Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | SYSTEMAX INC | |
Entity Central Index Key | 945,114 | |
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 Common Stock, Shares Outstanding | 36,858,688 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash | $ 136.1 | $ 165 |
Accounts receivable, net | 305.5 | 355.5 |
Inventories | 217.7 | 290.2 |
Prepaid expenses and other current assets | 19.7 | 15.9 |
Deferred income taxes | 1.8 | 1.7 |
Total current assets | 680.8 | 828.3 |
Property, plant and equipment, net | 38 | 41.2 |
Deferred income taxes | 6.2 | 13.5 |
Goodwill and intangibles | 20.1 | 7.4 |
Other assets | 4 | 4.8 |
Total assets | 749.1 | 895.2 |
Current liabilities: | ||
Accounts payable | 347 | 420.5 |
Accrued expenses and other current liabilities | 83 | 92.7 |
Current portion of long-term debt | 1.2 | 2.8 |
Total current liabilities | 431.2 | 516 |
Long-term debt | 0.5 | 1.1 |
Other liabilities | 28.7 | 18.5 |
Total liabilities | $ 460.4 | $ 535.6 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock | $ 0 | $ 0 |
Common stock | 0.4 | 0.4 |
Additional paid-in capital | 184.1 | 184.3 |
Treasury stock | (24.7) | (25.4) |
Retained earnings | 141.9 | 209.2 |
Accumulated other comprehensive loss | (13) | (8.9) |
Total shareholders' equity | 288.7 | 359.6 |
Total liabilities and shareholders' equity | $ 749.1 | $ 895.2 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements of Operations (Unaudited) [Abstract] | ||||
Net sales | $ 699.3 | $ 825.4 | $ 2,225.1 | $ 2,529.9 |
Cost of sales | 598.7 | 707.9 | 1,905.2 | 2,161.2 |
Gross profit | 100.6 | 117.5 | 319.9 | 368.7 |
Selling, general & administrative expenses | 106.2 | 118.5 | 339.7 | 368 |
Special charges | 2.6 | 1.7 | 36.4 | 10.1 |
Operating income (loss) | (8.2) | (2.7) | (56.2) | (9.4) |
Foreign currency exchange (income) loss | 1.2 | 3.5 | 7 | 4.9 |
Interest and other income, net | (0.2) | (0.1) | (0.3) | (0.1) |
Interest expense | 0.3 | 0.3 | 0.8 | 1 |
Income (loss) before income taxes | (9.5) | (6.4) | (63.7) | (15.2) |
Provision for (benefit from) income taxes | 0.8 | (3.6) | 3.6 | (3.2) |
Net income (loss) | $ (10.3) | $ (2.8) | $ (67.3) | $ (12) |
Net income (loss) per common share: | ||||
Basic (in dollars per share) | $ (0.28) | $ (0.08) | $ (1.81) | $ (0.32) |
Diluted (in dollars per share) | $ (0.28) | $ (0.08) | $ (1.81) | $ (0.32) |
Weighted average common and common equivalent shares: | ||||
Basic (in shares) | 37.1 | 37.1 | 37.1 | 37.1 |
Diluted (in shares) | 37.1 | 37.1 | 37.1 | 37.1 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) [Abstract] | ||||
Net income (loss) | $ (10.3) | $ (2.8) | $ (67.3) | $ (12) |
Other comprehensive income (loss): | ||||
Foreign currency translation | (2.6) | (6.4) | (4.1) | (3.8) |
Total comprehensive income (loss) | $ (12.9) | $ (9.2) | $ (71.4) | $ (15.8) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (67.3) | $ (12) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 9 | 11.6 |
Asset impairment | 1 | 0.1 |
(Benefit) provision for deferred income taxes | 0.5 | (0.5) |
Provision for doubtful accounts | 5 | 5.6 |
Compensation expense related to equity compensation plans | 1.1 | 1.3 |
Gain on disposition and abandonment | (0.2) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 39.8 | (18.1) |
Inventories | 79 | 26.1 |
Prepaid expenses and other current assets | 1.9 | (4.4) |
Income taxes payable (receivable) | (0.7) | 1.4 |
Accounts payable | (68.1) | (49.6) |
Accrued expenses and other current liabilities | 0.9 | 1 |
Net cash provided by (used in) operating activities | 1.9 | (37.5) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (6.9) | (5.5) |
Proceeds from disposals of property, plant and equipment | 1.3 | 1.1 |
Acquisitions net of cash acquired | (24.8) | (6.4) |
Net cash used in investing activities | (30.4) | (10.8) |
Cash flows from financing activities: | ||
Repayments of capital lease obligations | (2.1) | (1.9) |
Repurchase of treasury stock | (0.2) | 0 |
Proceeds from issuance of common stock | 0 | 0.3 |
Net cash used in financing activities | (2.3) | (1.6) |
Effects of exchange rates on cash | 1.9 | 2.1 |
Net decrease in cash | (28.9) | (47.8) |
Cash - beginning of period | 165 | 181.4 |
Cash - end of period | $ 136.1 | $ 133.6 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) shares in Millions, $ in Millions | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock, At Cost [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balances at Dec. 31, 2014 | $ 0.4 | $ 184.3 | $ (25.4) | $ 209.2 | $ (8.9) | $ 359.6 |
Balances (in shares) at Dec. 31, 2014 | 36,808 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 1.1 | 1.1 | ||||
Issuance of restricted stock | (0.9) | 0.9 | 0 | |||
Issuance of restricted stock (in shares) | 76 | |||||
Repurchase of treasury stock | (0.2) | (0.2) | ||||
Repurchase of treasury stock (in shares) | (25) | |||||
Surrender of fully vested options | (0.4) | (0.4) | ||||
Change in cumulative translation adjustment | (4.1) | (4.1) | ||||
Net income (loss) | (67.3) | (67.3) | ||||
Balances at Sep. 30, 2015 | $ 0.4 | $ 184.1 | $ (24.7) | $ 141.9 | $ (13) | $ 288.7 |
Balances (in shares) at Sep. 30, 2015 | 36,859 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation The accompanying condensed consolidated financial statements of the Company and its wholly-owned subsidiaries are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America are not required in these interim financial statements and have been condensed or omitted. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current year presentation. In the opinion of management, the accompanying condensed consolidated financial statements contain all normal and recurring adjustments necessary to present fairly the financial position of the Company as of September 30, 2015 and the results of operations for the three and nine month periods ended September 30, 2015 and 2014, statements of comprehensive income (loss) for the three and nine month periods ended September 30, 2015 and 2014, cash flows for the nine month periods ended September 30, 2015 and 2014 and changes in shareholders’ equity for the nine month period ended September 30, 2015. The December 31, 2014 condensed consolidated balance sheet has been derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2014 and for the year then ended included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The results for the nine month periods ended September 30, 2015 are not necessarily indicative of the results for the entire year. Systemax manages its business and reports using a 52-53 week fiscal year that ends at midnight on the Saturday closest to December 31. For clarity of presentation herein, fiscal years and quarters are referred to as if they ended on the traditional calendar month. The actual fiscal third quarter ended on September 26, 2015. The third quarters of both 2015 and 2014 included 13 weeks and the first nine months of both 2015 and 2014 included 26 weeks. |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2015 | |
Acquisition [Abstract] | |
Acquisition | 2. Acquisition On January 30, 2015, the Company’s Industrial Products group (“IPG”) acquired all of the outstanding equity interests of the Plant Equipment Group (“P.E.G.”) from TAKKT America, a business-to-business direct marketer of maintenance, repair and operations (“MRO”) products with operations in North America and Mexico for approximately $25.9 million in cash, $1.9 million of which was placed into an escrow account for one year to secure the sellers’ indemnification obligations under the purchase agreement. The Company completed a preliminary allocation of the purchase price as of the acquisition date and recorded assets of approximately $4.1 million for trade and domain names, $2.1 million for client lists, $0.8 million for favorable leases and $5.8 million of residual goodwill. The Company expects to amortize its client lists over a 5 to 10 year period and the favorable leases over a 3 to 6 year period. All other assets have indefinite lives. This acquisition expands the IPG segment presence in the MRO market in North America. The P.E.G. accounts are included in the IPG segment in the accompanying condensed consolidated statement of operations from the date of acquisition. This acquisition was not considered to be a material acquisition for financial reporting purposes. |
Net Income (Loss) per Common Sh
Net Income (Loss) per Common Share | 9 Months Ended |
Sep. 30, 2015 | |
Net Income (Loss) per Common Share [Abstract] | |
Net Income (Loss) per Common Share | 3. Net Income (Loss) per Common Share Net income (loss) 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 (loss) per common share - diluted was calculated based upon the weighted average number of common shares outstanding and included the equivalent shares for dilutive options and restricted stock awards 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. In periods when the Company recognizes a net loss, the Company excludes the impact of outstanding stock awards from the diluted loss per share calculation as their inclusion would have an antidilutive effect. The weighted average number of stock options outstanding included in the computation of diluted earnings (loss) per share was zero shares for the three and nine months ended September 30, 2015 and 2014, respectively. The weighted average number of restricted stock awards included in the computation of diluted earnings (loss) per share was zero shares for the three and nine month periods ended September 30, 2015 and 2014, respectively. The weighted average number of stock options excluded from the computation of diluted earnings (loss) per share was 1.0 million and 0.8 million shares for the three months ended September 30, 2015 and 2014, respectively, and 1.0 million and 0.3 million shares for the nine months ended September 30, 2015 and 2014, respectively, due to their antidilutive effect. |
Credit Facilities and Long Term
Credit Facilities and Long Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Credit Facilities and Long Term Debt [Abstract] | |
Credit Facilities and Long Term Debt | 4. Credit Facilities and Long Term Debt At September 30, 2015 the Company maintained 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 was scheduled to expire in October 2015 and the Company entered into an amended and restated revolving credit facility on October 13, 2015. The new facility has a maturity date of October 31, 2016. 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 September 30, 2015, eligible collateral under the agreement was $108.9 million, total availability was $102.8 million, total outstanding letters of credit were $6.1 million and there were no outstanding borrowings. The Company was in compliance with all of the covenants under this facility as of September 30, 2015. 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 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 of September 30, 2015, there was approximately $0.6 million outstanding against this financing facility. This facility was paid off in November 2015. |
Special Charges
Special Charges | 9 Months Ended |
Sep. 30, 2015 | |
Special Charges [Abstract] | |
Special Charges | 5. Special Charges The Company’s North America Technology Products Group (“NATG”) segment incurred special charges of approximately $2.6 million in the third quarter of 2015 relating to the exit from the retail store business and continued transition of its operations Charges incurred included approximately $2.2 million related to updating our future lease cash flows of our exited distribution facility and retail stores (present value of contractual gross lease payments net of sublease rental income, or settlement amount), $0.1 million for consulting and severance expenses and of $0.1 million. For the nine month periods ended September 30, 2015, Accounts payable, Additionally , in the third quarter, NATG incurred $0.4 million of professional costs, net of $0.2 million from a recovery settlement former NATG executives . EMEA Technology Products Group (“EMEA”) segment incurred special charges of approximately $0.7 million in the second quarter of 2015 related to the previously disclosed exit of the Chief Executive of the EMEA Technology operations. Amounts related to this action that are unpaid at September 30, 2015 are recorded in Accrued expenses and other current liabilities in the accompanying Condensed Consolidated Balance Sheets. The following table details the associated liabilities related to the Technology Products segments special charges (in millions): EMEA - Workforce reductions and personnel costs NATG – Workforce reductions NATG – Lease liabilities and other exit costs Total Balance January 1, 2015 $ 4.7 $ - $ - $ 4.7 Charged to expense 0.5 2.9 29.1 32.5 Paid or otherwise settled (4.0 ) (2.6 ) (11.2 ) (17.8 ) Balance September 30, 2015 $ 1.2 $ 0.3 $ 17.9 $ 19.4 The Company conducted an evaluation of its long-lived assets in its Germany operations, in the first quarter of 2015, and as a result of negative cash flows in 2015 and a forecast for continued cash use, concluded that those assets were impaired. As a result, an impairment charge of approximately $0.3 million was recorded in the first quarter of 2015 to adjust the long- lived assets to fair market value. IPG incurred special charges of approximately $0.4 million in the first quarter of 2015 related to severance costs associated with the integration of P.E.G. The unpaid severance cost is included in the Condensed Consolidated Balance Sheet within accrued expenses and will be settled within the year. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information [Abstract] | |
Segment Information | 6. Segment Information Systemax is primarily a direct marketer of brand name and private label products. Our operations are organized into three reportable business segments - Industrial Products Group (“IPG”), EMEA Technology Products Group (“EMEA”) and North America Technology Products Group (“NATG”). IPG sells a wide array of MRO industrial products and supplies which are marketed in North America. Most of these products are manufactured by other companies; however, the Company does offer a selection of products that are manufactured for our own design and marketed on a private label basis. EMEA sells products categorized as Information and Communications Technology (“ICT”) and Consumer Electronics (“CE”). These products include computers, computer supplies and consumer electronics which are marketed in Europe. Substantially all of these products are manufactured by other companies; however, the Company does offer a selection of products that are manufactured for our own design and marketed on a private label basis. NATG sells ICT and CE which are marketed in North America and Puerto Rico. Substantially all of these products are manufactured by other companies; however, the Company does offer a selection of products that are manufactured for our own design and marketed on a private label basis. The Company’s chief operating decision-maker is the Company’s Chief Executive Officer (“CEO”). The CEO, in his role as Chief Operating Decision Maker (“CODM”), evaluates segment performance based on operating income (loss). The CODM 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. Corporate costs not identified with the disclosed segments are grouped as “Corporate and other expenses”. The IPG, EMEA and NATG segments sell dissimilar products. IPG products are generally higher in price, lower in volume and higher in product margin. EMEA and NATG products are generally higher in volume, lower in price and lower in product margin as compared to IPG. This results in higher operating margin for the IPG segment. Each segment incurs specifically identifiable selling, general and administrative expenses, with the selling, general and administrative expenses for the IPG segment being higher as a percentage of sales than those of the EMEA and NATG segments as a result of the IPG segment having a longer selling cycle for its business customers and a business model requiring greater advertising expenditures than the EMEA and NATG segments. Additionally, the IPG segment’s vendors generally do not provide funding to offset its marketing expenses. Financial information relating to the Company’s operations by reportable segment was as follows (in millions): Three Months Ended September 30 Nine Months Ended September 30 2015 2014 2015 2014 Net sales: IPG $ 180.1 $ 142.7 $ 519.9 $ 413.9 EMEA 241.8 279.2 767.0 879.3 NATG 276.1 402.0 934.0 1,232.3 Corporate and other 1.3 1.5 4.2 4.4 Consolidated $ 699.3 $ 825.4 $ 2,225.1 $ 2,529.9 Operating income (loss): IPG $ 10.3 $ 10.6 $ 34.0 $ 32.7 EMEA (1.8 ) (7.9 ) (8.2 ) (14.1 ) NATG (12.9 ) (1.8 ) (68.2 ) (15.4 ) Corporate and other expenses (3.8 ) (3.6 ) (13.8 ) (12.6 ) Consolidated $ (8.2 ) $ (2.7 ) $ (56.2 ) $ (9.4 ) Financial information relating to the Company’s operations by geographic area was as follows (in millions): Three Months Ended September 30 Nine Months Ended September 30 2015 2014 2015 2014 Net sales: United States $ 431.8 $ 500.3 $ 1,360.6 $ 1,510.0 United Kingdom 82.3 114.1 263.0 371.8 France 82.4 82.9 264.4 274.4 Other Europe 77.1 82.2 239.6 233.1 Other North America 25.7 45.9 97.5 140.6 Consolidated $ 699.3 $ 825.4 $ 2,225.1 $ 2,529.9 Revenue is attributed to countries based on the location of the selling subsidiary. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | 7. 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. At September 30, 2015 and 2014, 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 be representative of its fair value because of its variable interest rate. The fair value of our reporting units with respect to goodwill, non-amortizing intangibles and long-lived assets is measured in connection with the Company’s annual impairment testing. The Company performs a qualitative assessment of goodwill and non-amortizing intangibles to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the qualitative assessment shows that the fair value of the reporting unit exceeds its carrying amount, the company is not required to complete the annual two step goodwill impairment test. If a quantitative analysis is required to be performed 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. Long-lived assets are assets used in the Company’s operations and include leasehold improvements, warehouse and retail store fixtures and similar property used to generate sales and cash flows. Long-lived assets are tested for impairment utilizing a recoverability test. The recoverability test compares the carrying value of an asset group to the undiscounted cash flows directly attributable to the asset group over the life of the primary asset. If the undiscounted cash flows of an asset group is less than the carrying value of the asset group, the fair value of the asset group is then measured. If the fair value is also determined to be less than the carrying value of the asset group, the asset group is impaired. In the first quarter of 2015, the Company’s evaluation of certain long-lived assets in the EMEA and NATG segments concluded that certain long lived assets were impaired and aggregated impairment charges of approximately $0.6 million were recorded within special charges. Due to continued losses within the NATG segment, in the second quarter of 2015, an additional impairment charge of approximately $0.7 million was recorded within selling, general and administrative expenses. In the third quarter of 2015, NATG segment recorded of $0.1 million. |
Legal Proceedings
Legal Proceedings | 9 Months Ended |
Sep. 30, 2015 | |
Legal Proceedings [Abstract] | |
Legal Proceedings | 8. Legal Proceedings The Company and its subsidiaries from time to time are involved in various lawsuits, claims, investigations and proceedings including commercial, employment, consumer, real estate, 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 or that are incorporated in the Company's e-commerce sales channel. 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. The Company intends to vigorously defend these matters and believes it has strong defenses. The Company is also being audited by an entity representing 45 states seeking recovery of “unclaimed property”. The Company is complying with the audit and is providing requested information. 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 position 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. In this regard, the Company establishes accrual estimates for its various lawsuits, claims, investigations and proceedings when it is probable that an asset has been impaired or a liability incurred at the date of the financial statements and the loss can be reasonably estimated. At September 30, 2015 the Company has established accruals for certain of its various lawsuits, claims, investigations and proceedings based upon estimates of the most likely outcome in a range of loss or the minimum amounts in a range of loss if no amount within a range is a more likely estimate. The Company does not believe that at September 30, 2015 any reasonably possible losses in excess of the amounts accrued would be material to the financial statements. Following the previously reported independent investigation of Gilbert Fiorentino and Carl Fiorentino by our Audit Committee in 2011 (in response to a whistleblower report) for a variety of improper acts, the subsequent termination of their employment and the entering into by Gilbert Fiorentino of a settlement agreement with the Securities and Exchange Commission, on November 20, 2014 the United States Attorney’s Office (“USAO”) for the Southern District of Florida announced that Gilbert Fiorentino and Carl Fiorentino had been charged with mail fraud, wire fraud and money laundering in connection with a scheme to defraud TigerDirect and Systemax. Specifically, the charges set forth a scheme to obtain kickbacks and other benefits, and to conceal this illicit income from the IRS, all while Gilbert Fiorentino and Carl Fiorentino were employed as senior executives at the Company’s NATG business. On December 2, 2014, the United States Attorney’s Office announced that Gilbert Fiorentino and Carl Fiorentino had pled guilty to various charges, and on March 3, 2015, Gilbert Fiorentino and Carl Fiorentino were sentenced to sixty and eighty months’ imprisonment, respectively. The Company began the process of seeking restitution on April 29, 2015. The judge assigned consideration of certain elements of the Company's restitution claims to a magistrate judge. The hearing before the magistrate judge was completed in September 2015 and the Company is awaiting the ruling on those certain elements and its other restitution claims. The Company's Audit Committee, with the assistance of independent outside counsel, has been cooperating with a request by the USAO that it assist the USAO’s investigation into allegations arising from the Fiorentino investigation regarding possible executive officer conflicts of interest and internal controls and books and records violations. The Company’s Audit Committee, along with the Audit Committee’s independent outside counsel, conducted an investigation of the allegations and its counsel presented the Audit Committee’s findings to the USAO in July 2015. The Company has been advised that the Audit Committee investigation has found no evidence of executive officer conflicts of interest, and no material evidence of internal controls violations or books and records violations. The Audit Committee considers its investigation to be closed at this time and the Company has been advised there has been no further contact from the USAO. |
Special Charges (Tables)
Special Charges (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Special Charges [Abstract] | |
Special Charge Liabilities | The following table details the associated liabilities related to the Technology Products segments special charges (in millions): EMEA - Workforce reductions and personnel costs NATG – Workforce reductions NATG – Lease liabilities and other exit costs Total Balance January 1, 2015 $ 4.7 $ - $ - $ 4.7 Charged to expense 0.5 2.9 29.1 32.5 Paid or otherwise settled (4.0 ) (2.6 ) (11.2 ) (17.8 ) Balance September 30, 2015 $ 1.2 $ 0.3 $ 17.9 $ 19.4 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Information [Abstract] | |
Financial Information by Reportable Segment | Financial information relating to the Company’s operations by reportable segment was as follows (in millions): Three Months Ended September 30 Nine Months Ended September 30 2015 2014 2015 2014 Net sales: IPG $ 180.1 $ 142.7 $ 519.9 $ 413.9 EMEA 241.8 279.2 767.0 879.3 NATG 276.1 402.0 934.0 1,232.3 Corporate and other 1.3 1.5 4.2 4.4 Consolidated $ 699.3 $ 825.4 $ 2,225.1 $ 2,529.9 Operating income (loss): IPG $ 10.3 $ 10.6 $ 34.0 $ 32.7 EMEA (1.8 ) (7.9 ) (8.2 ) (14.1 ) NATG (12.9 ) (1.8 ) (68.2 ) (15.4 ) Corporate and other expenses (3.8 ) (3.6 ) (13.8 ) (12.6 ) Consolidated $ (8.2 ) $ (2.7 ) $ (56.2 ) $ (9.4 ) |
Financial Information by Geographic Area | Financial information relating to the Company’s operations by geographic area was as follows (in millions): Three Months Ended September 30 Nine Months Ended September 30 2015 2014 2015 2014 Net sales: United States $ 431.8 $ 500.3 $ 1,360.6 $ 1,510.0 United Kingdom 82.3 114.1 263.0 371.8 France 82.4 82.9 264.4 274.4 Other Europe 77.1 82.2 239.6 233.1 Other North America 25.7 45.9 97.5 140.6 Consolidated $ 699.3 $ 825.4 $ 2,225.1 $ 2,529.9 |
Acquisition (Details)
Acquisition (Details) - Plant Equipment Group [Member] - USD ($) $ in Millions | Jan. 30, 2015 | Sep. 30, 2015 |
Acquisition [Line Items] | ||
Payments to Acquire Businesses, Gross | $ 25.9 | |
Escrow deposit to secure sellers' indemnification obligations | $ 1.9 | |
Duration period of escrow deposit | 1 year | |
Goodwill and other intangibles recorded | $ 5.8 | |
Trade and Domain Names [Member] | ||
Acquisition [Line Items] | ||
Intangible assets acquired | 4.1 | |
Client Lists [Member] | ||
Acquisition [Line Items] | ||
Intangible assets acquired | 2.1 | |
Client Lists [Member] | Minimum [Member] | ||
Acquisition [Line Items] | ||
Intangible assets of weighted average useful life | 5 years | |
Client Lists [Member] | Maximum [Member] | ||
Acquisition [Line Items] | ||
Intangible assets of weighted average useful life | 10 years | |
Leases [Member] | ||
Acquisition [Line Items] | ||
Intangible assets acquired | $ 0.8 | |
Leases [Member] | Minimum [Member] | ||
Acquisition [Line Items] | ||
Intangible assets of weighted average useful life | 3 years | |
Leases [Member] | Maximum [Member] | ||
Acquisition [Line Items] | ||
Intangible assets of weighted average useful life | 6 years |
Net Income (Loss) per Common 18
Net Income (Loss) per Common Share (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Option [Member] | ||||
Weighted Average Number of Shares Outstanding Reconciliation [Line Items] | ||||
Weighted average number of awards outstanding for computation of diluted earnings (loss) per share (in shares) | 0 | 0 | 0 | 0 |
Weighted average number of awards outstanding excluded from the computation of diluted earnings (loss) per share (in shares) | 1 | 0.8 | 1 | 0.3 |
Restricted Stock [Member] | ||||
Weighted Average Number of Shares Outstanding Reconciliation [Line Items] | ||||
Weighted average number of awards outstanding for computation of diluted earnings (loss) per share (in shares) | 0 | 0 | 0 | 0 |
Weighted average number of awards outstanding excluded from the computation of diluted earnings (loss) per share (in shares) | 0 | 0 | 0 | 0 |
Credit Facilities and Long Te19
Credit Facilities and Long Term Debt (Details) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Recovery Zone Facility Bond [Member] | |
Line of Credit Facility [Line Items] | |
Maturity date | Oct. 1, 2018 |
Capital equipment lease maturity date | Oct. 1, 2018 |
Additional amount to be paid over principal and interest to acquire ownership | $ 1 |
Long-term debt, outstanding amount | 600,000 |
Systemax Inc. [Member] | |
Line of Credit Facility [Line Items] | |
Secured revolving credit agreement, current borrowing capacity | 125,000,000 |
Secured revolving credit agreement, maximum borrowing capacity | $ 200,000,000 |
Credit facility, maturing date | Oct. 31, 2016 |
Percentage of eligible accounts receivable for borrowings, maximum | 85.00% |
Percentage of qualified inventories for borrowings, maximum | 40.00% |
Eligible collateral letters of credit | $ 108,900,000 |
Availability under line of credit | 102,800,000 |
Total outstanding letters of credit | 6,100,000 |
Outstanding borrowings | $ 0 |
Special Charges (Details)
Special Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Special Charges [Abstract] | ||||||
Special charges | $ 2.6 | $ 1.7 | $ 36.4 | $ 10.1 | ||
Asset impairment charges, net recoveries | (0.1) | |||||
Asset impairment charges | 1 | $ 0.1 | ||||
EMEA Technology Products Group [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | $ 0.7 | |||||
EMEA Technology Products Group [Member] | Workforce Reductions and Personnel Costs [Member] | ||||||
Special Charges [Abstract] | ||||||
Balance beginning of period | $ 4.7 | 4.7 | ||||
Charged to expense | 0.5 | |||||
Paid or otherwise settled | (4) | |||||
Balance end of period | 1.2 | 1.2 | ||||
North America Technology Products Group [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | 2.6 | 35 | ||||
Asset impairment charges, net recoveries | (0.1) | |||||
Asset impairment charges, net | 0.1 | |||||
Lease termination costs | 26.4 | |||||
Recovery settlement | (0.2) | |||||
North America Technology Products Group [Member] | Workforce Reductions and Personnel Costs [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | 2.9 | |||||
North America Technology Products Group [Member] | Workforce Reductions [Member] | ||||||
Special Charges [Abstract] | ||||||
Balance beginning of period | 0 | 0 | ||||
Charged to expense | 2.9 | |||||
Paid or otherwise settled | (2.6) | |||||
Balance end of period | 0.3 | 0.3 | ||||
North America Technology Products Group [Member] | Lease Liabilities and Other Exit Costs [Member] | ||||||
Special Charges [Abstract] | ||||||
Balance beginning of period | 0 | 0 | ||||
Charged to expense | 29.1 | |||||
Paid or otherwise settled | (11.2) | |||||
Balance end of period | 17.9 | 17.9 | ||||
North America Technology Products Group [Member] | Consulting and Severance Expenses [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | 0.1 | |||||
North America Technology Products Group [Member] | Consulting Expenses [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | 2.5 | |||||
North America Technology Products Group [Member] | Professional Costs [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | 0.4 | 3.1 | ||||
North America Technology Products Group [Member] | Updating Future Lease Cash Flows of Distribution Facility and Retail Stores [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | 2.2 | |||||
Technology Products [Member] | ||||||
Special Charges [Abstract] | ||||||
Balance beginning of period | 4.7 | 4.7 | ||||
Charged to expense | 32.5 | |||||
Paid or otherwise settled | (17.8) | |||||
Balance end of period | $ 19.4 | $ 19.4 | ||||
Technology Products [Member] | Germany [Member] | ||||||
Special Charges [Abstract] | ||||||
Asset impairment charges | 0.3 | |||||
Industrial Products Group [Member] | Severance [Member] | ||||||
Special Charges [Abstract] | ||||||
Special charges | $ 0.4 |
Segment Information, by Reporta
Segment Information, by Reportable Segments (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Segment | Sep. 30, 2014USD ($) | |
Segment Information [Abstract] | ||||
Number of reportable segments | Segment | 3 | |||
Net sales [Abstract] | ||||
Net sales | $ 699.3 | $ 825.4 | $ 2,225.1 | $ 2,529.9 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | (8.2) | (2.7) | (56.2) | (9.4) |
Reportable Segments [Member] | Industrial Products Group [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 180.1 | 142.7 | 519.9 | 413.9 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | 10.3 | 10.6 | 34 | 32.7 |
Reportable Segments [Member] | EMEA Technology Products Group [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 241.8 | 279.2 | 767 | 879.3 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | (1.8) | (7.9) | (8.2) | (14.1) |
Reportable Segments [Member] | North America Technology Products Group [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 276.1 | 402 | 934 | 1,232.3 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | (12.9) | (1.8) | (68.2) | (15.4) |
Corporate and Other [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 1.3 | 1.5 | 4.2 | 4.4 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | $ (3.8) | $ (3.6) | $ (13.8) | $ (12.6) |
Segment Information by Geograph
Segment Information by Geographic Area (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Net sales [Abstract] | ||||
Consolidated net sales | $ 699.3 | $ 825.4 | $ 2,225.1 | $ 2,529.9 |
United States [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 431.8 | 500.3 | 1,360.6 | 1,510 |
United Kingdom [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 82.3 | 114.1 | 263 | 371.8 |
France | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 82.4 | 82.9 | 264.4 | 274.4 |
Other Europe [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 77.1 | 82.2 | 239.6 | 233.1 |
Other North America [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | $ 25.7 | $ 45.9 | $ 97.5 | $ 140.6 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |
Fair Value Measurements [Abstract] | |||
Impairment Charge | $ 0.7 | $ 0.6 | |
Asset impairment charges, net recoveries | $ (0.1) |
Legal Proceedings (Details)
Legal Proceedings (Details) - State | Mar. 03, 2015 | Sep. 30, 2015 |
Legal Proceedings [Abstract] | ||
Number of states seeking recovery of unclaimed property | 45 | |
Duration of sentence given to Gilbert Fiorentino based on whistleblower report | 60 months | |
Duration of sentence given to Carl Fiorentino based on whistleblower report | 80 months |