CompUSA 2012 Annual Report Download - page 32

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The Company’s WStore subsidiary maintained a revolving credit agreement with a financial institution in France which was secured by WStore
accounts receivable balances. This credit facility was terminated by the Company on June 9, 2012. Available amounts for borrowing under this
facility included all accounts receivable balances not over 60 days past due reduced by the greater of €
4.0 million or 10% of the eligible accounts
receivable.
The Company (through a subsidiary) has an outstanding Bond financing with the Development Authority of Jefferson, Georgia (the
“Authority”). The Bonds were issued by the Authority and initially purchased by GE Government Finance Inc., and mature on October 1,
2018. The proceeds from the Bonds were used to finance capital equipment purchased for the Company’s distribution facility located in
Jefferson, Georgia. The purchase and installation of the equipment for the facility was completed by December 31, 2011. Pursuant to the
transaction, the Company transferred to the Authority, for consideration consisting of the Bonds proceeds, ownership of the equipment and the
Authority leased the equipment to the Company’s subsidiary pursuant to a capital equipment lease expiring October 1, 2018. Under the capital
equipment lease the Company has the right to acquire ownership of the equipment at any time for a purchase price sufficient to pay off all
principal and interest on the Bonds, plus $1.00. As a result of the capital lease treatment for this transaction, the leased equipment is included in
property, plant and equipment in the Company’s consolidated balance sheet. As of December 31, 2012, the Company had $5.9 million
outstanding against this financing facility.
Our earnings and cash flows are seasonal in nature, with the fourth quarter of the fiscal year generating higher earnings and cash flows than the
other quarters. Levels of earnings and cash flows are dependent on factors such as consolidated gross margin and selling, general and
administrative costs as a percentage of sales, product mix and relative levels of domestic and foreign sales. Unusual gains or expense items, such
as special (gains) charges and settlements, may impact earnings and are separately disclosed. We expect that past performance may not be
indicative of future performance due to the competitive nature of our Technology Products segment where the need to adjust prices to gain or
hold market share is prevalent.
Macroeconomic conditions, such as business and consumer sentiment, may affect our revenues, cash flows or financial condition. However, we
do not believe that there is a direct correlation between any specific macroeconomic indicator and our revenues, cash flows or financial
condition. We are not currently interest rate sensitive, as we have significant cash balances and minimal debt.
The expenses and capital expenditures described above will require significant levels of liquidity, which we believe can be adequately funded
from our currently available cash resources. In 2013 we anticipate capital expenditures of approximately $15.6 million, though at this time we
are not contractually committed to incur these expenditures. Over the past several years we have engaged in 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, 2012, 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 2032. We have sublease agreements for unused space we lease in the United Kingdom. In the event the sub lessee is
unable to fulfill its obligations, we would be responsible for rents due under the leases.
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