CompUSA 2015 Annual Report Download - page 13

Table of Contents
In response to significant market pressures described above under the heading Operating History and Recent Restructuring of Our Business, the
CompanynegotiatedthesaleofcertainassetsandliabilitiesoftheNATGbusinesstoPCM.ThesaletransactionclosedonDecember1,2015,though
deliveryofcertainIT,websiteandotherrelatedassetswasdeferredtoandcompletedinFebruary2016.Asofthisfiling,theCompanyhascompleted
mostoftheNATGwinddownactivities,includingsellingitsremaininginventory,closingthetworemainingTigerDirectretailstores,andclosingits
remainingNATGdistributioncenter.Employeereductionswereprimarilycompletedinthefourthquarterof2015andthefirstquarterof2016and
currentlyapproximately30employeesremainattheMiamioffice.TheCompanyexpectsthatadditionalNATGwind-downcostsincurredduring2016
orlaterwillaggregatebetween$15and$25million,whichwillbepresentedindiscontinuedoperations.
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TherecanbenoassurancetheCompanywillbeabletotimelyexititsexistingleasecommitments atexpectedcostslevels.Failuretoachievethese
expectationswillresultinincreasedcashexitcostsfortheCompanyandcouldhaveamaterialadverseeffectonitsoperatingresults.
·We have recently completed two acquisitions; our operations will be impacted by our ability to timely and efficiently transition and integrate those
acquisitions with the rest of our business in the US and EMEA.
Therearesignificantrisksanduncertaintiesassociatedwitheffectingacquisitiontransactions,particularlyinintegratingandmanagingthecombined
operations,technologies,technologyplatformsandproductsoftheacquiredcompaniesandrealizingtheanticipatedeconomic,operationalandother
benefits in a timely manner. Our failure to do so could result in substantial costs and delays or other operational, technical or financial problems.
Integrationeffortsalsomaydivertmanagementattentionandresources.
Wehavemadetwoacquisitionsinthepasttwentyfourmonths,andthereisariskthatintegrationdifficultiesorasignificantdeclineinrevenuesofthe
acquired business may cause us not to realize expected benefitsfrom the transactions and may affect our results. The success of these acquisitions
dependsonourabilitytorealizetheanticipatedbenefitsandcostsavingsfromcombiningtheacquiredbusinesseswithourexistingbusiness,including
growingtherevenuesoftheacquiredbusinessesthroughcrosssellingandotherinitiatives.Wemaynotbeabletoachievetheseobjectives,inwholeor
in part, or be able to do so in a timely manner.  Furthermore, the acquired businesses are, and will in the short term  continue to be, engaged in
transitioningtheirbusinessesfromtheexistingITplatformsonwhichtheyoperate(andwhicharelicensedfromthesellersofthosebusinessesunder
standardtransitionservicesagreements)toourITplatforms.Thistransitioniscomplicatedandaffectsmanyinter-relatedbusinessfunctions;ifweare
unabletotimelyandeffectivelyaffecttheITtransitionaspectoftheintegration,orfailtodosowithoutdisruption,theacquiredbusinessesoperations
andourresultswouldbemateriallyadverselyaffected.Theintegrationprocess,andtheissuesthatcanarise,canbecomplexandunforeseenoperating
challengesorunbudgetedsituationscanoccur.Additionalrisksinacquisitiontransactionsmayincludeourinabilitytotimelyandeffectivelyintegrate
theacquiredcompany’saccounting,humanresource,andotheradministrativesystems,andcoordinationofproduct,salesandmarketingfunctions.In
the case of foreign acquisitions, such as the acquisition of SCC/Misco Solutions, we will need to integrate operations across different cultures and
languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries. Subject to certain
exceptions, generally we will be responsible for the liabilities andobligations of the acquired businesses incurred or occurring prior to acquisition,
includingcontingentliabilities.Inthisregard,werelyheavilyontherepresentationsandwarrantiesprovidedtousbythesellersofacquiredcompanies,
includingastheyrelatetocompliancewithlawsandcontractualrequirements.Ifanyoftheserepresentationsandwarrantiesisinaccurateorbreached,
suchinaccuracyorbreachcouldresultincostlylitigationandassessmentofliabilityforwhichtheremaynotbeadequaterecourseagainstsuchsellers,
inpartduetocontractualtimelimitationsandlimitationsofliability.
Inadditiondifficultiesinintegratingacquiredcompaniessystems,controls,policiesandprocedurestocomplywiththeinternalcontroloverfinancial
reporting requirements of the Sarbanes-Oxley Act of 2002 may occur. Finally, potential accounting charges to the extent intangibles recorded in
connectionwithanacquisition,suchasgoodwill,trademarks,customerrelationshipsorintellectualproperty,arelaterdeterminedtobeimpairedand
writtendowninvalue.
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