Circuit City 2009 Annual Report Download - page 26

Table of Contents
eliminates the residual method of revenue allocation by requiring entities to allocate revenue in an arrangement to all of the deliverables based
upon the relative selling prices of the delivered goods and services The FASB also issued a new accounting standard in October 2009, which
changes revenue recognition for tangible products containing software and hardware elements. Under this standard, tangible products containing
software and hardware that function together to deliver the tangible products’ essential functionality are scoped out of the existing software
revenue recognition guidance and will be accounted for under the multiple-
element arrangements revenue recognition guidance discussed above.
Both standards are effective for fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact, if any, of the
adoption of this standard on our consolidated financial position and results of operations.
Effective January 1, 2009, the Company adopted authoritative guidance that establishes principles and requirements for how an acquirer in a
business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any non-
controlling interest in the acquiree, (ii) recognizes and measures goodwill acquired in a business combination or a gain from a bargain purchase,
and (iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the
business combination. This guidance is applied prospectively for all business combinations entered into after the date of adoption. In the third
quarter of 2009 the Company expensed approximately $0.8 million of costs that would have been capitalized under previous guidance.
In June 2008, FASB issued authoritative guidance to clarify that instruments granted in share-based payment transactions can be participating
securities prior to the requisite service having been rendered. The guidance applies to the calculation of Earnings Per Share (“EPS”) for share-
based payment awards with rights to dividends or dividend equivalents. Unvested share-based payment awards that contain non-
forfeitable rights
to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS
pursuant to the two-class method. This guidance became effective for financial statements issued for fiscal years beginning after December 15,
2008, and interim periods within those years. All prior-period EPS data presented is adjusted retrospectively (including interim financial
statements, summaries of earnings, and selected financial data). The Company adopted this authoritative guidance in January 2009 and it did not
have a material impact on its condensed consolidated financial statements.
Highlights from 2009
The discussion of our results of operations and financial condition that follows will provide information that will assist in understanding our
financial statements and information about how certain accounting principles and estimates affect the consolidated financial statements. This
discussion should be read in conjunction with the consolidated financial statements included herein.
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Sales increase of 4.4% to $3.2 billion in 2009 over 2008.
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Completed CircuitCity.com asset purchase and WStore Europe SA and Subsidiaries (“WStore”) stock purchase.
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Opened five new retail stores.
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Exited unprofitable Software Solutions segment.
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Diluted earnings per share declined to $1.24 from $1.40 in 2008.
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Movements in exchange rates negatively impacted European and Canadian sales by approximately $103.6 million and $17.3 million,
respectively.
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52 weeks in 2009 and 2007 vs. 53 weeks in 2008.
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