Systemax (NYSE:SYX)
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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
fourth quarter and year ended December 31, 2005.
Net sales for the fourth quarter increased 5.5% to a record $583.0
million compared to $552.4 million in the year-ago quarter. Income
from operations increased more than three-fold to $18.5 million from
$5.9 million during the fourth quarter of 2004. Richard Leeds,
Chairman and Chief Executive Officer said, "I am pleased to report
this sharp increase in operating income, which resulted from a
combination of increased sales and the positive effects of the cost
cutting, streamlining and restructuring actions that we have taken
during the last two years." Net income was $3.4 million or $.09 per
diluted share compared to $5.1 million or $.14 per diluted share in
the prior year period. Fourth quarter net income in 2005 was adversely
affected by an unusually high tax rate which resulted from the
write-off of approximately $10 million, or $.27 per diluted share, of
deferred tax assets related to carryforward losses and other timing
differences in the United Kingdom.
For the year ended December 31, 2005, net sales increased 9.7% to
a record $2.116 billion compared to $1.928 billion in the prior year.
Income from operations increased to $34.8 million from $19.0 million
last year. Net income for 2005 increased 12.3% to $11.4 million or
$.31 per diluted share from $10.2 million or $.29 per diluted share
last year. Net income in 2005 was adversely affected by an unusually
high tax rate which resulted from the write-off in the fourth quarter
of a reserve of approximately $10 million, or $.27 per diluted share,
of deferred tax assets related to carryforward losses and other timing
differences in the United Kingdom.
Gilbert Fiorentino, CEO of Tiger Direct, commented that the
Company remains focused on controlling its costs and completing the
streamlining that began two years ago. "We believe that we have taken
the correct steps in Europe and have begun to see improved performance
in all the markets we serve. Sales in North America climbed 15.3% this
year and our sharply increased operating income was enhanced by Tiger
Direct's continued strong growth in internet sales, principally to the
consumer sector," added Mr. Fiorentino.
Steven Goldschein, Chief Financial Officer, commented that the
Company's balance sheet continued to be very strong. Cash and
short-term investments increased to $70.9 million at the end of the
year compared to $36.3 million a year ago. He added, "We have
concentrated on managing inventory levels and have successfully been
able to increase sales without increasing inventory."
Mr. Goldschein noted that the Company's reporting of its 2005
results was delayed as a result of a change at year end of its
independent registered public accounting firm and delays caused by
last year's restatements. He added, "We are now working diligently to
prepare our financial statements for the first and second quarters of
2006. We currently anticipate first quarter results will be released
on or about August 7, 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.
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SYSTEMAX INC.
Condensed Consolidated Statements of
Operations (In thousands, except per
common share amounts)
Year Ended Year Ended Quarter Ended Quarter Ended
Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2005 Dec. 31, 2004
---------------------------------------------------------
Net sales $2,115,518 $1,928,147 $582,966 $552,389
Cost of sales 1,808,231 1,641,681 497,299 481,139
---------------------------------------------------------
Gross profit 307,287 286,466 85,667 71,250
Selling,
general &
administrative
expenses 268,327 260,111 66,521 64,019
Restructuring
and other
charges 4,151 7,356 657 1,315
---------------------------------------------------------
Income from
operations 34,809 18,999 18,489 5,916
Interest and
other
expense, net 1,935 2,443 (417) 655
---------------------------------------------------------
Income before
provision
for income
taxes 32,874 16,556 18,906 5,261
Provision for
income taxes 21,433 6,368 15,500 158
---------------------------------------------------------
Net income $11,441 $10,188 $3,406 $5,103
=========================================================
Net income
per common
share:
Basic $.33 $.30 $.10 $.15
==== ==== ==== ====
Diluted $.31 $.29 $.09 $.14
==== ==== ==== ====
Quarter 1* Quarter 2* Quarter 3*
2005 2005 2005
Net sales $537,908 $506,142 $488,502
Cost of sales 458,133 434,777 418,022
------------------------------------------
Gross profit 79,775 71,365 70,480
Selling,
general &
administrative
expenses 72,643 67,138 62,025
Restructuring
and other
charges 1,975 1,077 442
------------------------------------------
Income from
operations 5,157 3,150 8,013
Interest and
other
(income)
expense, net 571 505 1,276
------------------------------------------
Income before
provision
for income
taxes 4,586 2,645 6,737
Provision for
income taxes 1,948 1,123 2,862
------------------------------------------
Net income $2,638 $1,522 $3,875
==========================================
Net income
per common
share:
Basic $.08 $.04 $.11
==== ==== ====
Diluted $.07 $.04 $.11
==== ==== ====
* Reflects certain changes from results previously disclosed.
SYSTEMAX INC.
Condensed Consolidated Balance Sheet
(In thousands)
ASSETS December 31, 2005
------ -----------------
CURRENT ASSETS:
Cash, and cash equivalents $70,925
Accounts receivable, net 143,001
Inventories, net 189,502
Prepaid expenses and other current assets 18,477
Deferred tax assets - current 9,227
-----------------
Total current assets 431,132
PROPERTY, PLANT AND EQUIPMENT, net 57,259
DEFERRED TAX ASSETS - NON CURRENT 14,100
OTHER ASSETS 2,053
-----------------
TOTAL ASSETS $504,544
-----------------
LIABILITIES AND SHAREHOLDERS' EQUITY:
-------------------------------------
CURRENT LIABILITIES:
Current portion of long-term debt and notes payable
to bank $26,773
Accounts payable 171,667
Accrued expenses and other current liabilities 62,888
-----------------
Total current liabilities 261,328
-----------------
LONG-TERM DEBT 8,028
-----------------
OTHER NON-CURRENT LIABILITIES 2,346
-----------------
SHAREHOLDERS' EQUITY:
Common stock 382
Treasury stock (40,772)
Additional paid-in capital 177,574
Retained earnings 98,927
Accumulated other comprehensive income 893
Unearned restricted stock compensation (4,162)
-----------------
Total shareholders' equity 232,842
-----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $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
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.