Circuit City 2009 Annual Report Download - page 35

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Table of Contents
Off-Balance Sheet Arrangements
We have not created, and are not party to, any special-purpose or off-balance sheet entities for the purpose of raising capital, incurring debt or
operating our business. We do not have any arrangements or relationships with entities that are not consolidated into the financial statements that
are reasonably likely to materially affect our liquidity or the availability of capital resources.
The Company currently leases its facility in Port Washington, NY from Addwin Realty Associates, an entity owned by Richard Leeds, Bruce
Leeds, and Robert Leeds, senior executives, Directors and controlling shareholders of the Company.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are exposed to market risks, which include changes in U.S. and international interest rates as well as changes in currency exchange rates
(principally Pounds Sterling, Euros and Canadian Dollars) as measured against the U.S. Dollar and each other.
The translation of the financial statements of our operations located outside of the United States is impacted by movements in foreign currency
exchange rates. Changes in currency exchange rates as measured against the U.S. dollar may positively or negatively affect income statement,
balance sheet and cash flows as expressed in U.S. dollars. Sales would have fluctuated by approximately $109.3 million and pre tax income
would have fluctuated by approximately $1.8 million if average foreign exchange rates changed by 10% in 2009. We have limited involvement
with derivative financial instruments and do not use them for trading purposes. We may enter into foreign currency options or forward exchange
contracts aimed at limiting in part the impact of certain currency fluctuations, but as of December 31, 2009 we had no outstanding forward
exchange contracts.
Our exposure to market risk for changes in interest rates relates primarily to our variable rate debt. Our variable rate debt consists of short-term
borrowings under our credit facilities. As of December 31, 2009, there were no outstanding balances under our variable rate credit facility. A
hypothetical change in average interest rates of one percentage point is not expected to have a material effect on our financial position, results of
operations or cash flows over the next fiscal year.
Item 8. Financial Statements and Supplementary Data.
The information required by Item 8 of Part II is incorporated herein by reference to the Consolidated Financial Statements filed with this report;
see Item 15 of Part IV.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief
Financial Officer, the Company carried out an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls
and procedures as of December 31, 2009. Based upon this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have
concluded that the Company’s disclosure controls and procedures are effective.
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