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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





---




FORM 10-Q





Quarterly Report Pursuant to Section 13 or 15(d)


of the Securities Exchange Act of 1934





For the three months ended June 30, 2002





Commission File Number 0-14371





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COMPUCOM SYSTEMS, INC.


(Exact name of Registrant as specified in its charter)





Delaware

38-2363156(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification Number)7171 Forest Lane, Dallas, TX

75230(Address of principal executive offices)

(Zip Code)Registrants telephone number, including area code:

(972) 856-3600





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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.





Yes  x    No  ̈





The number of shares of the Registrants common stock outstanding as of August 12, 2002 was 48,665,833
shares.





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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Index





PagePART I.    FINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)Condensed Consolidated Balance Sheets June 30, 2002 and December 31, 2001

3Condensed Consolidated Statements of Operations Three and six months ended June 30, 2002 and 2001

4Condensed Consolidated Statements of Cash Flows Six months ended June 30, 2002 and 2001

5Notes to Condensed Consolidated Financial Statements

6Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

15Item 3.

Quantitative and Qualitative Disclosure About Market Risk

26PART II.    OTHER INFORMATIONItem 4.

Submission of Matters to a Vote of Security Holders

27Item 6.

Exhibits and Reports on Form 8-K

27




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Condensed Consolidated Balance Sheets


(In thousands)


(unaudited)





June 30, 2002

December 31, 2001AssetsCurrent assets:Cash and cash equivalents

$
117,315

$
123,150Receivables, net


162,901


134,980Inventories


35,692


29,608Other


5,406


8,131Total current assets


321,314


295,869Property and equipment, net


27,664


31,566Goodwill


101,804


99,643Intangible assets, net


9,610


11,446Other


4,254


5,559Total assets

$
464,646

$
444,083Liabilities and Stockholders EquityCurrent liabilities:Accounts payable

$
156,550

$
120,173Accrued liabilities


64,574


88,598Total current liabilities


221,124


208,771Stockholders equity:Preferred stock


15,000


15,000Common stock


486


498Additional paid-in capital


72,757


76,252Retained earnings


155,279


149,131Treasury stock





(5,569
)Total stockholders equity


243,522


235,312Total liabilities and stockholders equity

$
464,646

$
444,083





See accompanying notes to condensed consolidated financial statements.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Condensed Consolidated Statements of Operations


Three and Six Months Ended June 30, 2002 and 2001


(In thousands, except per share amounts)


(unaudited)





Three months ended June 30,

Six months ended June 30,2002

2001

2002

2001Revenue:Product

$
350,290

$
419,718

$
609,559

$
902,079Service


75,868


68,991


143,547


140,918Total revenue


426,158


488,709


753,106


1,042,997Cost of revenue:Product


324,011


381,824


556,549


822,095Service


47,893


43,410


92,024


91,744Total cost of revenue


371,904


425,234


648,573


913,839Gross margin


54,254


63,475


104,533


129,158Operating expenses:Selling


11,510


17,553


23,819


37,102Service


11,090


13,745


21,916


27,315General and administrative


18,863


22,267


36,495


44,478Depreciation and amortization


4,687


5,720


9,474


11,389Total operating expenses


46,150


59,285


91,704


120,284Earnings from operations


8,104


4,190


12,829


8,874Financing expenses, net


241


748


550


2,477Earnings before income taxes and cumulative effect of a change in accounting principle for negative
goodwill


7,863


3,442


12,279


6,397Income taxes


3,144


1,377


4,910


2,559Earnings before cumulative effect of a change in accounting principle for negative goodwill


4,719


2,065


7,369


3,838Cumulative effect of a change in accounting principle for negative goodwill, net of income taxes








707


Net earnings

$
4,719

$
2,065

$
8,076

$
3,838Basic and diluted earnings per common share:Earnings before cumulative effect of a change in accounting principle for negative goodwill

$
.09

$
.04

$
.14

$
.07Cumulative effect of a change in accounting principle for negative goodwill, net of income taxes








.01


Net earnings

$
.09

$
.04

$
.15

$
.07Average common shares outstanding:Basic


48,429


47,777


48,401


47,908Diluted


50,034


48,205


49,547


48,120





See accompanying notes to condensed consolidated financial statements.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Condensed Consolidated Statements of Cash Flows


(In thousands)


(unaudited)


Six months ended June 30,2002


2001Cash flows from operating activities:Earnings before cumulative effect of a change in accounting principle for negative goodwill

$
7,369


$
3,838Adjustments to reconcile earnings before cumulative effect of a change in accounting principle for negative goodwill to
net cash provided by (used in) operating activities:Depreciation and amortization


9,474



11,389Deferred income taxes


791



(1,102
)Changes in assets and liabilities, excluding effects from acquisitions:Receivables


(27,921
)


137,767Inventories


(6,084
)


50,634Other current assets


(1,172
)


(266
)Accounts payable


36,377



8,040Accrued liabilities and other


(21,660
)


(22,717
)Net cash provided by (used in) operating activities


(2,826
)


187,583Cash flows from investing activities:Capital expenditures


(3,143
)


(10,800
)Business acquisitions, net of cash acquired






(79,309
)Net cash used in investing activities


(3,143
)


(90,109
)Cash flows from financing activities:Borrowings under revolver






8,000Repayments of revolver






(8,000
)Issuance of common stock


584



375Preferred stock dividends


(450
)


(450
)Net cash provided by (used in) financing activities


134



(75
)Net increase (decrease) in cash and cash equivalents


(5,835
)


97,399Cash and cash equivalents at beginning of period


123,150



14,857Cash and cash equivalents at end of period

$
117,315


$
112,256





See accompanying notes to condensed consolidated financial statements.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







(1)    General





The accompanying unaudited condensed consolidated interim financial statements should be read in conjunction with the consolidated
financial statements and the summary of significant accounting policies and notes thereto included in the 2001 Annual Report on Form 10-K for CompuCom Systems, Inc. (CompuCom or the Company). In the opinion of management, the
accompanying unaudited condensed consolidated interim financial statements contain all adjustments considered necessary for the fair presentation of the results for these interim periods. Interim results are not necessarily indicative of results
expected for the full year.





(2)    Contingencies





There have been no material developments involving claims and legal actions involving CompuCom during the first half of 2002. CompuCom is involved in various claims and
legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on CompuComs consolidated financial position and results of operations,
taken as a whole.





(3)    Earnings per share





Basic earnings per common share have been computed based on net earnings after preferred stock dividend requirements and the weighted average number of common shares
outstanding during each period. Diluted earnings per common share assumes conversion of dilutive convertible securities into common stock at the later of the beginning of the period or date of issuance and includes the add-back of related dividends,
as required. Diluted earnings per common share also assumes the exercise of all options with an exercise price below the average market price of the Companys stock, at the later of the beginning of the period or date of issuance, regardless of
whether the options are vested or not. Earnings per common share have been computed as follows (in thousands, except per share amounts):





Three months ended June 30, 2002

Six months ended June 30, 2002Earnings (Numerator)


Shares (Denominator)

EPS

Earnings (Numerator)


Shares (Denominator)

EPSEarnings before cumulative effect of a change in accounting principle for negative goodwill

$
4,719







$
7,369Less:  Preferred stock dividends


(225
)







(450
)Basic EPSEarnings available to common stockholders before cumulative effect of a change in accounting principle for negative
goodwill


4,494


48,429

$
.09


6,919


48,401

$
.14Effect of dilutive securitiesStock options





1,605








1,146Diluted EPSEarnings available + assumed conversions

$
4,494


50,034

$
.09

$
6,919


49,547

$
.14




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







Three months ended June 30, 2002

Six months ended June 30, 2002Earnings (Numerator)


Shares (Denominator)

EPS

Earnings (Numerator)


Shares (Denominator)

EPSNet earnings

$
2,065







$
3,838Less:  Preferred stock dividends


(225
)







(450
)Basic EPSEarnings available to common stockholders


1,840


47,777

$
.04


3,388


47,908

$
.07Effect of dilutive securitiesStock options





428








212Diluted EPSEarnings available + assumed conversions

$
1,840


48,205

$
.04

$
3,388


48,120

$
.07





CompuCom has excluded 4,054,469 and 4,239,231 shares from its
calculations of diluted earnings per share for the three and six months ended June 30, 2002, respectively, and has excluded 6,829,001 and 6,931,632 shares from its calculations of diluted earnings per share for the three and six months ended June
30, 2001, respectively, as they are considered anti-dilutive.





(4)    Business Combinations





During 2001, CompuCom consummated four business combinations (collectively, the 2001 acquisitions). The 2001
acquisitions have been accounted for as purchase transactions. Accordingly, the consolidated financial statements reflect the operations of the acquired businesses from the respective dates of acquisition. The aggregate purchase price of the 2001
acquisitions, net of cash acquired, was approximately $121 million. CompuComs allocation of the aggregate purchase price for the 2001 acquisitions consisted of approximately $93 million to current assets, $1 million to non-current assets, $31
million to goodwill, $6 million to intangible assets with definite useful lives, and $10 million to current liabilities. CompuCom used available cash to finance the 2001 acquisitions. In accordance with Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other Intangible Assets, approximately $1.3 million of negative goodwill associated with the 2001 MicroAge Technology Services, L.L.C. acquisition was recognized in the Condensed Consolidated
Statements of Operations in the first quarter of 2002 as a cumulative effect of a change in accounting principle.





The following unaudited pro forma financial information presents the combined results of operations as if the 2001 acquisitions had occurred as of the beginning of 2001, after giving effect to certain adjustments, including
amortization of intangibles with definite useful lives, increased financing expense on debt assumed to have been incurred in relation to the 2001 acquisitions, and related income tax effects. The pro forma results do not necessarily represent
results that would have occurred if the acquisitions had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)


Three Months Ended June 30, 2001

Six Months Ended June 30, 2001(in thousands, except per share data)Revenue

$
507,204

$
1,081,132Net earnings

$
2,754

$
5,186Diluted earnings per share

$
0.05

$
0.10





(5)    Goodwill and Intangible Assets





In July 2001, the Financial Accounting Standards Board issued SFAS No. 142, Goodwill and Other Intangible Assets. CompuCom has
adopted the provisions of SFAS No. 142 effective January 1, 2002. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized but instead tested for impairment at least annually. SFAS No. 142 also
requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values.





Under SFAS No. 142, the Company was required to test all existing goodwill and intangible assets with indefinite useful lives for impairment as of January 1, 2002, on a reporting unit
basis. A reporting unit can be the same as an operating segment, unless discrete financial information is prepared and regularly reviewed by management at a component level, generally one level below the operating segment level. In this
case, the component is the reporting unit. A fair value approach was used to test goodwill for impairment. Under the fair value approach, an impairment charge would be recognized for the amount, if any, by which the carrying amount of goodwill
exceeds its fair value. The valuation of each reporting unit was based on combinations of both the income and market valuation approaches. CompuCom completed the required testing during the second quarter 2002. As a result of the goodwill impairment
tests, no impairment losses were indicated.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







The following table provides comparative earnings and earnings per
share had the non-amortization provisions of SFAS No. 142 been adopted for all periods presented:





Three Months Ended June 30,

Six Months Ended June 30,2002

2001

2002

2001(in thousands, except per share data)Impact on Statement of Operations:Earnings before cumulative effect of a change in accounting principle for negative goodwill

$
4,719

$
2,065

$
7,369

$
3,838Add back goodwill amortization





848





1,697Adjusted earnings before cumulative effect of a change in accounting principle for negative goodwill


4,719


2,913


7,369


5,535Cumulative effect of a change in accounting principle for negative goodwill, net of income taxes








707


Adjusted net earnings

$
4,719

$
2,913

$
8,076

$
5,535Impact on Basic and Fully Diluted Earnings Per Share:Earnings before cumulative effect of a change in accounting principle for negative goodwill

$
0.09

$
0.04

$
0.14

$
0.07Add back goodwill amortization





0.02





0.04Adjusted earnings before cumulative effect of a change in accounting principle for negative goodwill


0.09


0.06


0.14


0.11Cumulative effect of a change in accounting principle for negative goodwill, net of income taxes








0.01


Adjusted net earnings

$
0.09

$
0.06

$
0.15

$
0.11





The following is a summary of changes in the carrying amount of
goodwill by segment for the six months ended June 30, 2002:





Product

Service

Unallocated


Total(in thousands)Balance at December 31, 2001

$
59,402

$
41,494

$
(1,253
)

$
99,643Cumulative change in accounting principle for negative goodwill








1,253



1,253Additions





908






908Balance at June 30, 2002

$
59,402

$
42,402

$



$
101,804




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







In accordance with SFAS No. 142, approximately $1.3 million of
negative goodwill associated with the 2001 MicroAge Technology Services, L.L.C. acquisition was recognized in the Condensed Consolidated Statements of Operations in the first quarter of 2002 as a cumulative effect of a change in accounting
principle. Goodwill additions during six months ended June 30, 2002 resulted from adjustments to the preliminary purchase price allocations related to the 2001 acquisitions.





Intangible assets with definite useful lives are amortized over their respective estimated useful lives to their estimated residual values. The following table provides a
summary of CompuComs intangible assets with definite useful lives as of June 30, 2002 and December 31, 2001 (in thousands):





June 30, 2002Amortization Period

Gross Carrying Value

Accumulated Amortization

NetCustomer-related

6  11 years

$
15,467

$
7,920

$
7,547Contract-related

24 36 months


2,840


777


2,063Total



$
18,307

$
8,697

$
9,610December 31, 2001Amortization Period

Gross Carrying Value

Accumulated Amortization

NetCustomer-related

6  11 years

$
15,467

$
6,690

$
8,777Contract-related

24  36 months


2,840


171


2,669Total



$
18,307

$
6,861

$
11,446





Amortization expense related to intangible assets with definite
useful lives was $0.9 million and $1.8 million for the three and six months ended June 30, 2002, respectively, and $0.5 million and $1.1 million for the three and six months ended June 30, 2001, respectively. The following table provides estimated
amortization expense related to intangible assets with definite useful lives for each of the years in the five year period ending December 31, 2006:





Remainder of 2002

$
1,7922003


3,1462004


2,4942005


5792006 and thereafter


1,599$
9,610




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







(6)    Restructuring Charges





During the first quarter of 2000, CompuCom effected a restructuring plan designed to reduce its cost structure by closing its distribution
facility located in Houston, Texas, closing and consolidating three office facilities, and reducing its workforce. As a result, CompuCom recorded a restructuring charge of $5.2 million. During the fourth quarter of 1998, CompuCom recorded a $16.4
million restructuring charge, primarily consisting of costs associated with the closing of facilities and disposing of related fixed assets as well as employee severance and benefits related to a reduction in workforce.





The following table provides a summary rollforward by category of the activity in CompuComs restructuring accrual for the six months
ended June 30, 2002:





Accrual at December 31, 2001

Cash Payments


Accrual at June 30, 2002(in thousands)Lease termination costs

$
1,861

$
(154
)

$
1,707





The remaining accrual at June 30, 2002 is reflected in Accrued
liabilities on CompuComs Condensed Consolidated Balance Sheet and relates to eight leases for former office sites that have not been terminated, two of which have not been sublet. The Company believes the restructuring accrual is adequate.
Differences, if any, between the estimated amount accrued and actual amounts paid will be reflected in operating expenses in future periods.





(7)    Segment Information





CompuCom defines its operations as two
distinct businesses1) sales of personal computer-related products (product), which primarily includes desktop, networking, storage, and mobile computing products, as well as peripherals and software-related products and licenses
and 2) services (service), which is primarily derived from application design, development and maintenance, all aspects of desktop outsourcing, including field engineering, as well as help desk and LAN/WAN network outsourcing,
configuration, asset tracking, software management, mobile computing services, IT consulting, training, and services provided in support of certain manufacturers direct fulfillment initiatives. CompuCom measures segment earnings as operating
earnings, defined as income before financing expenses and income taxes. During the first quarter of 2002, CompuCom revised its segment measures for allocating operating expenses between segments. CompuCom believes the new segment measures provide
better information for the chief operating decision maker to assess segment performance and make resource allocation decisions. This change resulted in decreases of approximately $4.4 million and $8.8 million for the three and six months ended June
30, 2002, respectively, of allocated operating expenses to the product segment and corresponding increases by the same amounts to the services segment. In accordance with SFAS No. 131, prior period amounts have not been restated.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







Three Months Ended June 30, 2002


Operating Results

Product

Service

Total(in thousands)Revenues

$
350,290

$
75,868

$
426,158Gross margin


26,279


27,975


54,254Operating earnings


2,083


6,021


8,104Financing expenses, net








(241
)Earnings before income taxes and cumulative effect of a change in accounting for negative goodwill







$
7,863Three Months Ended June 30, 2001Operating Results

Product

Service

Total


(in thousands)Revenues

$
419,718


$
68,991

$
488,709Gross margin


37,894



25,581


63,475Operating earnings (loss)


(3,032
)


7,222


4,190Financing expenses, net









(748
)Earnings before income taxes and cumulative effect of a change in accounting for negative goodwill








$
3,442




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







Six Months Ended June 30, 2002


Operating Results

Product


Service

Total(in thousands)Revenues

$
609,559


$
143,547

$
753,106Gross margin


53,010



51,523


104,533Operating earnings


4,533



8,296


12,829Financing expenses, net









(550
)Earnings before income taxes and cumulative effect of a change in accounting for negative goodwill








$
12,279Six Months Ended June 30, 2001Operating Results

Product


Service

Total(in thousands)Revenues

$
902,079


$
140,918

$
1,042,997Gross margin


79,984



49,174


129,158Operating earnings (loss)


(3,923
)


12,797


8,874Financing expenses, net









(2,477
)Earnings before income taxes and cumulative effect of a change in accounting for negative goodwill








$
6,397





(8)    Financing Arrangements





At June 30, 2002, CompuCom had financing arrangements of $150 million, consisting of a $125 million receivable securitization
(Securitization) and a $25 million working capital line of credit (Revolver). Consistent with its financing requirements, CompuCom reduced the Revolver facility from $50 million to $25 million in May 2002.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Notes to Condensed Consolidated Financial Statements


June 30, 2002


(unaudited)







The Securitizations pricing is based on a designated short-term
interest rate plus an agreed upon spread. The Securitization allows CompuCom to sell, on an ongoing basis, its trade accounts receivable (receivables) to a consolidated, wholly-owned bankruptcy-remote special purpose subsidiary (the
SPS). The risk that CompuCom bears from bad debt losses on receivables sold is addressed in its allowance for doubtful accounts. The SPS has sold and, subject to certain conditions, may from time to time sell, an undivided ownership
interest in the pool of purchased receivables to financial institutions. As collections reduce receivables balances sold, CompuCom may sell interests in new receivables to bring the amount available up to the maximum allowed. The sales are reflected
as reductions of Receivables in the Condensed Consolidated Balance Sheets and are included in the net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. The proceeds from the sale of receivables are used
primarily to fund working capital requirements. CompuCom is retained as servicer of the receivables; however, the cost of servicing is not material. Discounts associated with the sale of receivables totaled $0.5 million and $0.9 million for the
three and six months ended June 30, 2002, respectively, and $1.5 million and $3.7 million for the three and six months ended June 30, 2001, respectively, and are included in Financing expenses, net, in the Condensed Consolidated Statements of
Operations. Amounts outstanding as sold receivables as of June 30, 2002 consisted of two certificates totaling $60 million, one certificate for $10 million which initially had an April 2002 maturity date but has been extended to a September 2002
maturity date, and one certificate for $50 million with an October 2003 maturity date. CompuCom expects the $10 million certificate to be renewed at its maturity date.





The Revolver, which initially had a May 2002 maturity date but has been extended to an October 2002 maturity date, bears interest at a rate of LIBOR plus an agreed-upon
spread and is secured by a lien on CompuComs assets. CompuCom expects the Revolver to be renewed prior to its maturity date. Availability under the Revolver is subject to a borrowing base calculation. As of June 30, 2002, availability under
the Revolver was $25 million. No amounts were outstanding under the Revolver as of June 30, 2002 and December 31, 2001. Terms of the Revolver limit the amounts available for capital expenditures and dividends. Both the Securitization and the
Revolver require CompuCom to maintain compliance with selected financial covenants and ratios.





Interest income of
$0.5 million and $1.1 million was earned during the three and six months ended June 30, 2002, respectively, and $1.2 million and $2.2 million was earned during the three and six months ended June 30, 2001, respectively. Interest income is included
in Financing expenses, net, on the Condensed Consolidated Statements of Operations.





(9)    Treasury Stock
Retirement





In June 2002, CompuCom retired 1,431,525 shares of treasury stock which had been repurchased in
prior years at a cost of $5.6 million.





(10)    Reclassifications





Certain prior period amounts have been reclassified to conform to the current period presentation.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations


June 30, 2002





Founded in 1987, CompuCom Systems, Inc., together with its subsidiaries is a leading single-source provider of information
systems services and products designed to enhance the productivity of large and medium-sized organizations throughout the United States. CompuCom provides information technology outsourcing and system integration services that help clients reduce
the costs, complexities, obstacles and risks associated with new technology adoption, operational transition and on-going management of their information systems.





CompuComs discussion and analysis of its financial condition and results of operations are based upon CompuComs Condensed Consolidated Financial Statements,
which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires CompuCom to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. CompuCom bases its estimates on historical experience and on other relevant assumptions that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations


June 30, 2002





Results of Operations





The following table shows CompuComs total revenue, gross margin and gross margin percentage by revenue source. Operating expenses,
financing expenses, income taxes, cumulative effect of a change in accounting principle for negative goodwill, and net earnings are shown as a percentage of total revenue for the three and six months ended June 30, 2002 and 2001:





Three months ended


Six months endedJune 30, 2002


June 30, 2001


June 30, 2002


June 30, 2001Revenue:Product

$
350,290


$
419,718


$
609,559


$
902,079Service


75,868



68,991



143,547



140,918Total revenue

$
426,158


$
488,709


$
753,106


$
1,042,997Gross margin:Product

$
26,279


$
37,894


$
53,010


$
79,984Service


27,975



25,581



51,523



49,174Total gross margin

$
54,254


$
63,475


$
104,533


$
129,158Gross margin percentage:Product


7.5
%


9.0
%


8.7
%


8.9
%Service


36.9
%


37.1
%


35.9
%


34.9
%Total gross margin percentage


12.7
%


13.0
%


13.9
%


12.4
%Operating expenses:Selling


2.7
%


3.6
%


3.2
%


3.5
%Service


2.6
%


2.8
%


2.9
%


2.6
%General and administrative


4.4
%


4.5
%


4.8
%


4.3
%Depreciation and amortization


1.1
%


1.2
%


1.3
%


1.1
%Total operating expenses


10.8
%


12.1
%


12.2
%


11.5
%Earnings from operations


1.9
%


0.9
%


1.7
%


0.9
%Financing expenses, net


0.1
%


0.2
%


0.1
%


0.3
%Earnings before income taxes and cumulative effect of a change in accounting principle for negative
goodwill


1.8
%


0.7
%


1.6
%


0.6
%Income taxes


0.7
%


0.3
%


0.6
%


0.2
%Earnings before cumulative effect of a change in accounting principle for negative goodwill


1.1
%


0.4
%


1.0
%


0.4
%Cumulative effect of a change in accounting principle for negative goodwill, net of income taxes










0.1
%


Net earnings


1.1
%


0.4
%


1.1
%


0.4
%




16




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





2001 Business Combinations (the 2001 acquisitions)





In January 2001, CompuCom
purchased certain assets of MicroAge Technology Services, L.L.C. (MTS, or the MTS acquisition). The purchase price of approximately $79 million (after post-closing adjustments) was financed using available cash. The purchased
assets were used by MTS primarily in its business as a services provider and systems integrator of personal computer products.





In July 2001, CompuCom purchased certain assets and assumed certain liabilities of Excell Data Corporation (Excell, or the Excell acquisition) for approximately $27 million in available cash. The net assets
acquired were used by Excell primarily in its business of high-end technical applications development, network infrastructure design and deployment and worldwide event technical planning and support. Essentially all of the Excell workforce,
consisting of technical application developers, consultants, and administrative personnel were hired as part of the Excell acquisition. The purpose of the Excell acquisition was to expand the suite of CompuComs service offerings.





In November 2001, CompuCom purchased certain assets and assumed certain liabilities associated with the application development
division of E-Certify Corporation (ClientLink, or the ClientLink acquisition) for approximately $2 million in available cash and the surrender of such number of E-Certify Corporations common stock to decrease the
Companys percent ownership from 22% to 19% of outstanding shares. ClientLink provides high-end technical consulting, development, deployment and maintenance services. The ClientLink acquisition further expanded the suite of CompuComs
service offerings.





In November 2001, CompuCom acquired Northern NEF, Inc. (NNEF, or the NNEF
acquisition) for approximately $15 million in available cash. NNEF is a federal systems integrator and solutions provider, whose services primarily include systems engineering, equipment procurement, software development, integration, test and
training as well as related program management support services to various defense and civilian agencies of the federal government. NNEF also provides the services to state governments and commercial accounts. The NNEF acquisition provides CompuCom
with an entrance to the federal marketplace and expands the capabilities NNEF can provide primarily to its federal clients through CompuComs existing service offerings.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





Comparison of the Quarter Ended June 30, 2002 to the Quarter Ended June 30, 2001





Product
revenue is primarily derived from the sale of hardware, which includes desktop, networking, storage, and mobile computing products and peripherals. Also included in product revenue is the sale of software, which includes software-related products
and licenses to corporate and government clients. Product revenue declined 16.5% to $350.3 million in the second quarter of 2002 from $419.7 million in the second quarter of 2001. The decline in the second quarter 2002 from the second quarter 2001
consisted of a 22.6% decline in hardware and other product revenue, partially offset by an 8.4% increase in software and software license revenue. CompuCom believes the overall product revenue decline can be primarily attributed to general economic
conditions that have resulted in lower demand for personal computer products mainly from its Fortune 1000 client base. As a result of this economic slowdown, product purchases and IT projects have been delayed, downsized or cancelled. In addition,
product revenue has been negatively impacted by certain clients electing to purchase product directly from manufacturers, as well as by increased competition from other direct marketers. CompuCom believes the increase in software revenue from the
second quarter 2001 to the second quarter 2002 was primarily due to announced changes in licensing programs of a certain software provider which resulted in increased demand for these licenses in the second quarter 2002. On a sequential basis,
product revenue increased 35.1%. This sequential increase in product revenue is due to both hardware and software sales. The Company believes this increase is primarily a result of more aggressive pricing in certain circumstances, as well as an
increase in demand from certain clients. In addition, with respect to software sales, the second quarter is typically the highest revenue quarter during the year. While product revenue increased sequentially in the second quarter, there can be no
assurance that continued increases will occur or that significant declines will not occur in future quarters.





Product gross margin as a percentage of product revenue decreased to 7.5% in the second quarter of 2002 from 9.0% in the second quarter of 2001. In the first quarter 2002, that percentage was 10.3%. Contributing to this decrease was
an increase in the proportion of lower margin software revenue relative to total product revenue. CompuCom also believes an increase in demand from certain clients impacted product gross margin. In addition, the Company engaged in more selective
aggressive client pricing primarily related to hardware sales. The sequential decline in the product gross margin percentage was due not only to the factors noted above, but also to more selective aggressive client pricing related to software sales
as well as a reduction of volume incentive dollars received from suppliers. Due to competitive conditions, CompuCom expects to experience continued pressure on product gross margin, the result of which may be to report both lower product gross
margin dollars and a lower percentage relative to product revenue when compared to the comparable prior year period or previous quarter.





Service revenue increased 10.0% to $75.9 million for the second quarter of 2002 compared to $69.0 million for the second quarter of 2001. Sequentially, service revenue increased 12.1%. Service revenue is primarily derived
from services directly related to the sale of product, such as configuration, vendor warranty contracts and services to support certain OEM product fulfullment programs, IT outsourcing services, such as desktop support, infrastructure services,
field engineering, help desk and other infrastructure related services, and application development, systems integration and other consulting services. Service revenue reflects revenue generated by the actual performance of specific services and
does not include product sales. The increase in service revenue for the second quarter of 2002 as compared to the same period in 2001 was primarily due to services directly related to the Excell, ClientLink and NNEF acquisitions, partially offset by
a decline in field engineering revenue. Sequentially, all areas of the service business increased, the most significant of which were services provided to the federal government and services directly related to the sale of product. Service gross
margin as a percentage of service revenue for the quarter ended June 30, 2002 of 36.9% remained relatively flat when compared to 37.1% for the same period in 2001. CompuCom expects to experience continued pressure on both service revenue and service
gross margin, the result of which may be to report lower service revenue and related service gross margin when compared to the comparable prior year period or previous quarter.




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





Selling expenses consist primarily of salary, commissions and benefits for sales and sales-support personnel, along with other costs directly related to such personnel. Selling expense decreased $6.0
million for the three months ended June 30, 2002 as compared to the same period in the prior year, and $0.8 million sequentially. CompuCom attributes this decrease to its own cost management efforts, primarily related to sales-support personnel and
related costs. Selling expense as a percentage of revenue decreased to 2.7% for the three months ended June 30, 2002, down from 3.6% for the same period a year ago and 3.8% in the first quarter 2002.





Service expenses consist primarily of salary and benefits cost for personnel supporting the service business, along with other costs
directly related to such personnel. Service expense decreased $2.7 million for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001 and remained relatively flat on a sequential basis. The decrease was due
primarily to CompuComs cost management efforts, particularly personnel and related costs, partially offset by personnel and infrastructure costs associated with the 2001 Excell and ClientLink acquisitions. As a percentage of revenue, service
expense decreased to 2.6% for the three months ended June 30, 2002 from 2.8% for the same period a year ago.





General and administrative expenses consist principally of salary and benefit costs for executive, operations, information services, and administrative personnel, along with certain infrastructure costs directly related to such
personnel, as well as professional services and other general corporate activities. General and administrative expense decreased $3.4 million for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001. The decrease
is reflective of the Companys ongoing cost management efforts which was primarily due to reductions in personnel-related costs. Operating expenses are reported net of reimbursements by certain manufacturers for specific training, promotional
and marketing programs. These reimbursements offset certain expenses incurred.





Depreciation and amortization
expense decreased approximately $1.0 million for the quarter ended June 30, 2002 as compared to the quarter ended June 30, 2001. The decrease was primarily due to the adoption of the non-amortization provisions of Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, on January 1, 2002. This decrease was partially offset by increased amortization expense of identifiable intangibles with definite useful lives associated with
the Excell and NNEF acquisitions. As a percentage of revenue, depreciation and amortization expense remained relatively flat for the three months ended June 30, 2002 as compared to the three months ended June 30, 2001.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





Financing expense decreased to $0.2 million for the quarter ended June 30, 2002 from $0.7 million for the same period in the prior year. As a percentage of revenue, financing expense declined to 0.1%
for the three months ended June 30, 2002 from 0.2% for the same period a year ago. The decrease in financing expense was primarily due to CompuComs continued improvement in working capital management, as well as lower financing requirements
due to the decline in product revenue. The decline in financing expense was also due to the effect of lower effective interest rates in the second quarter of 2002 as compared to the second quarter of 2001.





As a result of the factors discussed above, CompuCom recorded net earnings for the quarter ended June 30, 2002 of $4.7 million. This
compares to net earnings of $2.1 million for the quarter ended June 30, 2001.





Comparison of the Six Months Ended June 30, 2002 to the
Six Months Ended June 30, 2001





Product revenue declined 32.4% to $609.6 million in the six months ended June
30, 2002 from $902.1 million in the six months ended June 30, 2001. The decline consisted of a 38.5% decline in hardware and other product revenue, partially offset by a 4.6% increase in software and software license revenue. CompuCom believes the
overall product revenue decline can be primarily attributed to general economic conditions that have resulted in lower demand for personal computer products mainly from its Fortune 1000 client base. As a result of this economic slowdown, product
purchases and IT projects have been delayed, downsized or cancelled. In addition, product revenue has been negatively impacted by certain clients electing to purchase product directly from manufacturers, as well as by increased competition from
other direct marketers. CompuCom believes the increase in software revenue from the six months ended June 30, 2001 to the six months ended June 30, 2002 was primarily due to announced changes in licensing programs of a certain software provider
which resulted in increased demand for these licenses in the second quarter 2002. CompuCom expects to experience continued pressure on product revenue, the result of which may be to report lower product revenue when compared to the comparable prior
year period or previous quarter.





Product gross margin as a percentage of product revenue decreased to 8.7% in the
six months ended June 30, 2002 from 8.9% in the six months ended June 30, 2001. CompuCom believes this decrease is primarily due to an increase in the proportion of lower margin software revenue relative to total product revenue and more aggressive
pricing in certain circumstances for both hardware and software revenue. Due to competitive conditions, CompuCom expects to continue to experience pressure on product gross margin, the result of which may be to report both lower product gross margin
dollars and a lower percentage relative to product revenue when compared to the comparable prior year period.





Service revenue increased 1.9% to $143.5 million for the six months ended June 30, 2002 compared to $140.9 million for the six months ended June 30, 2001. The increase in service revenue was primarily due to services directly related
to the Excell, ClientLink and NNEF acquisitions, partially offset by declines primarily in field engineering and product-related services. Service gross margin as a percentage of service revenue increased for the six months ended June 30, 2002 to
35.9% from 34.9% for the same period in 2001. CompuCom expects to experience continued pressure on both service revenue and service gross margin, the result of which may be to report lower service revenue and related service gross margin when
compared to the comparable prior year period or previous quarter.




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





Selling expense decreased $13.3 million for the six months ended June 30, 2002 as compared to the same period in the prior year. Selling expense as a percentage of revenue decreased to 3.5% for the six
months ended June 30, 2002 from 3.6% for the same period a year ago. CompuCom attributes this decrease to its own cost management efforts, primarily related to sales-support personnel and related costs.





Service expense decreased $5.4 million for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. The
decrease was due primarily to CompuComs cost management efforts, particularly personnel and related costs, partially offset by personnel and infrastructure costs associated with the 2001 Excell and ClientLink acquisitions. As a percentage of
revenue, service expense increased to 2.9% for the six months ended June 30, 2002 from 2.6% for the same period a year ago due primarily to the decline in product revenue.





General and administrative expense decreased $8.0 million for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. The decrease is
reflective of the Companys ongoing cost management efforts which primarily include personnel-related costs, as well as certain infrastructure costs. General and administrative expense increased as a percentage of revenue from 4.3% to 4.8% for
the comparable periods due primarily to the decline in product revenue.




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





Depreciation and amortization expense decreased approximately $1.9 million for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001. The decrease was primarily due to
the adoption of the non-amortization provisions of Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, on January 1, 2002. This decrease was partially offset by increased
amortization expense of identifiable intangibles with definite useful lives associated with the Excell and NNEF acquisitions. As a percentage of revenue, depreciation and amortization expense increased from 1.1% for the six months ended June 30,
2001 to 1.3% for the six months ended June 30, 2002. Contributing to the increase was the decline in product revenue over the comparable periods.





Financing expense decreased to $0.6 million for the six months ended June 30, 2002 from $2.5 million for the same period in the prior year. As a percentage of revenue, financing expense declined to
0.1% for the six months ended June 30, 2002 from 0.3% for the same period a year ago. The decrease in financing expense was primarily due to CompuComs continued improvement in working capital management, as well as lower financing requirements
due to the decline in product revenue. The decline in financing expense was also due to the effect of lower effective interest rates in the six months ended June 30, 2002 as compared to the six months ended June 30, 2001.





As a result of the factors discussed above, CompuCom recorded earnings before the cumulative effect of a change in accounting principle
for negative goodwill for the six months ended June 30, 2002 of $7.4 million. This compares to net earnings of $3.8 million for the six months ended June 30, 2001.





Liquidity and Capital Resources





Working capital at June
30, 2002 was $100.2 million compared to $87.1 million at December 31, 2001. The increase in working capital was primarily the result of an increase in receivables, partially offset by a net increase in accounts payable and accrued liabilities. The
increase in receivables was directly related to the increase in revenue in the second quarter of 2002 as compared to the fourth quarter of 2001, particularly product revenue which increased approximately 17.3% over the comparable period. Also
contributing to the increase in receivables was a $14.0 million reduction in the amount of receivables utilized under CompuComs securitization facility.





CompuComs liquidity is impacted by the dollar volume of certain manufacturers rebate programs. Under these programs, CompuCom is required to pay a higher initial amount for product and
claim a rebate from the manufacturer to reduce the final cost. The collection of these rebates can take an extended period of time. Due to these programs, CompuComs initial cost for the product is often higher than the sales price CompuCom can
obtain from its clients. These programs have been at times a material factor in CompuComs financing needs. As of both June 30, 2002 and December 31, 2001, CompuCom was owed approximately $14 million under these vendor rebate programs.




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





CompuComs working capital requirements are generally funded through financing arrangements and internally generated funds. As of June 30, 2002, CompuComs financing arrangements consisted of
a $125 million receivable securitization (Securitization) and $25 million working capital line of credit (Revolver). Consistent with its financing requirements, CompuCom reduced the Revolver facility from $50 million to $25
million in May 2002. The Securitization pricing is based on a designated short-term interest rate plus an agreed upon spread. As of June 30, 2002, amounts outstanding as sold receivables consisted of two certificates totaling $60 million, one
certificate for $10 million which initially had an April 2002 maturity date but has been extended to a September 2002 maturity date, and one certificate for $50 million with an October 2003 maturity date. CompuCom expects the $10 million certificate
to be renewed at its maturity date. The Revolver, which initially had a May 2002 maturity date but has been extended to an October 2002 maturity date, bears interest at LIBOR plus an agreed upon spread and is secured by a lien on CompuComs
assets. CompuCom expects the Revolver to be renewed prior to its maturity date. Availability under the Revolver is subject to a borrowing base calculation. As of June 30, 2002, availability under the Revolver was $25 million. No amounts were
outstanding under the Revolver as of June 30, 2002 and December 31, 2001. Terms of the Revolver limit the amounts available for capital expenditures and dividends. Both the Securitization and the Revolver are subject to CompuComs compliance
with selected financial covenants and ratios.





CompuComs business is not capital asset intensive, and
capital expenditures in any year normally would not be significant in relation to its overall financial position. Generally, the Companys capital expenditures relate to its information technology hardware and software and improvements in its
distribution centers. Capital expenditures were $3.1 million for the six months ended June 30, 2002, as compared to $10.8 million for the same period in 2001. The decrease is a result of higher than normal capital spending in the first half of 2001
which was due primarily to upgrades to the Companys technology infrastructure and help desk offerings, system deployments to certain personnel, including those hired as part of the MTS acquisition, and certain other capital investments
associated with the MTS acquisition. CompuCom currently expects capital expenditures for 2002 to be in a range between $9 to $11 million.





Recent Accounting Pronouncements





In July 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets. CompuCom has adopted the provisions of SFAS No. 142 effective January 1, 2002. SFAS No. 142 requires
that goodwill and intangible assets with indefinite useful lives no longer be amortized but instead tested for impairment at least annually. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their
respective estimated useful lives to their estimated residual values.





Under SFAS No. 142, the Company is required
to perform transitional impairment tests for its goodwill and intangible assets with indefinite useful lives as of the date of adoption. CompuCom completed the required transitional impairment tests during the second quarter 2002. As a result of the
goodwill impairment tests, no impairment losses were indicated.




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





In August 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 requires entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. The Company will adopt SFAS No. 143 in fiscal year 2003. The Company does not expect the provisions of SFAS No. 143 to have any significant impact on its financial condition or results of operations.





In April 2002, the FASB issued SFAS No. 145, Recission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections. Generally, SFAS No. 145 is effective for transactions occurring after May 15, 2002. The Company does not expect the provisions of SFAS No. 145 to have any significant impact on its financial
condition or results of operations.





In July 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities. SFAS No. 146 applies to costs associated with an exit activity (including restructuring) or with a disposal of long-lived assets. SFAS No. 146 is effective prospectively for exit or disposal
activities initiated subsequent to December 31, 2002. The Company does not expect the provisions of SFAS No. 146 to have any significant impact on its financial condition or results of operations.




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





Forward Looking Statements and Risks





This document contains forward-looking
statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements may be identified by words such as will, believe, anticipate,
intend, estimate, expect, project and similar expressions. Although we believe the expectations contained in the forward-looking statements are reasonable, we can give no assurance that the
expectations will prove correct. In addition, the forward-looking statements do not reflect the potential impact of any future acquisitions or mergers and related integration, dispositions, joint ventures, strategic investments or one-time events.
These forward-looking statements are subject to certain risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those indicated by the forward-looking statements, and as a result could have
an adverse impact on our business, financial condition and operating results. These factors include: our ability to grow product and service revenue; the decline in product revenue and product gross margin may continue and may be greater than
anticipated; the product revenue increase on a sequential basis may not continue; our ability to increase consulting revenue; our ability to meet manufacturers expectations in providing assistance in implementing direct fulfillment
initiatives; our ability to find additional ways to leverage costs and reduce costs further, including financing costs; our ability to improve operational efficiency; our ability to integrate acquired businesses into our operations; our ability to
win new clients; the expansion of the services the Company provides may not be as broad as the Company currently expects or widely accepted by clients; the manufacturers who use the Companys direct services may elect not to use those
services; our ability to retain key employees of acquired businesses; our ability to accurately value acquired businesses; and our ability to improve product and service gross margin and our balance sheet. Other factors that could cause actual
results to differ include: acquisition integration issues; the impact of competitive pricing and supply; the potential impact of the Hewlett Packard and Compaq merger; lower demand than anticipated for the products and services the Company sells;
the impact of the manufacturers shift to direct fulfillment and marketing programs may be more significant than anticipated; changes to manufacturers pricing, price protection, rebate and incentive programs; short-term interest rate
fluctuations; general economic conditions; employee turnover; potential impact of litigation; the ability to collect accounts receivable and vendor rebates receivable; the impact of certain business and economic factors on the valuation of certain
investments in other businesses CompuCom has made or may make; and other uncertainties that may have an impact on future revenue and earnings as well as the risks and uncertainties set forth from time to time in our other public reports and
statements, including the risk factors set forth in our Annual Report on Form 10-K. As a result, readers should not place undue reliance on these forward-looking statements.




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Managements Discussion and Analysis of Financial Condition and Results of Operations





Item 3.    
Quantitative and Qualitative Disclosure About Market Risk





CompuCom is exposed to
interest rate risk primarily through its Securitization and Revolver. CompuCom utilizes its Securitization and Revolver for its working capital and other borrowing needs. If CompuComs effective interest rate were to increase by 100 basis
points (1.00%), CompuComs annual financing expense would increase by approximately $0.6 million based on the average balances utilized under the Securitization and Revolver during the six months ended June 30, 2002.





Currently, CompuCom does not have any significant financial investments for trading or other speculative purposes or to manage interest
rate exposure.




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##### Table of Contents

COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





PART II.    OTHER INFORMATION





Item
4.    
Submission of Matters to a Vote of Security Holders





The Company held its Annual Meeting
of Stockholders on May 15, 2002. At the meeting, the stockholders voted in favor of electing as directors the eleven nominees named in the Companys Definitive Proxy Statement dated April 12, 2002, and for an amendment to the Companys
Employee Stock Purchase Plan (the Plan) to increase the number of shares subject to the Plan by two million shares. The number of votes cast for, against or withheld, as well as the number of abstentions were as follows:





Election of Directors:





For

Withheld / Not VotedJ. Edward Coleman

56,123,509

3,345,078Anthony L. Craig

56,115,091

3,353,496Michael J. Emmi

56,120,491

3,348,096Richard F. Ford

56,119,883

3,348,704Edwin L. Harper

56,126,796

3,341,791Delbert W. Johnson

55,178,021

4,290,566John D. Loewenberg

56,118,033

3,350,554Warren V. Musser

55,086,691

4,381,896Anthony J. Paoni

55,172,146

4,296,441Edward N. Patrone

56,125,157

3,343,430M. Lazane Smith

56,128,203

3,340,384





Proposal to amend the Employee Stock Purchase Plan:





For

Against

Abstain

Not Voted44,400,118

731,959

82,645

3,175,580





Item 6.    
Exhibits and Reports on Form 8-K





(a)Exhibits





99.1    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002





(b)    Reports on Form 8-K





None




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COMPUCOM SYSTEMS, INC. AND SUBSIDIARIES





Signatures





Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





COMPUCOM SYSTEMS, INC.(Registrant)


DATE:    August 14, 2002





/s/    J. EDWARD
COLEMANJ. Edward Coleman,Chairman of the Board, President, Chief Executive Officer, and Director





DATE:    August 14, 2002





/s/     M. LAZANE
SMITHM. Lazane Smith,Senior Vice President, Finance, Chief Financial Officer, Secretary and Director




28