SYSTEMAX INC.
By: /s/ Steven Goldschein Name: Steven Goldschein Title: Sr. Vice President |
Dated: December 13, 2005
Exhibit Index
| 99.1 | Press Release of Systemax Inc., dated December 9, 2005 regarding new auditors |
| 99.2 | Press Release of Systemax Inc., dated December 9, 2005 regarding First Quarter 2005 financial results |
Exhibit 99.1
FOR IMMEDIATE RELEASE
INVESTOR CONTACT:
Steven M. Goldschein
516-608-7000
________________________________________________________________________
SYSTEMAX APPOINTS ERNST & YOUNG LLP
AS ITS NEW INDEPENDENT AUDITOR
PORT WASHINGTON, NY, December 9, 2005 - Systemax Inc. (NYSE:SYX), a leading manufacturer and distributor of PC hardware, related computer products and industrial products in North America and Europe, today announced that the Audit Committee of the Board of Directors has appointed Ernst & Young LLP as its Independent Registered Public Accountants effective for the Company’s year ending December 31, 2005.
Steven M. Goldschein, Senior Vice President and Chief Financial Officer, said, “The Audit Committee solicited proposals from several leading international accounting firms. Ernst & Young LLP was selected after a rigorous selection process.”
The change in auditor was not related to any disagreement between the Company and its previous auditors on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.
Systemax Inc. ( www.systemax.com ) has developed 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.
Exhibit 99.2
FOR IMMEDIATE RELEASE
INVESTOR CONTACT:
Steven M. Goldschein
516-608-7000
SYSTEMAX REPORTS FIRST QUARTER 2005 RESULTS
PORT WASHINGTON, NY, December 9, 2005 - Systemax Inc. (NYSE:SYX), a leading manufacturer and distributor of PC hardware, related computer products and industrial products in North America and Europe, today announced results for its first fiscal quarter of 2005 ended March 31, 2005. The Company’s quarterly results included in this release have not been reviewed by independent registered public accountants. However, management of the Company believes that the attached financial statements accurately reflect the results of operations and financial condition of the Company for the period.
Net sales for the first quarter, ended March 31, 2005, were $536.4 million compared to $484.5 million in the year-ago quarter, an increase of 10.7%. Sales in North America increased 19.1% to $351.7 million compared to $295.3 million in the same period a year ago, fueled by strong internet sales at the Company’s Tiger Direct subsidiary. European sales decreased 2.4% in US dollars (an 8.7% decrease at last year’s exchange rates) to $184.7 million compared to $189.2 million in the same quarter last year. Gross profit margin was $78.0 million this year compared to $76.4 million a year ago, 14.5% versus 15.8% of sales, respectively. The decreased margin resulted from pricing pressures in the computer products business and increased warehousing costs related to increased activity levels. Net income was $2.1 million ($.06 per diluted share) compared to $3.7 million ($.10 per diluted share) in the same period last year. Results in 2005 include $2.0 million of pretax restructuring and other charges incurred primarily in the Company’s European operations compared to $4.0 million in the prior period relating primarily to the restructuring of the Company’s United States computer business. Excluding the effects of the restructuring and other charges, net income would have been $3.4 million, or $.09 per diluted share in 2005, compared to $6.5 million, or $.18 per diluted share, in the prior year. (A reconciliation between income from operations, as reported in accordance with GAAP, and pro forma net income, excluding the adjustments discussed above, has been provided.)
Richard Leeds, Chairman and Chief Executive Officer, noted, “Our computer business continued to achieve increased sales resulting from increased e-commerce activity, especially in the North American consumer market. Our e-commerce sales now represent 28.8% of worldwide sales compared to 24.9% last year. While our gross margins improved from 12.9% in the fourth quarter of last year, they remain below year-ago levels due to continued pricing pressures in both North America and Europe. We will remain focused on reducing and controlling our selling, general and administrative expenses in order to continue to operate profitably.”
Steven Goldschein, Senior Vice President and Chief Financial Officer, said that the Company’s financial position continued to be sound. Cash increased to $56.3 million from $36.3 million at the end of December 2004. Short-term borrowing increased from $25.0 million as of December 31, 2004 to $32.0 million at the end of the first quarter as a result of increased borrowings in the United Kingdom. There have been no short-term borrowings in the United States for more than three years. He also noted that inventory levels decreased from the end of last fiscal year and days sales outstanding remained constant.
The Company anticipates releasing results for the second and third quarters of fiscal 2005 during the next six weeks. In addition, the Company currently anticipates that it will shortly be announcing its appointment of new independent registered public accountants.
Systemax Inc. ( www.systemax.com ) has developed 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
(In thousands, except per share and share amounts)
Three Months Ended 1.1
March 31,
------------------
2005 2004
Net Sales $536,358 $484,507
Cost of Sales 458,380 408,067
-------------- -------------
Gross Profit 77,978 76,440
Selling, General and Administrative Expenses 71,636 65,575
Restructuring and Other Charges 1,975 4,042
-------------- -------------
Income From Operations 4,367 6,823
Interest And Other Expense, Net 571 647
-------------- -------------
Income Before Income Taxes 3,796 6,176
Provision For Income Taxes 1,727 2,486
-------------- -------------
Net Income $2,069 $3,690
============== =============
Net Income Per Common Share:
Basic $.06 $.11
============== =============
Diluted $.06 $.10
============== =============
Weighted Average Common And Common Equivalent Shares:
Basic 34,472,352 34,304,883
============== =============
Diluted 36,364,412 35,218,480
============== =============
SYSTEMAX INC.
Condensed Consolidated Balance Sheets
(In thousands)
As of As of
March 31, December 31,
2005 2004
--------- ------------
CURRENT ASSETS:
Cash and cash equivalents $56,350 $36,257
Accounts receivable, net 140,323 137,706
Inventories 178,987 192,774
Prepaid expenses and other current assets 29,727 31,690
--------------- ----------------
Total Current Assets 405,387 398,427
64,082 65,563
Property, plant and equipment, net
Other assets 21,032 19,206
--------------- ----------------
TOTAL $490,501 $483,196
=============== ================
Systemax Inc.
Reconciliation of GAAP income to earnings excluding certain charges
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31,
2005 2004
---- ----
Income from operations $4,367 $6,823
Adjustments:
Restructuring charges (1) 1,975 4,042
----- -----
Earnings excluding certain charges before
interest and income taxes 6,342 10,865
Interest and other expense, net 571 647
--- ---
Earnings excluding certain charges before
income taxes 5,771 10,218
Provision for income taxes 2,327 3,707
----- -----
Earnings excluding certain charges $3,444 $6,511
====== ======
Earnings excluding certain charges per
diluted share $.09 $.18
==== ====
Diluted weighted average shares outstanding
36,364 35,218
====== ======
(1) The restructuring charges in the first quarters of 2005 and 2004 are comprised primarily of severance and related costs for personnel terminated in the quarter.
NOTE - The above reconciliation is intended to present Systemax's operating results, excluding certain charges and providing income taxes (benefits) at local effective tax rates. This reconciliation is not in accordance with, or an alternative method for, generally accepted accounting principles in the United States, and may be different from similar measures presented by other companies. The presentation of this financial measure facilitates meaningful comparison with prior periods.
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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