CompUSA 2010 Annual Report Download - page 75

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24
technological capabilities and information technology infrastructure, opening of new retail stores, and in building out and expanding
our distribution center facilities and inventory systems.
These expenses and capital expenditures will require significant levels of liquidity, which we believe can be adequately funded from
our currently available cash resources. We have recently engaged in several opportunistic acquisitions, choosing to pay the purchase
price in cash, and may do so in the future as favorable situations arise. However, a deep and prolonged period of reduced consumer
and/ or business to business spending could adversely impact our cash resources and force us to either forego future acquisition
opportunities or to pay the purchase price in shares of our common stock, which could have a dilutive effect on our earnings per share.
In addition we anticipate cash needs for implementation of the financial systems. We believe that our cash balances, future cash flows
from operations and our availability under credit facilities will be sufficient to fund our working capital and other cash requirements
for at least the next twelve months.
We maintain our cash and cash equivalents primarily in money market funds or their equivalent. As of December 31, 2010, all of our
investments had maturities of less than three months. Accordingly, we do not believe that our investments have significant exposure
to interest rate risk.
We are obligated under non-cancelable operating leases for the rental of most of our facilities and certain of our equipment which
expire at various dates through 2026. We have sublease agreements for unused space we lease in Uniondale, New York. In the event
the sub lessee is unable to fulfill its obligations, we would be responsible for rents due under the leases.
Following is a summary of our contractual obligations for future principal payments on our debt, minimum rental payments on our
non-cancelable operating leases and minimum payments on our other purchase obligations as of December 2010 (in thousands):
Total
Less than
1 year 1-3 years 3-5 years
More than
5 years
Contractual Obligations:
Capital lease obligations $ 19,845 $ 3,343 $ 7,958 $ 6,703 $ 1,841
Non
-cancelable operating leases, net of
subleases 220,370 26,069 70,291 57,916 66,094
Purchase & other obligations 34,977 27,619 5,166 2,192 —
Total contractual obligations $ 275,192 $ 57,031 $ 83,415 $ 66,811 $ 67,935
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 2010.
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. As of December 31, 2010, the Company had no uncertain tax positions.
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, senior executives, Directors and controlling shareholders of the Company.
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.