Circuit City 2003 Annual Report Download - page 9

conditions in Europe improve.
Computer Related Products
The North American computer related products market is highly fragmented and characterized by multiple
channels of distribution including direct marketers, local and national retail computer stores that carry computer
supplies, computer resellers, mass merchants, computer and office supply "superstores" and internet-based resellers. In
Europe, our major competitors are regional or country-specific retail and direct-mail distribution companies and internet-
based resellers.
As with PCs, the continued slowness of the global economy means the environment remains highly competitive,
resulting in the continued reduction in retail prices for computer related products, which may continue to adversely
affect our revenues and profits. Additionally, we rely in part upon the introduction of new technologies and products by
other manufacturers in order to sustain long-term sales growth and profitability. There is no assurance that the rapid rate
of such technological advances and product development will continue.
Industrial Products
The market for the sale of industrial products in North America is highly fragmented and is characterized by
multiple distribution channels such as retail outlets, small dealerships, direct mail distribution, internet-based resellers
and large warehouse stores. We also face competition from manufacturers' own sales representatives, who sell industrial
equipment directly to customers, and from regional or local distributors. Many high volume purchasers, however, utilize
catalog distributors as their first source of product. In the industrial products market, customer purchasing decisions are
primarily based on price, product selection, product availability, level of service and convenience. We believe that direct
marketing via catalog, the internet and sales representatives is an effective and convenient distribution method to reach
mid-sized facilities that place many small orders and require a wide selection of products. In addition, because the
industrial products market is highly fragmented and generally less brand oriented, it is well suited to private label
products. We sell a minor amount of industrial products in Europe.
Employees
As of December 31, 2003, we employed a total of 3,130 employees, including 3,040 full-time and 90 part-time
employees, of whom 1,826 were in North America and 1,304 were in Europe.
Environmental Matters
Under various national, state and local environmental laws and regulations in North America and Europe, a
current or previous owner or operator (including the lessee) of real property may become liable for the costs of removal
or remediation of hazardous substances at such real property. Such laws and regulations often impose liability without
regard to fault. We lease most of our facilities. In connection with such leases, we could be held liable for the costs of
removal or remedial actions with respect to hazardous substances. Although we have not been notified of, and are not
otherwise aware of, any material environmental liability, claim or non-compliance, there can be no assurance that we
will not be required to incur remediation or other costs in connection with environmental matters in the future.
Financial Information About Foreign and Domestic Operations
We conduct our business in North America (the United States and Canada) and Europe. The following sets forth our
operations in those two geographic markets (in thousands):
2003 Europe North America TOTAL
---- ------ ------------- -----
Net sales.................................. $631,545 $1,026,233 $1,657,778
Income (loss) from operations.............. $(2,007) $14,530 $12,523
Identifiable assets........................ $139,059 $306,593 $445,652