Welcome to the first quarter 2008 Systemax earnings conference call. (Operator Instructions) I would now like to turn the call over to your moderator, Donna Gehnrich.

Welcome to the Systemax first quarter 2008 conference call. I’m here today with Richard Leeds, Chairman and Chief Executive Officer of Systemax; Gilbert Fiorentino, General Manager of Systemax’s Technology Products business which includes TigerDirect, CompUSA and Misco; and Larry Reinhold, Executive Vice President and Chief Financial Officer of Systemax. This discussion may include certain forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors including those described under the caption “Forward Looking Statements” in the company’s annual report on Form 10-K. This call is the property of and is copyrighted by Systemax, Inc. I will now turn the call over to Richard Leeds.

I am very pleased to report that we achieved another record quarter where we increased sales year-over-year and earnings as well. Consolidated sales for the quarter was $725 million, a record amount for our first quarter and an increase of 7.2% over last year, with sales growing in our two largest business segments despite a challenging macro economic environment. Sales of technology products computers, computer supplies and accessories, consumer electronics, grew by 7% and sales of industrial products, material handling equipment, storage equipment and consumable industrial items grew by 11%. Continuing to drive our strong bottom-line results was a sustained focus on improving our gross margins. Consolidated gross margins improved 150 basis points over last year and continue the overall trend of improvement we saw throughout 2007. This improvement was primarily attributable to our technology product segment with less price discounting than a year ago and greater efficiencies in our warehousing and distribution operations due to higher volumes. We are also continuing to leverage our existing cost structure. Consolidated SG&A cost as a percentage of sales, excluding CompUSA’s start-up cost, have been in a relatively stable range despite our continued spending of significant amount on costs on regulatory compliance. All this has led to an all time best first quarter result of $28 million in operating income, a 28% increase; $18 million in net income, a 30% increase; and $0.48 in diluted earnings per share, also a 30% increase. As we reported in March during the first quarter we substantially completed our CompUSA acquisition. We are now operating the new and improved CompUSA.com website and sixteen new and improved CompUSA retail outlets. While our technology product sales revenue did not grow as fast as in prior quarters, through our focus on the CompUSA integration we believe we have positioned this business well for the future. And we declared our second $1 per share special dividend during the quarter. Our stockholders should have received their dividend payments during the first week of April. I will now turn the call over to Gilbert to discuss highlights of our technology products businesses, including TigerDirect, Misco and now CompUSA.

The first quarter was an extremely busy one for the technology products group. While we are extremely happy with the growth in operating income, we are not happy with the growth in the revenue in the technology products segment. In the U.S. during the quarter, we acquired the CompUSA web and 16 retail CompUSA stores. While we refer to this as an acquisition, in substance it was just an asset purchase of the web URLs and sixteen store locations. It was not like acquiring an ongoing business where in many cases you simply sign legal documents, change the organizational chart and then start tracking ongoing revenues that you own. On the day we took over the CompUSA.com URL, there were no sales and in fact we did not even acquire the old CompUSA.com website engine. On the days that we took over each store, it was empty, except for shelving and signage. During the first quarter we devoted much our attention to converting the CompUSA URL, to an entirely new CompUSA.com e-commerce site, with all new content and e-commerce capabilities. As expected, we have seen significant sales and steady growth increase in the nearly four months since we acquired the assets. Likewise, during the quarter much attention was spent on the conversion, refurbishment, restocking and reopening of the sixteen CompUSA retail stores. This included all new point of sale and other IT systems, employee hiring and training, restocking of the stores with new inventory and grand opening promotions and events. We added about 700 new employees during the quarter relating to the new retail stores and retrained those employees on our business model and approach to retail. In fact, the CompUSA store grand reopening extended into April of this year. Even with that distraction, we were able to improve our…

Our industrial products business, Global Industrial and Nexel Industries continued to perform extremely well due to its business model offering our customers low price and high quality products combined with this industry leading website technology. We’ve added to our product offerings and we expect to continue to do so. We have increased our business sales representatives and we are utilizing our ProfitCenter Software technology to continue profitably scaling the business. We continue to increase our sourcing capability and purchasing strength both in the U.S. and abroad. This enables us to offer better values to our customers as well as maintain profitability on staple items. It also allows us to bring one-off promotions to our customer base at times filling in slower periods of our business cycle thus increasing operating efficiencies. And finally it’s helped us to increase our product selection on the web by over 60% from just a year ago. New web visitors to our Global Industrial website grew up over 40% this quarter compared to last year. And even more important, the number of new web customers grew almost 30%. The fast expanding web customer base creates synergy with our outbound telemarketing sales force and traditional catalog mailings. The sales group solidifies their relationship with many of these new customers by reaching out to provide sourcing help, competitive pricing and customized solutions. The catalogs, including a hard cover edition since January to our best customers, keep our name front and center. We believe this special handling has contributed to our healthy increase in average order size this quarter. Our hosted software business, ProfitCenter Software, is advancing development of the PCS web-based on demand software application to enhance its features and functionality from multi-channel merchants and direct marketers. During the quarter, PCS delivered version 3.0 of the product, culminating over a year of development effort. This new version of the product includes new features and functionality including continuity, worldwide shipping, advanced search and faster navigation, personalization and enhanced accounting functionality. We also continued moving closer to deployment for a number of well-known third party clients and anticipate successfully going live with these customers in the coming months. Finally, as we disclosed in our 10-K and discussed on our last quarter’s conference call, one of our small business units that processes rebates in North America, was served with class action lawsuit and the Florida Attorney General’s Office requested us to provide information about our historical rebate claims and payments. The status of both of these remains essentially the same as reported on our fourth quarter conference call. The court has not as yet certified that this person is representative of the class, and there have been no rulings on our motion dismissed. We continue to also cooperate fully with Florida Attorney General’s Office. I will now turn the call over to Larry Reinhold to discuss more detailed financial results.

The company’s financial position showed continued strength in the first quarter of 2008 after the purchase of CompUSA. At the end of Q1 our working capital was $227 million, down from $274 million at the end of Q4, principally as the result of the cash used to fund the CompUSA purchase and for inventory to fill the new stores. Our current ratio at the end of the quarter was 1.6 to 1. Cash balances were $99 million, down $29 million from Q4, again principally related to CompUSA. During the quarter we generated cash from operations of $9 million while investing $30.4 million for the CompUSA acquisition and another $6 million in other capital expenditures, principally IT equipment. At the end of Q1, our inventory was $269 million, up 8% from Q4, primarily as the result of our adding stock to the sixteen new CompUSA retail stores. At the end of Q1 we had $2.1 million in debt outstanding, all in Europe. The total availability under our credit facility was approximately $108 million, giving us over $200 million in cash and available credit as of March 31 and we paid $1 per share special dividend early in Q2 on April 2. During Q1 our SG&A expenses were 12.0% of sales compared to 11.1% in Q1 of 2007. The increase in SG&A as a percent of sales is due principally to approximately $2.5 million of costs related to CompUSA. We incurred most of these costs related to hiring and training over 700 new employees for the retail stores, which were just beginning to have grand openings at the end of March. These employee-related expenses as well as store lease and other costs were incurred in advanced of the stores being opened and the sales revenue ramping up. Our effected tax rate in Q1 was 36.1% down from 37.6% last year. The tax rate benefited in 2008 from the favorable resolution of a state tax matter of about $400,000. Net income was about, was approximately $18 million in the quarter or $0.48 per diluted share, compared to $14 million or $0.37 per diluted share last year. Included in the 2007 results were a gain of about $2.4 million or $0.04 per share; diluted shares outstanding were 37.628 million in 2008 versus 37.701 million last year. This results from using a smaller number of unexercised stock options in the calculations due to different stock prices this year, than last year. I now will turn the call back to Richard Leeds.

Thanks for listening to our first quarter conference call. I would like to now open the call for questions.

(Operator Instructions) Your first question comes from David Kaczorowski - Signal Hill Capital.

For the CompUSA stores, you said there were 700 employees, were there any of those inherited from the former operations CompUSA?

Essentially all of those, there may have been a few that we hired outside of the acquisition of the stores and website, but essentially all of the new employees; in fact all of them working in the stores essentially were previous CompUSA employees.

The purchase price as it’s in the financials is $30 million. Can you give a little bit of a breakout about how much that was goodwill and how much that was tangible assets?

We’ll be finalizing the purchase accounting over the course of the year, but of the $30 million, about $17 million was trademarks and trade names, $8 million for a domain name, some for customer lists and about $4 million for goodwill. We think the portion of the costs that will be amortized is less than $1 million most of that will be not subject to amortization, but instead subject to impairment testing like the other long-term assets.

As far as the rebranding of the your TigerDirect stores is this going to be like a quick change to CompUSA, is it going to be tearing of a band-aid or are you going to have a double logo for half the year or how is that going to work?

Right now in states where we have stores, we are collecting sales tax in both the CompUSA and the TigerDirect businesses and so you are seeing some overlap in branding right now in some of the CompUSA stores you see dual-branded CompUSA/TigerDirect catalogs. In some the Tiger stores you see employees starting to wear the CompUSA dual branded to CompUSA/TigerDirect uniforms and so we expect that we are going to take our time and let customers, let it settle in, let all of the dust settle and probably towards the end of the year change the names of the Tiger stores to CompUSA.

You’ve got the breakout of technology versus industrial and all that. I don’t suppose you’ve got numbers for the technology products brick and mortar store versus website do you for the revenue and margins?

We don’t disclose our revenue and breakdown at that level of detail by any of our channels yet.

Your next question comes from [Andre Gardner – Argos Management]. [Andre Gardner – Argos Management]: On the revenue but on the CompUSA side, have you let us know what the breakdown there was before on retail versus Internet?

No, again, we’ve disclosed that CompUSA added about $18 million to the top line in the quarter. Again, we are not breaking the specific breakout between web and stores. We did say that the stores though, for the most part did not have their grand reopening until April. [Andre Gardner – Argos Management]: What about previous to the acquisition when CompUSA was functioning, was there any indication of the breakdown then?

They were in wind down mode for quite a while. So, when we took over, as Gilbert had mentioned, when we turned on the website there was zero sales. When we took over a store, the store was empty except for shelving. So, we had a complete rebuilding. What we are seeing on the stores is an opening pattern similar to as if we had a new store opening. We have some take-up from the location. Primarily the attraction that CompUSA had for us was the brand name, being able to look at the locations of the stores and seeing how their sales were doing for them as opposed to us having to take a shot on a new location we were able to see if that location was performing for them. So that was the benefit that we had seen in it. But really when we look at this in hindsight it was more as if it was opening up new locations and say, opening up a new website as opposed to a traditional acquisition. [Andre Gardner – Argos Management]: Would you ever consider doing an Investor Day in New York where you could get the story out to some more people?

Yes, we would. We plan on participating in some investor conferences later this year, and we will think about and holding an Investor Day at some point in the future.

Your next question comes from J.D. Padgett - Boston Company.

On the software business, I am just trying to figure out what the average economics per customer might look like there once you go live with these couple or several customers you are pursuing.

Right now, it’s still a relatively small business and we are not breaking that out. But, it’s a seat-based business. So, basically as we get paid each month for the seats, as Larry had discussed last quarter, we are only able to recognize revenue as those customers come live. So, look forward to that taking place in the future as we bring those customers up.

Is there any way to quantify what average economics per customer could look like for you in terms of monthly revenue or quarterly revenue?

Well, we certainly have the businesses modeled internally but we are not prepared to disclose any of that publicly.

And it would be a recurring?

Yes, it would be. I went through this last quarter but I’ll try to repeat it, the software business we have long and complex implementations, which leads paid for and then they have a contractual period following go live for a number of years. The accounting model that we follow for this is that all of the cash that we receive for the implementation is deferred. And then it will be recognized once they go live and it’s recognized on a straight-line basis over the contractual period. Also, when they go live there are monthly hosting fees based on the number of seats. So, after go live the revenue model is very predictable. But it is certainly very back-end weighted and that’s where we are right now. We have a handful of customers who are live and using the product to run their business, and we have several very large customers who we expect to go live later this year.

Would you be upset if you don’t have a couple of customers go live here in the second quarter or is that too early to think?

Well, we are looking at them later this year.

Now that you have the new CompUSA stores open are you starting to see growth in foot traffic there or do you have more work to do to repair and reinvigorate that brand name.

What we’re seeing is it’s similar to a new store opening as opposed to it being as if there was a store there, one of our stores there, for a lengthy period. So, it grows after time. We get a big burst from the grand opening and then it settles down a little bit and then it continues to grow. So, it’s following pretty much a traditional store opening pattern.

But, on the positive side, we were able to open sixteen stores in a short period of time where if we were just opening stores at our own rate that would have taking much longer. And we are also very happy with the quality of the management and district managers and store managers that we were able to acquire with the stores. That would have taken a tremendous amount of time to go out and find and train, get the experience that the CompUSA people have. So, that’s very positive. It’s not as positive as Richard said in terms of its like opening a new store. But it’s very positive because you were able to get sixteen of them quickly and you are able to get a lot of employees and managers that we are very, very happy to have as part of our team.

The expenses that you called out related to CompUSA. How much of that is ongoing versus grand opening, recruiting, hiring and stuff that are more one-time in nature?

Well, as we said we incurred about $2.5 million in SG&A costs in the quarter. Certainly the 700 employees, that’s the cost of those employees is substantially greater than that but you can see that. That’s what we were doing in the quarter was the acquisition and the integration and the grand reopening. So, I think that you could anticipate that we did it very efficiently only incurring $2.5 million in the quarter.

There might be some more grand opening costs, it sounds like, that bleed into the second quarter here?

Yes there are some grand opening costs in Q2. But all of the stores have had their grand reopening.

You’ll call that out in the second quarter when you report results, how much of it was one-time versus the ongoing lease and employee expense?

We will consider doing that.

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About the PCS Group, you’ve mentioned that it’s on a contract basis and that until they go live it’s deferred revenue. Can you give an idea of the average contract life that you sell with this?

It does vary customer by customer. But most of them have a three-year or 36 months contractual life. Some have longer, some have shorter with options. But I think the typical model is about a three-year commitment post go live.

I think in the last quarter you gave the deferred revenue associated with PCS. Do you have that now?

I think it’s $5.1 million, $5.3 million.

It was roughly the same as last quarter?

No, it’s slightly higher.

As far as the product, do you see yourselves as a competitor with salesforce.com in the respect of how the software works, what it does?

Well, our product is really more geared towards the direct marketers of the world that out there and multi-channel marketers and while salesforce integrates with other pieces of software, it’s really a CRM product. CRM is a piece of ours but we have a different take on what we’re doing and that is directed towards the direct marketers and multi-channel marketers. So, yes and no is really my answer.

And at this time there are no additional questions.

Thanks for listening to our first quarter results and we look forward to reporting our second quarter. Thank you.