Circuit City 1998 Annual Report Download - page 18

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.
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. Global attempts to reduce these risks by utilizing certain derivative financial
instruments.
The value of the U.S. dollar affects the Company's financial results. Changes in exchange rates may positively or negatively affect Global's
sales (as expressed in U.S. dollars), gross margins, operating expenses and retained earnings. The Company may engage in hedging programs
aimed at limiting in part the impact of certain currency fluctuations. Using primarily forward exchange and foreign currency option contracts,
Global, from time to time, hedges certain of its assets that, when remeasured according to generally accepted accounting principles, may impact
the Statement of Consolidated Income. These hedging activities provide only limited protection against currency exchange risks. Factors that
could impact the effectiveness of the Company's hedging programs include accuracy of sales forecasts, volatility of the currency markets,
availability of hedging instruments and the credit-worthiness of the parties which have entered into such contracts with the Company. All
currency contracts that are entered into by Global are for the sole purpose of hedging an existing or anticipated currency exposure, not for
speculative or trading purposes. In spite of Global's hedging efforts to reduce the effect of changes in exchange rates against the U.S. dollar, the
Company's sales or costs could still be adversely affected by changes in those exchange rates.
As of December 31,1998, 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 1999 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 Global DirectMail Corp.
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.