CompUSA 2012 Annual Report Download - page 12

Risks Related to Our Company
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. 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 websites, and applications could be adversely affected by viruses or worms and
may be vulnerable to malicious acts such as hacking. The availability and efficiency of sales via our websites could also be
adversely affected by “denial of service” attacks and other unfair competitive practices. 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 have announced that we will be launching our new shared services center in Budapest, Hungary during the second quarter of
2013. The new facility will provide certain administrative and back office services to our European business and will help drive
operational efficiencies and better serve the Company's pan-European operating strategy. Our efforts to operate our European
business in a more centralized manner, rather than on an individual country by country basis, will require us to implement changes
in our business processes, eliminate redundancies, relocate and/or hire new personnel, transition our information management
systems, and integrate the new operation into our existing business seamlessly and without disruption to our operations, customers
and vendors. However, changes in economic, regulatory or political conditions in Hungary, delays in launching or integrating the
facility, a lower than expected impact of the facility on the Company’s European operations, costs and capital expenditures, the
ability to timely hire and train new employees in Hungary, and delays, impediments or other problems associated with its
establishment, could all have a material adverse effect on our European operations and our results of operations.
We purchase substantially all of our technology products from major distributors and directly from large manufacturers 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.
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. Our ability to find qualified vendors who meet our standards and supply products in a timely and efficient manner is a
significant challenge, especially with respect to goods sourced from outside the U.S. Political or financial instability, merchandise
quality issues, product safety concerns, trade restrictions, work stoppages, tariffs, foreign currency exchange rates, transportation
capacity and costs, inflation, civil unrest, outbreaks of pandemics and other factors relating to foreign trade are beyond our
control. These and other issues affecting our vendors could materially adversely affect our revenue and gross profit .
Many product suppliers provide us with co-operative advertising support in exchange for featuring their products in our catalogs
and on our internet sites. Certain suppliers provide us with other incentives such as rebates, reimbursements, payment discounts,
price protection and other similar arrangements. These incentives are offset against cost of goods sold or selling, general and
administrative expenses, as applicable. The level of co-operative advertising support and other incentives received from suppliers
may decline in the future, which could increase our cost of goods sold or selling, general and administrative expenses and have an
adverse effect on results of operations and cash flows.
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• W ε rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our
failure to properly evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems
and websites, could have an adverse affect on our results of operations.
• The establishment and integration of our new shared service center in Hungary exposes us to various technology, regulatory and
economic risks.
• We rely on third party suppliers for most of our products and services. The loss or interruption of these relationships could impact
our sales volumes, the levels of inventory we must carry, and/or result in sales delays and/or higher inventory costs from new
suppliers. Co-operative advertising and other sales incentives provided by our suppliers could decrease in the future thereby
increasing our expenses and adversely affecting our results of operations and cash flows.
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