CompUSA 2008 Annual Report Download - page 47

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Changes in financial accounting standards may affect our results of operations.
A change in accounting standards or practices can have a significant effect on our reported
results of operations. New accounting pronouncements and interpretations of existing
accounting rules and practices have occurred and may occur in the future. Changes to existing
rules may adversely affect our reported financial results.
Risks Related to Our Company
Our reliance on information and communications technology requires significant expenditures
and entails risk.
We rely on a variety of information and telecommunications systems in our operations. Our
success is dependent in large part on the accuracy and proper use of our information systems,
including our telecommunications systems. To manage our growth, we continually evaluate
the adequacy of our existing systems and procedures. We anticipate that we will regularly
need to make capital expenditures to upgrade and modify our management information
systems, including software and hardware, as we grow and the needs of our business change.
In particular, our financial and retail point of sale systems will be replaced during the coming
years. The occurrence of a significant system failure, electrical or telecommunications outages
or our failure to expand or successfully implement new systems could have a material adverse
effect on our results of operations.
Our information systems networks, including our web sites, and applications could be
adversely affected by viruses or worms and may be vulnerable to malicious acts such as
hacking. Although we take preventive measures, these procedures may not be sufficient to
avoid harm to our operations, which could have an adverse effect on our results of operations.
We are dependent on third-party suppliers.
We purchase substantially all of our computer products from major distributors such as Ingram
Micro Inc. and Tech Data and directly from large manufacturers such as Hewlett Packard and
Acer, who may deliver those products directly to our customers. These relationships enable us
to make available to our customers a wide selection of products without having to maintain
large amounts of inventory. The termination or interruption of our relationships with any of
these suppliers could materially adversely affect our business.
Our PC products contain electronic components, subassemblies and software that in some
cases are supplied through sole or limited source third-party suppliers, some of which are
located outside of the U.S. Although we do not anticipate any problems procuring supplies in
the near-term, there is no assurance that parts and supplies will be available in a timely manner
and at reasonable prices. Any loss of, or interruption of, supply from key suppliers may
require us to find new suppliers. This could result in production or development delays while
new suppliers are located, which could substantially impair operating results. If the availability
of these or other components used in the manufacture of our products was to decrease, or if the
prices for these components were to increase significantly, operating costs and expenses could
be adversely affected.
We purchase a number of our products from vendors outside of the United States. Difficulties
encountered by one or several of these suppliers could halt or disrupt production and delay
completion or cause the cancellation of our orders. Delays or interruptions in the transportation
network could result in loss or delay of timely receipt of product required to fulfill customer
orders.
Many product suppliers provide us with co-op advertising support in exchange for featuring