CompUSA 2013 Annual Report Download - page 38

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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 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 British Pounds Sterling, European Union 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 $129.5 million and pretax loss would
have fluctuated by approximately $1.1 million if average foreign exchange rates changed by 10% in 2013. 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 31, 2013 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 31, 2013, 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.
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 15 of Part IV.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the Company’
s Chief Executive Officer and Chief
Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’
s disclosure controls
and procedures as of December 31, 2013. Based upon this evaluation, the Company’
s Chief Executive Officer and Chief Financial Officer have
concluded that the Company’s disclosure controls and procedures are effective.
Inherent Limitations of Internal Controls over Financial Reporting
The Company’
s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The
Company’
s internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’
s assets; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that the Company’s receipts and expenditures are being made only in accordance with authorizations of the Company’
s management and
directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
Company’s assets that could have a material effect on the Company’s financial statements.
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