SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
COMMISSION FILE NUMBER 1-13792
SYSTEMAX INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3262067
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification No.)
22 Harbor Park Drive
Port Washington, New York 11050
(Address of registrant's principal executive offices)
(516) 625-1555
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
The number of shares outstanding of the registrant's Common Stock as of November
5, 1999 was 35,554,590.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SYSTEMAX INC.
Condensed Consolidated Balance Sheets
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 42,661 $ 42,029
Short term investments 5,050
Accounts receivable, net 192,848 154,516
Inventories 134,066 129,966
Prepaid expenses and other current assets 39,344 28,382
------ ------
Total current assets 408,919 359,943
PROPERTY, PLANT AND EQUIPMENT, net 41,955 33,988
GOODWILL, net 69,122 56,612
OTHER ASSETS 4,556 3,896
----- -----
TOTAL $ 524,552 $ 454,439
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 218,019 $ 162,636
Current portion of long term debt 626 2,681
--- -----
Total current liabilities 218,645 165,317
------- -------
LONG-TERM DEBT 1,985 2,493
----- -----
STOCKHOLDERS' EQUITY:
Preferred stock
Common stock, par value $.01 per share, issued 38,231,990 shares,
outstanding 35,732,190 and 36,128,090 shares 382 382
Additional paid-in capital 176,743 176,743
Common stock in treasury at cost - 2,499,800 and 2,103,900 shares (34,323) (28,604)
Accumulated other comprehensive income (2,643) (348)
Retained earnings 163,763 138,456
------- -------
Total stockholders' equity 303,922 286,629
------- -------
TOTAL $ 524,552 $ 454,439
========= =========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
SYSTEMAX INC.
Condensed Consolidated Statements of Income
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTH NINE MONTH
PERIODS ENDED PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ----------------------
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET SALES $ 440,659 $ 359,771 $1,276,109 $1,048,581
COST OF SALES 362,962 288,167 1,042,880 834,552
------- ------- --------- -------
GROSS PROFIT 77,697 71,604 233,229 214,029
SELLING, GENERAL
AND ADMINISTRATIVE EXPENSES 61,884 56,024 191,319 166,745
------ ------ ------- -------
INCOME FROM OPERATIONS 15,813 15,580 41,910 47,284
INTEREST AND OTHER INCOME-net 271 624 625 2,227
--- --- --- -----
INCOME BEFORE INCOME TAXES 16,084 16,204 42,535 49,511
PROVISION FOR INCOME TAXES 6,770 6,643 17,228 19,466
----- ----- ------ ------
NET INCOME $ 9,314 $ 9,561 $ 25,307 $ 30,045
========== ========== ========== ==========
Net income per common share:
Basic $ .26 $ .26 $ .71 $. .80
========== ========== ========== ==========
Diluted $ .26 $ .26 $ .71 $ .80
========== ========== ========== ==========
Common and common equivalent shares:
Basic 35,732 36,690 35,870 37,674
====== ====== ======= ======
Diluted 35,732 36,690 35,886 37,678
====== ====== ======= ======
See notes to condensed consolidated financial statements
</TABLE>
<PAGE>
SYSTEMAX INC.
Condensed Statement of Consolidated Stockholders' Equity
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
------------ ADDITIONAL OTHER TREASURY
NUMBER OF PAID-IN RETAINED COMPREHENSIVE STOCK
SHARES AMOUNT CAPITAL EARNINGS INCOME AT COST
--------- ------ --------- -------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1998 36,128 $ 382 $ 176,743 $ 138,456 $ (348) $ (28,604)
Change in cumulative translation adjustment ( 2,295)
Purchase of treasury shares (396) ( 5,719)
Net income 25,307
------ ------ ------ ------ -------- ---------
BALANCES, SEPTEMBER 30, 1999 35,732 $ 382 $ 176,743 $ 163,763 $( 2,643) $ (34,323)
====== ======== ========== ========= ========== ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
SYSTEMAX INC.
Condensed Statements of Consolidated Cash Flows
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE-MONTH PERIOD
ENDED SEPTEMBER 30,
--------------------------------
1999 1998
------------ -----------
(UNAUDITED)
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 25,307 $ 30,045
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization, net 9,348 5,669
Provision for returns and doubtful accounts 4,746 4,472
Changes in certain assets and liabilities:
Accounts receivable (39,147) (17,435)
Inventories (875) (7,210)
Prepaid expenses and other current assets (10,178) (12,203)
Accounts payable and accrued expenses 36,532 25,518
------ ------
Net cash provided by operating activities 25,733 28,856
------ ------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Net change in short-term investments 5,050 1,493
Investments in property, plant and equipment (13,509) (7,985)
Acquisitions, net of cash acquired (8,398) (5,942)
------ ------
Net cash used in investing activities (16,857) (12,434)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Purchase of treasury shares (5,719) (28,604)
Proceeds of long-term borrowings 3,336
Repayments of long-term borrowings (2,487)
------ -------
Net cash used in financing activities (8,206) (25,268)
------ -------
EFFECTS OF EXCHANGE RATES ON CASH (38) (166)
--- ----
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 632 (9,012)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 42,029 43,432
------ ------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 42,661 $ 34,420
======== ========
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
SYSTEMAX INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
The accompanying consolidated financial statements include the accounts of
Systemax Inc. and its wholly-owned subsidiaries (collectively, the
"Company" or "Systemax"). The Company is a corporate supplier of personal
computers (PCs), notebook computers, computer related products, industrial
products and office products in North America and Europe. Systemax markets
these products through an integrated system of direct mail catalogs, a
network of major account sales representatives and proprietary "e-commerce"
Internet sites.
2. BASIS OF PRESENTATION
Net income per common share - basic was calculated based upon the weighted
average number of common shares outstanding during the respective periods
presented. 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.
All intercompany accounts have been eliminated in consolidation.
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all normal and recurring
adjustments necessary to present fairly the financial position of the
Company as of September 30,1999 and the results of operations for the three
and nine month periods ended September 30, 1999 and 1998, cash flows for
the nine months ended September 30, 1999 and 1998 and changes in
stockholders' equity for the nine months ended September 30, 1999. The
December 31, 1998 consolidated balance sheet has been extracted from the
audited consolidated financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998.
These condensed consolidated financial statements should be read in
conjunction with the Company's audited consolidated financial statements as
of December 31, 1998 and for the period then ended. The results for the
three months and nine months ended September 30, 1999 are not necessarily
indicative of the results for an entire year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1998
Net sales for the three months ended September 30, 1999 increased 22% to
$440.7 million compared to $359.8 million in the year-ago quarter. The
increase of $80.9 million was attributable to increased demand for PCs and
sales made by Simply Computers Ltd. (Simply), acquired in February 1999.
The number of orders shipped increased 19% to 1.1 million compared to the
year-ago quarter, and showed a 3% increase in the average order value to
$402, reflecting the increased PC sales. Sales during the quarter from
North American operations increased 11% to $319.6 million compared to
$287.6 million in the third quarter of 1998. European sales increased 68%
to $121.1 million (including approximately $30 million for Simply) compared
to $72.2 million in the year-ago quarter. The effect of changes in exchange
rates on European sales for the three months was not material.
Gross profit was $77.7 million, or 17.6% of sales, compared to $71.6
million, or 19.9% of sales in the year-ago quarter, an increase of $6.1
million. The decrease in the gross profit percentage was primarily due to
the continuing trend of increased sales of PCs and brand name products,
which generally have a lower gross profit percentage than our other
products. Increased relationship sales and a relatively lower sales
contribution from higher-margin industrial products also affected the gross
profit percentage unfavorably.
Selling, general and administrative expenses for the quarter increased by
$5.9 million or 10% to $61.9 million compared to $56.0 million in the third
quarter of 1998. This increase resulted from the inclusion of Simply,
continued expansion of our relationship marketing sales organizations and
investments in the Company's "e-commerce" Internet business. This was
partially offset by a decrease in advertising expenses from a reduction in
the number of catalogs we mailed. As a percentage of sales, selling,
general and administrative expenses improved to 14.0% compared to 15.6% in
the year-ago quarter.
Income from operations for the quarter increased to $15.8 million from
$15.6 million in the year-ago quarter. Income from operations as a
percentage of net sales decreased to 3.6% from 4.3% in the prior year
quarter. Operating income in North America decreased 3% to $13.7 million
from $14.1 million last year. Operating income in Europe increased to $2.2
million from $1.5 million in the year-ago quarter.
Interest and other income decreased as a result of less interest income in
the current year due to lower invested cash balances.
The Company's income tax rate was 41.6% for the third quarter of 1999 and
38.5% for the third quarter of 1998. The increase was due to a variety of
factors, including a change in the relative income earned in foreign
locations.
As a result of the above, net income for the quarter was $9.3 million, or
$.26 per basic and diluted share, compared to $9.6 million, or $.26 per
basic and diluted share, in the third quarter of 1998.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1998
Net sales for the nine months ended September 30, 1999 increased 22% to
$1.276 billion compared to $1.049 billion in the year-ago period. The
increase of $227 million was attributable to increased demand for PCs,
sales made by Simply, acquired in February 1999, and increased sales
generated by the Company's Internet sites. The number of orders increased
14% to 3.3 million compared to the year-ago period, with a 7% increase in
the average order value to $392. Sales during the nine months from North
American operations increased 11% to $926 million compared to $829 million
in 1998. European sales increased 59% to $350 million (including
approximately $76 million for Simply) compared to $220 million a year ago.
The effect of changes in exchange rates on European sales for the nine
months was not material.
Gross profit was $233.2 million, or 18.3% of sales, compared to $214.0
million, or 20.4% of sales, last year, an increase of $19.2 million. The
decrease in the gross profit percentage was primarily due to the continuing
change in our product mix resulting from increased sales of PCs and brand
name products, which generally have a lower gross profit percentage than
our other products. Increased relationship sales and a relatively lower
sales contribution from higher-margin industrial products also affected the
gross profit percentage unfavorably.
Selling, general and administrative expenses for the period increased by
$24.6 million or 14.7% to $191.3 million compared to $166.7 million in the
first nine months of 1998. This increase was primarily the result of
continuing investments for expansion of the relationship marketing sales
organizations, investments in the Company's "e-commerce" Internet
business, the inclusion of Simply and one-time charges of $4.1 million
recorded in the second quarter for reserves related to certain
contingencies and a write-off of goodwill associated with a variety of
small acquisitions made during the last few years. This was partially
offset by a decrease in net advertising expense as a result of a reduction
in the number of catalogs mailed, combined with increased vendor
participation and the overall leveraging of selling, general and
administrative expenses over the larger sales base. Selling, general and
administrative expenses as a percentage of sales improved to 15.0% compared
to 15.9% in the year-ago period.
Income from operations for the period decreased by $5.4 million to $41.9
million from $47.3 million in the year-ago period. Income from operations
as a percentage of net sales decreased to 3.3% from 4.5% a year ago.
Operating income in North America decreased 12% to $35.2 million from $39.8
million in the year ago period. Income from operations in Europe decreased
to $6.7 million from $7.4 million in the year ago period.
Interest and other income decreased as a result of less interest income in
the current year due to lower invested cash balances.
The Company's income tax rate was 40.5% for the first nine months of 1999
and 39.3% for the year-ago period, increasing due to a variety of factors,
both domestic and international.
As a result of the above, net income for the nine months was $25.3 million,
or $.71 per basic and diluted share, compared to $30.0 million, or $.80 per
basic and diluted share, in the year-ago period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs are to finance working capital for
sales growth, investments in property, equipment and information technology
and business acquisitions. Cash and cash equivalents totaled approximately
$43 million at September 30, 1999. For the nine months ended September 30,
1999, the Company generated cash from operating activities of $25.7 million
compared to $28.9 million for the year ago period. The decrease resulted
from lower net income in 1999 and increased accounts receivable as a result
of the increased sales volume. These were partially offset by an increase
in accounts payable. Cash was used in investing activities, primarily for
the purchase of Simply Computers and additions of capital equipment. Cash
was also used in financing activities for the purchase of additional
treasury shares and repayment of a mortgage loan. For the nine months ended
September 30, 1999, cash and cash equivalents increased by $0.6 million.
The Company believes it has access to adequate funds for growth through its
available cash balances and funds generated by operations and secured and
unsecured lines of credit maintained with financial institutions.
YEAR 2000 COMPLIANCE
The Company is in the process of addressing what is known as the year 2000
(or Y2K) issue. Based on current information, management believes that the
Company will be year 2000 compliant in a timely manner and the cost of
achieving such compliance will not have a materially adverse effect on the
Company's results of operations or financial condition. As noted in the
following discussion, however, there are multiple variables in determining
whether full Y2K compliance can be achieved, many of which are dependent on
efforts of third parties. For a discussion of this problem see the
Company's Form 10-K for the year ended December 31, 1998, "Item 7.
Management's Discussion and Analysis of Financial Conditions and Results of
Operations."
Internal Systems
The Company has tested and, as necessary, repaired or replaced its internal
PC hardware/software and computer network systems, and management believes
they are now Y2K compliant. The Company's phone systems have been tested
and management believes they are Y2K compliant. A majority of the Company's
North American internal business systems are currently Y2K compliant. The
remainder are in the process of being repaired and/or replaced to assure
Y2K compliance in a timely manner. The internal business systems of the
Company's European subsidiaries are currently Y2K compliant with the
exception of one subsidiary, which is in the process of repairing its
systems. Management believes these repairs will be completed in a timely
manner.
As noted in the Company's Form 10-K, the Company has been contacting its
key vendors and service providers to ascertain their Y2K compliance to the
extent that their problems could affect the Company's internal systems or
other aspects of its business. Inquiry letters have been sent to all key
vendors and service providers. Positive responses or other assurances have
been received from substantially all of our significant vendors and service
providers.
Products Sold
The Company has questioned its vendors as to the Y2K compliance status of
the brand name (i.e. third party-manufactured) hardware and software
products it sells. This includes the brand name software that is pre-
loaded onto the private label PC's the Company sells. Substantially all of
the Company's significant vendors have indicated that their products are
Y2K compliant although the Company makes no warranties to customers
regarding the Y2K compliance of third party-manufactured products.
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of that term in the Private Securities Litigation Reform
Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934). Additional written or oral forward
looking statements may be made by the Company from time to time, in filings
with the Securities Exchange Commission or otherwise. Statements contained
in this report that are not historical facts are forward looking statements
made pursuant to the safe harbor provisions referenced above.
Forward-looking statements may include, but are not limited to, projections
of revenue, income or loss and capital expenditures, statements regarding
future operations, financing needs, compliance with financial covenants in
loan agreements, plans for acquisition or sale of assets or businesses and
consolidation of operations of newly acquired businesses, and plans
relating to products or services of the Company, assessments of
materiality, predictions of future events and the effects of pending and
possible litigation, as well as assumptions relating to the foregoing. In
addition, when used in this discussion, the words "anticipates",
"believes", "estimates", "expects", "intends", "plans" and variations
thereof and similar expressions are intended to identify forward-looking
statements.
Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified based on
current expectations. Consequently, future events and actual results could
differ materially from those set forth in, contemplated by, or underlying
the forward-looking statements contained in this report. Statements in this
report, particularly in "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations", and the Notes to
Consolidated Financial Statements describe certain factors, among others,
that could contribute to or cause such differences. Other factors that
could contribute to or cause such differences include, but are not limited
to, unanticipated developments in any one or more of the following areas:
(i) the Company's ability to manage rapid growth as a result of internal
expansion and strategic acquisitions, (ii) the effect on the Company of
volatility in the price of paper and periodic increases in postage rates,
(iii) the operation of the Company's management information systems
including the costs and effects associated with the year 2000 date change
problem, (iv) the general risks attendant to the conduct of business in
foreign countries, including currency fluctuations associated with sales
not denominated in United States dollars, (v) significant changes in the
computer products retail industry, especially relating to the distribution
and sale of such products, (vi) competition in the PC, notebook computer,
computer related products, office products and industrial products markets
from superstores, direct response (mail order) distributors, mass
merchants, value added resellers, the Internet and other retailers, (vii)
the potential for expanded imposition of state sales taxes, use taxes, or
other taxes on direct marketing and e-commerce companies, (viii) the
continuation of key vendor relationships including the ability to continue
to receive vendor supported advertising, (ix) timely availability of
existing and new products, (x) 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 the Company,
(xi) risks associated with delivery of merchandise to customers by
utilizing common delivery services such as UPS, including possible strikes,
(xii) risks due to shifts in market demand and/or price erosion of owned
inventory, (xiii) borrowing costs, (xiv) changes in taxes due to changes in
the mix of U.S. and non-U.S. revenue, (xv) pending or threatened litigation
and investigations and (xvi) the availability of key personnel, as well as
other risk factors which may be detailed from time to time in the Company's
Securities and Exchange Commission filings.
Readers are cautioned not to place undue reliance on any forward-looking
statements contained in this report, which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result
of any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unexpected events.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company is exposed to market risks, which include changes in U.S. and
international interest rates as well as changes in currency exchange rates
as measured against the U.S. dollar and each other. Systemax attempts to
reduce these risks by utilizing certain derivative financial instruments.
The value of the U.S. dollar affects the Company's financial results.
Changes in exchange rates may positively or negatively affect Systemax's
sales (as expressed in U.S. dollars), gross margins, operating expenses and
retained earnings. The Company may engage in hedging programs aimed at
limiting in part the impact of certain currency fluctuations. Using
primarily forward exchange and foreign currency option contracts, Systemax
from time to time hedges certain of its assets that may impact the
Statement of Consolidated Income when remeasured according to generally
accepted accounting principles. These hedging activities provide only
limited protection against currency exchange risks. Factors that could
impact the effectiveness of the Company's hedging programs include accuracy
of sales forecasts, volatility of the currency markets, availability of
hedging instruments and the credit-worthiness of the parties which have
entered into such contracts with the Company. All currency contracts that
are entered into by Systemax are for the sole purpose of hedging an
existing or anticipated currency exposure, not for speculative or trading
purposes. In spite of Systemax's hedging efforts to reduce the effect of
changes in exchange rates against the U.S. dollar, the Company sales or
costs could still be adversely affected by changes in those exchange rates.
As of September 30,1999, the Company had no outstanding forward exchange
contracts.
PART II - OTHER INFORMATION
ITEM 5. On October 25,1999 the Board of Directors of the Company adopted the
Systemax 1999 Long-Term Stock Incentive Plan which authorizes a committee
composed of the Board's non-employee directors to grant to eligible
employees of the Company non-qualified stock options, stock appreciation
rights, restricted stock awards or other stock-based awards representing a
total of 2,000,000 shares of common stock of the Company, subject to
adjustment in certain cases. The 1999 Long-Term Stock Incentive Plan is
intended to supplement the Company's existing stock incentive plans,
namely, the 1995 Long-Term Stock Incentive Plan and the 1995 Stock Plan for
Non-Employee Directors.
ITEM 6. EXHIBITS
(a) Exhibits.
3.1 Certificate of Incorporation. (Incorporated herein by reference to
Exhibit 3.1 to the Company's Registration Statement on Form S-1, File
No. 33-92052).
3.2 By-laws. (Incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1, File No. 33-92052).
3.3 Certificate of Amendment of Certificate of Incorporation changing the
Company's name to Systemax Inc. (Incorporated herein by reference to
the Company's current report on Form 8-K, filed on May 18, 1999).
4.1 Stockholders Agreement. (Incorporated herein by reference to the
Company's quarterly report on Form 10-Q for the quarterly period ended
June 30, 1995).
4.2 Specimen Stock Certificate. (Incorporated herein by reference to
Exhibit 4.2 to the Company's Registration Statement on Form S-1, File
No. 33-92052).
19 Systemax 1999 Long-Term Stock Incentive Plan.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the three
months ended September 30, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYSTEMAX INC.
Date: November 12, 1999 By: /S/ RICHARD LEEDS
-----------------------------------
Richard Leeds
Chairman and Chief Executive Officer
By: /S/ STEVEN GOLDSCHEIN
-------------------------------
Steven Goldschein
Senior Vice President and Chief
Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
19 Systemax 1999 Long-Term Stock Incentive Plan
Stock Incentive Plan
27 Financial Data Schedule
Exhibit 19
SYSTEMAX INC.
1999 Long-Term Stock Incentive Plan
SECTION 1. PURPOSE. The purposes of this Systemax Inc. 1999 Long Term Stock
Incentive Plan are to promote the interests of Systemax Inc. and its
stockholders by (i) attracting and retaining exceptional executive personnel and
other key employees, including consultants and advisors to the Company and its
Affiliates, as defined below; (ii) motivating such employees, consultants and
advisors by means of performance-related incentives to achieve longer-ranger
performance goals; and (iii) enabling such employees, consultants and advisors
to participate in the long-term growth and financial success of the Company.
SECTION 2. DEFINITIONS. As used in the plan, the following terms shall have
the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by the Company and (ii) any entity in which the Company has
significant equity interest, in either case as determined by the Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted Stock
Award, Performance Award, Performance Award or other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean a committee of the Board designated by the Board to
administer the Plan and composed of not less than two directors, each of whom,
to the extent necessary to comply with Rule 16b-3 and to the extent that such
persons are available, is a "Non-Employee Director" within the meaning of Rule
16b-3 and, to the extent that such persons are available, each of whom is an
"outside director" within the meaning of Section 162 (m) of the Code.
"Company" shall mean Systemax Inc., together with any successor thereto.
"Employee" shall mean (i) an employee of the Company or of any affiliate
and (ii) an individual providing consulting or advisory services to the Company
or any Affiliate as an independent contractor.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value of the property or
other item being valued, as determined by the Committee in its sole discretion.
"Incentive Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
"Non-Qualified Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is not intended to
be an Incentive Stock Option.
"Option" shall mean a Non-Qualified Stock Option and shall include a
Restoration Option.
"Other Stock-Based Award" shall mean any right granted under Section 10 of
the Plan.
"Participant" shall mean any Employee selected by the Committee to receive
an Award under the Plan.
"Performance Award" shall mean any right granted under Section 9 of the
Plan.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.
"Plan" shall mean this Systemax 1999 Long-Term Stock Incentive Plan.
"Restoration Option" shall mean an Option granted pursuant to Section 6(e)
of the Plan.
"Restricted Stock" shall mean any Share granted under Section 8 of the
Plan.
"Restricted Stock Unit" shall mean any united granted under Section 8 of
the Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by the
SEC under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto and shall include the Staff thereof.
"Shares" shall mean the common stock of the Company, $0.01 par value, or
such other securities of the Company as may be designated by the Committee from
time to time.
"Stock Appreciation Right" shall mean any right granted under Section 7 of
the Plan.
"Substitute Awards" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.
SECTION 3. ADMINISTRATION. (a) The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Employee; (iii) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other Awards or other
property, or cancelled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend or waive rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, and Affiliate, and Participant, any holder or
beneficiary of any Award, any shareholder and any Employee.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section 4(b),
the number of Shares with respect to which Awards maybe granted under the Plan
shall be 2,000,000. The maximum number of Shares which may be the subject of
Options and Stock Appreciation Rights granted to any individual during any
calendar year shall not exceed 200,000 Shares. If, after the effective date of
the Plan any Shares covered by an Award granted under the Plan, or to which such
an Award relates, are forfeited, or if an Award is settled for cash or otherwise
terminates or is cancelled without the delivery of Shares, the Shares covered by
such Award, or to which such Award relates, or the number of Shares otherwise
counted against the aggregate number of Shares with respect to which Awards may
be granted, to the extent of any such settlement, forfeiture, termination or
cancellation, shall again be, or shall become, Shares with respect to which
Awards granted; PROVIDED, HOWEVER, that with respect to any Options or Stock
Appreciation Rights granted to any individual who is a "covered employee" as
defined in Section 162(m) of the Code and the regulations thereunder that is
canceled or as to which the exercise price or grant price is reduced, the number
of Shares subject to such Options or Stock Appreciation Rights shall continue to
count against the maximum number of Shares which may be the subject of Options
and Stock Appreciation Rights granted to such covered employee and such maximum
number of Shares shall be determined in accordance with Section 162(m) of the
Code and regulations promulgated thereunder. In the event that any Option or
other Award granted hereunder is exercised through the delivery of Shares, the
number of Shares available for Awards under the Plan shall be increased by the
number of Shares surrendered, to the extent permissible under Rule 16b-3.
Notwithstanding the foregoing and subject to adjustment as provided in Section
4(b), no more than 800,000 Shares shall be available for Awards of Restricted
Stock and Restricted Stock units.
(b) ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company,
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number of Shares or other
securities of the Company (or number and kinds of other securities of the
property) with respect to which Awards may be granted, (ii) the number of Shares
of other securities of the Company (or number and kinds of other securities or
property) subject to outstanding awards, and (iii) the grant or exercise price
with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award.
(c) SUBSTITUTE AWARDS. Any Shares underlying Substitute Awards shall not,
except in the case of Shares with respect to which substitute are granted to
Employees who are officers or directors of the Company for purposes of Section
16 of the Exchange Act or any successor section thereto, be counted against the
Shares available for Awards under the Plan.
(d) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued and unissued Shares or of treasury Shares.
SECTION 5. ELIGIBILITY. Any Employee, including any officer or director of
the Company, shall be eligible to be designated a participant.
SECTION 6. STOCK OPTIONS.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Options shall be
granted, the number of Shares to be covered by each Option. The option price
therefor and the conditions and limitations applicable to the exercise of the
Option. The Committee shall have the authority to grant Non-Qualified Stock
Options. The Committee shall not have the authority to grant Incentive Stock
Options under the Plan.
(b) EXERCISE PRICE. The Committee in it sole discretion shall establish the
exercise price at the time each option is granted.
(c) EXERCISE. Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may, in its sole discretion, specify
in the applicable Award Agreement or thereafter. The Committee may impose such
conditions with respect to the exercise of Options, including without
limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable.
(d) PAYMENT. No Shares shall be delivered pursuant to any exercise of an
Option until full payment in full of the Option price thereof is received by the
Company. Such payment may be made in cash, or its equivalent, or, if and to what
extent permitted by the Committee, by exchanging Shares owner by the optionee
(which are not the subject of any pledge or other security interest), or by a
combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any such Shares so tendered to the
Company as of the date of such tender is at least equal to such Option price.
(e) RESTORATION OPTIONS. In the event that any Participant delivers Shares
in payment of the exercise price of any Option granted hereunder in accordance
with Section 6(d), the Committee shall have the authority to grant or provide
for the automatic grant of a Restoration Option to such Participant. The Grant
of a Restoration Option shall be subject to the satisfaction of such conditions
or criteria as the Committee in its sole discretion shall establish from time to
time. A Restoration Option shall entitle the holder therof to purchase a number
of Shares equal to the number of such Shares so delivered upon exercise of the
original Option. A Restoration Option shall have a per share exercise price of
not less than 100% of the per Share Market Value on the date of grant of such
Restoration Option, a term no longer than the remaining term of the original
option at the time of exercise thereof, and such other terms and conditions as
the Committee in its sole discretion shall determine.
Section 7. STOCK APPRECIATION RIGHTS.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by each
Stock Appreciation Right Award, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. Stock Appreciation Rights granted
in tandem with or in addition to an Award may be granted either at the same time
as the Award or at a later time. Stock Appreciation Rights shall not be
exercisable earlier than six months after grant.
(b) EXERCISE AND PAYMENT. A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the excess of the Fair Market Value of
a Share on the date of exercise of the Stock Appreciation Right over the grant
price thereof. The Committee shall determine whether a Stock Appreciation Right
shall be settled in cash, Shares or a combination of cash and Shares.
(c) OTHER TERMS AND CONDITIONS. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the grant
of a Stock Appreciation Right, the term, methods of exercise, methods and form
of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised thereafter. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.
SECTION 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Shares of
Restricted Stock and Restricted Stock Units shall be granted, the number of
Shares of Restricted Stock and/or the number of Restricted Stock units to be
granted to each Participant, the duration of the period during which, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Company, and the other terms and conditions of such Awards.
(b) TRANSFER RESTRICTIONS. Shares of Restricted Stock and Restricted Stock
Units may not be sold, assigned, transferred, pledged or otherwise encumbered,
except, in the Case of Restricted Stock, as provided in the plan or the
applicable Award agreements. Certificates issues in respect of Shares of
Restricted Stock shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in the blank
with the company. Upon the lapse of the restrictions applicable to such Shares
of Restricted Stock, the Company shall deliver such certificates to the
Participant or the Participant's legal representative.
(c) PAYMENT. Each Restricted Stock Unit shall have a value equal to the
Fair Market Value of a Share. Restricted Stock Units shall be paid in cash,
other securities or other property, as determined in the sole discretion of the
Committee. Dividends paid on any Shares of Restricted Stock may be directly to
the Participant, or may be reinvested in additional Shares of Restricted Stock
or in additional Restricted Stock Units, as determined by the Committee in its
sole discretion.
Section 9. PERFORMANCE AWARDS.
(a) GRANT. The Committee shall have sole and complete authority to
determine Employees who shall receive a "Performance Award", which shall consist
of a right which is (i) denominated in cash or Shares, (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine.
(b) TERMS AND CONDITIONS. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award and the amount and kind of any
payment of transfer to be made pursuant to any Performance Award.
(c) PAYMENT OF PERFORMANCE AWARDS. Performance Awards may be paid in a lump
sum or in installments following the close of the performance period or, in
accordance with procedures established by the Committee, on a deferred basis.
SECTION 10. OTHER STOCK-BASED AWARDS.
(a) GENERAL. The Committee shall have authority to grant to eligible
Employees an "Other Stock-Based Award", which shall consist of any right which
is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of
Shares or an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the Plan; provided that any such rights must
comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and
applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of any such
Other Stock-Based Award. Except in the case of an Other Stock-Based Award that
is a Substitute Award, the price at which securities may be purchased pursuant
to any Other Stock Based Award granted under this plan or the provision, if any,
of any such Award that is analogous to the purchase of exercise price, shall not
be less than 100% of the Fair Market Value of the securities which such an Award
relates on the date of grant.
(b) DIVIDEND EQUIVALENTS. In the sole and complete discretion of the
Committee, an Award, whether made as an Other Stock-Based Award under this
Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may
provide the Participant with dividend equivalents, payable in cash, Shares,
other securities or other property on a current or deferred basis.
Section 11. AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any mandatory tax or regulatory requirement, including for these
purposes any approval requirement which is a prerequisite for exemptive relief
from Section 16(b) of the Exchange Act. Notwithstanding anything to the contrary
herein, the Committee may amend the Plan in such manner as may be necessary so
as to have the Plan conform with the local rules and regulations in any
jurisdiction outside the United States.
(b)AMENDMENTS TO AWARDS. The Committee may waive any conditions or rights
under, amend any terms of, or alter, suspend discontinue, cancel or terminate,
any Award theretofore granted, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of any Participant or any holder or
beneficiary of an Award theretofore granted shall not to that extent be
effective with the consent of the affected Participant, holder or beneficiary.
(c) ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of the changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
(d) CANCELLATION. Any provision of this Plan or any Award Agreement to the
contrary notwithstanding, the Committee may cause an Award granted hereunder to
be cancelled in consideration of a cash payment or alternative Award made to the
holder of such cancelled Award equal in value to the Fair Market Value of such
cancelled Award.
Section 12. GENERAL PROVISIONS.
(a) NONTRANSFERABILITY.
(i) Each Award, and each right under any Award, shall be exercisable
only by the Participant during a Participant's lifetime, if permissible under
applicable law, by the Participant's guardian or legal representative or by a
transferee receiving such Award pursuant to a qualified domestic relations order
("QDRO"), as determined by the Committee.
(ii) No Award that constitutes a "derivative security", for purposes
of Section 16 of the Exchange Act may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant otherwise than by
will or by the laws of descent and distribution or pursuant to QDRO, and any
such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or an Affiliate;
provided that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(b) NO RIGHTS TO AWARDS. No Employee, Participant, or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be same with respect to
each recipient.
(c) SHARE CERTIFICATES. All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the plan or the rules,
regulations, and other requirements of the Securities and Exchange Commission,
and stock exchange upon which such Shares or other securities are then listed,
and any applicable Federal or state laws, and the Committee may cause a legend
or legends to be put on any certificates to make appropriate references to such
restrictions.
(d) DELEGATION. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company or any
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify or waive rights with respect to, or to alter,
discontinue, suspend, or terminate Awards held by, Employees who are not
officers or directors of the Company for purposes of section 16 of the Exchange
Act, or any successor section thereto, or who are otherwise not subject to such
section and who are not "covered employees" under Section 162(m) of the Code or
would become covered under such Section.
(e) WITHHOLDING. Any participant may be required to pay the Company or any
Affiliate and the Company or any Affiliate shall have the right and is hereby
authorized to withhold from any Award, from any payment due or transfer made
under any Award or under the Plan or from any compensation or other amount owing
to a Participant the amount (in cash, Shares, other securities, other Awards or
other property) of any applicable withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to
take such other action as may be necessary in the opinion of the company to
satisfy all obligations for the payment of such taxes. The Committee may provide
for additional cash payments to holders of Awards to help defray or offset any
tax arising from the grant, vesting, exercise or payments of any Award.
(f) AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an Award
Agreement which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto, including
but not limited to the effect on such Award of the death, retirement or other
termination of employment of a Participant and the effect, if any, of a change
in control of the Company.
(g) NO LIMIT IN OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing on
effect other compensation arrangements, which may, but need not, provide for the
grant of options, Restricted Stocks, Shares and other types of Awards provided
for hereunder (subject to shareholder approval if such approval is required),
and such arrangements may either be generally applicable or applicable only in
specific cases.
(h) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the company or Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
(i) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be distributed under the
Plan until he or she has become the holder of such Shares. Notwithstanding the
foregoing, in connection with each grant of Restricted Stock hereunder, the
applicable Award shall specify if and to what extent the Participant shall not
be entitled to the rights of a stockholder in respect of Restricted Stock.
(j) GOVERNING LAW. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware.
(k) SEVERABILITY. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under and law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform the applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(l) OTHER LAWS. The Committee may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such consideration
might violate any applicable law or regulation or entitle the Company to recover
the same under Section 16(b) of the Exchange Act, and any payment tendered to
the Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant,
holder or beneficiary. Without limiting the generality of the foregoing, no
Award granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the Committee
in its sole discretion has determined that any such offer, if made, would be in
compliance with all applicable requirements of the U.S. federal securities laws.
(m) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(n) NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be cancelled, terminated, or otherwise eliminated.
(o) HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 13. TERM OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall be effective as of the date of its
approval by the directors of the Company.
(b) EXPIRATION DATE. No Award shall be granted under the Plan after
December 31, 2005; provided that the authority for grant of Restoration Options
hereunder in accordance with Section 6(e) shall continue, subject to the
provisions of Section 4, as long as any option granted hereunder remains
outstanding. Unless otherwise expressly provided in the Plan or an applicable
Award Agreement, any Award granted hereunder may, and the authority of the Board
or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award shall,
continue after December 31, 2005.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AT SEPTEMBER 30, 1999 (UNAUDITED) AND THE
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1999 (UNAUDITED) OF SYSTEMAX INC. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 42,661
<SECURITIES> 0
<RECEIVABLES> 192,848
<ALLOWANCES> 0
<INVENTORY> 134,066
<CURRENT-ASSETS> 408,919
<PP&E> 41,955
<DEPRECIATION> 0
<TOTAL-ASSETS> 524,552
<CURRENT-LIABILITIES> 218,645
<BONDS> 1,985
0
0
<COMMON> 382
<OTHER-SE> 303,540
<TOTAL-LIABILITY-AND-EQUITY> 524,552
<SALES> 1,276,109
<TOTAL-REVENUES> 1,276,109
<CGS> 1,042,880
<TOTAL-COSTS> 1,042,880
<OTHER-EXPENSES> 191,319
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 625
<INCOME-PRETAX> 42,535
<INCOME-TAX> 17,228
<INCOME-CONTINUING> 25,307
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,307
<EPS-BASIC> .71
<EPS-DILUTED> .71
</TABLE>
