☒ | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
11-3262067
|
|
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Name of each exchange on which registered
|
|
Common Stock, par value $ .01 per share
|
New York Stock Exchange
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Large Accelerated Filer ☐
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Accelerated Filer ☒
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Non-Accelerated Filer ☐
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Smaller reporting company ☐
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Part I
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||
Item 1.
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4
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4
|
||
5
|
||
5
|
||
6
|
||
7
|
||
7
|
||
7
|
||
7
|
||
8
|
||
8
|
||
Item 1A.
|
8
|
|
Item 1B.
|
16
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Item 2.
|
17
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Item 3.
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17
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Item 4.
|
18
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Part II
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||
Item 5.
|
19
|
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Item 6.
|
20
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Item 7.
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20
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Item 7A.
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36
|
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Item 8.
|
37
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Item 9.
|
37
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Item 9A.
|
37
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Item 9B.
|
38
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|
Part III
|
||
Item 10.
|
39
|
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Item 11.
|
39
|
|
Item 12.
|
39
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Item 13.
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39
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Item 14.
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39
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Part IV
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||
Item 15.
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39
|
|
44
|
· | risks involved with e-commerce, including possible loss of business and customer dissatisfaction if outages or other computer-related problems should preclude customer access to our products and services |
· | our ability to timely and efficiently exit and wind down the discontinued North American Technology Products operations |
· | our ability to timely and efficiently integrate recently acquired businesses, such as SCC/Misco Solutions in the Netherlands and the Plant Equipment Group in the US |
· | our information systems and other technology platforms supporting our sales, procurement and other operations are critical to our operations and disruptions or delays, particularly as we continue to transition certain functions from our existing platforms to a new platform specifically developed for our needs, have occurred and could occur in the future, and if not timely addressed would have a material adverse effect on us |
· | general economic conditions, such as decreased consumer confidence and spending and reductions in manufacturing capacity have contributed to our recent failure to achieve our historical sales growth rates and profit levels and could continue to impact our business |
· | technological change, such as the effect of mobile devices on sales of PCs and laptop computers, have had and can continue to have a material effect on our product mix and results of operations |
· | the markets for our products and services are extremely competitive and if we are unable to successfully respond to our competitors’ strategies our sales and gross margins will be adversely affected |
· | our ecommerce operations must compete with large, expanding ecommerce retailers |
· | sales tax laws or government enforcement priorities may be changed which could result in ecommerce and direct mail retailers having to collect sales taxes in states where the current laws and interpretations do not require us to do so |
· | our substantial international operations are subject to risks such as fluctuations in currency rates, foreign regulatory requirements, political uncertainty and the management of our expanding international operations infrastructure, including our ability to timely and effectively operate our shared services center in Hungary |
· | managing various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights and price protection from our vendors |
· | meeting credit card industry compliance standards in order to maintain our ability to accept credit cards |
· | timely availability of existing and new products |
· | risks associated with delivery of merchandise to customers by utilizing common delivery services |
· | borrowing costs or availability, including our ability to renew credit facilities |
· | pending or threatened litigation and investigations |
· | the availability of key personnel |
· | the continuation of key vendor relationships |
· | the ability to maintain satisfactory credit arrangements |
North America
|
Europe
|
www.globalindustrial.com
|
www.misco.co.uk
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www.globalindustrial.ca
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www.misco.de
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www.nexelwire.com
|
www.misco.fr
|
www.chdist.com
|
www.misco.nl
|
www.avenuesupply.ca
|
www.misco.it
|
www.industrialsupplies.com
|
www.misco.es
|
www.misco.se
|
|
www.misco.at
|
|
www.misco.ch
|
|
www.misco.be
|
|
www.inmac-wstore.com
|
|
www.miscosolutions.nl
|
North
America
|
Europe and Asia
|
Total
|
||||||||||
2015
|
||||||||||||
Net sales
|
$
|
801.8
|
$
|
1,052.9
|
$
|
1,854.7
|
||||||
Operating income (loss)
|
$
|
(13.5
|
)
|
$
|
(10.6
|
)
|
$
|
(24.1
|
)
|
|||
Identifiable assets
|
$
|
470.3
|
$
|
239.8
|
$
|
710.1
|
||||||
2014
|
||||||||||||
Net sales
|
$
|
914.3
|
$
|
1,189.9
|
$
|
2,104.2
|
||||||
Operating income (loss)
|
$
|
9.4
|
$
|
(23.1
|
)
|
$
|
(13.7
|
)
|
||||
Identifiable assets
|
$
|
582.9
|
$
|
314.0
|
$
|
896.9
|
||||||
2013
|
||||||||||||
Net sales
|
$
|
880.0
|
$
|
1,095.4
|
$
|
1,975.4
|
||||||
Operating income (loss)
|
$
|
(5.1
|
)
|
$
|
(5.7
|
)
|
$
|
(10.8
|
)
|
|||
Identifiable assets
|
$
|
610.2
|
$
|
332.0
|
$
|
942.2
|
· | Corporate Ethics Policy for officers, directors and employees |
· | Charter for the Audit Committee of the Board of Directors |
· | Charter for the Compensation Committee of the Board of Directors |
· | Charter for the Nominating/Corporate Governance Committee of the Board of Directors |
· | Corporate Governance Guidelines and Principles |
· | General economic conditions, such as decreased consumer confidence and spending and reductions in manufacturing capacity have and could continue to result in our failure to achieve our historical sales growth rates and profit levels. |
· | The markets for our products and services are extremely competitive and if we are unable to successfully respond to our competitors’ strategies our sales and gross margins will be adversely affected. |
· | Sales tax laws may be changed or interpreted differently which could result in ecommerce and direct mail retailers having to collect sales taxes in states where the current laws do not require us to do so. This could reduce demand for our products in such states and could result in us having substantial tax liabilities for past sales. |
· | Events such as acts of war or terrorism, natural disasters, changes in law, or large losses could adversely affect our insurance coverage and insurance expense, resulting in an adverse affect on our profitability and financial condition. |
· | We rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our failure to properly evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems and websites, could have an adverse effect on our results of operations. |
· | We have exited our NATG business and could incur costs in excess of our estimated exit expenses. |
· | We have recently completed two acquisitions; our operations will be impacted by our ability to timely and efficiently transition and integrate those acquisitions with the rest of our business in the US and EMEA. |
· | The establishment and integration of our shared service center in Hungary exposes us to various technology, regulatory and economic risks. |
· | We rely on third party suppliers for most of our products and services. The loss or interruption of these relationships could impact our sales volumes, the levels of inventory we must carry, and/or result in sales delays and/or higher inventory costs from new suppliers. Co-operative advertising and other sales incentives provided by our suppliers have decreased and could decrease further in the future thereby increasing our expenses and adversely affecting our results of operations and cash flows. |
· | Goodwill and intangible assets may become impaired resulting in a charge to earnings. |
· | Our substantial international operations are subject to risks such as fluctuations in currency rates (which can adversely impact foreign revenues and profits when translated to US Dollars), foreign regulatory requirements, political uncertainty and the management of our growing international operations. |
· | Changes in a country’s economic or political conditions |
· | Changes in foreign currency exchange rates |
· | Difficulties with staffing and managing international operations |
· | Unexpected changes in regulatory requirements |
· | Changes in transportation and shipping costs |
· | Enforcement of intellectual property rights |
· | We are exposed to various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights and price protection from our vendors; such events could lower our gross margins or result in inventory write-downs that would reduce reported future earnings. |
· | We depend on bank credit facilities to address our working capital and cash flow needs from time to time, and if we are unable to renew or replace these facilities, or borrowing capacity were to be reduced our liquidity and capital resources may be adversely affected. |
· | If we fail to observe certain restrictions and covenants under our credit facilities the lenders could refuse to waive such default, terminate the credit facility and demand immediate repayment, which would adversely affect our cash position and materially adversely affect our operations. |
· | incur additional debt |
· | create or permit liens on assets |
· | make capital expenditures or investments |
· | pay dividends |
· | Our European employees are represented by unions or workers’ councils or are employed subject to local laws that are less favorable to employers than the laws of the U.S. |
· | The failure to timely and satisfactorily process manufacturers’ and our own rebate programs could negatively impact our customer satisfaction levels. |
· | We may be unable to reduce prices in reaction to competitive pressures, or implement cost reductions or new product line expansion to address gross profit and operating margin pressures; failure to mitigate these pressures could adversely affect our operating results and financial condition. |
· | We would be exposed to liability, including substantial fines and penalties and, in extreme cases, loss of our ability to accept credit cards, in the event our privacy and data security policies and procedures are inadequate to prevent security breaches of our consumer personal information and credit card information records. |
· | Failure to protect the integrity, security and use of our customers’ information could expose us to litigation and materially damage our standing with our customers. |
· | Sales to individual customers expose us to credit card fraud, which impacts our operations. If we fail to adequately protect ourselves from credit card fraud, our operations could be adversely impacted. |
· | Our business is dependent on certain key personnel. |
· | We are subject to litigation risk due to the nature of our business, which may have a material adverse effect on our results of operations and business. |
· | Our profitability can be adversely affected by changes in our income tax exposure due to changes in tax rates or laws, changes in our effective tax rate due to changes in the mix of earnings among different countries, restrictions on utilization of tax benefits and changes in valuation of our deferred tax assets and liabilities. |
· | Changes in accounting standards or practices, as well as new accounting pronouncements or interpretations, may require us to account for and report our financial results in a different manner in the future, which may be less favorable than the manner used historically. |
· | Concentration of Ownership and Control Limits Stockholders Ability to Influence Corporate Actions |
· | Risk of Thin Trading and Volatility of our Common Stock Could Impact Stockholder Value |
Location
|
Stores Open – 12/31/14
|
Store Openings/
(Store Closings)
|
Stores Open – 12/31/15
|
||||
Delaware
|
1
|
(1)
|
-
|
||||
Florida
|
15
|
(14)
|
1
|
||||
Georgia
|
1
|
-
|
1
|
||||
Illinois
|
4
|
(4)
|
-
|
||||
North Carolina
|
1
|
(1)
|
-
|
||||
Puerto Rico
|
2
|
(2)
|
-
|
||||
Texas
|
4
|
(4)
|
-
|
||||
Ontario, Canada
|
6
|
(6)
|
-
|
||||
34
|
(32)
|
2
|
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
High
|
Low
|
|||||||
2015
|
||||||||
First Quarter
|
$
|
14.74
|
$
|
10.35
|
||||
Second Quarter
|
12.44
|
7.99
|
||||||
Third Quarter
|
9.18
|
6.73
|
||||||
Fourth Quarter
|
9.97
|
7.36
|
||||||
2014
|
||||||||
First Quarter
|
$
|
15.28
|
$
|
10.86
|
||||
Second Quarter
|
18.25
|
14.12
|
||||||
Third Quarter
|
16.41
|
12.30
|
||||||
Fourth Quarter
|
16.21
|
12.28
|
Years Ended December 31,
|
||||||||||||||||||||
(In millions, except per share data)
|
||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
|
||||||||||||||||
Statement of Operations Data:
|
||||||||||||||||||||
Net sales
|
$
|
1,854.7
|
$
|
2,104.2
|
$
|
1,975.4
|
$
|
1,961.2
|
$
|
1,923.7
|
||||||||||
Gross profit
|
$
|
342.7
|
$
|
377.2
|
$
|
360.7
|
$
|
354.4
|
$
|
352.5
|
||||||||||
Operating income (loss) from continuing operations
|
$
|
(24.1
|
)
|
$
|
(13.7
|
)
|
$
|
(10.8
|
)
|
$
|
8.2
|
$
|
33.1
|
|||||||
Net income (loss) from continuing operations
|
$
|
(48.3
|
)
|
$
|
(32.0
|
)
|
$
|
(43.0
|
)
|
$
|
17.8
|
$
|
17.9
|
|||||||
Per Share Amounts:
|
||||||||||||||||||||
Net income (loss) — diluted
|
$
|
(1.30
|
)
|
$
|
(0.86
|
)
|
$
|
(1.16
|
)
|
$
|
0.48
|
$
|
0.48
|
|||||||
Weighted average common shares — diluted
|
37.1
|
37.1
|
37.0
|
36.9
|
37.1
|
|||||||||||||||
Cash dividends declared per common share
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
0.25
|
$
|
-
|
||||||||||
Balance Sheet Data:
|
||||||||||||||||||||
Working capital
|
$
|
214.2
|
$
|
310.6
|
$
|
345.8
|
$
|
360.8
|
$
|
354.8
|
||||||||||
Total assets
|
$
|
710.1
|
$
|
896.9
|
$
|
942.2
|
$
|
962.3
|
$
|
889.7
|
||||||||||
Long-term debt, excluding current portion
|
$
|
0.4
|
$
|
1.1
|
$
|
2.9
|
$
|
5.4
|
$
|
7.1
|
||||||||||
Shareholders’ equity
|
$
|
253.9
|
$
|
359.6
|
$
|
406.2
|
$
|
446.3
|
$
|
454.3
|
Accounting policy
|
Assumptions and uncertainties
|
Quantification and analysis of effect on
actual results if estimates differ materially
|
||
Revenue Recognition. We recognize product sales when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Generally, these criteria are met at the time of receipt by customers when title and risk of loss both are transferred, except in our Industrial Products segment where title and risk pass at time of shipment. Sales are presented net of returns and allowances, rebates and sales incentives. Reserves for estimated returns and allowances are provided when sales are recorded, based on historical experience and current trends.
|
Our revenue recognition policy contains assumptions and judgments made by management related to the timing and amounts of future sales returns. Sales returns are estimated based upon historical experience and current known trends.
|
We have not made any material changes to our sales return reserve policy in the past three years and we do not anticipate making any material changes to this policy in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment.
|
||
Allowance for Doubtful Accounts Receivable. We record an allowance for doubtful accounts to reflect our estimate of the collectability of our trade accounts receivable. While bad debt allowances have been within expectations and the provisions established, there can be no guarantee that we will continue to experience the same allowance rate we have in the past.
|
Our allowance for doubtful accounts policy contains assumptions and judgments made by management related to collectability of aged accounts receivable and chargebacks from credit card sales. We evaluate the collectability of accounts receivable based on a combination of factors, including an analysis of the age of customer accounts and our historical experience with accounts receivable write-offs. The analysis also includes the financial condition of a specific customer or industry, and general economic conditions. In circumstances where we are aware of customer credit card charge-backs or a specific customer’s inability to meet its financial obligations, a specific reserve for bad debts applicable to amounts due to reduce the net recognized receivable to the amount management reasonably believes will be collected is recorded. In those situations with ongoing discussions, the amount of bad debt recognized is based on the status of the discussions.
|
We have not made any material changes to our allowance for doubtful accounts receivable reserve policy in the past three years and we do not anticipate making any material changes to this policy in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment.
A change of 10% in our allowance for doubtful accounts reserve at December 31, 2015 would impact net income by approximately $1.0 million.
|
Inventory valuation. We value our inventories at the lower of cost or market; cost being determined on the first-in, first-out method except in certain locations in Europe and retail locations where an average cost is used. Excess and obsolete or unmarketable merchandise are written down based on historical experience, assumptions about future product demand and market conditions. If market conditions are less favorable than projected or if technological developments result in accelerated obsolescence, additional write-downs may be required. While obsolescence and resultant markdowns have been within expectations, there can be no guarantee that we will continue to experience the same level of markdowns we have in the past.
|
Our inventory reserve policy contains assumptions and judgments made by management related to inventory aging, obsolescence, credits that we may obtain for returned merchandise, shrink and consumer demand.
|
We have not made any material changes to our inventory reserve policy in the past three years and we do not anticipate making any material changes to this policy in the future. However if our estimates are materially different than our actual experience we could have a material loss adjustment.
A change of 10% in our inventory reserves at December 31, 2015 would impact net income by approximately $1.6 million.
|
||
Goodwill and Intangible Assets. We apply the provisions of relevant accounting guidance in our valuation of goodwill, trademarks, domain names, client lists and other intangible assets. Relevant accounting guidance requires that goodwill and indefinite lived intangibles be reviewed at least annually for impairment or more frequently if indicators of impairment exist. The amount of an impairment loss would be recognized as the excess of the asset’s carrying value over its fair value.
|
Our impairment testing involves judgments and uncertainties, quantitative and qualitative, related to the use of discounted cash flow models and forecasts of future results, both of which involve significant judgment and may not be reliable. Significant management judgment is necessary to evaluate the operating environment and economic conditions that exist to develop a forecast for a reporting unit. Assumptions related to the discounted cash flow models we use include the inputs used to determine the Company’s weighted average cost of capital including a market risk premium, the beta of a reporting unit, reporting unit specific risk premiums and terminal growth values. Critical assumptions related to the forecast inputs used in our discounted cash flow models include projected sales growth, same store sales growth, gross margin percentages, new business opportunities, working capital requirements, capital expenditures and growth in selling, general and administrative expense. We also use our Company's market capitalization and comparable company market data to validate our reporting unit valuations.
|
We have not made any material changes to our goodwill policy in the past three years and we do not anticipate making any material changes to this policy in the future.
We recorded goodwill and intangible assets related to the January 2015 acquisition of P.E.G. of approximately $12.6 million. We have approximately in aggregate $18.8 million in goodwill and intangible assets at December 31, 2015. We do not believe it is reasonably likely that the estimates or assumptions used to determine whether any of our remaining goodwill or intangible assets are impaired will change materially in the future. However if the inputs used in our discounted cash flow models or our forecasts are materially different than actual experience we could incur impairment charges that are material.
We recorded goodwill and intangible assets related to the June 2014 Misco Solutions (f/k/a SCC Services B.V.) acquisition of approximately $2.7 million.
|
Long-lived Assets. Management exercises judgment in evaluating our long-lived assets for impairment and in their depreciation and amortization methods and lives including evaluating undiscounted cash flows.
|
The impairment analysis for long lived assets requires management to make judgments about useful lives and to estimate fair values of long lived assets. It may also require us to estimate future cash flows of related assets using discounted cash flow model. Our estimates of future cash flows involve assumptions concerning future operating performance and economic conditions. While we believe that our estimates of future cash flows are reasonable, different assumptions regarding such cash flows could materially affect our evaluations.
|
We have not made any material changes to our long lived assets policy in the past three years and we do not anticipate making any material changes to this policy in the future.
In 2015 the Company conducted an evaluation of the long-lived assets in its EMEA and now discontinued NATG segment and concluded that an impairment charge of $0.7 million each, pre-tax, be recorded.
In 2014 the Company conducted an evaluation of the long-lived assets in its now discontinued North America Technology Products segment and concluded that an impairment charge of $10.0 million, pre-tax, be recorded.
We do not believe it is reasonably likely that the estimates and assumptions used to determine long lived asset impairment will vary materially in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment.
A change of 10% in the carrying value of our long lived assets would impact net income by approximately $3.8 million.
|
||
Vendor Accruals. Our contractual agreements with certain suppliers provide us with funding or allowances for costs such as price protection, markdowns and advertising as well as funds or allowances for purchasing volumes.
Generally, allowances received as a reimbursement of identifiable costs are recorded as an expense reduction when the cost is incurred. Sales related allowances are generally determined by our level of purchases of product and are deferred and recorded as a reduction of inventory carrying value and are ultimately included as a reduction of cost of goods when inventory is sold.
|
Management makes assumptions and exercises judgment in estimating period end funding and allowances earned under our various agreements. Estimates are developed based on the terms of our vendor agreements and using existing expenditures for which funding is available, determining products whose market price would indicate coverage for markdown or price protection is available and estimating the level of our performance under agreements that provide funds or allowances for purchasing volumes. Estimates of funding or allowances for purchasing volume will include projections of annual purchases which are developed using current actual purchase data and historical purchase trends. Accruals in interim periods could be materially different if actual purchase volumes differ from projections.
|
We have not made any material changes to our vendor accrual policy in the past three years nor do we anticipate making any material changes to this policy in the future.
If actual results are different from the projections used we could have a material gain or loss adjustment.
A change of 10% in our vendor accruals at December 31, 2015 would impact net income by approximately $0.7 million.
|
Income Taxes. We are subject to taxation from federal, state and foreign jurisdictions and the determination of our tax provision is complex and requires significant management judgment.
We conduct operations in numerous U.S. states and foreign locations. Our effective tax rate depends upon the geographic distribution of our pre-tax income or losses among locations with varying tax rates and rules. As the geographic mix of our pre-tax results among various tax jurisdictions changes, the effective tax rate may vary from period to period. We are also subject to periodic examination from domestic and foreign tax authorities regarding the amount of taxes due. These examinations include questions regarding the timing and amount of deductions and the allocation of income among various tax jurisdictions. We establish as needed, and periodically reevaluate, an estimated income tax reserve on our consolidated balance sheet to provide for the possibility of adverse outcomes in income tax proceedings. While management believes that we have identified all reasonably identifiable exposures and whether or not a reserve is appropriate, it is possible that additional exposures exist and/or that exposures may be settled at amounts different than the amounts reserved.
|
The determination of deferred tax assets and liabilities and any valuation allowances that might be necessary requires management to make significant judgments concerning the ability to realize net deferred tax assets. The realization of net deferred tax assets is dependent upon the generation of future taxable income. In estimating future taxable income there are judgments and uncertainties related to the development of forecasts of future results that may not be reliable. Significant management judgment is also necessary to evaluate the operating environment and economic conditions that exist to develop a forecast for a reporting unit. Where management has determined that it is more likely than not that some portion or the entire deferred tax asset will not be realized, we have provided a valuation allowance. If the realization of those deferred tax assets in the future is considered more likely than not, an adjustment to the deferred tax assets would increase net income in the period such determination is made.
|
We have not made any material changes to our income tax policy in the past three years and we do not anticipate making any material changes to this policy in the future.
We do not believe it is reasonably likely that the estimates or assumptions used to determine our deferred tax assets and liabilities and related valuation allowances will change materially in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment.
In 2015 the Company recorded non-cash valuation allowances against the deferred tax assets of certain of its subsidiaries in Europe and Canada in the amount of approximately $0.8 million.
During the fourth quarter of 2014 the Company recorded a non-cash valuation allowance against its deferred assets in the U.K. of approximately $1.7 million.
|
||
Special charges. We have recorded reorganization, restructuring and other charges in the past and could in the future commence further reorganization, restructuring and other activities which result in recognition in charges to income.
|
The recording of reorganization, restructuring and other charges may involve assumptions and judgments about future costs and timing for amounts related to personnel terminations, stay bonuses, lease termination costs, lease sublet revenues, outplacement services, contract termination costs, asset impairments and other exit costs. Management may estimate these costs using existing contractual and other data or may rely on third party expert data.
|
When we incur a liability related to these actions, we estimate and record all appropriate expenses. We do not believe it is reasonably likely that the estimates or assumptions used to determine our reorganization, restructuring and other charges will change materially in the future. However if our estimates are materially different than our actual experience we could have a material gain or loss adjustment.
The Company recorded special charges of $27.9 million, $15.9 million and $16.2 million in continuing operations related to reorganization, restructuring and asset impairment and other charges for the years ended 2015, 2014 and 2013, respectively.
|
·
|
IPG sales grew 25.6%. On a constant currency basis and excluding P.E.G., sales grew 10.1%.
|
·
|
EMEA sales declined 11.5%. On a constant currency basis and excluding Misco Solutions, sales declined 1.9%.
|
·
|
The NATG business was sold in December 2015 for $14.0 million and the Circuit City name and trademarks were sold in November 2015 for $2.0 million.
|
Years Ended December 31, | ||||||||||||||||||||
2015
|
2014
|
2013
|
% Change
2015/2014
|
% Change
2014/2013
|
||||||||||||||||
Net sales of continuing operations by segment:
|
||||||||||||||||||||
IPG
|
$
|
698.6
|
$
|
556.0
|
$
|
473.8
|
25.6
|
%
|
17.3
|
%
|
||||||||||
EMEA
|
1,052.9
|
1,189.9
|
1,095.4
|
(11.5
|
)%
|
8.6
|
%
|
|||||||||||||
Corporate and other
|
5.4
|
5.9
|
5.2
|
(8.5
|
)%
|
13.5
|
%
|
|||||||||||||
NATG- continuing operations
|
97.8
|
352.4
|
401.0
|
(72.2
|
)%
|
(12.1
|
)%
|
|||||||||||||
Consolidated net sales
|
$
|
1,854.7
|
$
|
2,104.2
|
$
|
1,975.4
|
(11.9
|
)%
|
6.5
|
%
|
||||||||||
Consolidated gross profit
|
$
|
342.7
|
$
|
377.2
|
$
|
360.7
|
(9.1
|
)%
|
4.6
|
%
|
||||||||||
Consolidated gross margin
|
18.5
|
%
|
17.9
|
%
|
18.3
|
%
|
0.6
|
%
|
(0.4
|
)%
|
||||||||||
Consolidated SG&A costs**
|
$
|
366.8
|
$
|
390.9
|
$
|
371.5
|
(6.2
|
)%
|
5.2
|
%
|
||||||||||
Consolidated SG&A costs** as % of sales
|
19.8
|
%
|
18.6
|
%
|
18.8
|
%
|
1.2
|
%
|
(0.2
|
)%
|
||||||||||
Operating income (loss) from continuing operations by segment: | ||||||||||||||||||||
IPG
|
$
|
43.7
|
$
|
41.0
|
$
|
40.0
|
6.6
|
%
|
2.5
|
%
|
||||||||||
EMEA
|
(10.8
|
)
|
(21.2
|
)
|
(4.2
|
)
|
(49.1
|
)%
|
404.8
|
%
|
||||||||||
Corporate and other
|
(18.8
|
)
|
(15.6
|
)
|
(20.0
|
)
|
20.5
|
%
|
(22.0
|
)%
|
||||||||||
NATG – continuing operations
|
(38.2
|
)
|
(17.9
|
)
|
(26.6
|
)
|
113.4
|
%
|
(32.7
|
)%
|
||||||||||
Consolidated operating (loss)
|
$
|
(24.1
|
)
|
$
|
(13.7
|
)
|
$
|
(10.8
|
)
|
75.9
|
%
|
26.9
|
%
|
|||||||
Operating margin from continuing operations by segment:**
|
||||||||||||||||||||
IPG
|
6.3
|
%
|
7.4
|
%
|
8.4
|
%
|
(1.1
|
)%
|
(1.0
|
)%
|
||||||||||
EMEA
|
(1.0
|
)%
|
(1.8
|
)%
|
(0.4
|
)%
|
0.8
|
%
|
(1.4
|
)%
|
||||||||||
NATG
|
(39.1
|
)%
|
(5.1
|
)%
|
(6.6
|
)%
|
(34.0
|
)%
|
1.5
|
%
|
||||||||||
Consolidated operating margin from continuing operations
|
(1.3
|
)%
|
(0.7
|
)%
|
(0.6
|
)%
|
(0.6
|
)%
|
(0.2
|
)%
|
||||||||||
Effective income tax rate
|
38.8
|
%
|
59.2
|
%
|
246.8
|
%
|
(20.4
|
)%
|
(187.6
|
)%
|
||||||||||
Net income (loss) from continuing operations
|
$
|
(48.3
|
)
|
$
|
(32.0
|
)
|
$
|
(43.0
|
)
|
50.9
|
%
|
(6.2
|
)%
|
|||||||
Net margin from continuing operations
|
(2.6
|
)%
|
(1.5
|
)%
|
(2.2
|
)%
|
(1.1
|
)%
|
0.2
|
%
|
||||||||||
Net income (loss) from discontinued operations
|
$
|
(51.5
|
)
|
$
|
(5.5
|
)
|
$
|
(0.8
|
)
|
836.4
|
%
|
587.5
|
%
|
|||||||
Net margin from discontinuing operations
|
(2.8
|
)%
|
(0.3
|
)%
|
(0.0
|
)%
|
(2.5
|
)%
|
0.3
|
%
|
Supplemental Non-GAAP Continuing Operation Business Unit Summary Results - Unaudited
|
||||||||||||||||||||
Industrial Products Group
|
||||||||||||||||||||
Year Ended December 31,
|
% Change
|
|||||||||||||||||||
2015
|
2014
|
2013
|
2015 vs. 2014
|
2014 vs. 2013
|
||||||||||||||||
Sales
|
$
|
698.6
|
$
|
556.0
|
$
|
473.8
|
25.6
|
%
|
17.3
|
%
|
||||||||||
Gross profit
|
$
|
198.7
|
$
|
163.4
|
$
|
142.9
|
21.6
|
%
|
14.3
|
%
|
||||||||||
Gross margin
|
28.4
|
%
|
29.4
|
%
|
30.2
|
%
|
||||||||||||||
Operating income
|
$
|
44.0
|
$
|
43.0
|
$
|
40.4
|
2.3
|
%
|
6.4
|
%
|
||||||||||
Operating margin
|
6.3
|
%
|
7.7
|
%
|
8.5
|
%
|
EMEA Technology Products Group
|
||||||||||||||||||||
Year Ended December 31,
|
% Change
|
|||||||||||||||||||
2015
|
2014
|
2013
|
2015 vs. 2014
|
2014 vs. 2013
|
||||||||||||||||
Sales
|
$
|
1,052.9
|
$
|
1,189.9
|
$
|
1,095.4
|
(11.5
|
)%
|
8.6
|
%
|
||||||||||
Gross profit
|
$
|
129.8
|
$
|
153.7
|
$
|
151.0
|
(15.5
|
)%
|
1.8
|
%
|
||||||||||
Gross margin
|
12.3
|
%
|
12.9
|
%
|
13.8
|
%
|
||||||||||||||
Operating income (loss)
|
$
|
(9.0
|
)
|
$
|
(7.8
|
)
|
$
|
5.0
|
15.4
|
%
|
(256.0
|
)%
|
||||||||
Operating margin
|
(0.9
|
)%
|
(0.7
|
)%
|
0.5
|
%
|
Corporate & Other
|
||||||||||||||||||||
Year Ended December 31,
|
% Change
|
|||||||||||||||||||
2015
|
2014
|
2013
|
2015 vs. 2014
|
2014 vs. 2013
|
||||||||||||||||
Sales
|
$
|
5.4
|
$
|
5.9
|
$
|
5.2
|
(8.5
|
)%
|
13.5
|
%
|
||||||||||
Gross profit
|
$
|
3.6
|
$
|
3.9
|
$
|
4.2
|
(7.7
|
)%
|
(7.1
|
)%
|
||||||||||
Gross margin
|
66.7
|
%
|
66.1
|
%
|
80.8
|
%
|
||||||||||||||
Operating loss
|
$
|
(18.2
|
)
|
$
|
(14.7
|
)
|
$
|
(18.8
|
)
|
23.8
|
%
|
(21.8
|
)%
|
Consolidated
|
||||||||||||||||||||
Year Ended December 31,
|
% Change
|
|||||||||||||||||||
2015
|
2014
|
2013
|
2015 vs. 2014
|
2014 vs. 2013
|
||||||||||||||||
Sales
|
$
|
1,756.9
|
$
|
1,751.8
|
$
|
1,574.4
|
0.3
|
%
|
11.3
|
%
|
||||||||||
Gross profit
|
$
|
332.1
|
$
|
321.0
|
$
|
298.1
|
3.5
|
%
|
7.7
|
%
|
||||||||||
Gross margin
|
18.9
|
%
|
18.3
|
%
|
18.9
|
%
|
||||||||||||||
Operating income
|
$
|
16.8
|
$
|
20.5
|
$
|
26.6
|
(18.0
|
)%
|
(22.9
|
)%
|
||||||||||
Operating margin
|
1.0
|
%
|
1.2
|
%
|
1.7
|
%
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
IPG
|
$
|
43.7
|
$
|
41.0
|
$
|
40.0
|
||||||
EMEA
|
(10.8
|
)
|
(21.2
|
)
|
(4.2
|
)
|
||||||
NATG
|
(38.2
|
)
|
(17.9
|
)
|
(26.6
|
)
|
||||||
Corporate and Other
|
(18.8
|
)
|
(15.6
|
)
|
(20.0
|
)
|
||||||
GAAP operating loss
|
(24.1
|
)
|
(13.7
|
)
|
(10.8
|
)
|
||||||
Non-GAAP adjustments:
|
||||||||||||
Industrial Products:
|
||||||||||||
Integration costs
|
1.0
|
0.4
|
(0.2
|
)
|
||||||||
Intangible asset amortization
|
0.3
|
0.0
|
0.0
|
|||||||||
Stock-based and other special compensation
|
(1.0
|
)
|
1.6
|
0.6
|
||||||||
Total Non-GAAP Adjustments – Industrial Products
|
0.3
|
2.0
|
0.4
|
|||||||||
Technology Products - EMEA:
|
||||||||||||
Severance and other reorganization related charges
|
0.7
|
12.3
|
8.2
|
|||||||||
Asset impairment charges
|
0.7
|
0.0
|
0.0
|
|||||||||
Stock based compensation
|
0.1
|
0.3
|
0.3
|
|||||||||
Intangible asset amortization
|
0.3
|
0.8
|
0.7
|
|||||||||
Total Non-GAAP Adjustments: Technology Products EMEA
|
1.8
|
13.4
|
9.2
|
|||||||||
Technology Products - NA:
|
||||||||||||
Reverse results of NATG included in GAAP continuing operations
|
38.2
|
17.9
|
26.6
|
|||||||||
Total Non-GAAP Adjustments : Technology Products NA
|
38.2
|
17.9
|
26.6
|
|||||||||
Corporate and Other:
|
||||||||||||
Severance and other reorganization related charges
|
0.0
|
0.1
|
0.0
|
|||||||||
Stock based compensation
|
0.6
|
0.8
|
1.2
|
|||||||||
Total Non-GAAP Adjustments: Corporate and Other
|
0.6
|
0.9
|
1.2
|
|||||||||
IPG
|
44.0
|
43.0
|
40.4
|
|||||||||
EMEA
|
(9.0
|
)
|
(7.8
|
)
|
5.0
|
|||||||
NATG
|
0.0
|
0.0
|
0.0
|
|||||||||
Corporate and Other
|
(18.2
|
)
|
(14.7
|
)
|
(18.8
|
)
|
||||||
Non-GAAP operating income
|
$
|
16.8
|
$
|
20.5
|
$
|
26.6
|
December 31,
|
||||||||||||
2015
|
2014
|
$ Change
|
||||||||||
Cash
|
$
|
215.1
|
$
|
165.0
|
$
|
50.1
|
||||||
Accounts receivable, net
|
$
|
266.3
|
$
|
354.5
|
$
|
(88.2
|
)
|
|||||
Inventories
|
$
|
144.4
|
$
|
292.9
|
$
|
(148.5
|
)
|
|||||
Prepaid expenses and other current assets
|
$
|
14.5
|
$
|
15.9
|
$
|
(1.4
|
)
|
|||||
Accounts payable
|
$
|
346.5
|
$
|
419.5
|
$
|
(73.0
|
)
|
|||||
Accrued expenses and other current liabilities
|
$
|
79.0
|
$
|
95.4
|
$
|
(16.4
|
)
|
|||||
Current portion of long term debt
|
$
|
0.6
|
$
|
2.8
|
$
|
(2.2
|
)
|
|||||
Working capital
|
$
|
214.2
|
$
|
310.6
|
$
|
(96.4
|
)
|
Total
|
Less than
1 year
|
1-3 years
|
3-5 years
|
More than
5 years
|
||||||||||||||||
Contractual Obligations:
|
||||||||||||||||||||
Capital lease obligations
|
$
|
1.0
|
0.6
|
0.4
|
-
|
-
|
||||||||||||||
Non-cancelable operating leases, net of subleases
|
170.3
|
23.0
|
63.0
|
35.6
|
48.7
|
|||||||||||||||
Purchase & other obligations
|
57.8
|
42.7
|
7.6
|
7.5
|
-
|
|||||||||||||||
Total contractual obligations
|
$
|
229.1
|
66.3
|
71.0
|
43.1
|
48.7
|
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
(a)
|
1.
|
Consolidated Financial Statements of Systemax Inc.
|
Reference
|
Reports of Ernst & Young LLP Independent Registered Public Accounting Firm
|
45
|
||
Consolidated Balance Sheets as of December 31, 2015 and 2014
|
47
|
||
Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013
|
48
|
||
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2015, 2014 and 2013
|
49
|
||
Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013
|
50
|
||
Consolidated Statements of Shareholders’ Equity for the Years ended December 31, 2015, 2014 and 2013
|
51
|
||
Notes to Consolidated Financial Statements
|
52
|
||
2.
|
Financial Statement Schedules:
|
||
The following financial statement schedule is filed as part of this report and should be read together with our consolidated financial statements:
|
|||
Schedule II — Valuation and Qualifying Accounts
|
70
|
||
Schedules not included with this additional financial data have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto.
|
Item 15. | Exhibits and Financial Statement Schedules. |
3. Exhibits
|
|||
Exhibit No.
|
Description
|
||
3.1
|
Composite Certificate of Incorporation of Registrant, as amended (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2001).
|
||
3.2
|
Amended and Restated By-laws of Registrant (effective as of December 29, 2007, incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2007).
|
||
3.3
|
Amendment to the Bylaws of the Registrant (incorporated by reference to the Company’s report on Form 8-K dated March 3, 2008).
|
||
4.1
|
Stockholders Agreement (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended September 30, 1995).
|
||
10.1*
|
Form of 1995 Long-Term Stock Incentive Plan (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 333-1852).
|
||
10.2*
|
Form of 1995 Stock Plan for Non-Employee Directors (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 333-1852).
|
||
10.3*
|
Form of 1999 Long-Term Stock Incentive Plan as amended (incorporated by reference to the Company’s report on Form 8-K dated May 20, 2003).
|
||
10.4*
|
Form of 2006 Stock Incentive Plan for Non-Employee Directors (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2006).
|
||
10.5*
|
Form of 2005 Employee Stock Purchase Plan (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2006).
|
||
10.6
|
Lease Agreement dated September 20, 1988 between the Company and Addwin Realty Associates (Port Washington facility) (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 33-92052).
|
||
10.7
|
First Amendment to Lease Agreement dated September 20, 1998 between the Company and Addwin Realty Associates (Port Washington facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 1998).
|
||
10.8
|
Second Amendment to Lease Agreement dated September 20, 1988 between the Company and Addwin Realty Associates (Port Washington facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2007).
|
||
10.9
|
Build-to-Suit Lease Agreement dated April, 1995 among the Company, American National Bank and Trust Company of Chicago (Trustee for the original landlord) and Walsh, Higgins & Company (Contractor) (“Naperville Illinois Facility Lease”) (incorporated by reference to the Company’s registration statement on Form S-1) (Registration No. 33-92052).
|
||
10.10
|
First Amendment, dated as of February 1, 2006, to the Naperville Illinois Facility Lease between the Company and Ambassador Drive LLC (current landlord) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2005).
|
||
10.11
|
Lease Agreement dated September 17, 1998 between Tiger Direct, Inc. and Keystone Miami Property Holding Corp. (Miami facility) (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended September 30, 1998).
|
||
10.12
|
First Amendment, dated as of September 5, 2003, to the Lease Agreement between Tiger Direct, Inc. and Keystone Miami Property Holding Corp. (Miami facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2010).
|
||
10.13
|
Second Amendment, dated March 22, 2007, to the Lease Agreement between Tiger Direct, Inc. and Keystone Miami Property Holding Corp. (Miami facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2010).
|
10.14
|
Third Amendment, dated as of June 26, 2009, to the Lease Agreement between Tiger Direct, Inc. and Mota Associates Limited Partnership (successor in interest to landlord Keystone Miami Property Holding Corp.) (Miami facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2010).
|
||
10.15
|
Lease Agreement, dated December 8, 2005, between the Company and Hamilton Business Center, LLC (Buford, Georgia facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2005).
|
||
10.16
|
First Amendment, dated as of June 12, 2006, to the Lease Agreement between the Company and Hamilton Business Center, LLC (Buford, Georgia facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2005).
|
||
10.17*
|
Employment Agreement, dated as of January 17, 2007, between the Company and Lawrence P. Reinhold (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2006).
|
||
10.18*
|
Amendment No. 1, dated December 30, 2009, to the Employment Agreement between the Company and Lawrence P. Reinhold (incorporated by reference to the Company’s report on Form 8-K dated December 30, 2009).
|
||
10.19
|
Second Amended and Restated Credit Agreement, dated as of October 27, 2010, by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent, J.P. Morgan Europe Limited, as UK Administrative Agent, J.P. Morgan Securities, Inc. as Sole Bookrunner and Sole Lead Arranger, and the lenders from time to time party thereto (incorporated by reference to the Company’s report on Form 8-K dated November 2, 2010).
|
||
10.20
|
Amendment No. 1 and Waiver, dated as of December 15, 2011, to the Second Amended and Restated Credit Agreement by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent, J.P. Morgan Europe Limited, as UK Administrative Agent and the lenders from time to time party thereto (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2011).
|
||
10.21
|
Lease Agreement, dated April 16, 2010, between Jefferson Project I LLC as Landlord and SYX Distribution Inc. as Tenant (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2012).
|
||
10.22
|
First Amendment, dated August 24, 2010, to the Lease Agreement, dated April 2010, between Jefferson Project I LLC as Landlord and SYX Distribution Inc. as Tenant (Jefferson, GA facility) (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2012).
|
||
10.23
|
Lease Agreement, dated February 27, 2012 between PR I Washington Township NJ, LLC as Landlord and Global Equipment Company Inc. as Tenant (Robbinsville, NJ facility) (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2012).
|
||
10.24*
|
Form of 2010 Long Term Incentive Plan (incorporated by reference to the Company’s Definitive Proxy Statement filed April 29, 2010).
|
||
10.25*
|
Bonus Agreement, dated as of March 10, 2014, among Global Industrial Services, Inc., Systemax Inc. and Robert Dooley (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2013).
|
||
10.26*
|
Employment Agreement, dated April 12, 2012, between Systemax Inc. and Eric Lerner (incorporated by reference to the Company’s quarterly report on Form 10-Q for the quarterly period ended March 31, 2012).
|
||
10.27
|
Amendment No. 2 and Waiver, dated as of August 7, 2013, to the Second Amended and Restated Credit Agreement by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent and the lenders from time to time party thereto (incorporated by reference to the Company’s quarterly report on Form 10Q for the quarter ended September 30, 2013).
|
||
10.28
|
Amendment No. 3 and Waiver, dated as of October 31, 2013 with an effective date of September 28, 2013, to the Second Amendment and Restated Credit Agreement by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent and the lenders from time to time party thereto (incorporated by reference to the Company’s quarterly report on Form 10Q for the quarter ended September 30, 2013).
|
10.29
|
Amendment No. 4, dated as of August 28, 2014, to the Second Amendment and Restated Credit Agreement by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent and the lenders from time to time party thereto (incorporated by reference to the Company’s report on Form 8-K dated August 28, 2014).
|
||
10.30
|
Lease Agreement, dated December 10, 2014, between Prologis, L.P., as Landlord and Global Industrial Distribution Inc, as Tenant (Las Vegas, NV facility) (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2015)..
|
||
10.31
|
Purchase Agreement dated December 31, 2014, by and among TAKKT America Holding, LLC, Global Industrial Holdings LLC and Global Industrial Mexico Holdings LLC (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2015).
|
||
10.32
|
Amendment No. 1 to Purchase Agreement dated January 30, 2015, by and among TAKKT America Holding, LLC, Global Industrial Holdings LLC and Global Industrial Mexico Holdings LLC (incorporated by reference to the Company’s annual report on Form 10-K for the year ended December 31, 2015).
|
||
10.33*
|
Amendment to the Term of the 2010 Long Term Incentive Plan (incorporated by reference to the Company’s Supplemental Proxy Material filed May 18, 2015).
|
||
10.34
|
Amendment No. 5, dated as of October 13, 2015, to the Second Amendment and Restated Credit Agreement by and among Systemax Inc. and certain affiliates thereof and JPMorgan Chase Bank, N.A., as U.S. Administrative Agent and the lenders from time to time party thereto (incorporated by reference to the Company’s report on Form 8-K dated October 15, 2015).
|
||
Asset Purchase Agreement, dated November 17, 2015, by and among Intelligent IT, Inc., Acrodex Inc., PCM, Inc., Systemax Inc., and TigerDirect, Inc., TigerDirect CA, Inc., Global Gov/Ed Solutions, Inc., Infotel Distributors Inc., Tek Serv Inc., Global Computer Supplies, Inc., SYX Distribution Inc., SYX Services Inc., SYX North American Tech Holdings, LLC, Software Licensing Center, Inc. and Pocahontas Corp. (filed herewith).
|
|||
Amendment No. 1 to Asset Purchase Agreement, December 1, 2015, by and among Intelligent IT, Inc., Acrodex Inc., PCM, Inc., Systemax Inc., and TigerDirect, Inc., TigerDirect CA, Inc., Global Gov/Ed Solutions, Inc., Infotel Distributors Inc., Tek Serv Inc., Global Computer Supplies, Inc., SYX Distribution Inc., SYX Services Inc., SYX North American Tech Holdings, LLC, Software Licensing Center, Inc. and Pocahontas Corp. (filed herewith).
|
|||
Amendment No. 2 to Asset Purchase Agreement, January 21, 2016, by and among Intelligent IT, Inc., Acrodex Inc., PCM, Inc., Systemax Inc., and TigerDirect, Inc., TigerDirect CA, Inc., Global Gov/Ed Solutions, Inc., Infotel Distributors Inc., Tek Serv Inc., Global Computer Supplies, Inc., SYX Distribution Inc., SYX Services Inc., SYX North American Tech Holdings, LLC, Software Licensing Center, Inc. and Pocahontas Corp. (filed herewith).
|
|||
Amendment No. 3 to Asset Purchase Agreement, dated February 14, 2016, by and among Intelligent IT, Inc., Acrodex Inc., PCM, Inc., Systemax Inc., and TigerDirect, Inc., TigerDirect CA, Inc., Global Gov/Ed Solutions, Inc., Infotel Distributors Inc., Tek Serv Inc., Global Computer Supplies, Inc., SYX Distribution Inc., SYX Services Inc., SYX North American Tech Holdings, LLC, Software Licensing Center, Inc. and Pocahontas Corp. (filed herewith).
|
|||
Corporate Ethics Policy for Officers, Directors and Employees (revised as of January 2016) (filed herewith).
|
|||
Subsidiaries of the Registrant (filed herewith).
|
|||
Consent of Independent Registered Public Accounting Firm (filed herewith).
|
|||
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|||
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|||
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|||
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
SYSTEMAX INC.
|
|
By: /s/ LAWRENCE REINHOLD
|
|
Lawrence Reinhold
|
|
Chief Executive Officer
|
|
Date: March 17, 2016
|
Signature
|
Title
|
Date
|
||
/s/ RICHARD LEEDS
|
Executive Chairman and Director
|
March 17, 2016
|
||
Richard Leeds
|
||||
/s/ BRUCE LEEDS
|
Vice Chairman and Director
|
March 17, 2016
|
||
Bruce Leeds
|
||||
/s/ ROBERT LEEDS
|
Vice Chairman and Director
|
March 17, 2016
|
||
Robert Leeds
|
||||
/s/ LAWRENCE REINHOLD
|
President and Chief Executive Officer
|
March 17, 2016
|
||
Lawrence Reinhold
|
and Director
|
|||
(Principal Executive and Financial Officer)
|
||||
/s/ THOMAS AXMACHER
|
Vice President and Controller
|
March 17, 2016
|
||
Thomas Axmacher
|
(Principal Accounting Officer)
|
|||
/s/ ROBERT ROSENTHAL
|
Director
|
March 17, 2016
|
||
Robert Rosenthal
|
||||
/s/ STACY DICK
|
Director
|
March 17, 2016
|
||
Stacy Dick
|
||||
/s/ MARIE ADLER-KRAVECAS
|
Director
|
March 17, 2016
|
||
Marie Adler-Kravecas
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
ASSETS:
|
||||||||
Current assets:
|
||||||||
Cash
|
$
|
215.1
|
$
|
165.0
|
||||
Accounts receivable, net of allowances of $15.7 and $15.8
|
266.3
|
354.5
|
||||||
Inventories
|
144.4
|
292.9
|
||||||
Prepaid expenses and other current assets
|
14.5
|
15.9
|
||||||
Total current assets
|
640.3
|
828.3
|
||||||
Property, plant and equipment, net
|
38.3
|
41.2
|
||||||
Deferred income taxes
|
8.6
|
15.2
|
||||||
Goodwill and intangibles
|
18.8
|
7.4
|
||||||
Other assets
|
4.1
|
4.8
|
||||||
Total assets
|
$
|
710.1
|
$
|
896.9
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY:
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
346.5
|
$
|
419.5
|
||||
Accrued expenses and other current liabilities
|
79.0
|
95.4
|
||||||
Current portion of long term debt
|
0.6
|
2.8
|
||||||
Total current liabilities
|
426.1
|
517.7
|
||||||
Long-term debt
|
0.4
|
1.1
|
||||||
Deferred income tax liability
|
0.4
|
-
|
||||||
Other liabilities
|
29.3
|
18.5
|
||||||
Total liabilities
|
456.2
|
537.3
|
||||||
Commitments and contingencies
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, par value $.01 per share, authorized 25 million shares; issued none
|
||||||||
Common stock, par value $.01 per share, authorized 150 million shares; issued 38,861,992 and 38,861,992 shares; outstanding 36,872,688 and 36,808,158 shares
|
0.4
|
0.4
|
||||||
Additional paid-in capital
|
184.4
|
184.3
|
||||||
Treasury stock at cost —1,989,304 and 2,053,834 shares
|
(24.5
|
)
|
(25.4
|
)
|
||||
Retained earnings
|
109.4
|
209.2
|
||||||
Accumulated other comprehensive loss
|
(15.8
|
)
|
(8.9
|
)
|
||||
Total shareholders’ equity
|
253.9
|
359.6
|
||||||
Total liabilities and shareholders’ equity
|
$
|
710.1
|
$
|
896.9
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net sales
|
$
|
1,854.7
|
$
|
2,104.2
|
$
|
1,975.4
|
||||||
Cost of sales
|
1,512.0
|
1,727.0
|
1,614.7
|
|||||||||
Gross profit
|
342.7
|
377.2
|
360.7
|
|||||||||
Selling, general and administrative expenses
|
338.9
|
375.0
|
355.3
|
|||||||||
Special charges, net
|
27.9
|
15.9
|
16.2
|
|||||||||
Operating loss from continuing operations
|
(24.1
|
)
|
(13.7
|
)
|
(10.8
|
)
|
||||||
Foreign currency exchange loss
|
9.8
|
5.3
|
0.5
|
|||||||||
Interest and other income, net
|
0.9
|
1.1
|
1.1
|
|||||||||
Loss from continuing operations before income taxes
|
(34.8
|
)
|
(20.1
|
)
|
(12.4
|
)
|
||||||
Provision for income taxes
|
13.5
|
11.9
|
30.6
|
|||||||||
Net loss from continuing operations
|
(48.3
|
)
|
(32.0
|
)
|
(43.0
|
)
|
||||||
Loss from discontinued operations, net of tax
|
(51.5
|
)
|
(5.5
|
)
|
(0.8
|
)
|
||||||
Net loss
|
$
|
(99.8
|
)
|
$
|
(37.5
|
)
|
$
|
(43.8
|
)
|
|||
Basic and diluted EPS:
|
||||||||||||
Net loss per share from continuing operations
|
$
|
(1.30
|
)
|
$
|
(0.86
|
)
|
$
|
(1.16
|
)
|
|||
Net loss per share fom discontinued operations
|
$
|
(1.39
|
)
|
$
|
(0.15
|
)
|
$
|
(0.02
|
)
|
|||
Net loss per share, basic and diluted
|
$
|
(2.69
|
)
|
$
|
(1.01
|
)
|
$
|
(1.18
|
)
|
|||
Weighted average common and common equivalent shares:
|
||||||||||||
Basic and diluted
|
37.1
|
37.1
|
37.0
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net loss
|
$
|
(99.8
|
)
|
$
|
(37.5
|
)
|
$
|
(43.8
|
)
|
|||
Other comprehensive loss:
|
||||||||||||
Foreign currency translation gain (loss)………………………..
|
(6.9
|
)
|
(11.1
|
)
|
1.2
|
|||||||
Total comprehensive loss
|
$
|
(106.7
|
)
|
$
|
(48.6
|
)
|
$
|
(42.6
|
)
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Loss from continuing operations
|
$
|
(48.3
|
)
|
$
|
(32.0
|
)
|
$
|
(43.0
|
)
|
|||
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
|
||||||||||||
Depreciation and amortization
|
9.3
|
11.5
|
13.1
|
|||||||||
Asset impairment
|
1.4
|
10.2
|
4.1
|
|||||||||
Provision for deferred income taxes
|
5.5
|
0.7
|
27.1
|
|||||||||
Provision for returns and doubtful accounts
|
7.9
|
8.9
|
4.0
|
|||||||||
Compensation expense related to equity compensation plans
|
1.2
|
1.5
|
2.9
|
|||||||||
Excess tax benefit from exercises of stock options
|
-
|
-
|
(0.1
|
)
|
||||||||
(Gain) loss on dispositions and abandonment
|
(0.1
|
)
|
0.1
|
0.1
|
||||||||
Changes in operating assets and liabilities:
|
||||||||||||
Accounts receivable
|
70.7
|
(54.0
|
)
|
(23.4
|
)
|
|||||||
Inventories
|
153.5
|
23.9
|
46.1
|
|||||||||
Prepaid expenses and other current assets
|
2.7
|
(1.0
|
)
|
(1.4
|
)
|
|||||||
Income taxes payable (receivable)
|
(0.3
|
)
|
14.4
|
(8.7
|
)
|
|||||||
Accounts payable
|
(62.7
|
)
|
10.1
|
12.2
|
||||||||
Accrued expenses and other current liabilities
|
(5.2
|
)
|
6.5
|
9.1
|
||||||||
Net cash provided by operating activities from continuing operations
|
135.6
|
0.8
|
42.1
|
|||||||||
Net cash provided by (used in) operating activities from discontinued operations
|
(49.1
|
)
|
(0.9
|
)
|
4.7
|
|||||||
Net cash provided by (used in) operating activities
|
86.5
|
(0.1
|
)
|
46.8
|
||||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchases of property, plant and equipment
|
(11.3
|
)
|
(7.1
|
)
|
(13.7
|
)
|
||||||
Proceeds from disposals of property, plant and equipment
|
1.4
|
1.0
|
0.3
|
|||||||||
Acquisitions net of cash acquired
|
(24.8
|
)
|
(6.4
|
)
|
-
|
|||||||
Net cash used in investing activities
|
(34.7
|
)
|
(12.5
|
)
|
(13.4
|
)
|
||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Repayments of capital lease obligations
|
(2.8
|
)
|
(2.6
|
)
|
(2.8
|
)
|
||||||
Proceeds from issuance of common stock
|
-
|
0.3
|
0.1
|
|||||||||
Repurchase of treasury stock
|
(0.2
|
)
|
-
|
-
|
||||||||
Excess tax benefit from exercises of stock options
|
-
|
-
|
0.1
|
|||||||||
Net cash used in financing activities
|
(3.0
|
)
|
(2.3
|
)
|
(2.6
|
)
|
||||||
EFFECTS OF EXCHANGE RATES ON CASH
|
1.3
|
(1.5
|
)
|
(0.1
|
)
|
|||||||
NET INCREASE (DECREASE) IN CASH
|
50.1
|
(16.4
|
)
|
30.7
|
||||||||
CASH – BEGINNING OF YEAR
|
165.0
|
181.4
|
150.7
|
|||||||||
CASH – END OF YEAR
|
$
|
215.1
|
$
|
165.0
|
$
|
181.4
|
||||||
Supplemental disclosures:
|
||||||||||||
Interest paid
|
$
|
0.7
|
$
|
1.1
|
$
|
1.2
|
||||||
Income taxes paid
|
$
|
4.1
|
$
|
5.2
|
$
|
8.1
|
||||||
Supplemental disclosures of non-cash investing and financing activities:
|
||||||||||||
Acquisitions of equipment through capital leases
|
$
|
-
|
$
|
0.8
|
$
|
-
|
Common Stock
|
||||||||||||||||||||||||||||
Number
of Shares
Outstanding
|
Amount
|
Additional
Paid-in
Capital
|
Treasury
Stock,
At Cost
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Total
Equity
|
||||||||||||||||||||||
Balances, December 31, 2012
|
36,555
|
$
|
0.4
|
$
|
183.0
|
$
|
(28.6
|
)
|
$
|
290.5
|
$
|
1.0
|
$
|
446.3
|
||||||||||||||
Stock-based compensation expense
|
2.9
|
2.9
|
||||||||||||||||||||||||||
Issuance of restricted stock
|
140
|
(1.9
|
)
|
1.8
|
(0.1
|
)
|
||||||||||||||||||||||
Exercise of stock options
|
34
|
(0.3
|
)
|
0.4
|
0.1
|
|||||||||||||||||||||||
Surrender of fully vested options and restricted stock
|
(0.4
|
)
|
(0.4
|
)
|
||||||||||||||||||||||||
Change in cumulative translation adjustment
|
1.2
|
1.2
|
||||||||||||||||||||||||||
Net loss
|
(43.8
|
)
|
(43.8
|
)
|
||||||||||||||||||||||||
Balances, December 31, 2013
|
36,729
|
$
|
0.4
|
$
|
183.3
|
$
|
(26.4
|
)
|
$
|
246.7
|
$
|
2.2
|
406.2
|
|||||||||||||||
Stock-based compensation expense
|
1.5
|
1.5
|
||||||||||||||||||||||||||
Issuance of restricted stock
|
45
|
(0.3
|
)
|
0.6
|
0.3
|
|||||||||||||||||||||||
Exercise of stock options
|
34
|
(0.1
|
)
|
0.4
|
0.3
|
|||||||||||||||||||||||
Surrender of fully vested options
|
(0.1
|
)
|
(0.1
|
)
|
||||||||||||||||||||||||
Change in cumulative translation adjustment
|
(11.1
|
)
|
(11.1
|
)
|
||||||||||||||||||||||||
Net loss
|
(37.5
|
)
|
(37.5
|
)
|
||||||||||||||||||||||||
Balances, December 31, 2014
|
36,808
|
$
|
0.4
|
$
|
184.3
|
$
|
(25.4
|
)
|
$
|
209.2
|
$
|
(8.9
|
)
|
359.6
|
||||||||||||||
Stock-based compensation expense
|
1.2
|
1.2
|
||||||||||||||||||||||||||
Issuance of restricted stock
|
86
|
(1.1
|
)
|
1.1
|
-
|
|||||||||||||||||||||||
Exercise of stock options
|
4
|
-
|
-
|
-
|
||||||||||||||||||||||||
Repurchase of treasury stock
|
(25
|
)
|
(0.2
|
)
|
(0.2
|
)
|
||||||||||||||||||||||
Change in cumulative translation adjustment
|
(6.9
|
)
|
(6.9
|
)
|
||||||||||||||||||||||||
Net loss
|
(99.8
|
)
|
(99.8
|
)
|
||||||||||||||||||||||||
Balances, December 31, 2015
|
36,873
|
$
|
0.4
|
$
|
184.4
|
$
|
(24.5
|
)
|
$
|
109.4
|
$
|
(15.8
|
)
|
$
|
253.9
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
DISPOSITION
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net sales
|
$
|
1,053.4
|
$
|
1,338.6
|
$
|
1,376.9
|
||||||
Cost of sales
|
997.1
|
1,222.6
|
1,254.7
|
|||||||||
Gross profit
|
56.3
|
116.0
|
122.2
|
|||||||||
Selling, general and administrative expenses
|
109.9
|
119.7
|
126.0
|
|||||||||
Special charges, net
|
1.6
|
8.5
|
6.0
|
|||||||||
Foreign currency exchange (gain) loss
|
(0.5
|
)
|
0.1
|
(0.4
|
)
|
|||||||
Interest and other income, net
|
0.1
|
0.2
|
-
|
|||||||||
Loss of discontinued operations before income taxes
|
(54.8
|
)
|
(12.5
|
)
|
(9.4
|
)
|
||||||
Benefit for income tax
|
(3.3
|
)
|
(7.0
|
)
|
(8.6
|
)
|
||||||
Net loss from discontinued operations
|
(51.5
|
)
|
(5.5
|
)
|
(0.8
|
)
|
3.
|
ACQUISITIONS
|
Purchase price
|
$
|
25.9
|
||
Less:
|
||||
Cash
|
1.1
|
|||
Accounts receivable
|
10.0
|
|||
Inventory
|
11.8
|
|||
Fixed assets
|
1.2
|
|||
Prepaid expenses
|
0.6
|
|||
Leases, net
|
0.8
|
|||
Client lists
|
2.1
|
|||
Trademarks
|
4.1
|
|||
Accounts payable
|
(7.5
|
)
|
||
Accrued expenses
|
(3.7
|
)
|
||
Other liabilities
|
(0.2
|
)
|
||
Goodwill
|
$
|
5.6
|
Unaudited Pro Forma
|
||||||||
2015
|
2014
|
|||||||
Revenue
|
$
|
1,861.5
|
$
|
2,204.4
|
||||
Net loss
|
$
|
(48.3
|
)
|
$
|
(32.4
|
)
|
4. | GOODWILL AND INTANGIBLES |
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Balance, January 1
|
$
|
3.9
|
$
|
2.4
|
||||
Additions associated with acquisition
|
5.6
|
1.5
|
||||||
Foreign currency translation
|
(0.3
|
)
|
-
|
|||||
Balance, December 31
|
$
|
9.2
|
$
|
3.9
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Balance January 1
|
$
|
2.3
|
$
|
2.3
|
||||
Additions associated with acquisition
|
4.1
|
-
|
||||||
Balance December 31
|
$
|
6.4
|
$
|
2.3
|
December 31,
|
December 31,
|
|||||||||||||||||||||||||
2015
|
2014
|
|||||||||||||||||||||||||
Amortization
Period (Years)
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Weighted avg
useful life
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Weighted avg
useful life
|
||||||||||||||||||||
Client lists
|
5-10 yrs
|
$ |
5.5
|
$ |
3.0
|
8.3
|
$ |
3.6
|
$ |
2.6
|
7.3
|
|||||||||||||||
Leases
|
3-6 yrs
|
0.8
|
0.1
|
4.7
|
-
|
-
|
-
|
|||||||||||||||||||
Trademark
|
1 yr
|
0.2
|
0.2
|
-
|
0.2
|
-
|
-
|
|||||||||||||||||||
Total
|
$ |
6.5
|
$ |
3.3
|
7.3
|
$ |
3.8
|
$
|
2.6
|
7.3
|
2016
|
$
|
0.5
|
||
2017
|
0.5
|
|||
2018
|
0.4
|
|||
2019 and after
|
1.8
|
|||
Total
|
$ |
3.2
|
5.
|
PROPERTY, PLANT AND EQUIPMENT
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Land and buildings
|
$
|
17.7
|
$
|
18.6
|
||||
Furniture and fixtures, office, computer and other equipment and software
|
108.7
|
127.6
|
||||||
Leasehold improvements
|
21.8
|
26.8
|
||||||
148.2
|
173.0
|
|||||||
Less accumulated depreciation and amortization
|
109.9
|
131.8
|
||||||
Property, plant and equipment, net
|
$
|
38.3
|
$
|
41.2
|
2015
|
2014
|
|||||||
Office, computer and other equipment
|
$
|
17.5
|
$
|
17.7
|
||||
Less: Accumulated amortization
|
16.3
|
14.6
|
||||||
$
|
1.2
|
$
|
3.1
|
6.
|
CREDIT FACILITIES
|
7.
|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Payroll and employee benefits
|
$
|
31.0
|
$
|
34.6
|
||||
Advertising
|
7.6
|
11.9
|
||||||
Sales and VAT tax payable
|
5.1
|
9.3
|
||||||
Freight
|
5.6
|
8.0
|
||||||
Reorganization costs
|
6.3
|
4.7
|
||||||
Deferred revenue
|
5.4
|
5.1
|
||||||
Other
|
18.0
|
21.8
|
||||||
$
|
79.0
|
$
|
95.4
|
8.
|
LONG-TERM DEBT
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Warehouse capitalized equipment lease
|
$
|
-
|
$
|
2.2
|
||||
Other capitalized equipment lease
|
1.0
|
1.7
|
||||||
Subtotal
|
1.0
|
3.9
|
||||||
Less: current portion
|
0.6
|
2.8
|
||||||
$
|
0.4
|
$
|
1.1
|
2016
|
2017
|
2018
|
||||||||||
Maturities
|
$
|
0.6
|
$
|
0.3
|
$
|
0.1
|
9.
|
SPECIAL CHARGES, NET
|
EMEA-
Workforce
Reductions and
Personnel Costs
|
NATG-
Workforce
Reductions
|
NATG-
Other Exit
Costs
|
Total
|
|||||||||||||
Balance, January 1, 2015
|
$
|
4.7
|
-
|
$
|
-
|
$
|
4.7
|
|||||||||
Charged to expense
|
0.4
|
5.5
|
33.0
|
38.9
|
||||||||||||
Paid or otherwise settled
|
(4.8
|
)
|
(2.8
|
)
|
(16.7
|
)
|
(24.3
|
)
|
||||||||
Balance, December 31, 2015
|
$
|
0.3
|
2.7
|
$
|
16.3
|
$
|
19.3
|
10.
|
SHAREHOLDERS’ EQUITY
|
2015
|
2014
|
2013
|
||||||||||
Expected annual dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||||
Risk-free interest rate
|
1.73
|
%
|
2.02
|
%
|
1.66
|
%
|
||||||
Expected volatility
|
40.2
|
%
|
46.9
|
%
|
41.1
|
%
|
||||||
Expected life in years
|
6.3
|
6.2
|
7.9
|
Weighted Average
|
||||||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||||||
Shares
|
Exercise
Price
|
Shares
|
Exercise
Price
|
Shares
|
Exercise
Price
|
|||||||||||||||||||
Outstanding at beginning of year
|
1,127,250
|
$
|
16.12
|
1,175,499
|
$
|
16.11
|
1,353,059
|
$
|
15.88
|
|||||||||||||||
Granted
|
25,000
|
$
|
10.62
|
90,000
|
$
|
13.56
|
60,000
|
$
|
9.54
|
|||||||||||||||
Exercised
|
(4,000
|
)
|
$
|
6.30
|
(33,749
|
)
|
$
|
9.78
|
(34,310
|
)
|
$
|
3.04
|
||||||||||||
Cancelled or expired
|
(193,625
|
)
|
$
|
16.29
|
(104,500
|
)
|
$
|
15.83
|
(203,250
|
)
|
$
|
14.84
|
||||||||||||
Outstanding at end of year
|
954,625
|
$
|
15.98
|
1,127,250
|
$
|
16.12
|
1,175,499
|
$
|
16.11
|
|||||||||||||||
Options exercisable at year end
|
832,125
|
839,500
|
772,749
|
|||||||||||||||||||||
Weighted average fair value per option granted during the year
|
$
|
4.44
|
$
|
6.46
|
$
|
4.44
|
Range of Exercise Prices
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
Weighted Average
Remaining
Contractual Life
|
Aggregate
Intrinsic
Value (in
millions)
|
||||||||||||||||||
$
|
5.00
|
to
|
$
|
10.00
|
47,202
|
$
|
9.51
|
7.46
|
$
|
-
|
||||||||||||
$
|
10.01
|
to
|
$
|
15.00
|
390,950
|
$
|
12.84
|
4.98
|
-
|
|||||||||||||
$
|
15.01
|
to
|
$
|
20.00
|
431,763
|
$
|
18.22
|
3.93
|
-
|
|||||||||||||
$
|
20.01
|
to
|
$
|
20.15
|
100,000
|
$
|
20.15
|
1.04
|
-
|
|||||||||||||
$
|
5.00
|
to
|
$
|
20.15
|
969,915
|
$
|
15.83
|
4.22
|
$
|
-
|
Shares
|
Weighted
Average Grant-
Date Fair Value
|
|||||||
Unvested at January 1, 2015
|
287,750
|
$
|
8.21
|
|||||
Granted
|
25,000
|
$
|
4.44
|
|||||
Vested
|
(132,125
|
)
|
$
|
8.67
|
||||
Forfeited
|
(58,125
|
)
|
$
|
7.22
|
||||
Unvested at December 31, 2015
|
122,500
|
$
|
7.40
|
11.
|
INCOME TAXES
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
United States
|
$
|
(14.5
|
)
|
$
|
1.9
|
$
|
(11.1
|
)
|
||||
Foreign
|
(20.3
|
)
|
(22.0
|
)
|
(1.3
|
)
|
||||||
Total
|
$
|
(34.8
|
)
|
$
|
(20.1
|
)
|
$
|
(12.4
|
)
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
3.1
|
$
|
7.6
|
$
|
(0.3
|
)
|
|||||
State
|
0.6
|
0.4
|
0.4
|
|||||||||
Foreign
|
4.3
|
3.2
|
3.4
|
|||||||||
Total current
|
8.0
|
11.2
|
3.5
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
0.1
|
-
|
20.5
|
|||||||||
State
|
-
|
(0.3
|
)
|
5.3
|
||||||||
Foreign
|
5.4
|
1.0
|
1.3
|
|||||||||
Total deferred
|
5.5
|
0.7
|
27.1
|
|||||||||
TOTAL
|
$
|
13.5
|
$
|
11.9
|
$
|
30.6
|
Year Ended December 31,
|
||||||||||||||||||||||||
2015
|
2014
|
2013
|
||||||||||||||||||||||
Income tax at Federal statutory rate
|
$
|
(12.2
|
)
|
(35.0
|
)%
|
$
|
(7.1
|
)
|
(35.0
|
)%
|
$
|
(4.3
|
)
|
(35.0
|
)%
|
|||||||||
Foreign taxes at rates different from the U.S. rate
|
7.7
|
22.2
|
5.2
|
25.9
|
2.2
|
18.1
|
||||||||||||||||||
State and local income taxes, net of federal tax benefit
|
(1.4
|
)
|
(3.9
|
)
|
1.6
|
8.2
|
0.5
|
3.9
|
||||||||||||||||
Impact of state rate changes
|
0.7
|
1.9
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Changes in valuation allowances
|
18.8
|
54.2
|
12.4
|
61.5
|
33.5
|
271.7
|
||||||||||||||||||
Change in deferred tax liability
|
-
|
-
|
-
|
-
|
(1.2
|
)
|
(9.6
|
)
|
||||||||||||||||
Non-deductible items
|
0.1
|
0.2
|
-
|
-
|
0.1
|
0.3
|
||||||||||||||||||
Other items, net
|
(0.2
|
)
|
(0.8
|
)
|
(0.2
|
)
|
(1.1
|
)
|
(0.2
|
)
|
(1.4
|
)
|
||||||||||||
Income tax
|
$
|
13.5
|
38.8
|
%
|
$
|
11.9
|
59.5
|
%
|
$
|
30.6
|
248.0
|
%
|
December 31,
|
||||||||
2015
|
2014
|
|||||||
Assets:
|
||||||||
Accrued expenses and other liabilities
|
$
|
12.4
|
$
|
9.0
|
||||
Inventory
|
5.6
|
4.2
|
||||||
Depreciation
|
0.8
|
2.4
|
||||||
Intangible & other
|
13.0
|
13.4
|
||||||
Net operating loss and credit carryforwards
|
57.4
|
35.0
|
||||||
Valuation allowances
|
(80.6
|
)
|
(48.8
|
)
|
||||
Total non-current deferred tax assets
|
8.6
|
15.2
|
||||||
Liabilities :
|
||||||||
Non-current:
|
||||||||
Other
|
$
|
0.4
|
$
|
-
|
||||
Total non-current liabilities
|
$
|
0.4
|
$
|
-
|
12.
|
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
|
Capital
Leases
|
Operating
Leases
|
Total
|
||||||||||
2016
|
0.6
|
$
|
24.8
|
$
|
25.4
|
|||||||
2017
|
0.3
|
25.0
|
25.3
|
|||||||||
2018
|
0.1
|
22.1
|
22.2
|
|||||||||
2019
|
-
|
20.2
|
20.2
|
|||||||||
2020
|
-
|
16.3
|
16.3
|
|||||||||
2021-2025
|
-
|
44.2
|
44.2
|
|||||||||
2026-2030
|
-
|
22.5
|
22.5
|
|||||||||
Thereafter
|
-
|
4.4
|
4.4
|
|||||||||
Total minimum lease payments
|
1.0
|
179.5
|
180.5
|
|||||||||
Less: sublease rental income
|
-
|
9.2
|
9.2
|
|||||||||
Lease obligation net of subleases
|
1.0
|
$
|
170.3
|
171.3
|
||||||||
Less: amount representing interest
|
0.0
|
|||||||||||
Present value of minimum capital lease payments (including current portion of $0.6)
|
$
|
1.0
|
13.
|
SEGMENT AND RELATED INFORMATION
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net Sales:
|
||||||||||||
IPG
|
$
|
698.6
|
$
|
556.0
|
$
|
473.8
|
||||||
EMEA
|
1,052.9
|
1,189.9
|
1,095.4
|
|||||||||
NATG
|
97.8
|
352.4
|
401.0
|
|||||||||
Corporate and other
|
5.4
|
5.9
|
5.2
|
|||||||||
Consolidated
|
$
|
1,854.7
|
$
|
2,104.2
|
$
|
1,975.4
|
||||||
Depreciation and Amortization Expense:
|
||||||||||||
IPG
|
$
|
3.8
|
$
|
2.1
|
$
|
2.2
|
||||||
EMEA
|
3.9
|
4.0
|
2.9
|
|||||||||
NATG
|
0.6
|
4.1
|
7.0
|
|||||||||
Corporate and other
|
1.0
|
1.3
|
1.0
|
|||||||||
Consolidated
|
$
|
9.3
|
$
|
11.5
|
$
|
13.1
|
||||||
Operating Income (Loss):
|
||||||||||||
IPG
|
$
|
43.7
|
$
|
41.0
|
$
|
40.0
|
||||||
EMEA
|
(10.8
|
)
|
(21.2
|
)
|
(4.2
|
)
|
||||||
NATG
|
(38.2
|
)
|
(17.9
|
)
|
(26.6
|
)
|
||||||
Corporate and other expenses
|
(18.8
|
)
|
(15.6
|
)
|
(20.0
|
)
|
||||||
Consolidated
|
$
|
(24.1
|
)
|
$
|
(13.7
|
)
|
$
|
(10.8
|
)
|
|||
Total Assets
|
||||||||||||
IPG
|
$
|
175.3
|
$
|
135.5
|
$
|
110.0
|
||||||
EMEA
|
238.3
|
313.3
|
331.5
|
|||||||||
NATG
|
26.6
|
187.6
|
266.6
|
|||||||||
Corporate and other
|
269.9
|
260.5
|
234.1
|
|||||||||
Consolidated
|
$
|
710.1
|
$
|
896.9
|
$
|
942.2
|
Year Ended December 31,
|
||||||||||||
2015
|
2014
|
2013
|
||||||||||
Net Sales:
|
||||||||||||
United States
|
$
|
676.8
|
$
|
723.2
|
674.2
|
|||||||
United Kingdom
|
335.7
|
471.9
|
468.5
|
|||||||||
France
|
382.6
|
383.2
|
335.4
|
|||||||||
Other Europe
|
334.5
|
334.8
|
291.5
|
|||||||||
Other North America
|
125.1
|
191.1
|
205.8
|
|||||||||
Consolidated
|
$
|
1,854.7
|
$
|
2,104.2
|
1,975.4
|
|||||||
Long-lived Assets:
|
||||||||||||
United States
|
$
|
18.1
|
$
|
17.1
|
$
|
32.3
|
||||||
United Kingdom
|
15.6
|
17.5
|
18.7
|
|||||||||
France
|
1.1
|
0.8
|
0.9
|
|||||||||
Other Europe and Asia
|
3.5
|
5.5
|
6.4
|
|||||||||
Other North America
|
-
|
0.3
|
1.1
|
|||||||||
Consolidated
|
$
|
38.3
|
$
|
41.2
|
$
|
59.4
|
14.
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
|
First Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
|||||||||||||
2015:
|
||||||||||||||||
Net sales
|
$
|
512.1
|
$
|
454.1
|
$
|
423.2
|
$
|
465.3
|
||||||||
Gross profit
|
$
|
86.5
|
$
|
87.0
|
$
|
82.3
|
$
|
86.9
|
||||||||
Net income (loss)
|
$
|
(18.6
|
)
|
$
|
(19.9
|
)
|
$
|
1.8
|
$
|
(11.6
|
)
|
|||||
Net loss per common share:
|
||||||||||||||||
Basic
|
$
|
(0.50
|
)
|
$
|
(0.54
|
)
|
$
|
0.05
|
$
|
(0.31
|
)
|
|||||
Diluted
|
$
|
(0.50
|
)
|
$
|
(0.54
|
)
|
$
|
0.05
|
$
|
(0.31
|
)
|
|||||
2014:
|
||||||||||||||||
Net sales
|
$
|
541.2
|
$
|
505.6
|
$
|
505.4
|
$
|
552.0
|
||||||||
Gross profit
|
$
|
98.2
|
$
|
93.3
|
$
|
89.9
|
$
|
95.8
|
||||||||
Net loss
|
$
|
(0.3
|
)
|
$
|
(7.5
|
)
|
$
|
(2.4
|
)
|
$
|
(21.8
|
)
|
||||
Net loss per common share:
|
||||||||||||||||
Basic
|
$
|
(0.01
|
)
|
$
|
(0.20
|
)
|
$
|
(0.06
|
)
|
$
|
(0.59
|
)
|
||||
Diluted
|
$
|
(0.01
|
)
|
$
|
(0.20
|
)
|
$
|
(0.06
|
)
|
$
|
(0.59
|
)
|
15.
|
SUBSEQUENT EVENTS (UNAUDITED)
|
Description
|
Balance at
Beginning of
Period
|
Charged to
Expenses
|
Write-offs
|
Other
|
Balance at
End of Period
|
|||||||||||||||
Allowance for doubtful accounts
|
||||||||||||||||||||
2015
|
$
|
6.5
|
$
|
7.9
|
$
|
(4.8
|
)
|
$
|
0.2
|
(1)
|
$
|
9.8
|
||||||||
2014
|
$
|
5.8
|
$
|
8.9
|
$
|
(8.3
|
)
|
$
|
0.1
|
(2)
|
$
|
6.5
|
||||||||
2013
|
$
|
6.3
|
$
|
4.0
|
$
|
(4.5
|
)
|
$
|
-
|
$
|
5.8
|
|||||||||
Allowance for sales returns
|
||||||||||||||||||||
2015
|
$
|
9.3
|
$
|
5.9
|
$
|
-
|
$
|
(9.3
|
)(3)
|
$
|
5.9
|
|||||||||
2014
|
$
|
10.9
|
$
|
9.3
|
$
|
-
|
$
|
(10.9
|
)(3)
|
$
|
9.3
|
|||||||||
2013
|
$
|
9.2
|
$
|
10.9
|
$
|
-
|
$
|
(9.2
|
)(3)
|
$
|
10.9
|
|||||||||
Allowance for inventory returns
|
||||||||||||||||||||
2015
|
$
|
(7.8
|
)
|
$
|
(4.9
|
)
|
$
|
-
|
$
|
7.8
|
(3)
|
$
|
(4.9
|
)
|
||||||
2014
|
$
|
(9.2
|
)
|
$
|
(7.8
|
)
|
$
|
-
|
$
|
9.2
|
(3)
|
$
|
(7.8
|
)
|
||||||
2013
|
$
|
(8.0
|
)
|
$
|
(9.2
|
)
|
$
|
-
|
$
|
8.0
|
(3)
|
$
|
(9.2
|
)
|
||||||
Allowance for deferred tax assets
|
||||||||||||||||||||
2015
|
||||||||||||||||||||
Noncurrent
|
$
|
48.8
|
$
|
35.8
|
$
|
-
|
$
|
(4.0
|
)
|
$
|
80.6
|
|||||||||
2014
|
||||||||||||||||||||
Noncurrent
|
$
|
39.7
|
$
|
9.1
|
$
|
-
|
$
|
-
|
$
|
48.8
|
||||||||||
2013
|
||||||||||||||||||||
Noncurrent
|
$
|
11.1
|
$
|
28.6
|
$
|
-
|
$
|
-
|
$
|
39.7
|
1.5 | Non-Assignable Assets; Undisclosed Contracts. |
1.6 | Certain Purchased Asset and Assumed Liability Transfers. |
4.4 | Certain Notifications. |
4.6 | Access to Information. |
6.2 | Charter Documents |
6.5 | Material Contracts. |
6.7 | Title; Condition of Assets. |
6.8 | Real Property. |
6.12 | Compliance with Laws. |
6.13 | Governmental Approvals. |
6.14 | Proceedings and Orders. |
6.15 | Environmental Matters. |
6.16 | Taxes. |
6.21 | Canadian Competition Act and Investment Canada Act. |
6.22 | Full Disclosure. |
8.9 | Tax Elections. |
8.11 | Reserved. |
9.1 | Transferred Employees. |
U.S. PURCHASER:
|
||
INTELLIGENT IT, INC.
|
||
By:
|
/s/ Brandon LaVerne
|
|
Name:
|
Brandon LaVerne
|
|
Title:
|
President
|
|
CANADIAN PURCHASER:
|
||
ACRODEX INC.
|
||
By:
|
/s/ Yasmin Jivraj
|
|
Name:
|
Yasmin Jivraj
|
|
Title:
|
President
|
|
PCM:
|
||
PCM, INC.
|
||
By:
|
/s/ Frank Khulusi
|
|
Name:
|
Frank Khulusi
|
|
Title:
|
Chief Executive Officer
|
|
SYSTEMAX:
|
||
SYSTEMAX INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
Chief Financial Officer
|
SELLERS:
|
||
TIGERDIRECT, INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
TIGERDIRECT CA, INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
GLOBAL GOV/ED SOLUTIONS, INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
INFOTEL DISTRIBUTORS INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
TEK SERV INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
GLOBAL COMPUTER SUPPLIES, INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
SYX DISTRIBUTION INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
SYX SERVICES INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
SYSTEMAX NORTH AMERICA TECH HOLDINGS, LLC
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
SOFTWARE LICENSING CENTER, INC.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
|
POCAHONTAS CORP.
|
||
By:
|
/s/ Larry Reinhold
|
|
Name:
|
Larry Reinhold
|
|
Title:
|
President
|
Schedule
|
Title
|
Location
|
Schedule 1.1(a)
|
Leased Real Property
|
Reference is made to folder 2.8.1 of the VDR.
|
Schedule 1.1(c)
|
Personal Property Leases
|
Reference is made to folder 2.8.2 of the VDR.
|
Schedule 1.1(e)
|
Seller Contracts
|
Reference is made to folder 2.8.3 of the VDR.
|
Schedule 1.1(f)
|
Seller Intellectual Property
|
Reference is made to folder 2.8.4 of the VDR.
|
Schedule 1.2
|
Excluded Assets
|
Reference is made to folder 2.8.5 of the VDR.
|
Schedule 4.1
|
Sellers’ Conduct of the Business Prior to Closing
|
Reference is made to folder 2.8.6 of the VDR.
|
Schedule 4.2
|
Restrictions on Sellers’ Conduct of the Business Prior to Closing
|
Reference is made to folder 2.8.7 of the VDR.
|
Schedule 6.1
|
Organization; Good Standing; Qualification
|
Reference is made to folder 2.8.8 of the VDR.
|
Schedule 6.4
|
No Conflicts; Consents
|
Reference is made to folder 2.8.9 of the VDR.
|
Schedule 6.5
|
Material Contracts
|
Reference is made to folder 2.8.10 of the VDR.
|
Schedule 6.6
|
Customers
|
Reference is made to folder 2.8.11 of the VDR.
|
Schedule 6.7
|
Title; Condition of Assets
|
Reference is made to folder 2.8.12 of the VDR.
|
Schedule 6.8
|
Real Property
|
Reference is made to folder 2.8.13 of the VDR.
|
Schedule 6.9
|
Intellectual Property
|
Reference is made to folder 2.8.14 of the VDR.
|
Schedule 6.10
|
Employees and Consultants
|
Reference is made to folder 2.8.15 of the VDR.
|
Schedule 6.12
|
Compliance with Laws
|
Reference is made to folder 2.8.16 of the VDR.
|
Schedule 6.13
|
Governmental Approvals
|
Reference is made to folder 2.8.17 of the VDR.
|
Schedule 6.14
|
Proceedings and Orders
|
Reference is made to folder 2.8.18 of the VDR.
|
Schedule 6.15
|
Environmental Matters
|
Reference is made to folder 2.8.19 of the VDR.
|
Schedule 6.16(b)
|
Taxes
|
Reference is made to folder 2.8.20 of the VDR.
|
Schedule 8.14
|
Sellers Delivery of Systems
|
Reference is made to folder 2.8.21 of the VDR.
|
Schedule 9.1(a)
|
Transferred Employees
|
Reference is made to folder 2.8.22 of the VDR.
|
Schedule 9.1(b)
|
Restrictive Covenants Regarding Employees
|
Reference is made to folder 2.8.22 of the VDR.
|
INTELLIGENT IT, INC.
|
PCM, INC.
|
||||
By:
|
/s/ Brandon LaVerne
|
By:
|
/s/ Frank Khulusi
|
||
Name:
|
Brandon LaVerne
|
Name:
|
Frank Khulusi
|
||
Title:
|
President
|
Title:
|
Chief Executive Officer
|
||
ACRODEX INC.
|
SYSTEMAX INC.
|
||||
By:
|
/s/ Yasmin Jivraj
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Yasmin Jivraj
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
Chief Financial Officer
|
||
TIGERDIRECT, INC.
|
TEK SERV INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
TIGERDIRECT CA, INC.
|
GLOBAL COMPUTER SUPPLIES, INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
GLOBAL GOV/ED SOLUTIONS, INC.
|
SYX DISTRIBUTION INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
INFOTEL DISTRIBUTORS INC.
|
SYX NORTH AMERICAN TECH HOLDINGS, LLC
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
SYX SERVICES INC.
|
SOFTWARE LICENSING CENTER, INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
POCAHONTAS CORP.
|
|||||
By:
|
/s/ Larry Reinhold
|
||||
Name:
|
Larry Reinhold
|
||||
Title:
|
President
|
PCM SALES, INC.
|
PCM, INC.
|
||||
By:
|
/s/ Stephen Moss
|
By:
|
/s/ Frank Khulusi
|
||
Name:
|
Stephen Moss
|
Name:
|
Frank Khulusi
|
||
Title:
|
President
|
Title:
|
Chief Executive Officer
|
||
ACRODEX INC.
|
SYSTEMAX INC.
|
||||
By:
|
/s/ Simon Abuyounes
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Simon Abuyounes
|
Name:
|
Larry Reinhold
|
||
Title:
|
Treasurer
|
Title:
|
Chief Financial Officer
|
||
TIGERDIRECT, INC.
|
TEK SERV INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
TIGERDIRECT CA, INC.
|
GLOBAL COMPUTER SUPPLIES, INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
GLOBAL GOV/ED SOLUTIONS, INC.
|
SYX DISTRIBUTION INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
INFOTEL DISTRIBUTORS INC.
|
SYX NORTH AMERICAN TECH HOLDINGS, LLC
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
SYX SERVICES INC.
|
SOFTWARE LICENSING CENTER, INC.
|
||||
By:
|
/s/ Larry Reinhold
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Larry Reinhold
|
Name:
|
Larry Reinhold
|
||
Title:
|
President
|
Title:
|
President
|
||
POCAHONTAS CORP.
|
|||||
By:
|
/s/ Larry Reinhold
|
||||
Name:
|
Larry Reinhold
|
||||
Title:
|
President
|
PCM SALES, INC.
|
PCM, INC.
|
||||
By:
|
/s/ Stephen Moss
|
By:
|
/s/ Frank Khulusi | ||
Name:
|
Stephen Moss
|
Name:
|
Frank Khulusi
|
||
Title:
|
President |
Title:
|
Chief Executive Officer | ||
ACRODEX INC.
|
SYSTEMAX INC.
|
||||
By:
|
/s/ Yasmin Jivraj
|
By:
|
/s/ Larry Reinhold
|
||
Name:
|
Yasmin Jivraj |
Name:
|
Larry Reinhold | ||
Title:
|
President
|
Title:
|
Chief Financial Officer | ||
TIGERDIRECT, INC.
|
TEK SERV INC.
|
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By:
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/s/ Larry Reinhold |
By:
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/s/ Larry Reinhold
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Name:
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Larry Reinhold |
Name:
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Larry Reinhold | ||
Title:
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President
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Title:
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President
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TIGERDIRECT CA, INC.
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GLOBAL COMPUTER SUPPLIES, INC.
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By:
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/s/ Larry Reinhold
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By:
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/s/ Larry Reinhold | ||
Name:
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Larry Reinhold |
Name:
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Larry Reinhold | ||
Title:
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President |
Title:
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President | ||
GLOBAL GOV/ED SOLUTIONS, INC. | SYX DISTRIBUTION INC. | ||||
By:
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/s/ Larry Reinhold
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By:
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/s/ Larry Reinhold | ||
Name:
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Larry Reinhold |
Name:
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Larry Reinhold
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Title:
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President |
Title:
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President | ||
INFOTEL DISTRIBUTORS INC.
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SYX NORTH AMERICAN TECH HOLDINGS, LLC | ||||
By:
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/s/ Larry Reinhold |
By:
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/s/ Larry Reinhold
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Name:
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Larry Reinhold
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Name:
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Larry Reinhold | ||
Title:
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President |
Title:
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President | ||
SYX SERVICES INC.
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SOFTWARE LICENSING CENTER, INC. | ||||
By:
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/s/ Larry Reinhold
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By:
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/s/ Larry Reinhold | ||
Name:
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Larry Reinhold |
Name:
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Larry Reinhold | ||
Title:
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President |
Title:
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President | ||
POCAHONTAS CORP.
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By:
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/s/ Larry Reinhold
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Name:
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Larry Reinhold
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Title:
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President
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· | Avoid conflicts of interest and potential conflicts of interest between you and the Company. |
· | Do not offer or make gifts to customers (unless not of excessive value and unless for a business purpose of the Company). Cash or cash equivalent gifts of any value are absolutely prohibited. |
· | Do not offer or make gifts or payments to or otherwise attempt to bribe or unfairly influence a government official. |
· | Do not accept gifts or other personal payments from suppliers, service providers, customers or competitors (unless not of excessive value). Cash or cash equivalent gifts of any value are absolutely prohibited. |
· | Do not compete with the Company or take personal advantage of Company business opportunities, or have significant interests in companies the Company does business with. |
· | Do not waste, misappropriate or misuse Company assets. |
· | Keep all non-public Company information confidential. |
· | Deal with all customers, suppliers and competitors fairly. |
· | Comply with all laws and government regulations in all countries where the Company does business including laws against non-competitive practices (antitrust laws), insider stock trading, employment discrimination, bribery and other foreign corrupt practices, workplace safety laws and export/customs laws. |
· | Disclose and record accurately any use of Company funds. |
· | Do not falsify, inflate or disguise any accounting record or other business records of the Company. |
· | Report all violations of law and/or Company Ethics Policy to appropriate Company officials (see Section 11 below) or to the Company’s Anonymous Complaint Hotline (see Section 12 below). |
1. | Loyalty to the Company and its Shareholders: |
2. | Conflicts of Interest: |
3. | Gifts, Incentive Awards and Relationships with Customers, Suppliers and Service Providers: |
4. | Corporate Opportunities: |
5. | Protection and Proper Use of Company Assets: |
6. | Confidentiality: |
7. | Fair Treatment of Fellow Employees: |
8. | Fair dealing: |
9. | Compliance with Applicable Laws and Regulations of Governmental Bodies and Agencies: |
10. | Maintenance of Accurate and Complete Books and Records; Financial Reporting: |
11. | Exceptions in Particular Cases; Waiver. |
12. | Importance of Compliance with These Policies: |
SUBSIDIARIES OF SYSTEMAX INC.
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(as of March 9, 2016)
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Company Name
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Jurisdiction
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Afligo Marketing Services Inc.
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USA (FL)
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Avenue Industrial Supply Company Limited
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Canada
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C&H Distribution Holdings Inc.
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USA (DE)
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C&H Distributors, LLC
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USA (DE)
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C&H Service, LLC
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USA (DE)
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Distribucion Industrial Globales S. de R.I de CV
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Mexico
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Global Directmail BV
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Netherlands
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Global Equipment Company Inc.
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USA (NY)
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Global Gov/Ed Solutions Inc.
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USA (DE)
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Global Industrial Distribution Inc.
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USA (DE)
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Global Industrial Government Solutions Inc.
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USA (DE)
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Global Industrial Holdings LLC
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USA (DE)
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Global Industrial Marketplace Inc.
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USA (DE)
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Global Industrial Mexico Holdings II Inc.
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USA (DE)
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Global Industrial Mexico Holdings Inc.
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USA (DE)
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Global Industrial Services Inc.
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USA (DE)
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I-Com Software EURL
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France
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Industrialsupplies.Com, LLC
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USA (DE)
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Infotel Distributors Inc.
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USA (DE)
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InMac WStore SAS
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France
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Misco AB
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Sweden
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Misco America Inc.
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USA (FL)
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Misco Germany Inc.
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USA (NY)
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Misco Germany Inc. Zweigniederlassung
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Germany
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Misco Iberia Computer Supplies S.L.
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Spain
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Misco Ireland Ltd
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Ireland
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Misco Nederland BV
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Netherlands
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Misco Solutions B.V.
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Netherlands
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Misco UK Limited
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United Kingdom
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NA Tech Computer Supplies Inc.
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USA (NY)
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NA Tech Canada.ca Inc
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Canada
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NA Tech Direct Inc.
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USA (FL)
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NA Tech Retail Services Inc.
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USA (DE)
|
New SAH Corp.
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USA (DE)
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Nexel Industries, Inc.
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USA (NY)
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Onrebate.com Inc.
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USA (DE)
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Papier Catalogues, Inc.
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USA (NY)
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Pocahontas Corp.
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USA (DE)
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Products For Industry, LLC
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USA (DE)
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Rebate Holdings LLC
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USA (DE)
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Software Licensing Center, Inc.
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USA (FL)
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Streak Products Inc.
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USA (DE)
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Systemax Business Services Kft
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Hungary
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Systemax EMEA Technology Group Limited
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United Kingdom
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Systemax Europe Sarl
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Luxembourg
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Systemax Global Solutions Inc.
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USA (NY)
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Systemax Inc.
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USA (DE)
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Systemax Italy S.r.l.
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Italy
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Systemax Puerto Rico, Inc.
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Puerto Rico
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Systemax sp. Z.o.o
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Poland
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SYX Distribution Inc.
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USA (DE)
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SYX North American Tech Holdings LLC
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USA (DE)
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SYX S.A. Holdings II Inc.
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USA (DE)
|
SYX S.A. Holdings Inc.
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USA (DE)
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SYX Services Inc.
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USA (DE)
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SYX Services Private Limited
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India
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Target Advertising Inc.
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USA (DE)
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Tek Serv Inc.
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USA (DE)
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WStore Europe S.A.S.
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France
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(1) | Registration Statement (Form S-8 No. 333-21489), pertaining to the 1995 Stock Plan for Non-Employee Directors, |
(2) | Registration Statement (Form S-8 No. 333-12491), pertaining to the 1995 Long-Term Stock Incentive Plan, |
(3) | Registration Statement (Form S-8 No. 333-111618), pertaining to the 1999 Long-Term Stock Incentive Plan, and |
(4) | Registration Statement (Form S-8 No. 333-176264), pertaining to the 2010 Long-Term Incentive Plan; |
/s/ Ernst & Young LLP
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New York, New York
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March 17, 2016
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1. | I have reviewed this annual report on Form 10-K of Systemax Inc. (the "registrant"); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Dated: March 17, 2016
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/s/ Lawrence P. Reinhold
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Lawrence P. Reinhold, Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Systemax Inc. (the "registrant");
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2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting |
Dated: March 17, 2016
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/s/ Lawrence P. Reinhold
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Lawrence P. Reinhold, Chief Financial Officer
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Dated: March 17, 2016
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/s/Lawrence P. Reinhold
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Lawrence P. Reinhold, Chief Executive Officer
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Dated: March 17, 2016
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/s/Lawrence P. Reinhold
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Lawrence P. Reinhold, Chief Financial Officer
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Document and Entity Information - USD ($) |
12 Months Ended | ||
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Dec. 31, 2015 |
Mar. 10, 2016 |
Jun. 30, 2015 |
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Document and Entity Information [Abstract] | |||
Entity Registrant Name | SYSTEMAX INC | ||
Entity Central Index Key | 0000945114 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 93,208,121 | ||
Entity Common Stock, Shares Outstanding | 36,877,688 | ||
Document Fiscal Year Focus | 2015 | ||
Document Fiscal Period Focus | FY | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Current assets: | ||
Accounts receivable, allowances | $ 15.7 | $ 15.8 |
Shareholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 38,861,992 | 38,861,992 |
Common stock, shares outstanding (in shares) | 36,872,688 | 36,808,158 |
Treasury stock (in shares) | 1,989,304 | 2,053,834 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS [Abstract] | |||
Net loss | $ (99.8) | $ (37.5) | $ (43.8) |
Other comprehensive loss: | |||
Foreign currency translation gain (loss) | (6.9) | (11.1) | 1.2 |
Total comprehensive loss | $ (106.7) | $ (48.6) | $ (42.6) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
12 Months Ended | ||
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Dec. 31, 2015 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Systemax Inc. is primarily a direct marketer of brand name and private label products. During 2015, the Company’s operations were organized in three reportable business segments — Industrial Products Group (“IPG”), EMEA Technology Products Group (“EMEA”) and what was the largest business in terms of revenue, North America Technology Products Group (“NATG”). EMEA and NATG were aggregated in prior years. Smaller business operations and corporate functions are aggregated and reported as an additional segment – Corporate and Other (“Corporate”). On December 1, 2015, the Company sold the business operations and certain assets and liabilities of the NATG business to PCM, Inc. (“PCM”) for approximately $14 million (See Note 2). As a result, the operations of NATG are now reported both within continuing operations and as discontinued operations in this Form 10-K. The Company follows the guidance under Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which requires disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. Under ASU 2014-08 in order for a disposal to qualify for discontinued operations presentation in the financial statements the disposal must be a “strategic shift” with a major impact for the reporting enity. If the entity meets this threshold, only the components that were in operation at the time of disposal are presented as discontinued operations. The sale of the NATG business in December 2015 had a major impact on the Company and therefore met the strategic shift criteria. The NATG components in operaton at the time of the sale were the B2B and Ecommerce businesses and the three remaining retail stores. Accordingly these components and the results of operations have been adjusted in the accompanying financial statements to reflect the presentation of the discontinued operations. As part of the March 31, 2015 announcement of restructuring the business the Company closed 31 retail stores and a warehouse during the second quarter of fiscal 2015. The Company assessed the disposal group under ASU 2014-08 and concluded the closure of the disposal group to be a "strategic shift". However, this strategic shift was not determined to be a "major" strategic shift based on the portion of the consolidated business that the disposal group represented. Accordingly this disposal group, which includes all the operations that were ceased prior to the December 2015 sale to PCM is not presented in the accompanying financial statements as discontinued operations and remains in continuing operations for the twelve months ended December 31, 2015 and prior periods. Pretax losses for this disposal group were $39.0 million, $17.9 million and $26.8 million for the year ended December 31, 2015, 2014 and 2013, respectively. Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Systemax Inc. and its wholly-owned subsidiaries (collectively, the “Company” or “Systemax”). All significant intercompany accounts and transactions have been eliminated in consolidation. Reclassifications — Certain prior year amounts were reclassified to conform to current year presentation. Fiscal Year — The Company’s fiscal year ends at midnight on the Saturday closest to December 31. For clarity of presentation herein, all fiscal years are referred to as if they ended on December 31. The fiscal year is divided into four fiscal quarters that each end at midnight on a Saturday. Fiscal quarters will typically include 13 weeks, but the fourth quarter will include 14 weeks in a 53 week fiscal year. For clarity of presentation herein, all fiscal quarters are referred to as if they ended on the traditional calendar month. The full year of 2015 included 53 weeks compared to 2014 and 2013 which included 52 weeks. Use of Estimates In Financial Statements — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment, therefore, actual results could differ from these estimates. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Significant estimates and assumptions by management affect the allowance for doubtful accounts, sales return returns and allowances, inventory reserves, allowances for cooperative advertising, vendor drop shipments, the carrying value of long‑lived assets (including goodwill and intangible assets), the carrying value, capitalization and amortization of software development costs, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, sub-rental lease income, litigation and related legal accruals and the value attributed to employee stock options and other stock‑based awards. Foreign Currency Translation — The Company has operations in numerous foreign countries. The functional currency of each foreign country is the local currency. The financial statements of the Company’s foreign entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for assets and liabilities, year to date average exchange rates for the statement of operations items and historical rates for equity accounts. Translation gains or losses are recorded as a separate component of shareholders’ equity. Cash — The Company considers amounts held in money market accounts and other short-term investments, including overnight bank deposits, with an original maturity date of three months or less to be cash. Cash overdrafts are classified in accounts payable. Inventories — Inventories consist primarily of finished goods and are stated at the lower of cost or market value. Cost is determined by using the first-in, first-out method except in certain locations in Europe and retail locations where an average cost is used. Property, Plant and Equipment — Property, plant and equipment is stated at cost. Furniture, fixtures and equipment, including equipment under capital leases, are depreciated using the straight-line or accelerated method over their estimated useful lives ranging from three to ten years. Buildings are depreciated using the straight-line method over estimated useful lives of 30 to 50 years. Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of operations in the period realized. Internal-Use Software - Internal‑use software is included in fixed assets and is amortized on a straight‑line basis over 3 years. The Company capitalizes costs incurred during the application development stage. Costs related to minor upgrades, minor enhancements and maintenance activities are expensed as incurred. Evaluation of Long-lived Assets — 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. As a result of negative cash flows in its now discontinued NATG operations and its EMEA operations in Germany, Italy, Spain and Sweden, and a forecast for continued use of cash in 2015, the Company conducted an evaluation of the long-lived assets in those operations and concluded that those assets were impaired. Accordingly an impairment charge of approximately $1.4 million, pre-tax, was recorded during the year ended December 31, 2015. In 2014, NATG operations recorded an impairment charge of $10.0 million, pre-tax, after the Company conducted an evaluation of its long-lived assets and determined that those assets were impaired. Business Combinations — The Company accounts for its business combinations using the acquisition method of accounting. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of (i) the total costs of acquisition over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. Goodwill and Intangible Assets — Goodwill represents the excess of the cost of acquired assets over the fair value of assets acquired. 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. Income Taxes — The Company accounts for income taxes using the liability method, under which deferred tax assets and liabilities are determined based on the future tax consequences attributable to differences between the financial reporting carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards and net operating loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be in effect when the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income, and a valuation allowance is established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized. The Company recognizes and measures uncertain tax positions using a two‑step approach. The first step is to evaluate the tax position taken or expected to be taken by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Significant judgment is required to evaluate uncertain tax positions. The Company evaluates its uncertain tax positions on a regular basis. Its evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of audit and effective settlement of audit issues. The Company’s policy is to include interest and penalties related to unrecognized tax benefits as income tax expense in the consolidated statements of operations. Revenue Recognition and Accounts Receivable — The Company recognizes sales of products, including shipping revenue, when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met at the time the product is received by the customers when title and risk of loss have transferred except in our Industrial Products segment where title and risk pass at time of shipment. Allowances for estimated subsequent customer returns, rebates and sales incentives are provided when revenues are recorded. Revenues exclude sales tax collected. The Company evaluates collectability of accounts receivable based on numerous factors, including past transaction history with customers and their credit rating and provides a reserve for accounts that are potentially uncollectible. Trade receivables are generally written off once all collection efforts have been exhausted. Accounts receivable are shown in the consolidated balance sheets net of allowances for doubtful collections and subsequent customer returns. Shipping and Handling Costs— The Company recognizes shipping and handling costs in cost of sales. Advertising Costs — Expenditures for internet, television, local radio and newspaper advertising are expensed in the period the advertising takes place. Catalog preparation, printing and postage expenditures are amortized over the period of catalog distribution during which the benefits are expected, generally one to four months. Net advertising expenses were $74.4 million, $68.1 million and $60.1 million during 2015, 2014 and 2013, respectively, and are included in the accompanying consolidated statements of operations. Of the previously mentioned amounts, NATG operations net advertising expenses totaled $7.5 million, $10.7 million and $14.1 million during 2015, 2014 and 2013, respectively. The Company utilizes advertising programs to support vendors, including catalogs, internet and magazine advertising, and receives payments and credits from vendors, including consideration pursuant to volume incentive programs and cooperative marketing programs. The Company accounts for consideration from vendors as a reduction of cost of sales unless certain conditions are met showing that the funds are used for specific, incremental, identifiable costs, in which case the consideration is accounted for as a reduction in the related expense category, such as advertising expense. The amount of vendor consideration recorded as a reduction of selling, general and administrative expenses totaled $20.2 million, $38.8 million and $45.9 million during 2015, 2014 and 2013, respectively. Of the previously mentioned amounts, NATG operations vendor consideration recorded as a reduction of selling, general and administrative expenses totaled $12.1 million, $24.9 million and $28.3 million, respectively. Stock Based Compensation — The fair value of employee share options is recognized in expense over the vesting period of the options, using the graded attribution method. The fair value of employee share options is determined on the date of grant using the Black-Scholes option pricing model. The Company has used historical volatility in its estimate of expected volatility. The expected life represents the period of time (in years) for which the options granted are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury yield curve. Stock-based compensation expense includes an estimate for forfeitures and is recognized over the expected term of the award. Net Income (Loss) Per Common Share – Net income per common share - basic is 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 1.0 million shares, 0.8 million shares and 1.3 million shares for the years ended December 31, 2015, 2014 and 2013, respectively, due to their antidilutive effect. Employee Benefit Plans - The Company’s U.S. subsidiaries participate in a defined contribution 401(k) plan covering substantially all U.S. employees. Employees may invest 1% or more of their eligible compensation, limited to maximum amounts as determined by the Internal Revenue Service. The Company provides a matching contribution to the plan, determined as a percentage of the employees’ contributions. Aggregate expense to the Company for contributions to such plans was approximately $0.9 million in 2015, 2014 and 2013, respectively and of these amounts, NATG operations expense was $0.4 million, $0.5 million and $0.5 million in each of 2015, 2014 and 2013, respectively. Fair Value Measurements - Financial instruments consist primarily of investments in cash, trade accounts receivable, debt and accounts payable. The Company estimates the fair value of financial instruments based on interest rates available to the Company. At December 31, 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. Cash is classified as Level 1 within the fair value hierarchy. The Company’s debt is considered to be representative of its fair value because of its variable interest rate. The weighted average interest rate on short-term borrowings was 4.3%, 4.3%, and 4.3% in 2015, 2014 and 2013, respectively. The fair value of goodwill, non-amortizing intangibles and long lived assets is measured in connection with the Company’s annual impairment testing as discussed above. Significant Concentrations - Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and accounts receivable. The Company’s excess cash balances are invested with money center banks. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers and their geographic dispersion comprising the Company’s customer base. The Company also performs on-going credit evaluations and maintains allowances for potential losses as warranted. The Company purchases substantially all of our products and components directly from manufacturers and large wholesale distributors. Two vendors accounted for 10% or more of our purchases in 2015 and 2014: one vendor accounted for 12.2% and 12.6%, respectively; another vendor accounted for 10.9% and 11.6%, respectively. In 2013, one vendor accounted for 13.9% of our purchases. Excluding NATG operations, no vendor accounted for 10% or more of our purchases in 2015, 2014 or 2013. Recent Accounting Pronouncements Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities issue numerous pronouncements, most of which are not applicable to the Company’s current or reasonably foreseeable operating structure. Below are the new authoritative pronouncements that management believes are relevant to Company’s current operations. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the revised guidance requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018; early adoption is allowed. The revised guidance is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company is currently evaluating the transition method that will be elected and the potential effect the revised guidance will have on the Company’s consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments (Topic 805). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted, and is to be applied on a prospective basis. The Company is currently in the process of evaluating the impact of the adoption of this standard on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the consolidated balance sheet. The amendments in the update require that all deferred tax liabilities and assets be classified as noncurrent in the consolidated balance sheet. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods therein and may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. The Company has early adopted this standard in the fourth quarter of 2015 on a retrospective basis. Prior periods have been retrospectively adjusted. As a result of the adoption of ASU 2015-17, the Company reclassified $1.7 million of net current deferred tax assets and $1.9 million of noncurrent deferred tax liabilities in the 2014 balance sheet. In February 2016, the FASB issued ASU 2016-02, Leases, which requires a lessee, in most leases, to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. The Company is evaluating the effect of adopting this pronouncement. |
DISPOSITION |
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DISPOSITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISPOSITION |
In March 2015 the Company announced a restructuring of its NATG business and closed 31 retail stores and a warehouse during the second quarter of fiscal 2015. The Company assessed the disposal group under ASU 2014-08 and concluded the closure of the disposal group to be a "strategic shift". However, this strategic shift was not determined to be a "major" strategic shift based on the portion of our consolidated business that the disposal group represented. Accordingly this disposal group is not presented in the accompanying financial statements as discontinued operations and remains in continuing operations for the twelve months ended December 31, 2015 and prior periods. On November 17, 2015 the Company and PCM entered into an asset purchase agreement under which PCM acquired certain business to business assets of NATG, including the TigerDirect brand, for $14 million in cash and the assumption of certain liabilities. The proceeds from the sale are recorded in special charges, net within NATG discontinued operations loss. PCM did not acquire cash, accounts receivable, inventory or assume trade payables in connection with the transaction. This transaction closed on December 1, 2015 and on that date, the parties entered into a transition services agreement to facilitate an orderly transition of the purchased assets and for the provision of various IT and back office support services. The Company announced that after the sale and certain transition services agreements with PCM were completed, the Company would completely exit the remaining NATG operations during early 2016. This exit plan included the closing of the three remaining retail stores and management operations, the closing of its NATG distribution center, and implementing a general workforce reduction representing a major strategic shift, and, as a result the B2B and Ecommerce business and the three remaining retail stores in operation at the time of the sale are presented as discontinued operations. A reconciliation of pretax loss of Discontinued Operations to the Net Loss of Discontinued Operations is as follows:
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ACQUISITIONS |
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ACQUISITIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS |
On January 30, 2015, IPG acquired all of the outstanding equity interests of the Plant Equipment Group (“PEG”) from TAKKT America, a business-to-business direct marketer of maintenance, repair and operations (“MRO”) products with operations in North America 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. This acquisition expanded the IPG segment presence in the MRO market in North America. The acquisition is considered an asset acquisition for tax purposes and as such, the goodwill resulting from this acquisition is tax deductible. The total associated transaction costs of the acquisition were $0.4 million and were recorded in selling, general and administrative expense. The acquisition was accounted for using the acquisition method of accounting, which requires, among other things, the assets acquired and the liabilities assumed be recognized at their fair values as of the acquisition date. The following table summarizes the fair value of the assets acquired and liabilities assumed (in millions):
The amount allocated to goodwill reflects the benefits the Company expects to realize from the growth of the acquisition’s operations. For the twelve months ended December 31, 2015 PEG generated approximately $89.1 million in revenue and approximately $1.1 million of pretax income. The Company’s unaudited pro forma revenue and net loss for the years ended December 31, 2015 and 2014 below have been prepared as if PEG had been purchased on January 1, 2014 (in millions).
The unaudited pro forma financial information above is not necessarily indicative of what the Company’s consolidated results actually would have been if the acquisitions had been completed at the beginning of the respective periods. In addition, the unaudited pro forma information above does not attempt to project the Company’s future results. On June 12, 2014, the Company acquired Misco Solutions (f/k/a SCC Services B.V.), a supplier of business-to-business IT products and services with operations in the Netherlands. The purchase price (after giving effect to the conversion of Euros to U.S. dollars) was approximately $7.3 million in cash (5.4 million Euro), $0.6 million (0.4 million Euro) of which was placed into an escrow account for one year to secure the sellers’ indemnification obligations under the purchase agreement. The Company completed its purchase price allocation and recorded assets of approximately $1.5 million for Goodwill, $1.0 million for Client Lists and $0.2 million for Trademarks. The operating results of Misco Solutions are included in the accompanying consolidated statements of operations from the date of acquisition in the EMEA segment. The Company has determined that this was not a material acquisition for further financial statement disclosure purposes. |
GOODWILL AND INTANGIBLES |
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GOODWILL AND INTANGIBLES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLES |
Goodwill: The following table provides information related to the carrying value of goodwill (in millions):
Indefinite-lived intangible assets: The following table summarizes information related to indefinite-lived intangible assets (in millions):
Definite-lived intangible assets: The following table summarizes information related to definite-lived intangible assets (in millions):
The aggregate amortization expense for these intangibles was approximately $0.7 million in 2015. The estimated amortization for future years ending December 31 is as follows (in millions):
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PROPERTY, PLANT AND EQUIPMENT |
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PROPERTY, PLANT AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY, PLANT AND EQUIPMENT |
Property, plant and equipment, net consist of the following (in millions):
Included in property, plant and equipment are assets under capital leases, as follows (in thousands):
Depreciation charged to operations for property, plant and equipment including capital leases in 2015, 2014, and 2013 was $11.1 million, $15.4 million and $17.4 million, respectively. NATG operations accounted for $3.1 million, $8.5 million and $11.9 million, of these amounts in 2015, 2014 and 2013, respectively. |
CREDIT FACILITIES |
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CREDIT FACILITIES [Abstract] | |||
CREDIT FACILITIES |
The Company maintains a $125.0 million (which may be increased to $200.0 million, subject to certain conditions) secured revolving credit agreement with a group of financial institutions which provides for borrowings in the United States. The credit facility 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 December 31, 2015, eligible collateral under this agreement was $37.9 million, total availability was $33.0 million, total outstanding letters of credit were $4.9 million and there were no outstanding advances. The Company was in compliance with all of the covenants under this facility as of December 31, 2015. |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
Accrued expenses and other current liabilities consist of the following (in millions):
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LONG-TERM DEBT |
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LONG-TERM DEBT |
The Company (through a subsidiary) had 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 were to mature on October 1, 2018. The proceeds from the Bond were used to finance capital equipment purchased for the Company’s distribution facility located in Jefferson, Georgia. The purchase and installation of the equipment for the facility was completed by December 31, 2011. Pursuant to the transaction, the Company transferred to the Authority, for consideration consisting of the Bond proceeds, ownership of the equipment and the Authority leased the equipment to the Company’s subsidiary pursuant to a capital equipment lease expiring October 1, 2018. Under the capital equipment lease, the Company has the right to acquire ownership of the equipment at any time for a purchase price sufficient to pay off all principal and interest on the Bonds, plus $1.00. The Company exercised this right in November 2015 paying off all outstanding principal plus $1.00 and acquired title to all of the capital equipment. This facility was paid off in November 2015. Long-term debt consists of (in millions):
The aggregate maturities of long-term debt outstanding at December 31, 2015 are as follows (in millions):
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SPECIAL CHARGES, NET |
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SPECIAL CHARGES, NET |
The Company’s NATG segment incurred special charges of approximately $27.2 million for the year, of which $25.6 million is included in continuing operations, $1.6 million is included in discontinued operations. Charges incurred included approximately $29.9 million for lease termination costs for the retail stores and warehouse closures, $5.5 million in workforce reductions, $3.3 million in consulting expenses and net asset impairment charges of $0.1 million. These charges were offset by approximately $14.1 million, net from the sale of the NATG business and Circuit City name and trademarks. Amounts related to the exit from NATG operations that are unpaid at December 31, 2015 are recorded in Accounts payable, Accrued expenses and other current liabilities and Other liabilities in the accompanying Consolidated Balance Sheets. The Company expects that additional NATG wind-down costs incurred during 2016 or later will aggregate between $15 and $25 million which will be presented in discontinued operations. Included in the charges noted above is $2.5 million for the year of professional costs, net of $1.0 million from an insurance recovery settlement related to the investigation, settlement, prosecution, and restitution proceedings related to the former NATG executives; and professional costs related to the investigation conducted at the request of the US Attorney for the Southern District of Florida. EMEA incurred special charges of approximately $0.7 million in 2015 related to the termination of the Chief Executive of EMEA. Amounts related to this action that are unpaid at December 31, 2015 are recorded in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets. EMEA recorded $0.1 million benefit from adjustments to previously accrued workforce reductions and personnel costs. The following table details the associated liabilities incurred related to the Technology Products segments special charges (in millions):
The Company conducted an evaluation of its long-lived assets in certain EMEA locations (Germany, Italy, Spain and Sweden) and, as a result of negative cash flows in 2015 and a forecast for continued cash use, concluded that those assets were impaired and as a result, an impairment charge of approximately $0.7 million was recorded to adjust the long-lived assets to fair market value. IPG incurred special charges of approximately $1.0 million during 2015. In the fourth quarter, IPG recorded $0.6 million for lease termination costs related to one of their leased facilities. In the first quarter of 2015, IPG recorded $0.4 million of special charges related to severance costs associated with the integration of PEG. The unpaid severance cost and unpaid lease costs are included in the Condensed Consolidated Balance Sheet within Accrued expenses and other current liabilities and Other liabilities. |
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SHAREHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY |
Stock-Based Compensation Plans The Company currently has four equity compensation plans which reserve shares of common stock for issuance to key employees, directors, consultants and advisors to the Company. The following is a description of these plans: The 1995 Stock Option Plan for Non-Employee Directors - This plan, adopted in 1995, provides for automatic awards of non-qualified options to directors of the Company who are not employees of the Company or its affiliates. All options granted under this plan will have a ten year term from grant date and are immediately exercisable. A maximum of 100,000 shares may be granted for awards under this plan. The ability to grant new awards under this plan ended on October 12, 2006 but awards granted prior to such date continue until their expiration. No options were outstanding under this plan as of December 31, 2015. The 1999 Long-term Stock Incentive Plan, as amended (“1999 Plan”) - This plan was adopted in October 1999 with substantially the same terms and provisions as the 1995 Long-term Stock Incentive Plan. The number of shares that may be granted under this plan to a maximum of 7,500,000. The maximum number of shares granted per type of award to any individual may not exceed 1,500,000 in any calendar year and 3,000,000 in total. The ability to grant new awards under this plan ended on December 31, 2009 but awards granted prior to such date continue until their expiration. A total of 492,750 options were outstanding under this plan as of December 31, 2015. The 2006 Stock Incentive Plan For Non-Employee Directors - This plan, adopted by the Company’s stockholders in October, 2006, replaces the 1995 Stock Option Plan for Non-Employee Directors. The Company adopted the plan so that it could offer directors of the Company who are not employees of the Company or of any entity in which the Company has more than a 50% equity interest (“independent directors”) an opportunity to participate in the ownership of the Company by receiving options to purchase shares of common stock at a price equal to the fair market value at the date of grant of the option and restricted stock awards. Awards for a maximum of 200,000 shares may be granted under this plan. A total of 15,000 options were outstanding under this plan as of December 31, 2015. The 2010 Long-term Stock Incentive Plan (“2010 Plan”) - This plan was adopted in April, 2010 with substantially the same terms and provisions as the 1999 Long-term Stock Incentive Plan. The maximum number of shares granted per type of award to any individual may not exceed 1,500,000 in any calendar year. Restricted stock grants and common stock awards reduce stock options otherwise available for future grant. Awards for a maximum of 7,500,000 shares may be granted under this plan. A total of 446,875 options and 206,120 restricted stock units were outstanding under this plan as of December 31, 2015. Shares issued under our share-based compensation plans are usually issued from shares of our common stock held in the treasury. Compensation cost related to non-qualified stock options recognized in operating results (selling, general and administrative expense) for 2015, 2014 and 2013 was $0.2 million, $0.7 million, and $1.1 million respectively, and of these amounts NATG segment’s compensation cost related to non-qualified stock options was de minimis in 2015 and 2014 and $0.2 million in 2013. The related future income tax benefits recognized for 2015, 2014 and 2013 were $0.1 million, $0.2 million and $0.4 million, respectively. Stock Options The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2015, 2014 and 2013:
The following table summarizes information concerning outstanding and exercisable options:
The total intrinsic value of options exercised was de minimis for 2015 and $0.2 million for 2014 and 2013. The following table summarizes information about options vested and exercisable or nonvested that are expected to vest (nonvested outstanding less expected forfeitures) at December 31, 2015:
The aggregate intrinsic value in the tables above represents the total pretax intrinsic value (the difference between the closing stock price on the last day of trading in 2015 and the exercise price) that would have been received by the option holders had all options been exercised on December 31, 2015. This value will change based on the fair market value of the Company’s common stock. The following table reflects the activity for all unvested stock options during 2015:
At December 31, 2015, there was approximately $0.2 million of unrecognized compensation costs related to unvested stock options, which is expected to be recognized over a weighted average period of 1.48 years. The total fair value of stock options vested during 2015, 2014 and 2013 was $1.1 million, $1.2 million and $1.6 million, respectively. Restricted Stock and Restricted Stock Units In August 2010, the Company granted 175,000 RSUs under the 2010 Plan to a key employee who is also a Company director. These RSUs have none of the rights as other shares of common stock, other than rights to cash dividends, until common stock is distributed. This RSU award was a non-performance award which vests in ten equal annual installments of 17,500 units beginning May 15, 2011 and each May 15, thereafter. Compensation expense related to this RSU award was approximately $0.2 million during each of 2015 and 2014 and $0.3 million in 2013. In October 2011, the Company granted 100,000 RSUs under the 2010 Plan to, at that time, a key employee. This RSU award was a non-performance award which vested in ten equal annual installments of 10,000 units beginning October 3, 2012 and each October 3 thereafter. The termination without cause of this key employee during 2013 caused the accelerated vesting of the remaining 90,000 shares in accordance with the restricted stock agreement with the Company. Compensation expense related to these restricted stock awards was zero during each of 2015 and 2014 and approximately $0.8 million in 2013. In November 2011, the Company granted 100,000 RSUs under the 2010 Plan to a key employee who is also a Company director. This RSU award was a non-performance award which vests in ten equal annual installments of 10,000 units beginning November 14, 2012 and each November 14 thereafter. Compensation expense related to this RSU award was approximately $0.2 million during each of 2015, 2014 and 2013. In January 2012 and March 2012, the Company granted 50,000 RSUs under the 2010 Plan to each of two key employees. These RSU awards were non-performance awards which vest in ten equal annual installments of 10,000 units beginning January 3, 2013 and March 1, 2013, respectively, and each January 3 and March 1, thereafter. The termination without cause of one of these key employees during 2015 caused the accelerated vesting of the remaining 35,000 shares in accordance with the restricted stock agreement with the Company. Compensation expense related to these RSU awards were approximately $0.4 million, $0.3 million and $0.4 million during each of 2015, 2014 and 2013, respectively. In July 2015, the Company granted 23,620 RSUs under the 2010 Plan to a key employee. This RSU award was a non-performance award which vests in four equal annual installments of 5,905 units beginning July 6, 2015 and each July 6 thereafter. Compensation expense related to this RSU award was approximately $0.1 million in 2015. Share-based compensation expense for restricted stock issued to Directors was $0.1 million in each of 2015, 2014 and 2013. |
INCOME TAXES |
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INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES |
The components of income (loss) from continuing operations before income taxes are as follows (in millions):
The (benefit) provision for income taxes from continuing operations consists of the following (in millions):
Tax benefit from discontinued operations was $(3.3) million, $(7.0) million and $(8.6) million for the years ended December 31, 2015, 2014 and 2013, respectively. Income taxes are accrued and paid by each foreign entity in accordance with applicable local regulations. A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as follows (in millions):
The deferred tax assets and liabilities are comprised of the following (in millions):
During the current year the Company recorded valuation allowances against deferred tax assets of approximately $18.8 million. These valuation allowances were recorded against U.S. federal deferred tax assets of approximately $8.7 million, foreign deferred tax assets of $9.0 million and state deferred tax asset valuation allowances of approximately $1.1 million. These valuation allowances were recorded primarily as a result of Managements’ belief that the deferred assets are not likely to be realized due to recent losses. The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign subsidiaries of approximately $50.0 million as of December 31, 2015, since these earnings are considered indefinitely reinvested. The Company has gross foreign net operating loss carryforwards of $108.1 million which expire through 2031 and gross U.S. federal net operating loss carry forwards of $53.6 million which expire through 2035. The Company records these benefits as assets to the extent that utilization of such assets is more likely than not; otherwise, a valuation allowance has been recorded. The Company has also provided valuation allowances for certain state deferred tax assets and net operating loss carryforwards where it is not likely they will be realized. As of December 31, 2015, the Company has approximately $1.6 million in federal tax credit carryforwards expiring in years through 2025 and various amounts of state and foreign net operating loss carryforwards expiring through 2035. The Company has recorded valuation allowances of approximately $80.6 million, including valuations against the federal and state deductibility of temporary differences including net operating losses of $43.6 million and $9.8 million respectively, foreign tax credits of $1.6 million and tax effected temporary differences and net operating loss carryforwards in foreign jurisdictions of $25.6 million. The Company is routinely audited by federal, state and foreign tax authorities with respect to its income taxes. The Company regularly reviews and evaluates the likelihood of audit assessments. The Company’s federal income tax returns have been audited through 2013. The Company has not signed any consent to extend the statute of limitations for any subsequent years. The Company’s significant state tax returns have been audited through 2007. The Company considers its significant tax jurisdictions in foreign locations to be the United Kingdom, Canada, France, Italy and Germany. The Company remains subject to examination in the United Kingdom for years after 2011, in Canada for years after 2013, in France for years after 2012, in Italy for years after 2009 and in Germany for years after 2012. In accordance with the guidance for accounting for uncertainty in income taxes the Company recognizes the tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit of an uncertain tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount that is greater than 50% likely to be realized upon settlement with the tax authority. To the extent we prevail in matters for which accruals have been established or are required to pay amounts in excess of accruals, our effective tax rate in a given financial statement period could be affected. As of December 31, 2015 the Company had no uncertain tax positions. Interest and penalties, if any, are recorded in income tax expense. There were no accrued interests or penalty charges related to unrecognized tax benefits recorded in income tax expense in 2015 or 2014. |
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS |
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COMMITMENTS, CONTINGENCIES AND OTHER MATTERS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS, CONTINGENCIES AND OTHER MATTERS |
Leases - The Company is obligated under operating lease agreements for the rental of certain office and warehouse facilities and equipment which expire at various dates through August 2032. The Company currently leases its headquarters office/warehouse facility in New York from an entity owned by the Company’s three principal shareholders and senior executive officers. The Company believes that these payments were no higher than would be paid to an unrelated lessor for comparable space. The Company also acquires certain computer, communications equipment, and machinery and equipment pursuant to capital lease obligations. At December 31, 2015, the future minimum annual lease payments for capital leases and related and third-party operating leases were as follows (in millions):
Annual rent expense aggregated approximately $26.4 million, $31.5 million and $34.6 million in 2015, 2014 and 2013, respectively. Included in rent expense was $1.0 million in 2015, $0.9 million in 2014 and 2013, to related parties. Rent expense is net of sublease income of $0.1 million for 2015, $0.0 million for 2014, and $0.1 million for 2013, respectively. NATG operations annual rent expense totaled approximately $10.7 million, $18.3 million and $20.6 million for 2015, 2014 and 2013, respectively. The operating lease agreements generally provide for rental payments on a graduated basis and for options to renew, which could increase future minimum lease payments if exercised. The Company recognizes rent expense on a straight‑line basis over the lease period and has accrued for rent expense incurred but not paid. Deferred rent represents the difference between actual operating lease payments due and straight‑line rent expense. The excess is recorded as a deferred rent liability in the early periods of the lease, when cash payments are generally lower than straight‑line rent expense, and are reduced in the later periods of the lease when payments begin to exceed the straight‑line expense. The Company also accounts for leasehold improvement incentives within its deferred rent liability. Other Matters The Company and its subsidiaries are involved in various lawsuits, claims, investigations and proceedings including commercial, employment, consumer, personal injury and health and safety law matters, which are being handled and defended in the ordinary course of business. In addition, the Company is subject to various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that are incorporated in a broad spectrum of products the Company sells. The Company is also audited by (or has initiated voluntary disclosure agreements with) numerous governmental agencies in various countries, including U.S. Federal and state authorities, concerning potential income tax, sales tax and unclaimed property liabilities. These matters are in various stages of investigation, negotiation and/or litigation, and are being vigorously defended. 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 December 31, 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 December 31, 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 NATG. 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. On March 1, 2016, the United States District Court for the Southern District of Florida awarded the Company approximately $36 million in restitution from Gilbert and Carl Fiorentino, which the Company will utilize all available means to collect. 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. 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. |
SEGMENT AND RELATED INFORMATION |
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SEGMENT AND RELATED INFORMATION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND RELATED INFORMATION |
The Company operated and is internally managed in three reportable business segments— Industrial Products Group (“IPG”), EMEA Technology Products Group (“EMEA”) and what was the Company’s largest business in terms of revenue, North America Technology Products Group (NATG”). EMEA and NATG were aggregated in certain prior years as they met the aggregation criteria Smaller business operations and corporate functions are aggregated and reported as an additional segment – Corporate and Other (“Corporate”). On December 1, 2015, we sold certain assets of the NATG business and are currently winding down its remaining operations. 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.” Financial information relating to the Company’s continuing operations by reportable segment was as follows (in millions):
Financial information relating to the Company’s operations by geographic area was as follows (in millions):
Net sales are attributed to countries based on location of selling subsidiary. |
QUARTERLY FINANCIAL DATA (UNAUDITED) |
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QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) |
Quarterly financial data, excluding discontinued operations, is as follows (in millions, except for per share amounts):
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SUBSEQUENT EVENTS (UNAUDITED) |
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SUBSEQUENT EVENTS (UNAUDITED) [Abstract] | |||
SUBSEQUENT EVENTS (UNAUDITED) |
In January 2016 PCM exercised its option (for approximately $0.4 million) to acquire the consumer customer lists and related information used in connection with or generated by the NATG web business in the United States. In February 2016, the Company and PCM completed delivery of the remaining assets. As of this filing, the Company has completed most of the NATG wind down activities, including selling its remaining inventory, closing the two remaining retail stores and closing its remaining distribution center; employee reductions were primarily completed in the fourth quarter of 2015 and the first quarter of 2016 and currently approximately 30 employees remain at the Miami location. These employees are performing wind-down activities and it is anticipated these activities will be substantially complete by the end of the second quarter of 2016; any remaining activities after that date will be undertaken by the Company’s Corporate function in New York. The Company anticipates completing all wind down of remaining operations in 2016, other than settling of remaining lease obligations. |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS |
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS For the years ended December: (in millions)
(1) Other relates to P.E.G.acquisition allowance for doubtful accounts as of acquisition date. (2) Other relates to Misco Solutions (f/k/a SCC Services B.V.) acquisition allowance for doubtful accounts as of acquisition date. (3) Amounts represent gross revenue and cost reversals to the estimated sales returns and allowances accounts. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Principles of Consolidation | Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Systemax Inc. and its wholly-owned subsidiaries (collectively, the “Company” or “Systemax”). All significant intercompany accounts and transactions have been eliminated in consolidation. |
Reclassifications | Reclassifications — Certain prior year amounts were reclassified to conform to current year presentation. |
Fiscal Year | Fiscal Year — The Company’s fiscal year ends at midnight on the Saturday closest to December 31. For clarity of presentation herein, all fiscal years are referred to as if they ended on December 31. The fiscal year is divided into four fiscal quarters that each end at midnight on a Saturday. Fiscal quarters will typically include 13 weeks, but the fourth quarter will include 14 weeks in a 53 week fiscal year. For clarity of presentation herein, all fiscal quarters are referred to as if they ended on the traditional calendar month. The full year of 2015 included 53 weeks compared to 2014 and 2013 which included 52 weeks. |
Use of Estimates In Financial Statements | Use of Estimates In Financial Statements — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company bases its estimates on historical experience, current business factors, and various other assumptions that the Company believes are necessary to consider to form a basis for making judgments about the carrying values of assets and liabilities, the recorded amounts of revenue and expenses, and the disclosure of contingent assets and liabilities. The Company is subject to uncertainties such as the impact of future events, economic and political factors, and changes in the Company’s business environment, therefore, actual results could differ from these estimates. Changes in estimates are made when circumstances warrant. Such changes in estimates and refinements in estimation methodologies are reflected in reported results of operations; if material, the effects of changes in estimates are disclosed in the notes to the consolidated financial statements. Significant estimates and assumptions by management affect the allowance for doubtful accounts, sales return returns and allowances, inventory reserves, allowances for cooperative advertising, vendor drop shipments, the carrying value of long‑lived assets (including goodwill and intangible assets), the carrying value, capitalization and amortization of software development costs, the provision for income taxes and related deferred tax accounts, certain accrued liabilities, revenue recognition, contingencies, sub-rental lease income, litigation and related legal accruals and the value attributed to employee stock options and other stock‑based awards. |
Foreign Currency Translation | Foreign Currency Translation — The Company has operations in numerous foreign countries. The functional currency of each foreign country is the local currency. The financial statements of the Company’s foreign entities are translated into U.S. dollars, the reporting currency, using year-end exchange rates for assets and liabilities, year to date average exchange rates for the statement of operations items and historical rates for equity accounts. Translation gains or losses are recorded as a separate component of shareholders’ equity. |
Cash | Cash — The Company considers amounts held in money market accounts and other short-term investments, including overnight bank deposits, with an original maturity date of three months or less to be cash. Cash overdrafts are classified in accounts payable. |
Inventories | Inventories — Inventories consist primarily of finished goods and are stated at the lower of cost or market value. Cost is determined by using the first-in, first-out method except in certain locations in Europe and retail locations where an average cost is used. |
Property, Plant and Equipment | Property, Plant and Equipment — Property, plant and equipment is stated at cost. Furniture, fixtures and equipment, including equipment under capital leases, are depreciated using the straight-line or accelerated method over their estimated useful lives ranging from three to ten years. Buildings are depreciated using the straight-line method over estimated useful lives of 30 to 50 years. Leasehold improvements are amortized over the shorter of the useful lives or the term of the respective leases. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statement of operations in the period realized. |
Internal-Use Software | Internal-Use Software - Internal‑use software is included in fixed assets and is amortized on a straight‑line basis over 3 years. The Company capitalizes costs incurred during the application development stage. Costs related to minor upgrades, minor enhancements and maintenance activities are expensed as incurred. |
Evaluation of Long-lived Assets | Evaluation of Long-lived Assets — 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. As a result of negative cash flows in its now discontinued NATG operations and its EMEA operations in Germany, Italy, Spain and Sweden, and a forecast for continued use of cash in 2015, the Company conducted an evaluation of the long-lived assets in those operations and concluded that those assets were impaired. Accordingly an impairment charge of approximately $1.4 million, pre-tax, was recorded during the year ended December 31, 2015. In 2014, NATG operations recorded an impairment charge of $10.0 million, pre-tax, after the Company conducted an evaluation of its long-lived assets and determined that those assets were impaired. |
Business Combinations | Business Combinations — The Company accounts for its business combinations using the acquisition method of accounting. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities assumed by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date. The excess of (i) the total costs of acquisition over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets — Goodwill represents the excess of the cost of acquired assets over the fair value of assets acquired. The Company 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. |
Income Taxes | Income Taxes — The Company accounts for income taxes using the liability method, under which deferred tax assets and liabilities are determined based on the future tax consequences attributable to differences between the financial reporting carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards and net operating loss carryforwards. Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be in effect when the differences are expected to reverse. The Company assesses the likelihood that deferred tax assets will be recovered from future taxable income, and a valuation allowance is established when necessary to reduce deferred tax assets to the amounts more likely than not expected to be realized. The Company recognizes and measures uncertain tax positions using a two‑step approach. The first step is to evaluate the tax position taken or expected to be taken by determining if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. Significant judgment is required to evaluate uncertain tax positions. The Company evaluates its uncertain tax positions on a regular basis. Its evaluations are based on a number of factors, including changes in facts and circumstances, changes in tax law, correspondence with tax authorities during the course of audit and effective settlement of audit issues. The Company’s policy is to include interest and penalties related to unrecognized tax benefits as income tax expense in the consolidated statements of operations. |
Revenue Recognition and Accounts Receivable | Revenue Recognition and Accounts Receivable — The Company recognizes sales of products, including shipping revenue, when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met at the time the product is received by the customers when title and risk of loss have transferred except in our Industrial Products segment where title and risk pass at time of shipment. Allowances for estimated subsequent customer returns, rebates and sales incentives are provided when revenues are recorded. Revenues exclude sales tax collected. The Company evaluates collectability of accounts receivable based on numerous factors, including past transaction history with customers and their credit rating and provides a reserve for accounts that are potentially uncollectible. Trade receivables are generally written off once all collection efforts have been exhausted. Accounts receivable are shown in the consolidated balance sheets net of allowances for doubtful collections and subsequent customer returns. |
Shipping and Handling Costs | Shipping and Handling Costs— The Company recognizes shipping and handling costs in cost of sales. |
Advertising Costs | Advertising Costs — Expenditures for internet, television, local radio and newspaper advertising are expensed in the period the advertising takes place. Catalog preparation, printing and postage expenditures are amortized over the period of catalog distribution during which the benefits are expected, generally one to four months. Net advertising expenses were $74.4 million, $68.1 million and $60.1 million during 2015, 2014 and 2013, respectively, and are included in the accompanying consolidated statements of operations. Of the previously mentioned amounts, NATG operations net advertising expenses totaled $7.5 million, $10.7 million and $14.1 million during 2015, 2014 and 2013, respectively. The Company utilizes advertising programs to support vendors, including catalogs, internet and magazine advertising, and receives payments and credits from vendors, including consideration pursuant to volume incentive programs and cooperative marketing programs. The Company accounts for consideration from vendors as a reduction of cost of sales unless certain conditions are met showing that the funds are used for specific, incremental, identifiable costs, in which case the consideration is accounted for as a reduction in the related expense category, such as advertising expense. The amount of vendor consideration recorded as a reduction of selling, general and administrative expenses totaled $20.2 million, $38.8 million and $45.9 million during 2015, 2014 and 2013, respectively. Of the previously mentioned amounts, NATG operations vendor consideration recorded as a reduction of selling, general and administrative expenses totaled $12.1 million, $24.9 million and $28.3 million, respectively. |
Stock Based Compensation | Stock Based Compensation — The fair value of employee share options is recognized in expense over the vesting period of the options, using the graded attribution method. The fair value of employee share options is determined on the date of grant using the Black-Scholes option pricing model. The Company has used historical volatility in its estimate of expected volatility. The expected life represents the period of time (in years) for which the options granted are expected to be outstanding. The risk-free interest rate is based on the U.S. Treasury yield curve. Stock-based compensation expense includes an estimate for forfeitures and is recognized over the expected term of the award. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share – Net income per common share - basic is 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 1.0 million shares, 0.8 million shares and 1.3 million shares for the years ended December 31, 2015, 2014 and 2013, respectively, due to their antidilutive effect. |
Employee Benefit Plans | Employee Benefit Plans - The Company’s U.S. subsidiaries participate in a defined contribution 401(k) plan covering substantially all U.S. employees. Employees may invest 1% or more of their eligible compensation, limited to maximum amounts as determined by the Internal Revenue Service. The Company provides a matching contribution to the plan, determined as a percentage of the employees’ contributions. Aggregate expense to the Company for contributions to such plans was approximately $0.9 million in 2015, 2014 and 2013, respectively and of these amounts, NATG operations expense was $0.4 million, $0.5 million and $0.5 million in each of 2015, 2014 and 2013, respectively. |
Fair Value Measurements | Fair Value Measurements - Financial instruments consist primarily of investments in cash, trade accounts receivable, debt and accounts payable. The Company estimates the fair value of financial instruments based on interest rates available to the Company. At December 31, 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. Cash is classified as Level 1 within the fair value hierarchy. The Company’s debt is considered to be representative of its fair value because of its variable interest rate. The weighted average interest rate on short-term borrowings was 4.3%, 4.3%, and 4.3% in 2015, 2014 and 2013, respectively. The fair value of goodwill, non-amortizing intangibles and long lived assets is measured in connection with the Company’s annual impairment testing as discussed above. |
Significant Concentrations | Significant Concentrations - Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and accounts receivable. The Company’s excess cash balances are invested with money center banks. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers and their geographic dispersion comprising the Company’s customer base. The Company also performs on-going credit evaluations and maintains allowances for potential losses as warranted. The Company purchases substantially all of our products and components directly from manufacturers and large wholesale distributors. Two vendors accounted for 10% or more of our purchases in 2015 and 2014: one vendor accounted for 12.2% and 12.6%, respectively; another vendor accounted for 10.9% and 11.6%, respectively. In 2013, one vendor accounted for 13.9% of our purchases. Excluding NATG operations, no vendor accounted for 10% or more of our purchases in 2015, 2014 or 2013. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities issue numerous pronouncements, most of which are not applicable to the Company’s current or reasonably foreseeable operating structure. Below are the new authoritative pronouncements that management believes are relevant to Company’s current operations. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), to achieve a consistent application of revenue recognition within the U.S., resulting in a single revenue model to be applied by reporting companies under GAAP. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the revised guidance requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The revised guidance is effective for the Company beginning in the quarter ending March 31, 2018; early adoption is allowed. The revised guidance is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company is currently evaluating the transition method that will be elected and the potential effect the revised guidance will have on the Company’s consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Business Combinations - Simplifying the Accounting for Measurement-Period Adjustments (Topic 805). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for interim and annual periods beginning after December 15, 2015, with early adoption permitted, and is to be applied on a prospective basis. The Company is currently in the process of evaluating the impact of the adoption of this standard on the Company’s consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the consolidated balance sheet. The amendments in the update require that all deferred tax liabilities and assets be classified as noncurrent in the consolidated balance sheet. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods therein and may be applied either prospectively or retrospectively to all periods presented. Early adoption is permitted. The Company has early adopted this standard in the fourth quarter of 2015 on a retrospective basis. Prior periods have been retrospectively adjusted. As a result of the adoption of ASU 2015-17, the Company reclassified $1.7 million of net current deferred tax assets and $1.9 million of noncurrent deferred tax liabilities in the 2014 balance sheet. In February 2016, the FASB issued ASU 2016-02, Leases, which requires a lessee, in most leases, to initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years. Early adoption is permitted. The Company is evaluating the effect of adopting this pronouncement. |
DISPOSITION (Tables) |
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DISPOSITION [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Pretax Loss of Discontinued Operations to Loss of Discontinued Operations | A reconciliation of pretax loss of Discontinued Operations to the Net Loss of Discontinued Operations is as follows:
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ACQUISITIONS (Tables) |
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ACQUISITIONS [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The following table summarizes the fair value of the assets acquired and liabilities assumed (in millions):
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Pro forma Financial Information | The Company’s unaudited pro forma revenue and net loss for the years ended December 31, 2015 and 2014 below have been prepared as if PEG had been purchased on January 1, 2014 (in millions).
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GOODWILL AND INTANGIBLES (Tables) |
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GOODWILL AND INTANGIBLES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Value of Goodwill | The following table provides information related to the carrying value of goodwill (in millions):
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Schedule of Indefinite-Lived Intangible Assets | The following table summarizes information related to indefinite-lived intangible assets (in millions):
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Schedule of Definite-Lived Intangible Assets | The following table summarizes information related to definite-lived intangible assets (in millions):
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Schedule of Aggregate Amortization Expense for Intangibles | The aggregate amortization expense for these intangibles was approximately $0.7 million in 2015. The estimated amortization for future years ending December 31 is as follows (in millions):
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PROPERTY, PLANT AND EQUIPMENT (Tables) |
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PROPERTY, PLANT AND EQUIPMENT [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net | Property, plant and equipment, net consist of the following (in millions):
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Property, Plant and Equipment, Assets Under Capital Leases | Included in property, plant and equipment are assets under capital leases, as follows (in thousands):
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) |
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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consist of the following (in millions):
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LONG-TERM DEBT (Tables) |
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LONG-TERM DEBT [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long-term debt consists of (in millions):
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Schedule of Maturities of Long-Term Debt Outstanding | The aggregate maturities of long-term debt outstanding at December 31, 2015 are as follows (in millions):
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SPECIAL CHARGES, NET (Tables) |
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SPECIAL CHARGES, NET [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Special Charge Liabilities | The following table details the associated liabilities incurred related to the Technology Products segments special charges (in millions):
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SHAREHOLDER'S EQUITY (Tables) |
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SHAREHOLDERS' EQUITY [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Weighted-Average Assumptions Used To Estimate the Fair Value of Options Granted | The following table presents the weighted-average assumptions used to estimate the fair value of options granted in 2015, 2014 and 2013:
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Schedule of Outstanding and Exercisable Options | The following table summarizes information concerning outstanding and exercisable options:
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Schedule of Options Vested and Exercisable or Nonvested, Expected to Vest (Nonvested Outstanding Less Expected Forfeitures) | The following table summarizes information about options vested and exercisable or nonvested that are expected to vest (nonvested outstanding less expected forfeitures) at December 31, 2015:
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Schedule of Unvested Stock Options | The following table reflects the activity for all unvested stock options during 2015:
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INCOME TAXES (Tables) |
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INCOME TAXES [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income (Loss) before Income Taxes | The components of income (loss) from continuing operations before income taxes are as follows (in millions):
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Schedule of (Benefit) Provision for Income Taxes | The (benefit) provision for income taxes from continuing operations consists of the following (in millions):
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Reconciliation of Difference between Income Tax Expense and Computed Income Tax Expense Based on Federal Statutory Corporate Rate | A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as follows (in millions):
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Schedule of Deferred Tax Assets and Liabilities | The deferred tax assets and liabilities are comprised of the following (in millions):
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COMMITMENTS, CONTINGENCIES AND OTHER MATTERS (Tables) |
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COMMITMENTS, CONTINGENCIES AND OTHER MATTERS [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Future Minimum Annual Lease Payments for Capital Leases and Related and Third-Party Operating Leases | At December 31, 2015, the future minimum annual lease payments for capital leases and related and third-party operating leases were as follows (in millions):
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SEGMENT AND RELATED INFORMATION (Tables) |
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SEGMENT AND RELATED INFORMATION [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Information by Reportable Segment | Financial information relating to the Company’s continuing operations by reportable segment was as follows (in millions):
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Financial Information by Geographic Area | Financial information relating to the Company’s operations by geographic area was as follows (in millions):
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QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Data (Unaudited) | Quarterly financial data, excluding discontinued operations, is as follows (in millions, except for per share amounts):
|
CREDIT FACILITIES (Details) - Systemax Inc. [Member] $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Line of Credit Facility [Line Items] | |
Secured revolving credit agreement, maximum borrowing capacity | $ 125.0 |
Line of credit facility optional maximum borrowing capacity subject to conditions | $ 200.0 |
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 | $ 37.9 |
Availability under line of credit | 33.0 |
Total outstanding letters of credit | 4.9 |
Outstanding advances | $ 0.0 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract] | ||
Payroll and employee benefits | $ 31.0 | $ 34.6 |
Advertising | 7.6 | 11.9 |
Sales and VAT tax payable | 5.1 | 9.3 |
Freight | 5.6 | 8.0 |
Reorganization costs | 6.3 | 4.7 |
Deferred revenue | 5.4 | 5.1 |
Other | 18.0 | 21.8 |
Accrued expenses and other current liabilities | $ 79.0 | $ 95.4 |
LONG-TERM DEBT (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
LONG-TERM DEBT [Abstract] | ||
Recovery zone facility bond, maturity date | Oct. 01, 2018 | |
Capital equipment lease maturity date | Oct. 01, 2018 | |
Additional amount to be paid over principal and interest to acquire ownership | $ 1 | |
Capitalized equipment lease obligation [Abstract] | ||
Capitalized lease obligations | 1,000,000 | $ 3,900,000 |
Less: current portion | 600,000 | 2,800,000 |
Long term debt | 400,000 | 1,100,000 |
Maturities of long-term debt outstanding [Abstract] | ||
2016 | 600,000 | |
2017 | 300,000 | |
2018 | 100,000 | |
Warehouse Capitalized Equipment Lease [Member] | ||
Capitalized equipment lease obligation [Abstract] | ||
Capitalized lease obligations | 0 | 2,200,000 |
Other Capitalized Equipment Lease [Member] | ||
Capitalized equipment lease obligation [Abstract] | ||
Capitalized lease obligations | $ 1,000,000 | $ 1,700,000 |
QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
QUARTERLY FINANCIAL DATA (UNAUDITED) [Abstract] | |||||||||||
Net sales | $ 465.3 | $ 423.2 | $ 454.1 | $ 512.1 | $ 552.0 | $ 505.4 | $ 505.6 | $ 541.2 | $ 1,854.7 | $ 2,104.2 | $ 1,975.4 |
Gross profit | 86.9 | 82.3 | 87.0 | 86.5 | 95.8 | 89.9 | 93.3 | 98.2 | 342.7 | 377.2 | 360.7 |
Net income (loss) | $ (11.6) | $ 1.8 | $ (19.9) | $ (18.6) | $ (21.8) | $ (2.4) | $ (7.5) | $ (0.3) | $ (99.8) | $ (37.5) | $ (43.8) |
Net loss per common share [Abstract] | |||||||||||
Basic (in dollars per share) | $ (0.31) | $ 0.05 | $ (0.54) | $ (0.50) | $ (0.59) | $ (0.06) | $ (0.20) | $ (0.01) | |||
Diluted (in dollars per share) | $ (0.31) | $ 0.05 | $ (0.54) | $ (0.50) | $ (0.59) | $ (0.06) | $ (0.20) | $ (0.01) |
SUBSEQUENT EVENTS (UNAUDITED) (Details) $ in Millions |
1 Months Ended | 3 Months Ended | 6 Months Ended | |
---|---|---|---|---|
Jan. 31, 2016
USD ($)
|
Mar. 17, 2016
Employee
|
Jun. 30, 2015
Store
|
Mar. 17, 2016
Store
|
|
Subsequent Event [Line Items] | ||||
Number of retail stores closed | 31 | |||
Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Number of retail stores closed | 2 | |||
Number of remaining employees | Employee | 30 | |||
Subsequent Event [Member] | Consumer Customer Lists [Member] | ||||
Subsequent Event [Line Items] | ||||
Cash paid for acquisition | $ | $ 0.4 |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions |
12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
||||||||||
Allowance for Doubtful Accounts [Member] | ||||||||||||
Allowance for sales returns and doubtful accounts [Roll Forward] | ||||||||||||
Balance at Beginning of Period | $ 6.5 | $ 5.8 | $ 6.3 | |||||||||
Charged to Expenses | 7.9 | 8.9 | 4.0 | |||||||||
Write-offs | (4.8) | (8.3) | (4.5) | |||||||||
Other | 0.2 | [1] | 0.1 | [2] | 0.0 | |||||||
Balance at End of Period | 9.8 | 6.5 | 5.8 | |||||||||
Allowance for Sales Returns [Member] | ||||||||||||
Allowance for sales returns and doubtful accounts [Roll Forward] | ||||||||||||
Balance at Beginning of Period | 9.3 | 10.9 | 9.2 | |||||||||
Charged to Expenses | 5.9 | 9.3 | 10.9 | |||||||||
Write-offs | 0.0 | 0.0 | 0.0 | |||||||||
Other | [3] | (9.3) | (10.9) | (9.2) | ||||||||
Balance at End of Period | 5.9 | 9.3 | 10.9 | |||||||||
Allowance for Inventory Returns [Member] | ||||||||||||
Allowance for sales returns and doubtful accounts [Roll Forward] | ||||||||||||
Balance at Beginning of Period | (7.8) | (9.2) | (8.0) | |||||||||
Charged to Expenses | (4.9) | (7.8) | (9.2) | |||||||||
Write-offs | 0.0 | 0.0 | 0.0 | |||||||||
Other | [3] | 7.8 | 9.2 | 8.0 | ||||||||
Balance at End of Period | (4.9) | (7.8) | (9.2) | |||||||||
Allowance for Deferred Tax Assets, Noncurrent [Member] | ||||||||||||
Allowance for sales returns and doubtful accounts [Roll Forward] | ||||||||||||
Balance at Beginning of Period | 48.8 | 39.7 | 11.1 | |||||||||
Charged to Expenses | 35.8 | 9.1 | 28.6 | |||||||||
Write-offs | 0.0 | 0.0 | 0.0 | |||||||||
Other | (4.0) | 0.0 | 0.0 | |||||||||
Balance at End of Period | $ 80.6 | $ 48.8 | $ 39.7 | |||||||||
|
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