Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 29, 2016 | |
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 | 36,914,293 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 165.2 | $ 215.1 |
Accounts receivable, net | 228 | 266.3 |
Inventories | 126.4 | 144.4 |
Prepaid expenses and other current assets | 9.9 | 14.5 |
Total current assets | 529.5 | 640.3 |
Property, plant and equipment, net | 34.4 | 38.3 |
Deferred income taxes | 7.1 | 8.6 |
Goodwill and intangibles | 18.4 | 18.8 |
Other assets | 3.8 | 4.1 |
Total assets | 593.2 | 710.1 |
Current liabilities: | ||
Accounts payable | 262.8 | 346.5 |
Accrued expenses and other current liabilities | 71.7 | 81.3 |
Current portion of long-term debt | 0.2 | 0.6 |
Total current liabilities | 334.7 | 428.4 |
Long-term debt | 0.1 | 0.4 |
Deferred income tax liability | 0.3 | 0.4 |
Other liabilities | 29.1 | 27 |
Total liabilities | 364.2 | 456.2 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock | 0 | 0 |
Common stock | 0.4 | 0.4 |
Additional paid-in capital | 185 | 184.4 |
Treasury stock | (24.1) | (24.5) |
Retained earnings | 84.7 | 109.4 |
Accumulated other comprehensive loss | (17) | (15.8) |
Total shareholders' equity | 229 | 253.9 |
Total liabilities and shareholders' equity | $ 593.2 | $ 710.1 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidated Statements of Operations (Unaudited) [Abstract] | ||||
Net sales | $ 420.8 | $ 454.1 | $ 850.6 | $ 966.2 |
Cost of sales | 339.3 | 367.6 | 685.7 | 792.6 |
Gross profit | 81.5 | 86.5 | 164.9 | 173.6 |
Selling, general & administrative expenses | 80.1 | 82.7 | 162.4 | 176.6 |
Special charges | 0.3 | 20.5 | 1.9 | 25.8 |
Operating income (loss) from continuing operations | 1.1 | (16.7) | 0.6 | (28.8) |
Foreign currency exchange (income) loss | 0.6 | (1.4) | (0.7) | 6.6 |
Interest and other income, net | 0.4 | 0.2 | 0.4 | 0.4 |
Income (loss) from continuing operations before income taxes | 0.1 | (15.5) | 0.9 | (35.8) |
Provision for income taxes | 2.1 | 1.2 | 4 | 2.7 |
Net income (loss) from continuing operations | (2) | (16.7) | (3.1) | (38.5) |
Loss from discontinued operations, net of tax | (5.4) | (11.7) | (21.6) | (18.5) |
Net income (loss) | $ (7.4) | $ (28.4) | $ (24.7) | $ (57) |
Basic and diluted EPS: | ||||
Net income (loss) per share from continuing operations (in dollars per share) | $ (0.05) | $ (0.45) | $ (0.08) | $ (1.04) |
Net income (loss) per share from discontinued operations (in dollars per share) | (0.15) | (0.32) | (0.58) | (0.50) |
Net income (loss) per share, basic and diluted (in dollars per share) | $ (0.20) | $ (0.77) | $ (0.66) | $ (1.54) |
Weighted average common and common equivalent shares: | ||||
Basic and diluted (in shares) | 37.2 | 37.1 | 37.2 | 37.1 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidation Statements of Comprehensive Income (loss) [Abstract] | ||||
Net income (loss) | $ (7.4) | $ (28.4) | $ (24.7) | $ (57) |
Other comprehensive income (loss): | ||||
Foreign currency translation | (2.7) | 3.5 | (1.2) | (1.5) |
Total comprehensive loss | $ (10.1) | $ (24.9) | $ (25.9) | $ (58.5) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Income (loss) from continuing operations | $ (3.1) | $ (38.5) |
Adjustments to reconcile income (loss) from continuing operations to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 4 | 4.7 |
Other non-cash charges (benefit) and asset impairment | (0.4) | 1.2 |
Provision for deferred income taxes | 0 | 0.6 |
Provision for doubtful accounts | 1.9 | 2.8 |
Compensation expense related to equity compensation plans | 1 | 0.9 |
Loss on disposition and abandonment | 0.1 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 35.8 | 29.6 |
Inventories | 18.2 | 47.4 |
Prepaid expenses and other current assets | 5 | 3 |
Income taxes payable (receivable) | 0.7 | (0.3) |
Accounts payable | (83.3) | (35.1) |
Accrued expenses, other current liabilities and other liabilities | (6.3) | 7.4 |
Net cash (used in) provided by operating activities from continuing operations | (26.4) | 23.7 |
Net cash used in operating activities from discontinued operations | (21) | (16.9) |
Net cash (used in) provided by operating activities | (47.4) | 6.8 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (1.9) | (5.4) |
Proceeds from disposals of property, plant and equipment | 0.1 | 0.9 |
Acquisitions net of cash acquired | 0 | (24.8) |
Net cash used in investing activities | (1.8) | (29.3) |
Cash flows from financing activities: | ||
Repayments of capital lease obligations | (0.2) | (1.2) |
Net cash used in financing activities | (0.2) | (1.2) |
Effects of exchange rates on cash | (0.5) | 2.7 |
Net decrease in cash | (49.9) | (21) |
Cash - beginning of period | 215.1 | 165 |
Cash - end of period | $ 165.2 | $ 144 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Shareholders' Equity (Unaudited) - 6 months ended Jun. 30, 2016 - USD ($) shares in Thousands, $ in Millions | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock, At Cost [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] |
Balances at Dec. 31, 2015 | $ 253.9 | $ 0.4 | $ 184.4 | $ (24.5) | $ 109.4 | $ (15.8) |
Balances (in shares) at Dec. 31, 2015 | 36,873 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation expense | 1 | 1 | ||||
Issuance of restricted stock | 0 | (0.4) | 0.4 | |||
Issuance of restricted stock (in shares) | 35 | |||||
Change in cumulative translation adjustment | (1.2) | (1.2) | ||||
Net income (loss) | (24.7) | (24.7) | ||||
Balances at Jun. 30, 2016 | $ 229 | $ 0.4 | $ 185 | $ (24.1) | $ 84.7 | $ (17) |
Balances (in shares) at Jun. 30, 2016 | 36,908 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2016 | |
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. As disclosed in our Form 10-K for the fiscal year 2015, the Company announced a restructuring of its North American Technology group (“NATG”) business in March 2015 and closed 31 retail stores and a warehouse during the second quarter of fiscal 2015. On December 1, 2015, the Company sold the NATG business and began the wind-down of its remaining NATG operations. The Company followed the guidance under 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, As a result, the former operations of NATG are now reported both within continuing operations and as discontinued operations. D 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 June 30, 2016 and the results of operations for the three and six month periods ended June 30, 2016 and 2015, statements of comprehensive income (loss) for the three and six month periods ended June 30, 2016 and 2015, cash flows for the six month periods ended June 30, 2016 and 2015 and changes in shareholders’ equity for the six month period ended June 30, 2016. The December 31, 2015 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, 2015. These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements as of December 31, 2015 and for the year then ended included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. The results for the six month periods ended June 30, 2016 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 second quarter ended on July 2, 2016. The second quarters of both 2016 and 2015 included 13 weeks and the first six months of both 2016 and 2015 included 26 weeks. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | 2. Discontinued Operations As previously stated, the NATG business has been discontinued and below is a reconciliation of pretax loss from discontinued operations to the net loss from discontinued operations. Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net sales $ (0.1 ) $ 285.9 $ 12.0 $ 559.6 Cost of sales 1.1 261.4 13.4 513.9 Gross profit (loss) (1.2 ) 24.5 (1.4 ) 45.7 Selling, general & administrative expenses 3.2 28.3 11.1 56.9 Special charges 1.4 8.0 9.3 8.0 Operating loss from discontinued operations (5.8 ) (11.8 ) (21.8 ) (19.2 ) Foreign currency exchange (gain) loss (0.1 ) - 0.4 (0.8 ) Interest and other income, net - - (0.3 ) - Loss from discontinued operations before income taxes (5.7 ) (11.8 ) (21.9 ) (18.4 ) Provision for (benefit from) income taxes (0.3 ) (0.1 ) (0.3 ) 0.1 Net loss from discontinued operations $ (5.4 ) $ (11.7 ) $ (21.6 ) $ (18.5 ) |
Net Income (Loss) per Common Sh
Net Income (Loss) per Common Share | 6 Months Ended |
Jun. 30, 2016 | |
Net Income (Loss) per Common Share [Abstract] | |
Net Income (Loss) per Common Share | 3. Net Income (Loss) 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. Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock of the Company outstanding would have been anti‑dilutive. The weighted average number of stock options and restricted stock awards outstanding excluded from the computation of diluted earnings (loss) per share was 1.3 million shares and 1.0 million shares for the three and six months ended June 30, 2016 and 2015, respectively, due to their antidilutive effect. |
Credit Facilities and Long Term
Credit Facilities and Long Term Debt | 6 Months Ended |
Jun. 30, 2016 | |
Credit Facilities and Long Term Debt [Abstract] | |
Credit Facilities and Long term Debt | 4. Credit Facilities and Long Term Debt 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 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 June 30, 2016, eligible collateral under the agreement was $44.4 million, total availability was $38.9 million, total outstanding letters of credit were $5.5 million and there were no outstanding borrowings. The Company was in compliance with all of the covenants under this facility as of June 30, 2016. |
Special Charges
Special Charges | 6 Months Ended |
Jun. 30, 2016 | |
Special Charges [Abstract] | |
Special Charges | 5. Special Charges The Company’s NATG segment incurred special charges during the quarter of approximately $1.7 million, of which $0.3 million is included in continuing operations and $1.4 million is included in discontinued operations. Charges incurred included approximately $2.8 million for lease termination and other exit costs for the closing of the NATG corporate headquarters, approximately $0.1 million of professional costs offset by approximately $1.1 million benefit related to the settlement of vendor obligations and $0.1 million benefit from reversal of previously accrued severances. The Company’s NATG segment incurred special charges for the six months ended June 30, 2016 of approximately $11.2 million, of which $1.9 million is included in continuing operations and $9.3 million is included in discontinued operations. Charges incurred included approximately $9.8 million for lease terminations and other exit costs for the closing of the two remaining retail stores, a distribution center and the NATG corporate headquarters in 2016 and approximately $1.9 million related to additional lease termination costs of our previously exited retail stores (present value of contractual gross lease payments net of sublease rental income, or settlement amount). NATG also incurred approximately $0.2 million of professional costs, offset by approximately $1.1 million benefit related to the settlement of vendor obligations and approximately $0.4 million received when PCM Inc. exercised its option to acquire the consumer customer lists and related information of the NATG business. The following table details the associated liabilities related to the former NATG segments special charges (in millions): EMEA - Workforce NATG – Workforce reductions NATG – Lease liabilities and other exit costs Total Balance January 1, 2016 $ 0.3 $ 2.7 $ 16.3 $ 19.3 Charged to expense - 0.2 15.6 15.8 Paid or otherwise settled (0.3 ) (2.4 ) (9.0 ) (11.7 ) Balance June 30, 2016 $ - $ 0.5 $ 22.9 $ 23.4 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2016 | |
Segment Information [Abstract] | |
Segment Information | 6. Segment Information Since the December 2015 sale of the NATG business, the Company has operated and is internally managed in two reportable business segments— Industrial Products Group (“IPG”) and EMEA Technology Products Group (“EMEA”). Smaller business operations and corporate functions are aggregated and reported as the additional segment – Corporate and Other (“Corporate”). As previously stated in December 2015, the Company sold certain assets and liabilities of the NATG business and since that time has been winding down the NATG business. This wind-down was substantially completed during the second quarter of 2016, other than collecting accounts receivable and settling other remaining lease obligations and other contingencies. IPG sells a wide array of MRO products 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 to 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. Most of these products are manufactured by other companies; however, the Company does offer a selection of products that are manufactured to our own design and marketed on a private label basis. As disclosed above, the NATG business was discontinued and the Company . The NATG segment sold products categorized as ICT and CE products which were marketed in the United States, Canada and Puerto Rico. Most of these products were manufactured by other companies; however, the Company did offer a selection of products that were manufactured to 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) from continuing operations. 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 (while it was in operation) 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 continuing operations by reportable segment was as follows (in millions): Three Months Ended June 30 Six Months Ended June 30 2016 2015 2016 2015 Net sales: IPG $ 181.8 $ 180.9 $ 352.4 $ 339.8 EMEA 238.1 252.6 496.3 525.2 NATG - 19.2 - 98.3 Corporate and other 0.9 1.4 1.9 2.9 Consolidated $ 420.8 $ 454.1 $ 850.6 $ 966.2 Operating income (loss): IPG $ 8.6 $ 14.0 $ 16.5 $ 23.7 EMEA (2.4 ) (1.6 ) (3.2 ) (6.4 ) NATG (0.6 ) (23.8 ) (2.4 ) (36.1 ) Corporate and other expenses (4.5 ) (5.3 ) (10.3 ) (10.0 ) Consolidated $ 1.1 $ (16.7 ) $ 0.6 $ (28.8 ) Financial information relating to the Company’s continuing operations by geographic area was as follows (in millions): Three Months Ended June 30 Six Months Ended June 30 2016 2015 2016 2015 Net sales: United States $ 175.4 $ 189.8 $ 341.0 $ 409.8 France 103.7 90.6 203.8 182.0 United Kingdom 59.1 81.3 132.3 180.7 Other Europe 75.3 80.7 160.2 162.5 Other North America 7.3 11.7 13.3 31.2 Consolidated $ 420.8 $ 454.1 $ 850.6 $ 966.2 Revenue is attributed to countries based on the location of the selling subsidiary. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016 and 2015, 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. Cash is classified as Level 1 within the fair value hierarchy. 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 definite-lived intangible assets, 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. |
Legal Proceedings
Legal Proceedings | 6 Months Ended |
Jun. 30, 2016 | |
Legal Proceedings [Abstract] | |
Legal Proceedings | 8. Legal Proceedings The Company and its subsidiaries are from time to time involved in various lawsuits, claims, investigations and proceedings which may include commercial, employment, customer, personal injury and health and safety law matters, and which are handled and defended in the ordinary course of business. In addition, the Company is from time to time subjected to various assertions, claims, proceedings and requests for damages and/or indemnification concerning intellectual property matters, 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 channels. 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. The Company is also being audited by an entity representing 43 states seeking recovery of “unclaimed property”. The Company is complying with the unclaimed property audit and is providing requested information. The Company intends to vigorously defend these matters and believes it has strong defenses. 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 regularly 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 June 30, 2016 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 June 30, 2016 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's Audit Committee, with the assistance of independent outside counsel, cooperated 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 was advised that the Audit Committee investigation 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. Notwithstanding, it is not possible at this time to predict if or when the USAO will conclude its investigation; what subject(s) will be investigated; what actions, if any, may be taken by the government as a result of its investigation; or whether any of these matters will have a material adverse impact on the Company . |
Subsequent Event
Subsequent Event | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Event [Abstract] | |
Subsequent Events [Text Block] | 9. Subsequent Event In July 2016 the Company announced that it had signed a definitive agreement under which the buyer would acquire certain assets of its Misco Germany branch, including customer relationships and the hiring of its employees. The transaction, which is subject to certain closing conditions, is expected to close in the third quarter of 2016. |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Discontinued Operations [Abstract] | |
Reconciliation of Pretax Loss of Discontinued Operations to Loss of Discontinued Operations | As previously stated, the NATG business has been discontinued and below is a reconciliation of pretax loss from discontinued operations to the net loss from discontinued operations. Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Net sales $ (0.1 ) $ 285.9 $ 12.0 $ 559.6 Cost of sales 1.1 261.4 13.4 513.9 Gross profit (loss) (1.2 ) 24.5 (1.4 ) 45.7 Selling, general & administrative expenses 3.2 28.3 11.1 56.9 Special charges 1.4 8.0 9.3 8.0 Operating loss from discontinued operations (5.8 ) (11.8 ) (21.8 ) (19.2 ) Foreign currency exchange (gain) loss (0.1 ) - 0.4 (0.8 ) Interest and other income, net - - (0.3 ) - Loss from discontinued operations before income taxes (5.7 ) (11.8 ) (21.9 ) (18.4 ) Provision for (benefit from) income taxes (0.3 ) (0.1 ) (0.3 ) 0.1 Net loss from discontinued operations $ (5.4 ) $ (11.7 ) $ (21.6 ) $ (18.5 ) |
Special Charges (Tables)
Special Charges (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Special Charges [Abstract] | |
Special Charge Liabilities | The following table details the associated liabilities related to the former NATG segments special charges (in millions): EMEA - Workforce NATG – Workforce reductions NATG – Lease liabilities and other exit costs Total Balance January 1, 2016 $ 0.3 $ 2.7 $ 16.3 $ 19.3 Charged to expense - 0.2 15.6 15.8 Paid or otherwise settled (0.3 ) (2.4 ) (9.0 ) (11.7 ) Balance June 30, 2016 $ - $ 0.5 $ 22.9 $ 23.4 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Information [Abstract] | |
Financial Information by Reportable Segment | Financial information relating to the Company’s continuing operations by reportable segment was as follows (in millions): Three Months Ended June 30 Six Months Ended June 30 2016 2015 2016 2015 Net sales: IPG $ 181.8 $ 180.9 $ 352.4 $ 339.8 EMEA 238.1 252.6 496.3 525.2 NATG - 19.2 - 98.3 Corporate and other 0.9 1.4 1.9 2.9 Consolidated $ 420.8 $ 454.1 $ 850.6 $ 966.2 Operating income (loss): IPG $ 8.6 $ 14.0 $ 16.5 $ 23.7 EMEA (2.4 ) (1.6 ) (3.2 ) (6.4 ) NATG (0.6 ) (23.8 ) (2.4 ) (36.1 ) Corporate and other expenses (4.5 ) (5.3 ) (10.3 ) (10.0 ) Consolidated $ 1.1 $ (16.7 ) $ 0.6 $ (28.8 ) |
Financial Information by Geographic Area | Financial information relating to the Company’s continuing operations by geographic area was as follows (in millions): Three Months Ended June 30 Six Months Ended June 30 2016 2015 2016 2015 Net sales: United States $ 175.4 $ 189.8 $ 341.0 $ 409.8 France 103.7 90.6 203.8 182.0 United Kingdom 59.1 81.3 132.3 180.7 Other Europe 75.3 80.7 160.2 162.5 Other North America 7.3 11.7 13.3 31.2 Consolidated $ 420.8 $ 454.1 $ 850.6 $ 966.2 |
Basis of Presentation (Details)
Basis of Presentation (Details) - NATG [Member] - Store | Dec. 01, 2015 | Jun. 30, 2016 | Jun. 30, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of retail stores closed | 31 | ||
Number of remaining stores | 3 | 0 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Reconciliation of Pretax Profit (Loss) of Discontinued Operations to After-Tax Profit or Loss of Discontinued Operations [Abstract] | ||||
Net loss from discontinued operations | $ (5.4) | $ (11.7) | $ (21.6) | $ (18.5) |
NATG [Member] | ||||
Reconciliation of Pretax Profit (Loss) of Discontinued Operations to After-Tax Profit or Loss of Discontinued Operations [Abstract] | ||||
Net sales | (0.1) | 285.9 | 12 | 559.6 |
Cost of sales | 1.1 | 261.4 | 13.4 | 513.9 |
Gross profit (loss) | (1.2) | 24.5 | (1.4) | 45.7 |
Selling, general & administrative expenses | 3.2 | 28.3 | 11.1 | 56.9 |
Special charges | 1.4 | 8 | 9.3 | 8 |
Operating loss from discontinued operations | (5.8) | (11.8) | (21.8) | (19.2) |
Foreign currency exchange (gain) loss | (0.1) | 0 | 0.4 | (0.8) |
Interest and other income, net | 0 | 0 | (0.3) | 0 |
Loss from discontinued operations before income taxes | (5.7) | (11.8) | (21.9) | (18.4) |
Provision for (benefit from) income taxes | (0.3) | (0.1) | (0.3) | 0.1 |
Net loss from discontinued operations | $ (5.4) | $ (11.7) | $ (21.6) | $ (18.5) |
Net Income (Loss) per Common 21
Net Income (Loss) per Common Share (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net Income (Loss) per Common Share [Abstract] | ||||
Weighted average number of awards outstanding excluded from the computation of diluted earnings (loss) per share (in shares) | 1.3 | 1 | 1.3 | 1 |
Credit Facilities and Long Te22
Credit Facilities and Long Term Debt (Details) - Group f Financial Institutions [Member] - Secured Revolving Credit Facility [Member] $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Line of Credit Facility [Line Items] | |
Secured revolving credit agreement, maximum borrowing capacity | $ 125 |
Line of credit facility optional maximum borrowing capacity subject to conditions | $ 200 |
Credit facility, maturing date | Oct. 31, 2016 |
Eligible collateral under the credit facility | $ 44.4 |
Availability under line of credit | 38.9 |
Total outstanding letters of credit | 5.5 |
Outstanding borrowings | $ 0 |
Maximum [Member] | |
Line of Credit Facility [Line Items] | |
Percentage of eligible accounts receivable for borrowings | 85.00% |
Percentage of qualified inventories for borrowings | 40.00% |
Special Charges (Details)
Special Charges (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)Store | Jun. 30, 2015USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | $ 0.3 | $ 20.5 | $ 1.9 | $ 25.8 |
NATG [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | 1.7 | 11.2 | ||
Special charges in continuing operations | 0.3 | 1.9 | ||
Special charges discontinued operations | 1.4 | 9.3 | ||
Lease termination costs | 2.8 | $ 9.8 | ||
Number of retail stores closed | Store | 2 | |||
Settlement of vendor obligations | (1.1) | $ (1.1) | ||
Reversal of previously accrued severances | (0.1) | |||
NATG [Member] | Minimum [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Additional charges | 1 | |||
NATG [Member] | Maximum [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Additional charges | 2 | |||
NATG [Member] | Consumer Customer Lists [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Cash received for consumer customer list | 0.4 | |||
Technology Products [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance beginning of period | 19.3 | |||
Charged to expense | 15.8 | |||
Paid or otherwise settled | (11.7) | |||
Balance end of period | 23.4 | 23.4 | ||
Workforce Reductions and Personnel Costs [Member] | EMEA Technology Products Group [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance beginning of period | 0.3 | |||
Charged to expense | 0 | |||
Paid or otherwise settled | (0.3) | |||
Balance end of period | 0 | 0 | ||
Workforce Reductions [Member] | NATG [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance beginning of period | 2.7 | |||
Charged to expense | 0.2 | |||
Paid or otherwise settled | (2.4) | |||
Balance end of period | 0.5 | 0.5 | ||
Lease Liabilities and Other Exit Costs [Member] | NATG [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Balance beginning of period | 16.3 | |||
Charged to expense | 15.6 | |||
Paid or otherwise settled | (9) | |||
Balance end of period | 22.9 | 22.9 | ||
Consulting Expenses [Member] | NATG [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | 0.6 | |||
Professional Costs [Member] | NATG [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | $ 0.1 | 0.2 | ||
Severance [Member] | NATG [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | 0.2 | |||
Additional Lease Termination Costs of Previously Exited Retail Stores [Member] | NATG [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Special charges | $ 1.9 |
Segment Information, by Reporta
Segment Information, by Reportable Segments (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)Segment | Jun. 30, 2015USD ($) | |
Segment Information [Abstract] | ||||
Number of reportable segments | Segment | 2 | |||
Net sales [Abstract] | ||||
Net sales | $ 420.8 | $ 454.1 | $ 850.6 | $ 966.2 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | 1.1 | (16.7) | 0.6 | (28.8) |
Reportable Segments [Member] | IPG [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 181.8 | 180.9 | 352.4 | 339.8 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | 8.6 | 14 | 16.5 | 23.7 |
Reportable Segments [Member] | EMEA [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 238.1 | 252.6 | 496.3 | 525.2 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | (2.4) | (1.6) | (3.2) | (6.4) |
Reportable Segments [Member] | NATG [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 0 | 19.2 | 0 | 98.3 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | (0.6) | (23.8) | (2.4) | (36.1) |
Corporate and Other [Member] | ||||
Net sales [Abstract] | ||||
Net sales | 0.9 | 1.4 | 1.9 | 2.9 |
Operating income (loss) [Abstract] | ||||
Operating income (loss) | $ (4.5) | $ (5.3) | $ (10.3) | $ (10) |
Segment Information by Geograph
Segment Information by Geographic Area (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Net sales [Abstract] | ||||
Consolidated net sales | $ 420.8 | $ 454.1 | $ 850.6 | $ 966.2 |
Reportable Geographical Components [Member] | United States [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 175.4 | 189.8 | 341 | 409.8 |
Reportable Geographical Components [Member] | France | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 103.7 | 90.6 | 203.8 | 182 |
Reportable Geographical Components [Member] | United Kingdom [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 59.1 | 81.3 | 132.3 | 180.7 |
Reportable Geographical Components [Member] | Other Europe [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | 75.3 | 80.7 | 160.2 | 162.5 |
Reportable Geographical Components [Member] | Other North America [Member] | ||||
Net sales [Abstract] | ||||
Consolidated net sales | $ 7.3 | $ 11.7 | $ 13.3 | $ 31.2 |
Legal Proceedings (Details)
Legal Proceedings (Details) $ in Millions | Mar. 01, 2016USD ($) | Mar. 03, 2015 | Jun. 30, 2016State |
Legal Proceedings [Abstract] | |||
Number of states seeking recovery of unclaimed property | State | 43 | ||
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 | ||
Duration of supervised release to Gilbert Fiorentino for whistleblower report | 36 months | ||
Duration of supervised release to Carl Fiorentino for whistleblower report | 36 months | ||
Restitution from Gilbert and Carl Fiorentino | $ | $ 36 |