EXHIBIT 1
FOR IMMEDIATE RELEASE
SYSTEMAX INC.
11 Harbor Park Drive
Port Washington, NY 11050
INVESTOR CONTACT:
Steven M. Goldschein
Chief Financial Officer
516/608-7000
SYSTEMAX REPORTS FOURTH QUARTER AND YEAR END RESULTS
PORT WASHINGTON, NY, February 28, 2003 - Systemax Inc. (NYSE:SYX), a leading manufacturer and distributor of PC hardware, related computer products and industrial products in North America and Europe, today announced results for the fourth quarter and year ended December 31, 2002.
Net sales for the fourth quarter were $403.3 million compared to $406.9 million in the year ago quarter. Income from operations was $4.0 million compared to $3.9 million in the fourth quarter a year ago. Richard Leeds, Chairman and Chief Executive Officer, commented that while conditions in the market place remained difficult, the results of the Company’s cost reduction and containment efforts enabled us to maintain our operating income despite continued downward pressure on selling prices. He added, “The Company’s consumer segment was strong and grew profitably while the business-to-business segment remained weak.” Net income was $1 million or $.03 per diluted share compared to $2.6 million or $.08 per diluted share in the prior year period. Fourth quarter net income was adversely affected by a higher tax rate which resulted from an adjustment to the estimated rate used for the first three quarters.
For the year ended December 31, 2002, net sales were $1.552 billion compared to $1.547 billion in the prior year. Excluding the effect of a change in accounting for goodwill recorded in 2002, the Company incurred a net loss of $8.0 million or $.23 per diluted share compared to net income of $653,000 or $.02 per diluted share last year. The loss for 2002 includes a non-recurring, $13.2 million (pre-tax) charge resulting from the Company’s decision to discontinue the development of a customer order management system and $4.1 million of integration and other related costs incurred on the consolidation of the Company’s United Kingdom operations. Including the cumulative effect of the change in accounting for goodwill of $51 million (net of tax), the net loss for the year was $58.9 million or $1.73 per diluted share.
“We believe that we have taken appropriate steps to help position our business to be able to achieve repeatable profits. Strategically, we remain focused on improving service levels to our customers and improving our internet offerings and efficiencies. The unpredictable economic outlook in both North America and Europe remains the biggest question for 2003,” Mr. Leeds commented.
Steven Goldschein, Chief Financial Officer emphasized that the Company has continued to closely manage its inventory and accounts receivable. Tight cash controls and minimal capital expenditures enabled the Company to have no domestic short-term borrowing since April 2002. Cash increased to $63 million from $36 million at the end of the prior year.
Systemax (www.systemax.com) has developed an integrated system of branded e-commerce web sites, direct mail catalogs, infomercials and relationship marketers to sell PC hardware, related computer products and industrial products in North America and Europe. Systemax Inc. is a Fortune 1000 company.
SYSTEMAX INC.
Consolidated Statements of Operations
(In thousands, except per share and share amounts)
Three Months Ended Year Ended December 31, December 31, -------------------------------- ------------------------------------ 2002 2001 2002 2001 -------------- --------------- ----------------- ----------------- Net Sales $403,347 $406,935 $1,551,517 $1,546,975 Cost of Sales 336,272 326,543 1,285,929 1,270,051 -------------- --------------- ----------------- ----------------- Gross Profit 67,075 80,392 265,588 276,924 Selling, General & Admin Expenses 61,733 73,753 256,075 271,636 Restructuring and Other Special Charges 1,350 2,758 17,294 2,758 -------------- --------------- ----------------- ----------------- Income (Loss) From Operations 3,992 3,881 (7,781) 2,530 Interest And Other Expense, net 305 6 1,226 1,488 -------------- --------------- ----------------- ----------------- Income (Loss) Before Income Taxes 3,687 3,875 (9,007) 1,042 Provision (Benefit) For Income Taxes 2,686 1,259 (1,039) 389 -------------- --------------- ----------------- ----------------- Income (Loss) Before Cumulative Effect of 1,001 2,616 (7,968) 653 Accounting Change Cumulative Effect of Accounting Change-net (50,971) -------------- --------------- ----------------- ----------------- Net Income (Loss) $1,001 $2,616 ($58,939) $653 ============== =============== ================= ================= Net Income (Loss) Per Common Share: Before Cumulative Effect of Accounting Change $.03 $.08 $(.23) $.02 Cumulative Effect of Accounting Change - net (1.50) -------------- --------------- ----------------- ----------------- Net Income (Loss) $.03 $.08 $(1.73) $.02 ============== =============== ================= ================= Weighted Average Common And Common Equivalent Shares: Basic and Diluted 34,104,290 34,104,290 34,104,290 34,104,290 ============== =============== ================= =================
SYSTEMAX INC.
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31, 2002 2001 CURRENT ASSETS: Cash and cash equivalents $62,995 $36,464 Accounts receivable, net 148,554 136,358 Inventories 98,401 92,170 Prepaid expenses and other current assets 40,416 36,289 ---------------- ---------------- Total Current Assets 350,366 301,281 Property, plant and equipment, net 71,133 82,623 Goodwill 67,967 Other assets 16,405 2,576 ---------------- ---------------- TOTAL $437,904 $454,447 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Amounts due banks $21,211 $2,829 Accounts payable, accrued expenses and other current liabilities 195,859 195,113 ---------------- ---------------- Total Current Liabilities 217,070 197,942 Long-term debt 17,519 Other liabilities 1,398 1,557 Stockholders' equity 201,917 254,948 ---------------- ---------------- TOTAL $437,904 $454,447 ================ ================
Forward-Looking Statements
This press release contains forward-looking statements about the Company’s performance. These statements are based on management’s estimates, assumptions and projections and are not guarantees of future performance. The Company assumes no obligation to update these statements. Actual results may differ materially from results expressed or implied in these statements as the result of risks, uncertainties and other factors including, but not limited to: (a) unanticipated variations in sales volume, (b) economic conditions and exchange rates, (c) actions by competitors, (d) the continuation of key vendor relationships, (e) the ability to maintain satisfactory loan agreements with lenders, (f) risks associated with the delivery of merchandise to customers utilizing common carriers, (g) the operation of the Company’s management information systems, and (h) unanticipated legal and administrative proceedings. Please refer to the Forward Looking Statements section contained in Item 7 of the Company’s Form 10-K for a more detailed explanation of the inherent limitations in such forward-looking statements.
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