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<SEC-DOCUMENT>0000899681-06-000538.txt : 20060906
<SEC-HEADER>0000899681-06-000538.hdr.sgml : 20060906
<ACCEPTANCE-DATETIME>20060906150606
ACCESSION NUMBER:		0000899681-06-000538
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20060331
FILED AS OF DATE:		20060906
DATE AS OF CHANGE:		20060906

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:		061076474

	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_090506.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>[X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>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 March 31, 2006 </FONT></P>

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

<P><FONT SIZE=3>[&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B>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&#146;s principal executive offices)<BR>
(516) 608-7000<BR>
(Registrant&#146;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.<BR>
Yes [&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;No [X] </FONT></P>

<P><FONT SIZE=3>Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer or a non-accelerated filer (as defined
in Rule 12b-2 of the Exchange Act).<BR>
Large accelerated filer [&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;Accelerated filer [&nbsp;&nbsp;]&nbsp;&nbsp;Non-accelerated filer [X] </FONT></P>

<P><FONT SIZE=3>Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act) Yes [&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;No [X] </FONT></P>

<P><FONT SIZE=3>The number of shares outstanding of the registrant&#146;s Common
Stock as of August 31, 2006 was 35,056,891. </FONT></P>

<P><FONT SIZE=3><B><U>TABLE OF CONTENTS</U></B></FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>Available Information</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>3</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>Part I</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM></TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>&nbsp;&nbsp;Item 1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>4</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>&nbsp;&nbsp;Item 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Management's Discussion and Analysis of Financial Condition and Results of Operations</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>14</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>&nbsp;&nbsp;Item 3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Quantitative and Qualitative Disclosures About Market Risk</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>18</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>&nbsp;&nbsp;Item 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Controls and Procedures</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>19</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>Part II</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM></TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>&nbsp;&nbsp;Item 6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>21</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=95%>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Signatures</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>22</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3><B>Available Information</B></FONT></P>

<P><FONT SIZE=3>We maintain an internet web site at <U>www.systemax.com</U>. We
file reports with the Securities and Exchange Commission (&#147;SEC&#148;) and
make available free of charge on or through this web site our annual reports on
Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K,
including all amendments to those reports. These are available as soon as is
reasonably practicable after they are filed with the SEC. All reports mentioned
above are also available from the SEC&#146;s web site (<U>www.sec.gov</U>). The
information on our web site is not part of this or any other report we file
with, or furnish to, the SEC. </FONT></P>

<P><FONT SIZE=3>Our Board of Directors has adopted the following corporate
governance documents with respect to the Company (the &#147;Corporate Governance
Documents&#148;): </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>
Corporate Ethics Policy for officers, directors and employees
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>
Charter for the Audit Committee of the Board of Directors
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>
Charter for the Compensation Committee of the Board of Directors
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>
Charter for the Nominating/Corporate Governance Committee of the Board of Directors
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=95%>
Corporate Governance Guidelines and Principles
</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>In accordance with the corporate governance rules of the New
York Stock Exchange, each of the Corporate Governance Documents is available on
our Company web site (<U>www.systemax.com</U>) or can be obtained by writing to
Systemax Inc., Attention: Board of Directors (Corporate Governance), 11 Harbor
Park Drive, Port Washington, NY 11050. </FONT></P>

<P><FONT SIZE=3><B>PART I &#151; FINANCIAL INFORMATION<BR>
Item 1. <U>Financial Statements</U> </B></FONT></P>

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

<HR SIZE=1 NOSHADE>
<BR>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>March 31,<BR>
2006<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE>(Unaudited)</TH>
     <TH COLSPAN=3>December 31,<BR>
2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE><BR></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="71%" ALIGN="LEFT">ASSETS:</TD>
     <TD WIDTH="1%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">&nbsp;</TD><TD WIDTH="10%" ALIGN="RIGHT"></TD>
        <TD WIDTH="3%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">&nbsp;</TD><TD WIDTH="10%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;CURRENT ASSETS:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">   49,564</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">   70,925</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">148,700</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">143,001</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories, net</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">242,711</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">189,502</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">19,999</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">18,477</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income tax assets, net</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">8,142</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">9,227</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">469,116</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">431,132</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PROPERTY, PLANT AND EQUIPMENT, net</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">46,781</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">57,259</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DEFERRED INCOME TAXES AND OTHER ASSETS, net</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">15,990</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">16,153</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL ASSETS</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  531,887</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  504,544</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">LIABILITIES AND SHAREHOLDERS' EQUITY:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;CURRENT LIABILITIES:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term borrowings, including current portions of long-term debt</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">   23,416</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">   26,773</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">184,468</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">171,667</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other current liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">68,995</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">62,888</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">276,879</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">261,328</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;LONG-TERM DEBT</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">507</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">8,028</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;OTHER LIABILITIES</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">2,209</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">2,346</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">SHAREHOLDERS' EQUITY:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Preferred stock, par value $.01 per share, authorized 25 million shares, issued none</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Common stock, par value $.01 per share, authorized 150 million shares, issued</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;38,231,990 shares; outstanding 34,764,549 (2006) and 34,761,174 (2005) shares</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">382</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">382</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Additional paid-in capital</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">173,843</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">177,574</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">2,316</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">893</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Retained earnings</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">116,484</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">98,927</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Common stock in treasury at cost - 3,467,441 (2006) and 3,470,816 (2005) shares</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(40,733</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(40,772</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;Unearned restricted stock compensation - Note 2</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT"></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(4,162</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">252,292</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">232,842</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">531,887</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">504,544</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>

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

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

<HR SIZE=1 NOSHADE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=6>Three Months Ended<BR>
March 31,<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>2006<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="72%" ALIGN="LEFT">Net sales</TD>
     <TD WIDTH="1%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">$</TD><TD WIDTH="10%" ALIGN="RIGHT">  574,908</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">$</TD><TD WIDTH="10%" ALIGN="RIGHT">  537,908</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Cost of sales</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>484,145</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>458,133</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Gross profit</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>90,763</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>79,775</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Selling, general and administrative expenses</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>69,885</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>72,643</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Restructuring and other charges</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN="LEFT"></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,975</TD>
        <TD ALIGN="LEFT"></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Income from operations</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>20,878</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>5,157</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Other non-operating (income) expense, net</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(6,638</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Interest income and expense, net</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>15</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>565</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Income before income taxes</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>27,501</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>4,586</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Provision for income taxes</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>9,944</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,948</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   17,557</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>    2,638</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income per common share:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Basic</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      .51</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      .08</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Diluted</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      .48</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>      .07</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Weighted average common and common equivalent shares:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Basic</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>34,762</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>34,472</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;Diluted</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>36,553</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>36,364</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>

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

<P><FONT SIZE=3><B>Systemax Inc.</B><BR>
Condensed Consolidated Statement of Shareholders&#146; Equity (Unaudited)<BR>
(In Thousands)</FONT></P>

<HR SIZE=1 NOSHADE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=6><FONT SIZE=1>Common Stock</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3><FONT SIZE=1></FONT></TH>
     <TH COLSPAN=3><FONT SIZE=1>Number of<BR>
Shares<BR>
Outstanding</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Amount</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Additional<BR>
Paid-in<BR>
Capital</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Retained<BR>
Earnings</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Accumulated<BR>
Other<BR>
Comprehensive<BR>
Income (Loss),<BR>
Net of Tax</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Treasury<BR>
Stock,<BR>
At Cost</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Unearned<BR>
Restricted<BR>
Stock<BR>
Compensation</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3><FONT SIZE=1>Comprehensive<BR>
Income (Loss),<BR>
Net of Tax</FONT><HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=23% ALIGN=LEFT><FONT SIZE=1>Balances, January 1, 2006</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1>34,761</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1>      382</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1>  177,574</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1>   98,927</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1>      893</FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1>  (40,772</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=1>)</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1>   (4,162</FONT></TD>
        <TD WIDTH=3% ALIGN=LEFT><FONT SIZE=1>)</FONT></TD>
     <TD WIDTH=1% ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD WIDTH=6% ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD WIDTH=2% ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Reversal of unamortized</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;unearned restricted</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;stock compensation -</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;Note 2</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>(4,162</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>4,162</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Stock-based</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;compensation expense</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>458</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Exercise of stock options</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>4</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>(33</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>)</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>39</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Income tax benefit on</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;stock-based</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;compensation</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>6</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Change in cumulative</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;translation adjustment,</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;&nbsp;net</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>1,423</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>    1,423</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Net income</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>17,557</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>17,557</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Total comprehensive income</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1></FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>   18,980</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Balances, March 31, 2006</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>34,765</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>      382</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>  173,843</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>  116,484</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>    2,316</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>  (40,733</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>)</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>

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

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

<HR SIZE=1 NOSHADE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=6>Three Months<BR>
Ended March 31,<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>2006<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=75% ALIGN=LEFT>CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:</TD>
     <TD WIDTH=1% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=7% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=1% ALIGN=RIGHT>&nbsp;</TD><TD WIDTH=7% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Net income</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  17,557</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   2,638</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by (used in)</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;operating activities:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>2,011</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>2,617</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision (benefit) for deferred income taxes</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,460</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(792</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for returns and doubtful accounts</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>266</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>2,068</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation expense related to equity compensation plans</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>458</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>574</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain)/loss on dispositions and abandonment</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(7,753</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>2</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tax benefit from exercises of stock options</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT></TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>9</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(4,143</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(6,755</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(52,578</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>11,065</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(990</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>911</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses and other current liabilities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>17,059</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>653</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) operating activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(26,653</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>12,990</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Investments in property, plant and equipment</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(1,699</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(983</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Proceeds from disposals of property, plant and equipment</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>18,641</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>15</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) investing activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>16,942</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(968</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Proceeds (repayments) of borrowings from banks</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(3,586</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>7,474</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Repayments of long-term debt and capital lease obligations</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(7,911</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(174</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>6</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>597</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Excess tax benefit from exercises of stock options</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>5</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by (used in) financing activities</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(11,486</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>7,897</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>EFFECTS OF EXCHANGE RATES ON CASH</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(164</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>174</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(21,361</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>20,093</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>70,925</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>36,257</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>CASH AND CASH EQUIVALENTS - END OF PERIOD</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  49,564</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  56,350</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Supplemental disclosures of non-cash investing and financing activities:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;Acquisitions of equipment through capital leases</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>     257</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>

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

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

<HR SIZE=1 NOSHADE>
<BR>

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

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The accompanying condensed consolidated financial statements of the Company and
its wholly-owned subsidiaries are unaudited and have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America are not required
in these interim financial statements and have been condensed or omitted. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
In the opinion of management, the accompanying condensed consolidated financial
statements contain all normal and recurring adjustments necessary to present
fairly the financial position of the Company as of March 31, 2006 and the
results of operations for the three month periods ended March 31, 2006 and 2005,
cash flows for the three month periods ended March 31, 2006 and 2005 and changes
in shareholders&#146; equity for the three month period ended March 31, 2006.
The December 31, 2005 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, 2005.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
These condensed consolidated financial statements should be read in conjunction
with the Company&#146;s audited consolidated financial statements as of December
31, 2005 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, 2005. The results for
the three months ended March 31, 2006 are not necessarily indicative of the
results for an entire year.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<B>Adoption of New Accounting Standard</B>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company&#146;s significant accounting policies are disclosed in the Notes to
Consolidated Financial Statements in the Company&#146;s annual report on Form
10-K for the year ended December 31, 2005. During the first quarter of fiscal
2006, the Company adopted the provisions of, and accounts for stock-based
compensation in accordance with, Statement of Financial Accounting Standards No.
123&#150;revised 2004 (SFAS 123(R)), &#147;Share-Based Payment.&#148; Prior to
the adoption of SFAS 123(R), the Company applied the provisions prescribed by
Accounting Principles Board (APB) Opinion No. 25, &#147;Accounting for Stock
Issued to Employees,&#148; in accounting for its stock-based awards, and
accordingly, recognized no compensation cost for its stock option plans other
than for restricted stock awards. See Note 2 of this Form 10-Q for further
information regarding the Company&#146;s stock-based compensation expense and
assumptions, including pro forma disclosures for the prior year&#146;s first
quarter as if stock-based compensation was expensed.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Since the date of the Company&#146;s annual report on Form 10-K, there have been
no other material changes to the Company&#146;s significant accounting policies.
</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>Stock-based Compensation Plans</B>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company has three equity compensation plans which reserve shares of common
stock for issuance to key employees, directors, consultants and advisors to the
Company. The following is a description of these plans:
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I><U>The 1995 Long-term Stock Incentive Plan</U></I> &#151; This plan, adopted
in 1995, allowed the Company to issue qualified, non-qualified and deferred
compensation stock options, stock appreciation rights, restricted stock and
restricted unit grants, performance unit grants and other stock based awards
authorized by the Compensation Committee of the Board of Directors. Options
issued under this plan expire ten years after the options are granted.
The&nbsp;ability to grant new&nbsp;awards under this plan ended on December 31,
2005 but awards granted prior to such date continue until their expiration. A
total of 1,327,115 options were outstanding under this plan as of March 31,
2006.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I><U>The 1995 Stock Option Plan for Non-Employee Directors</U></I> &#151; This
plan, adopted in 1995, provides for automatic awards of non-qualified options to
directors of the Company who are not employees of the Company or its affiliates.
All options granted under this plan will have a ten year term from grant date
and are immediately exercisable. A maximum of 100,000 shares may be granted for
awards under this plan. This plan will terminate the day following the 2006
annual shareholders meeting. A total of 58,000 options were outstanding under
this plan as of March 31, 2006.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I><U>The 1999 Long-term Stock Incentive Plan, as amended (&#147;1999
Plan&#148;)</U></I> &#151; This plan was adopted on October 25, 1999 with
substantially the same terms and provisions as the 1995 Long-term Stock
Incentive Plan. A maximum of 5.0 million shares may be granted under this plan.
The maximum number of shares granted per type of award to any individual may not
exceed 1,500,000 in any calendar year and 3,000,000 in total. No award shall be
granted under this plan after December 31, 2009. Restricted stock grants and
common stock awards reduce stock options otherwise available for future grant. A
total of 1,437,121 options and 1,000,000 restricted stock units were outstanding
under this plan as of March 31, 2006.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Shares issued under our share-based compensation plans are usually issued from
shares of our common stock held in treasury.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I>Adoption of SFAS 123(R)</I>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
In December 2004, Statement of Financial Accounting Standard 123(R) (&#147;SFAS
123(R)&#148;), &#147;Share Based Payment&#148;, was issued, pursuant to which
the intrinsic value method of accounting under APB Opinion 25 was superseded
with a fair value method that requires recognition of compensation expense in
the consolidated results of operations for all share-based transactions.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Effective January 1, 2006, the Company adopted the provisions of SFAS 123(R),
using the modified-prospective-transition method. Under that transition method,
compensation cost recognized for the three months ended March 31, 2006 includes:
(a) compensation cost for all share-based payments granted prior to, but not yet
vested as of, January 1, 2006, based on the grant-date fair value estimated in
accordance with the original provisions of SFAS 123, and (b) compensation cost
for the vested portion of share-based payments granted subsequent to January 1,
2006, based on the grant-date fair value estimated in accordance with the
provisions of SFAS 123(R). Results for prior periods have not been restated.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The fair value of employee share options is recognized in expense over the
vesting period of the options, using the graded attribution method. The fair
value of employee share options is determined on the date of grant using the
Black-Scholes option pricing model. The Company has used historical volatility
in its estimate of expected volatility. The expected life represents the period
of time (in years) for which the options granted are expected to be outstanding.
The Company used the simplified method for determining expected life as
permitted in SEC Staff Accounting Bulletin 107 for options qualifying for such
treatment (&#147;plain-vanilla&#148; options) due to the limited history the
Company currently has with option exercise activity. The risk-free interest rate
is based on the U.S. Treasury yield curve. There were no modifications to stock
option awards during the three months ended March 31, 2006.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company receives an income tax deduction for stock options exercised by
employees in the United States equal to the excess of the market value of our
common stock on the date of exercise over the option price. Prior to the
adoption of SFAS 123(R), the income tax benefit from the exercise of stock
options was presented as a component of cash flow from operating activities.
SFAS 123(R) requires the excess tax benefits (tax benefits resulting from tax
deductions in excess of compensation cost recognized) to be classified as a cash
flow provided by financing activities.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Compensation cost related to non-qualified stock options recognized in operating
results (selling, general and administrative expense) was $314,000 for the three
months ended March 31, 2006. The related future income tax benefit recognized
was $108,000.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The adoption of SFAS 123(R) had the following impact on the first quarter of
fiscal 2006 results: income from operations and income before tax were decreased
by $0.3 million and net income was decreased by $0.2 million. The impact on
basic and diluted net income per share was a decrease of $.01. The impact on
cash flows was not material.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I>Stock Options</I>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The following table presents the weighted-average fair value and the
weighted-average assumptions used to estimate the fair value of options granted
in 2006:
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=50% ALIGN=CENTER>
<TR VALIGN=Bottom>
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=81% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=19% ALIGN=RIGHT><U>2006</U></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Fair value</TD>
     <TD ALIGN=RIGHT>4.79</TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Expected annual dividend yield</TD>
     <TD ALIGN=RIGHT>0%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Risk-free interest rate</TD>
     <TD ALIGN=RIGHT>4.77%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Expected volatility</TD>
     <TD ALIGN=RIGHT>78.8%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Expected life in years</TD>
     <TD ALIGN=RIGHT>5.87</TD></TR>
</TABLE>
<BR>

<P><FONT SIZE=3>The following table reflects the activity for all stock option
plans during the three months ended March 31, 2006: </FONT></P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="80%" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH></TH>
     <TH>For Shares<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH ALIGN=RIGHT>Weighted<BR>
Average<BR>
Exercise Price<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH ALIGN=RIGHT>Weighted<BR>
Average<BR>
Remaining<BR>
Contractual<BR>
 Life<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH ALIGN=RIGHT>Aggregate<BR>
Intrinsic<BR>
Value (in<BR>
thousands)<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="40%" ALIGN="LEFT">Outstanding January 1, 2006</TD>
     <TD WIDTH="15%" ALIGN="RIGHT">2,657,419&nbsp;</TD>
     <TD WIDTH="15%" ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.93</TD>
     <TD WIDTH="15%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="15%" ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Granted</TD>
     <TD ALIGN="RIGHT">172,667&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.78</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Exercised</TD>
     <TD ALIGN="RIGHT">(3,375)</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.89</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Canceled or lapsed</TD>
     <TD ALIGN="RIGHT">(4,475)</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.73</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN="RIGHT"></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Outstanding March 31, 2006</TD>
     <TD ALIGN="RIGHT">2,822,236&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.09</TD>
     <TD ALIGN="RIGHT">5.96</TD>
     <TD ALIGN="RIGHT">$9,169&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Exercisable at March 31, 2006</TD>
     <TD ALIGN="RIGHT">1,963,004&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.85</TD>
     <TD ALIGN="RIGHT">6.06</TD>
     <TD ALIGN="RIGHT">$6,954&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The aggregate intrinsic value in the table above represents the total pretax
intrinsic value (the difference between the closing stock price on the last day
of trading in the quarter ended March 31, 2006 and the exercise price) that
would have been received by the option holders had all options been exercised on
March 31, 2006. This value will change based on the fair market value of the
Company&#146;s common stock.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The total intrinsic value of options exercised was $17,000 and the cash received
from stock option exercises was $6,000 during the three months ended March 31,
2006. The tax benefit expected to be realized from the tax deductions for stock
option exercises totaled $6,000 for the three months ended March 31, 2006 and is
reflected as a component of shareholders&#146; equity in the Condensed
Consolidated Balance Sheet.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The following table reflects the activity for all unvested stock options during
the three months ended March 31, 2006:
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="80%">
<TR VALIGN=Bottom>
     <TH></TH>
     <TH ALIGN=RIGHT>For Shares<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH ALIGN=RIGHT>Weighted Average<BR>
Grant-Date Fair Value<HR WIDTH=88% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="60%" ALIGN="LEFT">Unvested at January 1, 2006</TD>
     <TD WIDTH="15%" ALIGN="RIGHT">840,189&nbsp;</TD>
     <TD WIDTH="25%" ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.84</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Granted</TD>
     <TD ALIGN="RIGHT">172,667&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.79</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Vested</TD>
     <TD ALIGN="RIGHT">(152,625)</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.80</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Forfeited</TD>
     <TD ALIGN="RIGHT">(999)</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD ALIGN="RIGHT"></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Unvested at March 31, 2006</TD>
     <TD ALIGN="RIGHT">859,232&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.44</TD></TR>
<TR>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN="RIGHT"></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
At March 31, 2006, there was $1.2 million of unrecognized compensation costs
related to unvested stock options, which is expected to be recognized over a
weighted average period of 1.4 years. The total fair value of stock options
vested during the three months ended March 31, 2006 was $275,000.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I>Restricted stock and restricted stock units</I>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
In October 2004, the Company granted 1,000,000 restricted stock units under the
1999 Plan to a key employee who is also a Company director. A restricted stock
unit represents the right to receive a share of the Company&#146;s common stock.
The restricted stock units have none of the rights as other shares of common
stock until common stock is distributed, other than rights to cash dividends.
The restricted stock unit award was a non-performance award which vests at the
rate of 20% on May 31, 2005 and 10% per year on April 1, 2006 and each year
thereafter. The share-based expense for restricted stock awards was determined
based on the market price of the Company&#146;s stock at the date of the award.
Compensation expense related to the restricted stock award was $144,000 for the
three month period ended March 31, 2006 and $574,000 for the three month period
ended March 31, 2005.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Under the provisions of SFAS 123(R), the recognition of unearned compensation is
no longer required. Unearned compensation is a contra-equity balance sheet
account representing the amount of unrecognized expense related to restricted
stock that is amortized as the expense is recognized over the vesting period of
the award. As of January 1, 2006, the balance of Unearned Restricted Stock
Compensation was reversed into Additional Paid-in Capital on the Company&#146;s
balance sheet. As of March 31, 2006, there was unrecognized stock-based
compensation of $4.0 million related to the restricted stock award, which is
expected to be recognized over a weighted-average period of 7.0 years.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I>Prior to the adoption of SFAS 123(R)</I>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Prior to 2006, the Company elected to follow the accounting provisions of APB
Opinion 25 for stock-based compensation and to provide the pro forma disclosures
required under SFAS 148, &#147;Accounting for Stock-Based Compensation &#150;
Transition and Disclosure.&#148; Accordingly, the Company did 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
for periods prior to January 1, 2006. The following table illustrates the effect
on net income per share had compensation costs of the plans been determined
under a fair value alternative method as stated in SFAS 123, &#147;Accounting
for Stock-Based Compensation&#148; (in thousands, except per share data):
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="70%">
<TR VALIGN=Bottom>
     <TH></TH>
     <TH>Three Months Ended<BR>
March 31,<BR>
2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="75%" ALIGN="LEFT">Net income - as reported</TD>
     <TD WIDTH="25%" ALIGN="RIGHT">$2,638&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Add: Stock-based compensation expense included in</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;reported net income, net of related tax effects</TD>
     <TD ALIGN="RIGHT">370&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Deduct: Stock-based employee compensation expense</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;determined under fair value based method, net of</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">&nbsp;&nbsp;&nbsp;&nbsp;related tax effects</TD>
     <TD ALIGN="RIGHT">485&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Pro forma net income</TD>
     <TD ALIGN="RIGHT">$2,523&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income per common share - basic:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income  - as reported</TD>
     <TD ALIGN="RIGHT">$.08</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income  - pro forma</TD>
     <TD ALIGN="RIGHT">$.07</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income per common share - diluted:</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income - as reported</TD>
     <TD ALIGN="RIGHT">$.07</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Net income - pro forma</TD>
     <TD ALIGN="RIGHT">$.07</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></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>Net Income per Common Share</B>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Net income per common share &#151; basic was calculated based upon the weighted
average number of common shares outstanding during the respective periods
presented. Net income per common share &#151; 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 is
reflected in net income per share &#151; 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. The weighted average number of stock options
outstanding excluded from the computation of diluted earnings per share was
367,000 shares for the three months ended March 31, 2006 and 531,000 shares for
the three months ended March 31, 2005 due to their antidilutive effect.
</TD>
</TR>
</TABLE>
<BR>

<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 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Comprehensive income consists of net income and foreign currency translation
adjustments, net of tax, and is included in the Condensed Consolidated Statement
of Shareholders&#146; Equity. For the three month periods ended March 31,
comprehensive income was $18,980,000 in 2006 and $1,961,000 in 2005.
</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 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company maintains a $120 million (which may be increased by up to $30
million, subject to certain conditions) secured revolving credit agreement with
a group of financial institutions which provides for borrowings in the United
States and United Kingdom. The borrowings are secured by all of the
Company&#146;s domestic and United Kingdom accounts receivable, the domestic
inventories of the Company, general intangibles and the Company&#146;s shares of
stock in its domestic subsidiaries and the Company&#146;s United Kingdom
headquarters building. The credit facility expires and the outstanding
borrowings thereunder are due on October 26, 2010. The revolving credit
agreement contains certain financial and other covenants, including maintaining
a minimum level of availability and restrictions on capital expenditures and
payments of dividends. The Company was in compliance with all of the covenants
as of March 31, 2006, except for the required timely submission of financial
statements, for which it has obtained a waiver. As of March 31, 2006,
availability under the agreement was $109.2 million. There were outstanding
letters of credit of $14.9 million and there were outstanding advances of $18.9
million (all in the United Kingdom) as of March 31, 2006.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Under the Company&#146;s &#128;5.0 million ($6.1 million at the March 31, 2006
exchange rate) Netherlands credit facility, there were &#128;3.5 million ($4.2
million) of borrowings outstanding at March 31, 2006, with interest payable at a
rate of 5.0% per annum. 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
2006.
</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 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company periodically assesses its operations to ensure that they are
efficient, aligned with market conditions and responsive to customer needs.
During the years ended December 31, 2005, 2004 and 2003 management approved and
implemented restructuring actions which included workforce reductions and
facility consolidations. The following table summarizes the amounts recognized
by the Company as restructuring and other charges for the periods presented (in
thousands):
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=50% ALIGN=CENTER>
<TR VALIGN=Bottom>
     <TH></TH>
     <TH></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=87% ALIGN=LEFT><U>Three months ended March 31,</U></TD>
     <TD WIDTH=13% ALIGN=RIGHT><U>2005</U>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>2004 United States streamlining plan</TD>
     <TD ALIGN=RIGHT>$122&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other severance and exit costs</TD>
     <TD ALIGN=RIGHT>1,853&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Total restructuring and other charges</TD>
     <TD ALIGN=RIGHT>$1,975&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I><U>2004 United States Streamlining Plan</U></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.
During the first quarter of 2005, the Company recorded $122,000 of additional
severance costs in connection with this plan.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
<I><U>Other Severance and Exit Costs</U></I><BR>
During the first quarter of 2005, the Company implemented plans to streamline
operations in its European businesses. The Company recorded $1.9 million of
costs related to these actions for severance and benefits for approximately 200
terminated employees during the first three months of 2005.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The following table summarizes the components of the accrued restructuring
charges and the movements within these components during the quarter ended March
31, 2006 (in thousands).
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>Severance and<BR>
Personnel Costs<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Other<BR>
Exit Costs<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>Total<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="50%" ALIGN="LEFT">Accrued at December 31, 2005</TD>
     <TD WIDTH="1%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">$</TD><TD WIDTH="12%" ALIGN="RIGHT">  253</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">$</TD><TD WIDTH="12%" ALIGN="RIGHT">  265</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">$</TD><TD WIDTH="12%" ALIGN="RIGHT">  518</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Amounts utilized</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(107</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(52</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(159</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Accrued at March 31, 2006</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  146</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  213</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  359</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>7.</B></TD>
<TD WIDTH=95%>
<B>Long-term Debt</B>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company repaid its 7.04% mortgage loan in March 2006 as a result of the sale
of its Suwanee, Georgia distribution facility.
</TD>
</TR>
</TABLE>
<BR>

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

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company operates in one primary business as a reseller of business products
to commercial and consumer users. The Company operates and is internally managed
in two operating segments, Computer Products and Industrial Products. Computer
Products sales include our Systemax PCs complemented by offerings of other brand
name PCs and notebook computers. This segment&#146;s sales also include computer
related products such as peripherals (hard disks, CD-ROM and DVD drives,
printers, scanners and monitors), memory upgrades, data communication and
networking equipment, packaged software, digital cameras, plasma televisions and
supplies, such as printer cartridges and media (recordable disks, CD&#146;s and
magnetic tape cartridges). Our Industrial Products sales include storage
equipment, such as metal shelving, bins and lockers, light material handling
equipment such as forklifts, hand carts and hand trucks, furniture and
consumable industrial products such as first aid items, safety items, protective
clothing and OSHA compliance items. The Company has also separately disclosed
its costs associated with the development of the Company&#146;s web-hosted
software application, which is being marketed to third parties and for which no
revenues have been recognized to date.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
The Company&#146;s chief operating decision-maker is the Company&#146;s Chief
Executive Officer. The Company evaluates segment performance based on income
from operations before net interest, foreign exchange gains and losses,
restructuring and other charges and income taxes. Corporate costs not identified
with the disclosed segments and restructuring and other charges are grouped as
&#147;Corporate and other expenses.&#148; The chief operating decision-maker
reviews assets and makes capital expenditure decisions for the Company on a
consolidated basis only. The accounting policies of the segments are the same as
those of the Company.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Financial information relating to the Company&#146;s operations by reportable
segment was as follows (in thousands):
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="80%" ALIGN="CENTER">
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=6>Three Months Ended<BR>
March 31,<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>2006<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="59%" ALIGN="LEFT">Net sales:</TD>
     <TD WIDTH="1%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">&nbsp;</TD><TD WIDTH="15%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">&nbsp;</TD><TD WIDTH="15%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Computer products</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  530,238</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  497,306</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Industrial products</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>44,670</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>40,602</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Consolidated</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  574,908</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  537,908</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Income (loss) from operations:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Computer products</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   21,759</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>    8,973</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Industrial products</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,339</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,510</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Software application</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(1,734</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(1,752</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Corporate and other expenses</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(486</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(3,574</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Consolidated</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   20,878</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>    5,157</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Financial information relating to the Company&#146;s operations by geographic
area was as follows (in thousands):
</TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" ALIGN="CENTER" WIDTH="80%">
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=6>Three Months Ended<BR>
March 31,<HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=3></TH>
     <TH COLSPAN=3>2006<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=3>2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH="59%" ALIGN="LEFT">Net sales:</TD>
     <TD WIDTH="1%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="4%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">&nbsp;</TD><TD WIDTH="15%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD>
     <TD WIDTH="1%" ALIGN="RIGHT">&nbsp;</TD><TD WIDTH="15%" ALIGN="RIGHT"></TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">United States:</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Industrial products</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  44,670</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  40,602</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Computer products</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">315,647</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">288,553</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">United States total</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">360,317</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">329,155</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Other North America</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">30,547</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">24,089</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">North America total</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">390,864</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">353,244</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Europe</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">183,944</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">184,664</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Consolidated</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT"> 574,908</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT"> 537,908</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
Revenues are attributed to countries based on the location of the selling
subsidiary.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>9.</B></TD>
<TD WIDTH=95%>
<B>Recent Accounting Pronouncements</B>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
In July 2006, the FASB issued Interpretation No. 48 (FIN 48), &#147;Accounting
for Uncertainty in Income Taxes &#150; an interpretation of FASB Statement No.
109.&#148; FIN 48 clarifies and sets forth consistent rules for accounting for
uncertain tax positions taken or expected to be taken in accordance with SFAS
109, &#147;Accounting for Income Taxes.&#148; FIN 48 is effective for fiscal
years beginning after December 15, 2006. The Company is currently evaluating the
impact that adoption of FIN 48 may have on its consolidated results of
operations or financial position.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%>
In June 2006, the FASB ratified the consensus reached by the EITF on Issue No.
06-3, &#147;How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus
Net Presentation).&#148; The consensus requires disclosure of either the gross
or net presentation, and any such taxes reported on a gross basis should be
disclosed in the interim and annual financial statements. This Issue is
effective for financial reports beginning after December 15, 2006. The Company
does not expect to change its presentation of such taxes, and will provide
additional disclosure upon the adoption of this Issue.
</TD>
</TR>
</TABLE>
<BR>

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

<P><FONT SIZE=3><B>Forward Looking Statements</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 and
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. Statements in this report, particularly in &#147;Item 2.
Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations&#148; and the Notes to Condensed Consolidated Financial Statements,
describe certain factors, among others, that could contribute to or cause such
differences. </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><FONT SIZE=3><B>Critical Accounting Policies and Estimates</B></FONT></P>

<P><FONT SIZE=3>The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements, and
revenues and expenses during the period. Significant accounting policies
employed by the Company, including the use of estimates, were presented in the
Notes to Consolidated Financial Statements of the Company&#146;s 2005 Annual
Report on Form 10-K. The Company adopted SFAS 123(R), &#147;Share-based
Payment,&#148; effective January 1, 2006 to account for stock-based
compensation. In accordance with SFAS 123 (R), we measure the cost of employee
services received in exchange for an award of equity instruments based on the
grant-date fair value of the award. That cost is recognized over the period
during which an employee is required to provide service in exchange for the
award for stock option grants. No compensation cost is recognized for equity
instruments for which employees do not render the requisite service. We
determine the grant-date fair value of employee share options using the
Black-Scholes option-pricing model. </FONT></P>

<P><FONT SIZE=3>Critical accounting policies are those that are most important
to the presentation of our financial condition and results of operations,
require management&#146;s most difficult, subjective and complex judgments, and
involve uncertainties. The accounting policies that have been identified as
critical to our business operations and understanding the results of operations
pertain to revenue recognition, net accounts receivable, inventories, long-lived
assets, income taxes and restructuring charges and accruals. The application of
each of these critical accounting policies and estimates was discussed in Item 7
of the Company&#146;s Annual Report on Form 10-K for the year ended December 31,
2005. There have been no significant changes in the application of critical
accounting policies or estimates during 2006. Management believes that full
consideration has been given to all relevant circumstances that we may be
subject to, and the condensed consolidated financial statements of the Company
accurately reflect management&#146;s best estimate of the consolidated results
of operations, financial position and cash flows of the Company for the periods
presented. Because of the uncertainty in these estimates, actual results could
differ from estimates used in applying the critical accounting policies. We are
not aware of any reasonably likely events or circumstances which would result in
different amounts being reported that would materially affect its financial
condition or results of operations. </FONT></P>

<P><FONT SIZE=3><B>Overview </B></FONT></P>

<P><FONT SIZE=3>We are a direct marketer of brand name and private label
products. Our operations are organized in two primary reportable segments &#150;
Computer Products and Industrial Products. Our Computer Products segment markets
personal desktop computers, notebook computers and computer related products in
North America and Europe. We assemble our own PCs and sell them under our own
trademarks, which we believe gives us a competitive advantage. We also sell
personal computers manufactured by other leading companies, such as Hewlett
Packard, E-Machines and Sony. Our Industrial Products segment markets material
handling equipment, storage equipment and consumable industrial items in North
America. We offer more than 100,000 products and continuously update our product
offerings to address the needs of our customers, which include large, mid-sized
and small businesses, educational and government entities as well as individual
consumers. We reach customers by multiple channels, utilizing relationship
marketers, e-commerce web sites, mailed catalogues and retail outlet stores. We
also participate in the emerging market for on-demand, web-based software
applications through the marketing of our PCS Profitability Suite&#153; of
hosted software, which we began during 2004, and in which we have not yet
recognized any revenues and have incurred considerable losses to date. Computers
and computer related products account for 92% of our net sales, and, as a
result, we are dependent on the general demand for information technology
products. </FONT></P>

<P><FONT SIZE=3>The market for computer products is subject to intense price
competition and is characterized by narrow gross profit margins. The North
American industrial products market is highly fragmented and we compete against
multiple distribution channels. Distribution of information technology and our
industrial products is working capital intensive, requiring us to incur
significant costs associated with the warehousing of many products, including
the costs of leasing warehouse space, maintaining inventory and inventory
management systems, and employing personnel to perform the associated tasks. We
supplement our on-hand product availability by maintaining relationships with
major distributors and manufacturers, utilizing a combination of stocking and
drop-shipment fulfillment. </FONT></P>

<P><FONT SIZE=3>The primary component of our operating expenses historically has
been employee related costs, which includes items such as wages, commissions,
bonuses, and employee benefits. We have made substantial reductions in our
workforce and closed or consolidated several facilities over the past several
years. With evidence of a prolonged economic downturn in Europe, we took
measures to align our cost structure with expected potentially lower revenues
and decreasing gross margins, initiating several cost reduction plans there
during 2004 and 2005. We will continue to monitor our costs and evaluate the
need for additional actions. </FONT></P>

<P><FONT SIZE=3>The discussion of our results of operations and financial
condition that follows will provide information that will assist in
understanding our financial statements, the factors that we believe may affect
our future results and financial condition as well as information about how
certain accounting principles and estimates affect the consolidated financial
statements. This discussion should be read in conjunction with the condensed
consolidated financial statements included herein. </FONT></P>

<P><FONT SIZE=3><B>Results of Operations </B></FONT></P>

<P><FONT SIZE=3><B>Three Months Ended March 31, 2006 Compared to Three Months
Ended March 31, 2005 </B></FONT></P>

<P><FONT SIZE=3>Net sales for the three months ended March 31, 2006 increased
6.9% to $574.9 million compared to $537.9 million in the year-ago quarter. Net
sales in the first quarter of 2006 included approximately $199.9 million of
internet-related sales, a 32.3% increase from $151.1 million of internet-related
sales in the prior year&#146;s first quarter. North American sales were $390.9
million, an increase of 10.6% from $353.2 million in the prior year. European
sales decreased 0.4%, to $183.9 million (representing 32.0% of worldwide sales)
compared to $184.7 million (34.3% of worldwide sales) in the year-ago quarter.
Movements in foreign exchange rates negatively impacted the European sales
comparison by approximately $21.2 million in 2006. Excluding the movements in
foreign exchange rates, European sales would have increased 11.1% from the prior
year. Sales as measured in local currencies in all but one of the European
markets we serve increased in the first quarter of 2006. The increase in our
North American sales resulted from sales growth in both our computer and
industrial products groups. Sales of computer products were $346.2 million, a
10.7% increase from $312.6 million of sales in the prior year. This increase was
primarily a result of our continuing internet initiatives and expansion of our
product offerings. Sales of industrial products increased 10.0% to $44.7 million
from $40.6 million in the prior year, and continue to grow in line with the
favorable economic conditions in the United States. Industrial products sales
growth in the first quarter of 2006 was constrained by the move of our largest
distribution center during this period. </FONT></P>

<P><FONT SIZE=3>Gross profit, which consists of net sales less product cost,
shipping, assembly and certain distribution center costs, was $90.8 million
compared to $79.8 million in the year-ago quarter, an increase of $11.0 million.
The gross profit margin was 15.8% in the current period, compared to 14.8% in
the year-ago period. The increase in the gross profit margin resulted from a
favorable change in product mix, increased consideration from vendors and
reduced warehouse costs for staff and supplies. </FONT></P>

<P><FONT SIZE=3>Selling, general and administrative expenses for the quarter
decreased $2.8 million, or 3.8%, to $69.9 million compared to $72.6 million in
the first quarter of 2005. This decrease resulted primarily from approximately
$4.6 million in savings resulting from the restructuring actions we took in
Europe in 2005 and $2.3 million of decreased costs in Europe due to the effects
of changes in foreign exchange rates. The European decreases were partially
offset by increased spending in North America on salaries and employee related
expenses, increased advertising costs net of rebates and higher credit card
processing fees related to the higher sales volume. Selling, general and
administrative expenses also include $0.3 million of stock compensation expense
in 2006 as a result of the adoption of SFAS 123(R). The Company used the
modified prospective transition method at adoption and accordingly, financial
statement amounts for prior periods presented in this Form 10-Q have not been
restated to reflect the fair value method of recognizing compensation cost
relating to non-qualified stock options. Selling, general and administrative
expenses as a percentage of net sales was 12.2% in the current quarter compared
to 13.5% in the year-ago quarter. </FONT></P>

<P><FONT SIZE=3>During the first quarter of 2005 we implemented plans to
streamline and restructure the activities of our European computer businesses,
resulting in the elimination of approximately 200 positions. We incurred $2.0
million of restructuring costs associated with these plans for staff severance
and benefits for terminated employees. </FONT></P>

<P><FONT SIZE=3>We had income from operations for the current quarter of $20.9
million compared to $5.2 million in the year-ago quarter. We had income from
operations of $16.3 million in North America in the current quarter compared to
income from operations of $10.9 million last year. We had income from operations
in Europe of $4.6 million in the first quarter of 2006, compared to a loss from
operations of $5.7 million in the year-ago quarter. </FONT></P>

<P><FONT SIZE=3>During the first quarter of 2006 we sold our distribution
facility in Suwanee, Georgia and recognized a gain of approximately $6.7 million
net of a prepayment penalty incurred upon the repayment of the underlying
mortgage loan, which is included in &#147;Other non-operating (income) expense,
net.&#148; The facility was replaced by a larger, leased building in the same
geographic area. </FONT></P>

<P><FONT SIZE=3>Interest income and expense, net includes interest expense of
$555,000 in the first quarter of 2006 and $712,000 in 2005. The decrease
resulted from lower average European short-term borrowings. Interest income
earned on invested funds increased in 2006 as a result of an increase in funds
available for investment. </FONT></P>

<P><FONT SIZE=3>Income tax expense was $9.9 million in the first quarter of 2006
and $1.9 million in the year-ago quarter. The effective income tax rate for the
first quarter of 2006 was 36.2%, compared to 42.5% in the year ago period. The
effective income tax rate was lower in 2006 primarily as a result of income
earned in the United Kingdom for which the tax provision has been offset by the
reversal of a deferred tax valuation allowance previously recorded against the
deferred tax asset for our United Kingdom carryforward losses. Changes in the
mix of U.S. and non-U.S. earnings over the balance of the year and changes in
the valuation of deferred tax assets could have a significant impact on the
effective tax rate for the year. </FONT></P>

<P><FONT SIZE=3>As a result of the above, net income for the first quarter was
$17.6 million, or $.51 per basic share and $.48 per diluted share, compared to
$2.6 million, or $.08 per basic and $.07 per diluted share, in the first quarter
of 2005. </FONT></P>

<P><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 working capital was $192.2 million at March 31, 2006, an
increase of $22.4 million from $169.8 million at the end of 2005. This resulted
from a $5.7 million increase in accounts receivable, a $53.2 million increase in
inventories, a $0.4 million increase in prepaid expense and other current assets
and a $3.4 million decrease in short-term borrowings, offset by an $18.9 million
increase in accounts payable and other accrued expenses and a $21.4 million
decrease in cash. Inventory levels increased $48.5 million in North America,
primarily in our computer products segment, as a result of bulk purchases of
selected items offered at favorable pricing made during and at the end of the
quarter. Inventories in Europe increased $4.7 million, in line with our sales
changes. Our inventory turnover decreased slightly to 8.5 times from 9.3 times
at the end of 2005. The increase in our accounts receivable occurred in Europe,
as local currency sales in some of our larger markets increased from the fourth
quarter. Accounts receivable in North America decreased slightly from the end of
the prior year. 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>Our cash balance decreased to $49.6 million during the three
months ended March 31, 2006 from $70.9 million at the end of 2005. Net cash used
in operating activities was $26.7 million for the first three months of 2006,
compared to net cash provided by operating activities of $13.0 million in the
same period of 2005. The decrease in cash provided by operations in 2006
resulted from changes in our working capital accounts, which used $40.7 million
in cash compared to $5.9 million of cash provided in 2005. The reduction
resulted primarily from a $52.6 million increase in inventories in the first
three months of 2006 compared to an $11.1 million decrease for the same period
of the prior year. That increase was partially offset by a $17.1 million
increase in accounts payable, accrued expenses and other current liabilities in
the first three months of 2006, compared to a $0.7 million increase for the same
period of the prior year. Cash generated from net income adjusted by other
non-cash items provided $14.0 million in 2006, compared to $7.1 million provided
by these items in 2005, primarily as a result of the increase in our net income.
</FONT></P>

<P><FONT SIZE=3>We maintain our cash and cash equivalents primarily in money
market funds or their equivalent. As of March 31, 2006, 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>We had $16.9 million of cash provided by investing activities in
2006. This consisted of $18.6 million of proceeds from the sale of our Suwanee,
Georgia distribution facility, offset by $1.7 million of capital expenditures.
Capital expenditures in 2006 included facilities costs and equipment for the
replacement distribution facility we leased and upgrades and enhancements to our
information and communications systems hardware. In 2005, we used $1.0 million
in investing activities, principally for the purchase of property, plant and
equipment. Capital expenditures in 2005 consisted primarily of upgrades and
enhancements to our information and communications systems hardware and
facilities costs for the opening of new retail outlet stores. </FONT></P>

<P><FONT SIZE=3>Net cash of $11.5 million was used in financing activities in
2006. We used cash of $7.9 million to repay long-term debt obligations,
primarily for the mortgage on our Georgia distribution facility, and we used
$3.6 million to repay short-term borrowings in Europe. Cash of $7.9 million was
provided by financing activities in 2005. Cash of $7.5 million was provided by
short-term borrowings under our European credit facilities. We used cash of $0.2
million for payments under long-term borrowing and capital lease agreements.
Exercises of stock options provided $0.6 million of cash in 2005. </FONT></P>

<P><FONT SIZE=3>Under our $120 million (which may be increased by up to $30
million, subject to certain conditions) secured revolving credit agreement for
borrowings in the United States and United Kingdom, as of March 31, 2006,
availability was $109.2 million. There were outstanding letters of credit of
$14.9 million and there were outstanding advances of $18.9 million (all in the
United Kingdom) as of March 31, 2006. The borrowings are secured by all of the
domestic and United Kingdom accounts receivable, the domestic inventories of the
Company, general intangibles and the Company&#146;s shares of stock in its
domestic subsidiaries and the Company&#146;s United Kingdom headquarters
building. The credit facility expires and the outstanding borrowings thereunder
are due on October 26, 2010. The revolving credit agreement contains certain
financial and other covenants, including maintaining a minimum level of
availability and restrictions on capital expenditures and payments of dividends.
We were in compliance with all of the covenants as of March 31, 2006, except for
the required timely submission of financial statements, for which we have
obtained a waiver. </FONT></P>

<P><FONT SIZE=3>Under our Netherlands &#128;5 million ($6.1 million at the March
31, 2006 exchange rate) credit facility, at March 31, 2006 there were &#128;3.5
million ($4.2 million) of borrowings outstanding under this line with interest
payable at a rate of 5.0% per annum. This facility expires in November 2006.
</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 March
31, 2006 consisted of repayments of borrowings under our credit agreements,
payments under operating leases for certain of our real property and equipment
and payments under employment and other service agreements. In connection with
the sale of our Suwanee, Georgia distribution facility, the Company repaid the
related mortgage loan which was secured by the land and building. </FONT></P>

<P><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><FONT SIZE=3><B>Recent Accounting Developments </B></FONT></P>

<P><FONT SIZE=3>In July 2006, the FASB issued Interpretation No. 48 (FIN 48),
&#147;Accounting for Uncertainty in Income Taxes &#150; an interpretation of
FASB Statement No. 109.&#148; FIN 48 clarifies and sets forth consistent rules
for accounting for uncertain tax positions taken or expected to be taken in
accordance with SFAS 109, &#147;Accounting for Income Taxes.&#148; FIN 48 is
effective for fiscal years beginning after December 15, 2006. The Company is
currently evaluating the impact that adoption of FIN 48 may have on its
consolidated results of operations or financial position. </FONT></P>

<P><FONT SIZE=3>In June 2006, the FASB ratified the consensus reached by the
EITF on Issue No. 06-3, &#147;How Taxes Collected from Customers and Remitted to
Governmental Authorities Should Be Presented in the Income Statement (That Is,
Gross versus Net Presentation).&#148; The consensus requires disclosure of
either the gross or net presentation, and any such taxes reported on a gross
basis should be disclosed in the interim and annual financial statements. This
Issue is effective for financial reports beginning after December 15, 2006. The
Company does not expect to change its presentation of such taxes, and will
provide additional disclosure upon the adoption of this Issue. </FONT></P>

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

<P><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
(principally Pounds Sterling, Euros and Canadian dollars) as measured against
the U.S. dollar and each other. </FONT></P>

<P><FONT SIZE=3>The translation of the financial statements of our operations
outside of the United States is impacted by movements in foreign currency
exchange rates. 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 have limited
involvement with derivative financial instruments and do not use them for
trading purposes. 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 March 31, 2006 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. Our variable rate debt includes
short-term borrowings in Europe under our credit facilities. As of March 31,
2006, the balance outstanding on our variable rate debt was approximately $23.0
million. Based on our market sensitive instruments as of March 31, 2006, a
hypothetical change in average interest rates of one percentage point is not
expected to have a material effect on our financial position, results of
operations or cash flows for the fiscal year. </FONT></P>

<P><FONT SIZE=3><B>Item&nbsp;4. <U>Controls and Procedures</U> </B></FONT></P>

<P><FONT SIZE=3><B>Disclosure Controls and Procedures </B></FONT></P>

<P><FONT SIZE=3>The Company establishes and maintains disclosure controls and
procedures that are designed to provide reasonable assurance that information
required to be disclosed by the Company in the reports it files under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the SEC&#146;s rules and forms. Disclosure
controls are also designed to provide reasonable assurance that such information
is accumulated and reported to management, including the Chief Executive Officer
and the Chief Financial Officer, to allow timely decisions regarding required
disclosure. </FONT></P>

<P><FONT SIZE=3>Our management, including our CEO and CFO, does not expect that
our disclosure controls and procedures will prevent all errors and all fraud. A
control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in control systems,
misstatements due to error or fraud may occur and not be detected. These
limitations include the circumstances that breakdowns can occur as a result of
error or mistake, the exercise of judgment by individuals or that controls can
be circumvented by acts of misconduct. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. </FONT></P>

<P><FONT SIZE=3>As of the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and the operation of our disclosure
controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 of the
Securities Exchange Act of 1934. </FONT></P>

<P><FONT SIZE=3>Based on their evaluation, as of March 31, 2006, the Chief
Executive Officer and the Chief Financial Officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended) were not effective to
ensure that the information required to be disclosed by us in this quarterly
report on Form 10-Q was recorded, processed, summarized and reported within the
time periods specified in the SEC&#146;s rules and forms. This conclusion is
based on our identification of three material weaknesses in our internal
controls over financial reporting as of March 31, 2006. The material weaknesses
are: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
We do not maintain sufficiently and adequately trained personnel resources at
certain locations outside of the Company&#146;s corporate headquarters with the
requisite knowledge and financial reporting expertise to execute a timely
financial closing process, address non-routine accounting issues that arise in
the normal course of the Company&#146;s operations and ensure the timely and
accurate preparation of interim and annual financial statements.
</TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
We have insufficient processes to effectively prepare timely account
reconciliations and analyses with thorough documentation and substantiation of
certain general ledger accounts resulting in a number of audit adjustments
required to be recorded after being identified by our independent registered
public accountants.
</TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
We have inadequately designed processes to properly estimate certain liability
accounts related to inventory purchases at our Tiger Direct subsidiary. The
processes lack sufficient internal controls to accurately record, reconcile and
review such transactions.
</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>As a result of this determination and as part of the work
undertaken in connection with this report, we have applied compensating
procedures and processes as necessary to ensure the reliability of our financial
reporting. Accordingly, management believes, based on its knowledge, that (i)
this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading with respect to the
period covered by this report and (ii) the financial statements, and other
financial information included in this report, fairly reflect the form and
substance of transactions and fairly present in all material respects our
financial condition, results of operations and cash flows as at, and for, the
periods presented in this report. </FONT></P>

<P><FONT SIZE=3><B>Material Weaknesses Reported for the Year Ended December 31,
2005 </B></FONT></P>

<P><FONT SIZE=3>As reported in our Annual Report on Form 10-K for the year ended
December 31, 2005, management was unable to conclude that the Company&#146;s
internal controls over financial reporting were then effective, as a result of
the three material weaknesses described above. Ernst &amp; Young LLP, our
independent registered public accounting firm, issued a material weakness letter
to the Company which addressed these material weaknesses. These matters have
been discussed among management, the audit committee and our independent
registered public accountants. </FONT></P>

<P><FONT SIZE=3>During 2006, we have taken the following actions to date to
address the material weaknesses: </FONT></P>

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<TD WIDTH=90%>
Hired additional staff, including two senior level managerial positions, at
Tiger Direct
</TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Implemented additional review and reconciliation procedures at Tiger Direct in
connection with inventory purchase transactions and the recording of vendor
liabilities
</TD>
</TR>
</TABLE>

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<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Began work on identification of required program changes in certain information
systems applications to remediate deficiencies related to account reconciliation
procedures
</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>While progress is being made to remediate the material
weaknesses identified, we are continuing to monitor these processes to further
improve our procedures. </FONT></P>

<P><FONT SIZE=3><B>Section 404 of the Sarbanes-Oxley Act </B></FONT></P>

<P><FONT SIZE=3>We are not yet subject to the internal controls certification
and attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002
because we are not an accelerated filer. Based on SEC implementing regulations
in effect as of June 30, 2006, at the end of fiscal year 2007 Section 404 of the
Sarbanes-Oxley Act of 2002 will require that management provide an assessment of
the effectiveness of the Company&#146;s internal control over financial
reporting and the Company&#146;s independent registered public accounting firm
will be required to audit that assessment beginning with fiscal year 2008.
</FONT></P>

<P><FONT SIZE=3>We are continuing to work to achieve compliance with the
requirements of Section 404. We have dedicated substantial time and resources to
documentation and review of our procedures, including the hiring of additional
internal audit staff in both the United States and in Europe. We will also
evaluate the need to engage outside consultants to assist us. We have not
completed this process or its assessment, due to the complexities of our
decentralized structure and the number of accounting systems in use. We have not
completed our assessment of our internal control over financial reporting. In
addition to the three material weaknesses as of March 31, 2006 discussed under
the caption &#147;Disclosure Controls and Procedures,&#148; we have identified a
number of internal control significant deficiencies, including controls in the
information technology area, that may affect the timeliness and accuracy of
recording transactions and which, individually or in the aggregate, could become
material weaknesses in future periods if not remediated. While the Company does
not believe that the following are currently material weaknesses, they are
designated as significant deficiencies as of March 31, 2006: </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
The disparate operating and financial information systems used at certain of our
locations have inherent limitations resulting in a control environment heavily
reliant upon manual review procedures and adjustments. These deficiencies
include inadequate or lack of systems interfaces and the preparation of numerous
manual journal entries.
</TD>
</TR>
</TABLE>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
Internal control deficiencies in the information technology area include lack of
adequate general controls. We lack program change and project management
controls, have inadequate segregation of duties between information technology
department development and production functions, need formal information
technology strategic planning, need formal documentation of information security
procedures, need security around user rights to certain application systems and
need to implement formal help desk procedures.
</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>We have a significant amount of work to do to remediate the
items we have identified. In the course of completing our evaluation and testing
we may identify further deficiencies and weaknesses that will need to be
addressed and will require remediation. We may not be able to correct all such
internal control deficiencies in a timely manner and may find that a material
weakness or weaknesses continues to exist. As a result, management may not be
able to issue an unqualified opinion on the effectiveness of the Company&#146;s
internal control over financial reporting as of December 31, 2007. </FONT></P>

<P><FONT SIZE=3><B>Changes in Internal Control Over Financial Reporting
</B></FONT></P>

<P><FONT SIZE=3>Our management is not aware of any changes in internal control
over financial reporting other than those described above that occurred during
the quarter ended March 31, 2006 that materially affected, or were reasonably
likely to materially affect, our internal control over financial reporting.
</FONT></P>

<P><FONT SIZE=3><B>PART II &#151; OTHER INFORMATION </B></FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><B>Item 6.</B></TD>
<TD WIDTH=90%>
<B><U>Exhibits</U></B>
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=10%>31</TD>
<TD WIDTH=80%>
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=10%>&nbsp;</TD>
<TD WIDTH=10%>32</TD>
<TD WIDTH=80%>
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=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%>&nbsp;</TD>
<TD WIDTH=50%>
SYSTEMAX INC.
</TD>
</TR>
</TABLE>
<BR>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=50%>Date:  September 6, 2006</TD>
<TD WIDTH=50%>
By: <U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds<BR>
Chairman and Chief Executive Officer<BR>
<BR>
<BR>
By: <U>/s/ STEVEN GOLDSCHEIN</U><BR>
Steven Goldschein<BR>
Senior Vice President and Chief Financial Officer
</TD>
</TR>
</TABLE>
<BR>

</BODY>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>systemax-ex31_090506.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><B>CERTIFICATION UNDER SECTION 302 OF THE<BR>
SARBANES-OXLEY ACT OF 2002 </B></FONT></P>

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

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

<P><FONT SIZE=3>1. I have reviewed this quarterly report on Form 10-Q of
Systemax Inc. (the &#147;registrant&#148;);</FONT></P>

<P><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><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><FONT SIZE=3>4. The registrant&#146;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 (except as
disclosed in Item 4 of this quarterly report on Form 10-Q) we have: </FONT></P>

<P><FONT SIZE=3>a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to
reasonably 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><FONT SIZE=3>b) Evaluated the effectiveness of the registrant&#146;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><FONT SIZE=3>c) Disclosed in this report any change in the registrant&#146;s
internal control over financial reporting that occurred during the
registrant&#146;s most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting. </FONT></P>

<P><FONT SIZE=3>5. The registrant&#146;s other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant&#146;s auditors and the audit committee
of the registrant&#146;s board of directors (or persons performing the
equivalent function): </FONT></P>

<P><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&#146;s ability to
record, process, summarize and report financial information; and </FONT></P>

<P><FONT SIZE=3>b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant&#146;s internal
controls over financial reporting. </FONT></P>

<P><FONT SIZE=3>Dated: September 6, 2006</FONT></P>

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

<P ALIGN=RIGHT><FONT SIZE=3>Exhibit 31</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><FONT SIZE=3><B>CERTIFICATION OF CHIEF FINANCIAL OFFICER </B></FONT></P>

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

<P><FONT SIZE=3>1. I have reviewed this quarterly report on Form 10-Q of
Systemax Inc. (the &#147;registrant&#148;);</FONT></P>

<P><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><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><FONT SIZE=3>4. The registrant&#146;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 (except as
disclosed in Item 4 of this quarterly report on Form 10-Q) we have: </FONT></P>

<P><FONT SIZE=3>a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under our supervision, to
reasonably 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><FONT SIZE=3>b) Evaluated the effectiveness of the registrant&#146;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><FONT SIZE=3>c) Disclosed in this report any change in the registrant&#146;s
internal control over financial reporting that occurred during the
registrant&#146;s most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the registrant&#146;s internal control
over financial reporting. </FONT></P>

<P><FONT SIZE=3>5. The registrant&#146;s other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant&#146;s auditors and the audit committee
of the registrant&#146;s board of directors (or persons performing the
equivalent function): </FONT></P>

<P><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&#146;s ability to
record, process, summarize and report financial information; and</FONT></P>

<P><FONT SIZE=3>b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant&#146;s internal
controls over financial reporting. </FONT></P>

<P><FONT SIZE=3>Dated: September 6, 2006</FONT></P>

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

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>3
<FILENAME>systemax-ex32_090506.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32</TITLE>
</HEAD>
<BODY>

<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><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.&#145;s Form
10-Q for the period ended March 31, 2006 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><FONT SIZE=3>Dated: September 6, 2006</FONT></P>

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

<P><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.&#145;s Form
10-Q for the period ended March 31, 2006 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><FONT SIZE=3>Dated: September 6, 2006</FONT></P>

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

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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