Circuit City 2002 Annual Report Download - page 41

11. SEGMENT AND RELATED INFORMATION
Net Sales
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2002 2001 2000
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North America$ 963,805 $ 982,615 $1,138,006
Europe587,712 564,360 548,097
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Consolidated$1,551,517 $1,546,975 $1,686,103
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Revenues are attributed to countries based on location of selling subsidiary.
Long-Lived Assets
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2002 2001
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North America$ 41,832 $ 117,770
Contingency - The Company is required to collect sales tax on certain of its sales. In accordance with current
laws, approximately 16% of the Company's 2002 domestic sales were subject to sales tax. Changes in law could
require the Company to collect sales tax in additional states.
Employee Benefit Plans
- The Company's U.S. subsidiaries participate in defined contribution 401(k) plans
covering eligible employees as defined by the plan document. Contributions to the plans by the Company are
determined as a percentage of the employees' contributions. Aggregate expense to the Company for contributions
to such plans was approximately $442,000 in 2002, $482,000 in 2001 and $514,000 in 2000.
Liabilities accrued by certain foreign entities for employee termination indemnities, determined in accordance
with labor laws and labor agreements in effect in the respective country, were not material.
Foreign Exchange Risk Management
- The Company has no involvement with derivative financial instruments
and does not use them for trading purposes. The Company may enter into foreign currency options or forward
exchange contracts to hedge certain foreign currency transactions. The intent of this practice would be to
minimize the impact of foreign exchange rate movements on the Company's operating results. As of December
31, 2002, the Company had no outstanding forward exchange contracts.
Fair Value of Financial Instruments
- Financial instruments consist primarily of investments in cash, trade
account receivables, accounts payable and debt obligations. 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, 2002 and 2001, the carrying amounts of cash and cash equivalents, accounts receivable, income
taxes receivable and accounts payable are considered to be representative of their respective fair values due to
their short-term nature. The carrying amounts of the notes payable to banks and the term loan payable are
considered to be representative of their respective fair values as their interest rates are based on market rates. The
estimated fair value of the Company's mortgage loan payable was $8.8 million at December 31, 2002.
Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentrations of
credit risk consist of cash, cash equivalents and accounts receivable. 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.
Pursuant to SFAS 131 "Disclosure About Segments of an Enterprise and Related Information", the Company
determined that it is engaged in a single reportable segment which markets and sells various business products.
The Company's product offerings include personal computers (PCs), computer related products, industrial
products and office products and are monitored for sales trends and profitability in these sub-categories. Products
are marketed through an integrated system of direct mail catalogs, a network of major account sales
representatives and proprietary e-commerce Internet web-sites.
Financial information relating to the Company's operations by geographic area was as follows (in thousands):