Circuit City 2009 Annual Report Download - page 18
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Table of Contents
of our privacy and data security practices or other related claims. Further, the Company has not yet achieved full compliance with the
Payment Card Industry (“PCI”) security standards. Without full compliance any breach involving the loss of credit card information
may lead to PCI related fines of up to $500,000. In the event of a severe breach credit card providers may prevent the accepting of
credit cards. Any such liability related to the aforementioned risks could lead to reduced profitability and damage our brand(s) and or
reputation.
•
Sales to individual customers expose us to credit card fraud, which impacts our operations. If we fail to adequately protect
ourselves from credit card fraud, our operations could be adversely impacted.
Failure to adequately control fraudulent credit card transactions could increase our expenses. Increased sales to individual consumers,
which are more likely to be paid for using a credit card, increases our exposure to fraud. We employ technology solutions to help us
detect the fraudulent use of credit card information. However, if we are unable to detect or control credit card fraud, we may suffer
losses as a result of orders placed with fraudulent credit card data, which could adversely affect our business.
•
Our profitability can be adversely affected by increases in our income tax exposure due to, among other things, changes in the mix
of U.S. and non-U.S. revenues and earnings, changes in tax rates or laws, changes in our effective tax rate due to changes in the mix
of earnings among different countries and changes in valuation of our deferred tax assets and liabilities.
Changes in our income tax expense due to changes in the mix of U.S. and non-
U.S. revenues and profitability, changes in tax rates or
exposure to additional income tax liabilities could affect our profitability. We are subject to income taxes in the United States and
various foreign jurisdictions. Our effective tax rate could be adversely affected by changes in the mix of earnings in countries with
differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws or by material audit
assessments. The carrying value of our deferred tax assets, which are primarily in the United States and the United Kingdom, is
dependent on our ability to generate future taxable income in those jurisdictions. In addition, the amount of income taxes we pay is
subject to ongoing audits in various jurisdictions and a material assessment by a tax authority could affect our profitability.
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