Radio Shack 2011 Annual Report Download - page 17

9
regulations (including tariffs on imports) could increase the
cost of those items. Although our purchases are
denominated in U.S. dollars, changes in the Chinese
currency exchange rate against the U.S. dollar or other
foreign currencies could cause our vendors to increase the
prices of items we purchase from them. The occurrence of
any of these events could materially adversely affect our
results of operations and financial condition.
Our ability to find qualified vendors that meet our standards
and supply products in a timely and efficient manner is a
significant challenge, especially with respect to goods
sourced from outside the United States. Merchandise
quality issues, product safety concerns, trade restrictions,
difficulties in enforcing intellectual property rights in foreign
countries, work stoppages, transportation capacity and
costs, tariffs, political or financial instability, foreign currency
exchange rates, monetary, tax and fiscal policies, inflation,
deflation, outbreak of pandemics and other factors relating
to foreign trade are beyond our control. Concerns regarding
the safety of products and services that we source from our
suppliers and then sell could cause shoppers to avoid
purchasing certain products and services from us, even if
the basis for the concern is outside our control. Any lost
confidence on the part of our customers would be difficult
and costly to reestablish. These and other issues affecting
our vendors could materially adversely affect our sales and
profitability.
Our business is heavily dependent upon information
systems, which could result in higher maintenance
costs and business disruption.
Our business is heavily dependent upon information
systems, given the number of individual transactions we
process each year. Our information systems include an in-
store point-of-sale system that helps us track sales
performance, inventory replenishment, product availability,
product margin and customer information. These systems
are complex and require integration with each other, with
some of our service providers, and with our business
processes, which may increase the risk of disruption.
Our information systems are also subject to damage or
interruption from power outages, computer and
telecommunications failures, computer viruses, security
breaches, catastrophic events and errors by our
employees. If we encounter damage to our systems,
difficulty implementing new systems, a security breach of
our systems, or difficulty maintaining and upgrading current
systems, our business operations could be disrupted, our
sales could decline, and our expenses could increase.
Failure to protect the integrity and security of our
customers’ information could materially damage our
standing with our customers and expose us to
litigation.
Increasing costs associated with information security,
including increased investments in technology, the costs of
compliance with consumer protection laws, and costs
resulting from consumer fraud could materially adversely
affect our results of operations. Additionally, if a significant
compromise in the security of our customer information,
including personal identification data, were to occur, it could
materially adversely affect our reputation, results of
operations and financial condition, and could increase the
costs we incur to protect against such security breaches.
We are subject to other litigation risks and may face
liabilities as a result of allegations and negative
publicity.
Our operations expose us to litigation risks, such as class
action lawsuits involving employees, consumers and
shareholders. For example, from time to time putative class
actions have been brought against us relating to various
labor matters. Defending against lawsuits and other
proceedings may involve significant expense and divert
management’s attention and resources from other matters.
In addition, if any lawsuits were brought against us and
resulted in a finding of substantial legal liability, it could
cause significant reputational harm to us and otherwise
materially adversely affect our results of operations and
financial condition.
We conduct business outside the United States, which
presents potential risks.
We have offices and assets, and generate a portion of our
revenue, in Mexico, Hong Kong, and Taiwan. Part of our
growth strategy is to expand our international business
because we believe the growth rates and the opportunity to
implement operating improvements may be greater than
those typically achievable in the United States. International
operations entail significant risks and uncertainties,
including without limitation:
• Economic, social and political instability in any
particular country or region
• Changes in currency exchange rates
• Changes in government restrictions on converting
currencies or repatriating funds
• Changes in U.S. or foreign laws and regulations or in
trade, monetary or fiscal policies
• High inflation and monetary fluctuations
• Changes in restrictions on imports and exports
• Difficulties in hiring, training and retaining qualified
personnel, particularly finance and accounting
personnel with U.S. GAAP expertise