CompUSA 2008 Annual Report Download - page 65

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30
Our purchase and other obligations consist primarily of certain employment agreements and service
agreements.
In addition to the contractual obligations noted above, we had $9.1 million of standby letters of credit
outstanding as of December 2008.
Our operating results have generated cash flow which, together with borrowings under our debt
agreements, has provided sufficient capital resources to finance working capital and cash operating
requirements, fund capital expenditures, and fund the payment of interest on outstanding debt. Our
primary ongoing cash requirements will be to finance working capital, fund the payment of principal and
interest on indebtedness, fund capital expenditures and fund small acquisitions. We believe future cash
flows from operations and availability of borrowings under our lines of credit will be sufficient to fund
ongoing cash requirements for at least the next twelve months.
We are party to certain litigation, the outcome of which we believe, based on discussions with legal
counsel, will not have a material adverse effect on our consolidated financial statements.
Tax contingencies are related to uncertain tax positions taken on income tax returns that may result in
additional tax, interest and penalties being paid to taxing authorities.
Off-Balance Sheet Arrangements
We have not created, and are not party to, any special-purpose or off-balance sheet entities for the
purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or
relationships with entities that are not consolidated into the financial statements that are reasonably likely
to materially affect our liquidity or the availability of capital resources.
The Company currently leases its facility in Port Washington, NY from Addwin Realty Associates, an
entity owned by Richard Leeds, Bruce Leeds, and Robert Leeds, Directors of the Company and the
Company’ s three senior executive officers and principal stockholders.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks, which include changes in U.S. and international interest rates as well as
changes in currency exchange rates (principally Pounds Sterling, Euros and Canadian Dollars) as
measured against the U.S. Dollar and each other.
The translation of the financial statements of our operations located outside of the United States is
impacted by movements in foreign currency exchange rates. Changes in currency exchange rates as
measured against the U.S. dollar may positively or negatively affect income statement, balance sheet and
cash flows as expressed in U.S. dollars. Sales would have fluctuated by approximately $112 million and
pre tax income would have fluctuated by approximately $2.3 million if average foreign exchange rates
changed by 10% in 2008. We have limited involvement with derivative financial instruments and do not
use them for trading purposes. We may enter into foreign currency options or forward exchange contracts
aimed at limiting in part the impact of certain currency fluctuations, but as of December 2008 we had no
outstanding forward exchange contracts.
Our exposure to market risk for changes in interest rates relates primarily to our variable rate debt. Our
variable rate debt consists of short-term borrowings under our credit facilities. As of December 2008,
there were no outstanding balances under our variable rate credit facility. A hypothetical change in
average interest rates of one percentage point is not expected to have a material effect on our financial
position, results of operations or cash flows over the next fiscal year.