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<SEC-DOCUMENT>0000899681-04-000617.txt : 20040823
<SEC-HEADER>0000899681-04-000617.hdr.sgml : 20040823
<ACCEPTANCE-DATETIME>20040823162356
ACCESSION NUMBER:		0000899681-04-000617
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20040630
FILED AS OF DATE:		20040823
DATE AS OF CHANGE:		20040823

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SYSTEMAX INC
		CENTRAL INDEX KEY:			0000945114
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-CATALOG & MAIL-ORDER HOUSES [5961]
		IRS NUMBER:				113262067
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13792
		FILM NUMBER:		04992155

	BUSINESS ADDRESS:	
		STREET 1:		22 HARBOR PARK DR
		CITY:			PORT WASHINGTON
		STATE:			NY
		ZIP:			11050
		BUSINESS PHONE:		5166087000

	MAIL ADDRESS:	
		STREET 1:		22 HARBOR PARK DRIVE
		CITY:			PORT WASHINGTON
		STATE:			NY
		ZIP:			11050

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GLOBAL DIRECTMAIL CORP
		DATE OF NAME CHANGE:	19950509
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>systemax-10q_082304.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>10-Q</TITLE>
</HEAD>
<BODY>

<P ALIGN=CENTER><FONT SIZE=3><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
WASHINGTON, D.C. 20549</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>FORM 10-Q</B></FONT></P>

<P><FONT SIZE=3><B>[X]&nbsp;&nbsp;&nbsp; QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></FONT></P>

<P><FONT SIZE=3>For the quarterly period ended June 30, 2004</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>or</FONT></P>

<P><FONT SIZE=3><B>[&nbsp;&nbsp; ]&nbsp;&nbsp;&nbsp; TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></FONT></P>

<P><FONT SIZE=3>For the transition period from ____________ to _____________</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>COMMISSION FILE NUMBER 1-13792</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>Systemax Inc.</B><BR>
(Exact name of registrant as specified in its charter)</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50% ALIGN=CENTER>
Delaware<BR>
(State or other jurisdiction<BR>
of incorporation or organization)</TD>
<TD WIDTH=50% ALIGN=CENTER>
11-3262067<BR>
(I.R.S. Employer<BR>
Identification No.)</TD>
</TR>
</TABLE>
<BR>

<P ALIGN=CENTER><FONT SIZE=3>11 Harbor Park Drive<BR>
Port Washington, New York 11050<BR>
(Address of registrant's principal executive offices)<BR>
(516) 608-7000<BR>
(Registrant's telephone number, including area code)</FONT></P>

<P><FONT SIZE=3>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. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>[X] Yes [&nbsp;&nbsp; ] No</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [ ] No [X]</FONT></P>

<P><FONT SIZE=3>The number of shares outstanding of the registrant's Common
Stock as of August 9, 2004 was 34,400,080. </FONT></P>

<PAGE>
<P ALIGN=LEFT><FONT SIZE=3><B>PART I - FINANCIAL INFORMATION<BR>
<BR>
Item 1. <U>Financial Statements</U></B></FONT></P>

<P><FONT SIZE=3>Our independent auditors, Deloitte and Touche LLP, have not
completed their review of the Company&#146;s interim financial statements for
the period ending June 30, 2004, pending the satisfactory completion of
the independent review discussed in Part II, Item 5. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Balance Sheets<BR>
(In Thousands, except share data)<BR>
<HR SIZE=1></FONT></P>

<PRE>
<FONT SIZE=1>
                                                                                    June 30,      December 31,
                                                                                     2004             2003
                                                                                  -----------     ------------
                                                                                  (Unaudited)
ASSETS:
   CURRENT ASSETS:
      Cash and cash equivalents                                                     $56,358          $38,702
      Accounts receivable, net                                                      156,560          152,435
      Inventories                                                                   126,230          133,905
      Prepaid expenses and other current assets                                      25,601           26,849
     Deferred income tax assets                                                      10,367           10,132
                                                                                  -----------     ------------
           Total current assets                                                     375,116          362,023

   PROPERTY, PLANT AND EQUIPMENT, net                                                65,209           68,647
   DEFERRED INCOME TAXES AND OTHER ASSETS                                            11,791           14,982
                                                                                  -----------     ------------

              TOTAL ASSETS                                                         $452,116         $445,652
                                                                                  ===========     ============

LIABILITIES AND SHAREHOLDERS' EQUITY:
   CURRENT LIABILITIES:
      Short-term borrowings, including current portions of long-term debt           $23,709          $20,814
       Accounts payable                                                             142,220          141,106
       Accrued expenses and other current liabilities                                50,743           51,037
                                                                                  -----------     ------------
          Total current liabilities                                                 216,672          212,957
                                                                                  -----------     ------------

   LONG-TERM DEBT                                                                    17,590           18,353
   OTHER LIABILITIES                                                                  1,732            1,768

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 38,231,990 shares; outstanding 34,391,296 (2004) and
       34,288,068 shares (2003)                                                         382              382
   Additional paid-in capital                                                       175,294          175,343
   Accumulated other comprehensive income, net                                        1,460            2,157
   Retained earnings                                                                 84,105           81,022
                                                                                -----------     ------------
                                                                                    261,241          258,904
                                                                                -----------     ------------
   Less: common stock in treasury at cost - 3,840,694 (2004) and 3,943,922
       (2003) shares                                                                 45,119           46,330
                                                                                -----------     ------------
                        Total shareholders' equity                                  216,122          212,574
                                                                                -----------     ------------

                TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $452,116         $445,652
                                                                                ===========     ============
</FONT>
</PRE>

<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Statements of Operations (Unaudited)<BR>
(In Thousands, except per share amounts)<BR>
<HR SIZE=1></FONT></P>

<PRE>
<FONT SIZE=1>
                                                            Six Months Ended                   Three Months Ended
                                                                June 30,                            June 30,
                                                     --------------------------------  ------------------------------------
                                                               2004             2003               2004               2003
                                                     ---------------  ---------------  -----------------  -----------------
Net sales                                                  $916,726         $815,259           $430,990           $388,798
Cost of sales                                               774,088          679,256            363,172            325,273
                                                     ---------------  ---------------  -----------------  -----------------
Gross profit                                                142,638          136,003             67,818             63,525
Selling, general &amp; administrative expenses                  129,676          125,483             64,101             61,682
Restructuring and other charges                               5,015              112                973
Goodwill impairment                                                            2,560                                 2,560
                                                     ---------------  ---------------  -----------------  -----------------
Income (loss) from operations                                 7,947            7,848              2,744               (717)
Interest and other expense, net                               1,073              533                426                319
                                                     ---------------  ---------------  -----------------  -----------------
Income (loss) before income taxes                             6,874            7,315              2,318             (1,036)
Provision for income taxes                                    3,791            4,144              1,647                828
                                                     ---------------  ---------------  -----------------  -----------------
Net income (loss)                                            $3,083           $3,171               $671            $(1,864)
                                                     ===============  ===============  =================  =================


Net income (loss) per common share:
Basic                                                          $.09             $.09               $.02              $(.05)
                                                     ===============  ===============  =================  =================
Diluted                                                        $.09             $.09               $.02              $(.05)
                                                     ===============  ===============  =================  =================

Weighted average common and common equivalent shares:
Basic                                                        34,338           34,106             34,371             34,108
                                                     ===============  ===============  =================  =================
Diluted                                                      35,227           34,312             35,224             34,108
                                                     ===============  ===============  =================  =================
</FONT>
</PRE>

<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Statement of Shareholders' Equity (Unaudited)<BR>
(In Thousands)<BR>
<HR SIZE=1></FONT></P>

<PRE>
<FONT SIZE=1>
                                  Common  Stock                                   Accumulated
                            -----------------------                                   Other
                                                      Additional                 Comprehensive     Treasury    Comprehensive
                              Number of                Paid-in      Retained    Income (Loss),      Stock,     Income (Loss),
                               Shares       Amount     Capital      Earnings      Net of Tax        At Cost      Net of Tax
                            ------------- ---------- ------------- ----------- ------------------ ------------ ---------------

Balances, January 1, 2004       34,288       $382      $175,343     $81,022          $2,157       $(46,330)

Exercise of stock options          103                     (849)                                     1,211
Change in cumulative
  translation
  adjustment, net                                                                      (697)                       $(697)
Compensation expense
  related to
  stock option plans                                        800
Net income                                                            3,083                                        3,083
                               -------      -----     ---------    --------         -------       --------        ------
Total comprehensive income                                                                                        $2,386
                                                                                                                  ======
Balances, June 30, 2004         34,391       $382      $175,294     $84,105          $1,460       $(45,119)
                               =======      =====     =========    ========         =======       ========
</FONT>
</PRE>

<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Statements of Cash Flows (Unaudited)<BR>
(In Thousands)<BR>
<HR SIZE=1></FONT></P>

<PRE>
<FONT SIZE=1>
                                                                                            Six Months
                                                                                          Ended June 30,
                                                                                 --------------------------------
                                                                                           2004             2003
                                                                                           ----             ----
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
   Net income                                                                            $3,083           $3,171
   Adjustments to reconcile net income to net cash provided by (used in)
   operating activities:
       Provision for deferred income taxes                                                2,434            1,304
       Depreciation and amortization                                                      5,857            6,768
       Provision for returns and doubtful accounts                                        1,634            1,399
       Loss on dispositions and abandonment                                                 525               24
       Compensation expense related to stock option plans                                   800
       Goodwill impairment                                                                                 2,560
   Changes in operating assets and liabilities:
       Accounts receivable                                                               (7,147)           9,849
       Inventories                                                                        7,185           (5,596)
       Prepaid expenses and other current assets                                          1,518            9,005
       Accounts payable, accrued expenses and other current liabilities                   1,641          (24,094)
                                                                                 ---------------  ---------------
           Net cash provided by operating activities                                     17,530            4,390
                                                                                 ---------------  ---------------

CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
   Investments in property, plant and equipment                                          (2,894)          (4,230)
   Proceeds from disposals of property, plant and equipment                                 131               61
   Purchase of minority interest                                                                          (2,560)
                                                                                 ---------------  ---------------
           Net cash used in investing activities                                         (2,763)          (6,729)
                                                                                 ---------------  ---------------

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
   Proceeds (repayments) of borrowings from banks                                         2,910           (7,409)
   Repayments of long-term debt and capital lease obligations                              (878)            (625)
   Exercise of stock options                                                                362               35
                                                                                 ---------------  ---------------
           Net cash provided by (used in) financing activities                            2,394           (7,999)
                                                                                 ---------------  ---------------

EFFECTS OF EXCHANGE RATES ON CASH                                                           495             (402)
                                                                                 ---------------  ---------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     17,656          (10,740)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                                          38,702           62,995
                                                                                 ---------------  ---------------

CASH AND CASH EQUIVALENTS - END OF PERIOD                                               $56,358          $52,255
                                                                                 ===============  ===============
</FONT>
</PRE>

<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Systemax Inc.</B><BR>
Notes to Condensed Consolidated Financial Statements (Unaudited)<BR>
<HR SIZE=1></FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>1.</B></TD>
<TD WIDTH=95%><B>Description of Business</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>Systemax Inc. (the &#147;Company&#148; or
&#147;Systemax&#148;) is a direct marketer of brand name and private label
products, including personal desktop computers (PCs), notebook computers,
computer related products and industrial products in North America and Europe.
Systemax markets these products through an integrated system of distinctively
branded, full-color direct mail catalogs, proprietary e-commerce Internet sites
and personalized relationship marketing.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>2.</B></TD>
<TD WIDTH=95%><B>Basis of Presentation</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>The accompanying condensed consolidated financial
statements include the accounts of the Company, its wholly-owned subsidiaries
and all Variable Interest Entities (VIEs) of which the Company is deemed to be
the primary beneficiary (see Note 8). All significant intercompany accounts and
transactions have been eliminated in consolidation.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>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 &#150; 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. The dilutive effect of outstanding options issued by the
Company are 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. Stock options for the following number of
shares in the period noted were excluded from the computation of diluted
earnings per share due to their antidilutive effect.</FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
              Six Months Ended June 30,        Three Months Ended June 30,
              -------------------------        ---------------------------
                  2004       2003                 2003            2004
                  ----       ----                 ----            ----
                626,000   1,277,000              588,000        693,000
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>In the opinion of management, 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 June 30, 2004 and the results of operations for the three and six
month periods ended June 30, 2004 and 2003, cash flows for the six months ended
June 30, 2004 and 2003 and changes in shareholders&#146; equity for the six
months ended June 30, 2004. The December 31, 2003 Condensed Consolidated Balance
Sheet has been derived from the audited consolidated financial statements
included in the Company&#146;s Annual Report on Form 10-K for the year ended
December 31, 2003.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>These condensed consolidated financial statements
should be read in conjunction with the Company&#146;s audited consolidated
financial statements as of December 31, 2003 and for the year then ended
included in the Company&#146;s Annual Report on Form 10-K for the fiscal year
ended December 31, 2003. The results for the six months ended June 30, 2004 are
not necessarily indicative of the results for an entire year.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>3.</B></TD>
<TD WIDTH=95%><B>Stock-based Compensation</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>The Company has three stock-based compensation plans,
two of which are for employees, consultants and advisors and the third of which
is for non-employee Directors. The Company has elected to follow the accounting
provisions of Accounting Principles Board Opinion 25 for stock-based
compensation and to provide the pro forma disclosures required under Statement
of Financial Accounting Standards (&#147;SFAS&#148;) 148, &#147;Accounting for
Stock-Based Compensation &#150; Transition and Disclosure.&#148; Accordingly,
the Company does not recognize compensation expense for stock option grants made
at an exercise price equal to or in excess of the market value of the underlying
stock on the date of grant. The following table illustrates the effect on net
income (loss) per share had compensation costs of the plans been determined
under a fair value alternative method as stated in SFAS 123 (in thousands,
except per share data):</FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
<FONT SIZE=1>
                                                                    Six Months Ended              Three Months Ended
                                                                          June 30,                    June 30,
                                                                    -----------------             ------------------
                                                                     2004           2003           2004          2003
                                                                     ----           ----           ----          ----
     Net income (loss) - as reported                               $3,083         $3,171           $671       $(1,864)
     Stock-based employee compensation expense determined
         under fair value based method, net of related
         tax effects                                                  214            259            208           124
                                                                   ------         ------           ----       -------
     Pro forma net income (loss)                                   $2,869         $2,912           $463       $(1,988)
                                                                   ======         ======           ====       =======

     Net income (loss) per common share:
     Basic:
     Net income (loss) - as reported                                 $.09           $.09           $.02         $(.05)
                                                                   ======         ======           ====       =======
     Net income (loss) - pro forma                                   $.08           $.09           $.01         $(.06)
                                                                   ======         ======           ====       =======

     Diluted:
     Net income (loss) - as reported                                 $.09           $.09           $.02         $(.05)
                                                                   ======         ======           ====       =======
     Net income (loss) - pro forma                                   $.08           $.08           $.01         $(.06)
                                                                   ======         ======           ====       =======
</FONT>
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=95%>The fair value of options granted was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:</TD>
</TR>
</TABLE>
<BR>

<PRE>
                                                                            2004           2003
                                                                            ----           ----
           Expected dividend yield                                            0%             0%
           Risk-free interest rate                                          5.0%           5.0%
           Expected volatility                                             55.0%          68.0%
           Expected life in years                                           2.29           2.35
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>4.</B></TD>
<TD WIDTH=95%><B>Comprehensive Income</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>Comprehensive income (loss) consists of net income
(loss) and foreign currency translation adjustments, net of tax and is included
in the Condensed Consolidated Statement of Shareholders&#146; Equity. For the
six month periods ended June 30, comprehensive income was $2,386,000 in 2004 and
$5,637,000 in 2003 net of tax effects on foreign currency translation
adjustments of $387,000 in 2004 and $(1,961,000) in 2003. For the three month
periods ended June 30, comprehensive income (loss) was $231,000 in 2004 and
$(136,000) in 2003, net of tax effects on foreign currency translation
adjustments of $227,000 in 2004 and $(1,162,000) in 2003.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>5.</B></TD>
<TD WIDTH=95%><B>Credit Facilities</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>The Company maintains a $70 million secured revolving
credit agreement with a group of financial institutions which provides for
borrowings in the United States. The borrowings are secured by all of the
domestic accounts receivable and inventories of the Company, general intangibles
and the Company&#146;s shares of stock in its domestic subsidiaries. The
revolving credit agreement contains certain financial and other covenants,
including restrictions on capital expenditures and payments of dividends. The
Company was in compliance with all of the covenants as of June 30, 2004. The
credit facility expires and outstanding borrowings thereunder are due on March
31, 2005. As of June 30, 2004, availability under the agreement was $58.7
million. There were outstanding letters of credit of $7.6 million and there were
no outstanding advances.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>Under the Company&#146;s &#163;15 million ($27.1
million at the June 30, 2004 exchange rate) United Kingdom credit facility,
which is available to its United Kingdom subsidiaries, at June 30, 2004 there
were &#163;9.1 million ($16.4 million) of borrowings outstanding with interest
payable at a rate of 5.87%. The facility does not have a termination date, but
may be canceled by either party with six months notice. Borrowings under the
facility are secured by certain assets of the Company&#146;s United Kingdom
subsidiaries.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>Under the Company&#146;s &#128;5 million ($6.1
million at the June 30, 2004 exchange rate) Netherlands credit facility, there
were &#128;4.5 million ($5.5 million) of borrowings outstanding at June 30,
2004, with interest payable at a rate of 5.0%. Borrowings under the facility are
secured by the subsidiary&#146;s accounts receivable and are subject to a
borrowing base limitation of 85% of the eligible accounts. The facility expires
in November 2005.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>6.</B></TD>
<TD WIDTH=95%><B>Accrued Restructuring Costs</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>The Company periodically assesses its operations to
ensure that they are efficient, aligned with market conditions and responsive to
customer needs. During the six months ended June 30, 2004 and the years ended
December 31, 2003 and 2002, management approved and implemented restructuring
actions which included workforce reductions and facility
consolidations.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3><I>2004 United States Streamlining Plan</I><BR>
In the first quarter of 2004, the Company implemented a plan to streamline the
back office and warehousing operations in its United States computer businesses.
The Company recorded $3.7 million of costs related to this plan, including $3.2
million for severance and benefits for approximately 200 terminated employees
and $483,00 of non-cash costs for impairment of the carrying value of fixed
assets.</FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>The following table summarizes the components of the
restructuring charges, the cash payments, non-cash activities, and the remaining
accrual as of June 30, 2004 (in thousands):</FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
<FONT SIZE=1>
                                                Severance and      Asset           Other
                                              Personnel Costs    Write-downs      Exit Costs       Total
                                              ---------------    -----------      ----------       -----
       Charged to expense in 2004                  $3,153           $483             $60          $3,696
       Amounts utilized                            (1,933)          (483)              -          (2,416)
                                                  -------           ----             ---          -------
       Accrued at June 30, 2004                   $ 1,220              -             $60          $1,280
                                                  =======           ====             ===          ======
</FONT>
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3><I>2003 United States Warehouse Consolidation Plan</I><BR>
In the fourth quarter of 2003, the Company implemented a plan to consolidate the
warehousing facilities in its United States computer supplies business. The
table below displays the activity and liability balance of the reserve for this
initiative (in thousands):</FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
<FONT SIZE=1>
                                                Severance and      Asset           Other
                                              Personnel Costs    Write-downs      Exit Costs       Total
                                              ---------------    -----------      ----------       -----
       Accrued at December 31, 2003                $ 63             $233            $417           $713
       Amounts utilized                             (63)             (82)           (261)          (406)
                                                   ----             ----            ----           ----
       Accrued at June 30, 2004                       -             $151            $156           $307
                                                   ====             ====            ====           ====
</FONT>
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3><I>2002 United Kingdom Consolidation Plan</I><BR>
In 2002 the Company implemented a restructuring plan to consolidate the
activities of three United Kingdom locations into a new facility constructed for
the Company. In the fourth quarter of 2003, the Company recorded additional
costs related to this plan. The table below displays the activity and liability
balance of the reserve for this initiative (in thousands):</FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
                                             Asset          Other
                                          Write-downs     Exit Costs    Total
                                          -----------     ----------    -----
       Accrued at December 31, 2003          $630          $1,682       $2,312
       Amounts utilized                      (630)           (951)      (1,581)
                                             ----          ------       ------
       Accrued at June 30, 2004                 -            $731         $731
                                             ====          ======       ======
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>7.</B></TD>
<TD WIDTH=95%><B>Segment Information</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>The Company is engaged in a single reportable
segment, the marketing and sales of various business products. Financial
information relating to the Company&#146;s operations by geographic area was as
follows (in thousands):</FONT></TD>
</TR>
</TABLE>
<BR>

<PRE>
<FONT SIZE=1>
                                                   Six Months Ended            Three Months Ended
                                                        June 30,                    June 30,
                                                        --------                    --------
                                                   2004          2003           2004          2003
                                                   ----          ----           ----          ----
         Net Sales (in thousands):
         North America                           $570,983      $500,332       $275,077      $240,501
         Europe                                   345,743       314,927        155,913       148,297
                                                 --------      --------       --------      --------
         Consolidated                            $916,726      $815,259       $430,990      $388,798
                                                 ========      ========       ========      ========

          Revenues are attributed to countries based on location of selling subsidiary.
</FONT>
</PRE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>8.</B></TD>
<TD WIDTH=95%><B>Recent Accounting Pronouncements</B></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>In December&#160;2003, the Financial Accounting
Standards Board (&#147;FASB&#148;) issued Financial Interpretation No.&#160;46
(Revised) (&quot;FIN 46-R&quot;) to address certain FIN 46 implementation
issues. This interpretation clarifies the application of Accounting Research
Bulletin 51, &#147;Consolidated Financial Statements&#148;, for companies that
have interests in entities that are VIEs (as defined in Note 2) as defined under
FIN&#160;46. According to this interpretation, if a company has an interest in a
VIE and is at risk for a majority of the VIE's expected losses or receives a
majority of the VIE's expected gains it shall consolidate the VIE. FIN&#160;46-R
also requires additional disclosures by primary beneficiaries and other
significant variable interest holders. For entities acquired or created before
February&#160;1, 2003, this interpretation is effective no later than the end of
the first interim or reporting period ending after March&#160;15, 2004, except
for those VIE's that are considered to be special purpose entities, for which
the effective date is no later than the end of the first interim or annual
reporting period ending after December&#160;15, 2003. For all entities that were
acquired subsequent to January&#160;31, 2003, this interpretation is effective
as of the first interim or annual period ending after December&#160;31, 2003.
The Company has adopted FIN 46-R and began consolidating a 50%-owned joint
venture in the first quarter of 2004. This consolidation did not have a material
impact on the Company&#146;s consolidated financial position, results of
operations or cash flows.</FONT></TD>
</TR>
</TABLE>
<BR>

<P ALIGN=LEFT><FONT SIZE=3><B>Item 2. <U>Management's Discussion and Analysis of
Financial Condition and Results of Operations</U>.</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Three Months Ended June 30, 2004 Compared to Three
Months Ended June 30, 2003</B></FONT></P>

<P><FONT SIZE=3>Net sales for the three months ended June 30, 2004 increased
10.9% to $431.0 million compared to $388.8 million in the year-ago quarter.
North American sales were $275.1 million, an increase of 14.4% from $240.5
million in the prior year. European sales increased 5.1%, to $155.9 million
(representing 36.2% of worldwide sales) compared to $148.3 million (38.1% of
worldwide sales) in the year-ago quarter. Movements in foreign exchange rates
positively impacted the European sales comparison by approximately $13.3 million
in 2004. Excluding the movements in foreign exchange rates, European sales would
have decreased 3.8% from the prior year. </FONT></P>

<P><FONT SIZE=3>Gross profit was $67.8 million compared to $63.5 million in the
year-ago quarter, an increase of $4.3 million. The increase in gross profit
includes an increase of $2.7 million in the amount of vendor allowances
reclassified from selling, general and administrative expenses (as a reduction
of advertising expenses) as a result of the adoption of Emerging Issues Task
Force (&#147;EITF&#148;) Issue 02-16, &#147;Accounting for Consideration
Received From a Vendor by a Customer (Including a Reseller of the Vendor&#146;s
Products)&#148; in 2003. The gross profit margin was 15.7% in the current
quarter, compared to 16.3% in the year-ago quarter. The decline in the gross
profit margin was due to pricing pressures, increased customer discounting and
changes in the mix of products sold from a year ago. </FONT></P>

<P><FONT SIZE=3>Selling, general and administrative expenses for the quarter
increased $2.4 million, or 3.9%, to $64.1 million compared to $61.7 million in
the second quarter of 2003. This increase resulted from an increase of $2.7
million in the amount of vendor allowances reclassified to cost of sales and
increased costs in Europe due to the adverse effects of changes in foreign
exchange rates. These increases were offset by decreased salaries resulting from
workforce reductions in the U. S. associated with our first quarter 2004
computer business streamlining plan and reductions in catalog spending. Selling,
general and administrative expenses as a percentage of net sales decreased to
14.9% compared to 15.9% in the year-ago quarter. </FONT></P>

<P><FONT SIZE=3>During the second quarter of 2004, we incurred $1.0 million of
restructuring charges in Europe in connection with facility exit costs and
workforce reductions. </FONT></P>

<P><FONT SIZE=3>During the second quarter of 2003, we purchased the minority
ownership of our Netherlands subsidiary pursuant to the terms of the original
purchase agreement for $2.6 million. All of the purchase price was attributable
to goodwill and, as a result of an impairment analysis, was written off in
accordance with Statement of Financial Accounting Standards (&#147;SFAS&#148;)
142. </FONT></P>

<P><FONT SIZE=3>As a result of the above factors, we had income from operations
for the current quarter of $2.7 million compared to a loss from operations of
$0.7 million in the year-ago quarter. In our North American operations, we had
income from operations of $5.1 million in the current quarter compared to income
from operations of $1.3 million last year. Europe had a loss from operations of
$2.4 million in the second quarter of 2004 compared to a loss from operations of
$2.0 million in the year-ago quarter. </FONT></P>

<P><FONT SIZE=3>Interest and other expense - net consists principally of
interest expense. Interest expense was $725,000 in the second quarter of 2004
and $524,000 in 2003 as a result of higher average borrowings in Europe.
Interest income on invested funds increased in 2004 as a result of more funds
available for investment. </FONT></P>

<P><FONT SIZE=3>Income tax expense was $1.6 million in the second quarter of
2004 and $0.8 million in the year-ago quarter. The effective tax rate for the
second quarter of 2004 was high due to losses in tax jurisdictions for which no
benefit is currently recognized. In 2003, as a result of the goodwill impairment
write-off which is not deductible for tax purposes, we had a loss before income
taxes with an income tax expense of $828,000. </FONT></P>

<P><FONT SIZE=3>As a result of the above, net income for the second quarter was
$671,000, or $.02 per basic and diluted share, compared to a loss of $1.9
million, or $.05 per basic and diluted share, in the second quarter of 2003.
</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Six Months Ended June 30, 2004 Compared to Six Months
Ended June 30, 2003</B></FONT></P>

<P><FONT SIZE=3>Net sales for the six months ended June 30, 2004 increased 12.4%
to $916.7 million compared to $815.3 million in the year-ago period. North
American sales were $571.0 million, a 14.1% increase from last year&#146;s
$500.3 million. European sales increased 9.8% to $345.7 million for the first
six months of 2004 (representing 37.7% of worldwide sales) compared to $314.9
million (representing 38.6% of worldwide sales) in the year-ago six-month
period. Movements in foreign exchange rates positively impacted European sales
for the first six months of 2004 by approximately $39.1 million. Excluding the
movements in foreign exchange rates, European sales would have decreased 2.6%
from the prior year. The increase in North American sales resulted from
increased sales of computer products to consumer customers, driven by increased
internet purchases and increased sales in our industrial products division.
These were partially offset by weakness in demand for information technology
products by corporate customers. European sales were lower in local currencies
as a result of continued weak market conditions in many of the local markets.</FONT></P>

<P><FONT SIZE=3>Gross profit was $142.6 million, or 15.6% of net sales, compared
to $136.0 million, or 16.7% of net sales, in the year-ago period, an increase of
$6.6 million.&#160;&#160;The increase in gross profit includes an increase of
$5.2 million in the amount of vendor allowances reclassified from selling,
general and administrative expenses (as a reduction of advertising expenses) as
a result of the adoption of EITF Issue 02-16 in 2003. The decline in gross
profit margin was due to continued pricing pressure, increased customer
discounting and a change in the mix of products sold. </FONT></P>

<P><FONT SIZE=3>Selling, general and administrative expenses for the six months
increased by $4.2 million or 3.3% to $129.7 million compared to $125.5 million
in the first half of 2003. This increase resulted from an increase of $5.2
million in the amount of vendor allowances reclassified to cost of sales in 2004
and the adverse effect of movements in foreign exchange rates on our European
costs. Decreases in selling, general and administrative expenses resulted from
workforce reductions in the U. S. associated with our first quarter 2004
computer business streamlining plan and reductions in catalog spending. As a
percentage of sales, these expenses were 14.1% compared to 15.4% in the year-ago
period. </FONT></P>

<P><FONT SIZE=3>During the second quarter of 2004, we incurred $1.0 million of
restructuring charges in Europe in connection with facility exit costs and
workforce reductions. During the first quarter of 2004 we implemented a plan to
streamline the activities of our United States computer businesses&#146; back
office and warehouse operations, resulting in the elimination of approximately
200 jobs. We incurred $3.7 million of restructuring costs associated with this
plan, including $3.2 million for staff severance and benefits for terminated
employees and $0.5 million of non-cash costs for impairment of the carrying
value of fixed assets. We also consolidated United Kingdom sales offices in the
first quarter of 2004, resulting in the elimination of 50 jobs with
restructuring costs of approximately $300,000. </FONT></P>

<P><FONT SIZE=3>During the second quarter of 2003, we purchased the minority
ownership of our Netherlands subsidiary pursuant to the terms of the original
purchase agreement for $2.6 million. All of the purchase price was attributable
to goodwill and, as a result of an impairment analysis, was written off in
accordance with SFAS 142. </FONT></P>

<P><FONT SIZE=3>The Company had income from operations for the current six month
period of $7.9 million compared to $7.8 million in the year-ago period. The
Company had income from operations of $7.0 million in its North American
operations in the current six month period compared to $7.1 million last year.
European income from operations was $0.9 million, an increase of $0.2 million
from $0.7 million in the year-ago period. </FONT></P>

<P><FONT SIZE=3>Interest and other expense - net consists principally of
interest expense. Interest expense was $1.4 million in the first six months of
2004 and $1.1 million in 2003 as a result of higher average borrowings in
Europe. Interest income on invested funds was $0.4 million in both years.</FONT></P>

<P><FONT SIZE=3>The income tax provision was $3.8 million for the first six
months of 2004 compared to a $4.1 million tax provision for the comparable
period in 2003. The effective tax rates were 55.1% in 2004 and 56.7% in 2003.
The high effective tax rates are due to non-deductible costs incurred and losses
in tax jurisdictions for which no benefit is currently recognized. </FONT></P>

<P><FONT SIZE=3>As a result of the above, net income for the first six months of
2004 was $3.1 million, or $.09 per basic and diluted share, compared to $3.2
million, or $.09 per basic and diluted share, in the year ago period.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Liquidity and Capital Resources</B></FONT></P>

<P><FONT SIZE=3>Our primary liquidity needs are to support working capital
requirements in our business and to fund capital expenditures. We rely
principally upon operating cash flow and borrowings under our credit facilities
to meet these needs. We believe that cash flow available from these sources will
be sufficient to meet our working capital requirements, projected capital
expenditures and interest and debt repayments in the foreseeable future.</FONT></P>

<P><FONT SIZE=3>Our cash balance increased to $56.4 million during the six
months ended June 30, 2004 from $38.7 million at the end of 2003. Net cash
provided by operating activities was $17.5 million in 2004, compared with $4.4
million in 2003. The increase in cash provided by operations in 2004 resulted
from changes in our working capital accounts, which provided $3.2 million in
cash compared to using $10.8 million of cash in 2003. The improvement resulted
primarily from a $7.7 million decrease in inventory in the first six months of
2004, compared to a $7.3 million increase for the same period of the prior year,
and a $0.8 million increase in accounts payable, accrued expenses and other
current liabilities in 2004, compared to an $18.6 million decrease in the year
ago period. Cash generated from net income adjusted by other non-cash items
provided $14.3 million in 2004, compared to $15.2 million provided by these
items in 2003. </FONT></P>

<P><FONT SIZE=3>Our working capital was $158 million at June 30, 2004, an
increase of $9 million from $149 million at the end of 2003. This was due
principally to an $18 million increase in cash and a $4 million increase in
accounts receivable offset by an $8 million decrease in inventories, a $1
million decrease in prepaid expenses and other current assets, a $3 million
increase in short-term debt and a $1 million increase in accounts payable. Our
inventories decreased as a result of the streamlining plan we initiated in our
U. S. computer business in the first quarter of this year, which included a
consolidation of multiple warehouses into a single location. Future accounts
receivable and inventory balances will continue to fluctuate with changes in
sales volume and the mix of our net sales between consumer and business
customers. </FONT></P>

<P><FONT SIZE=3>We maintain our cash and cash equivalents primarily in money
market funds or their equivalent. As of June 30, 2004, all of our investments
mature in less than three months. Accordingly, we do not believe that our
investments have significant exposure to interest rate risk. </FONT></P>

<P><FONT SIZE=3>In 2004 $2.8 million of cash was used in investing activities,
principally for the purchase of property, plant and equipment. Capital
expenditures in 2004 consisted primarily of upgrades and enhancements to our
information and communications systems hardware and facilities costs for the
opening of several new retail stores. Cash of $6.7 million was used in investing
activities in 2003, including $4.2 million for capital expenditures and $2.6
million for the acquisition of the minority interest in our Netherlands
subsidiary. </FONT></P>

<P><FONT SIZE=3>Net cash of $2.4 million was provided by financing activities in
2004. Cash of $2.9 million was provided by borrowings under our short-term
United Kingdom credit facility. We used cash of $878,000 for payments under
long-term borrowing agreements. Exercises of stock options provided $362,000 of
cash in 2004. Cash of $8.0 million was used by financing activities in 2003,
principally to repay bank borrowings and long-term debt. </FONT></P>

<P><FONT SIZE=3>Under our $70 million United States secured revolving credit
agreement, which expires on March 31, 2005, availability as of June 30, 2004 was
$58.7 million. There were outstanding letters of credit of $7.6 million and
there were no outstanding advances as of June 30, 2004. Under our &#163;15
million ($27.1 million at the June 30, 2004 exchange rate) multi-currency United
Kingdom credit facility, which is available to our United Kingdom subsidiaries,
at June 30, 2004 there were &#163;9.1 million ($16.4 million) of borrowings
outstanding with interest payable at a rate of 5.87%. The facility does not have
a termination date, but may be canceled by either party on six months notice.
Borrowings under the facility are secured by certain assets of our United
Kingdom subsidiaries. Under our Netherlands &#128;5 million ($6.1 million at the
June 30, 2004 exchange rate) credit facility, at June 30, 2004 there were
&#128;4.5 million ($5.5 million) of borrowings outstanding under this line with
interest payable at a rate of 5.0%. This facility expires in November 2005.</FONT></P>

<P><FONT SIZE=3>We have begun discussions with our lenders to replace the
current United States and United Kingdom credit facilities with a single
multi-currency borrowing facility. We expect that a new agreement will be
completed by the end of the calendar year. </FONT></P>

<P><FONT SIZE=3>We also have certain obligations with various parties that
include commitments to make future payments. Our principal commitments at June
30, 2004 consisted of repayments of borrowings under our credit agreements and
long-term borrowings and payments under operating leases for certain of our real
property and equipment. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Off-balance Sheet Arrangements</B></FONT></P>

<P><FONT SIZE=3>The Company has not created, and is not party to, any
special-purpose or off-balance sheet entities for the purpose of raising
capital, incurring debt or operating the Company&#146;s business. The Company
does not have any arrangements or relationships with entities that are not
consolidated into the financial statements that are reasonably likely to
materially affect the Company&#146;s liquidity or the availability of capital
resources. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Forward Looking Statements - Factors That May Affect
Future Results and Financial Condition</B></FONT></P>

<P><FONT SIZE=3>This report 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 of the Private Securities Litigation Reform Act of 1995.
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 &#147;anticipates&#148;, &#147;believes&#148;,
&#147;estimates&#148;, &#147;expects&#148;, &#147;intends&#148;,
&#147;plans&#148; and variations thereof and similar expressions are intended to
identify forward looking statements. </FONT></P>

<P><FONT SIZE=3>Forward-looking statements in this report are based on the
Company&#146;s beliefs and expectations as of the date of this report and are
subject to risks and uncertainties which may have a significant impact on the
Company&#146;s business, operating results or financial condition. Investors are
cautioned that these forward-looking statements are inherently uncertain. Should
one or more of the risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results or outcomes may vary materially from
those described herein. Many of these risk factors are discussed in Item 7
(&#147;Factors That May Affect Future Results and Financial Condition&#148;) of
the Company&#146;s Annual Report on Form&#160;10-K for the fiscal year ended
December&#160;31, 2003, and which discussion is incorporated by reference
herein. </FONT></P>

<P><FONT SIZE=3>Readers are cautioned not to place undue reliance on any forward
looking statements contained in this report, which speak only as of the date of
this report. We undertake 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. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Item 3. <U>Quantitative and Qualitative Disclosure
About Market Risk</U>.</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>We are 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.</FONT></P>

<P><FONT SIZE=3>We have limited involvement with derivative financial
instruments and do not use them for trading purposes. Changes in currency
exchange rates as measured against the U.S. dollar may positively or negatively
affect sales, gross margins, operating expenses and retained earnings as
expressed in U.S. dollars. We may enter into foreign currency options or forward
exchange contracts aimed at limiting in part the impact of certain currency
fluctuations, but as of June 30, 2004 we had no outstanding forward exchange
contracts. </FONT></P>

<P><FONT SIZE=3>Our exposure to market risk for changes in interest rates
relates primarily to our variable rate debt. In connection with our United
Kingdom term loan agreement, effective April 30, 2002 we entered into an
interest rate collar agreement to reduce our exposure to market rate
fluctuations. At June 30, 2004 the notional amount of the interest rate collar
was &#163;5.4 million ($9.8 million at the June 30, 2004 exchange rate) with an
interest rate cap of 6.0% and a floor of 4.5%. The interest rate collar expires
on April 30, 2005. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Item&#160;4. <U>Controls and Procedures</U></B>
</FONT></P>

<P><FONT SIZE=3>The Company has carried out an evaluation under the supervision
of management, including the Chairman and Chief Executive Officer and the Chief
Financial Officer, of the effectiveness of the design and operation of the
Company&#146;s disclosure controls and procedures. Based on that evaluation, the
Company&#146;s Chairman and Chief Executive Officer and Chief Financial Officer
have concluded that, as of June 30, 2004, the Company&#146;s disclosure controls
and procedures were effective to ensure that information required to be
disclosed by the Company in the reports filed or submitted by it under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified in the rules and forms of the
SEC, and include controls and procedures designed to ensure that information
required to be disclosed by the Company in such reports is assembled and
reported to the Company&#146;s management, including the Chairman and Chief
Executive Officer and the Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosures. </FONT></P>

<P><FONT SIZE=3>Other than arising from the review described below, there have
been no changes in internal control over financial reporting during the period
covered by this report that have materially affected, or are reasonably likely
to materially affect, the Company&#146;s internal control over financial
reporting. Management has identified and reported to the Audit Committee of the
Company&#146;s Board of Directors certain matters involving internal control
deficiencies. These deficiencies include informal worldwide policies and
procedures and inadequate systems interfaces which are remedied through
substantial manual intervention and numerous manual journal entries and account
reconciliation procedures. In addition, management has identified internal
control deficiencies arising from the consolidation of its U.S. computer
businesses with separate accounting systems to a single accounting system. These
internal control deficiencies affect the timeliness and accuracy of recording
certain transactions and include the lack of formal procedures to reconcile
intercompany accounts and transactions. Management will evaluate the additional
steps and actions needed to improve our financial infrastructure and eliminate
the deficiencies identified. There have been no significant changes in our
internal controls or in other factors that could significantly affect those
controls subsequent to the date we carried out this evaluation. </FONT></P>

<P><FONT SIZE=3>Management and the Audit Committee believe that the internal
control deficiencies, as mitigated by the substantial manual procedures and
account reconciliations noted above, individually or in the aggregate, did not
have a material effect on the financial statements of the Company for the period
ended June 30, 2004. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>PART II - OTHER INFORMATION</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>Item 4. <U>Submission of Matters to a Vote of Security-Holders</U>.</B></FONT></P>

<P><FONT SIZE=3>The annual meeting of the stockholders of the Company was held
on May 25, 2004. Each of the seven candidates for the position of director
(Richard Leeds, Bruce Leeds, Robert Leeds, Gilbert Fiorentino, Robert D.
Rosenthal, Stacy S. Dick and Ann R. Leven) was elected. </FONT></P>

<P><FONT SIZE=3>The matters voted upon at the meeting and the number of votes
cast for, against or withheld (including abstentions) as to each matter,
including nominees for office, are as follows: </FONT></P>

<PRE>
          1. Director election:

                  Richard Leeds
                                For:  33,170,928
                                Withhold Authority:  731,364
                  Robert Leeds
                                For:  33,645,753
                                Withhold Authority:  256,539
                  Bruce Leeds
                                For:  33,170,925
                                Withhold Authority:  731,367
                  Gilbert Fiorentino
                                For:  33,645,753
                                Withhold Authority:  256,539
                  Robert D. Rosenthal
                                For:  33,645,753
                                Withhold Authority: 256,539
                  Stacy S. Dick
                                For:  33,645,753
                                Withhold Authority: 256,539
                  Ann R. Leven
                                For: 33,645,753
                                Withhold Authority: 256,539

          2. Approval of amendments to the Company's 1999 Long-Term Stock
          Incentive Plan:

                              For: 27,924,959
                              Against: 2,022,178
                              Abstain: 61,006

          3. Ratification of the appointment of Deloitte &amp; Touche LLP as
          Independent Auditors for the Fiscal Year ending December 31, 2004:

                              For:  33,814,158
                              Against:  84,500
                              Abstain:  3,634
</PRE>

<P ALIGN=LEFT><FONT SIZE=3><B>Item 5. <U>Other Information</U></B></FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT SIZE=3>The Company announced that it is cooperating in an
investigation by the United States Attorney&#146;s Office for the Southern
District of Florida of one or more government employees and certain former
employees of the Company of possible misuse of certain previously terminated
rebate programs offered by a subsidiary of the Company. The Government has
informed the Company that it is not a subject of the investigation at this time.
The independent Audit Committee is conducting a review of the aforementioned
terminated rebate programs, including their potential violations of Company
policies, and is reviewing other similar programs offered by the
Company.</FONT></TD>
</TR>
</TABLE>
<BR>

<P ALIGN=LEFT><FONT SIZE=3><B>Item 6. <U>Exhibits and Reports on Form 8-K</U></B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Exhibits.</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>3.1</TD>
<TD WIDTH=90%>Composite Certificate of Incorporation of Registrant, as amended. (Incorporated
herein by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001.) </TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>3.2</TD>
<TD WIDTH=90%>By-laws of Registrant. (Incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1, File No. 33-92052.)</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>4.1</TD>
<TD WIDTH=90%>Stockholders Agreement. (Incorporated herein by reference to the Company's
quarterly report on Form 10-Q for the quarterly period ended June 30, 1995.)</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>4.2</TD>
<TD WIDTH=90%>Specimen Stock Certificate. (Incorporated herein by reference to Exhibit 19.1 to
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001.)</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>10.1</TD>
<TD WIDTH=90%>Amendment No. 9, dated as of July 2, 2004, to the Loan and Security Agreement,
dated June 13, 2001, between The Chase Manhattan Bank (as Lender and Agent) and
TransAmerica Business Capital Corporation (as Lender and Co-Agent) with the
Company and certain subsidiaries of the Company (as Borrowers).</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>31</TD>
<TD WIDTH=90%>Certifications of the Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>32</TD>
<TD WIDTH=90%>Certifications of the Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</TD>
</TR>
</TABLE>
<BR>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b) Reports on Form 8-K.</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=95%>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A
report on Form 8-K was filed by the Company on May 5, 2004 regarding the
Company's financial results for the three months ended March 31, 2004.</TD>
</TR>
</TABLE>
<BR>

<P ALIGN=CENTER><FONT SIZE=3><B><U>SIGNATURES</U></B></FONT></P>

<P><FONT SIZE=3>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. </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50% ALIGN=LEFT><BR>
<BR>
Date: August 20, 2004</TD>
<TD WIDTH=50%>SYSTEMAX INC.<BR>
<BR>
By&nbsp;<U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds<BR>
Chairman and Chief Executive Officer</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50% ALIGN=LEFT></TD>
<TD WIDTH=50%>By&nbsp;<U>/s/ STEVEN GOLDSCHEIN</U><BR>
Steven Goldschein<BR>
Senior Vice President and Chief Financial Officer</TD>
</TR>
</TABLE>
<BR>

</BODY>
</HTML>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>systemax-ex101_082304.htm
<DESCRIPTION>EXHIBT 10.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 10.1</TITLE>
</HEAD>
<BODY>

<P ALIGN=CENTER><FONT SIZE=3><B>AMENDMENT NO. 9</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>TO</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>LOAN AND SECURITY AGREEMENT</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>THIS AMENDMENT NO. 9</B> ("Amendment No. 9") is entered into as of July 2, 2004 by
and between SYSTEMAX INC., a corporation organized under the laws of the State
of Delaware ("SYX"), SYSTEMAX MANUFACTURING INC. (formerly known as Midwest
Micro Corp.), a corporation organized under the laws of the State of Delaware
("SMI"), GLOBAL COMPUTER SUPPLIES INC. (successor by merger to Continental
Dynamics Corp.), a corporation organized under the laws of the State of New York
("GCS"), GLOBAL EQUIPMENT COMPANY, INC., a corporation organized under the laws
of the State of New York ("GEC"), TIGER DIRECT, INC., a corporation organized
under the laws of the State of Florida ("Tiger"), DARTEK CORPORATION, a
corporation organized under the laws of the State of Delaware ("Dartek"), NEXEL
INDUSTRIES, INC., a corporation organized under the laws of the State of New
York ("NII"), MISCO AMERICA INC., a corporation organized under the laws of the
State of Delaware ("Misco"), SYSTEMAX RETAIL SALES INC., a corporation organized
under the laws of the State of Delaware ("SRS"), PAPIER CATALOGUES, INC., a
corporation organized under the laws of the State of New York ("PCI"), CATALOG
DATA SYSTEMS, INC., a corporation organized under the laws of the State of New
York ("CDS"), MILLENNIUM FALCON CORP., a corporation organized under the laws of
the State of Delaware ("MFC"), TEK SERV INC., a corporation organized under the
laws of the State of Delaware ("TSI"), B.T.S.A., Inc., a corporation organized
under the laws of the State of New York ("BTSA"), PROFIT CENTER SOFTWARE INC., a
corporation organized under the laws of the State of New York ("PCS"), GLOBAL
GOV'T/EDUCATION SOLUTIONS INC., a corporation organized under the laws of the
State of Delaware ("GGES") and SYX DISTRIBUTION INC., a corporation organized
under the laws of the State of Delaware ("SYXD") (SYX, SMI, GCS, GEC, Tiger,
Dartek, NII, Misco, SRS, PCI, CDS, MFC, TSI, BTSA, PCS, GGES and SYXD, each a
"Borrower" and jointly and severally the "Borrowers"), the lenders who are
parties to the Loan Agreement, as defined herein ("Lenders") and JPMORGAN CHASE
BANK, as agent for the Lenders ("Agent").</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>BACKGROUND</B></FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowers,
Agent and Lenders are parties to a Loan and Security Agreement dated as of June
13, 2001 (as amended by Amendment No. 1 to Loan and Security Agreement dated as
of September 1, 2001, Amendment No. 2 to Loan and Security Agreement and Consent
dated as of December 13, 2001, Amendment No. 3 to Loan and Security Agreement
dated as of December 20, 2001, Amendment No. 4 to Loan and Security Agreement
and Consent dated as of April 18, 2002, Amendment No. 5 and Waiver to Loan and
Security Agreement dated as of June 30, 2002, Amendment No. 6 to Loan and
Security Agreement dated as of September 22, 2003, Amendment No. 7 to Loan and
Security Agreement dated as of November 17, 2003, Joinder and Amendment No. 8
dated as of May 10, 2004 and as the same may be amended, supplemented or
otherwise modified from time to time, the &#147;Loan Agreement&#148;) pursuant
to which the Lenders provided the Borrowers with certain financial
accommodations. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrowers
have informed Agent and Lenders that they intend to advance up to $10,000,000 to
Systemax Europe Ltd. and Lenders are willing to amend the Loan Agreement to
permit such an advance on the terms and conditions hereafter set forth. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW</B>,
<B>THEREFORE</B>, in consideration of any loan or advance or grant of credit
heretofore or hereafter made to or for the account of Borrowers by Lenders, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows: </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <U>Definitions</U>. All
capitalized terms not otherwise defined herein shall have the meanings given to
them in the Loan Agreement.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <U>Amendment to Loan
Agreement</U>. Subject to satisfaction of the conditions precedent set forth in
Section 3 below, the Loan Agreement is hereby amended as follows: clause (i) of
Section 7.4 is hereby amended and restated in its entirety as
follows:</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%></TD>
<TD WIDTH=90%>"(i) loans or capital contributions in an aggregate amount at any time not in
excess of $10,000,000 to Systemax Europe Ltd."</TD>
</TR>
</TABLE>
<BR>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <U>Conditions of
Effectiveness</U>. This Amendment No. 9 shall become effective as of the date upon
which Agent shall have received (a) four (4) copies of this Amendment No. 9
executed by Borrowers, each of the Lenders and each Guarantor and (b) such other
certificates, instruments, documents, agreements and opinions of counsel as may
be required by Agent or its counsel, each of which shall be in form and
substance satisfactory to Agent and its counsel.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <U>Release</U>. Each
Borrower hereby releases, remises, acquits and forever discharges each Lender
and Agent and each Lender's and Agent's employees, agents, representatives,
consultants, attorneys, fiduciaries, officers, directors, partners,
predecessors, successors and assigns, subsidiary corporations, parent
corporations, and related corporate divisions (all of the foregoing hereinafter
called the "Released Parties"), from any and all actions and causes of action,
judgments, executions, suits, debts, claims, demands, liabilities, obligations,
damages and expenses of any and every character, known or unknown, direct and/or
indirect, at law or in equity, of whatsoever kind or nature, for or because of
any matter or things done, omitted or suffered to be done by any of the Released
Parties prior to and including the date of execution hereof, and in any way
directly or indirectly arising out of or in any way connected to this Agreement
or the Other Documents (all of the foregoing hereinafter called the "Released
Matters"). Each Borrower acknowledges that the agreements in this Section are
intended to be in full satisfaction of all or any alleged injuries or damages
arising in connection with the Released Matters.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <U>Representations
and Warranties</U>. Borrowers hereby represent and warrant as follows:</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Amendment
No. 9 and the Loan Agreement, as amended hereby, constitute legal, valid and
binding obligations of Borrowers and are enforceable against Borrowers in
accordance with their respective terms.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Upon the
effectiveness of this Amendment No. 9, each Borrower hereby reaffirms all
covenants, representations and warranties made in the Loan Agreement as amended
hereby and agree that all such covenants, representations and warranties shall
be deemed to have been remade as of the effective date of this Amendment No.
9.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) No Event of
Default or Default has occurred and is continuing or would exist after giving
effect to this Amendment No. 9.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Borrowers have
no defense, counterclaim or offset with respect to the Loan
Agreement.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <U>Effect on the Loan Agreement</U>.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Upon the
effectiveness of this Amendment No. 9, each reference in the Loan Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of like import shall
mean and be a reference to the Loan Agreement as amended hereby.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Except as
specifically amended herein, the Loan Agreement, and all other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect, and are hereby ratified and
confirmed.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The execution,
delivery and effectiveness of this Amendment No. 9 shall not operate as a waiver
of any right, power or remedy of Agent or any Lender, nor constitute a waiver of
any provision of the Loan Agreement, or any other documents, instruments or
agreements executed and/or delivered under or in connection
therewith.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <U>Governing Law</U>.
This Amendment No. 9 shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns and shall be governed
by and construed in accordance with the laws of the State of New
York.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <U>Headings</U>. Section
headings in this Amendment No. 9 are included herein for convenience of
reference only and shall not constitute a part of this Amendment No. 9 for any
other purpose.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <U>Counterparts;
Telecopied Signatures</U>. This Amendment No. 9 may be executed by the parties
hereto in one or more counterparts, each of which shall be deemed an original
and all of which taken together shall be deemed to constitute one and the same
agreement. Any signature delivered by a party via telecopier shall be deemed to
be an original signature hereto.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>[REMAINDER OF PAGE INTENTIONALLY LEFT BALNK]</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>IN WITNESS WHEREOF,</B> this Amendment No. 9 has been duly executed as of the day
and year first written above.</FONT></P>


<P ><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>IN WITNESS WHEREOF,</B> this Amendment No. 7 has been duly executed as of the
day and year first written above.</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50% ALIGN=LEFT></TD>
<TD WIDTH=50%>SYSTEMAX INC.<BR>
<BR>
<BR>
By:&nbsp;<U>/s/ Michael J. Speiler&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Michael J. Speiler<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Vice President<BR>
<BR>
SYSTEMAX MANUFACTURING INC.<BR>
GLOBAL COMPUTER SUPPLIES INC.<BR>
GLOBAL EQUIPMENT COMPANY, INC.<BR>
TIGER DIRECT, INC.<BR>
DARTEK CORPORATION<BR>
NEXEL INDUSTRIES, INC.<BR>
MISCO AMERICA INC.<BR>
SYSTEMAX RETAIL SALES INC.<BR>
PAPIER CATALOGUES, INC.<BR>
CATALOG DATA SYSTEMS, INC.<BR>
MILLENNIUM FALCON CORP.<BR>
TEK SERV INC.<BR>
B.T.S.A., INC.<BR>
PROFIT CENTER SOFTWARE INC.<BR>
GLOBAL GOV'T/EDUCATION SOLUTIONS INC.<BR>
SYX DISTRIBUTION INC.<BR>
<BR>
<BR>
By:&nbsp;<U>/s/ Michael J. Speiler&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Michael J. Speiler<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Vice President of each of the
foregoing entities<BR>
<BR>
<BR>
JPMORGAN CHASE BANK, as Lender and as Agent<BR>
<BR>
<BR>
By:&nbsp;<U>/s/ Donna M. DiForio&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Donna M. DiForio<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Vice President<BR>
<BR>
<BR>
TRANSAMERICA BUSINESS CAPITAL CORPORATION,<BR>
as Lender and as Co-Agent<BR>
<BR>
<BR>
By:  <U>/s/ James De Santis&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Its:  <U>Duly Authorized Signatory&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
<BR>
<BR>
GMAC COMMERCIAL FINANCE LLC,<BR>
(successor by merger to GMAC COMMERCIAL<BR>
CREDIT LLC), as Lender<BR>
<BR>
<BR>
By:  /s/ Harvey Winter<BR>
Its: Vice President</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50% ALIGN=LEFT>ACKNOWLEDGED AND AGREED:<BR>
<BR>
SYSTEMAX SUWANEE LLC<BR>
<BR>
BY: Systemax Inc., Member<BR>
<BR>
<BR>
By:&nbsp;<U>/s/ Michael J. Speiler&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Michael J. Speiler<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Vice President<BR>
<BR>
THE MILLENNIUM GROUP LLC<BR>
<BR>
By:  Millennium Falcon Corp., Member<BR>
<BR>
<BR>
By:&nbsp;<U>/s/ Michael J. Speiler&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Michael J. Speiler<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Vice President<BR>
<BR>
<BR>
By:  WRD Sales, Inc., Member<BR>
<BR>
<BR>
By: <U>/s/ William Davis&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: William Davis<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: ____________________<BR>
<BR>
SYSTEMAX SERVICES INC.<BR>
<BR>
By:&nbsp;<U>/s/ Michael J. Speiler&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Michael J. Speiler<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Vice President</TD>
<TD WIDTH=50%></TD>
</TR>
</TABLE>

</BODY>
</HTML>



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>systemax-ex31_082304.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31</TITLE>
</HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=3>Exhibit 31</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3>CERTIFICATION UNDER SECTION 302 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>CERTIFICATION OF CHIEF EXECUTIVE OFFICER</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>I, Richard Leeds, Chief Executive Officer of Systemax Inc., certify that:</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>1. I have reviewed this quarterly report on Form 10-Q
of Systemax Inc. (the "registrant");</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>2. Based on my knowledge, this quarterly 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 quarterly
report;</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>4. The registrant's other certifying officer 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 we have:</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>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 these entities, particularly
during the period in which this quarterly report is being prepared;</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>b) 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</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>c) 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 that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>5. The registrant's other certifying officer 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 function):</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting known to me which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls over
financial reporting.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>Dated: August 20, 2004</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds, Chief Executive Officer</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION UNDER SECTION 302 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>CERTIFICATION OF CHIEF FINANCIAL OFFICER</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>I, Steven M. Goldschein, Chief Financial Officer of Systemax Inc., certify that:</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>1. I have reviewed this quarterly report on Form 10-Q of Systemax Inc. (the
"registrant");</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>2. Based on my knowledge, this quarterly 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 quarterly
report;</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>4. The registrant's other certifying officer 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 we have:</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>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 these entities, particularly
during the period in which this quarterly report is being prepared;</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>b) 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</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>c) 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 that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>5. The registrant's other certifying officer 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 function):</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting known to me which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls over
financial reporting.</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>Dated: August 20, 2004</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><U>/s/ STEVEN M. GOLDSCHEIN</U><BR>
Steven M. Goldschein, Chief Financial Officer</FONT></P>


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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>4
<FILENAME>systemax-ex32_082304.htm
<TEXT>
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<HEAD>
<TITLE>Exhibit 32</TITLE>
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<P ALIGN=RIGHT><FONT SIZE=3>Exhibit 32</FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION PURSUANT TO SECTION 906 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B><U>CERTIFICATION OF CHIEF EXECUTIVE OFFICER</U></B></FONT></P>

<P><FONT SIZE=3>The undersigned, the Chief Executive Officer of Systemax Inc.,
hereby certifies that to the best of his knowledge Systemax Inc.&#146;s Form
10-Q for the period ended June 30, 2004 fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m or 78 (o)(d) and that the information contained in such Form 10-Q fairly
presents, in all material respects, the financial condition and results of
operations of Systemax Inc. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>Dated:   August 20, 2004</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><U>/s/ RICHARD LEEDS&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Richard Leeds, Chief Executive Officer</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B><U>CERTIFICATION OF CHIEF FINANCIAL OFFICER</U></B></FONT></P>

<P><FONT SIZE=3>The undersigned, the Chief Financial Officer of Systemax Inc.,
hereby certifies that to the best of his knowledge Systemax Inc.&#146;s Form
10-Q for the period ended June 30, 2004 fully complies with the requirements of
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78m or 78 (o)(d) and that the information contained in such Form 10-Q fairly
presents, in all material respects, the financial condition and results of
operations of Systemax Inc. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>Dated:   August 20, 2004</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><U>/s/ STEVEN M. GOLDSCHEIN&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><BR>
Steven M. Goldschein, Chief Financial Officer</FONT></P>

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</TEXT>
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