CompUSA 2009 Annual Report Download - page 99

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Employee Benefit Plans -The Company’ s U.S. subsidiaries participate in a defined contribution 401(k) plan covering
substantially all U.S. employees. Employees may invest 1% or more of their eligible compensation, limited to maximum
amounts as determined by the Internal Revenue Service. The Company provides a matching contribution to the plan, determined
as a percentage of the employees’ contributions. Aggregate expense to the Company for contributions to such plans was
approximately $0.9 million, $0.7 million and $0.6 million in 2009, 2008 and 2007, respectively.
Fair Value of Financial Instruments - Financial instruments consist primarily of investments in cash, trade accounts receivable,
accounts payable and debt obligations. The Company estimates the fair value of financial instruments based on interest rates
available to the Company and by comparison to quoted market prices. At December 31, 2009 and 2008, the carrying amounts of
cash, accounts receivable, debt and accounts payable are considered to be representative of their respective fair values due to their
short-term nature.
Concentration of Credit Risk —Financial instruments that potentially subject the Company to concentrations of credit risk
consist of cash, and accounts receivable. The Company’ s excess cash balances are invested with money center banks.
Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers and their
geographic dispersion comprising the Company’ s customer base. The Company also performs on-going credit evaluations and
maintains allowances for potential losses as warranted.
Recent Accounting Pronouncements
Public companies in the United States are subject to the accounting and reporting requirements of various authorities, including
the Financial Accounting Standards Board (“FASB”) and the Securities and Exchange Commission (“SEC”). These authorities
issue numerous pronouncements, most of which are not applicable to the Company’ s current or reasonably foreseeable operating
structure. Below are the new authoritative pronouncements that management believes are relevant to Company’ s current
operations.
In October 2009, the FASB issued amended guidance related to revenue recognition in multiple-deliverable revenue
arrangements and certain arrangements that include software elements. This standard 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.