CompUSA 2010 Annual Report Download - page 90

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39
Employee Benefit Plans -The Company’ s U.S. subsidiaries participate in a defined contribution 401(k) plan covering
substantially all U.S. employees. Employees may invest 1% or more of their eligible compensation, limited to maximum amounts
as determined by the Internal Revenue Service. The Company provides a matching contribution to the plan, determined as a
percentage of the employees’ contributions. Aggregate expense to the Company for contributions to such plans was
approximately $0.9 million, $0.9 million and $0.7 million in 2010, 2009 and 2008, respectively.
Fair Value of Financial Instruments - Financial instruments consist primarily of investments in cash, trade accounts receivable
debt and accounts payable. 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, 2010 and 2009, the carrying amounts of cash, accounts
receivable and accounts payable are considered to be representative of their respective fair values due to their short-term nature.
The Company’ s debt is considered to representative of its fair value because of its variable interest rate.
Concentration of Credit Risk —Financial instruments that potentially subject the Company to concentrations of credit risk
consist of cash, and accounts receivable. The Company’ s excess cash balances are invested with money center banks.
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. The Company also performs on-going credit evaluations and
maintains allowances for potential losses as warranted.
Recent Accounting Pronouncements
Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including
the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities
issue numerous pronouncements, most of which are not applicable to the Company’ s current or reasonably foreseeable operating
structure. Below are the new authoritative pronouncements that management believes are relevant to Company’ s current
operations.
In October 2009, the FASB issued revised guidance related to multiple-element arrangements which requires an entity to allocate
arrangement consideration at the inception of an arrangement to all deliverables based on relative selling prices. This update
eliminates the use of the residual method of allocation and requires the relative-selling-price method in all circumstances. This
guidance is effective for fiscal years beginning on or after September 15, 2010. Companies may use either prospective application
for revenue arrangements entered into, or materially modified, after the effective date or through retrospective application to all
revenue arrangements for all periods presented. The Company does not believe this amended guidance will have a material
impact on its consolidated financial statements.
In October 2009, the FASB issued amended guidance that affects how entities account for revenue arrangements that contain
both hardware and software elements. Products that rely on software will be accounted for under the revised multiple-element
arrangement revenue recognition guidance mentioned above rather than software revenue recognition guidance. The revised
guidance must be adopted no later than fiscal years beginning on or after September 15, 2010. The transition method and period
for the adoption of this guidance and the revisions to the multiple-element arrangements guidance noted above must be the same.
The Company does not believe that this guidance will have a material impact on its consolidated financial statements.