================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)
[ X ]           ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2001
                                       or

[   ]          TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                        For the transition period from to

                             Commission File Number:
                                     1-13792
                             -----------------------
                                  SYSTEMAX INC.
             (Exact name of registrant as specified in its charter)

            DELAWARE                                       11-3262067
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)

       22 HARBOR PARK DRIVE
     PORT WASHINGTON, NEW YORK                                11050
  (Address of principal executive offices)                  (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 608-7000
                     ---------------------------------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                                    NAME OF EACH EXCHANGE ON
       TITLE OF EACH CLASS                              WHICH REGISTERED
       -------------------                              -----------------
Common Stock, par value $ .01 per share              New York Stock Exchange

        SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
                              --------------------

     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 [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best knowledge of the registrant, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. [X]

     The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 13, 2002 was approximately $23,233,000. For purposes
of this computation, all executive officers and directors of the Registrant and
all parties to the Stockholders Agreement dated as of June 15, 1995 have been
deemed to be affiliates. Such determination should not be deemed to be an
admission that such persons are, in fact, affiliates of the Registrant.

     The number of shares outstanding of the registrant's common stock as of
March 13, 2002 was 34,104,290 shares.

     Documents incorporated by reference: Portions of the definitive Proxy
Statement of Systemax Inc. relating to the 2002 Annual Meeting of Stockholders
is incorporated by reference in Part III hereof.
================================================================================

<PAGE>
                                TABLE OF CONTENTS
Part I
  Item 1.  Business............................................................1
            General............................................................1
            Recent Developments................................................1
            Products...........................................................2
            Sales and Marketing................................................2
            Distribution Centers...............................................4
            Suppliers..........................................................4
            Management Information Systems.....................................5
            Research and Development...........................................5
            Competition and Other Market Factors...............................5
            Employees..........................................................7
            Environmental Matters..............................................7
            Financial Information About Foreign and Domestic Operations........7
  Item 2.  Properties..........................................................8
  Item 3.  Legal Proceedings...................................................8
  Item 4.  Submission of Matters to a Vote of Security Holders.................8

Part II
  Item 5.  Market for Registrant's Common Equity and Related Stockholder
            Matters............................................................9
  Item 6.  Selected Financial Data............................................10
  Item 7.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations.........................................11
  Item 7A. Quantitative and Qualitative Disclosures About Market Risk.........19
  Item 8.  Financial Statements and Supplementary Data .......................20
  Item 9.  Changes in and Disagreements With Accountants on Accounting
            and Financial Disclosure..........................................20

Part III
  Item 10. Directors and Executive Officers of the Registrant.................20
  Item 11. Executive Compensation.............................................20
  Item 12. Security Ownership of Certain Beneficial Owners and Management.....20
  Item 13. Certain Relationships and Related Transactions.....................20

Part IV
  Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....21

           Signatures.........................................................23

<PAGE>

                                     PART I

     UNLESS OTHERWISE INDICATED, ALL REFERENCES HEREIN TO SYSTEMAX INC.
(SOMETIMES REFERRED TO AS "SYSTEMAX" OR THE "COMPANY") INCLUDE ITS SUBSIDIARIES.

ITEM 1. BUSINESS.

GENERAL

     Systemax is a direct marketer of brand name and private label products,
including personal desktop computers ("PCs"), notebook computers, computer
related products and industrial products in North America and Europe. The
Company assembles its own PCs and sells them under the trademarks SYSTEMAX(TM),
TIGER(R) and ULTRA(TM). In addition, the Company markets and sells computers
manufactured by Compaq Computer Corp., International Business Machines Corp.,
Gateway Inc. and other leading companies. The Company features a broad selection
of products, extensive customer service and prompt order fulfillment. Computers
and computer related products accounted for 89% of the Company's net sales in
2001.

     Systemax markets its products through an integrated system of distinctively
branded, full-color direct mail catalogs, proprietary "e-commerce" Internet
sites and personalized "relationship marketing" to business customers. The
Company targets individuals at major accounts (customers with more than 1,000
employees), mid-sized accounts (customers with 20 to 1,000 employees), small
office/home office ("SOHO") customers and resellers. The Company's portfolio of
catalogs includes such established brand names as GLOBAL COMPUTER SUPPLIES(TM),
MISCO(R), HCS MISCO(TM), GLOBALDIRECT(TM), ARROWSTAR(TM), DARTEK.COM(TM),
TIGERDIRECT.COM(TM), 06(TM) and INFOTEL(TM). The Company mailed approximately
126 million catalogs comprising 38 different titles in 2001. The Company
currently has twenty-four e-commerce web sites and in 2001 generated over $218
million in Internet sales (14% of net sales).

     The Company operates in ten locations in North America. North American
operations accounted for 63.5% of net sales in 2001. European operations, which
represented 36.5% of net sales for 2001, are generated from nine sales and/or
distribution centers located across Europe: two in England and one each in
Scotland, France, Germany, Italy, Spain, the Netherlands and Sweden.

     A large number of the Company's products are carried in stock, and orders
for such products are fulfilled directly from the Company's distribution
centers, typically on the day the order is received. The strategic locations of
the Company's distribution centers allow next day or second day delivery via low
cost ground carriers throughout most of the United States, Canada and Western
Europe. The locations of the Company's distribution centers in Europe have
enabled the Company to market into four additional countries with limited
incremental investment. The Company maintains relationships with a number of
distributors in the United States and Europe that deliver products directly to
the Company's customers.


RECENT DEVELOPMENTS

COMPANY OBTAINS CREDIT FACILITY

     In June 2001, the Company and its domestic subsidiaries entered into a
$70,000,000 revolving credit agreement with a group of financial institutions
including JP Morgan Chase (acting as lender and agent) to provide for borrowings
in the United States. The borrowings are secured by all of the domestic accounts
receivable and inventories of the Company and the Company's shares of stock or
membership interests in its domestic subsidiaries. The credit facility expires
and outstanding borrowings thereunder are due on June 15, 2004. The borrowings
under the agreement are subject to borrowing base limitations of up to 75% of
eligible accounts receivable and up to 25% of qualified inventories. The
revolving credit agreement contains certain financial and other covenants,
including restrictions on capital expenditures and payments of dividends.

NEW DIRECTOR APPOINTED

     On May 23, 2001 the Company announced the appointment of Ann R. Leven to
the Company's Board of Directors. Ms. Leven's appointment increased the size of
the Board to seven directors, including three outside directors. Ms. Leven is
also a member of the Board's Audit Committee. Ms. Leven holds an MBA from
Harvard University and most recently served as treasurer and chief fiscal
officer of the National Gallery of Art in Washington, DC.

PRODUCTS

     The Company endeavors to expand the breadth of its product offerings in
order to fulfill the increasingly wide range of product needs of its customers.
Systemax offers more than 40,000 brand name and private label products.

     Computer sales include Systemax PCs complemented by offerings of other
brand named PCs and notebook computers. The Company's computer related products
include supplies such as laser printer toner cartridges and ink jet printer
cartridges; media such as recordable disks and magnetic tape cartridges;
peripherals such as hard disks, CD-ROM and DVD drives, printers and scanners;
memory upgrades; data communication and networking equipment; ergonomic
accessories such as adjustable monitor support arms and anti-glare screens; and
packaged software.

     The Company's industrial products include storage equipment such as metal
shelving, bins and lockers, light material handling equipment such as hand carts
and hand trucks; furniture, small office machines and related supplies; and
consumable industrial products such as first aid items, safety items, protective
clothing and OSHA compliance items. The table below summarizes the Company's mix
of sales by product category:

<TABLE>
<CAPTION>
     PRODUCT TYPE - YEAR ENDED DECEMBER 31 (PERCENTAGE OF NET SALES)
                                                                         2001        2000       1999
                                                                         ----        ----       ----
<S>                                                                       <C>         <C>        <C>
     Computer and Computer Related Products  .....................        89%         88%        87%
     Industrial Products .........................................        11          12         13
                                                                          --          --         --
     Total  ......................................................       100%        100%       100%
                                                                         ====        ====       ====
</TABLE>

SALES AND MARKETING

     Systemax has established an integrated three-pronged system of direct
marketing designed to maximize sales. The Company has been expanding its
"relationship marketing" team, which services large and mid-sized business
customers. These efforts are complemented by frequent catalog mailings and
e-mail campaigns in order to generate inbound telephone sales and the
availability of interactive Company web sites which allow customers to purchase
products directly over the Internet. The Company believes that the integration
of these three marketing methods should enable it to more thoroughly penetrate
its customer base. Increased Internet exposure, for example, should lead not
only to more Internet sales but can also generate more inbound telephone sales;
just as catalog mailings which feature the Company's web sites can result in
greater Internet sales.

     RELATIONSHIP MARKETING

     The Company's relationship marketing program focuses on expanding
penetration of large and mid-sized businesses by establishing a personal
relationship between such customers and a Systemax account manager. In the
United States, Systemax also has the ability to provide such customers with
electronic data interchange ("EDI") ordering and customized billing services,
customer savings reports and stocking of specialty items specifically requested
by customers. The goal of the relationship marketing sales force is to increase
the purchasing productivity of current customers and to actively solicit newly
targeted prospects to become customers. The Company has taken a number of
initiatives to improve the productivity of its sales forces and to more
aggressively pursue business from both past customers and new prospects,
including strengthening its training programs and utilizing new computer
software sales tools.

     CATALOGS AND INBOUND SALES

     The Company produces a total of 38 full-line and targeted specialty
catalogs under distinct titles. Full-line computer product catalogs offer
products such as PCs, notebooks, peripherals, computer components, magnetic
media, data communication, networking and power protection equipment, ergonomic
accessories, furniture and software. Full-line industrial product catalogs offer
products such as material handling products and industrial supplies. Specialty
catalogs contain more focused product offerings and are targeted to individuals
most likely to purchase from such catalogs. Systemax mails catalogs to many
individuals at a business location, providing the Company with multiple
points-of-entry. The Company's strategy is to increase sales volume through
broader market coverage and improve the productivity of its customer file
through more focused marketing.

     During 2001, the Company distributed approximately 126 million catalogs, of
which approximately 89 million catalogs were mailed in North America and
approximately 37 million catalogs were distributed in Europe.

     The Company's in-house staff designs all of the Company's catalogs. Catalog
paper is purchased from various sources and has historically been subject to
price fluctuations. Printing of the catalogs is done by third parties under
fixed pricing arrangements. In-house catalog production helps reduce overall
catalog expense and shortens catalog production time. This allows the Company
the flexibility to alter its product offerings and pricing and to refine its
catalog formats more quickly. The commonality of certain core pages of the
European catalogs also provides for economies in catalog production.

     Systemax's catalogs generate calls to inbound sales groups. Sales
representatives use the capabilities of the Company's information systems to
fulfill orders and explore additional customer product needs. Each sales
representative has immediate access to customer files, including usage and
billing information, and real-time inventory levels by distribution center.
Using this data, inbound sales personnel are also prompted by their computer
screen to cross-sell selected products and obtain specific information relating
to customer-specific purchasing habits and product needs.

     INTERNET MARKETING AND SALES

     In the past several years, the Company has greatly expanded and upgraded
its Internet presence. The Company currently has twenty-four e-commerce sites,
including WWW.SYSTEMAXPC.COM, WWW.GLOBALCOMPUTER.COM, WWW.DARTEK.COM,
WWW.TIGERDIRECT.COM, WWW.MISCO.CO.UK, WWW.SIMPLY.CO.UK and
WWW.GLOBALINDUSTRIAL.COM, offering a wide variety of computer, office and
industrial products. Many of these sites also permit customers to purchase
"build to order" PCs configured to their own specifications. In 2001 the Company
had over $218 million in Internet sales, or 14% of total revenues. In October
2001 the Company implemented a substantially improved e-commerce platform for
certain of its domestic divisions' web-sites. This new software enabled the
divisions to implement an on-line catalog and provides customers with an
easy-to-use ordering vehicle.

     CUSTOMER AND PROSPECT DATABASE

     Systemax has invested consistently and aggressively in developing a
proprietary customer and prospect database. This database includes more than 50
million names. The Company considers its customers to be the various individuals
who work within an organization rather than the business location itself. The
customer and prospect database includes detailed information, including company
size, number of employees, industry, various demographic and geographic
characteristics and purchasing history. Management believes that this variety
and depth of information on its customers can provide Systemax with a
competitive advantage.

     CUSTOMER SERVICE AND SUPPORT

     Order entry and/or fulfillment occurs at each of the Company's 19
locations. Systemax generally provides toll-free telephone number access to its
customers. The integration of the Company's call centers also provide domestic
locations with telephone backup in the event of a disruption in phone service.
In addition to telephone orders, Systemax also receives orders by mail, by fax,
by EDI and on the Internet.

     Orders generally are shipped by United Parcel Service in the United States
and by similar national small package delivery services in Europe, as well as by
various freight lines and local carriers. As a result of the regional locations
of the Company's distribution centers, Systemax estimates that most customers
receive their orders (other than custom items, large furniture and large
industrial items shipped directly by the vendor) within one or two business days
of the order date.

     The Company provides extensive technical support to customers. A database
of commonly asked questions which is maintained for each product is available to
technical support representatives, enabling them to respond quickly to similar
questions. It also allows product managers to monitor the effectiveness of the
information provided in the catalogs. The Company conducts regular on-site
training seminars for its sales representatives to help ensure that they are
well trained and informed regarding the Company's latest product offerings.

DISTRIBUTION CENTERS

     NORTH AMERICA

     The Company operates out of multiple sales and distribution facilities in
North America. Certain of these facilities are linked by a wide area network
management information system. In the event of adverse delivery conditions (such
as bad weather) at a location the Company can shift inbound calls and/or order
fulfillment and shipping to an alternative location. Management believes this
provides Systemax with important operating flexibility and protection from
possible sales interruptions for its North American businesses.

     EUROPE

     The Company has sales and/or distribution facilities in eight European
countries and a central office near London, England to direct their activities.
The central office is responsible for marketing support, catalog production,
financial reporting, logistics and computer programming support.

SUPPLIERS

     The Company purchases the majority of its products and components directly
from manufacturers and wholesale distributors. Substantially all of the European
catalog product content is sourced in Europe. For the year ended December 31,
2001, Tech Data Corporation accounted for 15.1% and Hewlett Packard Company
accounted for 10.5% of the Company's purchases. No single supplier accounted for
more than 10% of Systemax's total purchases in 2000 or 1999. The loss of any of
these vendors, or any other key vendors, could have an adverse effect on the
Company.

     Certain private label products are manufactured either by the Company or by
third parties to the Company's specifications. Many of these private label
products have been designed or developed by the Company's in-house research and
development teams. See "Research and Development".

MANAGEMENT INFORMATION SYSTEMS

     The Company operates management information systems, which the Company has
customized for its use. These systems support telemarketing, marketing,
purchasing, accounting, customer service, warehousing and distribution, and
facilitate the preparation of daily operating control reports which provide
concise and timely information regarding key aspects of its business. The
Company maintains databases containing over 50 million customer and prospect
names and keeps records of historical purchasing patterns in order to prompt
sales personnel with product suggestions to expand customer order values. In
addition, the Company has developed a customer prospecting function based upon
geographic, economic and demographic data which enables Systemax to utilize its
information systems to maintain and expand its customer data files. The Company
also operates telecommunications systems to support its sales, customer service
and technical support operations. Elements of the Company's telecommunications
systems are integrated with the Company's computer systems to provide timely
customer information to sales and service representatives. The Company believes
that its information systems enable it to enhance its flexibility by promptly
shipping customer orders, responding quickly to order changes and providing a
high level of customer service and support.

     The Company's success is dependent in large part on the accuracy and proper
use of its information systems, including its telecommunications systems. The
Company expects to continually upgrade its systems to more effectively manage
and improve its operations and customer databases.

RESEARCH AND DEVELOPMENT

     The Company's research and development teams design and develop products
for Systemax's private label offerings. The individuals responsible for research
and development have backgrounds in engineering and industrial design.

     This in-house capability provides important support to the private label
offerings. Products designed include PCs, servers, furniture, ergonomic monitor
support arms, printer and monitor stands, wrist rests and other durable computer
related products, storage racks and shelving systems, various stock and storage
carts, work benches, plastic bins and shop furniture. The Company owns the
tooling for many of these products, including plastic bins, computer
accessories, furniture, and metal alloy monitor arms. See "Research and
Development Costs" in Footnote 1 to the Consolidated Financial Statements for
further information.

COMPETITION AND OTHER MARKET FACTORS

     PCS AND NOTEBOOK COMPUTERS

     The North American and European computer markets are highly competitive,
with many U.S., Asian and European companies vying for market share. There are
few barriers of entry to the PC market, with PCs being sold through the direct
market channel, mass merchants, over the Internet and computer and office supply
superstores. Certain PC manufacturers that have traditionally sold to
wholesalers via the wholesale/retail sales channel are now marketing their
products directly to end users in order to compete more effectively with
established direct marketers.

     Timely introduction of new products or product features are critical
elements to remaining competitive. Other competitive factors include product
performance, quality and reliability, technical support and customer service,
marketing and distribution and price. There can be no assurance that the Company
will be able to maintain or improve its current competitive position with
respect to any of these or other competitive factors. Some of the Company's
competitors have stronger brand-recognition, broader product lines and greater
financial, marketing, manufacturing and technological resources than the
Company. Additionally, the Company's results could also be adversely affected
should it be unable to maintain its technological and marketing arrangements
with other companies, such as Microsoft(R), Intel(R) and Advanced Micro
Devices(R).

     Continued weakness in the global economy has led to a market-wide slowdown
in PC sales. This slowdown has resulted in lower selling prices among our
competitors creating an extremely competitive environment that has affected and
may continue to affect profitability over the short-term. Our long-term view of
the PC market, however, remains optimistic, although there can be no assurance
that current economic conditions will soon improve.

     COMPUTER RELATED PRODUCTS

     The North American computer related products market is highly fragmented
and characterized by multiple channels of distribution including direct
marketers, local and national retail computer stores that carry computer
supplies, computer resellers, mass merchants, computer and office supply
"superstores" and Internet-based resellers.

     In Europe, the Company's major competitors are regional or country-specific
retail and direct-mail distribution companies and Internet-based resellers.

     As with PCs, the slowing global economy has led to a highly competitive
environment resulting in the overall reduction in retail prices for computer
related products which may adversely affect the Company's future revenues and
profits. Additionally, the Company relies in part upon the introduction of new
technologies and products by other manufacturers in order to sustain long-term
sales growth and profitability. There is no assurance that the rapid rate of
such technological advances and product development will continue.

     INDUSTRIAL PRODUCTS

     The market for the sale of industrial products in North America is highly
fragmented and is characterized by multiple distribution channels such as retail
outlets, small dealerships, direct mail distribution, Internet-based resellers
and large warehouse stores. Systemax also faces competition from manufacturers'
own sales representatives, who sell industrial equipment directly to customers,
and from regional or local distributors. Many high volume purchasers, however,
utilize catalog distributors as their first source of product specifications. In
the industrial products market, customer purchasing decisions are primarily
based on price, product selection, product availability, level of service and
convenience. The Company believes that direct mail is an effective and
convenient distribution method to reach mid-sized facilities that place many
small orders and require a wide selection of products. In addition, because the
industrial products market is highly fragmented and generally less brand
oriented, it is well suited to private label products. A large portion of the
Company's industrial products are high gross profit margin, private label
products.

     The Company sells a minor amount of industrial products in Europe.

     There can be no assurance that the Company will be able to maintain or
improve its current competitive position with respect to any of these or other
competitive factors.

EMPLOYEES

     As of December 31, 2001, the Company employed a total of 3,778 employees,
including 3,640 full-time and 138 part-time employees, of whom 2,382 were in
North America and 1,396 were in Europe.

     None of the Company's employees is represented by a labor union, except for
approximately 23 warehouse employees in New York who are covered by an
"open-shop" agreement with the Company, which expires at the end of 2004, and
certain employees in several locations in Europe. Employees are not required to
join the union.

     The Company considers its relationships with employees to be good and has
not experienced a work stoppage in 27 years.

ENVIRONMENTAL MATTERS

     Under various national, state and local environmental laws and regulations
in North America and Europe, a current or previous owner or operator (including
the lessee) of real property may become liable for the costs of removal or
remediation of hazardous substances at such real property. Such laws and
regulations often impose liability without regard to fault. The Company leases
most of its facilities. In connection with such leases, the Company could be
held liable for the costs of removal or remedial actions with respect to
hazardous substances. Although the Company has not been notified of, and is not
otherwise aware of, any material environmental liability, claim or
non-compliance, there can be no assurance that the Company will not be required
to incur remediation or other costs in connection with environmental matters in
the future.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS

     The Company conducts its business in North America (the United States and
Canada) and Europe. The following sets forth the Company's operations in its two
geographic markets (in thousands):

<TABLE>
<CAPTION>
     2001                                          EUROPE                   NORTH AMERICA                TOTAL
     ----                                   --------------------       ----------------------       --------------
<S>                                               <C>                         <C>                   <C>
     NET SALES..............................      $564,360                    $982,615                $1,546,975
     INCOME (LOSS) FROM OPERATIONS..........       $18,229                    $(15,699)                   $2,530
     IDENTIFIABLE ASSETS....................      $121,717                    $332,730                  $454,447

     2000                                          EUROPE                   NORTH AMERICA                TOTAL
     ----                                   --------------------       ----------------------       --------------
     Net sales..............................      $548,097                 $1,138,006                 $1,686,103
     Income (loss) from operations..........       $17,294                   $(78,302)                  $(61,008)
     Identifiable assets....................      $107,800                   $430,218                   $538,018

     1999                                          EUROPE                   NORTH AMERICA                 TOTAL
     ----                                   --------------------       ----------------------       -----------
     Net sales..............................      $491,071                 $1,263,401                 $1,754,472
     Income from operations.................       $10,541                    $49,294                    $59,835
     Identifiable assets....................       $93,900                   $457,912                   $551,812
</TABLE>


ITEM 2. PROPERTIES.

     The Company's primary facilities, which are leased except where otherwise
indicated, are as follows:

<TABLE>
<CAPTION>
                                                                                 APPROX            EXPIRATION
               FACILITY                             LOCATION                     SQ. FT.            OF LEASE
               --------                             --------                     -------           ----------
<S>                                         <C>                                  <C>                  <C>
Headquarters, Sales and
  Distribution Center (1)...................Port Washington, NY                  178,000              2007
Sales and Distribution Center (2)...........Suwanee, GA                          360,675              owned
Sales and Distribution Center...............Compton, CA                          140,000              2007
Sales and Distribution Center...............Naperville, IL                       241,000              2010
Sales Center................................Holmdel, NJ                           13,000              2004
Sales and Distribution Center...............Markham, Ontario                      45,000              2005
Sales and Distribution Center...............Verrieres le Buisson, France          45,000              2008
Sales and Distribution Center...............Frankfurt, Germany                    92,000              2010
Sales and Distribution Center...............Madrid, Spain                         35,000               (3)
Sales and Distribution Center...............Milan, Italy                          90,000              2003
Sales and Distribution Center...............Greenock, Scotland                    78,000              owned
Sales and Distribution Center...............Wellingborough, England               33,000              2013
Sales, Distribution and PC
   Assembly Center  ........................London, England                       64,000              2006
Sales Center................................Miami, FL                             71,000              2010
Sales Center................................Amstelveen, Netherlands                5,000              2002
PC Assembly, Sales
   and Distribution Center..................Fletcher, Ohio                       297,000              owned
European Headquarters.......................Uxbridge, England                      7,400              2005
Sales Office................................Uxbridge, England                      3,600              2010
Sales and Distribution Center...............Lidkoping, Sweden                     20,000              2002
Sales Center................................Stockholm, Sweden                      3,000              2003

(1)  For information about facilities leased from related parties, see "Certain
     Relationships and Related Transactions--Agreements--Leases"

(2)  Approximately 120,000 sq. ft. are leased to a third party through March
     2004.

(3)  Terminable upon two months prior written notice.
</TABLE>

ITEM 3. LEGAL PROCEEDINGS.

    The Company is a party to various pending legal proceedings and disputes
arising in the normal course of its business, including those involving certain
commercial, employment and intellectual property related claims, none of which,
in management's opinion, is anticipated to have a material adverse effect on the
Company's consolidated financial position or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     During the quarter ended December 31, 2001, there were no matters submitted
to a vote of the Company's security holders.


                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "SYX". The following table sets forth the high and low closing sales
price of the Company's Common Stock as reported on the New York Stock Exchange
for the periods indicated.

     2001                                                    HIGH         LOW

     FIRST QUARTER.....................................     $2.75        $1.00
     SECOND QUARTER....................................      3.60         1.50
     THIRD QUARTER.....................................      2.80         1.40
     FOURTH QUARTER....................................      2.70         1.30


     2000                                                    HIGH         LOW

     First quarter.....................................    $11.06        $8.19
     Second quarter....................................      9.13         3.44
     Third quarter.....................................      5.19         2.75
     Fourth quarter....................................      3.00         1.00

     On March 13, 2002, the last reported sale price of the Company's Common
Stock on the New York Stock Exchange was $2.65 per share. As of March 13, 2002,
the Company had 257 stockholders of record.

     The Company has not paid any dividends since its initial public offering
and anticipates that all of its cash provided by operations in the foreseeable
future will be retained for the development and expansion of its business, and
therefore does not anticipate paying dividends on its Common Stock in the
foreseeable future.

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

     The following selected financial information is qualified by reference to,
and should be read in conjunction with, the Company's Consolidated Financial
Statements and the notes thereto, and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" contained elsewhere in this
report. The selected income statement data for the years ended December 31,
2001, 2000 and 1999 and the selected balance sheet data as of December 31, 2001
and 2000 is derived from the audited consolidated financial statements which are
included elsewhere in this report. The selected balance sheet data as of
December 31, 1999, 1998 and 1997 and the selected income statement data for the
years ended December 31, 1998 and 1997 is derived from the audited financial
statements of the Company which are not included in this report.

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                       ------------------------------------
                                                   2001       2000      1999      1998      1997
                                                   ----       ----      ----      ----      ----
                                                    (In millions,  except per common share data,
                                                  number of catalog titles and number of countries)
<S>                                              <C>       <C>       <C>       <C>       <C>
INCOME STATEMENT DATA:

Net sales......................................  $1,547.0  $1,686.1  $1,754.5  $1,435.7  $1,145.4
  Gross profit.................................    $276.9    $209.9    $314.5    $288.6    $265.5
  Selling, general and administrative expenses.    $274.4    $270.9    $254.7    $224.2    $206.3
  Income (loss) from operations................      $2.5    $(61.0)    $59.8     $64.3     $59.3
  Income taxes.................................      $ .4    $(24.5)    $24.5     $25.8     $23.3
  Net income (loss)............................      $ .7    $(40.8)    $36.0     $41.3     $38.8
  Net income (loss) per common share:
    Basic......................................      $.02    $(1.19)    $1.01     $1.11     $1.02
    Diluted....................................      $.02    $(1.19)    $1.01     $1.11     $1.02
  Weighted average common shares outstanding:
    Basic......................................      34.1      34.3      35.8      37.3      38.0
    Diluted....................................      34.1      34.3      35.8      37.3      38.2

SELECTED OPERATING DATA:

  Orders entered...............................       4.0       3.9       4.4       3.8       3.5
  Number of catalogs distributed...............       126       157       171       179       162
  Number of catalog titles.....................        38        37        37        44        41
  Number of countries receiving catalogs.......        14        14        14        14        13

BALANCE SHEET DATA:

  Working capital .............................    $103.3    $106.7    $186.9    $194.6    $187.8
  Total assets.................................    $454.4    $538.0    $551.8    $454.4    $399.7
  Short-term debt..............................      $2.8     $48.6      $9.0
  Long-term debt, excluding current portion....                          $1.7      $2.5      $2.0
  Stockholders' equity.........................    $254.9    $255.7    $310.2    $286.6    $272.2
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

FORWARD LOOKING STATEMENTS - FACTORS THAT MAY AFFECT FUTURE RESULTS

     This report contains forward looking statements within the meaning of that
term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).
Additional written or oral forward looking statements may be made by the Company
from time to time, in filings with the Securities Exchange Commission or
otherwise. Statements contained in this report that are not historical facts are
forward looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward looking statements may
include, but are not limited to, projections of revenue, income or loss and
capital expenditures, statements regarding future operations, financing needs,
compliance with financial covenants in loan agreements, plans for acquisition or
sale of assets or businesses and consolidation of operations of newly acquired
businesses, and plans relating to products or services of the Company,
assessments of materiality, predictions of future events and the effects of
pending and possible litigation, as well as assumptions relating to the
foregoing. In addition, when used in this discussion, the words "anticipates",
"believes", "estimates", "expects", "intends", "plans" and variations thereof
and similar expressions are intended to identify forward looking statements.

     Forward looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified based on current
expectations. Consequently, future events and results could differ materially
from those set forth in, contemplated by, or underlying the forward looking
statements contained in this report. Statements in this report, particularly in
"Item 1. Business", "Item 3. Legal Proceedings", "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations", and
the Notes to Consolidated Financial Statements describe certain factors, among
others, that could contribute to or cause such differences.

     Some of the factors that may affect future results are discussed below.

     o    The Company is subject to global economic and market conditions,
          including the current conditions affecting the results of the
          Company's customers. The Company's results have been and could
          continue to be adversely affected depending on the length and severity
          of the current economic downturn. The Company may experience a
          continued decline in sales as a result of the current economic
          conditions and the lack of visibility relating to future orders. In
          response to economic conditions, the Company from time to time adjusts
          its cost structure to reduce spending where appropriate. A failure by
          the Company to reduce costs in a timely manner could adversely affect
          the Company's future operating results. In addition, notwithstanding
          such cost control measures, a continuing decline in the economy that
          adversely affects the Company's customers would likely adversely
          affect the Company as well.

     o    The Company's consolidated results of operations depends upon, among
          other things, its ability to maintain and increase sales volumes with
          existing customers; its ability to attract new customers and the
          financial condition of its customers. The Company cannot predict with
          any certainty whether it will be able to maintain or improve upon
          historical sales volumes with existing customers, or whether it will
          be able to attract new customers.

     o    The Company may not be able to compete effectively with current or
          future competitors. The market for the Company's products and services
          is intensely competitive and subject to constant technological change.
          The Company expects this competition to further intensify in the
          future. Some competitors are large companies with greater financial,
          marketing and product development resources than the Company's. In
          addition, new competitors may enter the Company's key markets. This
          may place the Company at a disadvantage in responding to competitors'
          pricing strategies, technological advances and other initiatives.

     o    In many cases the Company's products compete directly with those
          offered by other manufacturers and distributors. If any of the
          Company's competitors were to develop products or services that are
          more cost-effective or technically superior, demand for the Company's
          product offerings could decrease.

     o    The Company purchases certain materials and components for its
          products from various suppliers, some of which are located outside of
          the U.S. Any loss of, or interruption of supply from key suppliers may
          require the Company to find new suppliers. This could result in
          production or development delays while new suppliers are located,
          which could substantially impair operating results.

     o    The Company's PC products contain electronic components, subassemblies
          and software that in some cases are supplied through sole or limited
          source third-party suppliers. Although the Company does not anticipate
          any problems procuring supplies in the near-term, there can never be
          any assurance that parts and supplies will be available in a timely
          manner and at reasonable prices. If the availability of these or other
          components used in the manufacture of our products was to decrease, or
          if the prices for these components was to increase significantly,
          operating costs and expenses could be adversely affected.

     o    A significant portion of the Company's revenues are derived from the
          sale of products manufactured using licensed patents, software and/or
          technology. Failure to renew these licenses on favorable terms or at
          all could force the Company to stop manufacturing and distributing
          these products and the Company's financial condition could be
          adversely affected.

     o    The Company's inventory is subject to risk due to changes in market
          demand for particular products. The resulting excess and/or obsolete
          inventory could have an adverse impact on the Company's results of
          operations.

     o    The Company currently has operations located in nine countries outside
          the United States, and non-U.S. sales accounted for 38% of the
          Company's revenue during 2001. The Company's future results could be
          adversely affected by several factors, including changes in foreign
          currency exchange rates, changes in a country's economic or political
          conditions, unexpected changes in regulatory requirements and natural
          disasters.

     o    The Company's current domestic credit facility expires on June 15,
          2004. If the Company is unable to renew or replace this credit
          facility, its liquidity and capital resources may be adversely
          affected.

     Other factors that could contribute to or cause such differences include,
but are not limited to, unanticipated developments in any one or more of the
following areas: (i) the effect on the Company of volatility in the price of
paper and periodic increases in postage rates, (ii) the operation of the
Company's management information systems, (iii) significant changes in the
computer products retail industry, especially relating to the distribution and
sale of such products, (iv) the potential for expanded imposition of state sales
taxes, use taxes, or other taxes on direct marketing and e-commerce companies,
(v) timely availability of existing and new products, (vi) risks involved with
e-commerce, including possible loss of business and customer dissatisfaction if
outages or other computer-related problems should preclude customer access to
the Company, (vii) risks associated with delivery of merchandise to customers by
utilizing common delivery services such as the United States Postal Service and
UPS, including possible strikes and contamination, (viii) borrowing costs, (ix)
changes in taxes due to changes in the mix of U.S. and non-U.S. revenue, (x)
pending or threatened litigation and investigations and (xi) the availability of
key personnel, as well as other risk factors which may be detailed from time to
time in the Company's Securities and Exchange Commission filings.

     Readers are cautioned not to place undue reliance on any forward looking
statements contained this report, which speak only as of the date of this
report. The Company undertakes 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.

RESULTS OF OPERATIONS

     The Company had net income for the year ended December 31, 2001 of $653,000
compared to a net loss for the year ended December 31, 2000 of $40.8 million and
net income for the year ended December 31, 1999 of $36.0 million.

     The following table represents the Company's consolidated statement of
income data expressed as a percentage of net sales for the three most recent
fiscal years:

                                                   2001      2000      1999
                                                   ----      ----      ----
Net sales                                         100.0%    100.0%    100.0%
Gross profit                                       17.9      12.4      17.9
Selling, general and administrative expenses       17.7      16.1      14.5
Income (loss) from operations                        .2      (3.6)      3.4
Interest and other income                                               (.1)
Interest expense                                     .1        .3
Income taxes                                                 (1.5)      1.4
Net income (loss)                                    .1      (2.4)      2.1

NET SALES

     Net sales of $1.55 billion in 2001 were $139 million or 8.3% lower than the
$1.69 billion reported in 2000. A slowdown in the worldwide market for PCs
resulted in a $75 million, or 18%, decrease in sales of PCs in 2001. PC sales
represented approximately 23% of the Company's total sales in 2001 and included
sales of other manufacturers' PCs, which the Company has been reselling at
sharply reduced prices, but at acceptable gross profit margins, and Systemax
PCs. Sales in North America decreased 13.7% to $983 million in 2001 from $1.14
billion in 2000 primarily as a result of the economic slowdown in the United
States. Decreased sales to business customers were partially offset by increased
sales through television retailers. European sales increased 3.0% to $564.4
million in 2001 from $548 million in 2000. Movements in foreign exchange rates,
however, negatively impacted the European sales comparison by approximately $25
million in 2001 compared to 2000. Excluding the movements in foreign exchange
rates, European sales would have increased 7.5% over the prior year. Most of the
Company's European businesses reported sales increases in local currency, but at
a slower rate of growth from the previous year.

     For the year ended December 31, 2000, net sales decreased by $68 million or
3.9% to $1.69 billion from $1.75 billion in 1999. Worldwide sales of PCs, which
represented approximately 25% of the Company's total sales, were down 1% for the
year as a result of difficulties in that market. Sales attributable to the
Company's North American operations decreased 9.9% to $1.14 billion in 2000 from
$1.26 billion in 1999. The decrease was primarily in the Company's computer
products business, as a result of lower incoming orders from inbound customers.
European sales increased 11.6% to $548.1 million in 2000 from $491.1 million in
1999, as all of the Company's operations in Europe reported sales increases for
the year. Movements in foreign exchange rates negatively impacted the European
sales comparison by approximately $57 million in 2000 compared to 1999.
Excluding the movements in foreign exchange rates, European sales would have
increased 23% over the prior year. The table below reflects European sales for
the three reported years at constant exchange rates (in millions):

                                               2001         2000         1999
European sales as reported                    $564.4       $548.1       $491.1
European sales at 1999 exchange rates         $648.4       $603.8       $491.1

GROSS PROFIT

     Gross profit, which consists of net sales less product, shipping, assembly
and certain distribution center costs, recovered to $276.9 million in 2001 up
32.0%, or $67.1 million, from $209.9 million in 2000. The improvement was
attributable to cost reductions implemented in the Company's PC assembly
business and the absence of inventory liquidation costs in the PC assembly
business which adversely affected 2000. The Company closed one of its computer
products distribution warehouses in the fourth quarter of 2001, with the full
effect of the cost reduction to be realized in future years. Gross profit in
2001 was also favorably affected by the elimination of a liability of $3 million
recorded in a prior year which the Company determined is no longer required. The
gross profit margin was 17.9% (17.7% excluding the effect of the $3 million
adjustment) in 2001 compared to 12.4% in 2000. The gross profit margin in Europe
remained constant compared to the prior year.

     Gross profit in 2000 decreased $104.6 million to $209.9 million, from
$314.5 million in 1999. Gross profit in 2000 was significantly impacted by
losses in the Company's PC assembly business, principally related to increased
sales returns and losses on liquidation of excess inventory. Increased technical
support and service costs also contributed to the lower margin. The gross profit
margin decreased to 12.4% in 2000 from 17.9% in 1999. Gross profit margin in the
North American computer products business declined by approximately 3 percentage
points on the lower sales volume and gross profit margin in Europe declined by
1.5 percentage points.

     The market for computer products is subject to intense price competition,
which the Company anticipates will continue to have a negative impact on gross
margins. Gross profit margins on industrial product sales remained consistent in
2001 from 2000 and 1999, but continuing lower sales contributions of these
higher-margin products negatively impacted the Company's overall gross profit
margin.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling, general and administrative expenses totaled $274.4 million, or
17.7% of net sales in 2001, compared to $270.9 million, or 16.1% of net sales in
2000. This was due to a variety of reasons, including the following. In 2001,
the Company incurred television advertising expenses related to sales of its
PCs. The Company incurred consulting costs associated with implementation of a
new e-commerce internet platform and new order entry and fulfillment software.
The Company also wrote off approximately $2 million of previously capitalized
software projects abandoned in 2001. These costs were partially offset by
decreases in catalog advertising costs, staff reductions and lower bad debt
expense.

     For the year ended December 31, 2000, selling, general and administrative
expenses totaled $270.9 million, or 16.1% of net sales, compared to $254.7
million, or 14.5% of net sales in 1999. This increase resulted from higher
personnel and related costs in both North America and Europe, reflecting the
increase in the worldwide relationship marketing sales force and higher bad debt
expense. These expense increases were partially offset by lower advertising
costs associated with catalog mailings as the Company's focus continues to shift
to relationship sales and decreases in staffing levels in areas other than
relationship marketing during the year to adjust to the lower level of incoming
business.

INCOME (LOSS) FROM OPERATIONS

     The Company reported income from operations of $2.5 million in 2001, had a
loss from operations for the year ended December 31, 2000 of $61.0 million and
income from operations of $59.8 million for the year ended December 31, 1999.
Income from operations in 2001 includes the elimination of a liability of $3
million recorded in a prior year which the Company determined is no longer
required. The operating loss in 2000 resulted from the decline in gross profit
and increase in selling, general and administrative expenses as discussed above.
During the second quarter of 2000, the Company sold its internet auction
subsidiary, EZBid Inc., and closed a small software sales subsidiary, which
together eliminated approximately $5 million in operating losses on an
annualized basis. Operating income in Europe increased to $18.2 million in 2001,
from $17.3 million in 2000 and $10.5 million in 1999. European results were
adversely affected by $0.6 million in 2001 compared to 2000 and $1.5 million in
2000 compared to 1999, due to the stronger dollar in relation to European
currencies.

INTEREST AND OTHER INCOME/INTEREST EXPENSE

     Interest expense decreased to $1.8 million in 2001 from $4.4 million in
2000 due to decreased borrowings under the Company's credit facilities and lower
short-term interest rates. The weighted average interest rate on short-term
borrowings was 6.6% in 2001 and 7.9% in 2000. Interest and other income was $0.3
million in 2001, $0.1 million in 2000 and $1.2 million in 1999.

INCOME TAXES

     The effective tax rate in 2001 was 37.3%. Income taxes in 2000 consist of
income tax benefits for net operating loss carrybacks, reduced by foreign income
taxes paid or payable. The effective tax rate was 40.5% in 1999 as a result of
higher state and local taxes in the United States and a change in the relative
income earned in foreign locations. No tax benefit has been recorded for certain
state and local and foreign net operating loss carryforwards, where the
realizability of the related deferred tax benefits cannot be reasonably assured.

NET INCOME (LOSS)

     As a result of the above, net income for 2001 was $653,000, or $.02 per
basic and diluted share, the net loss for 2000 was $40.8 million, or $1.19 per
basic and diluted share, and net income for 1999 was $36.0 million, or $1.01 per
basic and diluted share.

SEASONALITY

     Net sales have historically been modestly weaker during the second and
third quarter as a result of lower business activity during the summer months.
The following table sets forth the net sales, gross profit and income (loss)
from operations for each of the quarters since January 1, 2000 (AMOUNTS IN
MILLIONS).

2001                             MARCH 31   JUNE 30   SEPTEMBER 30   DECEMBER 31
----                             --------   -------   ------------   -----------
NET SALES......................     $406      $364        $371         $407
GROSS PROFIT...................      $66       $61         $69          $80
INCOME (LOSS) FROM OPERATIONS..       $1       $(3)         $1           $4

2000                             MARCH 31   JUNE 30   SEPTEMBER 30   DECEMBER 31
----                             --------   -------   ------------   -----------
Net sales......................     $449      $406        $410         $421
Gross profit...................      $68       $44         $48          $50
Loss from operations...........      $(3)     $(20)       $(21)        $(17)


FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

     Liquidity is the ability to generate sufficient cash flows from operating
activities to meet obligations and commitments. In addition, liquidity includes
the ability to obtain appropriate financing and to convert those assets that are
no longer required to meet existing strategic and financing objectives into
cash. Therefore, liquidity cannot be considered separately from capital
resources that consist of current and potentially available funds for use in
achieving long-range business objectives and meeting debt service commitments.
Currently, the Company's liquidity needs arise primarily from working capital
requirements and capital expenditures.

     The Company's cash balance increased $22.0 million to $36.5 million during
the year ended December 31, 2001. The Company's working capital was $103 million
at December 31, 2001, down from $107 million at the end of 2000. This was due
principally to a $47 million decrease in accounts receivable and a $35 million
decrease in inventories, offset by a $22 million increase in cash, a $46 million
decrease in notes payable to banks and a $39 million decrease in accrued
expenses and other current liabilities.

     The Company maintains its cash and cash equivalents primarily in money
market funds or their equivalent. The Company does not have any derivative
financial instruments. As of December 31, 2001, all of the Company's investments
mature in less than three months. Accordingly, the Company does not believe that
its investments have significant exposure to interest rate risk.

     Cash was provided by operating activities in each of the three years
presented, $95.6 million in 2001, $8.5 million in 2000 and $20.5 million in
1999. Cash flow was provided in 2001 through additional inventory reductions,
decreases in accounts receivable and receipt of a tax refund resulting from the
loss recorded in 2000, offset by a decrease in accounts payable. The significant
loss incurred by the Company in 2000 was the primary reason for the decrease in
operating cash flow compared to 1999. However, cash flow was provided by
operations in 2000 as a result of reductions in inventories and a decrease in
accounts receivable.

     In 2001 the Company used cash in investing activities of $23.8 million,
primarily for property, plant and equipment additions. These included $9.5
million for software and systems development and $5.5 million toward the
construction of a new facility for the Company's United Kingdom operations. In
2000 the Company used net cash in investing activities of $40.7 million for
property, plant and equipment additions. Capital additions in 2000 included
$13.6 million for the purchase and outfitting of a new distribution facility in
Georgia, $2 million for upgrading the Company's information systems
infrastructure and $7.9 million in connection with software development
programs. In 1999 the Company used net cash of $36.1 million for investing
activities. Expenditures for property, plant and equipment totaled $22.0 million
and included expenditures related to expansion of the Company's PC assembly
facility and improvements to information systems. Expenditures for business
acquisitions, including the payment of contingent consideration, totaled $19.2
million. Short-term investments decreased by $5.1 million to partially fund
these activities.

     Capital expenditures in 2002 are expected to be $10 million and includes
the completion of the construction of a new UK facility. The Company plans to
fund these expenditures out of cash from operations and borrowings.

     In 2001, $45.8 million of cash was used in financing activities, all of
which went to pay down short-term borrowings. In 2000, $27.5 million was
provided by financing activities and in 1999 $3.8 million of cash was used in
financing activities. In 2000, the Company purchased 1.1 million treasury shares
for $9.8 million and used $2.2 million to repay a long-term loan in Europe. The
Company borrowed $39.6 million to finance these expenditures as well as the
fixed asset additions. In 1999, $10.1 million was used to repurchase 890,000
shares of the Company's common stock and $2.8 million was used to repay a
mortgage loan. This was partially funded by $9.0 million in short-term bank
borrowings.

     As a result of the net loss incurred in the United States in the year ended
December 31, 2001, the Company intends to apply for a refund of approximately $9
million from the Internal Revenue Service. The Company applied for and received
a refund of approximately $25 million from the Internal Revenue Service for the
net loss incurred in 2000.

     In June 2001, the Company entered into a $70,000,000 revolving credit
agreement with a group of financial institutions to provide for borrowings in
the United States. The borrowings are secured by all of the domestic accounts
receivable and inventories of the Company and the Company's shares of stock and
membership interests in its domestic subsidiaries. The credit facility expires
and outstanding borrowings thereunder are due on June 15, 2004. The borrowings
under the agreement are subject to borrowing base limitations of up to 75% of
eligible accounts receivable and up to 25% of qualified inventories. The
interest on outstanding advances is payable monthly, at the Company's option, at
the agent bank's base rate (4.75 at December 31, 2001) plus 0.25% to 0.75% or
the bank's daily LIBOR rate (3.62% at December 31, 2001) plus 2.25% to 3%. The
facility also calls for a commitment fee payable quarterly in arrears of 0.5% of
the average daily unused portion of the facility. The undrawn availability under
the agreement may not be less than $20,000,000 prior to June 30, 2002. As of
December 31, 2001, availability under the agreement was $45,291,000, against
which there were no outstanding advances and there were outstanding letters of
credit of $4,000,000. The revolving credit agreement contains certain financial
and other covenants, including restrictions on capital expenditures and payments
of dividends.

     The Company also has a (pound)15,000,000 ($21,828,000 at the December 31,
2001 exchange rate) multi-currency credit facility with a financial institution
in the United Kingdom, which is available to its United Kingdom subsidiaries.
Drawings under the facility may be made by overdraft, trade acceptance or loan.
The facility is secured by assets of certain of the Company's United Kingdom
subsidiaries and a guaranty from Systemax. At December 31, 2001 there were
(pound)1,944,000 ($2,829,000) of borrowings outstanding under this line.

     The Company has accepted a proposal from a financial institution and signed
a commitment letter for an $8.4 million, ten-year mortgage on its Suwanee,
Georgia distribution facility. The loan will bear interest at 7.04%. Closing is
subject to due diligence and negotiation of a definitive agreement.

     The Company is obligated under operating leases for the rental of certain
facilities and equipment which expire at various dates through 2013. The Company
currently leases its two New York facilities from entities owned by Richard
Leeds, Robert Leeds and Bruce Leeds, the Company's three principal stockholders
and senior executive officers. The annual rentals total $1.2 million and both
leases expire in 2007.

     The Company believes it has access to adequate funds for continued
operations and growth through its available cash balances and funds generated by
operations and lines of credit maintained with financial institutions.

     The Company is party to certain litigation, as disclosed in "Commitments
and Contingencies" in the Notes to Consolidated Financial Statements, the
outcome of which the Company believes will not have a material adverse effect on
its consolidated financial statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The Company's significant accounting policies are described in Note 1 to
the consolidated financial statements. The policies below have been identified
as critical to the Company's business operations and understanding the results
of operations. Certain accounting policies require the application of
significant judgment by management in selecting the appropriate assumptions for
calculating financial estimates. By their nature, these judgments are subject to
an inherent degree of uncertainty, and as result, actual results could differ
from those estimates. These judgments are based on historical experience,
observation of trends in the industry, information provided by customers and
information available from other outside sources, as appropriate. Management
believes that full consideration has been given to all relevant circumstances
that the Company may be subject to, and the financial statements of the Company
accurately reflect management's best estimate of the results of operations,
financial position and cash flows of the Company for the years presented.

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE. The Company recognizes sales upon
shipment of products to customers since title passes upon shipment. Reserves for
estimated returns and allowances are provided when sales are recorded based on
historical experience and current trends. The Company evaluates the
collectibility of accounts receivable based on a combination of factors,
including (1) an analysis of customer accounts and (2) the Company's historical
experience with accounts receivable write-offs. The analysis includes the age of
the receivable, the financial condition of a customer or industry, and general
economic conditions. In circumstances where we are aware of customer
charge-backs or a specific customer's inability to meet its financial
obligations to us, a specific reserve for bad debts applicable to amounts due to
reduce the net recognized receivable to the amount we reasonably believe will be
collected is recorded. In those situations with ongoing discussions, the amount
of bad debt recognized is based on the status of the discussions. While bad debt
allowances have been within expectations and the provisions established, there
can be no guarantee that the Company will continue to experience the same
allowance rate it has in the past.

INVENTORIES. The Company values its inventories at the lower of cost or market,
cost being determined on the first-in, first-out method. Reserves for slow
moving and obsolete or unmarketable merchandise are provided based on historical
experience and current product demand. The adequacy of these reserves is
evaluated quarterly. While markdowns and obsolescence have been within
expectations and the provisions established, there can be no guarantee that the
Company will continue to experience the same level of markdowns it has in the
past.

LONG-LIVED ASSETS. Management exercises judgment in evaluating the Company's
long-lived assets for impairment. We believe the Company will generate
sufficient undiscounted cash flow to more than recover the investments made in
property, plant and equipment, as well as goodwill and other intangibles
recorded as a result of acquisitions. While the Company believes that its
estimates of future cash flows are reasonable, different assumptions regarding
such cash flows could materially affect its evaluations

INCOME TAXES. The determination of the Company's tax provision is complex due to
operations in several tax jurisdictions outside the United States. The Company
is subject to periodic examination from domestic and foreign tax authorities
regarding the amount of taxes due. These examinations include questions
regarding the timing and amount of deductions and the allocation of income among
various tax jurisdictions. In evaluating the exposure associated with our
various filing positions, the Company records reserves for probable exposures.
The Company is currently undergoing an examination of its tax year ended
December 31, 2000 by the United States Internal Revenue Service. Based on the
Company's evaluation of its tax positions, the Company believes it has
appropriately accrued for probable exposures.

DEFERRED TAX ASSETS. The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") 109, "Accounting for Income
Taxes", which requires that deferred tax assets and liabilities be recognized
for the effect of temporary differences between the book and tax bases of
recorded assets and liabilities. The realization of net deferred tax assets is
dependent upon the Company's ability to generate future taxable income. Where it
is more likely than not that some portion or all of the deferred tax asset will
not be realized, the Company has provided a valuation allowance. In preparing
estimates of future taxable income, the Company has used the same assumptions
and projections utilized in its internal forecasts and estimates.

RECENT ACCOUNTING DEVELOPMENTS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible
Assets". SFAS 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the pooling of
interests method. SFAS 142 requires the use of a non-amortization approach to
account for purchased goodwill and certain intangibles. Under a non-amortization
approach, goodwill and certain intangibles will not be amortized into results of
operations, but instead would be reviewed for impairment and written down and
charged to results of operations only in periods in which the recorded value of
goodwill and certain intangibles is more than its fair value. The Company will
be required within six months from the date of adoption to test its goodwill for
impairment under the new standard, which could result in an adjustment to the
amount of recorded goodwill. The Company is currently assessing, but has not yet
determined, the impact of SFAS 141 and SFAS 142 on its financial position and
results of operations.

     In August 2001, the FASB issued SFAS 143, " Accounting for Asset Retirement
Obligations". This standard requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes the
cost associated with the asset retirement obligation by increasing the carrying
amount of the related long-lived asset. Over time, the liability is adjusted to
its present value each period, and the capitalized cost is depreciated over the
useful life of the related asset. Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement. The standard is effective for fiscal years beginning after June
15, 2002. The adoption of SFAS 143 is not expected to have a material impact on
the Company's financial position or results of operations.

     In October 2001, the FASB issued SFAS 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets". SFAS 144 supercedes SFAS 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of", however, it retains many of its fundamental provisions. SFAS 144 requires
that long-lived assets be measured at the lower of carrying amount or fair value
less cost to sell, whether reported in continuing operations or in discontinued
operations. Therefore, discontinued operations will no longer be measured at net
realizable value or include amounts for operating losses that have not yet
occurred. SFAS 144 also broadens the reporting of discontinued operations to
include all components of an entity with operations that can be distinguished
from the rest of the entity and that will be eliminated from the ongoing
operations of the entity in a disposal transaction. The provisions of this
Statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The adoption of SFAS 144 is not expected to
have a material impact on the Company's financial position or results of
operations.

IMPLICATIONS TO THE COMPANY FROM THE ADOPTION OF A EUROPEAN COMMON CURRENCY

     The countries of the European Union have adopted a single currency, the
"Euro." The Euro came into existence on January 1, 2000, and could have been
used for transactions within and between the countries of the Economic and
Monetary Union (Austria, Belgium, Finland, France, Germany, Netherlands,
Ireland, Italy, Luxembourg, Portugal and Spain), with national currencies
expressed as a denomination (national currency units) of the Euro. During the
three-year transition period following its introduction, countries were allowed
to transact business both in the euro and in their own currencies at fixed
exchange rates. On January 1, 2002, the Euro became the only currency in
Economic and Monetary Union countries.

     The Company has extensive operations in Europe, including France, Germany,
Italy, the Netherlands, Spain, Sweden, England and Scotland. It also sells into
additional countries in Europe. For the 2001 fiscal year, approximately 36.5% of
the Company's net sales were in Europe. With the exception of Sweden and the
United Kingdom, all of the countries in which the Company has operations are
participants in the European common currency, the Euro. The introduction of the
Euro has not required a significant modification to the Company's accounting
systems and has not had a significant adverse impact on European sales or
pricing. There is no expectation of a significant adverse impact in the future.
The Company adopted the Euro for internal systems and reporting as of January 1,
2002.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

     The Company is exposed to market risks, which include changes in U.S. and
international interest rates as well as changes in currency exchange rates as
measured against the U.S. dollar and each other.

     The Company has no involvement with derivative financial instruments and
does not use them for trading purposes. Changes in currency exchange rates as
measured against the U.S. dollar may positively or negatively affect Systemax's
sales, gross margins, operating expenses and retained earnings as expressed in
U.S. dollars. The Company may enter into foreign currency options or forward
exchange contracts aimed at limiting in part the impact of certain currency
fluctuations, but as of December 31, 2001 the Company had no outstanding forward
exchange contracts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The information required by Item 8 of Part II is incorporated herein by
reference to the Consolidated Financial Statements filed with this report; see
Item 14 of Part IV.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information required by Item 10 of Part III is hereby incorporated by
reference from the Company's Proxy Statement for the 2002 Annual Meeting of
Stockholders (the "Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION.

     The information required by Item 11 of Part III is hereby incorporated by
reference from the Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information required by Item 12 of Part III is hereby incorporated by
reference from the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required by Item 13 of Part III is hereby incorporated by
reference from the Proxy Statement.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K.

     (a)  1.   The Consolidated Financial Statements of Systemax Inc.  REFERENCE
                                                                       ---------

               Independent Auditors' Report                            F-1
               Consolidated Balance Sheets                             F-2
               Consolidated Statements of Income                       F-3
               Consolidated Statements of Shareholders' Equity         F-4
               Consolidated Statements of Cash Flows                   F-5
               Notes to Consolidated Financial Statements              F-6 - F13

          2.   Financial Statement Schedules:

               Schedules not included with this additional financial data have
               been omitted because they are not applicable or the required
               information is shown in the Consolidated Financial Statements or
               Notes thereto.

          3.   Exhibits.

               EXHIBIT
               NO.       DESCRIPTION
               -------   -----------

               3.1       Composite Certificate of Incorporation of Registrant,
                         as amended

               3.2       By-laws of Registrant1

               4.1       Stockholders Agreement2

               10.1      Form of 1995 Long-Term Stock Incentive Plan3*

               10.2      Form of 1999 Long-Term Stock Incentive Plan8*

               10.3      Lease Agreement dated October 14, 1992 between the
                         Company and 2RB Associates Co. (Port Washington
                         facility) 1

               10.4      Lease Agreement dated September 20, 1988 between the
                         Company and Addwin Realty Associates (Port Washington
                         facility) 1

               10.5      Amendment to Lease Agreement dated September 29, 1998
                         between the Company and Addwin Realty Associates (Port
                         Washington facility) 7

               10.6      Lease Agreement dated as of July 17, 1997 between the
                         Company and South Bay Industrials Company (Compton
                         facility) 4

               10.7      Build-to-Suit Lease Agreement dated April, 1995 among
                         the Company, American National Bank and Trust Company
                         of Chicago and Walsh, Higgins & Company (Naperville
                         facility) 1

               10.8      Lease Agreement dated September 17, 1998 between Tiger
                         Direct, Inc. and Keystone Miami Property Holding Corp.
                         (Miami facility) 5

               10.9      Royalty Agreement dated June 30, 1986 between the
                         Company and Richard Leeds, Bruce Leeds and Robert
                         Leeds, and Addendum thereto 1

               10.10     Form of 1995 Stock Plan for Non-Employee Directors 3*

               10.11     Consulting Agreement dated as of January 1, 1996
                         between the Company and Gilbert Rothenberg 3*

               10.12     Asset Purchase Agreement dated September 12, 1997 among
                         Infotel, Inc., Mark L. Runkle, Midwest Micro Corp. and
                         the Company 6

               10.13     Employment Agreement dated as of December 12, 1997
                         between the Company and Steven M. Goldschein 4*

               10.14     Loan and Security Agreement, dated June 13, 2001,
                         between The Chase Manhattan Bank (as Lender and Agent)
                         and TransAmerica Business Capital Corporation (as
                         Lender and Co-Agent) with the Company and certain
                         subsidiaries of the Company (as Borrowers) 10

               10.15     Amendment No. 1, dated as of September 1, 2001, to the
                         Loan and Security Agreement, dated June 13, 2001,
                         between The Chase Manhattan Bank (as Lender and Agent)
                         and TransAmerica Business Capital Corporation (as
                         Lender and Co-Agent) with the Company and certain
                         subsidiaries of the Company (as Borrowers) 11

               10.16     Amendment No. 2, dated as of December 13, 2001, to the
                         Loan and Security Agreement, dated June 13, 2001,
                         between The Chase Manhattan Bank (as Lender and Agent)
                         and TransAmerica Business Capital Corporation (as
                         Lender and Co-Agent) with the Company and certain
                         subsidiaries of the Company (as Borrowers)

               10.17     Amendment No. 3, dated as of December 20, 2001, to the
                         Loan and Security Agreement, dated June 13, 2001,
                         between The Chase Manhattan Bank (as Lender and Agent)
                         and TransAmerica Business Capital Corporation (as
                         Lender and Co-Agent) with the Company and certain
                         subsidiaries of the Company (as Borrowers)

               19.1      Specimen stock certificate of Registrant

               21        Subsidiaries of the Registrant

               23        Consent of experts and counsel: Consent of Independent
                         Public Accountants

               99        Audit Committee Charter 9

     (b)  Reports on Form 8-K.

               No reports on Form 8K were filed during the quarter ended
               December 31, 2001.

*   Management contract or compensatory plan or arrangement

1    Incorporated herein by reference to the Company's registration statement on
     Form S-1 (Registration No. 33-92052).
2    Incorporated herein by reference to the Company's quarterly report on Form
     10-Q for the quarterly period ended September 30, 1995.
3    Incorporated herein by reference to the Company's registration statement on
     Form S-1 (Registration No. 333-1852).
4    Incorporated herein by reference to the Company's annual report on Form
     10-K for the year ended December 31, 1997.
5    Incorporated herein by reference to the Company's quarterly report on Form
     10-Q for the quarterly period ended September 30, 1998.
6    Incorporated herein by reference to the Company's report on Form 8-K dated
     September 26, 1997.
7    Incorporated herein by reference to the Company's annual report on Form
     10-K for the year ended December 31, 1998.
8    Incorporated herein by reference to the Company's report on Form 10-Q for
     the quarterly period ended September 30, 1999
9    Incorporated herein by reference to the Company's quarterly report on Form
     10-Q for the quarterly period ended June 30, 2000
10   Incorporated herein by reference to the Company's report on Form 8-K dated
     June 13, 2001.
11   Incorporated herein by reference to the Company's quarterly report on Form
     10-Q for the quarterly period ended September 30, 2001.

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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 in Port Washington, New
York on the 27th day of March, 2002.

                                        SYSTEMAX INC.

                                        By:         /s/ RICHARD  LEEDS
                                        ........................................
                                                     Richard Leeds
                                          Chairman and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

       SIGNATURE                           TITLE                      DATE

    /s/ RICHARD LEEDS       Chairman and Chief Executive Officer  March 27, 2002
...........................     (Principal Executive Officer)
      Richard Leeds

     /s/ BRUCE LEEDS           Vice Chairman and President of     March 27, 2002
..........................         International Operations
       Bruce Leeds

    /s/ ROBERT LEEDS           Vice Chairman and President of     March 27, 2002
..........................           Domestic Operations
        Robert Leeds

    /s/ ROBERT DOOLEY       Director and Senior Vice President--  March 27, 2002
..........................  Worldwide Computer Sales and Marketing
      Robert Dooley

  /s/ STEVEN GOLDSCHEIN          Senior Vice President and        March 27, 2002
..........................         Chief Financial Officer
    Steven Goldschein          (Principal Financial Officer)


 /s/ MICHAEL J. SPEILLER       Vice President and Controller      March 27, 2002
..........................     (Principal Accounting Officer)
    Michael J. Speiller

 /s/ ROBERT D. ROSENTHAL                 Director                 March 27, 2002
..........................
   Robert D. Rosenthal

     /s/ STACY DICK                      Director                 March 27, 2002
..........................
       Stacy Dick

    /s/ ANN R. LEVEN                     Director                 March 27, 2002
..........................
      Ann R. Leven

<PAGE>

                          INDEPENDENT AUDITORS' REPORT

The Shareholders and Board of Directors of
SYSTEMAX INC.:

We have audited the accompanying consolidated balance sheets of Systemax Inc.
and its subsidiaries, (the "Company"), as of December 31, 2001 and 2000 and the
related consolidated statements of operations, shareholders' equity and cash
flows for each of the three years in the period ended December 31, 2001. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company at
December 31, 2001 and 2000, and the consolidated results of their operations and
their cash flows for each of the three years ended December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.



/s/ DELOITTE & TOUCHE LLP
New York, New York
March 5, 2002

<PAGE>

                                  SYSTEMAX INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
                      (IN THOUSANDS, EXCEPT FOR SHARE DATA)



                                                         2001            2000
                                                         ----            ----

ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                          $  36,464       $   14,496
  Accounts receivable, net                             136,358          183,493
  Inventories                                           92,170          127,271
  Prepaid expenses and other current assets             18,884           29,509
  Income taxes receivable                                7,755           25,486
  Deferred income tax benefit                            9,650            8,781
                                                     ---------       ----------
         Total current assets                          301,281          389,036

PROPERTY, PLANT AND EQUIPMENT, net                      82,623           74,749

GOODWILL, net                                           67,967           70,672

DEFERRED INCOME TAX BENEFIT                                               3,224

OTHER ASSETS                                             2,576              337
                                                     ---------       ----------

      TOTAL                                          $ 454,447       $  538,018
                                                     =========       ==========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:

  Notes payable to banks                             $   2,829       $   48,559
  Accounts payable                                     139,472          170,548
  Accrued expenses and other current liabilities        55,641           63,240
                                                     ---------       ----------
         Total current liabilities                     197,942          282,347
                                                     ---------       ----------

Deferred tax liabilities                                 1,557
                                                     ---------
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
  Preferred stock, par value $.01 per share,
    authorized 25 million shares, issued none
  Common stock, par value $.01 per share,
    authorized 150 million shares, issued
    38,231,990; outstanding 34,104,290                     382              382
  Additional paid-in capital                           176,743          176,743
  Accumulated other comprehensive loss                  (8,038)          (6,662)
  Retained earnings                                    134,350          133,697
                                                     ---------       ----------
                                                       303,437          304,160
                                                     ---------       ----------
  Less: common stock in treasury at cost -
    4,127,700 shares                                    48,489           48,489
                                                     ---------       ----------
         Total shareholders' equity                    254,948          255,671
                                                     ---------       ----------

         TOTAL                                       $ 454,447       $  538,018
                                                     =========       ==========

See notes to consolidated financial statements.

<PAGE>

                                  SYSTEMAX INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                 (IN THOUSANDS, EXCEPT PER COMMON SHARE AMOUNTS)


                                          2001           2000           1999
                                          ----           ----           ----

NET SALES                             $ 1,546,975    $ 1,686,103    $ 1,754,472

COST OF SALES                           1,270,051      1,476,248      1,439,947
                                      -----------    -----------    -----------

GROSS PROFIT                              276,924        209,855        314,525

SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES                                274,394        270,863        254,690
                                      -----------    -----------    -----------

INCOME (LOSS) FROM OPERATIONS               2,530        (61,008)        59,835

INTEREST AND OTHER INCOME                    (276)          (106)        (1,153)

INTEREST EXPENSE                            1,764          4,352            465
                                      -----------    -----------    -----------

INCOME (LOSS) BEFORE INCOME TAXES           1,042        (65,254)        60,523

PROVISION (BENEFIT) FOR INCOME TAXES          389        (24,483)        24,511
                                      -----------    -----------    -----------

NET INCOME (LOSS)                     $       653    $   (40,771)   $    36,012
                                      ===========    ===========    ===========

NET INCOME (LOSS) PER COMMON SHARE:
  BASIC                               $       .02    $     (1.19)   $      1.01
                                      ===========    ===========    ===========
  DILUTED                             $       .02    $     (1.19)   $      1.01
                                      ===========    ===========    ===========

See notes to consolidated financial statements.

<PAGE>

                                  SYSTEMAX INC.
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                              Accumulated
                                        Common Stock                             Other
                                   --------------------- Additional          Comprehensive Treasury
                                   Number of               Paid-in  Retained      Loss       Stock   Comprehensive
                                     Shares     Amount     Capital  Earnings   Net of Tax   At Cost  Income (Loss)
                                   ---------- ---------- ---------- -------- ------------- --------- -------------
<S>                                <C>        <C>        <C>        <C>      <C>           <C>       <C>
BALANCES, JANUARY 1, 1999            36,128    $   382    $176,743  $138,456   $     (91)  $(28,604)

Change in cumulative translation
  adjustment                                                                      (2,657)              $  (2,657)
Purchase of treasury shares            (890)                                                (10,055)
Net income                                                            36,012                              36,012

                                   ---------- ---------- ---------- -------- ------------- --------- -------------

Total comprehensive income                                                                             $  33,355
                                                                                                     =============

BALANCES, DECEMBER 31, 1999          35,238        382     176,743   174,468      (2,748)   (38,659)

Change in cumulative translation
  adjustment                                                                      (3,914)              $  (3,914)
Purchase of treasury shares          (1,134)                                                 (9,830)
Net loss                                                             (40,771)                            (40,771)
                                   ---------- ---------- ---------- -------- ------------- --------- -------------

Total comprehensive loss                                                                               $ (44,685)
                                                                                                     =============

BALANCES, DECEMBER 31, 2000          34,104        382     176,743   133,697      (6,662)   (48,489)

Change in cumulative translation
  adjustment                                                                      (1,376)              $  (1,376)
Net income                                                               653                                 653
                                   ---------- ---------- ---------- -------- ------------- --------- -------------

Total comprehensive loss                                                                               $    (723)
                                                                                                     =============

BALANCES, DECEMBER 31, 2001          34,104    $   382    $176,743  $134,350   $  (8,038)  $(48,489)
                                   ========== ========== ========== ======== ============= =========

See notes to consolidated financial statements.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                  SYSTEMAX INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
                                 (IN THOUSANDS)

                                                                       2001             2000             1999
                                                                       ----             ----             ----
<S>                                                                  <C>              <C>              <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income (loss)                                                    $    653         $(40,771)        $ 36,012
Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
    Depreciation and amortization, net                                 15,143           13,608           11,170
    Charges associated with the impairment of certain
     long lived assets                                                                                    1,921
    Provision for deferred income taxes                                 7,940              230            1,160
    Provision for returns and doubtful accounts                         3,696           12,721            8,832
    Loss on abandonment                                                 2,003
    Changes in certain assets and liabilities:
      Accounts receivable                                              40,124           (3,263)         (46,578)
      Inventories                                                      33,946           43,124          (39,506)
      Prepaid expenses and other current assets                         9,037           (1,245)          (7,186)
      Income tax receivable                                            19,445          (25,486)
      Accounts payable and accrued expenses                           (36,381)           9,554           54,714
                                                                     ---------        ---------        ---------

          Net cash provided by operating activities                    95,606            8,472           20,539
                                                                     ---------        ---------        ---------

CASH FLOWS USED IN INVESTING ACTIVITIES:
Net change in short-term investments                                                                      5,050
Investments in property, plant and equipment                          (24,682)         (40,738)         (21,981)
Proceeds from disposals of property, plant and equipment                  856
Acquisitions, net of cash acquired                                                                      (10,176)
Deferred payments on acquisitions                                                         (249)          (9,000)
                                                                     ---------        ---------        ---------

          Net cash used in investing activities                       (23,826)         (40,987)         (36,107)
                                                                     ---------        ---------        ---------

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds (repayments) of short-term borrowings from banks             (45,762)          39,559            9,000
Repayments of long-term borrowings                                                      (2,245)          (2,767)
Purchase of treasury shares                                                             (9,830)         (10,055)
                                                                     ---------        ---------        ---------

          Net cash provided by (used in) financing activities         (45,762)          27,484           (3,822)
                                                                     ---------        ---------        ---------

EFFECTS OF EXCHANGE RATES ON CASH                                      (4,050)           2,057           (5,169)
                                                                     ---------        ---------        ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   21,968           (2,974)         (24,559)
                                                                     ---------        ---------        ---------
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                        14,496           17,470           42,029
                                                                     ---------        ---------        ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD                            $ 36,464         $ 14,496         $ 17,470
                                                                     =========        =========        =========
SUPPLEMENTAL DISCLOSURES:

Interest paid                                                        $  2,026         $  4,176         $    537
                                                                     =========        =========        =========
Income taxes paid                                                    $  3,819         $  5,027         $ 21,684
                                                                     =========        =========        =========

See notes to consolidated financial statements.
</TABLE>

<PAGE>

                                  SYSTEMAX INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial
     statements include the accounts of Systemax Inc. and its wholly-owned
     subsidiaries (collectively, the "Company" or "Systemax"). All significant
     intercompany accounts and transactions have been eliminated in
     consolidation. The equity method of accounting is used for the Company's
     investment in a 50%-owned joint venture, over which the Company exercises
     significant influence. The results of operations of this investee are not
     material to the results of operations of the Company. The joint venture
     brokers paper, a significant portion of which is used by the Company in
     printing its catalogs.

     CASH AND CASH EQUIVALENTS - The Company considers amounts held in money
     market accounts and other short-term investments with an original maturity
     date of approximately three months or less to be cash equivalents. The
     Company's investments in cash equivalents are classified as debt securities
     available-for-sale. These equivalents are stated at fair market value.
     Unrealized holding gains and losses are not significant for any of the
     years presented.

     REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE - The Company recognizes sales
     of products, including shipping revenue, at the time of shipment. Accounts
     receivable are shown in the consolidated balance sheets net of allowances
     for doubtful collections and subsequent customer returns of approximately
     $11,120,000 and $15,329,000 at December 31, 2001 and 2000, respectively.
     The changes in these allowance accounts are summarized as follows (in
     thousands):

       YEAR ENDED DECEMBER 31                      2001       2000       1999
       ----------------------                     ------     ------     ------
       Balance, beginning of year............... $ 15,329   $ 13,963   $  8,664
       Charged to expense.......................    3,696     12,721      8,832
       Acquisitions.............................                          1,614
       Reductions, principally write-offs.......   (7,905)   (11,355)    (5,147)
                                                 --------   --------   --------
       Balance, end of year..................... $ 11,120   $ 15,329   $ 13,963
                                                 ========   ========   ========

     INVENTORIES - Inventories consist primarily of finished goods and are
     stated at the lower of cost or market value. Cost is determined by using
     the first-in, first-out method.

     PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated at
     cost. Depreciation of furniture, fixtures and equipment is on the
     straight-line or accelerated method over their estimated useful lives
     ranging from three to ten years. Depreciation of buildings is on the
     straight-line method over estimated useful lives of 30 to 50 years.
     Leasehold improvements are amortized over the term of the respective
     leases.

     CAPITALIZED SOFTWARE COSTS - The Company capitalizes purchased software
     ready for service and capitalizes software development costs incurred on
     significant projects from the time that the preliminary project stage is
     completed and management commits to funding a project until the project is
     substantially complete and the software is ready for its intended use.
     Capitalized costs include materials and service costs and payroll and
     payroll-related costs. Capitalized software costs are amortized using the
     straight-line method over the estimated useful life of the underlying
     system, generally five years.

     FOREIGN CURRENCY TRANSLATION - The financial statements of the foreign
     entities are translated into U.S. dollars, the reporting currency, using
     year-end exchange rates for consolidated balance sheet items and average
     exchange rates for the consolidated statements of operations items. The
     translation differences are made directly to a separate component of
     shareholders' equity.

     FOREIGN CURRENCY TRANSACTIONS - Transactions in foreign currencies are
     recorded at the exchange rate in effect at the transaction date. Realized
     and unrealized exchange gains and losses during the year are included in
     the respective year's consolidated statement of operations.

     ADVERTISING COSTS - Direct response advertising costs, consisting primarily
     of catalog preparation, printing and postage expenditures, are amortized
     over the period of catalog distribution during which the benefits are
     expected. Advertising expenditures relating to the Company's national
     advertising campaign and other television advertising costs are expensed in
     the period the advertising takes place. Advertising costs, net of rebates
     from vendors, of $53.0 million in 2001, $54.1 million in 2000 and $57.1
     million in 1999 are included in the accompanying Consolidated Statements of
     Operations. Prepaid expenses at December 31, 2001 and 2000 include deferred
     advertising costs of $6.3 million and $14.8 million, respectively, which
     are reflected as an expense during the period benefited.

     RESEARCH AND DEVELOPMENT COSTS - Costs incurred in connection with research
     and development are expensed as incurred. Such expenses for the years ended
     December 31, 2001, 2000 and 1999 aggregated approximately $1,539,000,
     $1,868,000 and $2,256,000, respectively.

     GOODWILL, NET - Goodwill and negative goodwill are combined and presented
     net of accumulated amortization. Goodwill represents the excess of
     acquisition costs over the fair market value of the net assets of acquired
     businesses and is being amortized on a straight-line basis over their
     estimated useful lives, ranging from 10 to 40 years. In instances where the
     Company had acquired a business below the fair value of the assets
     acquired, the Company recorded negative goodwill. Annual amortization of
     goodwill was an expense of $1,605,000 in 2001, $1,698,000 in 2000 and
     $2,323,000 in 1999.

     EVALUATION OF LONG-LIVED ASSETS - Long-lived assets are assessed for
     recoverability whenever events or changes in circumstances indicate that an
     asset may have been impaired. In evaluating an asset for recoverability,
     the Company estimates the future cash flows expected to result from the use
     of the asset and eventual disposition. If the sum of the expected future
     cash flows (undiscounted and without interest charges) is less than the
     carrying amount of the asset, an impairment loss, equal to the excess of
     the carrying amount over the fair market value of the asset is recognized.
     During the second quarter of 1999, the Company wrote off $1.9 million of
     goodwill associated with a number of small acquisitions made during the
     previous few years.

     NET INCOME (LOSS) PER COMMON SHARE - The Company calculates net income
     (loss) per share in accordance with Statement of Financial Accounting
     Standard ("SFAS") 128, "Earnings Per Share". Net income (loss) per common
     share-basic was calculated based upon the weighted average number of common
     shares outstanding during the respective periods. Net income (loss) per
     common share-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 except in loss
     periods, where the effect is anti-dilutive.

     The weighted average common shares outstanding for the computation of basic
     earnings per common share for 2001, 2000 and 1999 were 34.1 million, 34.3
     million and 35.8 million, respectively. Additionally in 2001 and in 1999,
     19,000 and 42,000, respectively, of equivalent common shares were included
     for the diluted calculation.

     COMPREHENSIVE INCOME (LOSS) - Comprehensive income (loss) consists of net
     income (loss) and foreign currency translation adjustments and is included
     in the Consolidated Statements of Shareholders' Equity. Comprehensive
     income (loss) was ($723,000) in 2001, ($44,685,000) in 2000 and $33,355,000
     in 1999, net of tax effects on currency translation adjustments of
     $1,338,000 in 2001, $1,719,000 in 2000 and $1,593,000 in 1999.

     USE OF ESTIMATES IN FINANCIAL STATEMENTS - The preparation of financial
     statements in conformity with generally accepted accounting principles
     requires management to make estimates and assumptions that affect the
     reported amount of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements and the
     reported amounts of revenues and expenses during the reporting period.
     Actual results could differ from those estimates.

     RECENT ACCOUNTING PRONOUNCEMENTS - In July 2001, the Financial Accounting
     Standards Board ("FASB") issued SFAS 141, "Business Combinations" and SFAS
     142, "Goodwill and Other Intangible Assets". SFAS 141 requires the purchase
     method of accounting for business combinations initiated after June 30,
     2001 and eliminates the pooling of interests method. SFAS 142 requires the
     use of a nonamortization approach to account for purchased goodwill and
     certain intangibles. Under a nonamortization approach, goodwill and certain
     intangibles will not be amortized into results of operations ($1,605,000 in
     2001, $1,698,000 in 2000 and $2,323,000 in 1999), but instead would be
     reviewed for impairment and written down and charged to results of
     operations only in periods in which the recorded value of goodwill and
     certain intangibles is more than its fair value. The Company will be
     required within six months from the date of adoption to test its goodwill
     for impairment under the new standard, which could result in an adjustment
     to the amount of recorded goodwill. The Company is currently assessing, but
     has not yet determined, the impact of SFAS 141 and SFAS 142 on its
     financial position and results of operations.

     In August 2001, the FASB issued SFAS 143, " ACCOUNTING FOR ASSET RETIREMENT
     OBLIGATIONS". The standard requires entities to record the fair value of a
     liability for an asset retirement obligation in the period in which it is
     incurred. When the liability is initially recorded, the entity capitalizes
     the cost associated with the asset retirement obligation by increasing the
     carrying amount of the related long-lived asset. Over time, the liability
     is present valued each period, and the capitalized cost is depreciated over
     the useful life of the related asset. Upon settlement of the liability, an
     entity either settles the obligation for its recorded amount or incurs a
     gain or loss upon settlement. The standard is effective for fiscal years
     beginning after June 15, 2002. The adoption of SFAS 143 is not expected to
     have a material impact on the Company's financial position or results of
     operations.

     In October 2001, the FASB issued SFAS 144 "ACCOUNTING FOR THE IMPAIRMENT OR
     DISPOSAL OF LONG-LIVED ASSETS". SFAS 144 supercedes SFAS 121, "ACCOUNTING
     FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
     DISPOSED OF", however retains many of its fundamental provisions. SFAS 144
     requires that long-lived assets be measured at the lower of carrying amount
     or fair value less cost to sell, whether reported in continuing operations
     or in discontinued operations. Therefore, discontinued operations will no
     longer be measured at net realizable value or include amounts for operating
     losses that have not yet occurred. SFAS 144 also broadens the reporting of
     discontinued operations to include all components of an entity with
     operations that can be distinguished from the rest of the entity and that
     will be eliminated from the ongoing operations of the entity in a disposal
     transaction. The provisions of this Statement are effective for financial
     statements issued for fiscal years beginning after December 15, 2001. The
     adoption of SFAS 144 is not expected to have a material impact on the
     Company's financial position or results of operations.

2.   ACQUISITIONS

     The Company acquired two businesses in 1999 for $12.2 million in cash.
     These acquisitions were accounted for as purchases, and accordingly, the
     assets and liabilities of the acquired entities have been recorded at their
     estimated fair values at the dates of acquisition. The excess of purchase
     price over the estimated fair values of net assets acquired in the amount
     of $17.0 million has been recorded as goodwill and is being amortized over
     the estimated useful lives.

     The pro forma results for 2001, 2000 and 1999, assuming these acquisitions
     had been made at the beginning of the period, would not have been
     materially different from the reported results.

3.   PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment, net consists of the following (in
     thousands):

                                                          2001           2000
                                                          ----           ----
     Land and buildings..............................   $ 31,357       $ 25,518
     Furniture and fixtures, office, computer
       and other equipment...........................     90,056         77,205
     Leasehold improvements .........................     13,993         12,505
                                                        --------       --------
                                                         135,406        115,228
     Less accumulated depreciation and amortization..     52,783         40,479
                                                        --------       --------
     Property, plant and equipment, net..............   $ 82,623       $ 74,749
                                                        ========       ========

4.   RELATED PARTY TRANSACTIONS

     The Company leases two warehouse and office facilities from affiliates (see
     Note 8). Rent expense under those leases aggregated approximately
     $1,224,000, $1,314,000 and $1,584,000 for the years ended December 31,
     2001, 2000 and 1999, respectively.

5.   DEBT

     The Company has a $70,000,000 revolving credit agreement with a group of
     financial institutions which provides for borrowings in the United States.
     The borrowings are secured by all of the domestic accounts receivable and
     inventories of the Company and the Company's shares of stock in its
     domestic subsidiaries. The credit facility expires and outstanding
     borrowings thereunder are due on June 15, 2004. The borrowings under the
     agreement are subject to borrowing base limitations of up to 75% of
     eligible accounts receivable and up to 25% of qualified inventories. The
     interest on outstanding advances is payable monthly, at the Company's
     option, at the agent bank's base rate (4.75% at December 31, 2001) plus
     0.25% to 0.75% or the bank's daily LIBOR rate (3.62% at December 31, 2001)
     plus 2.25% to 3%. The facility also calls for a commitment fee payable
     quarterly in arrears of 0.5% of the average daily unused portion of the
     facility. The undrawn availability may not be less than $20 million prior
     to June 30, 2002. As of December 31, 2001 availability under the agreement
     was $45,291,000, against which there were no outstanding advances and
     outstanding letters of credit of $4,000,000. The revolving credit agreement
     contains certain financial and other covenants, including restrictions on
     capital expenditures and payments of dividends.

     The Company has a (pound)15,000,000 ($21,828,000 at the December 31, 2001
     exchange rate) multi-currency credit facility with Barclays Bank in the
     United Kingdom, which is available to its United Kingdom subsidiaries.
     Drawings under the facility may be made by overdraft, trade acceptance or
     loan. The facility is secured by assets of certain of the Company's United
     Kingdom subsidiaries and a guaranty from the Company. At December 31, 2001
     there were (pound)1,944,000 ($2,829,000) of borrowings outstanding under
     this line.

     The weighted average interest rate on short-term borrowings was 6.6% in
     2001, 7.9% in 2000 and 8.2% in 1999.

     The Company has accepted a proposal from a financial institution and signed
     a commitment letter for an $8.4 million, ten-year mortgage on its Suwanee,
     GA distribution facility. The loan will bear interest at 7.04%. Closing is
     subject to due diligence and negotiation of a definitive agreement.

6.   SHAREHOLDERS' EQUITY

     In May 1998 the Board of Directors authorized a share repurchase program to
     acquire up to 1,350,000 (subsequently increased to 4,350,000) common shares
     on the open market. The Company purchased an aggregate of 1,133,500 shares
     during 2000 at an aggregate cost of $9.8 million and 890,300 shares during
     1999 at an aggregate cost of $10.1 million.

     As required by law, certain foreign subsidiaries must retain a percentage
     of shareholders' capital in the respective company. Accordingly, a portion
     of retained earnings is restricted and not available for distribution to
     shareholders. Such amount at December 31, 2001 was not material.

     STOCK OPTION PLANS - The Company has three fixed option 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:

          THE 1995 LONG-TERM STOCK INCENTIVE PLAN - This plan allows 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 and generally become
     exercisable ratably on the third, fourth, and fifth anniversary of the
     grant date. A maximum total number of 2.0 million shares may be granted
     under this plan of which a maximum of 800,000 shares may be of restricted
     stock and restricted stock units. No award shall be granted under this plan
     after December 31, 2005. A total of 538,050 options were outstanding under
     this plan as of December 31, 2001.

          THE 1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS - This plan
     provides for automatic awards of non-qualified options to directors of the
     company who are not employees of the Company or its affiliates. All options
     granted under this plan will have a ten year term from grant date and are
     immediately exercisable. A maximum of 100,000 shares may be granted for
     awards under this plan. This plan will terminate the day following the
     tenth annual stockholders meeting. A total of 47,000 options were
     outstanding under this plan as of December 31, 2001.

          THE 1999 LONG-TERM STOCK INCENTIVE PLAN - This plan was adopted on
     October 25, 1999 with substantially the same terms and provisions as the
     1995 Long-Term Stock Incentive Plan, restricting the awards to
     non-qualified stock options authorized by the Compensation Committee of the
     Board of Directors. A maximum total number of 2.0 million shares may be
     granted under this plan. No award shall be granted under this plan after
     December 31, 2009. A total of 1,090,441 options were outstanding under this
     plan as of December 31, 2001.

     The Company accounts for these plans in accordance with Accounting
     Principles Board Opinion No. 25 "Accounting for Stock Issued to Employees",
     under which no compensation costs have been recognized for stock options.
     Had compensation costs of the plans been determined under a fair value
     alternative method as stated in SFAS 123, "Accounting for Stock-Based
     Compensations", the Company would have recorded such amount in the
     accompanying consolidated financial statements as compensation expense. On
     a pro forma basis, net income (loss) would have been ($0.1) million for
     2001, ($42.6) million for 2000 and $33.9 million for 1999, and diluted
     earnings (loss) per common share would have been ($.004) for 2001, ($1.24)
     for 2000 and $.95 for 1999. The Company arrived at the fair value of stock
     grant at the date of the grant by using the Black-Scholes pricing option
     model with the following assumptions used for grants: risk-free interest
     rate of 6.1% (2001), 6.0% (2000) and 6.0% (1999); expected dividend rate of
     0% for 2001, 2000 and 1999; expected life of 3.17 years (2001), 3.72 years
     (2000) and 3.67 years (1999); and expected volatility of 72% (2001), 62%
     (2000) and 48% (1999). The stock options outstanding at December 31, 2001,
     2000 and 1999 have a weighted average contractual life of 8.1 years, 6.7
     years and 7.8 years, respectively. The following table reflects the plan
     activity for the years ended December 31, 2001, 2000 and 1999:


                                             For Shares    Option Prices
                                             ----------   ----------------
          Outstanding, January 1, 1999        1,642,848   $12.38 to $39.06
          Granted                               848,700   $ 7.31 to $ 7.88
          Cancelled                             (65,164)  $12.38 to $18.41
                                             ----------   ----------------
          Outstanding, December 31, 1999      2,426,384   $ 7.31 to $39.06
          Granted                                 4,000   $ 7.19
          Cancelled                            (303,752)  $ 7.31 TO $18.41
                                             ----------   ----------------
          Outstanding, December 31, 2000      2,126,632   $ 7.19 to $39.06
          Granted                               849,917   $ 1.95 to $ 2.45
          Cancelled                          (1,301,058)  $ 1.95 TO $26.88
                                             ----------   ----------------
          Outstanding, December 31, 2001      1,675,491   $ 1.95 to $39.06
                                             ==========

     The following table summarizes information for the three years ended
     December 31, 2001 concerning currently outstanding and exercisable options:

<TABLE>
<CAPTION>
                                                   2001                        2000                        1999
                                        --------------------------  --------------------------  --------------------------
                                                  WEIGHTED-AVERAGE            Weighted Average            Weighted Average
                                         SHARES    EXERCISE PRICE    Shares    Exercise Price    Shares    Exercise Price
                                        --------  ----------------  --------  ----------------  --------  ----------------
     <S>                                <C>            <C>          <C>            <C>          <C>            <C>
     Outstanding at beginning of year   2,126,632      $14.70       2,426,384      $14.34       1,642,848      $18.04
     Granted .........................    849,917      $ 1.96           4,000      $ 7.19         848,700      $ 7.32
     Cancelled ....................... (1,301,058)     $17.52        (303,752)     $11.72         (65,164)     $17.14
                                       -----------                 -----------                 -----------
     Outstanding at end of year ......  1,675,491     $ 6.05        2,126,632      $14.70       2,426,384      $14.34
                                       ===========                 ===========                 ===========
     Options exercisable at year end..    478,413                   1,133,547                   595,050
     Weighted average fair value per
       option granted during the year.      $0.89                       $5.60                     $3.02
</TABLE>

<TABLE>
<CAPTION>
     As of December 31, 2001:
         Range of                   Weighted-Average   Weighted-Average              Weighted-Average
         Exercise         Number        Remaining          Exercise        Number        Exercise
          Price        Outstanding  Contractual Life        Price        Exercisable      Price
     ----------------  -----------  ----------------   ----------------  ----------- ----------------
     <S>                  <C>             <C>              <C>               <C>          <C>
     $ 1.95 to $ 5.00     804,341         9.15             $  2.45           4,000        $  1.96
     $ 5.01 to $15.00     685,600         7.79             $  7.49         318,261        $  7.48
     $15.01 to $20.00     163,550         4.65             $ 17.54         134,152        $ 17.53
     $20.01 to $30.00      18,000         4.67             $ 22.67          18,000        $ 22.67
     $30.01 to $39.06       4,000         4.33             $ 39.06           4,000        $ 39.06
                       -----------                                       -----------
     $ 1.95 to $39.06   1,675,491         8.09             $  6.05         478,413        $ 11.10
                       ===========                                       ===========
</TABLE>

7.   INCOME TAXES

     The provision (benefit) for income taxes consists of the following (in
     thousands):

     Year Ended December 31                    2001         2000         1999
     ----------------------                  --------     --------     --------
     Current:
        Federal                              $ (9,256)    $(24,915)    $ 18,145
        State                                    (730)      (1,146)       3,558
        Foreign                                 2,446        1,348        1,648
     Deferred                                   7,929          230        1,160
                                             --------     --------     --------
        Total                                $    389     $(24,483)    $ 24,511
                                             ========     ========     ========

     Income taxes are accrued and paid by each foreign entity in accordance with
     applicable local regulations.

     A reconciliation of the difference between the income tax expense (benefit)
     and the computed income tax expense based on the Federal statutory
     corporate rate is as follows (in thousands):

     Year Ended December 31                    2001         2000         1999
     ----------------------                  --------     --------     --------
     Income tax at Federal statutory rate    $    365     $(22,839)    $ 21,183
     State and local income taxes, net of
      federal tax benefit                         145         (766)       2,461
     Foreign operating losses with no
      benefit provided                            575                       932
     Foreign income taxed at different rates                  (481)
     Change in valuation allowance             (1,118)
     Nondeductible expenses                       142
     Other items, net                             280         (397)         (65)
                                             --------     --------     --------
                                             $    389     $(24,483)    $ 24,511
                                             ========     ========     ========

     The deferred tax assets (liabilities) are comprised of the following (in
     thousands):

                                                            2001         2000
                                                          --------     --------
     Current:
       Deductible assets..............................    $ (1,940)   $ (5,030)
       Non-deductible accruals and reserves...........      10,897      12,416
       Non-deductible assets..........................         688       1,430
       Other..........................................           5         (35)
                                                          --------     --------
         Current......................................       9,650        8,781
                                                          --------     --------

     Non-current:
       Net operating loss carryforwards...............       4,210        4,280
       Currency translation adjustments...............       4,909        3,569
       Accelerated depreciation.......................      (6,213)      (1,035)
       Basis differences from acquisitions............      (2,658)        (667)
       Valuation allowances...........................      (1,805)      (2,923)
                                                          --------     --------
         Non-current..................................      (1,557)       3,224
                                                          --------     --------
               Total..................................    $  8,093     $ 12,005
                                                          ========     ========

     The foreign net operating loss carryforwards generally expire from 2002
     through 2010 except for carryforwards in the Netherlands and Germany, which
     have no expiration. In accordance with SFAS 109 "Accounting for Income
     Taxes", the Company maintains valuation allowances against certain of its
     foreign net operating loss carryforwards where the realizability of the
     related deferred tax benefits can not be reasonably assured.

     The Company has also provided valuation allowances for certain state net
     operating loss carryforwards where it is not likely they will be realized.

8.   COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

     LEASES - The Company is obligated under operating lease agreements for the
     rental of certain office and warehouse facilities and equipment which
     expire at various dates through September 2013. The Company currently
     leases two facilities in New York from entities owned by the Company's
     three principal stockholders/senior executives.

     At December 31, 2001 future minimum annual lease payments for related and
     third-party leases were as follows (in thousands):

                                     Related Party     Third Party      Total
                                     -------------     -----------     --------
          2002.....................    $  1,224         $  5,008       $  6,232
          2003.....................       1,224            4,656          5,880
          2004.....................       1,224            3,781          5,005
          2005.....................       1,224            3,781          5,005
          2006.....................       1,224            3,531          4,755
          2007-2011................       1,148           10,358         11,506
          2012-2015................                          357            357
                                       --------         --------       --------
                                       $  7,268         $ 31,472       $ 38,740
                                       ========         ========       ========

     Annual rent expense aggregated approximately $7,869,000, including
     $1,224,000 to related parties, for 2001, $8,580,000, including $1,314,000
     to related parties, for 2000 and $8,223,000, including $1,584,000 to
     related parties, for 1999.

     GUARANTEES - The Company has issued a guarantee to a U. K. financial
     institution to secure a line of credit for the Company's United Kingdom
     subsidiaries.

     LITIGATION - In December 1999 the Company settled its lawsuit with a
     bankrupt former supplier and its lenders. After the payment of a cash
     settlement, the Company's results of operations were positively impacted
     ($3.0 million net of tax) by the reversal of amounts previously reserved
     for in connection with this lawsuit.

     The Company has been named as a defendant in other lawsuits incidental to
     its business. Management of the Company, based on discussions with legal
     counsel, believes the ultimate resolution of these lawsuits will not have a
     material effect on the Company's consolidated financial position or results
     of operations.

     CONTINGENCY - The Company is required to collect sales tax on certain of
     its sales. In accordance with current laws, approximately 16% of the
     Company's 2001 domestic sales were subject to sales tax. Changes in law
     could require the Company to collect sales tax in additional states.

     EMPLOYEE BENEFIT PLANS - The Company's U.S. subsidiaries participate in
     defined contribution 401(k) plans covering eligible employees as defined by
     the plan document. Contributions to the plans by the Company are determined
     as a percentage of the employees' contributions. Aggregate expense to the
     Company for contributions to such plans was approximately $482,000 in 2001,
     $514,000 in 2000 and $437,000 in 1999.

     Liabilities accrued by certain foreign entities for employee termination
     indemnities, determined in accordance with labor laws and labor agreements
     in effect in the respective country, were not material.

     FOREIGN EXCHANGE RISK MANAGEMENT - The Company has no involvement with
     derivative financial instruments and does not use them for trading
     purposes. The Company may enter into foreign currency options or forward
     exchange contracts to hedge certain foreign currency transactions. The
     intent of this practice would be to minimize the impact of foreign exchange
     rate movements on the Company's operating results. As of December 31, 2001,
     the Company had no outstanding forward exchange contracts.

     FAIR VALUE OF FINANCIAL INSTRUMENTS - Financial instruments consist
     primarily of investments in cash, trade account receivables, accounts
     payable and debt obligations. The Company estimates the fair value of
     financial instruments based on interest rates available to the Company and
     by comparison to quoted market prices. At December 31, 2001 and 2000, the
     carrying amounts of cash and cash equivalents, accounts receivable, income
     taxes receivable and accounts payable are considered to be representative
     of their respective fair values due to their short-term nature. The
     carrying amounts of the notes payable to banks are considered to be
     representative of their respective fair values as their interest rates are
     based on market rates.

     CONCENTRATION OF CREDIT RISK - Financial instruments that potentially
     subject the Company to concentrations of credit risk consist of cash, cash
     equivalents and accounts receivable. Concentrations of credit risk with
     respect to accounts receivable are limited due to the large number of
     customers and their geographic dispersion comprising the Company's customer
     base.

9.   SEGMENT AND RELATED INFORMATION

     Pursuant to SFAS No. 131 "Disclosure About Segments of an Enterprise and
     Related Information", the Company determined that it is engaged in a single
     reportable segment which markets and sells various business products. The
     Company's product offerings include personal computers (PCs), computer
     related products, industrial products and office products and are monitored
     for sales trends and profitability in these sub-categories. Products are
     marketed through an integrated system of direct mail catalogs, a network of
     major account sales representatives and proprietary e-commerce Internet
     web-sites.

     Financial information relating to the Company's operations by geographic
     area was as follows (in thousands):

                                                  Net Sales
                                   ----------------------------------------
                                      2001           2000           1999
                                   ----------     ----------     ----------
     North America                 $  982,615     $1,138,006     $1,263,401
     Europe                           564,360        548,097        491,071
                                   ----------     ----------     ----------
     Consolidated                  $1,546,975     $1,686,103     $1,754,472
                                   ==========     ==========     ==========

     Revenues are attributed to countries based on location of selling
     subsidiary.


                                              Long-Lived Assets
                                   ----------------------------------------
                                      2001           2000           1999
                                   ----------     ----------     ----------
     North America                 $  117,770     $  116,363     $   91,590
     Europe                            32,820         29,058         28,933
                                   ----------     ----------     ----------
     Consolidated                  $  150,590     $  145,421     $  120,523
                                   ==========     ==========     ==========

10.  QUARTERLY FINANCIAL DATA (UNAUDITED)

     Quarterly financial data is as follows (in thousands, except for per share
     amounts):

                                    FIRST      SECOND       THIRD      FOURTH
     2001                          QUARTER     QUARTER     QUARTER     QUARTER
     ----                          -------     -------     -------     -------

     Net sales................... $ 405,898   $ 363,506   $ 370,636   $ 406,935
     Gross profit................ $  66,111   $  61,162   $  69,259   $  80,392
     Net income (loss)........... $     363   $  (2,583)  $     257   $   2,616*
     Net income (loss) per
      common share:
          Basic and diluted...... $     .01   $    (.08)  $     .01   $    .08*

                                    First      Second       Third      Fourth
     2000                          Quarter     Quarter     Quarter     Quarter
     ----                          -------     -------     -------     -------

     Net sales................... $ 448,870   $ 405,972   $ 409,795   $ 421,466
     Gross profit................ $  68,169   $  44,348   $  47,777   $  49,561
     Net loss.................... $  (2,552)  $ (14,531)  $ (14,236)  $  (9,452)
     Net loss per common share:
          Basic and diluted...... $    (.07)  $    (.43)  $   ($.42)  $  ($ .28)

* Includes income of $2.0 million, net of tax, ($.06 per diluted share)
resulting from the elimination of a liability recorded in a prior year no longer
required.

                                  * * * * * * *