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<SEC-DOCUMENT>0000899681-04-000759.txt : 20041109
<SEC-HEADER>0000899681-04-000759.hdr.sgml : 20041109
<ACCEPTANCE-DATETIME>20041109123609
ACCESSION NUMBER:		0000899681-04-000759
CONFORMED SUBMISSION TYPE:	10-Q/A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20040630
FILED AS OF DATE:		20041109
DATE AS OF CHANGE:		20041109

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/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13792
		FILM NUMBER:		041128356

	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/A
<SEQUENCE>1
<FILENAME>systemax-10qa_110804.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>10-Q/A</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/A<BR>
(Amendment No. 1)</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 registered public accounting firm, Deloitte
&amp; Touche LLP, has completed its review of the Company's interim financial
statements for the period ending June 30, 2004 and has issued its report thereon
dated October 26, 2004. A copy of the review report is filed as an exhibit to this
Form 10-Q/A. </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>PART II - OTHER INFORMATION</B></FONT></P>

<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 Audit Committee engaged independent counsel and investigators to conduct a
review of the aforementioned terminated rebate programs and certain other
similar programs offered by the Company. The results of the review were reported
to the Audit Committee, Company management and the Company's registered public
accountants.</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%>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%>99.1</TD>
<TD WIDTH=90%>Report from Deloitte &amp; Touche LLP dated October 26, 2004 regarding
its review of the Company's condensed consolidated financial statements included in
the Form 10-Q for the quarter ended June 30, 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: November 9, 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>

<PAGE>
<P ALIGN=CENTER><FONT SIZE=3>EXHIBIT INDEX</FONT></P>

<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%>99.1</TD>
<TD WIDTH=90%>Report from Deloitte &amp; Touche LLP dated October 26, 2004 regarding
its review of the Company's condensed consolidated financial statements included in
the Form 10-Q for the quarter ended June 30, 2004</TD>
</TR>
</TABLE>
<BR>



</BODY>
</HTML>


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>systemax-ex31_110804.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: November 9, 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: November 9, 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-99
<SEQUENCE>3
<FILENAME>systemax-ex991_110804.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 99.1</TITLE>
</HEAD>
<BODY>


<P ALIGN=RIGHT><FONT SIZE=3>EXHIBIT 99.1</FONT></P>

<P ALIGN=LEFT><FONT SIZE=3><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B></FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>The Audit Committee<BR>
Systemax Inc.<BR>
11 Harbor Park Drive<BR>
Port Washington, New York</FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have reviewed the accompanying condensed consolidated balance
sheet of Systemax Inc. and subsidiaries (the &#147;Company&#148;) as of June 30,
2004, and the related condensed consolidated statements of operations for the
three-month and six-month periods ended June 30, 2004 and 2003, cash flows for
the six-month periods ended June 30, 2004 and 2003 and of shareholders&#146;
equity for the six months ended June 30, 2004.&#160; These interim financial
statements are the responsibility of the Company&#146;s management. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We conducted our reviews in accordance with standards of the Public
Company Accounting Oversight Board (United States).&#160; A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting
matters.&#160; It is substantially less in scope than an audit conducted in
accordance with standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.&#160; Accordingly, we do
not express such an opinion. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on our reviews, we are not aware of any material
modifications that should be made to such condensed consolidated interim
financial statements for them to be in conformity with accounting principles
generally accepted in the United States of America. </FONT></P>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have previously audited, in accordance with standards of the
Public Company Accounting Oversight Board (United States), the consolidated
balance sheet of Systemax Inc. and subsidiaries as of December 31, 2003, and the
related consolidated statements of operations, stockholders&#146; equity, and
cash flows for the year then ended (not presented herein); and in our report
dated March 12, 2004, we expressed an unqualified opinion and made reference to
a change in accounting for goodwill and other intangible assets in 2002 on those
consolidated financial statements.&#160; In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of December
31, 2003 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived. </FONT></P>

<P ALIGN=LEFT><FONT SIZE=3>/s/ Deloitte &amp; Touche LLP<BR>
<BR>
<BR>
October 26, 2004</FONT></P>


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