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<SEC-DOCUMENT>0000899681-06-000754.txt : 20061206
<SEC-HEADER>0000899681-06-000754.hdr.sgml : 20061206
<ACCEPTANCE-DATETIME>20061206132308
ACCESSION NUMBER:		0000899681-06-000754
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20060630
FILED AS OF DATE:		20061206
DATE AS OF CHANGE:		20061206

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:		061259616

	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_120106.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 June 30, 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 October 31, 2006 was 35,151,647. </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%>Explanatory Note<BR>
Available Information</TD>
<TD WIDTH=5% ALIGN=RIGHT>3<BR>
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;
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;
Quantitative and Qualitative Disclosures About Market Risk</TD>
<TD WIDTH=5% ALIGN=RIGHT VALIGN=BOTTOM>20</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>20</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>22</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>23</TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Explanatory Note&nbsp; </FONT></H1>

<P><FONT SIZE=3>The filing of this Quarterly Report on Form 10-Q was delayed
because of the longer-than-expected 2005 year-end closing process caused in part
by the decision by the Company's former independent registered public accounting
firm not to stand for re-appointment and the inability of the Company to appoint
a new registered public accounting firm until December 2005.</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2 Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" 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 ("SEC") 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'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 "Corporate Governance Documents"):</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>June 30,<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>$</TD><TD ALIGN="RIGHT">   52,226</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</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">148,320</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">217,528</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">26,350</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">6,989</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">451,413</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">48,229</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">15,785</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>$</TD><TD ALIGN="RIGHT">  515,427</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</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>$</TD><TD ALIGN="RIGHT">   23,077</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</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">168,621</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">56,936</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">248,634</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">648</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">2,577</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;38,331,990 (2006) and 38,231,990 (2005) shares; outstanding 35,012,633 (2006)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and 34,761,174 (2005)</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">383</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">173,225</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">5,363</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">123,590</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 - 3,319,357 (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">(38,993</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">263,568</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">515,427</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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=4>Six Months Ended<BR>
June 30,<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=4>Three Months Ended<BR>
June 30,<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2>2006<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2006<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2005<HR WIDTH=95% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=52% ALIGN=LEFT>Net sales</TD>
     <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>$&nbsp;1,122,150</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>$1,044,050</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>$&nbsp;547,242</TD>
        <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=9% ALIGN=RIGHT>$506,142</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=RIGHT>954,017</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>892,910</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>469,872</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>434,777</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>168,133</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>151,140</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>77,370</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>71,365</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Selling, general &amp; administrative expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>136,681</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>139,781</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>66,796</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>67,138</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=RIGHT>--</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,052</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>--</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,077</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>31,452</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>8,307</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10,574</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,150</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=RIGHT>(6,589</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>8</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>49</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2</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=RIGHT>(179</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>1,068</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(194</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>503</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>38,220</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>7,231</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>10,719</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,645</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=RIGHT>13,557</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,071</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,613</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,123</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;24,663</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4,160</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7,106</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;1,522</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Net income per common share:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Basic</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.71</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.20</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.04</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Diluted</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.67</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.19</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.04</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD 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></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;Basic</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>34,802</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>34,580</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35,229</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>34,687</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD 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=RIGHT>36,563</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>35,441</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>36,981</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>36,514</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>


<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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' 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,<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</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><BR>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><BR>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>1,004</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1><BR>Issuance of 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</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>100</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</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>&nbsp;</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1><BR>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>152</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>(1,450</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>1,779</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1><BR>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>259</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1><BR>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>4,470</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>    4,470</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1><BR>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>24,663</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>24,663</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>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>   29,133</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT SIZE=1>Balances, June 30, 2006</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>35,013</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>      383</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>  173,225</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>  123,590</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>    5,363</FONT></TD>
        <TD ALIGN=LEFT><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD ALIGN=RIGHT><FONT SIZE=1>$</FONT></TD><TD ALIGN=RIGHT><FONT SIZE=1>  (38,993</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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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>Six Months<BR>
Ended June 30,<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>$</TD><TD ALIGN=RIGHT>  24,663</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>   4,160</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>3,928</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>5,319</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>2,775</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(1,568</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>1,201</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>4,200</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>1,004</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>717</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>(7,760</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>11</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>957</TD>
        <TD ALIGN=LEFT></TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(7,679</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>(25,176</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>16,444</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>(6,156</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,563</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>(16,054</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(13,437</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;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>(20,618</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>9,732</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>(3,201</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(2,719</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>18,583</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>44</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>15,382</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(2,675</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;(Repayments) proceeds of borrowings from banks</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(5,517</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>426</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>(7,996</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>(291</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>328</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>613</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>162</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>(13,023</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>748</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>(440</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>1,230</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>(18,699</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN=RIGHT>9,035</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>$</TD><TD ALIGN=RIGHT>  52,226</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN=RIGHT>  45,292</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>     602</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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>See notes to condensed consolidated financial statements. </FONT></P>

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

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

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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 June 30, 2006 and the results of operations for the three
and six month periods ended June 30, 2006 and 2005, cash flows for the six month periods
ended June 30, 2006 and 2005 and changes in shareholders' equity for the six month
period ended June 30, 2006. The December 31, 2005 Condensed Consolidated Balance Sheet has
been derived from the audited consolidated financial statements included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2005. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
These
condensed consolidated financial statements should be read in conjunction with the
Company's audited consolidated financial statements as of December 31, 2005 and for
the year then ended included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2005. The results for the three and six months ended June
30, 2006 are not necessarily indicative of the results for an entire year. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>Adoption of New Accounting Standard</B><BR>
<BR>
The
Company's significant accounting policies are disclosed in the Notes to Consolidated
Financial Statements in the Company'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)), "Share-Based
Payment." Prior to the adoption of SFAS 123(R), the Company applied the provisions
prescribed by Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees," 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's
stock-based compensation expense and assumptions, including pro forma disclosures for the
prior year's first quarter as if stock-based compensation was expensed. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Since
the date of the Company's annual report on Form 10-K, there have been no other
material changes to the Company's significant accounting policies. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><B>2.</B></TD>
<TD WIDTH=95%><B>Stock-based Compensation Plans</B></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Workstation" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
Company currently 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:<BR>
<BR>
<I><U>The 1995 Long-term Stock Incentive Plan</U></I><U></U> &#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 1,283,565 options were outstanding under this plan as of June 30,
2006.<BR>
<BR>
<I><U>The 1995 Stock Option Plan for Non-Employee Directors</U></I><U></U>
&#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 terminated on
October 12, 2006. A total of 58,000 options were outstanding under this plan as
of June 30, 2006.<BR>
<BR>
<I><U>The 1999 Long-term Stock Incentive Plan, as amended ("1999 Plan")</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 1,425,071
options and 900,000 restricted stock units were outstanding under this plan as of June 30,
2006.<BR>
<BR>
<I><U>The 2006 Stock Incentive Plan For Non-Employee Directors
</U></I>&#151; This plan, adopted by the Company's stockholders on
October 11, 2006 replaces the 1995 Stock Option Plan for Non-Employee Directors.
The Company adopted the plan so that it could offer directors of the Company who
are not employees of the Company or of any entity in which the Company has more
than a 50% equity interest ("independent directors") an opportunity to
participate in the ownership of the Company by receiving options to purchase
shares of common stock at a price equal to the fair market value at the date of
grant of the option and restricted stock awards. A maximum of 200,000 shares may
be granted for awards under this plan. </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=95%>Shares issued under our share-based compensation plans are usually issued from
shares of our common stock held in treasury.<BR>
<BR>
<I>Adoption of SFAS 123(R)</I><BR>
<BR>
In December 2004, Statement of Financial Accounting Standards 123(R) ("SFAS
123(R)"), "Share Based Payment", 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.<BR>
<BR>
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 and six months ended June 30, 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.<BR>
<BR>
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 ("plain-vanilla" 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 six months ended June 30, 2006.<BR>
<BR>
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%></TD>
<TD WIDTH=95%>Compensation cost related to non-qualified stock options recognized in operating
results (selling, general and administrative expense) was $717,000 for the six
months ended June 30, 2006 and $403,000 for the three months ended June 30,
2006. The related future income tax benefits recognized were $247,000 for the
six months and $140,000 for the three months ended June 30, 2006.<BR>
<BR>
<I>Stock Options</I><BR>
<BR>
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>$4.87</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>4.78%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Expected volatility</TD>
     <TD ALIGN=RIGHT>78.7%</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Expected life in years</TD>
     <TD ALIGN=RIGHT>5.78</TD></TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=95%>The following table reflects the activity for all stock option plans during the
six months ended June 30, 2006:</TD>
</TR>
</TABLE>
<BR>

<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">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.93</TD>
     <TD WIDTH="15%" ALIGN="RIGHT">&nbsp;</TD>
     <TD WIDTH="15%" ALIGN="RIGHT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Granted</TD>
     <TD ALIGN="RIGHT">272,667&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.94</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Exercised</TD>
     <TD ALIGN="RIGHT">(151,459)</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.17</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Canceled or lapsed</TD>
     <TD ALIGN="RIGHT">(11,991)</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.06</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 June 30, 2006</TD>
     <TD ALIGN="RIGHT">2,766,636&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.29</TD>
     <TD ALIGN="RIGHT">6.63</TD>
     <TD ALIGN="RIGHT">$9,976&nbsp;</TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN="RIGHT"><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD>
     <TD ALIGN="RIGHT"></TD></TR>
<TR VALIGN=Bottom>
     <TD>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Exercisable at June 30, 2006</TD>
     <TD ALIGN="RIGHT">2,014,319&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13</TD>
     <TD ALIGN="RIGHT">6.05</TD>
     <TD ALIGN="RIGHT">$7,677&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%></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 June 30, 2006 and the exercise price) that would
have been received by the option holders had all options been exercised on June
30, 2006. This value will change based on the fair market value of the Company's
common stock.<BR>
<BR>
The total intrinsic value of options exercised was $582,000 and the cash
received from stock option exercises was $329,000 during the six months ended
June 30, 2006. The tax benefit expected to be realized from the tax deductions
for stock option exercises totaled $204,000 for the six months ended June 30,
2006 and is reflected as a component of shareholders' equity in the Condensed
Consolidated Balance Sheet.<BR>
<BR>
The following table reflects the activity for all unvested stock options during
the six months ended June 30, 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">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.84</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Granted</TD>
     <TD ALIGN="RIGHT">272,667&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.87</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Vested</TD>
     <TD ALIGN="RIGHT">(357,874)</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Forfeited</TD>
     <TD ALIGN="RIGHT">(2,665)</TD>
     <TD ALIGN="RIGHT">$&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 June 30, 2006</TD>
     <TD ALIGN="RIGHT">752,317&nbsp;</TD>
     <TD ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.80</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%></TD>
<TD WIDTH=95%>At June 30, 2006, there was $1.3 million of unrecognized compensation costs
related to unvested stock options, which is expected to be recognized over a
weighted average period of 1.2 years. The total fair value of stock options
vested during the six months ended June 30, 2006 was $762,000.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=95%><I>Restricted stock and restricted stock units</I><BR>
<BR>
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'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's stock at the date of the award.
Compensation expense related to the restricted stock award was $144,000 for the
three month period and $287,000 for the six month period ended June 30, 2006 and
$144,000 for the three month period and $717,000 for the six month period ended
June 30, 2005.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></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's
balance sheet. As of June 30, 2006, there was unrecognized stock-based
compensation of $3.9 million related to the restricted stock award, which is
expected to be recognized over a weighted-average period of 6.75 years.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=95%><I>Prior to the adoption of SFAS 123(R)</I><BR>
<BR>
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, "Accounting for Stock-Based Compensation &#150;
Transition and Disclosure." 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, "Accounting for
Stock-Based Compensation" (in thousands, except per share data):</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Periods ended June 30, 2005:</FONT></P>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=70%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2>Six months<HR WIDTH=88% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>Three months<HR WIDTH=88% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=64% ALIGN=LEFT>Net income - as reported</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=13% ALIGN=RIGHT>$4,160</TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=13% ALIGN=RIGHT>$1,522</TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Add: Stock-based compensation expense included in</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;reported net income, net of related tax effects</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>462</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>92</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Deduct: Stock-based employee compensation expense</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;determined under fair value based method, net of</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>&nbsp;&nbsp;&nbsp;&nbsp;related tax effects</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>698</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>213</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD>
     <TD COLSPAN=1 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Pro forma net income</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$3,924</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$1,401</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD COLSPAN=1 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Net income per common share - basic:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Net income  - as reported</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.12</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.04</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD COLSPAN=1 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Net income  - pro forma</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.04</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD COLSPAN=1 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Net income per common share - diluted:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><BR>Net income  - as reported</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.04</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD COLSPAN=1 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Net income  - pro forma</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.11</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;.04</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD>
     <TD COLSPAN=1 ALIGN=RIGHT>&nbsp;</TD>
     <TD COLSPAN=1 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>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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
396,000 shares for the six months ended June 30, 2006, 524,000 shares for the
six months ended June 30, 2005, 443,000 shares for the three months ended June
30, 2006 and 518,000 shares for the three months ended June 30, 2005 due to
their antidilutive effect. </FONT></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>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Comprehensive
income consists of net income and foreign currency translation adjustments, net of tax,
and is included in the Condensed Consolidated Statement of Shareholders' Equity. For
the six month periods ended June 30, comprehensive income was $29,133,000 in 2006 and
$1,799,000 in 2005. For the three month periods ended June 30, comprehensive income was
$10,153,000 in 2006 and $(162,000) in 2005. </FONT></TD>
</TR>
</TABLE>
<BR>

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

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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's domestic and United Kingdom accounts
receivable, the domestic inventories of the Company, general intangibles and the
Company's shares of stock in its domestic subsidiaries and the Company'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 June 30, 2006, except for the required timely
submission of financial statements, for which it has obtained a waiver. As of June 30,
2006, eligible collateral under the agreement was $108.0 million and total availability
was $79.4 million. There were outstanding letters of credit of $10.6 million and there
were outstanding advances of $18.0 million (all in the United Kingdom) as of June 30,
2006. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Under
the Company's &#128;5.0 million ($6.4 million at the June 30, 2006 exchange rate)
Netherlands credit facility, there were &#128;3.6 million ($4.6 million) of borrowings
outstanding at June 30, 2006, with interest payable at a rate of 5.0% per annum.
Borrowings under the facility are secured by the subsidiary's accounts receivable and
are subject to a borrowing base limitation of 85% of the eligible accounts. The facility
expires in August 2007. </FONT></TD>
</TR>
</TABLE>
<BR>

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

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
Company periodically assesses its operations to ensure that they are efficient, aligned
with market conditions and responsive to customer needs. During the 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): </FONT></TD>
</TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=70%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2 ALIGN=LEFT>Periods ended June 30, 2005<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>Six months<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>Three months<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=58% ALIGN=LEFT>2004 United States streamlining plan</TD>
     <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;122</TD>
        <TD WIDTH=5% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=15% ALIGN=RIGHT></TD>
        <TD WIDTH=2% ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other severance and exit costs</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>2,930</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$1,077</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Total restructuring and other charges</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$3,052</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$1,077</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><I>2004 United States Streamlining Plan</I><BR>
<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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3><I>Other Severance and Exit Costs</I><BR>
<BR>
During
the first quarter of 2005, the Company implemented plans to streamline operations in its
European businesses. The Company recorded $2.9 million of costs related to these actions
for severance and benefits for approximately 200 terminated employees during the first six
months of 2005. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
following table summarizes the components of the accrued restructuring charges and the
movements within these components during the six months ended June 30, 2006 (in
thousands). </FONT></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">$</TD><TD WIDTH="12%" ALIGN="RIGHT">  518</TD>
        <TD WIDTH="2%" ALIGN="LEFT">&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Amounts utilized</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(208</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(88</TD>
        <TD ALIGN="LEFT">)</TD>
     <TD ALIGN=RIGHT>&nbsp;</TD><TD ALIGN="RIGHT">(296</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=3></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD COLSPAN=2 ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN="LEFT">Accrued at June 30, 2006</TD><TD ALIGN=LEFT>&nbsp;</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  45</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  177</TD>
        <TD ALIGN="LEFT">&nbsp;</TD>
     <TD ALIGN=RIGHT>$</TD><TD ALIGN="RIGHT">  222</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>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
Company repaid its 7.04% mortgage loan in March 2006 as a result of the sale of its
Suwanee, Georgia distribution facility. </FONT></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>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
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'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'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's web-hosted software application, which is being marketed to third
parties and for which no revenues have been recognized to date. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
The
Company's chief operating decision-maker is the Company'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 "Corporate and other expenses." 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. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
Financial
information relating to the Company's operations by reportable segment was as follows
(in thousands): </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=4>Six Months Ended<BR>
June 30,<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=4>Three Months Ended<BR>
June 30,<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2>2006<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2005<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2006<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2005<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=35% ALIGN=LEFT>Net sales:</TD>
     <TD WIDTH=3% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=12% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=12% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=12% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=12% 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=RIGHT>$&nbsp;1,027,495</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;958,737</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;497,257</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;461,431</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Industrial products</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>94,655</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>85,313</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>49,985</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>44,711</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>$&nbsp;1,122,150</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;1,044,050</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;547,242</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;506,142</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Income (loss) from operations:</TD><TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Computer products</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;30,864</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14,389</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9,105</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5,416</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Industrial products</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>5,076</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,043</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>3,737</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>1,533</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Software application</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(3,654</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(3,234</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(1,920</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(1,482</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Corporate and other expenses</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>(834</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(5,891</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(348</TD>
        <TD ALIGN=LEFT>)</TD>
     <TD ALIGN=RIGHT>(2,317</TD>
        <TD ALIGN=LEFT>)</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;31,452</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8,307</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;10,574</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3,150</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>


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

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=4>Six Months Ended<BR>
June 30,<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=4>Three Months Ended<BR>
June 30,<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TH COLSPAN=2></TH>
     <TH COLSPAN=2>2006<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2005<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2006<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH COLSPAN=2>2005<HR WIDTH=90% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=26% ALIGN=LEFT>Net sales:</TD>
     <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=14% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=14% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=14% ALIGN=RIGHT></TD>
        <TD WIDTH=4% ALIGN=LEFT>&nbsp;</TD>
     <TD WIDTH=14% 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></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Industrial products</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;94,655</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;85,313</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;49,985</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$&nbsp;&nbsp;44,711</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Computer products</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>611,132</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>555,366</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>295,385</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>266,813</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>705,787</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>640,679</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>345,370</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>311,524</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Other North America</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>60,985</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>46,723</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>30,438</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>22,634</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>766,772</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>687,402</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>375,808</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>334,158</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT>Europe</TD><TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>355,378</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>356,648</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>171,434</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>171,984</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD><TD></TD>
     <TD 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=RIGHT>$1,122,150</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$1,044,050</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$547,242</TD>
        <TD ALIGN=LEFT>&nbsp;</TD>
     <TD ALIGN=RIGHT>$506,142</TD>
        <TD ALIGN=LEFT>&nbsp;</TD></TR>
<TR>
     <TD COLSPAN=2></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=2></TD><TD></TD></TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Revenues
are attributed to countries based on the location of the selling subsidiary. </FONT></P>

<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>

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
In
June 2006, the FASB ratified the consensus reached by the EITF on Issue No. 06-3,
"How Taxes Collected from Customers and Remitted to Governmental Authorities Should
Be Presented in the Income Statement (That Is, Gross versus Net Presentation)." 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, as its sales
are currently recorded net of tax. </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Large Indent Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>In
June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 "Accounting for Uncertainty in Income Taxes (an interpretation
of FASB Statement No. 109)" which is effective for fiscal years beginning after
December 15,2006. This interpretation was issued to clarify the accounting for uncertainty
in income taxes recognized in the financial statements by prescribing a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. The Company
is currently evaluating the potential impact, if any, of this pronouncement. </FONT>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=3>
In
September 2006, the SEC issued Staff Accounting Bulletin No. 108 ("SAB 108")
"Considering the Effects of Prior Year Misstatements when Quantifying Misstatements
in Current Year Financial Statements". SAB 108 provides interpretative guidance on
how the effects of the carryover or reversal of prior year misstatements should be
considered in quantifying a current year misstatement. The SEC staff believes that
registrants should quantify errors using both a balance sheet and an income statement
approach and evaluate whether either approach results in quantifying a misstatement that,
when all relevant quantitative and qualitative factors are considered, is material. This
pronouncement is effective for fiscal years ending after November 15, 2006. The Company is
currently evaluating the provisions of SAB 108. </FONT></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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Forward Looking
Statements </FONT></H1>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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 "anticipates", "believes", "estimates",
"expects", "intends", "plans" and variations thereof and
similar expressions are intended to identify forward looking statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Forward-looking statements in this report are based on the Company'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'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 "Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Notes to Condensed
Consolidated Financial Statements, describe certain factors, among others, that could
contribute to or cause such differences. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Critical Accounting
Policies and Estimates </FONT></H1>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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's
2005 Annual Report on Form 10-K. The Company adopted SFAS 123(R), "Share-based
Payment," 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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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'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'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'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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Overview </FONT></H1>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Results of Operations </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Six Months Ended June
30, 2006 Compared to Six Months Ended June 30, 2005 </FONT></H1>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Net sales for the six months ended June 30, 2006 increased 7.5% to $1.12 billion
compared to $1.04 billion in the year-ago period. Net sales in the first six months of
2006 included approximately $390.9 million of internet-related sales, a 30.8% increase
from $298.9 million of internet-related sales in the prior year's first six months.
North American sales were $766.8 million, an increase of 11.5% from $687.4 million in the
prior year. European sales decreased to $355.4 million (representing 31.7% of worldwide
sales) compared to $356.6 million (34.2% of worldwide sales) in the year-ago period.
Movements in foreign exchange rates negatively impacted the European sales comparison by
approximately $25.1 million in 2006. Excluding the movements in foreign exchange rates,
European sales would have increased 6.7% from the prior year. Sales as measured in local
currencies in all but two of the European markets we serve increased in the first six
months 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 $672.1
million, an 11.6% increase from $602.1 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 11.0% to $94.7 million from $85.3
million in the prior year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Gross profit, which consists of net sales less product cost, shipping,
assembly and certain distribution center costs, was $168.1 million compared to $151.1
million in the year-ago six months, an increase of $17.0 million. The gross profit margin
was 15.0% in the current period, compared to 14.5% 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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Selling, general and administrative expenses for the first six months
decreased $3.1 million, or 2.2%, to $136.7 million compared to $139.8 million in the first
six months of 2005. Selling, general and administrative costs in Europe declined
approximately $10.0 million in the first six months of 2006 primarily the result of the
restructuring actions we took in Europe in 2005 and $2.9 million of decreased costs 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 of
approximately $5.5 million and increased advertising costs net of rebates of approximately
$.6 million and higher credit card processing fees related to the higher sales volume of
approximately $1.4 million. Selling, general and administrative expenses also include $0.7
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 six month period compared to 13.4% in the year-ago
period. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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 $2.9 million of restructuring
costs associated with these actions in the first six months of 2005 for staff severance
and benefits for terminated employees. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>We had income from operations for the current six months of $31.5 million
compared to $8.3 million in the year-ago period. We had income from operations of $23.7
million in North America in the current year compared to income from operations of $15.8
million last year. We had income from operations in Europe of $7.7 million in the first
six months of 2006, compared to a loss from operations of $7.5 million in the year-ago
period. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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
"Other non-operating (income) expense, net." The facility was replaced by a
larger, leased building in the same geographic area. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Interest income and expense, net includes interest expense of $1.0 million
in the first six months of 2006 and $1.4 million 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>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Income tax expense was $13.6 million in the first six months of 2006 and
$3.1 million in the year-ago period. The effective income tax rate was 35.5%, 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>

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<P><FONT SIZE=3>Net income for the first six months was $24.7 million, or $.71 per basic
share and $.67 per diluted share, compared to $4.2 million, or $.12 per basic and $.11 per
diluted share, in the first six months of 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Three Months Ended June
30, 2006 Compared to Three Months Ended June 30, 2005 </FONT></H1>

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<P><FONT SIZE=3>Net sales for the three months ended June 30, 2006 increased 8.1% to
$547.2 million compared to $506.1 million in the year-ago quarter. Revenues in the quarter
were reduced by an adjustment of approximately $1.9 million for sales returns and
allowances related to prior periods. Net sales in the second quarter of 2006 included
approximately $191.0 million of internet-related sales, a 29.2% increase from $147.8
million of internet-related sales in the prior year's second quarter. North American
sales were $375.8 million, an increase of 12.4% from $334.2 million in the prior year.
European sales decreased 4%, to $171.4 million (representing 31.3% of worldwide sales)
compared to $172.0 million (34.0% of worldwide sales) in the year-ago quarter. Movements
in foreign exchange rates negatively impacted the European sales comparison by
approximately $4.1 million in 2006. Excluding the movements in foreign exchange rates,
European sales would have increased 2.0% from the prior year. Sales as measured in local
currencies in all but one of the European markets we serve increased in the second 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 $325.8 million, a
12.6% increase from $289.4 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 11.9% to $50.0 million from $44.7 million in the
prior year, and continue to grow in line with the favorable economic conditions in the
United States. </FONT></P>

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<P><FONT SIZE=3>Gross profit, which consists of net sales less product cost, shipping,
assembly and certain distribution center costs, was $77.4 million compared to $71.4
million in the year-ago quarter, an increase of $6.0 million. The gross profit margin was
14.1% in the current period and 14.1% in the year-ago period. </FONT></P>

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<P><FONT SIZE=3>Selling, general and administrative expenses for the quarter decreased $.3
million to $66.8 million compared to $67.1 million in the second quarter of 2005. Selling,
general and administrative costs in Europe declined approximately $4.9 million in the
second quarter of 2006 primarily the result of the restructuring actions we took in Europe
in 2005 and $.5 million of decreased costs due to the effects of changes in foreign
exchange rates. The European decreases were offset in part by increased spending in North
America on salaries and employee related expenses of approximately $3.1 million, increased
professional fees of approximately $.8 million and higher credit card processing fees
related to the higher sales volume of approximately $.6 million. Selling, general and
administrative expenses also include $0.4 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.
Additionally an adjustment of approximately $1.2 million was recorded in the second
quarter to lower accounts receivable reserves as the result of lower than expected write
offs from prior periods. Selling, general and administrative expense as a percentage of
net sales was 12.2% in the current quarter compared to 13.3% in the year-ago quarter. </FONT></P>

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<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 $1.1 million of additional
restructuring costs associated with these actions during the second quarter of 2005 for
staff severance and benefits for terminated employees. </FONT></P>

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<P><FONT SIZE=3>We had income from operations for the current quarter of $10.6 million
compared to $3.2 million in the year-ago quarter. We had income from operations of $7.4
million in North America in the second quarter compared to income from operations of $4.9
million last year. We had income from operations in Europe of $3.2 million in the second
quarter of 2006, compared to a loss from operations of $1.8 million in the year-ago
quarter. </FONT></P>

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<P><FONT SIZE=3>Interest income and expense, net includes interest expense of $0.5 million
in the second quarter of 2006 and $0.7 million 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>

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<P><FONT SIZE=3>Income tax expense was $3.6 million in the second quarter of 2006 and $1.1
million in the year-ago quarter. The effective income tax rate for the second quarter of
2006 was 33.7%, 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>

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<P><FONT SIZE=3>Net income for the second quarter was $7.1 million, or $.20 per basic
share and $.19 per diluted share, compared to $1.5 million, or $.04 per basic and diluted
share, in the second quarter of 2005. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Liquidity and Capital
Resources </FONT></H1>

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<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>

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<P><FONT SIZE=3>Our working capital was $202.8 million at June 30, 2006, an increase of
$33.0 million from $169.8 million at the end of 2005. This resulted from a $5.3 million
increase in accounts receivable, a $28.0 million increase in inventories, a $7.9 million
increase in prepaid expense and other current assets, a $3.7 million decrease in
short-term borrowings, a $9.0 million decrease in accounts payable and other accrued
expenses offset by a $2.2 million decrease in deferred tax assets and a $18.7 million
decrease in cash and cash equivalents. Inventory levels increased $28.7 million in North
America, primarily in our computer products segment and inventories in Europe decreased
$.7 million. Our inventory turnover decreased slightly to 8.7 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>

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<P><FONT SIZE=3>Our cash balance decreased to $52.2 million during the six months ended
June 30, 2006 from $70.9 million at the end of 2005. Net cash used in operating activities
was $20.6 million for the first six months of 2006, compared to net cash provided by
operating activities of $9.7 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 $46.4 million in cash compared to $3.1 million of cash used in 2005. The
reduction resulted primarily from a $25.2 million increase in inventories in the first six
months of 2006 compared to an $16.4 million decrease for the same period of the prior
year, an increase in prepaids and other current assets of $6.2 million compared to a
reduction of $1.6 million for the same period in 2005 and a decrease in accounts payable,
accrued expenses and other current liabilities in the first six months of 2006 of $16.1
million compared to a $13.4 million increase for the same period of the prior year. Cash
generated from net income adjusted by other non-cash items provided $25.8 million in 2006
compared to $12.8 million provided by these items in 2005, primarily as a result of the
increase in our net income. </FONT></P>

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<P><FONT SIZE=3>We maintain our cash and cash equivalents primarily in money market funds
or their equivalent. As of June 30, 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>

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<P><FONT SIZE=3>We had $15.4 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 $3.2 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 $2.7 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>

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<P><FONT SIZE=3>Net cash of $13.0 million was used in financing activities in 2006. We
used cash of $8.0 million to repay long-term debt obligations, primarily for the mortgage
on our Georgia distribution facility, and we used $5.5 million to repay short-term
borrowings in Europe. Exercises of stock options provided $0.3 million of cash in 2006.
Cash of $0.7 million was provided by financing activities in 2005. Cash of $0.4 million
was provided by short-term borrowings under our European credit facilities. We used cash
of $0.3 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>

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<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 June 30, 2006, eligible collateral was $108.0
million and total availability was $79.4 million. There were outstanding letters of credit
of $10.6 million and there were outstanding advances of $18.0 million (all in the United
Kingdom) as of June 30, 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's shares of stock in its domestic subsidiaries and the Company'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 June 30, 2006, except for the required
timely submission of financial statements, for which we have obtained a waiver. </FONT></P>

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<P><FONT SIZE=3>Under our Netherlands &#128;5 million ($6.4 million at the June 30, 2006
exchange rate) credit facility, at June 30, 2006 there were &#128;3.6 million ($4.6
million) of borrowings outstanding under this line with interest payable at a rate of 5.0%
per annum. This facility expires in August 2007. </FONT></P>

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<P><FONT SIZE=3>We also have certain obligations with various parties that include
commitments to make future payments. Our principal commitments at June 30, 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>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Off-balance Sheet
Arrangements </FONT></H1>

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<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'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's liquidity or the availability of capital
resources. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Recent Accounting
Developments </FONT></H1>

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<P><FONT SIZE=3>In July 2006, the FASB issued Interpretation No. 48 (FIN 48),
"Accounting for Uncertainty in Income Taxes &#150; an interpretation of FASB
Statement No. 109." 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,
"Accounting for Income Taxes." 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>

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<P><FONT SIZE=3>In June 2006, the FASB ratified the consensus reached by the EITF on Issue
No. 06-3, "How Taxes Collected from Customers and Remitted to Governmental
Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net
Presentation)." 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, as its sales are currently recorded net of tax. </FONT></P>

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<P><FONT SIZE=3>In September 2006, the SEC issued Staff Accounting Bulletin No. 108
("SAB 108") "Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements". SAB 108 provides
interpretative guidance on how the effects of the carryover or reversal of prior year
misstatements should be considered in quantifying a current year misstatement. The SEC
staff believes that registrants should quantify errors using both a balance sheet and an
income statement approach and evaluate whether either approach results in quantifying a
misstatement that, when all relevant quantitative and qualitative factors are considered,
is material. This pronouncement is effective for fiscal years ending after November 15,
2006. The Company is currently evaluating the provisions of SAB 108. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item 3. <U>Quantitative and
Qualitative Disclosure About Market Risk</U>. </FONT></H1>

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<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>

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<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
June 30, 2006 we had no outstanding forward exchange contracts. </FONT></P>

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<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 June 30, 2006, the balance outstanding on our
variable rate debt was approximately $22.6 million. Based on our market sensitive
instruments as of June 30, 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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Item&nbsp;4. <U>Controls
and Procedures</U> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Disclosure Controls and
Procedures </FONT></H1>

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<P><FONT SIZE=3>The Company establishes and maintains disclosure controls and procedures
that are intended 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's rules and forms. Disclosure controls are also intended 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>

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<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>

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<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>

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<P><FONT SIZE=3>Based on their evaluation, as of June 30, 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's rules and forms. This
conclusion is based on our identification of three material weaknesses in our internal
controls over financial reporting as of June 30, 2006. The material weaknesses are: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%></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'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's operations and ensure the timely and accurate preparation of interim and
annual financial statements.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></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>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%></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>

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<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 reasonably 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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Material Weaknesses
Reported for the Year Ended December 31, 2005 </FONT></H1>

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<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'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>

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<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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<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>Hired additional staff, including two senior level managerial positions,
at Tiger Direct</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%></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>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%></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>

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<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>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Section 404 of the
Sarbanes-Oxley Act </FONT></H1>

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<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's
internal control over financial reporting and the Company's independent registered
public accounting firm will be required to audit that assessment beginning with fiscal
year 2008. </FONT></P>

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<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 June 30, 2006 discussed under the caption
"Disclosure Controls and Procedures," 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 June 30, 2006: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%></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>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%></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>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>Internal control deficiencies in processes related to recording accurately and in a timely
manner certain cash and revenue transactions with third party service providers.</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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's internal control over financial reporting as of December 31, 2007. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Changes in Internal
Control Over Financial Reporting </FONT></H1>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<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 June 30, 2006 that materially affected, or were reasonably likely to materially
affect, our internal control over financial reporting. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>PART II &#151; OTHER
INFORMATION </FONT></H1>

<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%></TD>
<TD WIDTH=5%>31</TD>
<TD WIDTH=85%>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%></TD>
<TD WIDTH=5%>32</TD>
<TD WIDTH=85%>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>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%></TD>
<TD WIDTH=5%>99.1</TD>
<TD WIDTH=85%>Charter of the Audit Committee of the Company's Board of Directors, as revised
on August 29, 2006.</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%></TD>
<TD WIDTH=5%>99.2</TD>
<TD WIDTH=85%>Charter of the Compensation Committee of the Company's Board of Directors, as revised
on August 29, 2006.</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%></TD>
<TD WIDTH=5%>99.3</TD>
<TD WIDTH=85%>Charter of the&nbsp;Nominating/Corporate Governance Committee of the Company's Board
of Directors, as revised on August 29, 2006.</TD>
</TR>
</TABLE>
<BR>
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%></TD>
<TD WIDTH=5%>99.4</TD>
<TD WIDTH=85%>Corporate Governance Guidelines and Principles of the Company's Board of Directors,
as revised on August 29, 2006.</TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B><U>SIGNATURES</U> </B></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:  December 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>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>2
<FILENAME>systemax-ex31_120106.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Head Right" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Exhibit 31 </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION UNDER SECTION 302 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>CERTIFICATION OF CHIEF
EXECUTIVE OFFICER</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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 "registrant");</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'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'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's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.</FONT></P>

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

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

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

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3>Dated: December 6, 2006</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds, Chief Executive Officer</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Right" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Exhibit 31 </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION UNDER SECTION 302 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B>CERTIFICATION OF CHIEF
FINANCIAL OFFICER</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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 "registrant");</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'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'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's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the registrant's internal control over financial
reporting.</FONT></P>

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

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

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

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3>Dated: December 6, 2006</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><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_120106.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Head Right" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=3>Exhibit 32 </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION PURSUANT TO SECTION 906 OF THE<BR>
SARBANES-OXLEY ACT OF 2002</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B><U>CERTIFICATION OF CHIEF
EXECUTIVE OFFICER</U></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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 June 30, 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>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3>Dated: December 6, 2006</FONT></P>


<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT SIZE=3><U>/s/ RICHARD LEEDS</U><BR>
Richard Leeds, Chief Executive Officer</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><B><U>CERTIFICATION OF CHIEF
FINANCIAL OFFICER</U></B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<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 June 30, 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>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT SIZE=3>Dated: December 6, 2006</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Default" -->
<P ALIGN=LEFT><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-99
<SEQUENCE>4
<FILENAME>systemax-ex991_120106.htm
<DESCRIPTION>EX-99.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Ex-99.1</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>AUDIT COMMITTEE CHARTER</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>FOR</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>SYSTEMAX INC.</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Minor Center" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3>(Revised August 29, 2006)</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Purpose of Committee</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The purpose of the Audit Committee (the "Committee") of the
Board of Directors (the "Board") of Systemax Inc. (the "Company") is to (a)
assist the Board with oversight of (i) the integrity of the Company's financial
statements, (ii) the Company's compliance with legal and regulatory
requirements, (iii) the Company's independent auditor's qualifications and
independence, and (iv) the performance of the Company's internal audit function
and independent auditors; and (b) prepare the report that U.S. Securities and
Exchange Commission rules require be included in the Company's annual proxy
statement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The function of the Committee is oversight. It is not the
Committee's responsibility to certify the Company's financial statements or to
guarantee the report of the independent auditor. The Company's management is
responsible for the (i) preparation, presentation and integrity of the Company's
financial statements, (ii) maintenance of appropriate accounting and financial
reporting principles and policies, and (iii) maintenance of internal controls
and procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent auditor is responsible for
planning and carrying out a proper audit and reviews. In fulfilling their
responsibilities hereunder, it is recognized that members of the Committee are
not full-time employees of the Company. As such, it is not the duty or
responsibility of the Committee or its members to conduct auditing or accounting
reviews or procedures, except to the extent described below under "Performance
Evaluations". Each member of the Committee shall be entitled to rely on (i) the
integrity of those persons and organizations within and outside the Company from
which it receives information and (ii) the accuracy of the financial and other
information provided to the Committee by such persons and organizations absent
actual knowledge to the contrary (which shall be promptly reported to the
Company's Board). In addition, the evaluation of the Company's financial
statements by the Committee is not of the same scope as, and does not involve
the extent of detail as, audits performed by the independent auditor, nor does
the Committee's evaluation substitute for the responsibilities of the Company's
management for preparing, or the independent auditor for auditing, the financial
statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Duties and Responsibilities</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The duties and responsibilities of the Committee are to:
</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>1.</TD>
<TD WIDTH=95%>Retain and terminate the Company's independent auditors (subject,
if applicable, to shareholder ratification). The Committee shall conduct a
re-proposal for the Company's independent auditors at least once every five
years. The Committee shall have the sole authority to approve and/or pre-approve
all audit engagement fees and terms, as well as all significant non-audit
engagements with the independent auditor. It is the Company's policy that any
independent auditor responsible for auditing the Company's financial statements
shall not provide any consulting services to the Company except for tax
consulting services and it is the Committee's responsibility to enforce this
policy. The Committee need not pre-approve non-audit services that fall within
the "De Minimis Exception" set forth in Section 10A(i)(1)(B) of the Securities
Exchange Act of 1934.</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>2.</TD>
<TD WIDTH=95%>At least annually, obtain and review a report by the independent
auditor describing: the independent auditor's internal quality-control
procedures; any material issues raised by the most recent internal
quality-control review, or peer review, of the independent auditor, or by any
inquiry or investigation by governmental or professional authorities, within the
preceding five years, respecting one or more independent audits carried out by
the independent auditor, and any steps taken to deal with any such issues; and
(to assess the auditor's independence) all relationships between the independent
auditor and the Company. After reviewing the foregoing report and the
independent auditor's work throughout the year, the Committee shall evaluate the
auditor's qualifications, performance and independence. This evaluation shall
include the review and evaluation of the lead partner of the independent auditor
and the appropriateness of rotating the audit firm itself. In making its
evaluation, the Committee shall take into account the opinions of management and
the Company's internal auditors (or other personnel responsible for the internal
audit function). The Committee shall present its conclusions with respect to the
independent auditor to the full Board.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>3.</TD>
<TD WIDTH=95%>Discuss the annual audited financial statements and quarterly
financial statements with management and the independent auditor, including the
Company's disclosures under "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>4.</TD>
<TD WIDTH=95%>Discuss earnings press releases, as well as financial information
and earnings guidance provided to analysts and rating agencies. This discussion
may be done generally (i.e., discussion of the types of information to be
disclosed and the type of presentation to be made). The Committee is not
required to discuss in advance each earnings press release or each instance in
which the Company provides earnings guidance.
</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>5.</TD>
<TD WIDTH=95%>As appropriate, obtain advice and assistance from outside legal,
accounting or other advisors.
</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>6.</TD>
<TD WIDTH=95%>Discuss policies with respect to risk assessment and risk
management. While it is the job of the chief executive officer and senior
management to assess and manage the Company's exposure to risk, the Committee
must discuss guidelines and policies to govern the process by which this is
handled. The Committee should discuss the Company's major financial risk
exposures and the steps management has taken to monitor and control such
exposures.
</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>7.</TD>
<TD WIDTH=95%>Periodically meet separately with management, with internal
auditors (or other personnel responsible for the internal audit function), and
with independent auditors.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>8.</TD>
<TD WIDTH=95%>Review with the independent auditor any audit problems or
difficulties and management's response. The Committee must regularly review with
the independent auditor any difficulties the auditor encountered in the course
of the audit work, including any restrictions on the scope of the independent
auditor's activities or on access to requested information, and any significant
disagreements with management. The review should also include discussion of the
responsibilities, budget and staffing of the Company's internal audit function.
The Company's Directors of Internal Audit shall report directly to the Company's
Chief Financial Officer and the Audit Committee at least four times per fiscal
year, or more often as necessary.
</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>9.</TD>
<TD WIDTH=95%>Set clear hiring policies for the hiring by the Company of
employees or former employees of the independent auditors.
</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>10.</TD>
<TD WIDTH=95%>Establish procedures for (i) the receipt, retention and treatment
of complaints received by the Company, regarding accounting, internal accounting
controls, or auditing matters and (ii) the confidential, anonymous submission by
employees of the Company of concerns regarding questionable accounting or
auditing matters.
</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>11.</TD>
<TD WIDTH=95%>Report regularly to the Board. The Committee should review with
the full Board any issues that arise with respect to the quality or integrity of
the Company's financial statements, the Company's compliance with legal or
regulatory requirements, the performance and independence of the Company's
independent auditors, or the performance of the internal audit function.
</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT>12.</TD>
<TD WIDTH=95%>Review with the Company's management the appropriateness and
accounting treatment of all related-party transactions, including corporate
acquisitions and sales of assets greater than $300,000.
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Membership</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The Committee shall consist of at least three members of the
Board, each of whom is, in the business judgment of the Board, "independent"
under Section 10A(m)(3) of the Securities Exchange Act of 1934, the rules of the
New York Stock Exchange and any other securities exchange on which the Company's
securities are listed. Each member of the Committee shall be financially
literate (or shall become so within a reasonable period of time after
appointment to the Committee), and at least one member of the Committee shall
have "accounting or related financial management expertise" as such
qualifications are interpreted by the Board in its business judgment, and
qualify as a "financial expert" as defined by the U.S. Securities and Exchange
Commission. No Committee member may serve on the audit committees of more than
two other public companies, unless the Company's Board has determined that such
service will not impair the effectiveness of the member's service on the
Committee. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The members of the Committee shall be appointed by the Board,
and shall serve at the pleasure of the Board for such term or terms as the Board
may determine. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The compensation to be paid by the Company to any Committee
member must consist solely of director's fees; provided, however, that pension
or other deferred compensation that is not contingent on future service to the
Company will not be deemed to violate this requirement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Structure and Operations</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>A majority of the Committee shall constitute a quorum. The Board
shall designate a member of the Committee as its chairperson. The Committee may
act by a majority of the members present at a meeting of the Committee. In the
event of a tie vote on any issue, the chairperson's vote shall decide the issue.
The Committee shall meet in person or telephonically at least four times a year
at a time and place determined by the Committee chairperson, with further
meetings to occur when deemed necessary or desirable by the Committee or its
chairperson. The Committee may delegate some or all of its duties to a
subcommittee comprising one or more members of the Committee. The Committee may
ask members of management or others whose advice and counsel are relevant to the
issues then being considered by the Committee to attend any meetings and to
provide such pertinent information as the Committee may request. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Performance Evaluation</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The Committee shall review the adequacy of this charter and
evaluate its performance hereunder at least annually and present such report to
the full Board. Such report shall include any recommended changes to this
charter. The Board shall also review and approve this charter at least annually.
</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>While the fundamental responsibility for the Company's financial
statements and disclosures rests with management and the independent auditor,
the Committee shall review: (i) major issues regarding accounting principles,
and financial statement presentations, including any significant changes in the
Company's selection or application of accounting principles, and major issues as
to the adequacy of the Company's internal controls and any special audit steps
adopted in light of material control deficiencies; (ii) analyses prepared by
management and/or the independent auditor setting forth significant financial
reporting issues and judgments made in connection with the preparation of the
financial statements, including analyses of the effects of using alternative
methods under generally accepted accounting principles ("GAAP") on the financial
statements; (iii) the effect of regulatory and accounting initiatives, as well
as off-balance sheet structures, on the financial statements of the Company; and
(iv) earnings press releases (paying particular attention to any use of "pro
forma," or "adjusted" non-GAAP, information), as well as financial information
and earnings guidance provided to analysts and rating agencies. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Resources and Authority of the Committee</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>In discharging its oversight responsibilities, the Committee
shall have unrestricted access to the Company's management, books and records
and the authority to retain outside counsel, accountants or other consultants in
the Committee's sole discretion. The Committee may direct any officer of the
Company, the independent auditor and/or the Company's internal audit staff to
inquire into and report to the Committee on any matter. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Nothing contained in this charter is intended to, or should be
construed as, creating any responsibility or liability of the members of the
Committee except to the extent otherwise provided under applicable Delaware law
which shall continue to set the legal standard for the conduct of the members of
the Committee. </FONT></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>systemax-ex992_120106.htm
<DESCRIPTION>EX-99.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Ex-99.2</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=4><B>COMPENSATION COMMITTEE CHARTER<BR>
FOR<BR>
SYSTEMAX INC.</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1" FSL="Workstation" -->
<P ALIGN=CENTER><FONT SIZE=3><B>(revised August 29, 2006)</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Purpose of Committee</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The purpose of the Compensation Committee (the "Committee") of
the Board of Directors (the "Board") of Systemax Inc. (the "Company") is (i) to
perform the functions described below under "Committee Duties and
Responsibilities" in order to discharge the Board's responsibilities relating to
compensation of the Company's executives and (ii) to produce an annual report on
executive compensation for inclusion in the Company's proxy statement, in
accordance with applicable rules and regulations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>In pursuing its purpose the Committee shall ensure that a proper
system of long-term and short-term compensation is in place for management, and
that compensation plans are appropriate and competitive and properly reflect the
objectives and performance of management and the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Duties and Responsibilities</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The Committee's duties and responsibilities are to: </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>1.</TD>
<TD WIDTH=90%>Review and approve corporate goals and objectives relevant to the
compensation of the Chief Executive Officer and, after an evaluation of the
Chief Executive Officer's performance in light of those goals and objectives,
set the compensation of the Chief Executive Officer. In determining the
long-term incentive component of the Chief Executive Officer's compensation, the
Committee should consider, among other factors, the Company's performance and
relative shareholder return, the value of similar incentive awards for chief
executive officers at comparable companies and the awards given to the Chief
Executive Officer in past years;</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>2.</TD>
<TD WIDTH=90%>Review, and make periodic recommendations to the Board with
respect to, the general compensation, benefits and perquisites policies and
practices of the Company, including, without limitation, the Company's
incentive-compensation plans and equity-based compensation plans. In
circumstances in which equity-based compensation plans are not subject to
shareholder approval, such plans shall be subject to Committee approval;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>3.</TD>
<TD WIDTH=90%>Produce an annual report on executive compensation for inclusion
in the Company's proxy statement, and otherwise report to the shareholders of
the Company in accordance with the rules and regulations of the U.S. Securities
and Exchange Commission; and</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>4.</TD>
<TD WIDTH=90%>Perform such other duties as the Board may assign to the Committee
with respect to the Company's compensation policies.</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Membership</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The Committee shall consist of at least three members of the
Board. The members of the Committee shall be appointed by the Board, and shall
serve at the pleasure of the Board for such term or terms as the Board may
determine. By the end of 2006 and thereafter only independent directors, as such
term is defined under the Sarbanes-Oxley Act and the pertinent listing standards
of the New York Stock Exchange, shall serve on the Committee. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Structure and Operations</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>A majority of the Committee shall constitute a quorum. The Board
shall designate a member of the Committee as its chairperson. The Committee may
act by a majority of the members present at a meeting of the Committee. In the
event of a tie vote on any issue, the chairperson's vote shall decide the issue.
The Committee shall meet in person or telephonically at least once a year, at a
time and place determined by the Committee chairperson, with further meetings to
occur when deemed necessary or desirable by the Committee or its chairperson.
The Committee may delegate some or all of its duties to a subcommittee
comprising one or more members of the Committee. The Committee may ask members
of management or others whose advice and counsel are relevant to the issues then
being considered by the Committee to attend any meetings and to provide such
pertinent information as the Committee may request. The Committee shall report
to the Board at least once a year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Performance Evaluation</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The Committee shall annually compare its performance with the
requirements of this charter, set forth its objectives for the next year and
recommend changes in this charter, if any, considered appropriate by the
Committee. Such evaluation shall be reported to the Board in such manner as the
Committee from time to time determines. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Surveys and Studies</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The Committee may conduct or authorize surveys or studies of
matters within the Committee's scope of responsibilities as described above,
including, but not limited to, surveys or studies of compensation practices in
relevant industries, to maintain the Company's competitiveness and ability to
recruit and retain highly qualified personnel, and may retain and terminate, at
the expense of the Company, independent counsel or other consultants necessary
to assist in any such survey or study. If any compensation consultant or firm is
to assist in the evaluation of director, chief executive officer or senior
executive compensation, the Committee shall have the sole authority to retain
and terminate the compensation consultant or firm and approve such firm or
person's fees and other retention terms. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Nothing contained in this charter is intended to, or should be
construed as, creating any responsibility or liability of the members of the
Committee except to the extent otherwise provided under applicable Delaware law
which shall continue to set the legal standard for the conduct of the members of
the Committee. </FONT></P>

<P><FONT SIZE=3>Adopted:&nbsp;&nbsp;February 28, 2003; amended August 29,
2006</FONT></P>



</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>6
<FILENAME>systemax-ex993_120106.htm
<DESCRIPTION>EX-99.3
<TEXT>
<HTML>
<HEAD>
<TITLE>Ex-99.3</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Default" -->
<P ALIGN=CENTER><FONT SIZE=4><B>NOMINATING/CORPORATE GOVERNANCE COMMITTEE<BR>
CHARTER FOR SYSTEMAX INC.</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>(revised August 29, 2006)</B></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Purpose of Committee</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The purpose of the Nominating/Corporate Governance Committee
(the "Committee") of the Board of Directors (the "Board") of Systemax Inc. (the
"Company") is to perform the functions described below under "Committee Goals
and Responsibilities". </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Goals and Responsibilities</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The goals and responsibilities of the Committee are to: </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>1.</TD>
<TD WIDTH=90%>Identify individuals qualified to become Board members, and to
recommend that the Board select the director nominees to stand for election as
directors at any meeting of stockholders and to fill any vacancy, however
created, in the Board. In nominating candidates, the Committee shall take into
consideration such factors as it deems appropriate, such as the experience,
skill and background of the candidates. The Committee may consider candidates
proposed by management, but is not required to do so;</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>2.</TD>
<TD WIDTH=90%>Identify, and recommend for appointment by the Board, Board
members qualified to fill vacancies on any committee of the Board, including the
Committee. In nominating a candidate for committee membership, the Committee
shall take into consideration the factors set forth in the charter of such
committee, if any, as well as any other factors it deems appropriate;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>3.</TD>
<TD WIDTH=90%>Develop and recommend to the Board a code of business conduct and
ethics applicable to the Company, and to review the code at least once a
year;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>4.</TD>
<TD WIDTH=90%>Develop and recommend to the Board a set of corporate governance
principles applicable to the Company, and to review those principles at least
once a year. Such principles shall include, at a minimum, the following
subjects: (i) director qualification standards, (ii) director responsibilities,
(iii) director access to management and, as necessary and appropriate,
independent advisors, (iv) director compensation, (v) director orientation and
continuing education, (vi) management succession, and (vii) annual performance
evaluation of the Board;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>5.</TD>
<TD WIDTH=90%>Prepare and deliver to the Board the evaluation required under
"Performance Evaluation" below;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>6.</TD>
<TD WIDTH=90%>Pursuant to procedures established by the Committee, exercise
oversight of the evaluation of the Board and management; and</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT></TD>
<TD WIDTH=5%>7.</TD>
<TD WIDTH=90%>Carry out other duties or responsibilities expressly delegated to
the Committee by the Board from time to time relating to the nomination of Board
and committee members and corporate governance.</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Committee Membership</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3><U>The Committee shall consist of at least three members of the
Board. The members of the Committee shall be appointed by the Board, and shall
serve at the pleasure of the Board for such term or terms as the Board may
determine. By the end of 2006 and thereafter only independent directors, as such
term is defined under the Sarbanes-Oxley Act and the pertinent listing standards
of the New York Stock Exchange, shall serve on the Committee. Committee
Structure and Operations</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>A majority of the Committee shall constitute a quorum. The Board
shall designate a member of the Committee as its chairperson. The Committee may
act by a majority of the members present at a meeting of the Committee. In the
event of a tie vote on any issue, the chairperson's vote shall decide the issue.
The Committee shall meet in person or telephonically at least once a year at a
time and place determined by the Committee chairperson, with further meetings to
occur when deemed necessary or desirable by the Committee or its chairperson.
The Committee may delegate some or all of its duties to a subcommittee
comprising one or more members of the Committee. The Committee may ask members
of management or others whose advice and counsel are relevant to the issues then
being considered by the Committee to attend any meetings and to provide such
pertinent information as the Committee may request. The Committee shall report
to the Board at least once a year. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Performance Evaluation</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Each year, the Committee shall compare its performance with the
requirements of this charter, set forth its objectives for the next year and
recommend changes in this charter, if any, considered appropriate by the
Committee. Such evaluation shall be reported to the Board in such manner as the
Committee from time to time determines. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Head Left" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><U>Resources and Authority of the
Committee</U></FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>The Committee shall have the resources and authority to
discharge its duties and responsibilities, including the authority to retain
counsel and other experts or consultants. The Committee shall have the sole
authority to select and retain a consultant or search firm to identify director
candidates, to terminate any such consultant or search firm retained by it, and
to approve the consultant or search firm's fees and other retention terms.
</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Workstation" -->
<P><FONT SIZE=3>Nothing contained in this charter is intended to, or should be
construed as, creating any responsibility or liability of the members of the
Committee except to the extent otherwise provided under applicable Delaware law
which shall continue to set the legal standard for the conduct of the members of
the Committee. </FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para Flush" FSL="Default" -->
<P><FONT SIZE=3>Adopted:&nbsp;&nbsp;February 28, 2003; amended August 29, 2006
</FONT></P>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>7
<FILENAME>systemax-ex994_120106.htm
<DESCRIPTION>EX-99.4
<TEXT>
<HTML>
<HEAD>
<TITLE>Ex-99.4</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Stroock Head Major Center Bold" FSL="Default" -->
<P ALIGN=CENTER><FONT SIZE=3><B>SYSTEMAX INC.</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1" FSL="Default" -->
<P ALIGN=CENTER><FONT SIZE=3><B>Board of Directors</B> </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1" FSL="Default" -->
<P ALIGN=CENTER><FONT SIZE=3><B>Corporate Governance Guidelines and Principles</B>
</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold 1" FSL="Default" -->
<P ALIGN=CENTER><FONT SIZE=3><B>(revised August 29, 2006)</B> </FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>I</B></TD>
<TD WIDTH=95%><B>Responsibilities of the Board and Management</B>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Workstation" -->
<P><FONT SIZE=3><B>A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Role of the Board</U></B>.
The Board of Directors (the "Board") of Systemax Inc. (the "Company") is elected
by and accountable to the stockholders of the Company (the "Stockholders"). The
Board is primarily responsible for the strategic direction, oversight and
control of the management of the Company for the benefit of the Stockholders.
The Board must exercise sound, informed and independent business
judgment.</FONT></P>

<!-- MARKER FORMAT-SHEET="Stroock Para (List) Flush Bold" FSL="Default" -->
<P><FONT SIZE=3><B>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Functions of the Board</U></B>. The
Board's specific responsibilities include:</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>reviewing, approving and monitoring fundamental financial and
business strategies and major corporate actions;</TD>
</TR>
</TABLE>
<BR>



<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>
ensuring processes are in place for maintaining the integrity of the Company,
including the integrity of the financial statements, the integrity of compliance
with legal and ethical obligations, the integrity of relationships with
customers and suppliers, and the integrity of relationships with lenders and
Stockholders;</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>assessing major risks facing the Company and reviewing options for
their mitigation;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>selecting, monitoring and evaluating the performance of members of
the Board and its committees;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>selecting, evaluating and compensating the Chief Executive Officer
("CEO") and overseeing CEO succession planning; and</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>providing counsel and oversight on the selection, evaluation,
development and compensation of senior management.</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Role of
Management</U></B>. The Board delegates to the CEO and the other executive
officers the authority and responsibility for managing the business of the
Company in a manner consistent with the Company's standards and practices and in
accordance with the Board's specific plans, instructions and directions.
Management must seek the advice and, in appropriate situations, approval of the
Board with respect to the Company's activities. The Chief Executive Officer of
the Company shall be prohibited from serving on the Board of Directors of any
other public for-profit corporations, other than any public for-profit
corporation that is an affiliate of the Company.</FONT></P>

<P><FONT SIZE=3><B>D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Board Self Evaluation</U></B>. The Board and each committee should perform an
annual evaluation under the direction of the Nominating/Corporate Governance
Committee of its performance to determine whether it is operating
effectively.</FONT></P>

<P><FONT SIZE=3><B>E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Management Succession and Annual CEO Evaluation</U></B>. The non-management
directors of the Compensation Committee should conduct an annual review of the
CEO's performance based upon a formal evaluation process and specific criteria
determined in advance. The Board should approve and maintain a succession plan
for the CEO and other senior management, based upon recommendations from senior
management and the Nominating/Corporate Governance Committee.</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>II</B></TD>
<TD WIDTH=95%><B>Board Selection and Composition</B></TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3><B>A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Board Size</U></B>. The Board should be of a size sufficient to reflect the
size and complexity of the Company's business and the need for diverse view
points. The Board believes that six to nine members is an appropriate size of
the Board based on the Company's current state of affairs. The Board should
periodically review and if necessary change its size in light of changes in the
Company's businesses.</FONT></P>

<P><FONT SIZE=3><B>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Independence of Directors</U></B>. The Board recognizes that the Company is
currently deemed a "controlled company" under New York Stock Exchange ("NYSE")
rules (in that more than 50% of the voting power of the Company is held by the
Leeds family, including Richard Leeds, Robert Leeds and Bruce Leeds, all of whom
are directors and executive officers of the Company.) As a "controlled company"
the Company is not subject to the NYSE requirement (Section 303A of the NYSE
Corporate Governance Rules) that listed companies have a majority of independent
directors. The Board believes this rule exception is warranted in the case of
the Company because the three Board members who collectively own a controlling
interest in the Company effectively represent the stockholders interests.
Nevertheless the Board believes that non-management, "independent" directors
must play a significant, active role as part of the Board. In determining the
"independence" of a director, the Board must be guided by the definition of
"independent director" under the Sarbanes- Oxley Act and the pertinent listing
standards of the NYSE. The full Board should make an affirmative determination
as to the independence of each Board member, which determination, together with
the standards applied in making them, should be disclosed to the
Stockholders.</FONT></P>

<P><FONT SIZE=3><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Nomination and Selection of Directors</U></B>. The Board as a whole will be
responsible for nominating individuals for election to the Board by the
Stockholders and for filling vacancies on the Board that may occur between
annual meetings of the Stockholders. The Nominating/Corporate Governance
Committee will be responsible for identifying, screening, and recommending
candidates to the entire Board based upon the appropriate skills and
characteristics required of Board members in the context of the current make-up
of the Board and will consider suggestions for potential directors from other
directors or Stockholders.</FONT></P>

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<P><FONT SIZE=3><B>D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Expectations of Individual Directors</U></B>. Board members are expected to
rigorously prepare for, attend and participate in all Board and applicable
Committee meetings. Each Board member is expected to ensure that other existing
and planned future commitments, including service on other boards, do not
materially interfere with the member's service as an outstanding director. These
other commitments will be considered by the Nominating/Corporate Governance
Committee and the Board when reviewing Board candidates and in connection with
the Board's annual self-assessment process.</FONT></P>

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<P><FONT SIZE=3><B>E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Board Compensation</U></B>. The Board shall determine compensation for its
members based on recommendations of the Compensation Committee after
consideration of relevant factors, including the Board compensation paid by
comparable entities. Members of management who are also directors will not
receive additional compensation for their service on the Board. The compensation
should be a mix of cash and equity-based compensation which directly correlates
with the market value of the Company. Director's fees must be the sole
renumeration a member of the Audit Committee receives from the
Company.</FONT></P>

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<P><FONT SIZE=3><B>F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Term Limits and Retirement Policy</U></B>. The Board does not believe it
should establish term limits or a rigid retirement policy for directors. While
these policies potentially foster fresh ideas and viewpoints for the Board, the
Board believes the disadvantages of losing the contribution of directors who
over time have developed increasing insight into the Company outweigh any
potential benefits.</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>III</B></TD>
<TD WIDTH=95%><B>Board Meetings and Operations</B></TD>
</TR>
</TABLE>
<BR>

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<P><FONT SIZE=3><B>A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Scheduling of Board Meetings</U></B>. The Board must have regularly scheduled
periodic meetings in order to review and discuss management reports on the
Company's performance, strategies, prospects and issues. Special meetings should
be held as necessary.</FONT></P>

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<P><FONT SIZE=3><B>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Setting of Agenda and Advance Distribution of Board Materials</U></B>. The
Chairman of the Board will set the agenda for each Board meeting after taking
into account suggestions from other members of the Board. The Secretary shall
distribute the agenda and all other relevant information (subject to appropriate
confidentiality concerns) pertaining to matters to be discussed at the upcoming
Board meeting to all members of the Board sufficiently in advance of the
meeting.</FONT></P>

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<P><FONT SIZE=3><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Access to Management and Employees</U></B>. The Board should have complete
and unfettered access to Company management and employees (without management
present) in order to ensure that directors can ask all questions and glean all
information necessary to fulfill their duties. The Board may specify a protocol
for making such inquiries. The Board should invite senior management and other
Company personnel to attend relevant portions of Board and committee
meetings.</FONT></P>

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<P><FONT SIZE=3><B>D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Outside Advisors</U></B>.
The Board and each Committee should have the authority to engage outside
experts, advisers and counsel to the extent it considers appropriate to assist
it in its work, at the Company's expense.</FONT></P>

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<P><FONT SIZE=3><B>E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Non-Management Executive Sessions</U></B>. The non-management directors
should meet periodically in executive sessions without management or inside
directors present as a part of its routine activities and deliberations. The
Lead Independent Director, if present, or if not, a non-management director
chosen by the non-management directors, shall preside at each
meeting.</FONT></P>

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<P><FONT SIZE=3>The presiding person may be rotated and does not have to be the
same at each meeting. The Company must establish and disclose procedures whereby
interested persons may communicate directly with non-management directors. Any
non-management director who thinks an executive session of non-management
directors is desirable can so indicate to the Chairman of the Board and such a
meeting will be held. </FONT></P>

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<P><FONT SIZE=3><B>F.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Attendance and Director Orientation and Continuing Education</U></B>.
Directors are expected to attend all scheduled board and committee meetings and
be prepared for group deliberation and discussion. The Board should establish a
director orientation and continuing education program for its
members.</FONT></P>

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<P><FONT SIZE=3><B>G.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Reporting of Concerns to the Audit Committee</U></B>. The Board should
appoint the chairman of the Audit Committee as the person to whom anyone should
voice concerns about the Company's conduct, or about the Company's accounting,
internal controls and procedures or disclosure controls and procedures. The
Board must adopt procedures for the receipt and handling of these concerns,
which must include measures to ensure the anonymity of the person expressing the
concerns and/or the confidentiality of the concerns and to prevent retaliatory
or other adverse action by management.</FONT></P>

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<P><FONT SIZE=3><B>H.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Minutes</U></B>. The Board shall keep typed meeting minutes from their
regular and/or special meetings and circulate to the directors prior to the
subsequent Board meeting, provided that such meeting takes place at least two
weeks following the previous meeting. All such minutes shall be maintained for
at least five years.</FONT></P>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5% ALIGN=LEFT><B>IV</B></TD>
<TD WIDTH=95%><B>Board Committees</B></TD>
</TR>
</TABLE>
<BR>

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<P><FONT SIZE=3>The Board of Directors should have an Audit Committee, a
Compensation Committee and a Nominating/Corporate Governance Committee. The
Audit Committee should be composed entirely of "independent" directors and the
Compensation and Nominating/Corporate Governance Committees should be composed
of a majority of "independent" directors, and effective by the end of 2006 and
thereafter solely of "independent" directors. The Board shall appoint the
members and chairman of each committee. Each committee must have a written
charter, approved by the Board, which describes the Committee's general
authority and responsibilities. Each committee will undertake an annual review
of its charter, and will work with the Nominating/Corporate Governance Committee
and the Board to make such revisions as are considered appropriate. The Board's
committees shall have standing authorization, on their own initiative, to retain
legal or other advisors of their choice, who shall report directly to the
Chairman of the Board and/or the Lead Independent Director. The Board's
committees shall meet independently and in separate sessions from the Board's
regular and/or special meetings at least twice per fiscal year, <I>provided,
however</I>, the Audit Committee shall meet at least four times per year and
there shall be no yearly minimum of Executive Committee meetings. The Lead
Independent Director shall be a member of any Executive Committee. The
committees shall keep typed meeting minutes from their regular and/or special
meetings and circulate to the members of the committee and the Board prior to
the subsequent committee and/or Board meeting, provided that such meeting takes
place at least two weeks following the previous meeting. All such minutes shall
be maintained for at least five years. </FONT></P>

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<P><FONT SIZE=3><B>A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Audit Committee</U></B>.
The principal duties of the Audit Committee should be:</FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to assist the Board in fulfilling its oversight responsibilities
by reviewing: the financial reports and other financial information the Company
provides to any governmental body or the public; the Company's systems of
internal controls, established by management and the Board, regarding finance,
accounting, legal compliance and ethics; and the Company's auditing, accounting
and financial reporting processes generally. Consistent with this function, the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, Company policies, procedures and practices at all levels;</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to serve as an independent and objective body to monitor the
Company's financial reporting process and internal control system;</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to select, evaluate and, when appropriate, replace the Company's
independent auditors; and</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to review and appraise the audit efforts of the Company's
independent accountants and internal auditing department; and to provide an open
avenue of communication among the independent accountants, financial and senior
management, the internal auditing department, and the Board.</TD>
</TR>
</TABLE>
<BR>

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<P><FONT SIZE=3><B>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Compensation Committee</U></B>. The principal duties of the Compensation
Committee should be:</FONT></P>


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<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to ensure the Company's senior executives are compensated
effectively in a manner consistent with the Company's stated compensation
strategy, internal equity considerations, competitive practice, and the
requirements of the appropriate regulatory bodies; and</TD>
</TR>
</TABLE>
<BR>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to communicate to Stockholders the Company's compensation policies
and the reasoning behind such policies, as required by the SEC.</TD>
</TR>
</TABLE>
<BR>

<P><FONT SIZE=3><B>C.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Nominating/Corporate Governance Committee</U></B>. The principal duties of
the Nominating/Corporate Governance Committee should be:</FONT></P>


<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to recommend to the Board proposed nominees for election to the
Board by the Stockholders at annual meetings, including an annual review as to
the renominations of incumbents and proposed nominees for election by the Board
to fill vacancies which occur between Stockholder meetings; and</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%></TD>
<TD WIDTH=5%>&#149;</TD>
<TD WIDTH=90%>to make recommendations to the Board regarding corporate
governance matters and practices.</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Workstation" -->
<P ALIGN=LEFT><FONT SIZE=3><B>D.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Code of Business Conduct and Ethics</U></B> </FONT></P>

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<P><FONT SIZE=3>The Board shall approve a code of business conduct and ethics
for directors, officers and employees. Any revisions to, or waivers under, the
code of conduct must be reported to and approved by the Board and disclosed in
accordance with the pertinent listing requirements of the New York Stock
Exchange or applicable law. </FONT></P>

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<P ALIGN=LEFT><FONT SIZE=3><B>E.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Stockholder Approval Requirements</U></B> </FONT></P>

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<P><FONT SIZE=3>Stockholder approval must be obtained for all
equity-compensation plans, as well as material revisions to existing plans,
subject to certain limited exceptions, in accordance with the pertinent listing
requirements of the NYSE or applicable law. </FONT></P>

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