Delaware
(State or other jurisdiction
of incorporation)
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1-13792
(Commission
File Number)
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11-3262067
(IRS Employer
Identification No.)
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Item 2.02
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Results of Operations and Financial Condition
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Item 9.01
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Financial Statements and Exhibits
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99.1
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Press Release of Systemax Inc., dated July 31, 2012, regarding financial results for the second quarter and six months ended June 30, 2012.
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99.1
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Press Release of Systemax Inc., dated July 31, 2012, regarding financial results for the second quarter and six months ended June 30, 2012.
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Performance Summary
(U.S. dollars in millions, except per share data)
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Highlights
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Quarter Ended
June 30,
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Six Months Ended
June 30,
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2012
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2011
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2012
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2011
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||||||||||||
Sales
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$ | 849.5 | $ | 872.2 | $ | 1,763.1 | $ | 1,802.0 | |||||||
Gross profit
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$ | 118.0 | $ | 128.9 | $ | 248.7 | $ | 259.4 | |||||||
Gross margin
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13.9 | % | 14.8 | % | 14.1 | % | 14.4 | % | |||||||
Operating income (loss) from continuing operations
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$ | (2.0 | ) | $ | 21.9 | $ | 8.8 | $ | 40.5 | ||||||
Operating margin from continuing operations
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(0.2 | )% | 2.5 | % | 0.5 | % | 2.2 | % | |||||||
Diluted earnings (loss) per share
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$ | (0.06 | ) | $ | 0.42 | $ | 0.13 | $ | 0.78 | ||||||
Special charges (gains), net
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$ | 2.2 | $ | (7.1 | ) | $ | 4.1 | $ | (6.6 | ) | |||||
Special charges (gains), net, per diluted share, after tax
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$ | 0.04 | $ | (0.13 | ) | $ | 0.08 | $ | (0.12 | ) |
·
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Consolidated sales declined 2.6% to $849.5 million in U.S. dollars. On a constant currency basis, sales increased 0.2%.
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·
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Business to business channel sales grew 7.7% to $519.6 million in U.S. dollars. On a constant currency basis, sales grew 11.9%. On a “same store” and constant currency basis, sales grew 11.3%.
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·
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Consumer channel sales declined 15.3% to $329.9 million in U.S. dollars. On a constant currency basis, sales declined 14.4%. On a “same store” and constant currency basis, sales declined 15.1%.
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·
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Special charges incurred were approximately $2.2 million on a pre-tax basis, or $0.04 per diluted share after tax, consisting primarily of costs related to the closing and relocation of one of our smaller distribution centers to a new, significantly larger distribution and call center for our Industrial Products business, and legal and professional fees related to the previously disclosed investigation and settlement with a former officer and director.
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·
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Operating loss from continuing operations, which excludes results of the Company’s discontinued Software Solutions segment, was $2.0 million, compared to operating income from continuing operations of $21.9 million in the second quarter of 2011. The decline was primarily a result of the performance of the Company’s North America technology consumer business.
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·
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Diluted loss per share (EPS) was $0.06.
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·
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Consolidated sales declined 2.2% to $1.8 billion in U.S. dollars. On a constant currency basis, sales declined 0.3%.
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·
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Business to business channel sales grew 7.2% to $1.0 billion in U.S. dollars. On a constant currency basis, sales grew 10.0%.
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·
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Consumer channel sales declined 12.9% to $730.8 million in U.S. dollars. On a constant currency basis, sales declined 12.3%.
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·
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Special charges incurred were approximately $4.1 million on a pre-tax basis, or $0.08 per diluted share after tax, consisting of costs associated with senior staffing changes in our North America technology business, legal and professional fees related to the previously disclosed investigation and settlement with a former officer and director, and costs related to the closing and relocation of one of our smaller distribution centers to a new, significantly larger distribution and call center for our Industrial Products business.
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·
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Operating income from continuing operations, which excludes results of the Company’s discontinued Software Solutions segment, was $8.8 million, compared to operating income from continuing operations of $40.5 million in the first six months of 2011. The decline was primarily a result of the performance of the Company’s North America technology consumer business.
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·
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Diluted earnings per share (EPS) was $0.13.
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Supplemental Channel Sales Summary
(in millions)
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Channel
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Quarter Ended June 30,
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Six Months Ended June 30,
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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Business to Business1
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$ | 519.6 | 61 | % | 8 | % | $ | 482.5 | 55 | % | $ | 1,032.3 | 59 | % | 7 | % | $ | 962.9 | 53 | % | |||||||||||||
Consumer 2
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$ | 329.9 | 39 | % | -15 | % | $ | 389.7 | 45 | % | $ | 730.8 | 41 | % | -13 | % | $ | 839.1 | 47 | % | |||||||||||||
Consolidated Sales
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$ | 849.5 | 100 | % | -3 | % | $ | 872.2 | 100 | % | $ | 1,763.1 | 100 | % | -2 | % | $ | 1,802.0 | 100 | % |
1
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Includes sales from managed business relationships, including outbound call centers and extranets, and the entire Industrial Products and Corporate segments
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2
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Includes sales from retail stores, consumer websites, inbound call centers and television shopping
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Supplemental “Same Store” Channel Growth1 – Q2 2012 vs. Q2 2011
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Channel
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Change
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Business to Business
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11 | % | ||
Consumer
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-15 | % | ||
Consolidated Sales | -1 | % | ||
1
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Excludes revenue at retail stores, websites and call centers operating for less than 14 full months as of the beginning of thecurrent comparison period and computed on a constant currency basis. The method of calculating comparable store and channel sales varies across the retail and direct marketing industry. As a result, Systemax’s method of calculating comparable sales may not be the same as other companies’ methods.
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Supplemental Product Category Sales Summary
(in millions)
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Product Category
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Quarter Ended June 30,
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Six Months Ended June 30,
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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Computers
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$ | 238.3 | 28 | % | -2 | % | $ | 243.0 | 28 | % | $ | 500.4 | 28 | % | 8 | % | $ | 461.7 | 26 | % | ||||||||||||||||||||
Computer Accessories & Software
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$ | 237.6 | 28 | % | -5 | % | $ | 251.0 | 29 | % | $ | 497.2 | 28 | % | -5 | % | $ | 521.6 | 29 | % | ||||||||||||||||||||
Consumer Electronics
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$ | 147.7 | 17 | % | -14 | % | $ | 170.8 | 20 | % | $ | 314.6 | 18 | % | -16 | % | $ | 376.4 | 21 | % | ||||||||||||||||||||
Industrial Products
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$ | 102.9 | 12 | % | 31 | % | $ | 78.8 | 9 | % | $ | 193.2 | 11 | % | 29 | % | $ | 149.6 | 8 | % | ||||||||||||||||||||
Computer Components
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$ | 99.5 | 12 | % | -7 | % | $ | 106.5 | 12 | % | $ | 208.1 | 12 | % | -16 | % | $ | 249.0 | 14 | % | ||||||||||||||||||||
Other
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$ | 23.5 | 3 | % | 6 | % | $ | 22.1 | 2 | % | $ | 49.6 | 3 | % | 14 | % | $ | 43.7 | 2 | % | ||||||||||||||||||||
Consolidated Sales
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$ | 849.5 | 100 | % | -3 | % | $ | 872.2 | 100 | % | $ | 1,763.1 | 100 | % | -2 | % | $ | 1,802.0 | 100 | % |
Supplemental Business Unit Sales Summary
(in millions)
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Business Unit
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Quarter Ended June 30,
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Six Months Ended June 30,
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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2012
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% of Sales
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Change y/y
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2011
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% of Sales
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Technology Products
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$ | 745.6 | 88 | % | -6 | % | $ | 792.7 | 91 | % | $ | 1,567.5 | 89 | % | -5 | % | $ | 1,651.0 | 92 | % | ||||||||||||||||||||
Industrial Products
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$ | 102.9 | 12 | % | 31 | % | $ | 78.8 | 9 | % | $ | 193.2 | 11 | % | 29 | % | $ | 149.6 | 8 | % | ||||||||||||||||||||
Corporate and Other
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$ | 1.0 | - | 43 | % | $ | 0.7 | - | $ | 2.4 | - | 71 | % | $ | 1.4 | - | ||||||||||||||||||||||||
Consolidated Sales
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$ | 849.5 | 100 | % | -3 | % | $ | 872.2 | 100 | % | $ | 1,763.1 | 100 | % | -2 | % | $ | 1,802.0 | 100 | % |
SYSTEMAX INC.
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Condensed Consolidated Statements of Operations – Unaudited
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(In thousands, except per share amounts)
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Quarter Ended
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Six Months Ended
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June 30*
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June 30*
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2012
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2011
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2012
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2011
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Net sales
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$ | 849,540 | $ | 872,196 | $ | 1,763,092 | $ | 1,802,022 | ||||||||
Cost of sales
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731,504 | 743,279 | 1,514,428 | 1,542,648 | ||||||||||||
Gross profit
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118,036 | 128,917 | 248,664 | 259,374 | ||||||||||||
Gross margin
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13.9 | % | 14.8 | % | 14.1 | % | 14.4 | % | ||||||||
Selling, general and administrative expenses
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117,782 | 114,158 | 235,737 | 225,484 | ||||||||||||
Special charges (gains), net
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2,233 | (7,150 | ) | 4,098 | (6,646 | ) | ||||||||||
Operating income (loss) from continuing operations
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(1,979 | ) | 21,909 | 8,829 | 40,536 | |||||||||||
Operating margin
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(0.2 | )% | 2.5 | % | 0.5 | % | 2.2 | % | ||||||||
Interest and other (income) expense, net
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1,595 | (478 | ) | 1,647 | (1,461 | ) | ||||||||||
Income (loss) from continuing operations before income taxes
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(3,574 | ) | 22,387 | 7,182 | 41,997 | |||||||||||
Provision (benefit) for income taxes
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(1,347 | ) | 6,744 | 2,082 | 12,782 | |||||||||||
Effective tax rate
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37.7 | % | 30.1 | % | 29.0 | % | 30.4 | % | ||||||||
Net income (loss) from continuing operations
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(2,227 | ) | 15,643 | 5,100 | 29,215 | |||||||||||
Net margin from continuing operations
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(0.3 | )% | 1.8 | % | 0.3 | % | 1.6 | % | ||||||||
Net loss from discontinued operations**
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(9 | ) | (84 | ) | (253 | ) | (90 | ) | ||||||||
Net income (loss)
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$ | (2,236 | ) | $ | 15,559 | $ | 4,847 | $ | 29,125 | |||||||
Per share amounts
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Earnings from continuing operations
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Basic earnings per share
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$ | (0.06 | ) | $ | 0.42 | $ | 0.14 | $ | 0.79 | |||||||
Diluted earnings per share
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$ | (0.06 | ) | $ | 0.42 | $ | 0.14 | $ | 0.78 | |||||||
Net earnings
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Basic earnings per share
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$ | (0.06 | ) | $ | 0.42 | $ | 0.13 | $ | 0.79 | |||||||
Diluted earnings per share
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$ | (0.06 | ) | $ | 0.42 | $ | 0.13 | $ | 0.78 | |||||||
Weighted average common and common equivalent shares:
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||||||||||||||||
Basic
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36,931 | 36,833 | 36,875 | 36,996 | ||||||||||||
Diluted
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37,024 | 37,101 | 37,032 | 37,405 | ||||||||||||
SYSTEMAX INC.
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Condensed Consolidated Balance Sheets
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(In thousands)
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||||||||
(Unaudited)
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June 30
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December 31
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|||||||
2012
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2011
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|||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 145,781 | $ | 97,254 | ||||
Accounts receivable, net
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277,532 | 268,980 | ||||||
Inventories
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354,649 | 372,244 | ||||||
Prepaid expenses and other current assets
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43,640 | 38,678 | ||||||
Total current assets
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821,602 | 777,156 | ||||||
Property, plant and equipment, net
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70,586 | 70,699 | ||||||
Goodwill, intangibles and other assets
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65,977 | 66,695 | ||||||
Total assets
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$ | 958,165 | $ | 914,550 | ||||
Current liabilities:
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Short-term debt
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$ | 2,789 | $ | 2,552 | ||||
Accounts payable and accrued expenses
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453,962 | 419,900 | ||||||
Total current liabilities
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456,751 | 422,452 | ||||||
Long-term debt
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6,740 | 7,133 | ||||||
Other liabilities
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32,861 | 30,673 | ||||||
Shareholders’ equity
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461,813 | 454,292 | ||||||
Total liabilities and shareholders’ equity
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$ | 958,165 | $ | 914,550 | ||||
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