10-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

or

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to         

Commission File Number: 1-13792

 Systemax Inc.

 (Exact name of registrant as specified in its charter)

Delaware	11-3262067
(State or other jurisdiction of incorporation or organization)	(I.R.S. 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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, par value $ .01 per share	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best knowledge of the registrant, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

Large Accelerated Filer o	Accelerated Filer x
Non-Accelerated Filer o	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No x

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2012, which is the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $125,641,055. For purposes of this computation, all executive officers and directors of the Registrant and all parties to the Stockholders Agreement dated as of June 15, 1995 have been deemed to be affiliates. Such determination should not be deemed to be an admission that such persons are, in fact, affiliates of the Registrant.

The number of shares outstanding of the registrant’s common stock as of February 28, 2013 was 36,568,472 shares.

Documents incorporated by reference: Portions of the Proxy Statement of Systemax Inc. relating to the 2013 Annual Meeting of Stockholders are incorporated by reference in Part III hereof.

TABLE OF CONTENTS

Part I
Item 1.	Business	4
	General	4
	Products	4
	Sales and Marketing	5
	Customer Service, Order Fulfillment and Support	6
	Suppliers	6
	Competition and Other Market Factors	6
	Employees	7
	Environmental Matters	7
	Financial Information About Foreign and Domestic Operations	7
	Available Information	8
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	15
Item 2.	Properties	15
Item 3.	Legal Proceedings	15
Item 4.	Mine Safety Disclosures	16
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17
Item 6.	Selected Financial Data	18
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 8.	Financial Statements and Supplementary Data	31
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	31
Item 9A.	Controls and Procedures	31
Item 9B.	Other Information	32
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	33
Item 11.	Executive Compensation	33
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	33
Item 13.	Certain Relationships and Related Transactions, and Director Independence	33
Item 14.	Principal Accounting Fees and Services	33
Part IV
Item 15.	Exhibits and Financial Statement Schedules	33
	Signatures	37

PART I

Unless otherwise indicated, all references herein to Systemax Inc. (sometimes referred to as “Systemax,” the “Company” or “we”) include its subsidiaries.

Forward Looking Statements

This report contains forward looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).  Additional written or oral forward looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise.  Statements contained in this report that are not historical facts are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward looking statements may include, but are not limited to, projections of revenue, income or loss and capital expenditures, statements regarding future operations, expansion or restructuring plans, financing needs, compliance with financial covenants in loan agreements, plans for reorganizing our European operations, including timely opening and integration of our new shared services center in Hungary, plans for acquisition or sale of assets or businesses and consolidation of operations of newly acquired businesses, and plans relating to products or services of the Company, assessments of materiality, predictions of future events and the effects of pending and possible litigation, as well as assumptions relating to the foregoing.  In addition, when used in this report, the words “anticipates,” “believes,” “estimates,” “expects,” “intends,” and “plans” and variations thereof and similar expressions are intended to identify forward looking statements.

Forward looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations.  Consequently, future events and results could differ materially from those set forth in, contemplated by, or underlying the forward looking statements contained in this report.  Statements in this report, particularly in “Item 1. Business,” “Item 1A. Risk Factors,” “Item 3. Legal Proceedings,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the Notes to Consolidated Financial Statements describe certain factors, among others, that could contribute to or cause such differences.

Other factors that may affect our future results of operations and financial condition include, but are not limited to, unanticipated developments in any one or more of the following areas, as well as other factors which may be detailed from time to time in our Securities and Exchange Commission filings:

· risks involved with e-commerce, including possible loss of business and customer dissatisfaction if outages or other computer-related problems should preclude customer access to our products and services

· the Company’s management information systems and other technology platforms supporting our sales, procurement and other operations are critical to our operations and disruptions would have a material adverse effect on us

· general economic conditions, such as decreased consumer confidence and spending, reductions in manufacturing capacity and inflation could result in our failure to achieve our historical sales growth rates and profit level

· the markets for our products and services are extremely competitive and if we are unable to successfully respond to our competitors’ strategies our sales and gross margins will be adversely affected

· sales tax laws or government enforcement priorities may be changed which could result in ecommerce and direct mail retailers having to collect sales taxes in states where the current laws and interpretations do not require us to do so

· goodwill and intangible assets may become impaired resulting in a charge to earnings

· our substantial international operations are subject to risks such as fluctuations in currency rates, foreign regulatory requirements, political uncertainty and the management of our expanding international operations infrastructure, including our ability to timely and effectively open and transition certain support operations to our new shared services center in Hungary and effectively implement distribution logistics initiatives in Europe

· managing various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights and price protection from our vendors

· effective management of our retail stores in North America

· meeting credit card industry compliance standards in order to maintain our ability to accept credit cards

· significant changes in the computer products retail industry, especially relating to the distribution and sale of such products

· timely availability of existing and new products

· risks associated with delivery of merchandise to customers by utilizing common delivery services

· borrowing costs or availability

· pending or threatened litigation and investigations

· the availability of key personnel

· the continuation of key vendor  relationships

· the ability to maintain satisfactory credit arrangements

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Readers are cautioned not to place undue reliance on any forward looking statements contained in this report, which speak only as of the date of this report.  We undertake no obligation to publicly release the result of any revisions to these forward looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events.

Item 1. Business.

General

Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized in two reportable business segments — Technology Products and Industrial Products.

Our Technology Products segment sells computers, computer supplies and consumer electronics which are marketed in North America and Europe. Most of these products are manufactured by other companies; however, we do offer a selection of products that are manufactured for us to our own design and marketed on a private label basis. Technology Products accounted for 89%, 91% and 93% of our net sales in 2012, 2011 and 2010, respectively.

Our Industrial Products segment sells a wide array of industrial products and supplies which are marketed in North America. Most of these products are manufactured by other companies. Some products are manufactured for us to our own design and marketed on a private label basis. Industrial products accounted for 11%, 9%, and 7% of our net sales in 2012, 2011 and 2010, respectively.

Recent developments

The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company’s future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand.  This brand consolidation was effected in the fourth quarter of 2012 resulting in a write off of the intangible assets and goodwill of CompUSA and Circuit City of approximately $35.3 million.

The Company exited the PC manufacturing business during the fourth quarter of 2012 after conducting an evaluation of its operations and concluded that the Company’s North American technology results will be enhanced by exiting the computer manufacturing business.  The exit resulted in a fourth quarter of 2012 asset write down of the carrying cost of the Company’s computer manufacturing facilities, related equipment and inventory of approximately $4.6 million.

The Company is opening a shared services center in Budapest, Hungary in 2013 to facilitate the continued growth of its European Technology business.  This new facility will provide certain administrative and back office services for the existing European business and will help drive operational efficiencies and better serve the Company’s pan-European operating strategy and will serve as the sales location for future business in Eastern Europe. Exit, severance and startup costs to implement the facility together with other cost reduction initiatives in Europe, aggregated $4.7 million in the fourth quarter of 2012.

The Company exited the Software Solutions segment in June 2009.  One customer remained being served by the Company until the second quarter of 2012.  The termination of this customer has resulted in all current and prior period results for this business segment being classified as discontinued operations.  Balance sheet amounts reflecting this change are not shown due to their immateriality.

See Note 12 to the Consolidated Financial Statements included in Item 15 of this Form 10-K for additional financial information about our business s as well as information about our geographic operations.

The Company was incorporated in Delaware in 1995. Certain predecessor businesses which now constitute part of the Company have been in business since 1949. Our headquarters office is located at 11 Harbor Park Drive, Port Washington, New York.

Products

We offer hundreds of thousands of brand name and private label products. We endeavor to expand and keep current the breadth of our product offerings in order to fulfill the increasingly wide range of product needs of our customers.

Products offered by our Technology Products segment include individual technology products in the following categories:  computers; computer parts; Tablets; TV and video; audio; cameras and surveillance; car and GPS; cell phones; software; video games and toys; home and electronics accessories.

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Products offered by our Industrial Products segment include individual industrial products in the following categories:  material handling; storage and shelving; workbench and shop desks; packaging and supplies; furniture and office; foodservice and appliances; janitorial and maintenance; tools and instruments; fasteners and hardware; motors and power transmission; HVAC/R and fans; electrical and bulbs; plumbing supplies; and safety and medical items.

Sales and Marketing

We market our products to both individual consumers and business customers. Our business customers include for-profit businesses, educational organizations and government entities. We have developed numerous proprietary customer and prospect databases.

To reach our individual consumer customers, we use online methods such as website campaigns, banner ads and e-mail campaigns. We are able to monitor and evaluate the results of our various advertising campaigns to enable us to execute them in the most cost-effective manner. We combine our use of e-commerce initiatives with catalog mailings, which generate online orders and calls to inbound sales representatives. These sales representatives use our information and distribution systems to fulfill orders and explore additional customer product needs. Sales to individual consumers are generally fulfilled from our own stock, requiring us to carry more inventory than we would for our business customers. We also periodically take advantage of attractive product pricing by making opportunistic bulk inventory purchases with the objective of turning them quickly into sales. We have also successfully increased our sales to individual consumers by using retail outlet stores.

We have established a multi-faceted direct marketing system to business customers, consisting primarily of our relationship marketers, catalog mailings and proprietary internet websites, the combination of which is designed to maximize sales. Our relationship marketers focus their efforts on our business customers by establishing a personal relationship between such customers and a Systemax account manager. The goal of the relationship marketing sales force is to increase the purchasing productivity of current customers and to actively solicit newly targeted prospects to become customers. With access to the records we maintain, our relationship marketers are prompted with product suggestions to expand customer order values. In certain countries, we also have the ability to provide such customers with electronic data interchange (“EDI”) ordering and customized billing services, customer savings reports and stocking of specialty items specifically requested by these customers. Our relationship marketers’ efforts are supported by frequent catalog mailings and e-mail campaigns, both of which are designed to generate inbound telephone sales, and our interactive websites, which allow customers to purchase products directly over the Internet. We believe that the integration of our multiple marketing methods enables us to more thoroughly penetrate our business, educational and government customer base. We believe increased internet exposure leads to more internet-related sales and also generates more inbound telephone sales; just as we believe catalog mailings and email campaigns which feature our websites results in greater internet-related sales.

E-commerce

The worldwide growth in active internet users has made e-commerce a significant opportunity for sales growth.

The increase in our internet-related sales enables us to leverage our advertising spending. We currently operate multiple e-commerce sites, including:

North America	Europe
www.tigerdirect.com	www.misco.co.uk
www.tigerdirect.ca	www.misco.de
www.infotelusa.com	www.misco.fr
www.globalcomputer.com	www.misco.nl
www.globalgoved.com	www.misco.it
www.globalindustrial.com	www.misco.es
www.globalindustrial.ca	www.misco.se
www.nexelwire.com	www.misco.at
	www.misco.ch
	www.misco.be
	www.misco.ie
	www.inmac-wstore.com
	www.dealopro.com

We are continually upgrading the capabilities and performance of these websites. Our internet sites feature on-line catalogs of hundreds of thousands of products, allowing us to offer a wider variety of computer and industrial products than our printed catalogs.  Our customers have around-the-clock, on-line access to purchase products and we have the ability to create targeted promotions for our customers’ interests.

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In addition to our own e-commerce websites, we have partnering agreements with several of the largest internet shopping and search engine providers who feature our products on their websites or provide “click-throughs” from their sites directly to ours.  These arrangements allow us to expand our customer base at an economical cost.

Catalogs

We currently produce a total of 13 full-line or direct mail publications in North America and Europe under distinct titles.  Our portfolio of catalogs includes such established brand names as TigerDirect.com™, Global Computer Supplies™, TigerDirect.ca™, Misco®, Global Industrial™, Nexel™ and Inmac WStore®.  We mail catalogs to both businesses and individual consumers.  In the case of business mailings, we mail our catalogs to many individuals at a single business location, providing us with multiple points-of-contact.  Our in-house staff designs all of our catalogs, which reduces overall catalog expense and shortens catalog production time.  Our catalogs are printed by third parties under fixed pricing arrangements.  The commonality of certain core pages of our catalogs also allows for economies of scale in catalog production.

Continuing our focus on internet advertising, the distribution of our catalogs decreased to 18.5 million in 2012, which was 39.5% less than in the prior year.  In 2012, we mailed approximately 13.0 million catalogs in North America, a 46.4% decrease from last year and approximately 5.5 million catalogs in Europe, or 13.9% fewer than mailed in 2011.

Customer Service, Order Fulfillment and Support

We receive orders through the Internet, by telephone, electronic data interchange and by fax.  We generally provide toll-free telephone number access for our customers in countries where it is customary.  Certain domestic call centers are linked to provide telephone backup in the event of a disruption in phone service.

Certain of our products are carried in stock, and orders for such products are fulfilled on a timely basis directly from our distribution centers, typically within one day of the order.  We utilize numerous sales and distribution facilities in North America and Europe. Orders are generally shipped by third-party delivery services.  We maintain relationships with a number of large distributors in North America and Europe that also deliver products directly to our customers.

We provide extensive technical telephone support to our private label PC customers.  We maintain a database of commonly asked questions for our technical support representatives, enabling them to respond quickly to similar questions.  We conduct regular on-site training seminars for our sales representatives to help ensure that they are well trained and informed regarding our latest product offerings.

Suppliers

We purchase substantially all of our products and components directly from manufacturers and large wholesale distributors. In 2012, no vendor accounted for 10% of more of our purchases.  One vendor accounted for 11.5% and 10.0% of our purchases in 2011 and 2010, respectively.  The loss of these vendors, or any other key vendors, could have a material adverse effect on us.

Most private label products are manufactured by third parties to our specifications.

Competition and Other Market Factors

Technology Products

The North American and European technology product markets are highly competitive, with many U.S., Asian and European companies vying for market share.  There are few barriers to entry, with these products being sold through multiple channels of distribution, including direct marketers, local and national retail computer stores, computer resellers, mass merchants, over the Internet and by computer and office supply superstores.

Timely introduction of new products or product features are critical elements to remaining competitive. Other competitive factors include product performance, quality and reliability, technical support and customer service, marketing and distribution and price. Some of our competitors have stronger brand-recognition, broader product lines and greater financial, marketing, manufacturing and technological resources than us.

Conditions in the market for technology products remain highly competitive, resulting in our frequent discounting of product sales price as well as offering free or highly discounted freight.  These actions have and may continue to adversely affect our revenues and profits.  Additionally, we rely in part upon the introduction of new technologies and products by other manufacturers in order to sustain long-term sales growth and profitability.  There is no assurance that the rapid rate of such technological advances and product development will continue.

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Current economic conditions in the United States, including eroding consumer demand, as well as ongoing difficulties in the various European countries where we operate, raise additional concerns as we believe the loss of consumer confidence in the Company’s markets together with the effects of the fiscal cliff and budget discussions in the U.S. has resulted in a decrease of spending in the categories of products we sell.  It is also possible that as manufacturers react to the marketplace they may reduce manufacturing capacity and create shortages of product.

Industrial Products

The market for the sale of industrial products in North America is highly fragmented and is characterized by multiple distribution channels such as small dealerships, direct mail distribution, internet-based resellers, large warehouse stores and retail outlets.  We also face competition from manufacturers’ own sales representatives, who sell industrial equipment directly to customers, and from regional or local distributors.  Many high volume purchasers, however, utilize catalog distributors as their first source of product. In the industrial products market, customer purchasing decisions are primarily based on price, product selection, product availability, level of service and convenience.  We believe that direct marketing via sales representatives, catalog and the Internet are effective and convenient distribution methods to reach mid-sized facilities that place many small orders and require a wide selection of products.  In addition, because the industrial products market is highly fragmented and generally less brand oriented, it is well suited to private label products.

Employees

As of December 31, 2012, we employed a total of approximately 5,300 employees, of whom 3,800 were in North America and 1,500 were in Europe and Asia.

Seasonality

As the Company has a significant portion of its sales in the North America consumer business market, the fourth quarter has represented the greatest portion of annual sales.  Net sales have historically been modestly weaker during the second and third quarters as a result of lower business activity during those months.  See Item 7, “Management’s Discussions and Analysis of Financial Condition and Results of Operations; Seasonality”.

Environmental Matters

Under various national, state and local environmental laws and regulations in North America and Western Europe, a current or previous owner or operator (including the lessee) of real property may become liable for the costs of removal or remediation of hazardous substances at such real property. Such laws and regulations often impose liability without regard to fault.  We lease most of our facilities.  In connection with such leases, we could be held liable for the costs of removal or remedial actions with respect to hazardous substances.  Although we have not been notified of, and are not otherwise aware of, any material real property environmental liability, claim or non-compliance, there can be no assurance that we will not be required to incur remediation or other costs in connection with real property environmental matters in the future.

Financial Information About Foreign and Domestic Operations

We currently sell our products in North America (the United States, Puerto Rico and Canada) and Europe.  Approximately 37.8%, 36.0%, and 35.1% of our net sales during 2012, 2011 and 2010, respectively were made by subsidiaries located outside of the United States.  For information pertaining to our international operations, see Note 12, “Segment and Related Information,” to the Consolidated Financial Statements included in Item 15 of this Form 10-K. The following sets forth selected information with respect to our operations, excluding discontinued operations, in those two geographic markets (in millions):

	North America				Europe			Total
2012
Net sales		$	2,417.9			$	1,126.7		$	3,544.6
Operating (loss) income		$	(63.6	)		$	23.7		$	(39.9	)
Identifiable assets		$	642.9			$	319.4		$	962.3
2011
Net sales		$	2,580.8			$	1,099.8		$	3,680.6
Operating income		$	45.0			$	35.8		$	80.8
Identifiable assets		$	643.9			$	245.8		$	889.7
2010
Net sales		$	2,542.1			$	1,047.0		$	3,589.1
Operating income		$	47.8			$	21.0		$	68.8
Identifiable assets		$	665.7			$	228.4		$	894.1

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See Item 7, “Management’s Discussions and Analysis of Financial Condition and Results of Operations”, for further information with respect to our operations.

Available Information

We maintain an internet website at www.systemax.com. We file reports with the Securities and Exchange Commission and make available free of charge on or through this website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, including all amendments to those reports.  These are available as soon as is reasonably practicable after they are filed with the SEC.  All reports mentioned above are also available from the SEC’s website (www.sec.gov). The information on our website is not part of this or any other report we file with, or furnish to, the SEC.

Our Board of Directors has adopted the following corporate governance documents with respect to the Company (the “Corporate Governance Documents”):

· Corporate Ethics Policy for officers, directors and employees

· Charter for the Audit Committee of the Board of Directors

· Charter for the Compensation Committee of the Board of Directors

· Charter for the Nominating/Corporate Governance Committee of the Board of Directors

· Corporate Governance Guidelines and Principles

In accordance with the listing standards of the New York Stock Exchange, each of the Corporate Governance Documents is available on our Company website (www.systemax.com).

Item 1A. Risk Factors.

There are a number of factors and variables described below that may affect our future results of operations and financial condition. Other factors of which we are currently not aware or that we currently deem immaterial may also affect our results of operations and financial position.

Risks Related to the Economy and Our Industries

· General economic conditions, such as decreased consumer confidence and spending, reductions in manufacturing capacity, and inflation could result in our failure to achieve our historical sales growth rates and profit levels.

Current economic conditions may cause the loss of consumer confidence in the Company’s domestic and international markets which may result in a decrease of spending in the categories of products we sell, as occurred in 2012. With conditions in the market for technology products remaining highly competitive, reductions in our selling prices, as we have experienced in recent years, have adversely affected our revenues and profits and could continue to do so in the future.  It is also possible that as manufacturers react to the marketplace they may reduce manufacturing capacity or allocations to their customers creating shortages of product.  Both we and our customers are subject to global political, economic and market conditions, including inflation, interest rates, energy costs, the impact of natural disasters, military action and the threat of terrorism.  Our consolidated results of operations are directly affected by economic conditions in North America and Europe.  We may experience a decline in sales as a result of poor economic conditions and the lack of visibility relating to future orders, as occurred in 2012.  Our results of operations depend upon, among other things, our ability to maintain and increase sales volumes with existing customers, our ability to limit price reductions and maintain our margins, our ability to attract new customers and the financial condition of our customers.  A decline in the economy that adversely affects our customers, causing them to limit or defer their spending, would likely adversely affect our sales, prices and profitability as well, as occurred in 2012.  We cannot predict with any certainty whether we will be able to maintain or improve upon historical sales volumes with existing customers, or whether we will be able to attract new customers.

In response to economic and market conditions, from time to time we have undertaken initiatives to reduce our cost structure where appropriate.  These initiatives, as well as any future workforce and facilities reductions, may not be sufficient to meet current and future changes in economic and market conditions and allow us to continue to achieve the growth rates and re-attain the levels of profitability we experienced prior to the recent market downturns.  In addition, costs actually incurred in connection with our restructuring actions, including launching and integrating the new shared services facility in Hungary, may be higher than our estimates of such costs and/or may not lead to the anticipated cost savings.

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· The markets for our products and services are extremely competitive and if we are unable to successfully respond to our competitors’ strategies our sales and gross margins will be adversely affected.

We may not be able to compete effectively with current or future competitors.  The markets for our products and services are intensely competitive and subject to constant technological change.  We expect this competition to further intensify in the future. Competitive factors include price, availability, service and support.  We compete with a wide variety of other resellers and retailers, including internet marketers, as well as manufacturers.  Many of our competitors are larger companies with greater financial, marketing and product development resources than ours.  The market for the sale of industrial products in North America is highly fragmented and is characterized by multiple distribution channels such as small dealerships, direct mail distribution, internet-based resellers, large warehouse stores and retail outlets.  We also face competition from manufacturers’ own sales representatives, who sell industrial equipment directly to customers, and from regional or local distributors. In addition, new competitors may enter our markets.  This may place us at a disadvantage in responding to competitors’ pricing strategies, technological advances and other initiatives, resulting in our inability to increase our revenues or maintain our gross margins in the future.

In most cases our products compete directly with those offered by other manufacturers and distributors.  If any of our competitors were to develop products or services that are more cost-effective or technically superior, demand for our product offerings could decrease.

Our gross margins are also dependent on the mix of products we sell and could be adversely affected by a continuation of our customers’ shift to lower-priced products.

· Sales tax laws may be changed or interpreted differently which could result in ecommerce and direct mail retailers having to collect sales taxes in states where the current laws do not require us to do so.  This could reduce demand for our products in such states and could result in us having substantial tax liabilities for past sales.

Our United States subsidiaries collect and remit sales tax in states in which the subsidiaries have physical presence or in which we believe sufficient nexus exists which obligates us to collect sales tax.  Other states may, from time to time, claim that we have state-related activities constituting physical nexus to require such collection.  Additionally, many other states seek to impose sales tax collection or reporting obligations on companies that sell goods to customers in their state, or directly to the state and its political subdivisions, regardless of physical presence.  Such efforts by states have increased recently, as states seek to raise revenues without increasing the income tax burden on residents. We rely on United States Supreme Court decisions which hold that, without Congressional authority, a state may not enforce a sales tax collection obligation on a company that has no physical presence in the state and whose only contacts with the state are through the use of interstate commerce such as the mailing of catalogs into the state and the delivery of goods by mail or common carrier.  We cannot predict whether the nature or level of contacts we have with a particular state will be deemed enough to require us to collect sales tax in that state nor can we be assured that Congress or individual states will not approve legislation authorizing states to impose tax collection or reporting obligations on all e-commerce and/or direct mail transactions.  A successful assertion by one or more states that we should collect sales tax on the sale of merchandise could result in substantial tax liabilities related to past sales would result in considerable administrative burdens and costs for us and may reduce demand for our products from customers in such states when we charge customers for such taxes.

· Events such as acts of war or terrorism, natural disasters, changes in law, or large losses could adversely affect our insurance coverage and insurance expense, resulting in an adverse affect on our profitability and financial condition.

We insure for certain property and casualty risks consisting primarily of physical loss to property, business interruptions resulting from property losses, worker’s compensation, comprehensive general liability, and auto liability.  Insurance coverage is obtained for catastrophic property and casualty exposures as well as those risks required to be insured by law or contract.  Although we believe that our insurance coverage is reasonable, significant events such as acts of war and terrorism, economic conditions, judicial decisions, legislation, natural disasters and large losses could materially affect our insurance obligations and future expense.

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Risks Related to Our Company

· We rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our failure to properly evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems and websites, could have an adverse affect on our results of operations.

We rely on a variety of information and telecommunications systems in our operations.  Our success is dependent in large part on the accuracy and proper use of our information systems, including our telecommunications systems.  To manage our growth, we continually evaluate the adequacy of our existing systems and procedures.  We anticipate that we will regularly need to make capital expenditures to upgrade and modify our management information systems, including software and hardware, as we grow and the needs of our business change.  The occurrence of a significant system failure, electrical or telecommunications outages or our failure to expand or successfully implement new systems could have a material adverse effect on our results of operations.

Our information systems networks, including our websites, and applications could be adversely affected by viruses or worms and may be vulnerable to malicious acts such as hacking.  The availability and efficiency of sales via our websites could also be adversely affected by “denial of service” attacks and other unfair competitive practices.  Although we take preventive measures, these procedures may not be sufficient to avoid harm to our operations, which could have an adverse effect on our results of operations.

· The establishment and integration of our new shared service center in Hungary exposes us to various technology, regulatory and economic risks.

We have announced that we will be launching our new shared services center in Budapest, Hungary during the second quarter of 2013. The new facility will provide certain administrative and back office services to our European business and will help drive operational efficiencies and better serve the Company's pan-European operating strategy. Our efforts to operate our European business in a more centralized manner, rather than on an individual country by country basis, will require us to implement changes in our business processes, eliminate redundancies, relocate and/or hire new personnel, transition our information management systems, and integrate the new operation into our existing business seamlessly and without disruption to our operations, customers and vendors. However, changes in economic, regulatory or political conditions in Hungary, delays in launching or integrating the facility, a lower than expected impact of the facility on the Company’s European operations, costs and capital expenditures, the ability to timely hire and train new employees in Hungary, and delays, impediments or other problems associated with its establishment, could all have a material adverse effect on our European operations and our results of operations.

· We rely on third party suppliers for most of our products and services. The loss or interruption of these relationships could impact our sales volumes, the levels of inventory we must carry, and/or result in sales delays and/or higher inventory costs from new suppliers.  Co-operative advertising and other sales incentives provided by our suppliers could decrease in the future thereby increasing our expenses and adversely affecting our results of operations and cash flows.

We purchase substantially all of our technology products from major distributors and directly from large manufacturers who may deliver those products directly to our customers.  These relationships enable us to make available to our customers a wide selection of products without having to maintain large amounts of inventory.  The termination or interruption of our relationships with any of these suppliers could materially adversely affect our business.

We purchase a number of our products from vendors outside of the United States.  Difficulties encountered by one or several of these suppliers could halt or disrupt production and delay completion or cause the cancellation of our orders. Delays or interruptions in the transportation network could result in loss or delay of timely receipt of product required to fulfill customer orders.  Our ability to find qualified vendors who meet our standards and supply products in a timely and efficient manner is a significant challenge, especially with respect to goods sourced from outside the U.S.  Political or financial instability, merchandise quality issues, product safety concerns, trade restrictions, work stoppages, tariffs, foreign currency exchange rates, transportation capacity and costs, inflation, civil unrest, outbreaks of pandemics and other factors relating to foreign trade are beyond our control.  These and other issues affecting our vendors could materially adversely affect our revenue and gross profit.

Many product suppliers provide us with co-operative advertising support in exchange for featuring their products in our catalogs and on our internet sites.  Certain suppliers provide us with other incentives such as rebates, reimbursements, payment discounts, price protection and other similar arrangements.  These incentives are offset against cost of goods sold or selling, general and administrative expenses, as applicable.  The level of co-operative advertising support and other incentives received from suppliers may decline in the future, which could increase our cost of goods sold or selling, general and administrative expenses and have an adverse effect on results of operations and cash flows.

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· Goodwill and intangible assets may become impaired resulting in a charge to earnings.

The acquisition of certain assets of CompUSA, Circuit City and the purchase of the stock of WStore Europe SA resulted in the recording of significant intangible assets and/or goodwill. We are required to test goodwill and intangible assets annually to determine if the carrying values of these assets are impaired or on a more frequent basis if indicators of impairment exist. If any of our goodwill or intangible assets are determined to be impaired we may be required to record a significant charge to earnings in the period during which the impairment is discovered.  In the fourth quarter of 2012, the Company did record one-time, non-cash impairment charges of approximately $35.3 million related to the intangible assets and goodwill of CompUSA and Circuit City.

· Our substantial international operations are subject to risks such as fluctuations in currency rates (which can adversely impact foreign revenues and profits when translated to US Dollars), foreign regulatory requirements, political uncertainty and the management of our growing international operations.

We operate internationally and as a result, we are subject to risks associated with doing business globally, such as risks related to the differing legal, political and regulatory requirements and economic conditions of many jurisdictions.  Risks inherent to operating internationally include:

·       Changes in a country’s economic or political conditions

·       Changes in foreign currency exchange rates

·       Difficulties with staffing and managing international operations

·       Unexpected changes in regulatory requirements

·       Changes in transportation and shipping costs

·       Enforcement of intellectual property rights

We conduct our business and incur costs in the local currency of most of the countries in which we operate.  The financial condition and results of operations of each foreign operating subsidiary are reported in the relevant local currency and then translated to U.S. Dollars at the applicable currency exchange rate for inclusion in our consolidated financial statements. Changes in exchange rates between these foreign currencies and the U.S. Dollar will affect the recorded levels of our assets, liabilities, net sales, cost of goods sold and operating margins and could result in exchange gains or losses. The primary currencies to which we have exposure are the European Union Euro, Canadian Dollar, British Pound Sterling, and the U.S. Dollar. Exchange rates between these currencies and the U.S. Dollar in recent years have fluctuated significantly and may do so in the future.  Our operating results and net income may be affected by any volatility in currency exchange rates and our ability to manage effectively our currency transaction and translation risks. For example, we currently have operations located in numerous countries outside the United States, and non-U.S. sales (Europe and Canada) accounted for approximately 37.8% of our revenue during 2012.  To the extent the U.S. dollar strengthens against foreign currencies, our foreign revenues and profits will be reduced when translated into U.S. dollars.

· We are exposed to various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights and price protection from our vendors; such events could lower our gross margins or result in inventory write-downs that would reduce reported future earnings.

Our inventory is subject to risk due to technological change and changes in market demand for particular products. If we fail to manage our inventory of older products we may have excess or obsolete inventory.  We may have limited rights to return purchases to certain suppliers and we may not be able to obtain price protection on these items.  The elimination of purchase return privileges and lack of availability of price protection could lower our gross margin or result in inventory write-downs.

We also take advantage of attractive product pricing by making opportunistic bulk inventory purchases; any resulting excess and/or obsolete inventory that we are not able to re-sell could have an adverse impact on our results of operations. Any inability to make such bulk inventory purchases may significantly impact our sales and profitability.

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· We depend on bank credit facilities to address our working capital and cash flow needs from time to time, and if we are unable to renew or replace these facilities, or borrowing capacity were to be reduced our liquidity and capital resources may be adversely affected.

We require significant levels of capital in our business to finance accounts receivable and inventory.  We maintain credit facilities in the United States to finance increases in our working capital if available cash is insufficient.  The amount of credit available to us at any point in time may be adversely affected by the quality or value of the assets collateralizing these credit lines.  In addition, in recent years global financial markets have experienced diminished liquidity and lending constraints.  Our ability to obtain future and/or increased financing to satisfy our requirements as our business expands could be adversely affected by economic and market conditions, credit availability and lender perception of our Company and industry.  However, we currently have no reason to believe that we will not be able to renew or replace our facilities when they reach maturity.

· If we fail to observe certain restrictions and covenants under our credit facilities the lenders could refuse to waive such default, terminate the credit facility and demand immediate repayment, which would adversely affect our cash position and materially adversely affect our operations.

Our United States revolving credit agreement contains covenants restricting or limiting our ability to, among other things:

·      incur additional debt

·      create or permit liens on assets

·      make capital expenditures or investments

·      pay dividends

If we fail to comply with the covenants and other requirements set forth in the credit agreement, we would be in default and would need to negotiate a waiver agreement with the lenders.  Failure to agree on such a waiver could result in the lenders terminating the credit agreement and demanding repayment of any outstanding borrowings, which could adversely affect our cash position and adversely affect the availability of financing to us, which could materially impact our operations.

· Our European employees are represented by unions or workers’ councils or are employed subject to local laws that are less favorable to employers than the laws of the U.S.

As of December 31, 2012, we had approximately 5,300 employees, 1,500 of which are located in Europe and Asia. We have workers’ councils representing the employees of our France, Germany, and Netherlands operations, and trade unions representing our employees in Italy and Sweden and elected employee representatives for our employees in the United Kingdom and Spain. Most of these European employees are employed in countries in which employment laws provide greater bargaining or other rights to employees than the laws of the U.S. Such employment rights require us to work collaboratively with the legal representatives of the employees to effect any changes to labor arrangements. For example, most of our employees in Europe are represented by unions or workers’ councils that must approve certain changes in conditions of employment, including salaries and benefits and staff changes, and may impede efforts to restructure our workforce. The establishment of our shared services center in Hungary regarding related reductions in force is subject to discussion with and approval of certain of the workers councils. We believe that we have a generally good relationship with these councils and unions. We have entered into consultation processes under local laws at our Germany, France, Netherlands and Italy locations for, among other things, restructuring our operations and effecting reductions in force in connection with implementing our shared services center in Hungary. Although we believe that we have a good working relationship with our employees, a strike, work stoppage or slowdown by our employees or significant dispute with our employees could result in a significant disruption of our operations or higher ongoing labor costs.

· We operate retail stores in North America and we must effectively manage our cost structure, such as inventory needs, point of sales systems, personnel and lease expense.

We currently have 41 retail stores operating in North America at December 31, 2012.  The Company needs to effectively manage its cost structure including the additional inventory needs, retail point of sales IT systems, retail personnel and leased facilities.  Future growth in retail will also be dependent on the ability to attract customers and build brand loyalty.  The retail computer and consumer electronics business is highly competitive and has narrow gross margins.  If we fail to manage our growth and cost structure while maintaining high levels of service and meeting competitive pressures adequately, our business plan  may not be achieved and may lead to reduced profitability.

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· The failure to timely and satisfactorily process manufacturers’ and our own rebate programs could negatively impact our customer satisfaction levels.

Similar to other companies in the technology products industry, we advertise manufacturers’ mail-in rebates on many products we sell and, in some cases, offer our own rebates.  These rebates are processed through third party vendors and in house.  If these rebates are not processed in a timely and satisfactory manner by either third party vendors or our in house operations, our reputation in the marketplace could be negatively impacted.

· We may be unable to reduce prices in reaction to competitive pressures, or implement cost reductions or new product line expansion to address gross profit and operating margin pressures; failure to mitigate these pressures could adversely affect our operating results and financial condition.

The computer and consumer electronics industry is highly price competitive and gross profit margins are narrow and variable.  The Company’s ability to further reduce prices in reaction to competitive pressure is limited.  Additionally, gross margins and operating margins are affected by changes in factors such as vendor pricing, vendor rebate and/or price protection programs, product return rights, and product mix.  In 2012 pricing pressure continued to be prevalent in the markets we serve and we expect this to continue.  We may not be able to mitigate these pricing pressures and resultant declines in sales and gross profit margin with cost reductions in other areas or expansion into new product lines.  If we are unable to proportionately mitigate these conditions our operating results and financial condition may suffer.

· We would be exposed to liability, including substantial fines and penalties and, in extreme cases, loss of our ability to accept credit cards, in the event our privacy and data security policies and procedures are inadequate to prevent security breaches of our consumer personal information and credit card information records.

In processing our sales orders we often collect personal information and credit card information from our customers.  The Company has privacy and data security policies in place which are designed to prevent security breaches, however, if a third party or a rogue employee or employees are able to bypass our network security, “hack into” our systems or otherwise compromise our customers’ personal information or credit card information, we could be subject to liability.  This liability may include claims for identity theft, unauthorized purchases and claims alleging misrepresentation of our privacy and data security practices or other related claims.  While the Company believes it conforms to appropriate Payment Card Industry (“PCI”) security standards for its various businesses, any breach involving the loss of credit card information may lead to PCI related fines in the millions of dollars.  In the event of a severe breach, credit card providers may prevent our accepting of credit cards. Any such liability related to the aforementioned risks could lead to reduced profitability and damage our brand(s) and/or reputation.

· Failure to protect the integrity, security and use of our customers’ information could expose us to litigation and materially damage our standing with our customers.

The use of individually identifiable consumer data is regulated at the state, federal and international levels and we incur costs associated with information security – such as increased investment in technology and the costs of compliance with consumer protection laws.  Additionally, our internet operations and website sales depends upon the secure transmission of confidential information over public networks, including the use of cashless payments.  While we have taken significant steps to protect customer and confidential information, there can be no assurance that advances in computer capabilities, new discoveries in the field of cryptography, the efforts of “hackers” and cyber criminals or other developments will prevent the compromise of our customer transaction processing capabilities and our customers’ personal data.  If any such compromise of our security were to occur, it could have a material adverse effect on our reputation, operating results and financial condition and could subject us to litigation.

· Sales to individual customers expose us to credit card fraud, which impacts our operations.  If we fail to adequately protect ourselves from credit card fraud, our operations could be adversely impacted.

Failure to adequately control fraudulent credit card transactions could increase our expenses.  Increased sales to individual consumers, which are more likely to be paid for using a credit card, increases our exposure to fraud.  We employ technology solutions to help us detect the fraudulent use of credit card information.  However, if we are unable to detect or control credit card fraud, we may suffer losses as a result of orders placed with fraudulent credit card data, which could adversely affect our business.

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· Our business is dependent on certain key personnel.

Our business depends largely on the efforts and abilities of certain key senior management.  The loss of the services of one or more of such key personnel could have a material adverse affect on our business and financial results.  We do maintain key man insurance policies on one of our executive officers, Lawrence P. Reinhold.

· We are subject to litigation risk due to the nature of our business, which may have a material adverse effect on our results of operations and business.

From time to time, we are involved in lawsuits or other legal proceedings arising in the ordinary course of our business. These may relate to, for example, patent, trademark or other intellectual property matters, employment law matters product liability, commercial disputes, consumer sales practices, or other matters. In addition, as a public company we could from time to time face claims relating to corporate or securities law matters.  The defense and/or outcome of such lawsuits or proceedings could have a material adverse affect on our business. See “Legal Proceedings”.

· Our profitability can be adversely affected by changes in our income tax exposure due to changes in tax rates or laws, changes in our effective tax rate due to changes in the mix of earnings among different countries, restrictions on utilization of tax benefits and changes in valuation of our deferred tax assets and liabilities.

Changes in our income tax expense due to changes in the mix of U.S. and non-U.S. revenues and profitability, changes in tax rates or exposure to additional income tax liabilities could affect our profitability.  We are subject to income taxes in the United States and various foreign jurisdictions.  Our effective tax rate could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, restrictions on utilization of tax benefits, changes in the valuation of deferred tax assets and liabilities, changes in tax laws or by material audit assessments.  The carrying value of our deferred tax assets, which are primarily in the United States and the United Kingdom, is dependent on our ability to generate future taxable income in those jurisdictions.  In addition, the amount of income taxes we pay is subject to audit in our various jurisdictions and a material assessment by a tax authority could affect our profitability.

· Changes in accounting standards or practices, as well as new accounting pronouncements or interpretations, may require us to account for and report our financial results in a different manner in the future, which may be less favorable than the manner used historically.

A change in accounting standards or practices can have a significant effect on our reported results of operations.  New accounting pronouncements and interpretations of existing accounting rules and practices have occurred and may occur in the future.  Changes to existing rules may adversely affect our reported financial results.

· Concentration of Ownership and Control Limits Stockholders Ability to Influence Corporate Actions

Richard Leeds, Robert Leeds, and Bruce Leeds (each a director and executive officer of the Company), together with trusts for the benefit of certain members of their respective families and other entities controlled by them, control in excess of 70% of the voting power of our outstanding common stock. Due to such holdings, the Leeds brothers together with these trusts and entities are able to determine the outcome of virtually all matters submitted to stockholders for approval, including the election of directors, the appointment of management, amendment of our articles of incorporation, significant corporate transactions (such as a merger or other sale of our company or our assets), the payments of dividends on our common stock and the entering into of extraordinary transactions.  Further, as a "controlled company" under NYSE rules,  the Company has elected to opt-out of certain New York Stock Exchange listing standards that, among other things, require listed companies to have a majority of independent directors on their board; the Company does however currently have an independent Audit, Compensation Committee and Corporate Governance and Nominating Committees.  

· Risk of Thin Trading and Volatility of our Common Stock Could Impact Stockholder Value

Our common stock is currently listed on the NYSE and is thinly traded. Volatility of thinly traded stocks is typically higher than the volatility of more liquid stocks with higher trading volumes. The trading of relatively small quantities of shares of common stock by our stockholders may disproportionately influence the price of those shares in either direction. This may result in volatility in our stock price and could exacerbate the other volatility-inducing factors described below. The market price of our common stock could be subject to significant fluctuations as a result of being thinly traded.

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Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

We operate our business from numerous facilities in North America, Europe and Asia.  These facilities include our headquarters location, administrative offices, telephone call centers, distribution centers, computer assembly and retail stores.  Certain facilities handle multiple functions.  Most of our facilities are leased; certain are owned by the Company.

North America

As of December 31, 2012 we have six distribution centers in North America which aggregate approximately 2.0 million square feet, all of which are leased.  Our headquarters, administrative offices and call centers aggregate approximately 382,000 square feet, all of which are leased.  Our computer assembly facility is approximately 300,000 square feet and is owned by the Company and is currently available for sale.

The following table summarizes the geographic location of our North America stores at the end of 2012:

Location	Stores Open – 12/31/11	Store Openings/  (Store Closings)	Stores Open – 12/31/12
Delaware	2		2
Florida	18	(1)	17
Georgia	1		1
Illinois	5		5
North Carolina	2		2
Puerto Rico	1	1	2
Texas	7	(1)	6
Ontario, Canada	6		6
	42	(1)	41

All of our retail stores are leased.  The retail stores average 22,506 square feet.

Europe

As of December 31, 2012, we have five distribution centers in Europe which aggregate approximately 264,000 square feet.  Four of these, aggregating approximately 191,000 square feet, are leased; one distribution center of approximately 73,000 square feet is owned by the Company.  Our administrative offices and call centers aggregate approximately 330,000 square feet, of which 252,000 square feet are leased and 77,000 square feet are owned by the Company.

Asia

As of December 31, 2012, we leased administrative offices in Asia of approximately 58,000 square feet.

Please refer to Note 11 to the Consolidated Financial Statements for additional information about leased properties, including aggregate rental expense for these properties.

Item 3. Legal Proceedings.

The Company and its subsidiaries are involved in various lawsuits, claims, investigations and proceedings including commercial, employment, consumer, personal injury and health and safety law matters, which are being handled and defended in the ordinary course of business.  In addition, the Company is subject to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of products the Company sells. The Company is also audited by (or has initiated voluntary disclosure agreements with) numerous governmental agencies in various countries, including U.S. Federal and state authorities, concerning potential income tax, sales tax and unclaimed property liabilities.  These matters are in various stages of investigation, negotiation and/or litigation, and are being vigorously defended.  In this regard, the Company is being audited by the state of Texas regarding its claim that certain of the company’s consumer electronics e-commerce sales are subject to sales tax in Texas; the Company is defending this matter, believes it has strong defenses, and has established reserves for this matter. Results for year ended December 31, 2012 were positively impacted by approximately $7.6 million of which $2.6 million related to the favorable resolution of contingent liabilities which were recorded in the second quarter of 2012 and $5.0 million related to an insurance recovery relating to action taken by a former officer and director, and negatively impacted by $1.8 million of patent claim settlements with non-practicing entities which were recorded in the third and fourth quarter of 2012.

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Although the Company does not expect, based on currently available information, that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, the ultimate outcome is inherently unpredictable. Therefore, judgments could be rendered or settlements entered, that could adversely affect the Company’s operating results or cash flows in a particular period.  The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable and estimable.

Audit Committee Investigation and Gilbert Fiorentino’s Resignation and Settlement.

In January and February 2011 the Company received anonymous whistleblower allegations concerning the Company’s Miami Florida operations involving the actions of Mr. Gilbert Fiorentino, then the Chief Executive of the Company’s Technology Products Group. In response to the allegations, the Company commenced an internal investigation of the whistleblower allegations, which was conducted by the Company’s Audit Committee of the Board of Directors with the assistance of independent counsel.

On April 18, 2011, following the independent investigation, the Company delivered a Cause Notice to Mr. Fiorentino pursuant to the terms of his Employment Agreement dated October 12, 2004. The Cause Notice advised Mr. Fiorentino that the Company intended to terminate him for “Cause” (as defined in the Employment Agreement) at a meeting of its Executive Committee scheduled for May 3, 2011, at which meeting Mr. Fiorentino and his counsel could appear, and that Mr. Fiorentino was being placed on administrative leave pending the outcome of that meeting. In the Cause Notice, the Company advised Mr. Fiorentino that the Audit Committee investigation had identified grounds to terminate him for Cause under his Employment Agreement, and set forth the following findings by the Audit Committee constituting such grounds:

i) Mr. Fiorentino personally removed or caused to be removed from the Company’s Miami premises product inventory, and/or kept or caused others to receive at his direction such removed product inventory, without payment to the Company and for his own personal gain;

ii) Mr. Fiorentino caused substantial amounts of Company inventory purchases to be effected through Company credit cards in order to accrue and/or use “reward points” for his personal benefit and which he improperly converted to his own use;

iii) Mr. Fiorentino caused his mother to be identified as an employee of the Company in positions for which she had no bona fide job responsibility or function, and caused the Company to pay her a salary and employee benefits, including extended COBRA reimbursements; and

iv) Mr.Fiorentino engaged in fraudulent “kickback” arrangements with certain of the Company’s vendors, to the detriment of the Company

The Company stated in the Cause Notice that the foregoing activities were in violation of Company policy, the Company’s Corporate Ethics Policy, his fiduciary duties and applicable law. The Audit Committee’s independent investigation determined that the matters described above did not have any material impact on our previously reported financial results and were limited to the Company’s Miami operations.

On May 9, 2011, following several meetings of the Executive Committee and after extensive discussions with Mr. Fiorentino and his counsel, the Company announced that it had accepted the resignation of Mr. Fiorentino, and that it had executed an agreement with Mr. Fiorentino, effective May 6, 2011, under which Mr. Fiorentino surrendered certain assets to the Company valued at approximately $11 million at May 9, 2011: these assets included the surrender of 1,130,001 shares of Systemax common stock and $480,000 in cash. The shares surrendered consisted of 580,001 shares of fully vested unexercised stock options, 2) 100,000 shares of fully vested restricted stock awards and 3) 450,000 shares directly owned by Mr. Fiorentino. The shares surrendered were valued at fair value on May 6, 2011 in the case of the stock options and restricted stock awards and at fair value on May 12, 2011 in the case of the owned shares. The agreement also required Mr. Fiorentino to disclose his and his immediate family’s personal assets; forfeit undisclosed assets discovered by the Company; disclose information regarding certain matters that led to his being notified of the Company’s intent to terminate him; and to fully cooperate with the Company in the future. Mr. Fiorentino and the Company also exchanged mutual general releases and nondisparagement commitments, and Mr. Fiorentino agreed to a 5 year noncompetition obligation. The $11 million settlement value included a financial statement benefit to the Company related to the surrender of shares and cash payment of approximately $8.4 million which was recorded in the second quarter of 2011 under special (gains) charges, net of related legal and professional fees of approximately $1.3 million for the quarter ended June 30, 2011 and $1.8 million for the first six months of 2011. The remainder of the settlement value, approximately $2.6 million, was the intrinsic value of the fully vested unexercised stock options on the date of the settlement agreement for which there is no financial statement impact. The amount of the settlement with Mr. Fiorentino was based on negotiation with him, and was not based on any specific level or nature of damages incurred by the Company, and does not constitute restitution.

On June 21, 2011 Systemax Inc. received notice that the Securities and Exchange Commission (“SEC”) has initiated a formal investigation into the matters discovered by the Audit Committee’s internal investigation. The Company fully cooperated with the SEC in its formal investigation and in February 2013 the SEC advised the Company that it had concluded its investigation and would not be recommending that any action be taken against the Company.

Item 4. Mine Safety Disclosures.

Not applicable.

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PART II

Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Systemax common stock is traded on the NYSE Euronext Exchange under the symbol “SYX.”  The following table sets forth the high and low closing sales price of our common stock as reported on the New York Stock Exchange for the periods indicated.

	High		Low
2012
First Quarter	$	20.57	$	16.33
Second Quarter		17.71		11.41
Third Quarter		12.80		10.60
Fourth Quarter		12.35		9.16
2011
First Quarter	$	14.80	$	12.25
Second Quarter		15.18		12.37
Third Quarter		17.01		11.90
Fourth Quarter		16.97		11.64

On December 29, 2012, the last reported sale price of our common stock on the New York Stock Exchange was $9.30 per share.  As of December 29, 2012, we had 186 shareholders of record.

On November 29, 2012, the Company’s Board of Directors declared a special dividend of $0.25 per share payable on December 21, 2012 to shareholders of record on December 12, 2012.  This special dividend is the fourth dividend we have paid since our initial public offering.

Depending in part upon profitability, the strength of our balance sheet, our cash position and the need to retain cash for the development and expansion of our business, we may decide to declare special dividends in the future, subject to availability limitations under our credit facilities.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Condition, Liquidity and Capital Resources” and Note 4 of Notes to Consolidated Financial Statements.

Information regarding securities authorized for issuance under equity compensation plans and a performance graph relating to the Company’s common stock is set forth in the Company’s Proxy Statement relating to the 2013 Annual Meeting of Shareholders and is incorporated by reference herein.

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Item 6. Selected Financial Data.

The following selected financial information is qualified by reference to, and should be read in conjunction with, the Company’s Consolidated Financial Statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this report.  The selected statement of operations data, excluding discontinued operations, for fiscal years 2012, 2011 and 2010 and the selected balance sheet data as of December 2012 and 2011 are derived from the audited consolidated financial statements which are included elsewhere in this report.  The selected balance sheet data as of December 2010, 2009 and 2008 and the selected statement of operations data for fiscal years 2009 and 2008 are derived from the audited consolidated financial statements of the Company which are not included in this report.

	Years Ended December 31,
	(In millions, except per share data)
	2012			2011		2010		2009		2008
Statement of Operations Data:
Net sales	$	3,544.6		$	3,680.6	$	3,589.1	$	3,163.0	$	3,031.2
Gross profit	$	488.1		$	530.5	$	489.5	$	453.4	$	456.3
Operating (loss) income from continuing operations	$	(39.9	)	$	80.8	$	68.8	$	80.1	$	101.6
Net income from continuing operations	$	(8.0	)	$	54.6	$	42.6	$	49.2	$	77.3
Per Share Amounts:
Net income (loss) — diluted	$	(0.22	)	$	1.47	$	1.13	$	1.32	$	2.05
Weighted average common shares — diluted		36.9			37.1		37.6		37.3		37.7
Cash dividends declared per common share	$	0.25		$	-	$	-	$	0.75	$	1.00
Balance Sheet Data:
Working capital	$	360.8		$	354.8	$	300.9	$	250.1	$	253.1
Total assets	$	962.3		$	889.7	$	894.1	$	816.9	$	702.5
Long-term debt, excluding current portion	$	5.3		$	7.1	$	7.4	$	1.2	$	1.4
Shareholders’ equity	$	446.3		$	454.3	$	409.3	$	364.7	$	334.0

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized in two reportable business segments — Technology Products and Industrial Products.

Our Technology Products segment sells computers, computer supplies and consumer electronics which are marketed in North America, Puerto Rico and Europe. Most of these products are manufactured by other companies; however, we do offer a selection of products that are manufactured for us to our own design and marketed on a private label basis.  Technology products accounted for 89%, 91% and 93% of our net sales in 2012, 2011 and 2010, respectively.

The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company’s future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand.  This consolidation was effected in the fourth quarter of 2012 resulting in a write off of the intangible assets and goodwill of CompUSA and Circuit City of approximately $35.3 million.

The Company exited the PC manufacturing operations during the fourth quarter of 2012 after conducting an evaluation of its operations and concluded that the Company’s North American technology results will be enhanced by exiting the computer manufacturing business.  The exit resulted in a fourth quarter of 2012 asset write down of the carrying cost of the Company’s computer manufacturing facilities, related equipment and inventory of approximately $4.6 million.

The Company is opening a shared services center in Budapest, Hungary in 2013 to facilitate the continued growth of its European Technology Products business.  This new facility will provide certain administrative and back office services for the existing European business, will help drive operational efficiencies and better serve the Company’s pan-European operating strategy, and will serve as the sales location for future business in Eastern Europe. Exit, severance and start up costs to implement the facility together with other cost reduction initiatives in Europe, aggregated to $4.7 million in the fourth quarter of 2012.

Our Industrial Products segment sells a wide array of industrial products and supplies which are marketed in North America. Most of these products are manufactured by other companies. Some products are manufactured for us to our own design and marketed under the trademarks Global™, GlobalIndustrial.com™ and Nexel™. Industrial products accounted for 11%, 9% and7% of our net sales in 2012, 2011 and 2010, respectively. In both of these product groups, we offer our customers a broad selection of products, prompt order fulfillment and extensive customer service.

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We exited the Software Solutions segment in June 2009.  One customer remained being serviced by the Company until the second quarter of 2012  The termination of this customer has resulted in all current and prior period results have for this business segment to be classified as discontinued operations.  See Note 12 to the ConsolidatedFinancial Statements included in Item 15 of this Form 10-K for additional financial information about our business segments as well as information about our geographic operations.

The market for computer products and consumer electronics is subject to intense price competition and is characterized by narrow gross profit margins. The North American industrial products market is highly fragmented and we compete against multiple distribution channels. Distribution is working capital intensive, requiring us to incur significant costs associated with the warehousing of many products, including the costs of maintaining inventory, leasing warehouse space, inventory management systems, and employing personnel to perform the associated tasks. We supplement our on-hand product availability by maintaining relationships with major distributors and manufacturers, utilizing a combination of stock and drop-shipment fulfillment.

The primary component of our operating expenses historically has been employee-related costs, which includes items such as wages, commissions, bonuses, employee benefits and stock option expenses. We continually assess our operations to ensure that they are efficient, aligned with market conditions and responsive to customer needs.

In the discussion of our results of operations we refer to business to business sales, consumer channel sales and period to period constant currency comparisons. Business to business sales are sales made direct to other businesses through managed business relationships, outbound call centers and extranets. Sales in the Industrial Products segment and Corporate and other are considered to be business to business sales. Consumer channel sales are sales from retail stores, consumer websites, inbound call centers and television shopping channels. Constant currency refers to the adjustment of the results of our foreign operations to exclude the effects of period to period fluctuations in currency exchange rates.

Critical Accounting Policies and Estimates

Our significant accounting policies are described in Note 1 to the Consolidated Financial Statements included in Item 15 of this Form 10-K. Certain accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty, and as a result, actual results could differ materially from those estimates. These judgments are based on historical experience, observation of trends in the industry, information provided by customers and information available from other outside sources, as appropriate. Management believes that full consideration has been given to all relevant circumstances that we may be subject to, and the consolidated financial statements of the Company accurately reflect management’s best estimate of the consolidated results of operations, financial position and cash flows of the Company for the years presented. We identify below a number of policies that entail significant judgments or estimates, the assumptions and or judgments used to determine those estimates and the potential effects on reported financial results if actual results differ materially from these estimates.

Accounting policy	Assumptions and uncertainties	Quantification and analysis of effect on actual results if estimates differ materially
Revenue Recognition. We recognize product sales when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met at the time of receipt by customers when title and risk of loss both are transferred, except in our Industrial Products segment where title and risk pass at time of shipment. Sales are presented net of returns and allowances, rebates and sales incentives.  Reserves for estimated returns and allowances are provided when sales are recorded, based on historical experience and current trends.	Our revenue recognition policy contains assumptions and judgments made by management related to the timing and amounts of future sales returns. Sales returns are estimated based upon historical experience and current known trends.	We have not made any material changes to our sales return reserve policy in the past three years and we do not anticipate making any material changes to this policy in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment.
Allowance for Doubtful Accounts Receivable. We record an allowance for doubtful accounts to reflect our estimate of the collectibility of our trade accounts receivable. While bad debt allowances have been within expectations and the provisions established, there can be no guarantee that we will continue to experience the same allowance rate we have in the past.	Our allowance for doubtful accounts policy contains assumptions and judgments made by management related to collectibility of aged accounts receivable and chargebacks from credit card sales. We evaluate the collectibility of accounts receivable based on a combination of factors, including an analysis of the age of customer accounts and our historical experience with accounts receivable write-offs. The analysis also includes the financial condition of a specific customer or industry, and general economic conditions.  In circumstances where we are aware of customer credit card charge-backs or a specific customer’s inability to meet its financial obligations, a specific reserve for bad debts applicable to amounts due to reduce the net recognized receivable to the amount management reasonably believes will be collected is recorded. In those situations with ongoing discussions, the amount of bad debt recognized is based on the status of the discussions.	We have not made any material changes to our allowance for doubtful accounts receivable reserve policy in the past three years and we do not anticipate making any material changes to this policy in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment. A change of 10% in our allowance for doubtful accounts reserve at December 31, 2012 would impact net income by approximately $0.6 million.

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Accounting policy	Assumptions and uncertainties	Quantification and analysis of effect on actual results if estimates differ materially
Inventory valuation.  We value our inventories at the lower of cost or market, cost being determined on the first-in, first-out method except in Europe and retail locations where an average cost is used. Excess and obsolete or unmarketable merchandise are written down based on historical experience, assumptions about future product demand and market conditions. If market conditions are less favorable than projected or if technological developments result in accelerated obsolescence, additional write-downs may be required. While obsolescence and resultant markdowns have been within expectations, there can be no guarantee that we will continue to experience the same level of markdowns we have in the past.	Our inventory reserve policy contains assumptions and judgments made by management related to inventory aging, obsolescence, credits that we may obtain for returned merchandise, shrink and consumer demand.	We have not made any material changes to our inventory reserve policy in the past three years and we do not anticipate making any material changes to this policy in the future. However if our estimates are materially different than our actual experience we could have a material loss adjustment. A change of 10% in our inventory reserves at December 31, 2012 would impact net income by approximately $1.0 million.
Goodwill and Intangible Assets. We apply the provisions of relevant accounting guidance in our valuation of goodwill, trademarks, domain names, client lists and other intangible assets. Relevant accounting guidance requires that goodwill and indefinite lived intangibles be reviewed at least annually for impairment or more frequently if indicators of impairment exist. The amount of an impairment loss would be recognized as the excess of the asset’s carrying value over its fair value.	Our impairment testing involves judgments and uncertainties, quantitative and qualitative, related to the use of discounted cash flow models and forecasts of future results, both of which involve significant judgment and may not be reliable. Significant management judgment is necessary to evaluate the operating environment and economic conditions that exist to develop a forecast for a reporting unit. Assumptions related to the discounted cash flow models we use include the inputs used to determine the Company’s weighted average cost of capital including a market risk premium, the beta of a reporting unit, reporting unit specific risk premiums and terminal growth values.   Critical assumptions related to the forecast inputs used in our discounted cash flow models include projected sales growth, same store sales growth, gross margin percentages, new business opportunities, working capital requirements, capital expenditures and growth in selling, general and administrative expense. We also use our company's market capitalization and comparable company market data to validate our reporting unit valuations.	We have not made any material changes to our goodwill policy in the past three years and we do not anticipate making any material changes to this policy in the future. We recorded goodwill and intangible impairment charges in 2012 (see below) and have approximately $11.1 million in goodwill and intangible assets at December 31, 2012.We do not believe it is reasonably likely that the estimates or assumptions used to determine whether any of our remaining goodwill or intangible assets are impaired will change materially in the future. However if the inputs used in our discounted cash flow models or our forecasts are materially different than actual experience we could incur impairment charges that are material. The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company’s future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand.  As a result an impairment charge of approximately $35.3 million related to the trademarks, domain names and goodwill of CompUSA and Circuit City was taken in the fourth quarter of 2012.

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Accounting policy	Assumptions and uncertainties	Quantification and analysis of effect on actual results if estimates differ materially
Long-lived Assets. Management exercises judgment in evaluating our long-lived assets for impairment and in their depreciation and amortization methods and lives. We believe we will generate sufficient undiscounted cash flow to more than recover the investments made in property, plant and equipment.	The impairment analysis for long lived assets requires management to make judgments about useful lives and to estimate fair values of long lived assets. It may also require us to estimate future cash flows of related assets using discounted cash flow model Our estimates of future cash flows involve assumptions concerning future operating performance and economic conditions. While we believe that our estimates of future cash flows are reasonable, different assumptions regarding such cash flows could materially affect our evaluations.	We have not made any material changes to our long lived assets policy in the past three years and we do not anticipate making any material changes to this policy in the future. We do not believe it is reasonably likely that the estimates and assumptions used to determine long lived asset impairment will vary materially in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment. A change of 10% in the carrying value of our long lived assets would impact net income by approximately $6.3 million.
Vendor Accruals. Our contractual agreements with certain suppliers provide us with funding or allowances for costs such as price protection, markdowns and advertising as well funds or allowances for purchasing volumes. Generally, allowances received as a reimbursement of identifiable costs are recorded as an expense reduction when the cost is incurred. Sales related allowances are generally determined by our level of purchases of product and are deferred and recorded as a reduction of inventory carrying value and are ultimately included as a reduction of cost of goods when inventory is sold.	Management makes assumptions and exercises judgment in estimating period end funding and allowances earned under our various agreements. Estimates are developed based on the terms of our vendor agreements and using existing expenditures for which funding is available, determining products whose market price would indicate coverage for markdown or price protection is available and estimating the level of our performance under agreements that provide funds or allowances for purchasing volumes. Estimates of funding or allowances for purchasing volume will include projections of annual purchases which are developed using current actual purchase data and historical purchase trends. Accruals in interim periods could be materially different if actual purchase volumes differ from projections.	We have not made any material changes to our vendor accrual policy in the past three years nor do we anticipate making any material changes to this policy in the future. If actual results are different from the projections used we could have a material gain or loss adjustment. A change of 10% in our vendor accruals at December 31, 2012 would impact net income by approximately $1.6 million.

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Accounting policy	Assumptions and uncertainties	Quantification and analysis of effect on actual results if estimates differ materially
Income Taxes. We are subject to taxation from federal, state and foreign jurisdictions and the determination of our tax provision is complex and requires significant management judgment. We conduct operations in numerous U.S. states and foreign locations. Our effective tax rate depends upon the geographic distribution of our pre-tax income or losses among locations with varying tax rates and rules. As the geographic mix of our pre-tax results among various tax jurisdictions changes, the effective tax rate may vary from period to period. We are also subject to periodic examination from domestic and foreign tax authorities regarding the amount of taxes due. These examinations include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. We establish as needed, and periodically reevaluate, an estimated income tax reserve on our consolidated balance sheet to provide for the possibility of adverse outcomes in income tax proceedings. While management believes that we have identified all reasonably identifiable exposures and whether or not a reserve is appropriate, it is possible that additional exposures exist and/or that exposures may be settled at amounts different than the amounts reserved.	The determination of deferred tax assets and liabilities and any valuation allowances that might be necessary requires management to make significant judgments concerning the ability to realize net deferred tax assets. The realization of net deferred tax assets is dependent upon the generation of future taxable income. In estimating future taxable income there are judgments and uncertainties related to the development of forecasts of future results that may not be reliable. Significant management judgment is also necessary to evaluate the operating environment and economic conditions that exist to develop a forecast for a reporting unit. Where management has determined that it is more likely than not that some portion or the entire deferred tax asset will not be realized, we have provided a valuation allowance. If the realization of those deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination is made.	We have not made any material changes to our income tax policy in the past three years and we do not anticipate making any material changes to this policy in the future. We do not believe it is reasonably likely that the estimates or assumptions used to determine our deferred tax assets and liabilities and related valuation allowances will change materially in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment. In 2012 we reversed approximately $15.1 million in valuation allowances against the deferred tax assets of our French subsidiary as a result of the subsidiary no longer being in a cumulative loss position. A change of 5% in our effective tax rate at December 31, 2012 would impact net income by approximately $2.1 million.
Reorganization and other charges.  We have recorded reorganization, restructuring and other charges in the past and could in the future commence further reorganization, restructuring and other activities which result in recognition in charges to income.	The recording of reorganization, restructuring and other charges may involve  assumptions and judgments about future costs and  timing for amounts  related to personnel terminations, stay bonuses, lease termination costs, lease sublet revenues, outplacement services, contract termination costs, asset impairments and other exit costs. Management may estimate these costs using existing contractual and other data or may rely on third party expert data.	When we incur a liability related to these actions, we estimate and record all appropriate expenses. We do not believe it is reasonably likely that the estimates or assumptions used to determine our reorganization, restructuring and other charges will change materially in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment. For the year ended December 31, 2012 the Company recorded reorganization and other charges of approximately $46.3 million for reorganization, restructuring and asset impairment and other charges.

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Recently Adopted and Newly Issued Accounting Pronouncements

Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities issue numerous pronouncements, most of which are not applicable to the Company’s current or reasonably foreseeable operating structure. Below are the new authoritative pronouncements that management believes are relevant to the Company’s current operations.

In July 2012, the FASB issued an update related to annual impairment testing for indefinite-lived intangible assets which provides companies with the option to perform a qualitative impairment assessment for their indefinite-lived intangible assets that may allow them to skip the annual fair value calculation.  The qualitative assessment is similar to the screen companies can use to determine whether they must perform the two-step goodwill impairment test. Companies must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used in determining the fair value of these assets.  This ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in shareholders’ equity and requires that all items of net income, items of other comprehensive income and total comprehensive income be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this ASU in the first quarter of 2012. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Highlights from 2012

The discussion of our results of operations and financial condition that follows will provide information that will assist in understanding our financial statements and information about how certain accounting principles and estimates affect the consolidated financial statements. This discussion should be read in conjunction with the consolidated financial statements included herein.

· Sales declined 3.7%, 1.9% on a constant currency basis, to $3.5 billion in 2012 compared to 2011.

· Business to business channel sales grew 5.1%, 8.0% on a constant currency basis, to $2.1 billion in 2012 over 2011.

· Consumer channel sales declined 14.0%, 13.7% on a constant currency basis, to $1.5 billion in 2012 compared to 2011.

· Movements in exchange rates negatively impacted European sales by approximately $57.6 million and Canadian sales by approximately $7.1 million.

· Special one-time asset impairment charges of $35.3 million related to intangible assets and goodwill of CompUSA and Circuit City.

· Special one-time asset write downs of $4.6 million related to the exit from the PC manufacturing business.

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Results of Operations

Key Performance Indicators* (in millions):

	Years Ended December 31,
	2012			2011			% Change			2011			2010			% Change
Net sales by segment:
Technology Products	$	3,137.6		$	3,357.4			(6.5	)%	$	3,357.4		$	3,336.9			0.6	%
Industrial Products		401.9			319.9			25.6	%		319.9			250.0			28.0	%
Corporate and other		5.1			3.3			54.5	%		3.3			2.2			50.0	%
Consolidated net sales	$	3,544.6		$	3,680.6			(3.7	)%	$	3,680.6		$	3,589.1			2.5	%
Net sales by channel:
Business to business	$	2,085.8		$	1,984.4			5.1	%	$	1,984.4		$	1,769.7			12.1	%
Consumer		1,458.8			1,696.2			(14.0	)%		1,696.2			1,819.4			(6.8	)%
Consolidated net sales	$	3,544.6		$	3,680.6			(3.7	)%	$	3,680.6			3,589.1			2.5	%
Consolidated gross margin		13.8	%		14.4	%		(0.6	)%		14.4	%		13.6	%		0.8	%
Consolidated SG&A costs**	$	528.0		$	449.7			17.4	%	$	449.7		$	420.7			6.9	%
Consolidated SG&A costs** as % of sales		14.9	%		12.2	%		2.7	%		12.2	%		11.7	%		0.5	%
Operating income (loss) from continuing operations by segment:**
Technology Products	$	(47.2	)	$	68.0			(169.4	)%	$	68.0		$	65.0			4.6	%
Industrial Products		29.9			35.1			(14.8	)%		35.1			24.1			45.6	%
Corporate and other		(22.6	)		(22.3	)		(1.3	)%		(22.3	)		(20.3	)		(9.9	)%
Consolidated operating income (loss)	$	(39.9	)	$	80.8			(149.4	)%	$	80.8		$	68.8			17.4	%
Operating margin from continuing operations by segment:**
Technology Products		(1.5	)%		2.0	%		(3.5	)%		2.0	%		1.9	%		0.1	%
Industrial Products		7.4	%		11.0	%		(3.6	)%		11.0	%		9.6	%		1.4	%
Consolidated operating margin from continuing operations		(1.1	)		2.2	%		(3.3	)%		2.2	%		1.9	%		0.3	%
Effective income tax rate		80.8	%		30.9	%		49.9	%		30.9	%		35.6	%		(4.7	)%
Net income (loss) from continuing operations	$	(8.0	)	$	54.6			(114.7	)%	$	54.6		$	42.6			28.2	%
Net margin from continuing operations		(0.2	)%		1.5	%		(1.7	)%		1.5	%		1.2	%		0.3	%

* excludes discontinued operations

** includes special charges (gains), net (See Note 7 of Notes to Consolidated Financial Statements).

NET SALES

SEGMENTS:

The Technology Products net sales decrease is attributable to weakness in North American consumer web, television and retail store sales which were only partially offset by our European business to business sales growth. We have made a number of investments in the European market to better capitalize on the opportunities we see in those existing markets and we have built out our European team to support anticipated growth.  On a constant currency basis, sales declined 4.6% or $155.2 million.

The Industrial Products net sales increase in 2012 is attributable to increased product offerings on the Company’s websites, including the recently opened Canadian website, and the addition of business to business sales personnel to strengthen our sales teams.

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The Technology Products net sales increase in 2011 compared to 2010 is attributable to the effects of currency movements and improved business to business sales offset by decreased consumer channel sales.  On a constant currency basis, sales declined 1.0% or $33.5 million. This decline is due to lower sales in certain geographies, primarily North America and certain channels, primarily unassisted web and television shopping.  The Industrial Products segment net sales increase in 2011 compared to 2010 is attributable to more products offered on the Company’s website and the addition of new sales personnel.

CHANNEL SALES:

The increase in consolidated business to business channel sales was driven by the Industrial Products segment’s additional products offered and new product categories on the Company’s website and addition of sales personnel. On a constant currency basis, worldwide business to business channel sales grew 8.0%.

The decline in consolidated consumer-channel sales resulted from softness in television shopping, internet and retail stores in North America. Consumer-channel sales declines were primarily the result of declines in sales of personal computers and televisions, driven by both volume and selling price erosion.  On a constant currency basis, worldwide consumer channel sales declined 14.8%.

The worldwide business to business channel sales increase in 2011 resulted primarily from the Industrial Products segment’s additional product lines and the addition of business to business sales personnel in both the Technology Products and Industrial Products segments. On a constant currency basis, worldwide business to business channel sales grew 9.7% in 2011.  The worldwide consumer-channels, defined as revenues from retail stores, consumer websites, inbound call centers and shopping channels, decline resulted primarily from European and North American unassisted web and television shopping sales. On a constant currency basis, worldwide consumer channel sales declined 7.4% in 2011.

The Company exited the Software Solutions segment in June 2009.  One customer remained being served by the Company until the second quarter of 2012.  The termination of this customer has resulted in all prior period results for this business segment to be classified as discontinued operations in the second quarter of 2012.

GROSS MARGIN

The consolidated gross margin decrease in 2012 is due to increased promotional freight campaigns and competitive pricing pressures within our North American Technology business offset by changes in the segment and channel mix, with Industrial Products sales, which are typically higher margin than Technology Products, contributing a larger percentage to gross profit dollars.  Gross margin is dependent on variables such as product mix, vendor price protection and other sales incentives, competition, pricing strategy, cooperative advertising funds required to be classified as a reduction to cost of sales, freight discounting and other variables, any or all of which may result in fluctuations in gross margin.

The consolidated gross margin increase in 2011 was due to changes in the segment and channel mix, with Industrial Products sales, which are typically higher margin than Technology Products, contributing a larger percentage to gross profit dollars. Modest improvements in our freight margin in Technology Products contributed to the improved margin from our ongoing freight and logistics initiatives.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The selling, general and administrative expenses increase in 2012 primarily resulted from the increased Industrial Products sales volume and increases in facility and other operating costs related to the Industrial Products segment compared to 2011.  Significant expense increases include approximately $4.5 million of increased payroll and related costs due to additional contract labor expenses, approximately $2.3 million in expenses related to ongoing sales tax and other regulatory audits in our North American Technology business; additional rent and related costs of approximately $1.4 million due to the opening of a new distribution center in the Industrial Products segment and new sales and administrative offices in the United Kingdom, approximately $6.9 million of reduced vendor co-operative funding partially offset by savings in catalog and store advertising costs, and increased internet advertising of $11.4 million.  The Company incurred approximately $0.6 million of additional depreciation and amortization compared to 2011 due to the addition of our Industrial Products segment distribution center and extensive data storage upgrades and fabrication materials acquired in that segment.

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The selling, general and administrative expenses increase in 2011 primarily resulted from the increased sales volume, increases in facility and other operating costs related to the retail stores being opened a full year compared to 2010 and hiring of additional sales personnel.  Significant expense increases include approximately $21.4 million of increased payroll, and related costs due to additional sales personnel and additional retail stores operating for the full year of 2011 compared to 2010, additional rent and related costs of approximately $2.8 million and $10.1 million of increased internet, store space ads advertising and reduced cooperative advertising funding on catalogs, offset by decreased spending on catalogs compared to 2010. The Company incurred approximately $2.8 million of additional depreciation and amortization compared to 2010 due to significant additions to our second distribution center, expenditures in our retail stores and amortization of intangible assets.

SPECIAL CHARGES (GAINS), NET

The Company recorded net special charges of approximately $46.3 million primarily related to asset impairment charges of $39.9 million in the North American Technology Products business which includes the write off of $35.3 million of intangible assets and goodwill of CompUSA and Circuit City and $4.6 million related to the closing of the Company’s computer manufacturing location.  The North American Technology Products business also incurred $0.5 million of severance costs related to the exit from the computer manufacturing business as well as $1.8 million related to patent settlements with non-practicing entities (see Notes 2 and 7 of the Notes to Consolidated Financial Statements).  These charges were partially offset by net recoveries of $3.9 million for litigation costs and settlements related to a former officer and director of the Company.  There were also $8.0 million of severance related charges incurred in the Technology Products business and the Industrial Products segment.

In 2011 the Company recorded a net special gain of approximately $5.6 million primarily related to the investigation and settlement with a former officer and director of the Company (see Note 8 of the Notes to Consolidated Financial Statements).  A special gain of approximately $8.4 million related to the Settlement Agreement was recorded in the second quarter of 2011.  This gain was partially offset by charges for related investigative, legal and professional fees of approximately $2.8 million for the year.

OPERATING MARGIN

The decline in Technology products operating margin was primarily due to $39.9 million of asset impairment charges, $6.4 million of severance and other reorganization related charges, $1.8 million of patent settlements with non-practicing entities offset by net recoveries of $3.9 million for litigation costs and settlements related to a former officer and director of the Company.  Excluding these net charges, Technology Products operating margin would have declined compared to 2011 due to the soft demand for personal computers and consumer electronics, a decline in vendor co-operative funding within the North America technology business, and lower sales and gross profit to cover fixed selling, general and administrative expenses, partially offset by continued strength in business to business operations.

Technology products operating margin increased 10 basis points in 2011 versus 2010 due to the effect of a special gain recorded in 2011 related to the investigation of the former officer and director of the Company and the special charges incurred in 2010 for the WStore integration. Excluding these gains and charges, Technology products operating margin would have declined compared to 2010 due to continuing price promotions offered and increased spending related to the retail stores, additional headcount and a full year of operation of the second distribution center.

The decline in Industrial Products operating margin was due to a shift towards drop shipped products which tend to lower consolidated profit margins, a decline in freight margins, costs incurred for the new distribution and call center which opened in the second quarter 2012, and sales and other personnel costs as the segment continues to expand into newer product categories.

Industrial products operating margin increased 140 basis points in 2011 due to increased demand for the segment’s various products, the availability of additional products on the Company’s websites and in its catalogs and additional sales personnel.

The increase in Corporate and other loss primarily resulted from increased overhead expenses. Corporate and other operating costs increased 13.2% during 2011 primarily as a result of increased personnel costs and increased tax and accounting fees offset by savings in general consulting fees.

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The discontinued operations of Software Solutions incurred a loss of approximately $0.3 million, $0.2 million and $0.0 million, net of tax, for the years ended December 31, 2012, 2011 and 2010, respectively.

INTEREST EXPENSE

Interest expense was $1.7 million, $2.2 million, and $1.8 million for 2012, 2011 and 2010, respectively. The interest expense decrease is attributable to decreasing balances owed on the Recovery Zone Bond facility and outstanding capital lease obligations.  The increase in 2011 compared to 2010 is primarily the result of a full year of interest on the Recovery Zone Bond entered into to finance the equipment for the second Technology Products distribution center opened in 2010.

INCOME TAXES

The Company’s effective tax rate was an 80.8% benefit in 2012 as compared to a 30.9% provision in 2011. The tax benefit in 2012 is primarily due to the reversal of approximately $15.1 million of valuation allowances against deferred tax assets of the Company’s French subsidiary as a result of the subsidiary no longer being in a cumulative loss position and operating losses in the United States, including impacts of the asset impairment charges recorded.

The effective tax rate in 2011 was 30.9% compared to 35.6% in 2010. The lower tax rate in 2011 is primarily the result of the company’s France operations having sufficient income to partially utilize net operating loss carryforwards that had a full valuation allowance applied.

Seasonality

The Company’s  fourth quarter has represented a greater portion of annual sales than historically.  Net sales have historically been modestly weaker during the second and third quarters as a result of lower business activity during those months. The following table sets forth the net sales seasonality, excluding discontinued operations, for each of the quarters since January 1, 2010 (amounts in millions).

	Quarter Ended
	March 31			June 30			September 30			December 31
2012
Net sales	$	913.6		$	849.5		$	846.3		$	935.2
Percentage of year’s net sales		25.8	%		24.0	%		23.9	%		26.3	%
2011
Net sales	$	929.8		$	872.2		$	900.2		$	978.4
Percentage of year’s net sales		25.3	%		23.7	%		24.4	%		26.6	%
2010
Net sales	$	914.9		$	806.0		$	862.6		$	1,005.6
Percentage of year’s net sales		25.5	%		22.5	%		24.0	%		28.0	%

Financial Condition, Liquidity and Capital Resources

Selected liquidity data (in millions):

	December 31,
	2012		2011		$ Change
Cash	$	150.7	$	97.3	$	53.4
Accounts receivable, net	$	297.4	$	269.0	$	28.4
Inventories	$	367.2	$	372.2	$	(5.0	)
Assets available for sale	$	2.3	$	-	$	2.3
Prepaid expenses and other current assets	$	21.2	$	18.2	$	3.0
Accounts payable	$	405.3	$	336.5	$	68.8
Accrued expenses and other current liabilities	$	83.5	$	72.4	$	11.1
Current portion of long term debt	$	2.8	$	2.6	$	0.2
Working capital	$	360.8	$	354.8	$	6.0

27

Our primary liquidity needs are to support working capital requirements in our business, including working capital for the exit from the PC manufacturing business, opening a shared services center in Hungary, reorganizing our European operations, including separation costs, the new distribution and call center for our Industrial Products segment, funding capital expenditures, including those related to our retail stores and information technology systems, implementing new inventory and warehouse functions in Europe, continued investment in upgrading and expanding our technological capabilities, repaying outstanding debt, special dividends declared by our Board of Directors and acquisitions. We rely principally upon operating cash flows to meet these needs. We believe that cash flows from operations and our availability under credit facilities will be sufficient to fund our working capital and other cash requirements for the next twelve months.  We believe our current capital structure and cash resources are adequate for our internal growth initiatives.  To the extent our growth initiatives expand, including major acquisitions, we would seek to raise additional capital.  We believe that, if needed, we can access public or private funding alternatives to raise additional capital.

Our working capital increase in 2012 is primarily the result of increased cash, accounts receivable, and prepaid balances offset by increased accounts payable, accrued expenses and other current liabilities balances compared to 2011.  Accounts receivable days outstanding were at 29.0 in 2012 up from 27.0 in 2011. We expect that future accounts receivable and inventory balances will fluctuate with net sales and the mix of our net sales between consumer and business customers.

Net cash provided by operating activities from continuing operations was $75.4 million, $18.4 million, and $64.7 million during 2012, 2011, and 2010, respectively.  The increase in cash provided by operating activities in 2012 compared to 2011 resulted from a $104.2 million increase in our working capital accounts, primarily the result of increased payable balances at year end offset by a $47.2 million decrease in net income adjusted by non-cash items, such as asset impairment charges, depreciation and provision for deferred income taxes.  The decrease in cash provided by operating activities in 2011 compared to 2010 resulted from changes in our working capital accounts which used $49.2 million offset by a $2.9 million increase in net income adjusted by other non-cash items, such as depreciation expense.  Net cash used in operating activities from discontinued operations during 2012 and 2011 was $0.4 million and $0.2 million, respectively and net cash provided by discontinued operations in 2010 was $0.2 million.

Net cash used in investing activities from continuing operations was $12.0 million for 2012 and were for warehouse racking systems for the new distribution center, network upgrades, fabrication equipment, expenditures for a new retail store opening, upgrades and enhancements to our information and communications systems hardware. In 2011, net cash used in investing activities was $12.3 million, primarily for upgrades and enhancements to our information and communication systems hardware and software and expenditures in retail stores in North America. In 2010, net cash used in investing activities was $24.7 million, primarily for capital expenditures including expenditures for the second North American distribution center for the Technology Products segment.

Net cash used in financing activities from continuing operations was $11.1 million in 2012, $0.5 million in 2011 and $4.5 million in 2010.  In 2012, we paid a special dividend of $9.1 million and repaid approximately $2.8 million of capital lease obligations. Net proceeds and excess tax benefits from stock option exercises provided $0.8 million.  In 2011, we borrowed and repaid approximately $10.9 million from revolving credit and short term debt facilities. We repaid approximately $2.5 million in capital lease obligations. Net proceeds and excess tax benefits from stock option exercises provided $0.5 million and we received proceeds of approximately $1.5 million from the Recovery Zone Facility Bond.  In 2010, we borrowed and repaid approximately $261.7 million against our credit facilities. We repaid approximately $13.2 million in short term debt and approximately $1.3 million in capital lease obligations and received proceeds of approximately $7.9 million from the Recovery Zone Facility Bond. Net proceeds and excess tax benefits from stock option exercises provided approximately $2.1 million of cash. Net cash used in financing activities from discontinued operations was $0 million, $0.2 million and $0.2 million for 2012, 2011 and 2010, respectively.

The Company maintains a $125.0 million (which may be increased to $200.0 million, subject to certain conditions) secured revolving credit agreement with a group of financial institutions which provides for borrowings in the United States. The credit facility has a five year term and expires in October 2015. Borrowings are secured by substantially all of the Company’s assets, including accounts receivable, inventory and certain other assets, subject to limited exceptions. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and up to 40% of qualified inventories. The interest rate under this facility is computed at applicable market rates based on LIBOR or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of December 31, 2012, eligible collateral under this agreement was $110.6 million, total availability was $104.6 million, total outstanding letters of credit were $6.0 million and there were no outstanding advances. The Company was in compliance with all of the covenants under this facility as of December 31, 2012.

28

The Company’s WStore subsidiary maintained a revolving credit agreement with a financial institution in France which was secured by WStore accounts receivable balances.  This credit facility was terminated by the Company on June 9, 2012.  Available amounts for borrowing under this facility included all accounts receivable balances not over 60 days past due reduced by the greater of €4.0 million or 10% of the eligible accounts receivable.

The Company (through a subsidiary) has an outstanding Bond financing with the Development Authority of Jefferson, Georgia (the “Authority”).  The Bonds were issued by the Authority and initially purchased by GE Government Finance Inc., and mature on October 1, 2018.  The proceeds from the Bonds were used to finance capital equipment purchased for the Company’s distribution facility located in Jefferson, Georgia.  The purchase and installation of the equipment for the facility was completed by December 31, 2011.  Pursuant to the transaction, the Company transferred to the Authority, for consideration consisting of the Bonds proceeds, ownership of the equipment and the Authority leased the equipment to the Company’s subsidiary pursuant to a capital equipment lease expiring October 1, 2018.  Under the capital equipment lease the Company has the right to acquire ownership of the equipment at any time for a purchase price sufficient to pay off all principal and interest on the Bonds, plus $1.00.  As a result of the capital lease treatment for this transaction, the leased equipment is included in property, plant and equipment in the Company’s consolidated balance sheet.  As of December 31, 2012, the Company had $5.9 million outstanding against this financing facility.

Our earnings and cash flows are seasonal in nature, with the fourth quarter of the fiscal year generating higher earnings and cash flows than the other quarters. Levels of earnings and cash flows are dependent on factors such as consolidated gross margin and selling, general and administrative costs as a percentage of sales, product mix and relative levels of domestic and foreign sales. Unusual gains or expense items, such as special (gains) charges and settlements, may impact earnings and are separately disclosed. We expect that past performance may not be indicative of future performance due to the competitive nature of our Technology Products segment where the need to adjust prices to gain or hold market share is prevalent.

Macroeconomic conditions, such as business and consumer sentiment, may affect our revenues, cash flows or financial condition.  However, we do not believe that there is a direct correlation between any specific macroeconomic indicator and our revenues, cash flows or financial condition.  We are not currently interest rate sensitive, as we have significant cash balances and minimal debt.

The expenses and capital expenditures described above will require significant levels of liquidity, which we believe can be adequately funded from our currently available cash resources. In 2013 we anticipate capital expenditures of approximately $15.6 million, though at this time we are not contractually committed to incur these expenditures.  Over the past several years we have engaged in opportunistic acquisitions, choosing to pay the purchase price in cash, and may do so in the future as favorable situations arise.  However, a deep and prolonged period of reduced consumer and/ or business to business spending could adversely impact our cash resources and force us to either forego future acquisition opportunities or to pay the purchase price in shares of our common stock, which could have a dilutive effect on our earnings per share. In addition we anticipate cash needs for implementation of the financial systems.  We believe that our cash balances, future cash flows from operations and our availability under credit facilities will be sufficient to fund our working capital and other cash requirements for at least the next twelve months.

We maintain our cash and cash equivalents primarily in money market funds or their equivalent. As of December 31, 2012, all of our investments had maturities of less than three months.  Accordingly, we do not believe that our investments have significant exposure to interest rate risk.

We are obligated under non-cancelable operating leases for the rental of most of our facilities and certain of our equipment which expire at various dates through 2032.  We have sublease agreements for unused space we lease in the United Kingdom.  In the event the sub lessee is unable to fulfill its obligations, we would be responsible for rents due under the leases.

29

Following is a summary of our contractual obligations for future principal payments on our debt, minimum rental payments on our non-cancelable operating leases and minimum payments on our other purchase obligations as of December 31, 2012 (in millions):

	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Contractual Obligations:
Capital lease obligations	$	9.7		3.3		6.2		0.2		-
Non-cancelable operating leases, net of subleases		233.3		28.4		75.3		59.3		70.3
Purchase & other obligations		46.8		28.2		9.6		9.0		-
Total contractual obligations	$	289.8		59.9		91.1		68.5		70.3

Our purchase and other obligations consist primarily of certain employment agreements and service agreements.

In addition to the contractual obligations noted above, we had $6.0 million of standby letters of credit outstanding as of December 2012.

We are party to certain litigation, the outcome of which we believe, based on discussions with legal counsel, will not have a material adverse effect on our consolidated financial statements.

Tax contingencies are related to uncertain tax positions taken on income tax returns that may result in additional tax, interest and penalties being paid to taxing authorities. As of December 31, 2012, the Company had no material uncertain tax positions.

In January 2013, the Company entered into a lease for the European Technology Products segment’s shared services center.  The facility, located in Budapest, Hungary, is approximately 52,000 square feet and is leased through March 2023.  The following table details the contractual obligations related to this lease (in millions):

	Payments due by period
	2013		2014		2015		2016		2017		After 2017
Shared services center operating lease	$	0.3	$	0.9	$	1.1	$	1.1	$	1.1	$	5.5

Off-Balance Sheet Arrangements

We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or relationships with entities that are not consolidated into the financial statements that are reasonably likely to materially affect our liquidity or the availability of capital resources.

The Company currently leases its facility in Port Washington, NY from Addwin Realty Associates, an entity owned by Richard Leeds, Bruce Leeds, and Robert Leeds, senior executives, Directors and controlling shareholders of the Company.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks, which include changes in U.S. and international interest rates as well as changes in currency exchange rates (principally British Pounds Sterling, European Union Euros and Canadian Dollars) as measured against the U.S. Dollar and each other.

The translation of the financial statements of our operations located outside of the United States is impacted by movements in foreign currency exchange rates. Changes in currency exchange rates as measured against the U.S. dollar may positively or negatively affect income statement, balance sheet and cash flows as expressed in U.S. dollars. Sales would have fluctuated by approximately $140.0 million and pretax income would have fluctuated by approximately $4.0 million if average foreign exchange rates changed by 10% in 2012. We have limited involvement with derivative financial instruments and do not use them for trading purposes. We may enter into foreign currency options or forward exchange contracts aimed at limiting in part the impact of certain currency fluctuations, but as of December 31, 2012 we had no outstanding forward exchange contracts.

30

Our exposure to market risk for changes in interest rates relates primarily to our variable rate debt. Our variable rate debt consists of short-term borrowings under our credit facilities. As of December 31, 2012, there were no outstanding balances under our variable rate credit facility. A hypothetical change in average interest rates of one percentage point is not expected to have a material effect on our financial position, results of operations or cash flows over the next fiscal year.

Item 8. Financial Statements and Supplementary Data.

The information required by Item 8 of Part II is incorporated herein by reference to the Consolidated Financial Statements filed with this report; see Item 15 of Part IV.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2012. Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective.

Inherent Limitations of Internal Controls over Financial Reporting

The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’s management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.

Management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its internal control over financial reporting based on the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was effective as of December 31, 2012.

31

The Company’s independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2012, a copy of which is included in this report on Form 10-K.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting for the quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

32

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by Item 10 of Part III is hereby incorporated by reference to the Company’s Proxy Statement for the 2013 Annual Meeting of Stockholders. (the “Proxy Statement”).

Item 11. Executive Compensation.

The information required by Item 11 of Part III is hereby incorporated by reference to the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by item 12 of Part III is hereby incorporated by reference to the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by Item 10 of Part III is hereby incorporated by reference to the Proxy Statement.

Item 14. Principal Accounting Fees and Services.

The information required by Item 14 of Part III is hereby incorporated by reference to the Proxy Statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) 1.	Consolidated Financial Statements of Systemax Inc.	Reference
	Reports of Ernst & Young LLP Independent Registered Public Accounting Firm	38
	Consolidated Balance Sheets as of December 31, 2012 and 2011	40
	Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010	41
	Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010	42
	Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010	43
	Consolidated Statements of Shareholders’ Equity for the Years ended December 31, 2012, 2011 and 2010	45
	Notes to Consolidated Financial Statements	46
2.	Financial Statement Schedules:
	The following financial statement schedule is filed as part of this report and should be read together with our consolidated financial statements:
	Schedule II — Valuation and Qualifying Accounts	60

Schedules not included with this additional financial data have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.

33

Item 15. Exhibits and Financial Statement Schedules.

3. Exhibits.

Exhibit
No.	Description
3.1	Composite Certificate of Incorporation of Registrant, as amended (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2001)
3.2	Amended and Restated By-laws of Registrant (effective as of December 29, 2007, incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2007)
3.3	Amendment to the Bylaws of the Registrant (incorporated by reference to the Company’s report on Form 8-K dated March 3, 2008)
4.1	Stockholders Agreement (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended September 30, 1995)
10.1	Form of 1995 Long-Term Stock Incentive Plan* (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 333-1852)
10.2	Form of 1995 Stock Plan for Non-Employee Directors* (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 333-1852)
10.3	Form of 1999 Long-Term Stock Incentive Plan as amended* (incorporated by reference to the Company’s report on Form 8-K dated May 20, 2003)
10.4	Form of 2006 Stock Incentive Plan for Non-Employee Directors* (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2006)
10.5	Form of 2005 Employee Stock Purchase Plan* (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2006)
10.6	Lease Agreement dated September 20, 1988 between the Company and Addwin Realty Associates (Port Washington facility) (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 33-92052)
10.7	First Amendment to Lease Agreement dated September 20, 1998 between the Company and Addwin Realty Associates (Port Washington facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 1998)
10.8	Second Amendment to Lease Agreement dated September 20, 1988 between the Company and Addwin Realty Associates (Port Washington facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2007)
10.9	Build-to-Suit Lease Agreement dated April, 1995 among the Company, American National Bank and Trust Company of Chicago (Trustee for the original landlord) and Walsh, Higgins & Company (Contractor) (“Naperville Illinois Facility Lease”) (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 33-92052)
10.10	First Amendment, dated as of February 1, 2006, to the Naperville Illinois Facility Lease between the Company and Ambassador Drive LLC (current landlord) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2005)
10.11	Lease Agreement dated September 17, 1998 between Tiger Direct, Inc. and Keystone Miami Property Holding Corp. (Miami facility) (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended September 30, 1998)
10.12	First Amendment, dated as of September 5, 2003, to the Lease Agreement between Tiger Direct, Inc. and Keystone Miami Property Holding Corp. (Miami facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2010)
10.13	Second Amendment, dated March 22, 2007, to the Lease Agreement between Tiger Direct, Inc. and Keystone Miami Property Holding Corp. (Miami facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2010)

34

10.14	Third Amendment, dated as of June 26, 2009, to the Lease Agreement between Tiger Direct, Inc. and Mota Associates Limited Partnership (successor in interest to landlord Keystone Miami Property Holding Corp.) (Miami facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2010)
10.15	Lease agreement, dated December 8, 2005, between the Company and Hamilton Business Center, LLC (Buford, Georgia facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2005)
10.16	First Amendment, dated as of June 12, 2006, to the Lease Agreement between the Company and Hamilton Business Center, LLC (Buford, Georgia facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2005)
10.18	Employment Agreement, dated as of October 3, 2011, between Systemax Inc. and David Sprotsy* (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2011)
10.19	Executive Directors Service Agreement, dated December 15, 2011, between Misco UK Limited and Perminder Dale* (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2011)
10.20	Employment Agreement, dated as of January 17, 2007, between the Company and Lawrence P. Reinhold*(incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2006)
10.21	Amendment No.1, dated December 30, 2009, to the Employment Agreement between the Company and Lawrence P. Reinhold* (incorporated by reference to the Company’s report on Form 8-K dated December 30, 2009)
10.25	Second Amended and Restated Credit Agreement, dated as of October 27, 2010, by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent, J.P. Morgan Europe Limited, as UK Administrative Agent, J.P. Morgan Securities, Inc. as Sole Bookrunner and Sole Lead Arranger, and the lenders from time to time party thereto (incorporated by reference to the Company’s report on Form 8-K dated November 2, 2010)
10.26	Amendment No. 1 and Waiver, dated as of December 15, 2011, to the Second Amended and Restated Credit Agreement by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent, J.P. Morgan Europe Limited, as UK Administrative Agent and the lenders from time to time party thereto (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2011)
10.27	Lease Agreement, dated as of September 1, 2010, among Development Authority of Jefferson,  Georgia, GE Government Finance Inc. and SYX Distribution Inc. (incorporated by reference to the Company’s report on Form 8-K dated September 24, 2010)
10.28	Corporate Guaranty and Negative Pledge Agreement, dated as of September 1, 2010, among Systemax Inc., Development Authority of Jefferson, Georgia and GE Government Finance Inc. (incorporated by reference to the Company’s report on Form 8-K dated September 24, 2010).
10.29	Escrow Agreement, dated as of September 1, 2010, among Marshall & Ilsley Trust Company, N.A. (as escrow agent), GE Government Finance Inc., Development Authority of Jefferson, Georgia and SYX Distribution Inc. (incorporated by reference to the Company’s report on Form 8-K dated September 24, 2010)
10.30	Lease Agreement, dated February 27, 2012 between PR I Washington Township NJ, LLC as Landlord and Global Equipment Company Inc. as Tenant (Robbinsville, NJ facility) (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2012)
10.31	Form of 2010 Long Term Incentive Plan* (incorporated by reference to the Company’s Definitive Proxy Statement filed April 29, 2010)
14	Corporate Ethics Policy for Officers, Directors and Employees (revised as of August, 2012) (filed herewith)
21	Subsidiaries of the Registrant (filed herewith)
23	Consent of Independent Registered Public Accounting Firm (filed herewith)
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2	Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)

35

101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*   Management contract or compensatory plan or arrangement

36

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SYSTEMAX INC.

By: /s/ RICHARD LEEDS

Richard Leeds

Chairman and Chief Executive Officer

Date: March 14, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ RICHARD LEEDS	Chairman and Chief Executive Officer	March 14, 2013
Richard Leeds	(Principal Executive Officer)
/s/ BRUCE LEEDS	Vice Chairman and Director	March 14, 2013
Bruce Leeds
/s/ ROBERT LEEDS	Vice Chairman and Director	March 14, 2013
Robert Leeds
	Executive Vice President, Chief Financial
/s/ LAWRENCE P. REINHOLD	Officer	March 14, 2013
Lawrence P. Reinhold	and Director
	(Principal Financial Officer)
/s/ THOMAS AXMACHER	Vice President and Controller	March 14, 2013
Thomas Axmacher	(Principal Accounting Officer)
/s/ ROBERT D. ROSENTHAL	Director	March 14, 2013
Robert D. Rosenthal
/s/ STACY DICK	Director	March 14, 2013
Stacy Dick
/s/ MARIE ADLER-KRAVECAS	Director	March 14, 2013
Marie Adler-Kravecas

37

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Systemax Inc.

We have audited the accompanying consolidated balance sheets of Systemax Inc. and subsidiaries (“the Company”) as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2012. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Systemax Inc. and subsidiaries at December 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 2012, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. 

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Systemax Inc.’s internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2013 expressed and unqualified opinion thereon.

/s/ Ernst & Young LLP

New York, New York

March 14, 2013

38

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Systemax Inc.

We have audited Systemax Inc. and subsidiaries (“the Company”) internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Systemax Inc. and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Systemax Inc. and subsidiaries as of December 31, 2012 and 2011 and the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for each of the three years in the period ended December 31, 2012 and our report dated March 14, 2013 expressed an unqualified opinion thereon. 

/s/ Ernst & Young LLP

New York, New York

March 14, 2013

39

SYSTEMAX INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except for share data)

	December 31,
	2012			2011
ASSETS:
Current assets:
Cash	$	150.7		$	97.3
Accounts receivable, net of allowances of $15.5 and $14.7		297.4			269.0
Inventories		367.2			372.2
Assets available for sale		2.3			-
Prepaid expenses and other current assets		21.2			18.2
Deferred income taxes		13.6			9.6
Total current assets		852.4			766.3
Property, plant and equipment, net		63.0			70.7
Deferred income taxes		30.2			-
Goodwill and intangibles		11.1			47.8
Other assets		5.6			4.9
Total assets	$	962.3		$	889.7
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Current liabilities:
Accounts payable	$	405.3		$	336.5
Accrued expenses and other current liabilities		83.5			72.4
Current portion of long term debt		2.8			2.6
Total current liabilities		491.6			411.5
Long term debt		5.3			7.1
Deferred income taxes		-			2.3
Other liabilities		19.1			14.5
Total liabilities		516.0			435.4
Commitments and contingencies
Shareholders’ equity:
Preferred stock, par value $.01 per share, authorized 25 million shares; issued none
Common stock, par value $.01 per share, authorized 150 million shares; issued 38,861,992 and 38,861,992 shares; outstanding 36,554,972 and 36,398,523 shares		0.4			0.4
Additional paid-in capital		183.0			180.5
Treasury stock at cost —2,307,020 and 2,463,496 shares		(28.6	)		(30.5	)
Retained earnings		290.5			307.9
Accumulated other comprehensive gain (loss)		1.0			(4.0	)
Total shareholders’ equity		446.3			454.3
Total liabilities and shareholders’ equity	$	962.3		$	889.7

See notes to consolidated financial statements.

40

SYSTEMAX INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

	Year Ended December 31,
	2012			2011			2010
Net sales	$	3,544.6		$	3,680.6		$	3,589.1
Cost of sales		3,056.5			3,150.1			3,099.6
Gross profit		488.1			530.5			489.5
Selling, general and administrative expenses		481.7			455.3			416.4
Special (gains) charges, net		46.3			(5.6	)		4.3
Operating income (loss) from continuing operations		(39.9	)		80.8			68.8
Foreign currency exchange loss		0.3			1.0			1.7
Interest and other income, net		(0.3	)		(1.4	)		(0.8	)
Interest expense		1.7			2.2			1.8
Income (loss) from continuing operations before income taxes		(41.6	)		79.0			66.1
Provision for (benefit from) income taxes		(33.6	)		24.4			23.5
Income (loss) from continuing operations		(8.0	)		54.6			42.6
Loss from discontinued operations, net of tax		(0.3	)		(0.2	)		(-	)
Net income	$	(8.3	)	$	54.4		$	42.6
Income (loss) from continuing operations per common share:
Basic	$	(0.22	)	$	1.48		$	1.15
Diluted	$	(0.22	)	$	1.47		$	1.13
Net income (loss) per common share:
Basic	$	(0.22	)	$	1.48		$	1.15
Diluted	$	(0.22	)	$	1.47		$	1.13
Weighted average common and common equivalent shares:
Basic		36.9			36.8			37.0
Diluted		36.9			37.1			37.6
Dividends declared	$	0.25			-			-

See notes to consolidated financial statements.

41

SYSTEMAX INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions)

	Year Ended December 31,
	2012			2011			2010
Net income (loss)	$	(8.3	)	$	54.4		$	42.6
Other comprehensive income (loss):
Foreign currency translation		5.0			(2.8	)		(2.6	)
Total comprehensive income (loss)	$	(3.3	)	$	51.6		$	40.0

See notes to consolidated financial statements.

42

SYSTEMAX INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Year Ended December 31,
	2012			2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations	$	(8.0	)	$	54.6		$	42.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		18.0			17.5			14.5
Asset impairment charges		39.9			-			-
Provision for deferred income taxes		(36.6	)		0.2			4.6
Provision for returns and doubtful accounts		5.0			3.2			3.3
Compensation expense related to equity compensation plans		4.1			1.9			2.5
Return of common stock-special gain		-			(7.9	)		-
Excess tax benefit from exercises of stock options		(0.5	)		(0.2	)		(1.1	)
Loss on dispositions and abandonment		0.3			0.1			0.1
Changes in operating assets and liabilities:
Accounts receivable		(25.4	)		(0.4	)		(45.1	)
Inventories		5.0			(4.1	)		(5.9	)
Prepaid expenses and other current assets		(18.7	)		(4.5	)		6.4
Income taxes payable (receivable)		12.9			4.8			(3.3	)
Accounts payable, accrued expenses and other current liabilities		79.4			(46.8	)		46.1
Net cash provided by operating activities from continuing operations		75.4			18.4			64.7
Net cash (used in) provided by operating activities from discontinued operations		(0.4	)		(0.2	)		0.2
Net cash provided by operating activities		75.0			18.2			64.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(12.1	)		(12.3	)		(24.7	)
Proceeds from disposals of property, plant and equipment		0.1			-			-
Net cash used in investing activities		(12.0	)		(12.3	)		(24.7	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility and short term debt		-			10.9			261.7
Repayments of borrowings on credit facility and short term debt		-			(10.9	)		(274.9	)
Proceeds from recovery zone bond		-			1.5			7.9
Repayments of capital lease obligations		(2.8	)		(2.5	)		(1.3	)
Dividends paid		(9.1	)		-			-
Proceeds from issuance of common stock		0.3			0.3			1.0
Excess tax benefit from exercises of stock options		0.5			0.2			1.1
Net cash used in financing activities from continuing operations		(11.1	)		(0.5	)		(4.5	)
Net cash used in financing activities from discontinued operations		-			(0.2	)		(0.2	)
Net cash used in financing activities		(11.1	)		(0.7	)		(4.7	)
EFFECTS OF EXCHANGE RATES ON CASH		1.5			-			(1.7	)
NET INCREASE IN CASH		53.4			5.2			33.8
CASH – BEGINNING OF YEAR		97.3			92.1			58.3
CASH – END OF YEAR	$	150.7		$	97.3		$	92.1
Supplemental disclosures:
Interest paid	$	1.4		$	1.7		$	1.3
Income taxes paid	$	11.4		$	19.2		$	21.7
Supplemental disclosures of non-cash investing and financing activities:
Acquisitions of equipment through capital leases	$	1.3		$	2.4		$	9.4

See notes to consolidated financial statements.

43

SYSTEMAX INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in millions, except share data in thousands)

	Common Stock
	Number of Shares Outstanding			Amount		Additional Paid-in Capital			Treasury Stock, At Cost			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
Balances, December 31, 2009		36,451		$	0.4	$	180.5		$	(28.5	)	$	210.9		$	1.4
Stock-based compensation expense							2.4
Issuance of restricted stock		106					(0.4	)		1.2
Restricted stock withheld for employee taxes		(36	)				(0.4	)		(0.4	)
Exercise of stock options		234					(1.8	)		2.8
Income tax benefit on stock-based compensation							1.2
Change in cumulative translation adjustment																(2.6	)
Net income													42.6
Balances, December 31, 2010		36,755		$	0.4	$	181.5		$	(24.9	)	$	253.5		$	(1.2	)
Stock-based compensation expense							1.8
Issuance of restricted stock		126					(1.4	)		1.5
Exercise of stock options		68					(0.5	)		0.8
Return of Common Stock		(550	)							(7.9	)
Surrender of fully vested options							(1.1	)
Income tax benefit on stock-based compensation							0.2
Change in cumulative translation adjustment																(2.8	)
Net income													54.4
Balances, December 31, 2011		36,399		$	0.4	$	180.5		$	(30.5	)	$	307.9		$	(4.0	)
Stock-based compensation expense							4.0
Issuance of restricted stock		47					(0.4	)		0.6
Exercise of stock options		109					(1.0	)		1.3
Surrender of fully vested options							(0.7	)
Income tax benefit on stock-based compensation							0.6
Change in cumulative translation adjustment																5.0
Dividends Paid													(9.1	)
Net income (loss)													(8.3	)
Balances, December 31, 2012		36,555		$	0.4	$	183.0		$	(28.6	)	$	290.5		$	1.0

See notes to consolidated financial statements.

44

SYSTEMAX INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Systemax Inc. and its wholly-owned subsidiaries (collectively, the “Company” or “Systemax”).  All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications— Certain prior year amounts were reclassified to conform to current year presentation.

Use of Estimates In Financial Statements — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Fiscal Year — The Company’s fiscal year ends at midnight on the Saturday closest to December 31. For clarity of presentation herein, all fiscal years are referred to as if they ended on December 31. The fiscal year will be divided into four fiscal quarters that each end at midnight on a Saturday. Fiscal quarters will typically include 13 weeks, but the fourth quarter will include 14 weeks in a 53 week fiscal year. For clarity of presentation herein, all fiscal quarters are referred to as if they ended on the traditional calendar month.

Foreign Currency Translation — The Company has operations in numerous foreign countries. The functional currency of each foreign country is the local currency.  The financial statements of the Company’s foreign entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for assets and liabilities, average exchange rates for the statement of operations items and historical rates for equity accounts. Translation gains or losses are recorded as a separate component of shareholders’ equity.

Cash — The Company considers amounts held in money market accounts and other short-term investments, including overnight bank deposits, with an original maturity date of three months or less to be cash. Cash overdrafts are classified in accounts payable.

Inventories — Inventories consist primarily of finished goods and are stated at the lower of cost or market value. Cost is determined by using the first-in, first-out method except in Europe and retail locations where an average cost is used.

Assets available for sale — Assets available for sale consist of our ISO-9001: 2008 certified PC manufacturing facility located in Fletcher, Ohio, including land and land improvements.  The cost of the land, land improvements and building has been adjusted to fair market value.

Property, Plant and Equipment — Property, plant and equipment is stated at cost. Furniture, fixtures and equipment, including equipment under capital leases, are depreciated using the straight-line or accelerated method over their estimated useful lives ranging from three to ten years. Buildings are depreciated using the straight-line method over estimated useful lives of 30 to 50 years.  Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases.

Evaluation of Long-lived Assets — Long-lived assets are evaluated for recoverability whenever events or changes in circumstances indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flows expected to result from the use of the asset and eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair market value of the asset is recognized.

Goodwill and intangible assets — Goodwill represents the excess of the cost of acquired assets over the fair value of assets acquired. The Company tests goodwill and intangibles for impairment annually or more frequently if indicators of impairment exist. The Company assesses the carrying value of its definite-lived intangible assets if circumstances indicate that those values may not be recoverable. In addition, goodwill is required to be tested for impairment after a portion of the goodwill is allocated to a business targeted for disposal. The Company’s identifiable intangible assets consist of trademarks, trade and domain names, technology, retail leases and customer lists (See Note 2). The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company’s future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand.  As a result an impairment charge of approximately $35.3 million related to the trademarks, domain names and goodwill of CompUSA and Circuit City was taken in the fourth quarter of 2012.

45

Accruals — Management makes estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. These estimates are based upon various factors such as the number of units sold, historical and anticipated results and data received from third party vendors. Actual results could differ from these estimates. Our most significant estimates include those related to the costs of vendor drop shipments, sales returns and allowances, cooperative advertising and customer rebate reserves, and other vendor and employee related costs.

Income Taxes — Deferred tax assets and liabilities are recognized for the effect of temporary differences between the book and tax bases of recorded assets and liabilities and for tax loss carry forwards. The realization of net deferred tax assets is dependent upon our ability to generate sufficient future taxable income. Where it is more likely than not that some portion or the entire deferred tax asset will not be realized, we have provided a valuation allowance. If the realization of those deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination is made.

The Company provides for uncertain tax positions and related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected.

Revenue Recognition and Accounts Receivable — The Company recognizes sales of products, including shipping revenue, when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met at the time the product is received by the customers when title and risk of loss have transferred except in our Industrial Products segment where title and risk pass at time of shipment. Allowances for estimated subsequent customer returns, rebates and sales incentives are provided when revenues are recorded. Costs incurred for the shipping and handling of its products are recorded as cost of sales. Revenue from extended warranty and support contracts on the Company’s assembled PCs is deferred and recognized over the contract period. The Company evaluates collectibility of accounts receivable based on numerous factors, including past transaction history with customers and their credit rating and provides a reserve for accounts that are potentially uncollectible. Trade receivables are generally written off once all collection efforts have been exhausted. Accounts receivable are shown in the consolidated balance sheets net of allowances for doubtful collections and subsequent customer returns.

Advertising Costs — Expenditures for internet, television, local radio and newspaper advertising are expensed in the period the advertising takes place. Catalog preparation, printing and postage expenditures are amortized over the period of catalog distribution during which the benefits are expected, generally one to four months.

Net advertising expenses were $57.7 million, $40.2 million and $31.7 million during 2012, 2011 and 2010, respectively, and are included in the accompanying consolidated statements of operations. The Company utilizes advertising programs to support vendors, including catalogs, internet and magazine advertising, and receives payments and credits from vendors, including consideration pursuant to volume incentive programs and cooperative marketing programs. The Company accounts for consideration from vendors as a reduction of cost of sales unless certain conditions are met showing that the funds are used for specific, incremental, identifiable costs, in which case the consideration is accounted for as a reduction in the related expense category, such as advertising expense. The amount of vendor consideration recorded as a reduction of selling, general and administrative expenses totaled $47.8 million, $59.4 million and $65.6 million during 2012, 2011 and 2010, respectively.

46

Prepaid expenses as of December 2012 and 2011 include deferred advertising costs of $1.5 million and $1.7 million, respectively which are reflected as an expense during the periods benefited, typically the subsequent fiscal quarter.

Stock based compensation — The Company recognizes the fair value of share based compensation in the consolidated statement of operations over the requisite employee service period. Stock-based compensation expense includes an estimate for forfeitures and is recognized over the expected term of the award.

Net Income Per Common Share – Net income per common share - basic was calculated based upon the weighted average number of common shares outstanding during the respective periods presented using the two class method of computing earnings per share. The two class method was used as the Company has outstanding restricted stock with rights to dividend participation for unvested shares.  Net income per common share - diluted was calculated based upon the weighted average number of common shares outstanding and included the equivalent shares for dilutive options outstanding during the respective periods, including unvested options. The dilutive effect of outstanding options and restricted stock issued by the Company is reflected in net income per share - diluted using the treasury stock method. Under the treasury stock method, options will only have a dilutive effect when the average market price of common stock during the period exceeds the exercise price of the options. The weighted average number of stock options outstanding included in the computation of diluted earnings per share was zero for the year ended December 31, 2012 and 0.3 million and 0.6 million for the years ended December 31, 2011 and 2010, respectively. The weighted average number of restricted stock awards included in the computation of diluted earnings per share was 0.0 million for the year December 31, 2012 and 0.1 million and 0.2 million for the years ended December 31, 2011 and 2010, respectively. The weighted average number of stock options outstanding excluded from the computation of diluted earnings per share was  1.1 million for the year ended December 31, 2012 and 0.8 million and 0.7 million for the years ended December 31, 2011 and 2010, respectively, due to their antidilutive effect.

Employee Benefit Plans - The Company’s U.S. subsidiaries participate in a defined contribution 401(k) plan covering substantially all U.S. employees.  Employees may invest 1% or more of their eligible compensation, limited to maximum amounts as determined by the Internal Revenue Service.  The Company provides a matching contribution to the plan, determined as a percentage of the employees’ contributions.  Aggregate expense to the Company for contributions to such plans was approximately $1.0 million, $1.0 million and $0.9 million in 2012, 2011 and 2010, respectively.

Fair Value Measurements - Financial instruments consist primarily of investments in cash, trade accounts receivable debt and accounts payable.  The Company estimates the fair value of financial instruments based on interest rates available to the Company and by comparison to quoted market prices.  At December 31, 2012 and 2011, the carrying amounts of cash, accounts receivable and accounts payable are considered to be representative of their respective fair values due to their short-term nature. The Company’s debt is considered to representative of its fair value because of its variable interest rate.

The fair value of goodwill and non-amortizing intangibles is measured on a non-recurring basis in connection with the Company’s annual impairment testing.  For goodwill, the fair value of the reporting unit to which the goodwill has been assigned is determined using a discounted cash flow model.  A discounted cash flow model is also used to determine fair value of indefinite-lived intangibles using projected cash flows of the intangible. Unobservable inputs related to these discounted cash flow models include projected sales growth, same store sales growth, gross margin percentages, new business opportunities, working capital requirements, capital expenditures and growth in selling, general and administrative expense and are classified in accordance with ASC 820, “Fair Value Measurements and Disclosures”, within Level 3 of the valuation hierarchy.

Significant Concentrations-Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, and accounts receivable.  The Company’s excess cash balances are invested with money center banks.  Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers and their geographic dispersion comprising the Company’s customer base.  The Company also performs on-going credit evaluations and maintains allowances for potential losses as warranted.

We purchase substantially all of our products and components directly from manufacturers and large wholesale distributors.  In 2012, no vendor accounted for 10% of more of our purchases.  One vendor accounted for 11.5% and 10.0% of our purchases in 2011 and 2010, respectively.  The loss of these vendors, or any other key vendors, could have a material adverse effect on us.

47

Recent Accounting Pronouncements

Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities issue numerous pronouncements, most of which are not applicable to the Company’s current or reasonably foreseeable operating structure. Below are the new authoritative pronouncements that management believes are relevant to Company’s current operations.

In July 2012, the FASB issued an update related to annual impairment testing for indefinite-lived intangible assets which provides companies with the option to perform a qualitative impairment assessment for their indefinite-lived intangible assets that may allow them to skip the annual fair value calculation.  The qualitative assessment is similar to the screen companies can use to determine whether they must perform the two-step goodwill impairment test.  Companies must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used in determining the fair value of these assets.  This ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This ASU eliminates the option to report other comprehensive income and its components in the statement of changes in shareholders’ equity and requires that all items of net income, items of other comprehensive income and total comprehensive income be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this ASU in the first quarter of 2012. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

2.  GOODWILL AND INTANGIBLES

The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company’s future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand.  As a result an impairment charge of approximately $35.3 million related to the trademarks, domain names and goodwill of CompUSA and Circuit City was taken in the fourth quarter of 2012.

Goodwill:

The following table provides information related to the carrying value of goodwill (in millions):

	December 31,			December 31,
	2012			2011
Balance January 1	$	3.3		$	3.3
Impairment charges		(0.9	)		-
Balance December 31	$	2.4		$	3.3

For the year ended December 31, 2012, the Company incurred one-time impairment charges related to goodwill of approximately $0.9 million.  This impairment charge was recorded in the Consolidated Statements of Operations as special charges within the Technology Products segment.

Indefinite-lived intangible assets:

The following table summarizes information related to indefinite-lived intangible assets (in millions):

	Gross Carrying Amount: Trademarks			Gross Carrying Amount: Domain Names
Balance January 1	$	24.1		$	14.7
Impairment charges		(18.7	)		(14.7	)
Balance December 31	$	5.4		$	-

48

For the year ended December 31, 2012, the Company incurred one-time impairment charges related to indefinite-lived intangible assets of approximately $33.4 million.  This impairment charge was recorded in the Consolidated Statements of Operations as special charges within the Technology Products segment.

Definite-lived intangible assets:

The following table summarizes information related to definite-lived intangible assets (in millions):

	December 31,				December 31,
	2012				2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Retail store leases	$	3.4	$	1.3	$	3.4	$	1.0
Client lists		2.6		1.7		5.9		3.1
Technology		1.0		0.7		1.0		.5
Total	$	7.0	$	3.7	$	10.3	$	4.6

For the year ended December 31, 2012, the Company incurred one-time impairment charges related to definite-lived intangible assets of approximately $1.0 million.  This impairment charge was recorded in the Consolidated Statements of Operations as special charges within the Technology Products segment

The aggregate amortization expense for these intangibles was approximately $1.4 million in 2012. The estimated amortization for future years ending December 31 is as follows (in millions):

2013	$	1.0
2014		0.8
2015		0.3
2016 and after		1.2
Total	$	3.3

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consist of the following (in millions):

	December 31,
	2012		2011
Land and buildings	$	19.4	$	27.7
Furniture and fixtures, office, computer and other equipment and software		133.1		131.6
Leasehold improvements		30.6		27.2
		183.1		186.5
Less accumulated depreciation and amortization		120.1		115.8
Property, plant and equipment, net	$	63.0	$	70.7

Included in property, plant and equipment are assets under capital leases, as follows (in thousands):

	2012		2011
Furniture and fixtures, office, computer and other equipment	$	17.4	$	17.2
Less: Accumulated amortization		9.4		7.8
	$	8.0	$	9.4

Depreciation charged to operations for property, plant and equipment including capital leases in 2012, 2011, and 2010 was $16.6 million, $15.9 million and $12.9 million, respectively.

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4.  CREDIT FACILITIES

The Company maintains a $125.0 million (which may be increased to $200.0 million, subject to certain conditions) secured revolving credit agreement with a group of financial institutions which provides for borrowings in the United States. The credit facility has a five year term and expires in October 2015. Availability is subject to a borrowing base formula that takes into account eligible receivables and eligible inventory. Borrowings are secured by substantially all of the Company’s assets, including accounts receivable, inventory and certain other assets, subject to limited exceptions. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and up to 40% of qualified inventories. The interest rate under this facility is computed at applicable market rates based on LIBOR or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of December 31, 2012, eligible collateral under this agreement was $110.6 million, total availability was $104.6 million, total outstanding letters of credit were $6.0 million and there were no outstanding advances. The Company was in compliance with all of the covenants under this facility as of December 31, 2012.

The Company’s WStore subsidiary maintained a revolving credit agreement with a financial institution in France which was secured by WStore accounts receivable balances. This credit facility was terminated by the Company on June 9, 2012.  Available amounts for borrowing under this facility included all accounts receivable balances not over 60 days past due reduced by the greater of €4.0 million or 10% of the eligible accounts receivable.

The weighted average interest rate on short-term borrowings was4.3%, 4.5%, and 3.5% in 2012, 2011 and 2010, respectively.

5.  ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in millions):

	December 31,
	2012		2011
Payroll and employee benefits	$	29.7	$	32.5
Freight		4.0		3.1
Advertising		9.0		7.6
Sales and VAT tax payable		9.7		5.3
Income taxes payable		5.1		4.7
Other		26.0		19.2
	$	83.5	$	72.4

6.  LONG-TERM DEBT

The Company (through a subsidiary) has an outstanding Bond financing with the Development Authority of Jefferson, Georgia (the “Authority”).  The Bonds were issued by the Authority and purchased by GE Government Finance Inc., and mature on October 1, 2018.  The proceeds from the Bond were used to finance capital equipment purchased for the Company’s distribution facility located in Jefferson, Georgia.  The purchase and installation of the equipment for the facility was completed by December 31, 2011. Pursuant to the transaction, the Company transferred to the Authority, for consideration consisting of the Bond proceeds, ownership of the equipment and the Authority leased the equipment to the Company’s subsidiary pursuant to a capital equipment lease expiring October 1, 2018.  Under the capital equipment lease, the Company has the right to acquire ownership of the equipment at any time for a purchase price sufficient to pay off all principal and interest on the Bonds, plus $1.00.  As of December 31, 2012, there was $5.9 million outstanding against this financing facility.

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Long-term debt consists of (in millions):

	December 31,
	2012		2011
Capitalized equipment lease obligations	$	8.1	$	9.7
Less: current portion		2.8		2.6
	$	5.3	$	7.1

The aggregate maturities of long-term debt outstanding at December 31, 2012 are as follows (in millions):

	2013		2014		2015		2016		2017
Maturities	$	2.8	$	2.5	$	2.2	$	0.6	$	-

7.  SPECIAL CHARGES (GAINS), NET

The Company’s Industrial Products segment incurred severance, personnel and other exit costs related to the planned closing and relocation of one of our smaller distribution centers to a new, significantly larger distribution and call center in the second quarter of 2012.  These costs were recorded as special charges within the Industrial Products segment.  The balance of the restructuring reserves is included in the Consolidated Balance Sheet within accrued expenses and other current liabilities and other liabilities. The Company anticipates incurring minimal additional costs related to this facility closing and relocation.

The following table details the associated liabilities incurred related to this plan (in millions):

	Severance and Personnel Costs			Other Exit  Costs			Total
Balance January 1, 2012	$	-		$	-		$	-
Charged to expense		0.3			1.9			2.2
Paid or otherwise settled		(0.1	)		(0.3	)		(0.4	)
Balance December 31, 2012	$	0.2		$	1.6		$	1.8

The Company’s North America Technology Products segment incurred $35.3 million of one-time impairment charges related to certain intangible assets and goodwill of CompUSA and Circuit City in the fourth quarter of 2012 (See Note 2 of Notes to Consolidated Financial Statements), costs associated with senior staffing changes for which no future services will be rendered, and additional legal and professional fees related to the previously disclosed completed investigation and settlement with a former officer and director and in pursuing related matters.  The legal and professional fees and restructuring costs, for the year ended December 31, 2012, were approximately $2.2 million and were offset by a $5.0 million insurance recovery relating to action taken by a former officer and director.  The Company also incurred $1.8 million of patent settlements with non-practicing entities.  These costs were recorded as special charges in the Technology Products segment.

The Company’s North America Technology Products segment also incurred severance and other exit costs and asset write downs of approximately $0.5 million and $4.6 million, respectively, related to the exit from the PC manufacturing business in the fourth quarter of 2012.  These costs were recorded as special charges in the Technology Products segment. The balance of the exit costs of $0.5 million is included in the Consolidated Balance Sheet within accrued expenses and other current liabilities. The Company anticipates incurring minimal additional costs related to this facility closing.

The Company’s European Technology Products segment incurred severance and other exit costs related to workforce reductions in order to implement the shared services center in Europe.  These costs, incurred in the fourth quarter of 2012, were approximately $4.7 million and were included as special charges.  The balance of the restructuring reserves is included in the Consolidated Balance Sheet within accrued expenses and other current liabilities. The Company anticipates incurring additional costs related to this restructuring..

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The following table details the associated liabilities incurred related to this plan (in millions):

	Severance and Other Exit Costs
Balance January 1, 2012	$	-
Charged to expense		4.7
Paid or otherwise settled		(0.9)
Balance December 31, 2012	$	3.8

8. SETTLEMENT AGREEMENT

Audit Committee Investigation and Gilbert Fiorentino’s Resignation and Settlement.

In January and February 2011 the Company received anonymous whistleblower allegations concerning the Company’s Miami Florida operations involving the actions of Mr. Gilbert Fiorentino, then the Chief Executive of the Company’s Technology Products Group. In response to the allegations, the Company commenced an internal investigation of the whistleblower allegations, which was conducted by the Company’s Audit Committee of the Board of Directors with the assistance of independent counsel.

On April 18, 2011, following the independent investigation, the Company delivered a Cause Notice to Mr. Fiorentino pursuant to the terms of his Employment Agreement dated October 12, 2004. The Cause Notice advised Mr. Fiorentino that the Company intended to terminate him for “Cause” (as defined in the Employment Agreement) at a meeting of its Executive Committee scheduled for May 3, 2011, at which meeting Mr. Fiorentino and his counsel could appear, and that Mr. Fiorentino was being placed on administrative leave pending the outcome of that meeting. In the Cause Notice, the Company advised Mr. Fiorentino that the Audit Committee investigation had identified grounds to terminate him for Cause under his Employment Agreement, and set forth the following findings by the Audit Committee constituting such grounds:

i) Mr. Fiorentino personally removed or caused to be removed from the Company’s Miami premises product inventory, and/or kept or caused others to receive at his direction such removed product inventory, without payment to the Company and for his own personal gain;

ii) Mr. Fiorentino caused substantial amounts of Company inventory purchases to be effected through Company credit cards in order to accrue and/or use “reward points” for his personal benefit and which he improperly converted to his own use;

iii) Mr. Fiorentino caused his mother to be identified as an employee of the Company in positions for which she had no bona fide job responsibility or function, and caused the Company to pay her a salary and employee benefits, including extended COBRA reimbursements; and iv) Mr.Fiorentino engaged in fraudulent “kickback” arrangements with certain of the Company’s vendors, to the detriment of the Company

The Company stated in the Cause Notice that the foregoing activities were in violation of Company policy, the Company’s Corporate Ethics Policy, his fiduciary duties and applicable law. The Audit Committee’s independent investigation determined that the matters described above did not have any material impact on our previously reported financial results and were limited to the Company’s Miami operations.

On May 9, 2011, following several meetings of the Executive Committee and after extensive discussions with Mr. Fiorentino and his counsel, the Company announced that it had accepted the resignation of Mr. Fiorentino, and that it had executed an agreement with Mr. Fiorentino, effective May 6, 2011, under which Mr. Fiorentino surrendered certain assets to the Company valued at approximately $11 million at May 9, 2011: these assets included the surrender of 1,130,001 shares of Systemax common stock and $480,000 in cash. The shares surrendered consisted of 580,001 shares of fully vested unexercised stock options, 2) 100,000 shares of fully vested restricted stock awards and 3) 450,000 shares directly owned by Mr. Fiorentino. The shares surrendered were valued at fair value on May 6, 2011 in the case of the stock options and restricted stock awards and at fair value on May 12, 2011 in the case of the owned shares. The agreement also requires Mr. Fiorentino to disclose his and his immediate family’s personal assets; forfeit undisclosed assets discovered by the Company; disclose information regarding certain matters that led to his being notified of the Company’s intent to terminate him; and to fully cooperate with the Company in the future. Mr. Fiorentino and the Company also exchanged mutual general releases and nondisparagement commitments, and Mr. Fiorentino agreed to a 5 year noncompetition obligation. The $11 million settlement value included a financial statement benefit to the Company related to the surrender of shares and cash payment of approximately $8.4 million which was recorded in the second quarter of 2011 under special (gains) charges, net of related legal and professional fees of approximately $1.3 million for the quarter ended June 30, 2011 and $1.8 million for the first six months of 2011. The remainder of the settlement value, approximately $2.6 million, was the intrinsic value of the fully vested unexercised stock options on the date of the settlement agreement for which there is no financial statement impact. The amount of the settlement with Mr. Fiorentino was based on negotiation with him, and was not based on any specific level or nature of damages incurred by the Company, and does not constitute restitution.

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On June 21, 2011 Systemax Inc. received notice that the Securities and Exchange Commission (“SEC”) had initiated a formal investigation into the matters discovered by the Audit Committee’s internal investigation. The Company fully cooperated with the SEC in its formal investigation and  in February_2013, the SEC advised the Company that it had concluded its investigation and would not be recommending that any action be taken against the Company.

9. SHAREHOLDERS’ EQUITY

Stock based compensation plans

The Company currently has five equity compensation plans which reserve shares of common stock for issuance to key employees, directors, consultants and advisors to the Company. The following is a description of these plans:

The 1995 Long-term Stock Incentive Plan - This plan, adopted in 1995, allowed the Company to issue qualified, non-qualified and deferred compensation stock options, stock appreciation rights, restricted stock and restricted unit grants, performance unit grants and other stock based awards authorized by the Compensation Committee of the Board of Directors. Options issued under this plan expire ten years after the options are granted. The ability to grant new awards under this plan ended on December 31, 2005 but awards granted prior to such date continue until their expiration. A total of 25,359 options were outstanding under this plan as of December 31, 2012.

The 1995 Stock Option Plan for Non-Employee Directors - This plan, adopted in 1995, provides for automatic awards of non-qualified options to directors of the Company who are not employees of the Company or its affiliates. All options granted under this plan will have a ten year term from grant date and are immediately exercisable. A maximum of 100,000 shares may be granted for awards under this plan. The ability to grant new awards under this plan ended on October 12, 2006 but awards granted prior to such date continue until their expiration. A total of 12,250 options were outstanding under this plan as of December 31, 2012.

The1999 Long-term Stock Incentive Plan, as amended (“1999 Plan”) - This plan was adopted on October 25, 1999 with substantially the same terms and provisions as the 1995 Long-term Stock Incentive Plan. The Company increased the number of shares that may be granted under this plan to a maximum of 7,500,000 from 5,000,000 shares. The maximum number of shares granted per type of award to any individual may not exceed 1,500,000 in any calendar year and 3,000,000 in total. The ability to grant new awards under this plan ended on December 31, 2009 but awards granted prior to such date continue until their expiration.  A total of 607,950 options were outstanding under this plan as of December 31, 2012.

The 2006 Stock Incentive Plan For Non-Employee Directors - This plan, adopted by the Company’s stockholders on October 11, 2006, replaces the 1995 Stock Option Plan for Non-Employee Directors. The Company adopted the plan so that it could offer directors of the Company who are not employees of the Company or of any entity in which the Company has more than a 50% equity interest (“independent directors”) an opportunity to participate in the ownership of the Company by receiving options to purchase shares of common stock at a price equal to the fair market value at the date of grant of the option and restricted stock awards. Awards for a maximum of 200,000 shares may be granted under this plan. A total of 15,000 options were outstanding under this plan as of December 31, 2012.

The 2010 Long-term Stock Incentive Plan (“2010 Plan”) - This plan was adopted on April 23, 2010 with substantially the same terms and provisions as the 1999 Long-term Stock Incentive Plan. The maximum number of shares granted per type of award to any individual may not exceed 1,500,000 in any calendar year. Restricted stock grants and common stock awards reduce stock options otherwise available for future grant. Awards for a maximum of 7,500,000 shares may be granted under this plan. A total of 692,500 options and 420,000 restricted stock units were outstanding under this plan as of December 31, 2012.

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Shares issued under our share-based compensation plans are usually issued from shares of our common stock held in the treasury.

The fair value of employee share options is recognized in expense over the vesting period of the options, using the graded attribution method.  The fair value of employee share options is determined on the date of grant using the Black-Scholes option pricing model. The Company has used historical volatility in its estimate of expected volatility. The expected life represents the period of time (in years) for which the options granted are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury yield curve.

Compensation cost related to non-qualified stock options recognized in operating results (selling, general and administrative expense) for 2012, 2011 and 2010 was $2.5 million, $1.0 million, and $1.5 million respectively. The related future income tax benefits recognized for 2012, 2011 and 2010 were $1.4 million, $0.6 million and $0.6 million, respectively.

Stock options

The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2012, 2011 and 2010:

	2012			2011			2010
Expected annual dividend yield		0	%		0	%		0	%
Risk-free interest rate		1.10	%		2.02	%		1.37	%
Expected volatility		57.3	%		59.8	%		61.1	%
Expected life in years		6.3			8.0			4.8

       The following table summarizes information concerning outstanding and exercisable options:

	Weighted Average
	2012					2011					2010
	Shares			Exercise Price		Shares			Exercise Price		Shares			Exercise Price
Outstanding at beginning of year		1,285,115		$	13.39		1,900,698		$	10.60		2,102,459		$	9.87
Granted		772,500		$	15.00		277,000		$	12.61		40,000		$	14.18
Exercised		(109,466	)	$	3.12		(67,758	)	$	4.18		(234,011	)	$	4.34
Cancelled or expired		(595,090	)	$	11.71		(824,825	)	$	7.45		(7,750	)	$	19.39
Outstanding at end of year		1,353,059		$	15.88		1,285,115		$	13.39		1,900,698		$	10.60
Options exercisable at year end		682,809					914,365					1,559,872
Weighted average fair value per option granted during the year	$	7.90				$	7.81				$	7.24

The total intrinsic value of options exercised was $1.4 million, $0.7 million and $3.2 million respectively, for 2012, 2011 and 2010.

The following table summarizes information about options vested and exercisable or nonvested that are expected to vest (nonvested outstanding less expected forfeitures) at December 31, 2012:

Range of Exercise Prices						Number Exercisable		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value (in millions)
	$	1.76	to	$	5.00	24,000	$	2.07	0.22	$	0.2
	$	5.01	to	$	15.00	522,003	$	12.40	7.31		0.1
	$	15.01	to	$	20.00	624,402	$	18.43	6.97		-
	$	20.01	to	$	20.15	100,000	$	20.15	4.05		-
	$	1.76	to	$	20.15	1,270,405	$	15.78	6.75	$	0.3

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The aggregate intrinsic value in the tables above represents the total pretax intrinsic value (the difference between the closing stock price on the last day of trading in 2012 and the exercise price) that would have been received by the option holders had all options been exercised on December 31, 2012. This value will change based on the fair market value of the Company’s common stock.

The following table reflects the activity for all unvested stock options during 2012:

	Shares			Weighted Average Grant- Date Fair Value
Unvested at January 1, 2012		370,750		$	8.29
Granted		772,500		$	7.90
Vested		(123,250	)	$	8.54
Forfeited		(349,750	)	$	5.96
Unvested at December 31, 2012		670,250		$	9.01

At December 31, 2012, there was approximately $2.8 million of unrecognized compensation costs related to unvested stock options, which is expected to be recognized over a weighted average period of 2.87 years. The total fair value of stock options vested during 2012, 2011 and 2010 was $1.1 million, $2.2 million and $2.6 million, respectively.

Restricted Stock and Restricted Stock Units

In October 2004, the Company granted 1,000,000 restricted stock units under the 1999 Plan to a former officer and director (See Note 8 of Notes to Consolidated Financial Statements). A restricted stock unit represents the right to receive a share of the Company’s common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vested at the rate of 20% on May 31, 2005 and 10% per year on April 1, 2006 and each year thereafter. The share-based expense for restricted stock awards was determined based on the market price of the Company’s stock at the date of the award.  Compensation expense related to the restricted stock award was $0 in 2012, $0.1 million in 2011 and $0.6 million in 2010.  As part of the settlement agreement (see Note 8 of Notes to Consolidated Financial Statements), no less than 300,000 shares or units of restricted stock were terminated and of no further force and effect.

In August 2010, the Company granted 175,000 restricted stock units under the 2010 Plan to a key employee who is also a Company director. A restricted stock unit represents the right to receive a share of the Company’s common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vests in ten equal annual installments of 17,500 units beginning May 15, 2011 and each May 15, thereafter. The share-based expense for restricted stock awards was determined based on the market price of the Company’s stock at the date of the award. Compensation expense related to the restricted stock award was approximately $0.4 million for the year ended December 31, 2012.

In October 2011 and November 2011, the Company granted 100,000 restricted stock units under the 2010 Plan to two key employees, one of whom is a Company director. A restricted stock unit represents the right to receive a share of the Company’s common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vests in ten equal annual installments of 10,000 units beginning October 3, 2012 and November 14, 2012, respectively, and each October 3 and November 14, respectively, thereafter. The share-based expense for restricted stock awards was determined based on the market price of the Company’s stock at the date of the award. Compensation expense related to these restricted stock awards was approximately $0.7 million for the year ended December 31, 2012.

In January 2012 and March 2012, the Company granted 50,000 restricted stock units under the 2010 Plan to two key employees.  A restricted stock unit represents the right to receive a share of the Company’s common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vests in ten equal annual installments of 10,000 units beginning January 3, 2013 and March 1, 2013, respectively, and each January 3 and March 1, thereafter.  The share-based expense for restricted stock awards was determined based on the market price of the Company’s stock at the date of the award. Compensation expense related to these restricted stock awards was approximately $0.5 million for the year ended December 31, 2012.

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Share-based compensation expense for restricted stock issued to Directors was $0.1 million in each of 2012, 2011 and 2010.

10.  INCOME TAXES

The components of income (loss) from continuing operations before income taxes are as follows (in millions):

	Year Ended December 31,
	2012			2011		2010
United States	$	(66.5	)	$	43.5	$	43.5
Foreign		24.9			35.5		22.6
Total	$	(41.6	)	$	79.0	$	66.1

The (benefit) provision for income taxes consists of the following (in millions):

	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	(5.4	)	$	13.6		$	9.5
State		0.3			2.2			2.3
Foreign		8.1			8.4			7.1
Total current		3.0			24.2			18.9
Deferred:
Federal		(16.5	)		0.5			4.7
State		(3.3	)		0.4			(0.2	)
Foreign		(16.8	)		(0.7	)		0.1
Total deferred		(36.6	)		0.2			4.6
TOTAL	$	(33.6	)	$	24.4		$	23.5

Income taxes are accrued and paid by each foreign entity in accordance with applicable local regulations. The Company recorded tax (benefit) expense of $(0.2) million, $0.1 million and $0.0 million in 2012, 2011 and 2010, respectively, related to discontinued operations.

A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as follows (in millions):

	Year Ended December 31,
		2012					2011					2010
Income tax at Federal statutory rate	$	(14.5	)	(35.0	)%	$	27.6		35.0	%	$	23.1		35.0	%
Foreign taxes at rates different from the U.S. rate		(3.7	)	(8.9	)		(0.9	)	(1.1	)		(1.4	)	(2.0	)
State and local income taxes, net of federal tax benefit		(2.1	)	(5.0	)		1.3		1.6			1.4		2.0
Changes in valuation allowances		(13.3	)	(31.9	)		(3.7	)	(4.7	)		(0.1	)	(0.2	)
Non-deductible items		0.1		0.2			0.1		0.1			0.7		1.1
Other items, net		(0.1	)	(0.2	)		-		-			(0.2	)	(0.3	)
Income tax at Federal statutory rate	$	(33.6	)	80.8	%	$	24.4		30.9	%	$	23.5		35.6	%

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The deferred tax assets and liabilities are comprised of the following (in millions):

	December 31,
	2012			2011
Assets:
Current:
Accrued expenses and other liabilities	$	12.1		$	13.6
Inventory		6.2			2.6
Valuation allowances		(2.2	)		(1.5	)
Total current assets	$	16.1		$	14.7
Non-current:
Net operating loss and credit carryforwards	$	25.7		$	23.4
Depreciation		2.6			3.6
Intangible & other		22.4			7.6
Valuation allowances		(8.9	)		(28.4	)
Total non-current assets	$	41.8		$	6.2
Liabilities :
Current :
Deductible assets	$	2.5		$	0.8
Other		-			4.3
Total current liabilities	$	2.5		$	5.1
Non-current:
Amortization	$	6.2		$	8.0
Depreciation		5.4			-
Other		-			0.5
Total non-current liabilities	$	11.6		$	8.5

The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign subsidiaries of approximately $127.4 million as of December 31, 2012, since these earnings are considered indefinitely reinvested. The Company has foreign net operating loss carryforwards which expire through 2030. The Company records these benefits as assets to the extent that utilization of such assets is more likely than not; otherwise, a valuation allowance has been recorded. The Company has also provided valuation allowances for certain state deferred tax assets and net operating loss carryforwards where it is not likely they will be realized.

As of December 31, 2012, the Company has approximately $1.2 million in foreign tax credit carryforwards expiring in years through 2022 and various amounts of state and foreign net operating loss carryforwards expiring through 2032. The company has recorded valuation allowances of approximately $11.1 million, including valuations against foreign tax credits of $1.2 million, tax effected net operating loss carryforwards in foreign and state jurisdictions of $5.0 million and $4.2 million, respectively, and deductible temporary differences of $0.7 million for state deductible temporary differences.

The Company is routinely audited by federal, state and foreign tax authorities with respect to its income taxes. The Company regularly reviews and evaluates the likelihood of audit assessments. The Company’s federal income tax returns have been audited through 2009. The Company has not signed any consents to extend the statute of limitations for any subsequent years. The Company’s significant state tax returns have been audited through 2006. The Company considers its significant tax jurisdictions in foreign locations to be the United Kingdom, Canada, France, Italy and Germany. The Company remains subject to examination in the United Kingdom for years after 2010, in Canada for years after 2006, in France for years after 2007, in Italy for years after 2007, in Netherlands for years after 2005 and in Germany for years after 2007.

In accordance with the guidance for accounting for uncertainty in income taxes the Company recognizes the tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit of an uncertain tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount that is greater than 50% likely to be realized upon settlement with the tax authority. To the extent we prevail in matters for which accruals have been established or are required to pay amounts in excess of accruals, our effective tax rate in a given financial statement period could be affected. As of December 31, 2012 the Company had no uncertain tax positions. There were no accrued interest or penalty charges related to unrecognized tax benefits recorded in income tax expense in 2012 or 2011.

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11.  COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

Leases- The Company is obligated under operating lease agreements for the rental of certain office and warehouse facilities and equipment which expire at various dates through July 2030. The Company currently leases its headquarters office/warehouse facility in New York from an entity owned by the Company’s three principal shareholders and senior executive officers. The Company believes that these payments were no higher than would be paid to an unrelated lessor for comparable space. The Company also acquires certain computer, communications equipment, and machinery and equipment pursuant to capital lease obligations.

At December 31, 2012, the future minimum annual lease payments for capital leases and related and third-party operating leases were as follows (in millions):

	Capital Leases		Operating Leases		Total
2013	$	3.3	$	28.5	$	31.8
2014		2.9		26.2		29.1
2015		2.5		25.6		28.1
2016		0.8		23.5		24.3
2017		0.2		23.0		23.2
2018-2022				63.3		63.3
2023-2027				26.1		26.1
Thereafter				17.2		17.2
Total minimum lease payments		9.7		233.4		243.1
Less: sublease rental income				0.1		0.1
Lease obligation net of subleases		9.7	$	233.3		243.0
Less: amount representing interest		1.6
Present value of minimum capital lease payments (including current portion of $2.8)	$	8.1

Annual rent expense aggregated approximately $33.4 million, $30.8 million and $31.1 million in 2012, 2011 and 2010, respectively. Included in rent expense was $0.9 million, $0.9 million and $0.9 million in 2012, 2011 and 2010, respectively, to related parties. Rent expense is net of sublease income of $0.2 million, $0.2 million and $0.2 million for 2012, 2011 and 2010, respectively.

Other Matters

The Company and its subsidiaries are involved in various lawsuits, claims, investigations and  proceedings including commercial, employment, consumer, personal injury and health and safety law matters, which are being handled and defended in the ordinary course of business.  In addition, the Company is subject to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of products the Company sells. The Company is also audited by (or has initiated voluntary disclosure agreements with) numerous governmental agencies in various countries, including U.S. Federal and state authorities, concerning potential income tax, sales tax and unclaimed property liabilities. These matters are in various stages of investigation, negotiation and/or litigation, and are being vigorously defended. In this regard, the Company is being audited by the state of Texas regarding its claim that certain of the company’s consumer electronics e-commerce sales are subject to sales tax in Texas; the Company is defending this matter, believes it has strong defenses, and has established reserves for this matter. Although the Company does not expect, based on currently available information, that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, the ultimate outcome is inherently unpredictable.  Therefore, judgments could be rendered or settlements entered, that could adversely affect the Company’s operating results or cash flows in a particular period.   The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable and estimable.

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12.  SEGMENT AND RELATED INFORMATION

The Company operates and is internally managed in two operating segments, Technology Products and Industrial Products. The Company’s chief operating decision-maker is the Company’s Chief Executive Officer. The Company evaluates segment performance based on income from operations before net interest, foreign exchange gains and losses, special (gains) charges and income taxes. Corporate costs not identified with the disclosed segments are grouped as “Corporate and other expenses.” The chief operating decision-maker reviews assets and makes significant capital expenditure decisions for the Company on a consolidated basis only. The accounting policies of the segments are the same as those of the Company described in Note 1.

Financial information relating to the Company’s operations by reportable segment was as follows (in millions):

	Year Ended December 31,
	2012			2011			2010
Net Sales:
Technology Products	$	3,137.6		$	3,357.4		$	3,336.9
Industrial Products		401.9			319.9			250.0
Corporate and other		5.1			3.3			2.2
Consolidated	$	3,544.6		$	3,680.6		$	3,589.1
Depreciation and Amortization Expense:
Technology Products	$	15.1		$	15.0		$	12.1
Industrial Products		1.9			1.3			1.6
Corporate and other		1.0			1.2			.8
Consolidated	$	18.0		$	17.5		$	14.5
Operating Income (Loss):
Technology Products	$	(47.2	)	$	68.0		$	65.0
Industrial Products		29.9			35.1			24.1
Corporate and other expenses		(22.6	)		(22.3	)		(20.3	)
Consolidated	$	(39.9	)	$	80.8		$	68.8
Total Assets
Technology Products	$	564.4		$	546.7		$	574.0
Industrial Products		157.7			127.2			136.9
Corporate and other		240.2			215.8			183.2
Consolidated	$	962.3		$	889.7		$	894.1

Financial information relating to the Company’s operations by geographic area was as follows (in millions):

	Year Ended December 31,
	2012		2011		2010
Net Sales:
United States	$	2,203.5	$	2,353.3	$	2,328.6
United Kingdom		491.7		442.5		418.9
Other Europe		635.0		657.3		628.1
Other North America		214.4		227.5		213.5
Consolidated	$	3,544.6	$	3,680.6	$	3,589.1
Long-lived Assets:
United States	$	42.0	$	50.7	$	51.5
United Kingdom		16.6		15.4		16.0
Other Europe and Asia		2.8		2.5		3.4
Other North America		1.6		2.1		2.9
Consolidated	$	63.0	$	70.7	$	73.8

Net sales are attributed to countries based on location of selling subsidiary.

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Financial information relating to the Company’s entity-wide product category sales was as follows (in millions):

	Year Ended December 31,
	2012		%			2011		%			2010		%
Product Category
Computers	$	1,048.3		29.6	%		1,047.6		28.5	%		878.4		24.5	%
Computer accessories & software		970.8		27.4	%		1,025.0		27.8	%		982.8		27.4	%
Consumer electronics		619.7		17.5	%		746.5		20.3	%		856.3		23.8	%
Computer components		407.6		11.5	%		453.8		12.3	%		551.0		15.3	%
Industrial products		401.9		11.3	%		319.9		8.7	%		250.0		7.0	%
Other		96.3		2.7	%		87.8		2.4	%		70.6		2.0	%
Consolidated	$	3,544.6		100	%	$	3,680.6		100	%		3,589.1		100	%

13.  QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial data, excluding discontinued operations, is as follows (in millions, except for per share amounts):

	First Quarter		Second Quarter			Third Quarter		Fourth Quarter
2012:
Net sales	$	913.6	$	849.5		$	846.3	$	935.2
Gross profit	$	130.7	$	118.0		$	119.0	$	120.4
Net income	$	7.3	$	(2.2	)	$	13.9	$	(27.0	)
Net income per common share:
Basic	$	0.20	$	(0.06	)	$	0.38	$	(0.73	)
Diluted	$	0.20	$	(0.06	)	$	0.38	$	(0.73	)
2011:
Net sales	$	929.8	$	872.2		$	900.2	$	978.4
Gross profit	$	130.4	$	128.9		$	131.3	$	139.9
Net income	$	13.6	$	15.6		$	10.6	$	14.8
Net income per common share:
Basic	$	0.37	$	0.42		$	0.29	$	0.40
Diluted	$	0.36	$	0.42		$	0.29	$	0.40

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SYSTEMAX INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

For the years ended December:

(in millions)

Description	Balance at Beginning of Period		Charged to Expenses			Write-offs			Other				Balance at End of Period
Allowance for sales returns and doubtful accounts
2012	$	14.7	$	5.0		$	(4.2	)	$	-			$	15.5
2011	$	17.9	$	3.2		$	(6.4	)	$	-			$	14.7
2010	$	22.5	$	3.3		$	(6.8	)	$	(1.1	)	(1)	$	17.9
Allowance for deferred tax assets
2012
Current	$	1.5	$	0.7		$	-		$	-			$	2.2
Noncurrent	$	28.4	$	(19.5	)	$	-		$	-			$	8.9
2011
Current	$	1.5	$	-		$	-		$	-			$	1.5
Noncurrent	$	27.7	$	0.6		$	-		$	0.1			$	28.4
2010
Current	$	1.5	$	-		$	-		$	-			$	1.5
Noncurrent	$	28.3	$	-		$	--		$	(0.6	)		$	27.7

(1)      WStore opening balance sheet adjustment.

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EX-14

EXHIBIT 14

SYSTEMAX INC.

CORPORATE ETHICS POLICY

(REVISED August 2012)

The Corporate Ethics Policy of Systemax Inc. (the “Company”) was prepared to provide the directors, officers, employees and other representatives of the Company and its subsidiaries (collectively “Company Representatives”) as well as the Company’s shareholders, customers, suppliers and the general public with a statement of the Company’s commitment to ethical business conduct.  This Corporate Ethics Policy applies to the Company and all of its subsidiaries on a worldwide basis.  The Company is committed to acting as a responsible and ethical corporate world citizen.  Company Representatives will conduct Company business with the highest regard for the Company’s ethical and legal obligations and with the utmost loyalty to its shareholders and customers.  It is the duty of all Company Representatives to see that these policies are followed.  Every Company Representative is expected to comply with these policies.  Failure to do so may not only harm the Company and your fellow employees, it will subject you to disciplinary action, including termination of employment under appropriate circumstances.

Summary of Duties for All Company Representatives:

· Avoid conflicts of interest and potential conflicts of interest between you and the Company.

· Do not offer or make gifts to customers (unless not of excessive value and unless for a business purpose of the Company).  Cash or cash equivalent gifts of any value are absolutely prohibited.

· Do not offer or make gifts or payments to or otherwise attempt to bribe or unfairly influence a government official.

· Do not accept gifts or other personal payments from suppliers, service providers, customers or competitors (unless not of excessive value).  Cash or cash equivalent gifts of any value are absolutely prohibited.

· Do not compete with the Company or take personal advantage of Company business opportunities, or have significant interests in companies the Company does business with.

· Do not waste, misappropriate or misuse Company assets.

· Keep all non-public Company information confidential.

· Deal with all customers, suppliers and competitors fairly.

· Comply with all laws and government regulations in all countries where the Company does business including laws against non-competitive practices (antitrust laws), insider stock trading, employment discrimination, bribery and other foreign corrupt practices, workplace safety laws and export/customs laws.

· Disclose and record accurately any use of Company funds.

· Do not falsify, inflate or disguise any accounting record or other business records of the Company.

· Report all violations of law and/or Company Ethics Policy to appropriate Company officials (see Section 11 below) or to the Company’s Anonymous Complaint Hotline (see Section 12 below).

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Policies:

1. Loyalty to the Company and its Shareholders:

Company Representatives owe a duty of loyalty to the Company and to its shareholders. .  The duty of loyalty includes both a duty to protect the interests of the Company and an obligation to refrain from business conduct that would injure the Company and its shareholders.

2. Conflicts of Interest:

Company Representatives are required to avoid conflicts of interest, appearances of conflicts of interest and potential conflicts of interest.  A “conflict of interest” occurs when an individual’s private interest interferes in any way – or even appears to interfere - with the interests of the Company.  A conflict situation can arise when a Company Representative takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively.  Conflicts of interest also arise when a Company Representative, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company or has a personal interest in a transaction involving the Company (beyond merely being a Company Representative).  Company Representatives shall not allow any consideration such as the receipt of gifts or financial interests in other businesses or personal or family relationships to interfere with the independent exercise of his or her business judgment and work activities to the benefit of the Company. Company Representatives should not have significant ownership interests in, or positions with, or financial or other involvements with, the Company’s vendors, customers, or other third parties doing business with the Company, without prior written disclosure to the Company and approval by the Company’s Board of Directors or a Committee of the Board. Company Representatives shall have no more than a one percent (1%) ownership interest in any public company that directly competes with the Company. Loans to, or guarantees of obligations of, Company Representatives are prohibited unless permitted by law and authorized by the Board of Directors or a Committee designated by the Board.  If a Company Representative becomes aware of a potential conflict of interest he or she must communicate such potential conflict of interest to the Company.

3. Gifts, Incentive Awards and Relationships with Customers, Suppliers and Service Providers:

No gift may be offered or provided to any corporate or individual customer or potential customer unless the gift is not cash or cash equivalent and also not of excessive value and is made for business purposes of the Company.  No gift of any value may be offered or made to any government customer, government official or individual agent of a government customer.  No gift, gratuity, incentive payment or award whether in the form of cash or its equivalent, personal property, rebates or points awarded towards the entitlement to any of the foregoing (an “Incentive Award”) may be specifically offered or provided to any purchasing agent or other employee of any corporate or government customer (a “Purchasing Agent”) without the knowledge of such customer’s management.  A “gift” includes any tangible and intangible payment or gratuity such as cash, products, meals, tickets to events, services, etc.  A gift, which is by itself not of “excessive value” may be, when aggregated with other gifts from the same source, a gift that is of excessive value.

The solicitation of gifts of any type by an employee is prohibited.  If a gift is offered to an employee, it must be considered separately depending on whether such gift is (a) cash or cash equivalent ((b) non-cash (including products, travel, entertainment, meals, personal services, etc.) or (c) gift cards, lotteries, raffles, funded coupons or similar programs provided by third party vendors pursuant to marketing programs approved by the Company.  The receipt of cash or cash equivalent gifts (other than under approved gift card, lottery, raffles, funded coupon or similar programs) of any value is absolutely prohibited and must be refused by the employee or surrendered to the Company’s Chief Compliance Officer.  The receipt of a non-cash gift or permitted cash equivalent gift is permitted only if (a) the gift is not of excessive value, (b) the gift cannot be construed as a bribe, payoff or improper inducement and (c) the gift is for a business purpose of the Company. Non-cash gifts under vendor incentive programs, as well as gift cards, funded coupons, lotteries, raffles, or similar programs under vendor incentive programs are only permitted if made pursuant to approved marketing programs with the Company’s vendors, and otherwise pursuant to the Company’s Vendor Incentive Program Policy. In considering whether a non-cash gift is of “excessive value” the Company will consider, among other things, the value of the non-cash gift as well as the job responsibilities and annual compensation of the gift recipient.

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Any gift offered or received (for any amount) must be reported to an employee’s supervisor.  In some circumstances, such person may be required to return the gift with a letter explaining Company policy or, if a gift is perishable or impractical to return, such person may be required to distribute it to employees or donate it to charity, with a letter of explanation to the donor.  Any gift offered or received that is greater than $100 in value must be reported to the Company’s Chief Compliance Officer.

No gift, friendship, or other non-business aspect of any relationship with any customer or supplier should affect a Company Representative’s obligation to deal with all customers, prospective customers and suppliers in a manner consistent with the best interests of the Company.  Neither a Company Representative nor any member of his/her family may have any financial or economic involvement with the Company or with any customer or supplier of the Company (such as employment or an employment agreement, a business venture, a consulting or service agreement, or an investment other than the ownership of the stock of a publicly traded company) without prior written disclosure to the Company and approval by the Company’s Board of Directors or a Committee of the Board.

Company managers are prohibited from accepting gifts from subordinate employees unless not of excessive value.

4. Corporate Opportunities:

Company Representatives are prohibited from (a) taking for themselves personally opportunities that are discovered through the use of Company property, information or position; (b) using Company property, information, or position for personal gain; and (c) competing with the Company.  Company Representatives owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

5. Protection and Proper Use of Company Assets:

Company Representatives must guard against any misappropriation, misuse or waste of the Company’s assets or corporate opportunities.  This includes, but is not limited to, trade secrets, intellectual property rights such as trademarks and patents, product sourcing information, strategic plans, etc.  Company Representatives will refrain from the use of Company property for personal use other than on an incidental basis.  Company Representatives will comply with internal controls and procedures of the Company that are intended to allow for better management and protection of the Company’s assets.  All Company Representatives should protect the Company’s assets and ensure their efficient use.  Theft, carelessness and waste have a direct impact on the Company’s profitability.  All Company assets should be used for legitimate business purposes.

6. Confidentiality:

Company Representatives must maintain the confidentiality of information entrusted to them by the Company or its customers, except when disclosure is authorized or legally mandated.  Confidential information includes all non-public information that might be of use to competitors or harmful to the Company or its customers if disclosed.

7. Fair Treatment of Fellow Employees:

Company Representatives will not discriminate against any Company employee or potential employee on the basis of race, color, religion, sex, national origin, age, handicap, veteran status, marital status or sexual preference.  Company Representatives will be sensitive to the rights of all employees to work in an environment free from all aspects of illegal discrimination, including an environment free from all forms of illegal harassment.

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8. Fair dealing:

Company Representatives should endeavor to deal fairly and honestly with the Company’s customers, suppliers, competitors and employees and should not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.  Company Representatives shall not knowingly engage in conduct that results in the Company using any trade secrets, copyrights, trademarks, patents or other proprietary or confidential information belonging to a competitor.

9. Compliance with Applicable Laws and Regulations of Governmental Bodies and Agencies:

The Company and all Company Representatives shall fully comply with all applicable laws and regulations, including securities laws (which require fair disclosure of the Company’s business and financial information to the public and prohibit any use of inside information about the Company in deciding to buy or sell stock of the Company, among other things), antitrust laws (which establish standards for dealing fairly with competitors, suppliers and customers), laws regarding safety in the workplace, laws relating to the preservation of the environment, laws protecting employees and prospective employees from discrimination or sexual harassment, customs laws, including country of origin marking and value laws, and other laws regulating products as well as laws prohibiting corrupt practices such as payments to public officials or improper political activities.

While the Company encourages its employees to participate in the political process, they are cautioned not to create the impression that they speak or act on behalf of the Company.  Certain U.S. and foreign laws prohibit the Company from contributing to political candidates of parties or party officials except under limited conditions.  The numerous applications of domestic and international laws to the activities of the Company cannot be set forth fully here, but all Company Representatives should be sensitive to the ongoing need to assure appropriate consideration of any activity that might violate any such laws.  Clarification of these matters can be obtained by contacting the Company’s General Counsel.

Foreign Corrupt Practices Act

Many countries have laws or rules prohibiting gifts to people who are employed by the government of that country.  In addition the U.S. Foreign Corrupt Practices Act prohibits the Company or any Company Representative from making a payment or giving anything of value to a foreign official or political party for the purpose of obtaining or retaining business.  This provision also applies to payments or offers of anything of value to intermediaries, sales representatives or agents if the Company Representative knows, or has reason to know, that the payment or offer will be used for a prohibited payment, gift or favor.  Company Representatives must obey these laws.

Export Control Laws and Regulations

It is the Company’s policy to comply with the export control laws and regulations of all countries in which the Company does business.  Compliance with these laws and regulations may result in some loss of business opportunities but a failure to comply may result in fines and penalties and loss of exporting privileges.  U.S. customs law prohibits the shipment of goods to certain countries as well as to certain designated individuals and entities while shipment (including re-export) to some other countries, persons, and/or entities requires U.S. Government license application and approval.  Consult these websites for further information: http://www.pmddtc.state.gov/embargoed_countries/index.html; http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx.

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10. Maintenance of Accurate and Complete Books and Records; Financial Reporting:

Every Company Representative has an obligation to maintain accurate and complete books and records in accordance with the Company’s Standard Accounting Policies.  No false or misleading entries may be made on the Company’s books and records and no documents shall be signed without proper authorization.  No funds or assets may be used or maintained by the Company for any illegal purpose.  All transactions shall be fully and completely documented and recorded in the Company’s accounting records.  All labor, travel, material and other expenses should be recorded truthfully.  A variety of U.S.  and foreign laws govern the accurate and complete entry of accounting and financial information.  The Company and Company Representatives are to maintain all such financial records in an accurate and complete manner in accordance with such laws.

Company Representatives shall take all reasonable action within the scope of their responsibilities to promote full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission, the New York Stock Exchange or any other applicable regulatory body or in other public communications made by the Company. Company Representatives shall not knowingly misrepresent or conceal with an intent to mislead, or cause others to misrepresent or conceal with an intent to mislead, material facts concerning the Company.

In connection with Company’s financial disclosures, Company Representatives shall take reasonable action within the scope of their responsibilities designed to cause the Company, and/or to require its personnel, as appropriate, to comply with generally accepted accounting principles and the rules and regulations of the SEC concerning financial and accounting matters; maintain books and records that accurately and fairly reflect the transactions, assets and liabilities of the Company, as required by applicable law; refrain from any financial or accounting practices or pubic financial disclosure that, while in possible technical compliance with generally accepted accounting principles and applicable law, are intended to present a misleading picture of the Company’s financial condition or results of operations or trends relating to these items; promptly report to the Audit Committee any significant or material deficiencies or weaknesses in the design or operation of the Company's internal controls over financial reporting; promptly report to the Company’s internal audit department or the Audit Committee any information indicating that a material violation of generally accepted accounting principles or any illegal financial or accounting practices has or may have occurred; cooperate fully with the Company’s internal audit department, independent auditors, internal legal staff, outside legal advisors or any governmental authority in any investigation regarding possible wrongdoing related to the Company’s financial and accounting disclosure; and refrain from improperly influencing or attempting to coerce, manipulate, mislead or fraudulently influence the activities of the internal audit department or any audit conducted by the Company’s independent auditors.

11. Procedures in the Event of a Legal or Policy Violation or Concern:

Company Representatives must promptly report violations of laws, rules, regulations or the Corporate Ethics Policy to appropriate personnel as indicated below.  The Company will not allow retaliation for reports made in good faith. Any Company Representative who is charged with a felony or other serious crime, and any Company Representative who learns that another Company Representative has been charged with a felony or other serious crime, must immediately inform the local Human Resources Department. The local Human Resources Department, upon being advised of this information, must immediately inform the Company’s Legal Department at the Company’s headquarters in Port Washington, New York.

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In addition, all Company Representatives have an obligation to discuss any concern they have with regard to the application of these policies to any conduct in which they participate, are asked to participate, or become aware of.  Normally, such concerns should be brought to the attention of the immediate supervisor of the Company Representative.  The Company is aware that in certain situations it may be unrealistic to discuss concerns with a supervisor and encourages any Company Representative to contact any of the following in such circumstances (all of whom can be reached at the Company’s headquarters in Port Washington, New York).

Richard Leeds - Chairman and Chief Executive Officer

Larry Reinhold - Executive Vice President and Chief Financial Officer

Eric Lerner – Senior Vice President and General Counsel

Robert D. Rosenthal - Chair of the Nominating and Corporate Governance Committee of the Board of Directors

12. Anonymous Complaint Hotline:

The Company has implemented an anonymous reporting system to receive and address complaints regarding improper or questionable accounting and other business practices.  Examples of improper accounting practices include improper recording of sales transactions, inventory, accounts receivable, accounts payable or other revenue, expense or asset items. The Company’s Audit Committee of the Board of Directors oversees the investigation of complaints regarding improper accounting practices. Examples of other improper business practices include employment discrimination, theft of Company property (including inventory), undisclosed conflicts of interest, insider trading, safety violations and other violations of law and/or this Corporate Ethics Policy.  The Company has set up an anonymous Telephone Hotline to receive all such complaints.  In order to maintain complete anonymity for callers, the Company is utilizing the services of an independent company called Ethicspoint to administer the hotline.

The system is easy to use.  Simply phone the 24 hour toll-free Hotline Number:

866-292-1177	(U.S., Canada, and India)
0800-032-3687	(England and Scotland)
800-786907	(Italy)
0800-902500	(France)
###-##-####	(Sweden)
900-991498	(Spain)
0800-1016582	(Germany)
0800-0226174	(Holland)
00-800-222-55288	(Ireland)
Retail Hot Line
888-773-2508	(U.S. and Canada)

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An Ethicspoint compliance specialist will guide you through the questions to complete the report.  The reports will be available only to specific individuals in the Company who are charged with evaluating and, when appropriate, investigating the violation.  The system is designed so that no report is ever shared with implicated parties.

The Company believes this hotline will be an effective tool in reducing losses from improper accounting, fraud, theft and other illegal and/or unethical practices and therefore help to protect the Company’s reputation and financial strength.  If you are uncertain if a practice violates Company policy or is illegal, please call the hotline.  The Company would rather be informed of a potential problem than let it go unchecked.  Should you have any questions regarding the anonymous reporting procedures or the hotline, you may contact Eric Lerner, the Company’s Senior Vice President and General Counsel.

13. Exceptions in Particular Cases; Waiver.

In certain very limited circumstances, the Company, acting through the Board of Directors’ Corporate Governance Committee and after being provided with full and complete information as to the circumstances, upon the request of a Company Representative, may permit an activity otherwise restricted under this Policy (other than an activity that would constitute illegal conduct).  In such cases, prior written disclosure of the matter shall be made to one of the persons identified in Section 11 above for further consideration by the Corporate Governance Committee as to whether such activity should be permitted.  In the event that such waiver is requested by a director or executive officer of the Company, such waiver may be granted only by the Board, and must be promptly disclosed to shareholders.

14. Importance of Compliance with These Policies:

It is the duty of all Company Representatives to see that these policies are followed.  Every Company Representative is expected to comply with the policies set forth above.  Failure to do so may not only harm the Company and your fellow employees, it will subject you to disciplinary action, including termination of employment under appropriate circumstances.

Signature: Date:

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EX-21

SUBSIDIARIES OF SYSTEMAX INC.

Exhibit 21

Domestic Subsidiaries

Global Computer Supplies Inc. (a New York corporation)

Global Equipment Company Inc. (a New York corporation)

TigerDirect Inc. (a Florida corporation)

Nexel Industries Inc. (a New York corporation)

Systemax Manufacturing Inc. (a Delaware corporation)

Profitcenter Software Inc. (a New York corporation)

Global Government & Education Inc. (a Delaware corporation)

Global Gov/Ed Solutions Inc. (a Delaware corporation)

Papier Catalogues Inc. (a New York corporation)

Misco America Inc. (a Delaware corporation)

SYX Services Inc. (a Delaware corporation)

SYX Distribution Inc. (a Delaware corporation)

Streak Products Inc. (a Delaware corporation)

Misco Germany Inc. (a New York corporation)

CompUSA Retail Inc. (a Delaware corporation)

CompUSA.com Inc. (a Florida corporation)

New CompUSA Corp. (a Delaware corporation)

CircuitCity.com Inc. (a Delaware corporation)

Systemax Puerto Rico Inc. (a Puerto Rican corporation)

Worldwide Rebates Inc. (a Florida corporation)

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OnRebate.com Inc. (a Delaware corporation)

Tek Serv Inc. (a Delaware corporation)

Target Advertising Inc. (a Delaware corporation)

Software Licensing Center Inc. (a Florida corporation)

SYX North American Tech Holdings LLC (a Delaware limited liability company)

Rebate Holdings LLC (a Delaware limited liability company)

Global Industrial Holdings LLC (a Delaware limited liability company)

SYX S.A. Holdings Inc. (a Delaware corporation)

SYX S.A. Holdings II Inc. (a Delaware corporation)

Global Industrial Marketplace Inc. (a Delaware corporation)

Foreign Subsidiaries

Misco UK Limited (a U.K. corporation)

TigerDirect.ca Inc. (a Canadian corporation)

Global Industrial Canada Inc. (a Canadian corporation)

Systemax Italy S.R.L (an Italian corporation)

Wstore Europe S.A.S (a French corporation)

Inmac Wstore SAS (a French corporation)

I-Com Software Eurl (a French corporation)

Misco Nederland BV (a Dutch corporation)

Global Directmail B.V. (a Dutch corporation)

Misco AB (a Swedish corporation)

Misco Iberia Computer Supplies S.A. (a Spanish corporation)

2

Misco Ireland Limited (an Irish corporation)

Systemax Europe Sarl (a Luxembourg corporation)

Systemax EMEA Technology Group Limited (a UK corporation)

SYX Services Private Limited (an Indian corporation)

Misco OY (a Finnish corporation)

Systemax Polska Sp Zoo (a Polish corporation)

Systemax Business Services K.F.T. (a Hungarian corporation)

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EX-23

EXHIBIT 23

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-8 No. 333-21489), pertaining to the 1995 Stock Pan for Non-Employee Directors,

(2) Registration Statement (Form S-8 No. 333-12491), pertaining to the 1995 Long-Term Stock Incentive Plan,

(3) Registration Statement (Form S-8 No. 333-111618), pertaining to the 1999 Long-Term Stock Incentive Plan, and

(4) Registration Statement (Form S-8 No. 333-176264), pertaining to the 2010 Long-Term Incentive Plan;

of our reports dated March 14, 2013, with respect to the consolidated financial statements and schedule of Systemax Inc., and subsidiaries and the effectiveness of internal control over financial reporting of Systemax Inc. and subsidiaries included in this Annual Report (Form 10-K) of Systemax Inc. and subsidiaries for the year ended December 31, 2012.

/s/ Ernst & Young LLP

New York, New York

March 14, 2013

EX-31.1

Exhibit 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Richard Leeds, certify that:

1. I have reviewed this annual report on Form 10-K of Systemax Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this l report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter( the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2013

/s/ RICHARD LEEDS

Richard Leeds, Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Lawrence P. Reinhold, certify that:

1. I have reviewed this annual report on Form 10-K of Systemax Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this l report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this  report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter ( the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 14, 2013

/s/ LAWRENCE P. REINHOLD

Lawrence P. Reinhold, Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Executive Officer of Systemax Inc., hereby certifies that Systemax Inc.’s Form 10-K for the Year Ended December 31, 2012 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78 (o)(d)) and that the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Systemax Inc.

Dated: March 14, 2013

/s/ RICHARD LEEDS

Richard Leeds, Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION UNDER SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Financial Officer of Systemax Inc., hereby certifies that Systemax Inc.’s Form 10-K for the Year Ended December 31, 2012 fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78 (o)(d)) and that the information contained in such Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Systemax Inc.

Dated: March 142, 2013

/s/ LAWRENCE P. REINHOLD

Lawrence P. Reinhold, Chief Financial Officer

XML

SPECIAL CHARGES (GAINS), NET (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012
Severance and Personnel Costs [Member]
Special Charges [Abstract]
Charged to expense		$ 2.2
Industrial Products [Member]
Special Charges [Abstract]
Balance beginning of period		0
Charged to expense		2.2
Paid or otherwise settled		(0.4)
Balance end of period	1.8	1.8
Industrial Products [Member] | Severance and Personnel Costs [Member]
Special Charges [Abstract]
Balance beginning of period		0
Charged to expense		0.3
Paid or otherwise settled		(0.1)
Balance end of period	0.2	0.2
Industrial Products [Member] | Other Exit Costs [Member]
Special Charges [Abstract]
Balance beginning of period		0
Charged to expense		1.9
Paid or otherwise settled		(0.3)
Balance end of period	1.6	1.6
Technology Products [Member]
Special Charges [Abstract]
Charged to expense		1.8
Intangible assets impairment charge		35.3
Insurance recovery		5.0
Technology Products [Member] | Other Exit Costs [Member]
Special Charges [Abstract]
Balance end of period	0.5	0.5
European Technology Products Segment [Member]
Special Charges [Abstract]
Balance beginning of period		0
Charged to expense	4.7	4.7
Paid or otherwise settled		(0.9)
Balance end of period	3.8	3.8
North American Technology Products [Member]
Special Charges [Abstract]
Intangible assets impairment charge	4.6
North American Technology Products [Member] | Severance and Personnel Costs [Member]
Special Charges [Abstract]
Charged to expense	$ 0.5

XML

SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Allowance for Sales Returns and Doubtful Accounts [Member]
Allowance for sales returns and doubtful accounts [Roll Forward]
Balance at Beginning of Period	$ 14.7	$ 17.9	$ 22.5
Charged to Expenses	5.0	3.2	3.3
Write-offs	(4.2)	(6.4)	(6.8)
Other	0	0	(1.1)	[1]
Balance at End of Period	15.5	14.7	17.9
Allowance for Deferred Tax Assets, Current [Member]
Allowance for sales returns and doubtful accounts [Roll Forward]
Balance at Beginning of Period	1.5	1.5	1.5
Charged to Expenses	0.7	0	0
Write-offs	0	0	0
Other	0	0	0
Balance at End of Period	2.2	1.5	1.5
Allowance for Deferred Tax Assets, Noncurrent [Member]
Allowance for sales returns and doubtful accounts [Roll Forward]
Balance at Beginning of Period	28.4	27.7	28.3
Charged to Expenses	(19.5)	0.6	0
Write-offs	0	0	0
Other	0	0.1	(0.6)
Balance at End of Period	$ 8.9	$ 28.4	$ 27.7

[1] WStore opening balance sheet adjustment.

XML

SEGMENT AND RELATED INFORMATION, by Product Category Sales (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Product Category [Abstract]
Consolidated net sales	$ 935.2	$ 846.3	$ 849.5	$ 913.6	$ 978.4	$ 900.2	$ 872.2	$ 929.8	$ 3,544.6	$ 3,680.6	$ 3,589.1
Consolidated net sales (in hundredths)									100.00%	100.00%	100.00%
Computers [Member]
Product Category [Abstract]
Consolidated net sales									1,048.3	1,047.6	878.4
Consolidated net sales (in hundredths)									29.60%	28.50%	24.50%
Computer Accessories & Software [Member]
Product Category [Abstract]
Consolidated net sales									970.8	1,025.0	982.8
Consolidated net sales (in hundredths)									27.40%	27.80%	27.40%
Consumer Electronics [Member]
Product Category [Abstract]
Consolidated net sales									619.7	746.5	856.3
Consolidated net sales (in hundredths)									17.50%	20.30%	23.80%
Computer Components [Member]
Product Category [Abstract]
Consolidated net sales									407.6	453.8	551.0
Consolidated net sales (in hundredths)									11.50%	12.30%	15.30%
Industrial Products [Member]
Product Category [Abstract]
Consolidated net sales									401.9	319.9	250.0
Consolidated net sales (in hundredths)									11.30%	8.70%	7.00%
Other Products [Member]
Product Category [Abstract]
Consolidated net sales									$ 96.3	$ 87.8	$ 70.6
Consolidated net sales (in hundredths)									2.70%	2.40%	2.00%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Fiscal Year [Abstract]
Number of weeks in fiscal quarter (in weeks)	13
Number of weeks in fourth quarter (in weeks)	14
Number of weeks in fiscal period (in weeks)	53
Advertising Costs [Abstract]
Amortization period, minimum	1 month
Amortization period, maximum	4 months
Advertising expense	$ 57.7	$ 40.2	$ 31.7
Vendor consideration	47.8	59.4	65.6
Deferred advertising costs	1.5	1.7
Net Income Per Common Share [Abstract]
Weighted average number of stock options outstanding, treasury stock (in shares)	0	0.3	0.6
Weighted average number of stock options outstanding, restricted stock (in shares)	0.0	0.1	0.2
Employee Benefit Plans [Abstract]
Minimum annual contribution per employee (in hundredths)	1.00%
Aggregate expense in contributions plans	$ 1.0	$ 1.0	$ 0.9
Supplier Concentration Risk [Member]
Concentration Risk [Line Items]
Concentration risk (in hundredths)	0.00%	11.50%	10.00%
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	1.1	0.8	0.7
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	3
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	10
Building [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	30
Building [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Estimated useful lives	50

XML

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2012

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in millions):

	December 31,
	2012		2011
Payroll and employee benefits	$	29.7	$	32.5
Freight		4.0		3.1
Advertising		9.0		7.6
Sales and VAT tax payable		9.7		5.3
Income taxes payable		5.1		4.7
Other		26.0		19.2
	$	83.5	$	72.4

XML

INCOME TAXES (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Components of income before income taxes [Abstract]
United States	$ (66.5)	$ 43.5	$ 43.5
Foreign	24.9	35.5	22.6
Income (loss) from continuing operations before income taxes	(41.6)	79.0	66.1
Current [Abstract]
Federal	(5.4)	13.6	9.5
State	0.3	2.2	2.3
Foreign	8.1	8.4	7.1
Total current	3.0	24.2	18.9
Deferred [Abstract]
Federal	(16.5)	0.5	4.7
State	(3.3)	0.4	(0.2)
Foreign	(16.8)	(0.7)	0.1
Total deferred	(36.6)	0.2	4.6
TOTAL	(33.6)	24.4	23.5
Foreign income tax (benefit) expense	(0.2)	0.1	0
Reconciliation of the difference between income tax expense and computed income tax expense based on Federal statutory corporate rate [Abstract]
Income tax at Federal statutory rate	(14.5)	27.6	23.1
Foreign taxes at rates different from the U.S. rate	(3.7)	(0.9)	(1.4)
State and local income taxes and changes in valuation allowances, net of federal tax benefit	(2.1)	1.3	1.4
Changes in valuation allowances	(13.3)	(3.7)	(0.1)
Non-deductible items	0.1	0.1	0.7
Other items, net	(0.1)	0	(0.2)
Income tax at Federal statutory rate	(33.6)	24.4	23.5
Reconciliation of the difference between income tax expense and computed income tax expense based on Federal statutory corporate rate, Tax Rate [Abstract]
Income tax at Federal statutory rate (in hundredths)	35.00%	35.00%	35.00%
Foreign taxes at rates different from the U.S. rate (in hundredths)	(8.90%)	(1.10%)	(2.00%)
State and local income taxes and changes in valuation allowances, net of federal tax benefit (in hundredths)	(5.00%)	1.60%	2.00%
Changes in valuation allowances (in hundredths)	(31.90%)	(4.70%)	(0.20%)
Non-deductible items (in hundredths)	0.20%	0.10%	1.10%
Other items, net (in hundredths)	0.20%	0.00%	(0.30%)
Income tax at Federal statutory rate (in hundredths)	80.80%	30.90%	35.60%
Current [Abstract]
Accrued expenses and other liabilities	12.1	13.6
Inventory	6.2	2.6
Valuation allowances	(2.2)	(1.5)
Total current assets	16.1	14.7
Non-current [Abstract]
Net operating loss and credit carryforwards	25.7	23.4
Depreciation	2.6	3.6
Intangible & other	22.4	7.6
Valuation allowances	(8.9)	(28.4)
Total non-current assets	41.8	6.2
Current [Abstract]
Deductible assets	2.5	0.8
Other	0	4.3
Total current liabilities	2.5	5.1
Non-current [Abstract]
Amortization	6.2	8.0
Depreciation	5.4	0
Other	0	0.5
Total non-current liabilities	11.6	8.5
Undistributed earnings of its foreign subsidiaries	127.4
Foreign net operating loss carryforwards expiration year	2030
Valuation allowances	11.1
Net operating loss carryforwards, foreign	5.0
Net operating loss carryforwards, state	4.2
Foreign tax credit	1.2
Deductible temporary differences incurred in foreign jurisdictions	0.7
Uncertain tax position that meets the more-likely-than-not recognition threshold (in hundredths)	50.00%
Uncertain tax positions	0
Unrecognized tax benefits, accrued interest and penalties	$ 0	$ 0

XML

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract]
Payroll and employee benefits	$ 29.7	$ 32.5
Freight	4.0	3.1
Advertising	9.0	7.6
Sales and VAT tax payable	9.7	5.3
Income taxes payable	5.1	4.7
Other	26.0	19.2
Accrued expenses and other current liabilities	$ 83.5	$ 72.4

XML

QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract]
Net sales	$ 935.2	$ 846.3	$ 849.5	$ 913.6	$ 978.4	$ 900.2	$ 872.2	$ 929.8	$ 3,544.6	$ 3,680.6	$ 3,589.1
Gross profit	120.4	119.0	118.0	130.7	139.9	131.3	128.9	130.4	488.1	530.5	489.5
Net income	$ (27.0)	$ 13.9	$ (2.2)	$ 7.3	$ 14.8	$ 10.6	$ 15.6	$ 13.6	$ (8.3)	$ 54.4	$ 42.6
Net income per common share [Abstract]
Basic (in dollars per share)	$ (0.73)	$ 0.38	$ (0.06)	$ 0.20	$ 0.40	$ 0.29	$ 0.42	$ 0.37	$ (0.22)	$ 1.48	$ 1.15
Diluted (in dollars per share)	$ (0.73)	$ 0.38	$ (0.06)	$ 0.20	$ 0.40	$ 0.29	$ 0.42	$ 0.36	$ (0.22)	$ 1.47	$ 1.13

XML

GOODWILL AND INTANGIBLES

12 Months Ended

Dec. 31, 2012

GOODWILL AND INTANGIBLES [Abstract]

GOODWILL AND INTANGIBLES

2.      GOODWILL AND INTANGIBLES

The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company's future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand. As a result an impairment charge of approximately $35.3 million related to the trademarks, domain names and goodwill of CompUSA and Circuit City was taken in the fourth quarter of 2012.

Goodwill:

The following table provides information related to the carrying value of goodwill (in millions):

	December 31,			December 31,
	2012			2011
Balance January 1	$	3.3		$	3.3
Impairment charges		(0.9	)		-
Balance December 31	$	2.4		$	3.3

For the year ended December 31, 2012, the Company incurred one-time impairment charges related to goodwill of approximately $0.9 million. This impairment charge was recorded in the Consolidated Statements of Operations as special charges within the Technology Products segment.

Indefinite-lived intangible assets:

The following table summarizes information related to indefinite-lived intangible assets (in millions):

	Gross Carrying Amount: Trademarks			Gross Carrying Amount: Domain Names
Balance January 1	$	24.1		$	14.7
Impairment charges		(18.7	)		(14.7	)
Balance December 31	$	5.4		$	-

For the year ended December 31, 2012, the Company incurred one-time impairment charges related to indefinite-lived intangible assets of approximately $33.4 million. This impairment charge was recorded in the Consolidated Statements of Operations as special charges within the Technology Products segment.

Definite-lived intangible assets:

The following table summarizes information related to definite-lived intangible assets (in millions):

	December 31,				December 31,
	2012				2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Retail store leases	$	3.4	$	1.3	$	3.4	$	1.0
Client lists		2.6		1.7		5.9		3.1
Technology		1.0		0.7		1.0		.5
Total	$	7.0	$	3.7	$	10.3	$	4.6

For the year ended December 31, 2012, the Company incurred one-time impairment charges related to definite-lived intangible assets of approximately $1.0 million. This impairment charge was recorded in the Consolidated Statements of Operations as special charges within the Technology Products segment

The aggregate amortization expense for these intangibles was approximately $1.4 million in 2012. The estimated amortization for future years ending December 31 is as follows (in millions):

2013	$	1.0
2014		0.8
2015		0.3
2016 and after		1.2
Total	$	3.3

XML

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS [Abstract]
Number of principal shareholders and senior executive officers	3
Capital Leases [Abstract]
2013	$ 3.3
2014	2.9
2015	2.5
2016	0.8
2017	0.2
Total minimum lease payments	9.7
Lease obligation net of subleases	9.7
Less amount representing interest	1.6
Present value of minimum capital lease payments (including current portion of $2.8 Mil)	8.1
Present value of minimum capital lease payments, current portion	2.8
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2013	28.5
2014	26.2
2015	25.6
2016	23.5
2017	23.0
2018-2022	63.3
2023-2027	26.1
Thereafter	17.2
Total minimum lease payments	233.4
Less: sublease rental income	0.1
Lease obligation net of subleases	233.3
Total lease [Abstract]
2013	31.8
2014	29.1
2015	28.1
2016	24.3
2017	23.2
2018-2021	63.3
2023-2026	26.1
Thereafter	17.2
Total minimum lease payments	243.1
Less: sublease rental income	0.1
Lease obligation net of subleases	243.0
Annual rent expense	33.4	30.8	31.1
Related party rent expense	0.9	0.9	0.9
Rent expense net of sublease income	$ 0.2	$ 0.2	$ 0.2

XML

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

Components of Income before Income Taxes

The components of income (loss) from continuing operations before income taxes are as follows (in millions):

	Year Ended December 31,
	2012			2011		2010
United States	$	(66.5	)	$	43.5	$	43.5
Foreign		24.9			35.5		22.6
Total	$	(41.6	)	$	79.0	$	66.1

Schedule of Provision for Income Taxes

The (benefit) provision for income taxes consists of the following (in millions):

	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	(5.4	)	$	13.6		$	9.5
State		0.3			2.2			2.3
Foreign		8.1			8.4			7.1
Total current		3.0			24.2			18.9
Deferred:
Federal		(16.5	)		0.5			4.7
State		(3.3	)		0.4			(0.2	)
Foreign		(16.8	)		(0.7	)		0.1
Total deferred		(36.6	)		0.2			4.6
TOTAL	$	(33.6	)	$	24.4		$	23.5

Reconciliation of Difference between Income Tax Expense and Computed Income Tax Expense Based on Federal Statutory Corporate Rate

A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as follows (in millions):

	Year Ended December 31,
	2012					2011						2010
Income tax at Federal statutory rate	$	(14.5	)	35.0	%		$	27.6		35.0	%		$	23.1		35.0	%
Foreign taxes at rates different from the U.S. rate		(3.7	)	8.9				(0.9	)	(1.1	)			(1.4	)	(2.0	)
State and local income taxes and changes in valuation allowances, net of federal tax benefit		(2.1	)	(5.0	)			1.3		1.6				1.4		2.0
Changes in valuation allowances		(13.3	)	(31.9	)			(3.7	)	(4.7	)			(0.1	)	(0.2	)
Non-deductible items		0.1		0.2				0.1		0.1				0.7		1.1
Other items, net		(0.1	)	0.2				-		-				(0.2	)	(0.3	)
Income tax at Federal statutory rate	$	(33.6	)	80.8	%		$	24.4		30.9	%		$	23.5		35.6	%

Schedule of Deferred Tax Assets and Liabilities

The deferred tax assets and liabilities are comprised of the following (in millions):

	December 31,
	2012			2011
Assets:
Current:
Accrued expenses and other liabilities	$	12.1		$	13.6
Inventory		6.2			2.6
Valuation allowances		(2.2	)		(1.5	)
Total current assets	$	16.1		$	14.7
Non-current:
Net operating loss and credit carryforwards	$	25.7		$	23.4
Depreciation		2.6			3.6
Intangible & other		22.4			7.6
Valuation allowances		(8.9	)		(28.4	)
Total non-current assets	$	41.8		$	6.2
Liabilities :
Current :
Deductible assets	$	2.5		$	0.8
Other		-			4.3
Total current liabilities	$	2.5		$	5.1
Non-current:
Amortization	$	6.2		$	8.0
Depreciation		5.4			-
Other		-			.5
Total non-current liabilities	$	11.6		$	8.5

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SHAREHOLDER'S EQUITY (Tables)

12 Months Ended

Dec. 31, 2012

SHAREHOLDERS' EQUITY [Abstract]

Schedule of Weighted-Average Assumptions Used To Estimate the Fair Value of Options Granted

The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2012, 2011 and 2010:

	2012			2011			2010
Expected annual dividend yield		0	%		0	%		0	%
Risk-free interest rate		1.10	%		2.02	%		1.37	%
Expected volatility		57.3	%		59.8	%		61.1	%
Expected life in years		6.3			8.0			4.8

Schedule of Outstanding and Exercisable Options

The following table summarizes information concerning outstanding and exercisable options:

	Weighted Average
	2012					2011					2010
	Shares			Exercise Price		Shares			Exercise Price		Shares			Exercise Price
Outstanding at beginning of year		1,285,115		$	13.39		1,900,698		$	10.60		2,102,459		$	9.87
Granted		772,500		$	15.00		277,000		$	12.61		40,000		$	14.18
Exercised		(109,466	)	$	3.12		(67,758	)	$	4.18		(234,011	)	$	4.34
Cancelled or expired		(595,090	)	$	11.71		(824,825	)	$	7.45		(7,750	)	$	19.39
Outstanding at end of year		1,353,059		$	15.88		1,285,115		$	13.39		1,900,698		$	10.60
Options exercisable at year end		682,809					914,365					1,559,872
Weighted average fair value per option granted during the year	$	7.90				$	7.81				$	7.24

Schedule of Options Vested and Exercisable or Nonvested, Expected to Vest (Nonvested Outstanding Less Expected Forfeitures)

The following table summarizes information about options vested and exercisable or nonvested that are expected to vest (nonvested outstanding less expected forfeitures) at December 31, 2012:

Range of Exercise Prices						Number Exercisable		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value (in millions)
	$	1.76	to	$	5.00	24,000	$	2.07	0.22	$	0.2
	$	5.01	to	$	15.00	522,003	$	12.40	7.31		0.1
	$	15.01	to	$	20.00	624,402	$	18.43	6.97		-
	$	20.01	to	$	20.15	100,000	$	20.15	4.05		-
	$	1.76	to	$	20.15	1,270,405	$	15.78	6.75	$	0.3

Schedule of Unvested Stock Options

The following table reflects the activity for all unvested stock options during 2012:

	Shares			Weighted Average Grant- Date Fair Value
Unvested at January 1, 2012		370,750		$	8.29
Granted		772,500		$	7.90
Vested		(123,250	)	$	8.54
Forfeited		(349,750	)	$	5.96
Unvested at December 31, 2012		670,250		$	9.01

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SEGMENT AND RELATED INFORMATION, by Reportable Segments (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
SEGMENT AND RELATED INFORMATION [Abstract]
Number of reportable segments									2
Net sales [Abstract]
Net sales	$ 935.2	$ 846.3	$ 849.5	$ 913.6	$ 978.4	$ 900.2	$ 872.2	$ 929.8	$ 3,544.6	$ 3,680.6	$ 3,589.1
Depreciation and Amortization Expense [Abstract]
Depreciation and Amortization Expense									18.0	17.5	14.5
Operating Income (Loss) [Abstract]
Operating Income (Loss)									(39.9)	80.8	68.8
Total Assets [Abstract]
Total Assets	962.3				889.7				962.3	889.7	894.1
Technology Products [Member]
Net sales [Abstract]
Net sales									3,137.6	3,357.4	3,336.9
Depreciation and Amortization Expense [Abstract]
Depreciation and Amortization Expense									15.1	15.0	12.1
Operating Income (Loss) [Abstract]
Operating Income (Loss)									(47.2)	68.0	65.0
Total Assets [Abstract]
Total Assets	564.4				546.7				564.4	546.7	574.0
Industrial Products [Member]
Net sales [Abstract]
Net sales									401.9	319.9	250.0
Depreciation and Amortization Expense [Abstract]
Depreciation and Amortization Expense									1.9	1.3	1.6
Operating Income (Loss) [Abstract]
Operating Income (Loss)									29.9	35.1	24.1
Total Assets [Abstract]
Total Assets	157.7				127.2				157.7	127.2	136.9
Corporate and Other [Member]
Net sales [Abstract]
Net sales									5.1	3.3	2.2
Depreciation and Amortization Expense [Abstract]
Depreciation and Amortization Expense									1.0	1.2	0.8
Operating Income (Loss) [Abstract]
Operating Income (Loss)									(22.6)	(22.3)	(20.3)
Total Assets [Abstract]
Total Assets	$ 240.2				$ 215.8				$ 240.2	$ 215.8	$ 183.2

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COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Tables)

12 Months Ended

Dec. 31, 2012

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS [Abstract]

Future Minimum Annual Lease Payments for Capital Leases and Related and Third-Party Operating Leases

At December 31, 2012, the future minimum annual lease payments for capital leases and related and third-party operating leases were as follows (in millions):

	Capital Leases		Operating Leases		Total
2013	$	3.3	$	28.5	$	31.8
2014		2.9		26.2		29.1
2015		2.5		25.6		28.1
2016		0.8		23.5		24.3
2017		0.2		23.0		23.2
2018-2022				63.3		63.3
2023-2027				26.1		26.1
Thereafter				17.2		17.2
Total minimum lease payments		9.7		233.4		243.1
Less: sublease rental income				0.1		0.1
Lease obligation net of subleases		9.7	$	233.3		243.0
Less: amount representing interest		1.6
Present value of minimum capital lease payments (including current portion of $2.8)	$	8.1

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SEGMENT AND RELATED INFORMATION (Tables)

12 Months Ended

Dec. 31, 2012

SEGMENT AND RELATED INFORMATION [Abstract]

Financial Information by Reportable Segment

Financial information relating to the Company's operations by reportable segment was as follows (in millions):

	Year Ended December 31,
	2012			2011			2010
Net Sales:
Technology Products	$	3,137.6		$	3,357.4		$	3,336.9
Industrial Products		401.9			319.9			250.0
Corporate and other		5.1			3.3			2.2
Consolidated	$	3,544.6		$	3,680.6		$	3,589.1
Depreciation and Amortization Expense:
Technology Products	$	15.1		$	15.0		$	12.1
Industrial Products		1.9			1.3			1.6
Corporate and other		1.0			1.2			.8
Consolidated	$	18.0		$	17.5		$	14.5
Operating Income (Loss):
Technology Products	$	(47.2	)	$	68.0		$	65.0
Industrial Products		29.9			35.1			24.1
Corporate and other expenses		(22.6	)		(22.3	)		(20.3	)
Consolidated	$	(39.9	)	$	80.8		$	68.8
Total Assets
Technology Products	$	564.4		$	546.7		$	574.0
Industrial Products		157.7			127.2			136.9
Corporate and other		240.2			215.8			183.2
Consolidated	$	962.3		$	889.7		$	894.1

Financial Information by Geographic Area

Financial information relating to the Company's operations by geographic area was as follows (in millions):

	Year Ended December 31,
	2012		2011		2010
Net Sales:
United States	$	2,203.5	$	2,353.3	$	2,328.6
United Kingdom		491.7		442.5		418.9
Other Europe		635.0		657.3		628.1
Other North America		214.4		227.5		213.5
Consolidated	$	3,544.6	$	3,680.6	$	3,589.1
Long-lived Assets:
United States	$	42.0	$	50.7	$	51.5
United Kingdom		16.6		15.4		16.0
Other Europe and Asia		2.8		2.5		3.4
Other North America		1.6		2.1		2.9
Consolidated	$	63.0	$	70.7	$	73.8

Financial Information by Product Category Sales

Financial information relating to the Company's entity-wide product category sales was as follows (in millions):

	Year Ended December 31,
	2012		%			2011		%			2010		%
Product Category
Computers	$	1,048.3		29.6	%		1,047.6		28.5	%		878.4		24.5	%
Computer accessories & software		970.8		27.4	%		1,025.0		27.8	%		982.8		27.4	%
Consumer electronics		619.7		17.5	%		746.5		20.3	%		856.3		23.8	%
Computer components		407.6		11.5	%		453.8		12.3	%		551.0		15.3	%
Industrial products		401.9		11.3	%		319.9		8.7	%		250.0		7.0	%
Other		96.3		2.7	%		87.8		2.4	%		70.6		2.0	%
Consolidated	$	3,544.6		100	%	$	3,680.6		100	%		3,589.1		100	%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation —The accompanying consolidated financial statements include the accounts of Systemax Inc. and its wholly-owned subsidiaries (collectively, the "Company" or "Systemax"). All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications— Certain prior year amounts were reclassified to conform to current year presentation.

Use of Estimates In Financial Statements — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Fiscal Year — The Company's fiscal year ends at midnight on the Saturday closest to December 31. For clarity of presentation herein, all fiscal years are referred to as if they ended on December 31. The fiscal year will be divided into four fiscal quarters that each end at midnight on a Saturday. Fiscal quarters will typically include 13 weeks, but the fourth quarter will include 14 weeks in a 53 week fiscal year. For clarity of presentation herein, all fiscal quarters are referred to as if they ended on the traditional calendar month.

Foreign Currency Translation — The Company has operations in numerous foreign countries. The functional currency of each foreign country is the local currency. The financial statements of the Company's foreign entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for assets and liabilities, average exchange rates for the statement of operations items and historical rates for equity accounts. Translation gains or losses are recorded as a separate component of shareholders' equity.

Cash — The Company considers amounts held in money market accounts and other short-term investments, including overnight bank deposits, with an original maturity date of three months or less to be cash. Cash overdrafts are classified in accounts payable.

Inventories — Inventories consist primarily of finished goods and are stated at the lower of cost or market value. Cost is determined by using the first-in, first-out method except in Europe and retail locations where an average cost is used.

Assets available for sale — Assets available for sale consist of our ISO-9001: 2008 certified PC manufacturing facility located in Fletcher, Ohio, including land and land improvements. The cost of the land, land improvements and building has been adjusted to fair market value.

Property, Plant and Equipment — Property, plant and equipment is stated at cost. Furniture, fixtures and equipment, including equipment under capital leases, are depreciated using the straight-line or accelerated method over their estimated useful lives ranging from three to ten years. Buildings are depreciated using the straight-line method over estimated useful lives of 30 to 50 years. Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases.

Evaluation of Long-lived Assets — Long-lived assets are evaluated for recoverability whenever events or changes in circumstances indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flows expected to result from the use of the asset and eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair market value of the asset is recognized.

Goodwill and intangible assets — Goodwill represents the excess of the cost of acquired assets over the fair value of assets acquired. The Company tests goodwill and intangibles for impairment annually or more frequently if indicators of impairment exist. The Company assesses the carrying value of its definite-lived intangible assets if circumstances indicate that those values may not be recoverable. In addition, goodwill is required to be tested for impairment after a portion of the goodwill is allocated to a business targeted for disposal. The Company's identifiable intangible assets consist of trademarks, trade and domain names, technology, retail leases and customer lists (See Note 2). The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company's future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand. As a result an impairment charge of approximately $35.3 million related to the trademarks, domain names and goodwill of CompUSA and Circuit City was taken in the fourth quarter of 2012.

Accruals — Management makes estimates and assumptions that affect amounts reported in the consolidated financial statements and accompanying notes. These estimates are based upon various factors such as the number of units sold, historical and anticipated results and data received from third party vendors. Actual results could differ from these estimates. Our most significant estimates include those related to the costs of vendor drop shipments, sales returns and allowances, cooperative advertising and customer rebate reserves, and other vendor and employee related costs.

Income Taxes — Deferred tax assets and liabilities are recognized for the effect of temporary differences between the book and tax bases of recorded assets and liabilities and for tax loss carry forwards. The realization of net deferred tax assets is dependent upon our ability to generate sufficient future taxable income. Where it is more likely than not that some portion or the entire deferred tax asset will not be realized, we have provided a valuation allowance. If the realization of those deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination is made.

The Company provides for uncertain tax positions and related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the Company's effective tax rate in a given financial statement period may be affected.

Revenue Recognition and Accounts Receivable — The Company recognizes sales of products, including shipping revenue, when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met at the time the product is received by the customers when title and risk of loss have transferred except in our Industrial Products segment where title and risk pass at time of shipment. Allowances for estimated subsequent customer returns, rebates and sales incentives are provided when revenues are recorded. Costs incurred for the shipping and handling of its products are recorded as cost of sales. Revenue from extended warranty and support contracts on the Company's assembled PCs is deferred and recognized over the contract period. The Company evaluates collectibility of accounts receivable based on numerous factors, including past transaction history with customers and their credit rating and provides a reserve for accounts that are potentially uncollectible. Trade receivables are generally written off once all collection efforts have been exhausted. Accounts receivable are shown in the consolidated balance sheets net of allowances for doubtful collections and subsequent customer returns.

Advertising Costs — Expenditures for internet, television, local radio and newspaper advertising are expensed in the period the advertising takes place. Catalog preparation, printing and postage expenditures are amortized over the period of catalog distribution during which the benefits are expected, generally one to four months.

Net advertising expenses were $57.7 million, $40.2 million and $31.7 million during 2012, 2011 and 2010, respectively, and are included in the accompanying consolidated statements of operations. The Company utilizes advertising programs to support vendors, including catalogs, internet and magazine advertising, and receives payments and credits from vendors, including consideration pursuant to volume incentive programs and cooperative marketing programs. The Company accounts for consideration from vendors as a reduction of cost of sales unless certain conditions are met showing that the funds are used for specific, incremental, identifiable costs, in which case the consideration is accounted for as a reduction in the related expense category, such as advertising expense. The amount of vendor consideration recorded as a reduction of selling, general and administrative expenses totaled $47.8 million, $59.4 million and $65.6 million during 2012, 2011 and 2010, respectively.  Prepaid expenses as of December 2012 and 2011 include deferred advertising costs of $1.5 million and $1.7 million, respectively which are reflected as an expense during the periods benefited, typically the subsequent fiscal quarter.

Stock based compensation — The Company recognizes the fair value of share based compensation in the consolidated statement of operations over the requisite employee service period. Stock-based compensation expense includes an estimate for forfeitures and is recognized over the expected term of the award.

Net Income Per Common Share – Net income per common share - basic was calculated based upon the weighted average number of common shares outstanding during the respective periods presented using the two class method of computing earnings per share. The two class method was used as the Company has outstanding restricted stock with rights to dividend participation for unvested shares. Net income per common share - diluted was calculated based upon the weighted average number of common shares outstanding and included the equivalent shares for dilutive options outstanding during the respective periods, including unvested options. The dilutive effect of outstanding options and restricted stock issued by the Company is reflected in net income per share - diluted using the treasury stock method. Under the treasury stock method, options will only have a dilutive effect when the average market price of common stock during the period exceeds the exercise price of the options. The weighted average number of stock options outstanding included in the computation of diluted earnings per share was zero for the year ended December 31, 2012 and 0.3 million and 0.6 million for the years ended December 31, 2011 and 2010, respectively. The weighted average number of restricted stock awards included in the computation of diluted earnings per share was 0.0 million for the year December 31, 2012 and 0.1 million and 0.2 million for the years ended December 31, 2011 and 2010, respectively. The weighted average number of stock options outstanding excluded from the computation of diluted earnings per share was 1.1 million for the year ended December 31, 2012 and 0.8 million and 0.7 million for the years ended December 31, 2011 and 2010, respectively, due to their antidilutive effect.

Employee Benefit Plans - The Company's U.S. subsidiaries participate in a defined contribution 401(k) plan covering substantially all U.S. employees. Employees may invest 1% or more of their eligible compensation, limited to maximum amounts as determined by the Internal Revenue Service. The Company provides a matching contribution to the plan, determined as a percentage of the employees' contributions. Aggregate expense to the Company for contributions to such plans was approximately $1.0 million, $1.0 million and $0.9 million in 2012, 2011 and 2010, respectively.

Fair Value Measurements - Financial instruments consist primarily of investments in cash, trade accounts receivable debt and accounts payable. The Company estimates the fair value of financial instruments based on interest rates available to the Company and by comparison to quoted market prices. At December 31, 2012 and 2011, the carrying amounts of cash, accounts receivable and accounts payable are considered to be representative of their respective fair values due to their short-term nature. The Company's debt is considered to representative of its fair value because of its variable interest rate.

The fair value of goodwill and non-amortizing intangibles is measured on a non-recurring basis in connection with the Company's annual impairment testing. For goodwill, the fair value of the reporting unit to which the goodwill has been assigned is determined using a discounted cash flow model. A discounted cash flow model is also used to determine fair value of indefinite-lived intangibles using projected cash flows of the intangible. Unobservable inputs related to these discounted cash flow models include projected sales growth, same store sales growth, gross margin percentages, new business opportunities, working capital requirements, capital expenditures and growth in selling, general and administrative expense and are classified in accordance with ASC 820, "Fair Value Measurements and Disclosures", within Level 3 of the valuation hierarchy.

Significant Concentrations-Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, and accounts receivable. The Company's excess cash balances are invested with money center banks. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers and their geographic dispersion comprising the Company's customer base. The Company also performs on-going credit evaluations and maintains allowances for potential losses as warranted.

We purchase substantially all of our products and components directly from manufacturers and large wholesale distributors. In 2012, no vendor accounted for 10% of more of our purchases. One vendor accounted for 11.5% and 10.0% of our purchases in 2011 and 2010, respectively. The loss of these vendors, or any other key vendors, could have a material adverse effect on us.

Recent Accounting Pronouncements

Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board ("FASB") and the Securities and Exchange Commission ("SEC"). These authorities issue numerous pronouncements, most of which are not applicable to the Company's current or reasonably foreseeable operating structure. Below are the new authoritative pronouncements that management believes are relevant to Company's current operations.

In July 2012, the FASB issued an update related to annual impairment testing for indefinite-lived intangible assets which provides companies with the option to perform a qualitative impairment assessment for their indefinite-lived intangible assets that may allow them to skip the annual fair value calculation. The qualitative assessment is similar to the screen companies can use to determine whether they must perform the two-step goodwill impairment test. Companies must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used in determining the fair value of these assets. This ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This ASU eliminates the option to report other comprehensive income and its components in the statement of changes in shareholders' equity and requires that all items of net income, items of other comprehensive income and total comprehensive income be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this ASU in the first quarter of 2012. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

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QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables)

12 Months Ended

Dec. 31, 2012

QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract]

Quarterly Financial Data (Unaudited)

Quarterly financial data, excluding discontinued operations, is as follows (in millions, except for per share amounts):

	First Quarter		Second Quarter			Third Quarter		Fourth Quarter
2012:
Net sales	$	913.6	$	849.5		$	846.3	$	935.2
Gross profit	$	130.7	$	118.0		$	119.0	$	120.4
Net income	$	7.3	$	(2.2	)	$	13.9	$	(27.0	)
Net income per common share:
Basic	$	0.20	$	(0.06	)	$	0.38	$	(0.73	)
Diluted	$	0.20	$	(0.06	)	$	0.38	$	(0.73	)
2011:
Net sales	$	929.8	$	872.2		$	900.2	$	978.4
Gross profit	$	130.4	$	128.9		$	131.3	$	139.9
Net income	$	13.6	$	15.6		$	10.6	$	14.8
Net income per common share:
Basic	$	0.37	$	0.42		$	0.29	$	0.40
Diluted	$	0.36	$	0.42		$	0.29	$	0.40

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SETTLEMENT AGREEMENT (Details) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2011	May 06, 2011
SETTLEMENT AGREEMENT [Abstract]
Assets surrendered in settlement agreement			$ 11,000,000
Shares of common stock surrendered in settlement agreement (in shares)			1,130,001
Cash surrendered in settlement agreement			480,000
Shares of fully vested unexercised stock options in settlement agreement (in shares)			580,001
Shares of fully vested unexercised restricted stock awards surrendered in settlement agreement (in shares)			100,000
Number of shares surrendered directly owned by party (in shares)			450,000
Term of noncompetition obligation	5 years
Special (gains) charges, net of related legal and professional fees	8,400,000
Legal and professional fees	1,300,000	1,800,000
Intrinsic value of fully vested unexercised stock options			$ 2,600,000

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CONSOLIDATED BALANCE SHEETS (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash	$ 150.7	$ 97.3
Accounts receivable, net of allowances of $15.5 and $14.7	297.4	269.0
Inventories	367.2	372.2
Assets available for sale	2.3	0
Prepaid expenses and other current assets	21.2	18.2
Deferred income taxes	13.6	9.6
Total current assets	852.4	766.3
Property, plant and equipment, net	63.0	70.7
Deferred income taxes	30.2	0
Goodwill and intangibles	11.1	47.8
Other assets	5.6	4.9
Total assets	962.3	889.7
Current liabilities:
Accounts payable	405.3	336.5
Accrued expenses and other current liabilities	83.5	72.4
Current portion of long term debt	2.8	2.6
Total current liabilities	491.6	411.5
Long term debt	5.3	7.1
Deferred income taxes	0	2.3
Other liabilities	19.1	14.5
Total liabilities	516.0	435.4
Commitments and contingencies
Shareholders' equity:
Common stock, par value $.01 per share, authorized 150 million shares; issued 38,861,992 and 38,861,992 shares; outstanding 36,554,972 and 36,398,523 shares	0.4	0.4
Additional paid-in capital	183.0	180.5
Treasury stock at cost -2,307,020 and 2,463,496 shares	(28.6)	(30.5)
Retained earnings	290.5	307.9
Accumulated other comprehensive gain (loss)	1.0	(4.0)
Total shareholders' equity	446.3	454.3
Total liabilities and shareholders' equity	$ 962.3	$ 889.7

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SEGMENT AND RELATED INFORMATION, by Geographic Area (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net sales [Abstract]
Net sales	$ 935.2	$ 846.3	$ 849.5	$ 913.6	$ 978.4	$ 900.2	$ 872.2	$ 929.8	$ 3,544.6	$ 3,680.6	$ 3,589.1
Long-lived Assets [Abstract]
Long-lived Assets	63.0				70.7				63.0	70.7	73.8
United States [Member]
Net sales [Abstract]
Net sales									2,203.5	2,353.3	2,328.6
Long-lived Assets [Abstract]
Long-lived Assets	42.0				50.7				42.0	50.7	51.5
United Kingdom [Member]
Net sales [Abstract]
Net sales									491.7	442.5	418.9
Long-lived Assets [Abstract]
Long-lived Assets	16.6				15.4				16.6	15.4	16.0
Other Europe [Member]
Net sales [Abstract]
Net sales									635.0	657.3	628.1
Other Europe and Asia [Member]
Long-lived Assets [Abstract]
Long-lived Assets	2.8				2.5				2.8	2.5	3.4
Other North America [Member]
Net sales [Abstract]
Net sales									214.4	227.5	213.5
Long-lived Assets [Abstract]
Long-lived Assets	$ 1.6				$ 2.1				$ 1.6	$ 2.1	$ 2.9

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations	$ (8.0)	$ 54.6	$ 42.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	18.0	17.5	14.5
Asset impairment charges	39.9	0	0
Provision for deferred income taxes	(36.6)	0.2	4.6
Provision for returns and doubtful accounts	5.0	3.2	3.3
Compensation expense related to equity compensation plans	4.1	1.9	2.5
Return of common stock-special gain	0	(7.9)	0
Excess tax benefit from exercises of stock options	(0.5)	(0.2)	(1.1)
Loss on dispositions and abandonment	0.3	0.1	0.1
Changes in operating assets and liabilities:
Accounts receivable	(25.4)	(0.4)	(45.1)
Inventories	5.0	(4.1)	(5.9)
Prepaid expenses and other current assets	(18.7)	(4.5)	6.4
Income taxes payable (receivable)	12.9	4.8	(3.3)
Accounts payable, accrued expenses and other current liabilities	79.4	(46.8)	46.1
Net cash provided by operating activities from continuing operations	75.4	18.4	64.7
Net cash (used in) provided by operating activities from discontinued operations	(0.4)	(0.2)	0.2
Net cash provided by operating activities	75.0	18.2	64.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(12.1)	(12.3)	(24.7)
Proceeds from disposals of property, plant and equipment	0.1	0	0
Net cash used in investing activities	(12.0)	(12.3)	(24.7)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility and short term debt	0	10.9	261.7
Repayments of borrowings on credit facility and short term debt	0	(10.9)	(274.9)
Proceeds from recovery zone bond	0	1.5	7.9
Repayments of capital lease obligations	(2.8)	(2.5)	(1.3)
Dividends paid	(9.1)	0	0
Proceeds from issuance of common stock	0.3	0.3	1.0
Excess tax benefit from exercises of stock options	0.5	0.2	1.1
Net cash used in financing activities	(11.1)	(0.5)	(4.5)
Net cash used in financing activities from discontinued operations	0	(0.2)	(0.2)
Net cash used in financing activities	(11.1)	(0.7)	(4.7)
EFFECTS OF EXCHANGE RATES ON CASH	1.5	0	(1.7)
NET INCREASE (DECREASE) IN CASH	53.4	5.2	33.8
CASH - BEGINNING OF YEAR	97.3	92.1	58.3
CASH - END OF YEAR	150.7	97.3	92.1
Supplemental disclosures:
Interest paid	1.4	1.7	1.3
Income taxes paid	11.4	19.2	21.7
Supplemental disclosures of non-cash investing and financing activities:
Acquisitions of equipment through capital leases	$ 1.3	$ 2.4	$ 9.4

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PROPERTY, PLANT AND EQUIPMENT (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, plant and equipment, net [Abstract]
Property, plant and equipment, Gross	$ 183.1	$ 186.5
Less accumulated depreciation and amortization	120.1	115.8
Property, plant and equipment, net	63.0	70.7
Included in property, plant and equipment are assets under capital leases [Abstract]
Property, plant and equipment, assets under capital leases Gross	17.4	17.2
Less: Accumulated amortization	9.4	7.8
Property, plant and equipment, assets under capital leases, net	8.0	9.4
Depreciation	16.6	15.9	12.9
Land and Buildings [Member]
Property, plant and equipment, net [Abstract]
Property, plant and equipment, Gross	19.4	27.7
Furniture and Fixtures, Office, Computer and Other Equipment and Software [Member]
Property, plant and equipment, net [Abstract]
Property, plant and equipment, Gross	133.1	131.6
Leasehold Improvements [Member]
Property, plant and equipment, net [Abstract]
Property, plant and equipment, Gross	$ 30.6	$ 27.2

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2012

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Principles of Consolidation

 

Principles of Consolidation —The accompanying consolidated financial statements include the accounts of Systemax Inc. and its wholly-owned subsidiaries (collectively, the "Company" or "Systemax"). All significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Reclassifications— Certain prior year amounts were reclassified to conform to current year presentation.

Use of Estimates In Financial Statements

Use of Estimates In Financial Statements — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Fiscal Year

Fiscal Year — The Company's fiscal year ends at midnight on the Saturday closest to December 31. For clarity of presentation herein, all fiscal years are referred to as if they ended on December 31. The fiscal year will be divided into four fiscal quarters that each end at midnight on a Saturday. Fiscal quarters will typically include 13 weeks, but the fourth quarter will include 14 weeks in a 53 week fiscal year. For clarity of presentation herein, all fiscal quarters are referred to as if they ended on the traditional calendar month.

Foreign Currency Translation

Foreign Currency Translation — The Company has operations in numerous foreign countries. The functional currency of each foreign country is the local currency. The financial statements of the Company's foreign entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for assets and liabilities, average exchange rates for the statement of operations items and historical rates for equity accounts. Translation gains or losses are recorded as a separate component of shareholders' equity.

Cash

Cash — The Company considers amounts held in money market accounts and other short-term investments, including overnight bank deposits, with an original maturity date of three months or less to be cash. Cash overdrafts are classified in accounts payable.

Inventories

Inventories — Inventories consist primarily of finished goods and are stated at the lower of cost or market value. Cost is determined by using the first-in, first-out method except in Europe and retail locations where an average cost is used.

Assets available for sale

Assets available for sale — Assets available for sale consist of our ISO-9001: 2008 certified PC manufacturing facility located in Fletcher, Ohio, including land and land improvements. The cost of the land, land improvements and building has been adjusted to fair market value.

Property, Plant and Equipment

Property, Plant and Equipment — Property, plant and equipment is stated at cost. Furniture, fixtures and equipment, including equipment under capital leases, are depreciated using the straight-line or accelerated method over their estimated useful lives ranging from three to ten years. Buildings are depreciated using the straight-line method over estimated useful lives of 30 to 50 years. Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases.

Evaluation of Long-lived Assets

Evaluation of Long-lived Assets — Long-lived assets are evaluated for recoverability whenever events or changes in circumstances indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flows expected to result from the use of the asset and eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over the fair market value of the asset is recognized.

Goodwill and intangible assets

Goodwill and intangible assets — Goodwill represents the excess of the cost of acquired assets over the fair value of assets acquired. The Company tests goodwill and intangibles for impairment annually or more frequently if indicators of impairment exist. The Company assesses the carrying value of its definite-lived intangible assets if circumstances indicate that those values may not be recoverable. In addition, goodwill is required to be tested for impairment after a portion of the goodwill is allocated to a business targeted for disposal. The Company's identifiable intangible assets consist of trademarks, trade and domain names, technology, retail leases and customer lists (See Note 2). The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the intangible assets used in that strategy and concluded that the Company's future North American consumer business would be optimized by consolidating its United States consumer operations under TigerDirect, its leading and largest brand. As a result an impairment charge of approximately $35.3 million related to the trademarks, domain names and goodwill of CompUSA and Circuit City was taken in the fourth quarter of 2012.

Accruals

Use of Estimates In Financial Statements — The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Income Taxes

Income Taxes — Deferred tax assets and liabilities are recognized for the effect of temporary differences between the book and tax bases of recorded assets and liabilities and for tax loss carry forwards. The realization of net deferred tax assets is dependent upon our ability to generate sufficient future taxable income. Where it is more likely than not that some portion or the entire deferred tax asset will not be realized, we have provided a valuation allowance. If the realization of those deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination is made.

The Company provides for uncertain tax positions and related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. To the extent the Company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the Company's effective tax rate in a given financial statement period may be affected.

Revenue Recognition and Accounts Receivable

Revenue Recognition and Accounts Receivable — The Company recognizes sales of products, including shipping revenue, when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met at the time the product is received by the customers when title and risk of loss have transferred except in our Industrial Products segment where title and risk pass at time of shipment. Allowances for estimated subsequent customer returns, rebates and sales incentives are provided when revenues are recorded. Costs incurred for the shipping and handling of its products are recorded as cost of sales. Revenue from extended warranty and support contracts on the Company's assembled PCs is deferred and recognized over the contract period. The Company evaluates collectibility of accounts receivable based on numerous factors, including past transaction history with customers and their credit rating and provides a reserve for accounts that are potentially uncollectible. Trade receivables are generally written off once all collection efforts have been exhausted. Accounts receivable are shown in the consolidated balance sheets net of allowances for doubtful collections and subsequent customer returns.

Advertising Costs

Advertising Costs — Expenditures for internet, television, local radio and newspaper advertising are expensed in the period the advertising takes place. Catalog preparation, printing and postage expenditures are amortized over the period of catalog distribution during which the benefits are expected, generally one to four months.

Net advertising expenses were $57.7 million, $40.2 million and $31.7 million during 2012, 2011 and 2010, respectively, and are included in the accompanying consolidated statements of operations. The Company utilizes advertising programs to support vendors, including catalogs, internet and magazine advertising, and receives payments and credits from vendors, including consideration pursuant to volume incentive programs and cooperative marketing programs. The Company accounts for consideration from vendors as a reduction of cost of sales unless certain conditions are met showing that the funds are used for specific, incremental, identifiable costs, in which case the consideration is accounted for as a reduction in the related expense category, such as advertising expense. The amount of vendor consideration recorded as a reduction of selling, general and administrative expenses totaled $47.8 million, $59.4 million and $65.6 million during 2012, 2011 and 2010, respectively.  Prepaid expenses as of December 2012 and 2011 include deferred advertising costs of $1.5 million and $1.7 million, respectively which are reflected as an expense during the periods benefited, typically the subsequent fiscal quarter.

Stock based compensation

Stock based compensation — The Company recognizes the fair value of share based compensation in the consolidated statement of operations over the requisite employee service period. Stock-based compensation expense includes an estimate for forfeitures and is recognized over the expected term of the award.

Net Income Per Common Share

Net Income Per Common Share – Net income per common share - basic was calculated based upon the weighted average number of common shares outstanding during the respective periods presented using the two class method of computing earnings per share. The two class method was used as the Company has outstanding restricted stock with rights to dividend participation for unvested shares. Net income per common share - diluted was calculated based upon the weighted average number of common shares outstanding and included the equivalent shares for dilutive options outstanding during the respective periods, including unvested options. The dilutive effect of outstanding options and restricted stock issued by the Company is reflected in net income per share - diluted using the treasury stock method. Under the treasury stock method, options will only have a dilutive effect when the average market price of common stock during the period exceeds the exercise price of the options. The weighted average number of stock options outstanding included in the computation of diluted earnings per share was zero for the year ended December 31, 2012 and 0.3 million and 0.6 million for the years ended December 31, 2011 and 2010, respectively. The weighted average number of restricted stock awards included in the computation of diluted earnings per share was 0.0 million for the year December 31, 2012 and 0.1 million and 0.2 million for the years ended December 31, 2011 and 2010, respectively. The weighted average number of stock options outstanding excluded from the computation of diluted earnings per share was 1.1 million for the year ended December 31, 2012 and 0.8 million and 0.7 million for the years ended December 31, 2011 and 2010, respectively, due to their antidilutive effect.

Employee Benefit Plans

Employee Benefit Plans - The Company's U.S. subsidiaries participate in a defined contribution 401(k) plan covering substantially all U.S. employees. Employees may invest 1% or more of their eligible compensation, limited to maximum amounts as determined by the Internal Revenue Service. The Company provides a matching contribution to the plan, determined as a percentage of the employees' contributions. Aggregate expense to the Company for contributions to such plans was approximately $1.0 million, $1.0 million and $0.9 million in 2012, 2011 and 2010, respectively.

Fair Value Measurements

Fair Value Measurements - Financial instruments consist primarily of investments in cash, trade accounts receivable debt and accounts payable. The Company estimates the fair value of financial instruments based on interest rates available to the Company and by comparison to quoted market prices. At December 31, 2012 and 2011, the carrying amounts of cash, accounts receivable and accounts payable are considered to be representative of their respective fair values due to their short-term nature. The Company's debt is considered to representative of its fair value because of its variable interest rate.

The fair value of goodwill and non-amortizing intangibles is measured on a non-recurring basis in connection with the Company's annual impairment testing. For goodwill, the fair value of the reporting unit to which the goodwill has been assigned is determined using a discounted cash flow model. A discounted cash flow model is also used to determine fair value of indefinite-lived intangibles using projected cash flows of the intangible. Unobservable inputs related to these discounted cash flow models include projected sales growth, same store sales growth, gross margin percentages, new business opportunities, working capital requirements, capital expenditures and growth in selling, general and administrative expense and are classified in accordance with ASC 820, "Fair Value Measurements and Disclosures", within Level 3 of the valuation hierarchy.

Concentration of Credit Risk

Significant Concentrations-Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, and accounts receivable. The Company's excess cash balances are invested with money center banks. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers and their geographic dispersion comprising the Company's customer base. The Company also performs on-going credit evaluations and maintains allowances for potential losses as warranted.

We purchase substantially all of our products and components directly from manufacturers and large wholesale distributors. In 2012, no vendor accounted for 10% of more of our purchases. One vendor accounted for 11.5% and 10.0% of our purchases in 2011 and 2010, respectively. The loss of these vendors, or any other key vendors, could have a material adverse effect on us.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board ("FASB") and the Securities and Exchange Commission ("SEC"). These authorities issue numerous pronouncements, most of which are not applicable to the Company's current or reasonably foreseeable operating structure. Below are the new authoritative pronouncements that management believes are relevant to Company's current operations.

In July 2012, the FASB issued an update related to annual impairment testing for indefinite-lived intangible assets which provides companies with the option to perform a qualitative impairment assessment for their indefinite-lived intangible assets that may allow them to skip the annual fair value calculation. The qualitative assessment is similar to the screen companies can use to determine whether they must perform the two-step goodwill impairment test. Companies must identify and evaluate changes in economic, industry and company-specific events and circumstances that could affect the significant inputs used in determining the fair value of these assets. This ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This ASU eliminates the option to report other comprehensive income and its components in the statement of changes in shareholders' equity and requires that all items of net income, items of other comprehensive income and total comprehensive income be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this ASU in the first quarter of 2012. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.

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CREDIT FACILITIES (Details) In Millions, unless otherwise specified				12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Revolving Credit [Member] USD ($)	Dec. 31, 2012 Revolving Credit [Member] WStore [Member] EUR (€)
Line of Credit Facility [Line Items]
Secured revolving credit agreement, maximum borrowing capacity				$ 125.0
Line of credit facility optional maximum borrowing capacity subject to conditions				200.0
Term of credit facility				5 years
Credit facility, maturing date				Oct. 27, 2015
Percentage of eligible accounts receivable for borrowings, maximum (in hundredths)				85.00%
Percentage of qualified inventories for borrowings, maximum (in hundredths)				40.00%
Variable rate basis				LIBOR or the Prime Rate
Eligible collateral letters of credit				110.6
Availability under line of credit				104.6
Total outstanding letters of credit				6.0
Number of days for financing receivables past due, minimum					60 days
Threshold limit to calculate accounts receivables					€ 4.0
Percentage of eligible accounts (in hundredths)					10.00%
Weighted average interest rate on short-term borrowings	4.30%	4.50%	3.50%

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PROPERTY, PLANT AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2012

PROPERTY, PLANT AND EQUIPMENT [Abstract]

Property, Plant and Equipment, Net

Property, plant and equipment, net consist of the following (in millions):

	December 31,
	2012		2011
Land and buildings	$	19.4	$	27.7
Furniture and fixtures, office, computer and other equipment and software		133.1		131.6
Leasehold improvements		30.6		27.2
		183.1		186.5
Less accumulated depreciation and amortization		120.1		115.8
Property, plant and equipment, net	$	63.0	$	70.7

Property, Plant and Equipment, Assets Under Capital Leases

Included in property, plant and equipment are assets under capital leases, as follows (in thousands):

	2012		2011
Furniture and fixtures, office, computer and other equipment	$	17.4	$	17.2
Less: Accumulated amortization		9.4		7.8
	$	8.0	$	9.4

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (USD $) In Millions, except Share data, unless otherwise specified	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock, At Cost [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Total
Balances at Dec. 31, 2009	$ 0.4	$ 180.5	$ (28.5)	$ 210.9	$ 1.4
Balances (in shares) at Dec. 31, 2009	36,451,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense		2.4
Issuance of restricted stock		(0.4)	1.2
Issuance of restricted stock (in shares)	106,000
Restricted stock withheld for employee taxes		(0.4)	(0.4)
Restricted stock withheld for employee taxes (in shares)	(36,000)
Exercise of stock options		(1.8)	2.8
Exercise of stock options (in shares)	234,000
Income tax benefit on stock-based compensation		1.2
Change in cumulative translation adjustment					(2.6)	(2.6)
Net income (loss)				42.6		42.6
Balances at Dec. 31, 2010	0.4	181.5	(24.9)	253.5	(1.2)
Balances (in shares) at Dec. 31, 2010	36,755,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense		1.8
Issuance of restricted stock		(1.4)	1.5
Issuance of restricted stock (in shares)	126,000
Exercise of stock options		(0.5)	0.8
Exercise of stock options (in shares)	68,000
Return of common stock			(7.9)
Return of common stock (in shares)	(550,000)
Surrender of fully vested options		(1.1)
Income tax benefit on stock-based compensation		0.2
Change in cumulative translation adjustment					(2.8)	(2.8)
Net income (loss)				54.4		54.4
Balances at Dec. 31, 2011	0.4	180.5	(30.5)	307.9	(4.0)	454.3
Balances (in shares) at Dec. 31, 2011	36,399,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation expense		4.0
Issuance of restricted stock		(0.4)	0.6
Issuance of restricted stock (in shares)	47,000
Exercise of stock options		(1.0)	1.3
Exercise of stock options (in shares)	109,000
Surrender of fully vested options		(0.7)
Income tax benefit on stock-based compensation		0.6
Change in cumulative translation adjustment					5.0	5.0
Dividends paid				(9.1)
Net income (loss)				(8.3)		(8.3)
Balances at Dec. 31, 2012	$ 0.4	$ 183.0	$ (28.6)	$ 290.5	$ 1.0	$ 446.3
Balances (in shares) at Dec. 31, 2012	36,555,000

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Accounts receivable, allowances	$ 15.5	$ 14.7
Shareholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.01
Preferred stock, shares authorized (in shares)	25
Preferred stock, shares issued (in shares)	0
Common stock, par value (in dollars per share)	$ 0.01
Common stock, shares authorized (in shares)	150
Common stock, shares issued (in shares)	38,861,992	38,861,992
Common stock, shares outstanding (in shares)	36,554,972	36,398,523
Treasury stock (in shares)	2,307,020	2,463,496

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INCOME TAXES

12 Months Ended

Dec. 31, 2012

INCOME TAXES [Abstract]

INCOME TAXES

10.      INCOME TAXES

The components of income (loss) from continuing operations before income taxes are as follows (in millions):

	Year Ended December 31,
	2012			2011		2010
United States	$	(66.5	)	$	43.5	$	43.5
Foreign		24.9			35.5		22.6
Total	$	(41.6	)	$	79.0	$	66.1

The (benefit) provision for income taxes consists of the following (in millions):

	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	(5.4	)	$	13.6		$	9.5
State		0.3			2.2			2.3
Foreign		8.1			8.4			7.1
Total current		3.0			24.2			18.9
Deferred:
Federal		(16.5	)		0.5			4.7
State		(3.3	)		0.4			(0.2	)
Foreign		(16.8	)		(0.7	)		0.1
Total deferred		(36.6	)		0.2			4.6
TOTAL	$	(33.6	)	$	24.4		$	23.5

Income taxes are accrued and paid by each foreign entity in accordance with applicable local regulations.

The Company recorded tax (benefit) expense of $(0.2) million, $0.1 million and $0.0 million in 2012, 2011 and 2010, respectively.

A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as follows (in millions):

	Year Ended December 31,
	2012					2011						2010
Income tax at Federal statutory rate	$	(14.5	)	35.0	%		$	27.6		35.0	%		$	23.1		35.0	%
Foreign taxes at rates different from the U.S. rate		(3.7	)	8.9				(0.9	)	(1.1	)			(1.4	)	(2.0	)
State and local income taxes and changes in valuation allowances, net of federal tax benefit		(2.1	)	(5.0	)			1.3		1.6				1.4		2.0
Changes in valuation allowances		(13.3	)	(31.9	)			(3.7	)	(4.7	)			(0.1	)	(0.2	)
Non-deductible items		0.1		0.2				0.1		0.1				0.7		1.1
Other items, net		(0.1	)	0.2				-		-				(0.2	)	(0.3	)
Income tax at Federal statutory rate	$	(33.6	)	80.8	%		$	24.4		30.9	%		$	23.5		35.6	%

The deferred tax assets and liabilities are comprised of the following (in millions):

	December 31,
	2012			2011
Assets:
Current:
Accrued expenses and other liabilities	$	12.1		$	13.6
Inventory		6.2			2.6
Valuation allowances		(2.2	)		(1.5	)
Total current assets	$	16.1		$	14.7
Non-current:
Net operating loss and credit carryforwards	$	25.7		$	23.4
Depreciation		2.6			3.6
Intangible & other		22.4			7.6
Valuation allowances		(8.9	)		(28.4	)
Total non-current assets	$	41.8		$	6.2
Liabilities :
Current :
Deductible assets	$	2.5		$	0.8
Other		-			4.3
Total current liabilities	$	2.5		$	5.1
Non-current:
Amortization	$	6.2		$	8.0
Depreciation		5.4			-
Other		-			.5
Total non-current liabilities	$	11.6		$	8.5

The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign subsidiaries of approximately $127.4 million as of December 31, 2012, since these earnings are considered indefinitely reinvested. The Company has foreign net operating loss carryforwards which expire through 2030. The Company records these benefits as assets to the extent that utilization of such assets is more likely than not; otherwise, a valuation allowance has been recorded. The Company has also provided valuation allowances for certain state deferred tax assets and net operating loss carryforwards where it is not likely they will be realized.

As of December 31, 2012, the Company has approximately $1.2 million in foreign tax credit carryforwards expiring in years through 2022 and various amounts of state and foreign net operating loss carryforwards expiring through 2032.  The Company has recorded valuation allowances of approximately $11.1 million including, valuations against federal tax credits of $1.2 million, tax effected net operating loss carryforwards in foreign and state jurisdictions of $5.0 million and $4.2 million, respectively, and deductible temporary differences of $0.7 million for state deductible temporary differences.

The Company is routinely audited by federal, state and foreign tax authorities with respect to its income taxes. The Company regularly reviews and evaluates the likelihood of audit assessments. The Company's federal income tax returns have been audited through 2009. The Company has not signed any consents to extend the statute of limitations for any subsequent years. The Company's significant state tax returns have been audited through 2006. The Company considers its significant tax jurisdictions in foreign locations to be the United Kingdom, Canada, France, Italy and Germany. The Company remains subject to examination in the United Kingdom for years after 2010, in Canada for years after 2006, in France for years after 2007, in Italy for years after 2007, in Netherlands for years after 2005 and in Germany for years after 2007.

In accordance with the guidance for accounting for uncertainty in income taxes the Company recognizes the tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit of an uncertain tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount that is greater than 50% likely to be realized upon settlement with the tax authority. To the extent we prevail in matters for which accruals have been established or are required to pay amounts in excess of accruals, our effective tax rate in a given financial statement period could be affected. As of December 31, 2012 the Company had no uncertain tax positions.  There were no accrued interest or penalty charges related to unrecognized tax benefits recorded in income tax expense in 2012 or 2011.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Feb. 28, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	SYSTEMAX INC
Entity Central Index Key	0000945114
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 125,641,055
Entity Common Stock, Shares Outstanding		36,568,472
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012

XML

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

12 Months Ended

Dec. 31, 2012

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS [Abstract]

COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

11.      COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

 

Leases-The Company is obligated under operating lease agreements for the rental of certain office and warehouse facilities and equipment which expire at various dates through July 2030. The Company currently leases its headquarters office/warehouse facility in New York from an entity owned by the Company's three principal shareholders and senior executive officers. The Company believes that these payments were no higher than would be paid to an unrelated lessor for comparable space. The Company also acquires certain computer, communications equipment, and machinery and equipment pursuant to capital lease obligations.

At December 31, 2012, the future minimum annual lease payments for capital leases and related and third-party operating leases were as follows (in millions):

	Capital Leases		Operating Leases		Total
2013	$	3.3	$	28.5	$	31.8
2014		2.9		26.2		29.1
2015		2.5		25.6		28.1
2016		0.8		23.5		24.3
2017		0.2		23.0		23.2
2018-2022				63.3		63.3
2023-2027				26.1		26.1
Thereafter				17.2		17.2
Total minimum lease payments		9.7		233.4		243.1
Less: sublease rental income				0.1		0.1
Lease obligation net of subleases		9.7	$	233.3		243.0
Less: amount representing interest		1.6
Present value of minimum capital lease payments (including current portion of $2.8)	$	8.1

Annual rent expense aggregated approximately $33.4 million, $30.8 million and $31.1 million in 2012, 2011 and 2010, respectively. Included in rent expense was $0.9 million, $0.9 million and $0.9 million in 2012, 2011 and 2010, respectively, to related parties. Rent expense is net of sublease income of $0.2 million, $0.2 million and $0.2 million for 2012, 2011 and 2010, respectively.

Other Matters

The Company and its subsidiaries are involved in various lawsuits, claims, investigations and proceedings including commercial, employment, consumer, personal injury and health and safety law matters, which are being handled and defended in the ordinary course of business. In addition, the Company is subject to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of products the Company sells. The Company is also audited by (or has initiated voluntary disclosure agreements with) numerous governmental agencies in various countries, including U.S. Federal and state authorities, concerning potential income tax, sales tax and unclaimed property liabilities. These matters are in various stages of investigation, negotiation and/or litigation, and are being vigorously defended. In this regard, the Company is being audited by the state of Texas regarding its claim that certain of the company's consumer electronics e-commerce sales are subject to sales tax in Texas; the Company is defending this matter, believes it has strong defenses, and has established reserves for this matter. Although the Company does not expect, based on currently available information, that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, the ultimate outcome is inherently unpredictable. Therefore, judgments could be rendered or settlements entered, that could adversely affect the Company's operating results or cash flows in a particular period. The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable and estimable.

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net sales	$ 3,544.6	$ 3,680.6	$ 3,589.1
Cost of sales	3,056.5	3,150.1	3,099.6
Gross profit	488.1	530.5	489.5
Selling, general and administrative expenses	481.7	455.3	416.4
Special (gains) charges, net	46.3	(5.6)	4.3
Operating income (loss) from continuing operations	(39.9)	80.8	68.8
Foreign currency exchange loss	0.3	1.0	1.7
Interest and other income, net	(0.3)	(1.4)	(0.8)
Interest expense	1.7	2.2	1.8
Income (loss) from continuing operations before income taxes	(41.6)	79.0	66.1
Provision for (benefit from) income taxes	(33.6)	24.4	23.5
Income (loss) from continuing operations	(8.0)	54.6	42.6
Loss from discontinued operations, net of tax	(0.3)	(0.2)	0
Net income	$ (8.3)	$ 54.4	$ 42.6
Income (loss) from continuing operations per common share:
Basic (in dollars per share)	$ (0.22)	$ 1.48	$ 1.15
Diluted (in dollars per share)	$ (0.22)	$ 1.47	$ 1.13
Net income (loss) per common share:
Basic (in dollars per share)	$ (0.22)	$ 1.48	$ 1.15
Diluted (in dollars per share)	$ (0.22)	$ 1.47	$ 1.13
Weighted average common and common equivalent shares:
Basic (in shares)	36.9	36.8	37.0
Diluted (in shares)	36.9	37.1	37.6
Dividends declared (in dollars per share)	$ 0.25	$ 0	$ 0

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2012

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

5.      ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in millions):

	December 31,
	2012		2011
Payroll and employee benefits	$	29.7	$	32.5
Freight		4.0		3.1
Advertising		9.0		7.6
Sales and VAT tax payable		9.7		5.3
Income taxes payable		5.1		4.7
Other		26.0		19.2
	$	83.5	$	72.4

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CREDIT FACILITIES

12 Months Ended

Dec. 31, 2012

CREDIT FACILITIES [Abstract]

CREDIT FACILITIES

4.      CREDIT FACILITIES

The Company maintains a $125.0 million (which may be increased to $200.0 million, subject to certain conditions) secured revolving credit agreement with a group of financial institutions which provides for borrowings in the United States. The credit facility has a five year term and expires in October 2015. Availability is subject to a borrowing base formula that takes into account eligible receivables and eligible inventory. Borrowings are secured by substantially all of the Company's assets, including accounts receivable, inventory and certain other assets, subject to limited exceptions. The credit agreement contains certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and up to 40% of qualified inventories. The interest rate under this facility is computed at applicable market rates based on LIBOR or the Prime Rate, plus an applicable margin. The applicable margin varies based on borrowing base availability. As of December 31, 2012, eligible collateral under this agreement was $110.6 million, total availability was $104.6 million, total outstanding letters of credit were $6.0 million and there were no outstanding advances. The Company was in compliance with all of the covenants under this facility as of December 31, 2012.

The Company's WStore subsidiary maintained a revolving credit agreement with a financial institution in France which was secured by WStore accounts receivable balances. This credit facility was terminated by the Company on June 9, 2012. Available amounts for borrowing under this facility included all accounts receivable balances not over 60 days past due reduced by the greater of €4.0 million or 10% of the eligible accounts receivable.

The weighted average interest rate on short-term borrowings was4.3%, 4.5%, and 3.5% in 2012, 2011 and 2010, respectively.

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GOODWILL AND INTANGIBLES (Tables)

12 Months Ended

Dec. 31, 2012

GOODWILL AND INTANGIBLES [Abstract]

Schedule of Carrying Value of Goodwill

Goodwill:

The following table provides information related to the carrying value of goodwill (in millions):

	December 31,			December 31,
	2012			2011
Balance January 1	$	3.3		$	3.3
Impairment charges		(0.9	)		-
Balance December 31	$	2.4		$	3.3

Schedule of Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets:

The following table summarizes information related to indefinite-lived intangible assets (in millions):

	Gross Carrying Amount: Trademarks			Gross Carrying Amount: Domain Names
Balance January 1	$	24.1		$	14.7
Impairment charges		(18.7	)		(14.7	)
Balance December 31	$	5.4		$	-

Schedule of Definite-Lived Intangible Assets

Definite-lived intangible assets:

The following table summarizes information related to definite-lived intangible assets (in millions):

	December 31,				December 31,
	2012				2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Retail store leases	$	3.4	$	1.3	$	3.4	$	1.0
Client lists		2.6		1.7		5.9		3.1
Technology		1.0		0.7		1.0		.5
Total	$	7.0	$	3.7	$	10.3	$	4.6

Schedule of Aggregate Amortization Expense for Intangibles

The aggregate amortization expense for these intangibles was approximately $1.4 million in 2012. The estimated amortization for future years ending December 31 is as follows (in millions):

2013	$	1.0
2014		0.8
2015		0.3
2016 and after		1.2
Total	$	3.3

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SEGMENT AND RELATED INFORMATION

12 Months Ended

Dec. 31, 2012

SEGMENT AND RELATED INFORMATION [Abstract]

SEGMENT AND RELATED INFORMATION

12.      SEGMENT AND RELATED INFORMATION

The Company operates and is internally managed in two operating segments, Technology Products and Industrial Products. The Company's chief operating decision-maker is the Company's Chief Executive Officer. The Company evaluates segment performance based on income from operations before net interest, foreign exchange gains and losses, special (gains) charges and income taxes. Corporate costs not identified with the disclosed segments are grouped as "Corporate and other expenses." The chief operating decision-maker reviews assets and makes significant capital expenditure decisions for the Company on a consolidated basis only. The accounting policies of the segments are the same as those of the Company described in Note 1.

Financial information relating to the Company's operations by reportable segment was as follows (in millions):

	Year Ended December 31,
	2012			2011			2010
Net Sales:
Technology Products	$	3,137.6		$	3,357.4		$	3,336.9
Industrial Products		401.9			319.9			250.0
Corporate and other		5.1			3.3			2.2
Consolidated	$	3,544.6		$	3,680.6		$	3,589.1
Depreciation and Amortization Expense:
Technology Products	$	15.1		$	15.0		$	12.1
Industrial Products		1.9			1.3			1.6
Corporate and other		1.0			1.2			.8
Consolidated	$	18.0		$	17.5		$	14.5
Operating Income (Loss):
Technology Products	$	(47.2	)	$	68.0		$	65.0
Industrial Products		29.9			35.1			24.1
Corporate and other expenses		(22.6	)		(22.3	)		(20.3	)
Consolidated	$	(39.9	)	$	80.8		$	68.8
Total Assets
Technology Products	$	564.4		$	546.7		$	574.0
Industrial Products		157.7			127.2			136.9
Corporate and other		240.2			215.8			183.2
Consolidated	$	962.3		$	889.7		$	894.1

Financial information relating to the Company's operations by geographic area was as follows (in millions):

	Year Ended December 31,
	2012		2011		2010
Net Sales:
United States	$	2,203.5	$	2,353.3	$	2,328.6
United Kingdom		491.7		442.5		418.9
Other Europe		635.0		657.3		628.1
Other North America		214.4		227.5		213.5
Consolidated	$	3,544.6	$	3,680.6	$	3,589.1
Long-lived Assets:
United States	$	42.0	$	50.7	$	51.5
United Kingdom		16.6		15.4		16.0
Other Europe and Asia		2.8		2.5		3.4
Other North America		1.6		2.1		2.9
Consolidated	$	63.0	$	70.7	$	73.8

Net sales are attributed to countries based on location of selling subsidiary.

Financial information relating to the Company's entity-wide product category sales was as follows (in millions):

	Year Ended December 31,
	2012		%			2011		%			2010		%
Product Category
Computers	$	1,048.3		29.6	%		1,047.6		28.5	%		878.4		24.5	%
Computer accessories & software		970.8		27.4	%		1,025.0		27.8	%		982.8		27.4	%
Consumer electronics		619.7		17.5	%		746.5		20.3	%		856.3		23.8	%
Computer components		407.6		11.5	%		453.8		12.3	%		551.0		15.3	%
Industrial products		401.9		11.3	%		319.9		8.7	%		250.0		7.0	%
Other		96.3		2.7	%		87.8		2.4	%		70.6		2.0	%
Consolidated	$	3,544.6		100	%	$	3,680.6		100	%		3,589.1		100	%

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SETTLEMENT AGREEMENT

12 Months Ended

Dec. 31, 2012

SETTLEMENT AGREEMENT [Abstract]

SETTLEMENT AGREEMENT

8.      SETTLEMENT AGREEMENT

Audit Committee Investigation and Gilbert Fiorentino's Resignation and Settlement.

In January and February 2011 the Company received anonymous whistleblower allegations concerning the Company's Miami Florida operations involving the actions of Mr. Gilbert Fiorentino, then the Chief Executive of the Company's Technology Products Group. In response to the allegations, the Company commenced an internal investigation of the whistleblower allegations, which was conducted by the Company's Audit Committee of the Board of Directors with the assistance of independent counsel.

On April 18, 2011, following the independent investigation, the Company delivered a Cause Notice to Mr. Fiorentino pursuant to the terms of his Employment Agreement dated October 12, 2004. The Cause Notice advised Mr. Fiorentino that the Company intended to terminate him for "Cause" (as defined in the Employment Agreement) at a meeting of its Executive Committee scheduled for May 3, 2011, at which meeting Mr. Fiorentino and his counsel could appear, and that Mr. Fiorentino was being placed on administrative leave pending the outcome of that meeting. In the Cause Notice, the Company advised Mr. Fiorentino that the Audit Committee investigation had identified grounds to terminate him for Cause under his Employment Agreement, and set forth the following findings by the Audit Committee constituting such grounds:

i) Mr. Fiorentino personally removed or caused to be removed from the Company's Miami premises product inventory, and/or kept or caused others to receive at his direction such removed product inventory, without payment to the Company and for his own personal gain;

ii) Mr. Fiorentino caused substantial amounts of Company inventory purchases to be effected through Company credit cards in order to accrue and/or use "reward points" for his personal benefit and which he improperly converted to his own use;

iii) Mr. Fiorentino caused his mother to be identified as an employee of the Company in positions for which she had no bona fide job responsibility or function, and caused the Company to pay her a salary and employee benefits, including extended COBRA reimbursements; and iv) Mr.Fiorentino engaged in fraudulent "kickback" arrangements with certain of the Company's vendors, to the detriment of the Company

The Company stated in the Cause Notice that the foregoing activities were in violation of Company policy, the Company's Corporate Ethics Policy, his fiduciary duties and applicable law. The Audit Committee's independent investigation determined that the matters described above did not have any material impact on our previously reported financial results and were limited to the Company's Miami operations.

On May 9, 2011, following several meetings of the Executive Committee and after extensive discussions with Mr. Fiorentino and his counsel, the Company announced that it had accepted the resignation of Mr. Fiorentino, and that it had executed an agreement with Mr. Fiorentino, effective May 6, 2011, under which Mr. Fiorentino surrendered certain assets to the Company valued at approximately $11 million at May 9, 2011: these assets included the surrender of 1,130,001 shares of Systemax common stock and $480,000 in cash. The shares surrendered consisted of 580,001 shares of fully vested unexercised stock options, 2) 100,000 shares of fully vested restricted stock awards and 3) 450,000 shares directly owned by Mr. Fiorentino. The shares surrendered were valued at fair value on May 6, 2011 in the case of the stock options and restricted stock awards and at fair value on May 12, 2011 in the case of the owned shares. The agreement also requires Mr. Fiorentino to disclose his and his immediate family's personal assets; forfeit undisclosed assets discovered by the Company; disclose information regarding certain matters that led to his being notified of the Company's intent to terminate him; and to fully cooperate with the Company in the future. Mr. Fiorentino and the Company also exchanged mutual general releases and nondisparagement commitments, and Mr. Fiorentino agreed to a 5 year noncompetition obligation. The $11 million settlement value included a financial statement benefit to the Company related to the surrender of shares and cash payment of approximately $8.4 million which was recorded in the second quarter of 2011 under special (gains) charges, net of related legal and professional fees of approximately $1.3 million for the quarter ended June 30, 2011 and $1.8 million for the first six months of 2011. The remainder of the settlement value, approximately $2.6 million, was the intrinsic value of the fully vested unexercised stock options on the date of the settlement agreement for which there is no financial statement impact. The amount of the settlement with Mr. Fiorentino was based on negotiation with him, and was not based on any specific level or nature of damages incurred by the Company, and does not constitute restitution.

On June 21, 2011 Systemax Inc. received notice that the Securities and Exchange Commission ("SEC") had initiated a formal investigation into the matters discovered by the Audit Committee's internal investigation. The Company fully cooperated with the SEC in its formal investigation and in February_2013, the SEC advised the Company that it had concluded its investigation and would not be recommending that any action be taken against the Company.

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LONG-TERM DEBT

12 Months Ended

Dec. 31, 2012

LONG-TERM DEBT [Abstract]

LONG-TERM DEBT

6.      LONG-TERM DEBT

The Company (through a subsidiary) has an outstanding Bond financing with the Development Authority of Jefferson, Georgia (the "Authority"). The Bonds were issued by the Authority and purchased by GE Government Finance Inc., and mature on October 1, 2018. The proceeds from the Bond were used to finance capital equipment purchased for the Company's distribution facility located in Jefferson, Georgia. The purchase and installation of the equipment for the facility was completed by December 31, 2011. Pursuant to the transaction, the Company transferred to the Authority, for consideration consisting of the Bond proceeds, ownership of the equipment and the Authority leased the equipment to the Company's subsidiary pursuant to a capital equipment lease expiring October 1, 2018. Under the capital equipment lease, the Company has the right to acquire ownership of the equipment at any time for a purchase price sufficient to pay off all principal and interest on the Bonds, plus $1.00. As of December 31, 2012, there was $5.9 million outstanding against this financing facility.

Long-term debt consists of (in millions):

	December 31,
	2012		2011
Capitalized equipment lease obligations	$	8.1	$	9.7
Less: current portion		2.8		2.6
	$	5.3	$	7.1

The aggregate maturities of long-term debt outstanding at December 31, 2012 are as follows (in millions):

	2013		2014		2015		2016		2017
Maturities	$	2.8	$	2.5	$	2.2	$	0.6	$	-

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SPECIAL CHARGES (GAINS), NET

12 Months Ended

Dec. 31, 2012

SPECIAL CHARGES [Abstract]

SPECIAL CHARGES [Text Block]

7.      SPECIAL CHARGES (GAINS), NET

The Company's Industrial Products segment incurred severance, personnel and other exit costs related to the planned closing and relocation of one of our smaller distribution centers to a new, significantly larger distribution and call center in the second quarter of 2012. These costs were recorded as special charges within the Industrial Products segment. The balance of the restructuring reserves is included in the Consolidated Balance Sheet within accrued expenses and other current liabilities and other liabilities. The Company anticipates incurring minimal additional costs related to this facility closing and relocation.

The following table details the associated liabilities incurred related to this plan (in millions):

	Severance and Personnel Costs			Other Exit Costs			Total
Balance January 1, 2012	$	-		$	-		$	-
Charged to expense		0.3			1.9			2.2
Paid or otherwise settled		(0.1	)		(0.3	)		(0.4	)
Balance December 31, 2012	$	0.2		$	1.6		$	1.8

The Company's North America Technology Products segment incurred $35.3 million of one-time impairment charges related to certain intangible assets and goodwill of CompUSA and Circuit City in the fourth quarter of 2012 (See Note 2 of Notes to Consolidated Financial Statements), costs associated with senior staffing changes for which no future services will be rendered, and additional legal and professional fees related to the previously disclosed completed investigation and settlement with a former officer and director and in pursuing related matters. The legal and professional fees and restructuring costs, for the year ended December 31, 2012, were approximately $2.2 million and were offset by a $5.0 million insurance recovery relating to action taken by a former officer and director. The Company also incurred $1.8 million of patent settlements with non-practicing entities. These costs were recorded as special charges in the Technology Products segment.

The Company's North America Technology Products segment also incurred severance and other exit costs and asset write downs of approximately $0.5 million and $4.6 million, respectively, related to the exit from the PC manufacturing business in the fourth quarter of 2012. These costs were recorded as special charges in the Technology Products segment. The balance of the exit costs of $0.5 million is included in the Consolidated Balance Sheet within accrued expenses and other current liabilities. The Company anticipates incurring minimal additional costs related to this facility closing.

The Company's European Technology Products segment incurred severance and other exit costs related to workforce reductions in order to implement the shared services center in Europe. These costs, incurred in the fourth quarter of 2012, were approximately $4.7 million and were included as special charges. The balance of the restructuring reserves is included in the Consolidated Balance Sheet within accrued expenses and other current liabilities. The Company anticipates incurring additional costs related to this restructuring..

The following table details the associated liabilities incurred related to this plan (in millions):

	Severance and Other Exit Costs
Balance January 1, 2012	$	-
Charged to expense		4.7
Paid or otherwise settled		(0.9)
Balance December 31, 2012	$	3.8

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SHAREHOLDER'S EQUITY

12 Months Ended

Dec. 31, 2012

SHAREHOLDERS' EQUITY [Abstract]

SHAREHOLDERS' EQUITY

9.      SHAREHOLDERS' EQUITY

Stock based compensation plans

The Company currently has five equity compensation plans which reserve shares of common stock for issuance to key employees, directors, consultants and advisors to the Company. The following is a description of these plans:

The 1995 Long-term Stock Incentive Plan - This plan, adopted in 1995, allowed the Company to issue qualified, non-qualified and deferred compensation stock options, stock appreciation rights, restricted stock and restricted unit grants, performance unit grants and other stock based awards authorized by the Compensation Committee of the Board of Directors. Options issued under this plan expire ten years after the options are granted. The ability to grant new awards under this plan ended on December 31, 2005 but awards granted prior to such date continue until their expiration. A total of 25,359 options were outstanding under this plan as of December 31, 2012.

The 1995 Stock Option Plan for Non-Employee Directors - This plan, adopted in 1995, provides for automatic awards of non-qualified options to directors of the Company who are not employees of the Company or its affiliates. All options granted under this plan will have a ten year term from grant date and are immediately exercisable. A maximum of 100,000 shares may be granted for awards under this plan. The ability to grant new awards under this plan ended on October 12, 2006 but awards granted prior to such date continue until their expiration. A total of 12,250 options were outstanding under this plan as of December 31, 2012.

The1999 Long-term Stock Incentive Plan, as amended ("1999 Plan") - This plan was adopted on October 25, 1999 with substantially the same terms and provisions as the 1995 Long-term Stock Incentive Plan. The Company increased the number of shares that may be granted under this plan to a maximum of 7,500,000 from 5,000,000 shares. The maximum number of shares granted per type of award to any individual may not exceed 1,500,000 in any calendar year and 3,000,000 in total. The ability to grant new awards under this plan ended on December 31, 2009 but awards granted prior to such date continue until their expiration. A total of 607,950 options were outstanding under this plan as of December 31, 2012.

The 2006 Stock Incentive Plan For Non-Employee Directors - This plan, adopted by the Company's stockholders on October 11, 2006, replaces the 1995 Stock Option Plan for Non-Employee Directors. The Company adopted the plan so that it could offer directors of the Company who are not employees of the Company or of any entity in which the Company has more than a 50% equity interest ("independent directors") an opportunity to participate in the ownership of the Company by receiving options to purchase shares of common stock at a price equal to the fair market value at the date of grant of the option and restricted stock awards. Awards for a maximum of 200,000 shares may be granted under this plan. A total of 15,000 options were outstanding under this plan as of December 31, 2012.

The 2010 Long-term Stock Incentive Plan ("2010 Plan") - This plan was adopted on April 23, 2010 with substantially the same terms and provisions as the 1999 Long-term Stock Incentive Plan. The maximum number of shares granted per type of award to any individual may not exceed 1,500,000 in any calendar year. Restricted stock grants and common stock awards reduce stock options otherwise available for future grant. Awards for a maximum of 7,500,000 shares may be granted under this plan. A total of 692,500 options and 420,000 restricted stock units were outstanding under this plan as of December 31, 2012.

Shares issued under our share-based compensation plans are usually issued from shares of our common stock held in the treasury.

The fair value of employee share options is recognized in expense over the vesting period of the options, using the graded attribution method. The fair value of employee share options is determined on the date of grant using the Black-Scholes option pricing model. The Company has used historical volatility in its estimate of expected volatility. The expected life represents the period of time (in years) for which the options granted are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury yield curve.

Compensation cost related to non-qualified stock options recognized in operating results (selling, general and administrative expense) for 2012, 2011 and 2010 was $2.5 million, $1.0 million, and $1.5 million respectively. The related future income tax benefits recognized for 2012, 2011 and 2010 were $1.4 million, $0.6 million and $0.6 million, respectively.

Stock options

The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2012, 2011 and 2010:

	2012			2011			2010
Expected annual dividend yield		0	%		0	%		0	%
Risk-free interest rate		1.10	%		2.02	%		1.37	%
Expected volatility		57.3	%		59.8	%		61.1	%
Expected life in years		6.3			8.0			4.8

The following table summarizes information concerning outstanding and exercisable options:

	Weighted Average
	2012					2011					2010
	Shares			Exercise Price		Shares			Exercise Price		Shares			Exercise Price
Outstanding at beginning of year		1,285,115		$	13.39		1,900,698		$	10.60		2,102,459		$	9.87
Granted		772,500		$	15.00		277,000		$	12.61		40,000		$	14.18
Exercised		(109,466	)	$	3.12		(67,758	)	$	4.18		(234,011	)	$	4.34
Cancelled or expired		(595,090	)	$	11.71		(824,825	)	$	7.45		(7,750	)	$	19.39
Outstanding at end of year		1,353,059		$	15.88		1,285,115		$	13.39		1,900,698		$	10.60
Options exercisable at year end		682,809					914,365					1,559,872
Weighted average fair value per option granted during the year	$	7.90				$	7.81				$	7.24

The total intrinsic value of options exercised was $1.4 million, $0.7 million and $3.2 million respectively, for 2012, 2011 and 2010.

The following table summarizes information about options vested and exercisable or nonvested that are expected to vest (nonvested outstanding less expected forfeitures) at December 31, 2012:

Range of Exercise Prices						Number Exercisable		Weighted Average Exercise Price	Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value (in millions)
	$	1.76	to	$	5.00	24,000	$	2.07	0.22	$	0.2
	$	5.01	to	$	15.00	522,003	$	12.40	7.31		0.1
	$	15.01	to	$	20.00	624,402	$	18.43	6.97		-
	$	20.01	to	$	20.15	100,000	$	20.15	4.05		-
	$	1.76	to	$	20.15	1,270,405	$	15.78	6.75	$	0.3

The aggregate intrinsic value in the tables above represents the total pretax intrinsic value (the difference between the closing stock price on the last day of trading in 2012 and the exercise price) that would have been received by the option holders had all options been exercised on December 31, 2012. This value will change based on the fair market value of the Company's common stock.

The following table reflects the activity for all unvested stock options during 2012:

	Shares			Weighted Average Grant- Date Fair Value
Unvested at January 1, 2012		370,750		$	8.29
Granted		772,500		$	7.90
Vested		(123,250	)	$	8.54
Forfeited		(349,750	)	$	5.96
Unvested at December 31, 2012		670,250		$	9.01

At December 31, 2012, there was approximately $2.8 million of unrecognized compensation costs related to unvested stock options, which is expected to be recognized over a weighted average period of 2.87 years. The total fair value of stock options vested during 2012, 2011 and 2010 was $1.1 million, $2.2 million and $2.6 million, respectively.

Restricted Stock and Restricted Stock Units

In October 2004, the Company granted 1,000,000 restricted stock units under the 1999 Plan to a former officer and director (See Note 8 of Notes to Consolidated Financial Statements). A restricted stock unit represents the right to receive a share of the Company's common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vested at the rate of 20% on May 31, 2005 and 10% per year on April 1, 2006 and each year thereafter. The share-based expense for restricted stock awards was determined based on the market price of the Company's stock at the date of the award. Compensation expense related to the restricted stock award was $0 in 2012, $0.1 million in 2011 and $0.6 million in 2010. As part of the settlement agreement (see Note 8 of Notes to Consolidated Financial Statements), no less than 300,000 shares or units of restricted stock were terminated and of no further force and effect.

In August 2010, the Company granted 175,000 restricted stock units under the 2010 Plan to a key employee who is also a Company director. A restricted stock unit represents the right to receive a share of the Company's common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vests in ten equal annual installments of 17,500 units beginning May 15, 2011 and each May 15, thereafter. The share-based expense for restricted stock awards was determined based on the market price of the Company's stock at the date of the award. Compensation expense related to the restricted stock award was approximately $0.4 million for the year ended December 31, 2012.

In October 2011 and November 2011, the Company granted 100,000 restricted stock units under the 2010 Plan to two key employees, one of whom is a Company director. A restricted stock unit represents the right to receive a share of the Company's common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vests in ten equal annual installments of 10,000 units beginning October 3, 2012 and November 14, 2012, respectively, and each October 3 and November 14, respectively, thereafter. The share-based expense for restricted stock awards was determined based on the market price of the Company's stock at the date of the award. Compensation expense related to these restricted stock awards was approximately $0.7 million for the year ended December 31, 2012.

In January 2012 and March 2012, the Company granted 50,000 restricted stock units under the 2010 Plan to two key employees. A restricted stock unit represents the right to receive a share of the Company's common stock. The restricted stock units have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. The restricted stock unit award was a non-performance award which vests in ten equal annual installments of 10,000 units beginning January 3, 2013 and March 1, 2013, respectively, and each January 3 and March 1, thereafter. The share-based expense for restricted stock awards was determined based on the market price of the Company's stock at the date of the award. Compensation expense related to these restricted stock awards was approximately $0.5 million for the year ended December 31, 2012.

Share-based compensation expense for restricted stock issued to Directors was $0.1 million in each of 2012, 2011 and 2010.

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GOODWILL AND INTANGIBLES (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2011
GOODWILL AND INTANGIBLES [Abstract]
Impairment of intangible assets	$ 35.3
Goodwill [Roll Forward]
Balance at beginning of period		3.3	3.3
Impairment charges		(0.9)	0
Balance at end of period	2.4	2.4	3.3
Indefinite-lived Intangible Assets [Line Items]
Impairment charges		33.4
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	7.0	7.0	10.3
Accumulated Amortization	3.7	3.7	4.6
Impairment charges		1.0
Amortization expense		1.4
Aggregate amortization expense for intangibles [Abstract]
2013	1.0	1.0
2014	0.8	0.8
2015	0.3	0.3
2016 and after	1.2	1.2
Total	3.3	3.3
Retail Store Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	3.4	3.4	3.4
Accumulated Amortization	1.3	1.3	1.0
Client Lists [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	2.6	2.6	5.9
Accumulated Amortization	1.7	1.7	3.1
Technology [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	1.0	1.0	1.0
Accumulated Amortization	0.7	0.7	0.5
Trademarks [Member]
Indefinite-lived Intangible Assets [Line Items]
Balance January 1		24.1
Impairment charges		(18.7)
Balance December 31	5.4	5.4
Domain Names [Member]
Indefinite-lived Intangible Assets [Line Items]
Balance January 1		14.7
Impairment charges		(14.7)
Balance December 31	$ 0	$ 0

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SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2012

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS [Abstract]

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Description	Balance at Beginning of Period		Charged to Expenses			Write-offs			Other			Balance at End of Period
Allowance for sales returns and doubtful accounts
2012	$	14.7	$	5.0		$	(4.2	)	$	-		$	15.5
2011	$	17.9	$	3.2		$	(6.4	)	$	-		$	14.7
2010	$	22.5	$	3.3		$	(6.8	)	$	(1.1	) (1)	$	17.9
Allowance for deferred tax assets
2012
Current	$	1.5	$	0.7		$	-		$	-		$	2.2
Noncurrent	$	28.4	$	(19.5	)	$	-		$	-		$	8.9
2011
Current	$	1.5	$	-		$	-		$	-		$	1.5
Noncurrent	$	27.7	$	0.6		$	-		$	0.1		$	28.4
2010
Current	$	1.5	$	-		$	-		$	-		$	1.5
Noncurrent	$	28.3	$	-		$	--		$	(0.6	)	$	27.7

(1)      WStore opening balance sheet adjustment.

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LONG-TERM DEBT (Tables)

12 Months Ended

Dec. 31, 2012

LONG-TERM DEBT [Abstract]

Schedule of Long-term Debt

Long-term debt consists of (in millions):

	December 31,
	2012		2011
Capitalized equipment lease obligations	$	8.1	$	9.7
Less: current portion		2.8		2.6
	$	5.3	$	7.1

Schedule of Maturities of Long-Term Debt Outstanding

The aggregate maturities of long-term debt outstanding at December 31, 2012 are as follows (in millions):

	2013		2014		2015		2016		2017
Maturities	$	2.8	$	2.5	$	2.2	$	0.6	$	-

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SHAREHOLDER'S EQUITY (Details) (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended																								12 Months Ended		12 Months Ended		1 Months Ended			12 Months Ended				12 Months Ended			1 Months Ended		3 Months Ended		2 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 1.76 to 5.00 [Member]	Dec. 31, 2012 5.01 to 15.00 [Member]	Dec. 31, 2012 15.01 to 20.00 [Member]	Dec. 31, 2012 20.01 to 20.15 [Member]	Dec. 31, 2012 1.76 to 20.15 [Member]	Dec. 31, 2012 Stock Options [Member]	Dec. 31, 2011 Stock Options [Member]	Dec. 31, 2010 Stock Options [Member]	Dec. 31, 2012 Restricted Stock Units [Member] Former Officer and Director [Member]	Dec. 31, 2011 Restricted Stock Units [Member] Former Officer and Director [Member]	Dec. 31, 2010 Restricted Stock Units [Member] Former Officer and Director [Member]	Dec. 31, 2012 Restricted Stock Units [Member] Key Employee [Member]	Dec. 31, 2012 Restricted Stock Units [Member] Two Key Employees [Member]	Dec. 31, 2012 Restricted Stock Units [Member] Two Key Employees [Member]	Dec. 31, 2012 Restricted Stock Units [Member] Director [Member]	Dec. 31, 2011 Restricted Stock Units [Member] Director [Member]	Dec. 31, 2010 Restricted Stock Units [Member] Director [Member]	Dec. 31, 2012 Unvested Stock Options [Member]	Dec. 31, 2012 1995 Long-term Stock Incentive Plan [Member]	Dec. 31, 2012 1995 Stock Option Plan for Non-Employee Directors [Member]	Dec. 31, 2012 1995 Stock Option Plan for Non-Employee Directors [Member] Stock Options [Member]	Dec. 31, 2012 1999 Long-term Stock Incentive Plan, as amended [Member]	Dec. 31, 2011 1999 Long-term Stock Incentive Plan, as amended [Member]	Dec. 31, 2012 1999 Long-term Stock Incentive Plan, as amended [Member] Stock Options [Member]	Dec. 31, 2012 1999 Long-term Stock Incentive Plan, as amended [Member] Restricted Stock Units [Member]	Apr. 30, 2006 1999 Long-term Stock Incentive Plan, as amended [Member] Restricted Stock Units [Member] Former Officer and Director [Member]	May 31, 2005 1999 Long-term Stock Incentive Plan, as amended [Member] Restricted Stock Units [Member] Former Officer and Director [Member]	Oct. 31, 2004 1999 Long-term Stock Incentive Plan, as amended [Member] Restricted Stock Units [Member] Former Officer and Director [Member]	Dec. 31, 2012 1999 Long-term Stock Incentive Plan, as amended [Member] Restricted Stock Units [Member] Former Officer and Director [Member]	Dec. 31, 2012 2006 Stock Incentive Plan For Non-Employee Directors [Member]	Dec. 31, 2012 2006 Stock Incentive Plan For Non-Employee Directors [Member] Stock Options [Member]	Dec. 31, 2012 2010 Long-term Stock Incentive Plan [Member]	Dec. 31, 2012 2010 Long-term Stock Incentive Plan [Member] Stock Options [Member]	Dec. 31, 2012 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member]	Dec. 31, 2010 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member] Former Officer and Director [Member]	Aug. 31, 2010 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member] Key Employee [Member]	Dec. 31, 2012 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member] Key Employee [Member]	Mar. 31, 2012 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member] Two Key Employees [Member]	Dec. 31, 2011 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member] Two Key Employees [Member]	Nov. 30, 2011 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member] Two Key Employees [Member]	Dec. 31, 2011 2010 Long-term Stock Incentive Plan [Member] Restricted Stock Units [Member] Two Key Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of compensation plans	5
Term of award																						10 years	10 years
Number of shares authorized for issuance (in shares)																							100,000		7,500,000	5,000,000							200,000		7,500,000
Number of shares granted per employee in each calendar year, maximum (in shares)																									3,000,000		1,500,000	1,500,000								1,500,000	1,500,000
Share based compensation cost	$ 4.1	$ 1.9	$ 2.5						$ 2.5	$ 1.0	$ 1.5	$ 0	$ 0.1	$ 0.6	$ 0.4	$ 0.5	$ 0.7	$ 0.1	$ 0.1	$ 0.1
Share based compensation cost, future income tax benefits									1.4	0.6	0.6
Weighted-average assumptions used to estimate the fair value of options granted [Abstract]
Expected annual dividend yield (in hundredths)									0.00%	0.00%	0.00%
Risk-free interest rate (in hundredths)									1.10%	2.02%	1.37%
Expected volatility (in hundredths)									57.30%	59.80%	61.10%
Expected life in years									6 years 3 months 18 days	8 years	4 years 9 months 18 days
Outstanding and exercisable options, Weighted Average Shares [Roll Forward]
Outstanding at beginning of year (in shares)									1,285,115	1,900,698	2,102,459													25,359										15,000
Granted (in shares)									772,500	277,000	40,000
Exercised (in shares)									(109,466)	(67,758)	(234,011)
Cancelled or expired (in shares)									(595,090)	(824,825)	(7,750)
Outstanding at end of year (in shares)									1,353,059	1,285,115	1,900,698													25,359			607,950							15,000		692,500
Options exercisable at year end (in shares)									682,809	914,365	1,559,872
Weighted average fair value per option granted during the year (in dollars per share)									$ 7.90	$ 7.81	$ 7.24
Outstanding and exercisable options, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning of year (in dollars per share)									$ 13.39	$ 10.60	$ 9.87
Granted (in dollars per share)									$ 15.00	$ 12.61	$ 14.18
Exercised (in dollars per share)									$ 3.12	$ 4.18	$ 4.34
Cancelled or expired (in dollars per share)									$ 11.71	$ 7.45	$ 19.39
Outstanding at end of year (in dollars per share)									$ 15.88	$ 13.39	$ 10.60
Total intrinsic value of options exercised									1.4	0.7	3.2
Unrecognized compensation costs																					2.8
Weighted average period of recognition																					2 years 10 months 13 days
Total fair value of stock options vested									1.1	2.2	2.6
Restricted Stock and Restricted Stock Units [Abstract]
Restricted stock units outstanding (in shares)																																					420,000
Granted (in shares)																															1,000,000								175,000		50,000		100,000
Non performance award, Vested (in hundredths)																													10.00%	20.00%
Number of shares terminated (in shares)																																(300,000)
Number of vesting installments																																						10		10		10		10
Number of units vesting annually (in shares)																																								17,500		10,000		10,000
Options vested and exercisable or nonvested that are expected to vest (nonvested outstanding less expected forfeitures) [Abstract]
Range of Exercise Prices, Lower Range Limit (in dollars per share)				$ 1.76	$ 5.01	$ 15.01	$ 20.01	$ 1.76
Range of Exercise Prices, Upper Range Limit (in dollars per share)				$ 5.00	$ 15.00	$ 20.00	$ 20.15	$ 20.15
Number Exercisable (in shares)				24,000	522,003	624,402	100,000	1,270,405
Weighted Average Exercise Price (in dollars per share)				$ 2.07	$ 12.40	$ 18.43	$ 20.15	$ 15.78
Weighted Average Remaining Contractual Life				2 months 19 days	7 years 3 months 22 days	6 years 11 months 19 days	4 years 18 days	6 years 9 months
Aggregate Intrinsic Value				$ 0.2	$ 0.1	$ 0	$ 0	$ 0.3

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CONSOLIDATED STATEMENT OF OPERATIONS [Abstract]
Net income (loss)	$ (8.3)	$ 54.4	$ 42.6
Other comprehensive income (loss):
Foreign currency translation	5.0	(2.8)	(2.6)
Total comprehensive income (loss)	$ (3.3)	$ 51.6	$ 40.0

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PROPERTY, PLANT AND EQUIPMENT

12 Months Ended

Dec. 31, 2012

PROPERTY, PLANT AND EQUIPMENT [Abstract]

PROPERTY, PLANT AND EQUIPMENT

3.      PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net consist of the following (in millions):

	December 31,
	2012		2011
Land and buildings	$	19.4	$	27.7
Furniture and fixtures, office, computer and other equipment and software		133.1		131.6
Leasehold improvements		30.6		27.2
		183.1		186.5
Less accumulated depreciation and amortization		120.1		115.8
Property, plant and equipment, net	$	63.0	$	70.7

Included in property, plant and equipment are assets under capital leases, as follows (in thousands):

	2012		2011
Furniture and fixtures, office, computer and other equipment	$	17.4	$	17.2
Less: Accumulated amortization		9.4		7.8
	$	8.0	$	9.4

Depreciation charged to operations for property, plant and equipment including capital leases in 2012, 2011, and 2010 was $16.6 million, $15.9 million and $12.9 million, respectively.

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SPECIAL CHARGES (GAINS), NET (Tables)

12 Months Ended

Dec. 31, 2012

Industrial Products Segment [Member]

Restructuring Cost and Reserve [Line Items]

Special charge liabilities

The following table details the associated liabilities incurred related to this plan (in millions):

	Severance and Personnel Costs			Other Exit Costs			Total
Balance January 1, 2012	$	-		$	-		$	-
Charged to expense		0.3			1.9			2.2
Paid or otherwise settled		(0.1	)		(0.3	)		(0.4	)
Balance December 31, 2012	$	0.2		$	1.6		$	1.8

European Technology Products Segment [Member]

Restructuring Cost and Reserve [Line Items]

Special charge liabilities

The following table details the associated liabilities incurred related to this plan (in millions):

	Severance and Other Exit Costs
Balance January 1, 2012	$	-
Charged to expense		4.7
Paid or otherwise settled		(0.9)
Balance December 31, 2012	$	3.8

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LONG-TERM DEBT (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
LONG-TERM DEBT [Abstract]
Recovery zone facility bond, maturity date	Oct. 01, 2018
Capital equipment lease maturity date	Oct. 01, 2018
Additional amount to be paid over principal and interest to acquire ownership	$ 1.00
Long-term debt, outstanding amount	5,900,000
Long-term debt [Abstract]
Capitalized equipment lease obligations	8,100,000	9,700,000
Less: current portion	2,800,000	2,600,000
Long term debt	5,300,000	7,100,000
Maturities of long-term debt outstanding [Abstract]
2013	2,800,000
2014	2,500,000
2015	2,200,000
2016	600,000
2017	$ 0

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QUARTERLY FINANCIAL DATA (UNAUDITED)

12 Months Ended

Dec. 31, 2012

QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract]

QUARTERLY FINANCIAL DATA (UNAUDITED)

13.                                                    QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial data, excluding discontinued operations, is as follows (in millions, except for per share amounts):

	First Quarter		Second Quarter			Third Quarter		Fourth Quarter
2012:
Net sales	$	913.6	$	849.5		$	846.3	$	935.2
Gross profit	$	130.7	$	118.0		$	119.0	$	120.4
Net income	$	7.3	$	(2.2	)	$	13.9	$	(27.0	)
Net income per common share:
Basic	$	0.20	$	(0.06	)	$	0.38	$	(0.73	)
Diluted	$	0.20	$	(0.06	)	$	0.38	$	(0.73	)
2011:
Net sales	$	929.8	$	872.2		$	900.2	$	978.4
Gross profit	$	130.4	$	128.9		$	131.3	$	139.9
Net income	$	13.6	$	15.6		$	10.6	$	14.8
Net income per common share:
Basic	$	0.37	$	0.42		$	0.29	$	0.40
Diluted	$	0.36	$	0.42		$	0.29	$	0.40