CompUSA 2012 Annual Report Download - page 48

SYSTEMAX INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Systemax Inc. and its wholly-
owned subsidiaries (collectively, the “Company” or “Systemax”). All significant intercompany accounts and transactions have been
eliminated in consolidation.
Reclassifications — Certain prior year amounts were reclassified to conform to current year presentation.
Use of Estimates In Financial Statements — The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Fiscal Year — The Company’s fiscal year ends at midnight on the Saturday closest to December 31. For clarity of presentation herein, all
fiscal years are referred to as if they ended on December 31. The fiscal year will be divided into four fiscal quarters that each end at
midnight on a Saturday. Fiscal quarters will typically include 13 weeks, but the fourth quarter will include 14 weeks in a 53 week fiscal
year. For clarity of presentation herein, all fiscal quarters are referred to as if they ended on the traditional calendar month.
Foreign Currency Translation — The Company has operations in numerous foreign countries. The functional currency of each foreign
country is the local currency. The financial statements of the Company’s foreign entities are translated into U.S. dollars, the reporting
currency, using year-end exchange rates for assets and liabilities, average exchange rates for the statement of operations items and
historical rates for equity accounts. Translation gains or losses are recorded as a separate component of shareholders’ equity.
Cash — The Company considers amounts held in money market accounts and other short-term investments, including overnight bank
deposits, with an original maturity date of three months or less to be cash. Cash overdrafts are classified in accounts payable.
Inventories — Inventories consist primarily of finished goods and are stated at the lower of cost or market value. Cost is determined by
using the first-in, first-out method except in Europe and retail locations where an average cost is used.
Assets available for sale — Assets available for sale consist of our ISO-9001: 2008 certified PC manufacturing facility located in
Fletcher, Ohio, including land and land improvements. The cost of the land, land improvements and building has been adjusted to fair
market value.
Property, Plant and Equipment — Property, plant and equipment is stated at cost. Furniture, fixtures and equipment, including equipment
under capital leases, are depreciated using the straight-line or accelerated method over their estimated useful lives ranging from three to
ten years. Buildings are depreciated using the straight-
line method over estimated useful lives of 30 to 50 years. Leasehold improvements
are amortized over the shorter of the useful lives or the term of the respective leases.
Evaluation of Long-lived Assets — Long-lived assets are evaluated for recoverability whenever events or changes in circumstances
indicate that an asset may have been impaired. In evaluating an asset for recoverability, the Company estimates the future cash flows
expected to result from the use of the asset and eventual disposition. If the sum of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the asset, an impairment loss, equal to the excess of the carrying amount over
the fair market value of the asset is recognized.
Goodwill and intangible assets — Goodwill represents the excess of the cost of acquired assets over the fair value of assets acquired. The
Company tests goodwill and intangibles for impairment annually or more frequently if indicators of impairment exist. The Company
assesses the carrying value of its definite-lived intangible assets if circumstances indicate that those values may not be recoverable. In
addition, goodwill is required to be tested for impairment after a portion of the goodwill is allocated to a business targeted for disposal.
The Company’s identifiable intangible assets consist of trademarks, trade and domain names, technology, retail leases and customer lists
(See Note 2). The Company conducted an evaluation of its Technology Products multi-brand United States consumer strategy and the
intangible assets used in that strategy and concluded that the Company’s future North American consumer business would be optimized
by consolidating its United States consumer operations under TigerDirect, its leading and largest brand. As a result an impairment charge
of approximately $35.3 million related to the trademarks, domain names and goodwill of CompUSA and Circuit City was taken in the
fourth quarter of 2012.
Table of Contents
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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