CompUSA 2015 Annual Report Download - page 15

Table of Contents
·Our substantial international operations are subject to risks such as fluctuations in currency rates (which can adversely impact foreign revenues and
profits when translated to US Dollars), foreign regulatory requirements, political uncertainty and the management of our growing international
operations .
Weoperateinternationallyandasaresult,wearesubjecttorisksassociatedwithdoingbusinessglobally,suchasrisksrelatedtothedifferinglegal,
politicalandregulatoryrequirementsandeconomicconditionsofmanyjurisdictions.Risksinherenttooperatinginternationallyinclude:
·Changesinacountry’seconomicorpoliticalconditions
·Changesinforeigncurrencyexchangerates
·Difficultieswithstaffingandmanaginginternationaloperations
·Unexpectedchangesinregulatoryrequirements
·Changesintransportationandshippingcosts
·Enforcementofintellectualpropertyrights
ThefunctionalcurrenciesofourbusinessesoutsideoftheU.S.arethelocalcurrencies.Changesinexchangeratesbetweentheseforeigncurrenciesand
theU.S.Dollarwillaffecttherecordedlevelsofourassets,liabilities,netsales,costofgoodssoldandoperatingmarginsandcouldresultinexchange
gainsorlosses.TheprimarycurrenciestowhichwehaveexposurearetheEuropeanUnionEuro,CanadianDollar,BritishPoundSterling,andtheU.S.
Dollar.Exchange rates betweenthesecurrenciesandtheU.S. Dollarinrecentyearshave fluctuated significantly and maydosoin thefuture.Our
operating results and profitability may be affected by any volatility in currency exchange rates and our ability to manage effectively our currency
transactionandtranslationrisks.Forexample,wecurrentlyhaveoperationslocatedinnumerouscountriesoutsidetheUnitedStates,andnon-U.S.sales
accountedforapproximately63.5%ofournetsalesfromcontinuingoperationsduring2015.TotheextenttheU.S.dollarstrengthensagainstforeign
currencies,ourforeignrevenuesandprofitswillbereducedwhentranslatedintoU.S.dollars.
·We are exposed to various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights
and price protection from our vendors; such events could lower our gross margins or result in inventory write-downs that would reduce reported future
earnings.
Ourinventoryissubjecttoriskduetotechnologicalchangeandchangesinmarketdemandforparticularproducts.Ifwefailtomanageourinventory
ofolderproductswemayhaveexcessorobsoleteinventory.Wemayhavelimitedrightstoreturnpurchasestocertainsuppliersandwemaynotbe
abletoobtainpriceprotectionontheseitems.Theeliminationofpurchasereturnprivilegesandlackofavailabilityofpriceprotectioncouldlowerour
grossmarginorresultininventorywrite-downs.
Wealsotakeadvantageofattractiveproductpricingbymakingopportunisticbulkinventorypurchases;anyresultingexcessand/orobsoleteinventory
thatwe arenotableto re-sell couldhaveanadverse impact onourresultsof operations. Anyinabilitytomake such bulkinventorypurchasesmay
significantlyimpactoursalesandprofitability.
·We depend on bank credit facilities to address our working capital and cash flow needs from time to time, and if we are unable to renew or replace
these facilities, or borrowing capacity were to be reduced our liquidity and capital resources may be adversely affected.
Werequiresignificantlevelsofcapitalinourbusinesstofinanceaccountsreceivableandinventory.WemaintaincreditfacilitiesintheUnitedStates
tofinanceincreasesinourworkingcapitalifavailablecashisinsufficient.Theamountofcreditavailabletousatanypointintimemaybeadversely
affectedbythequalityorvalueoftheassetscollateralizingthesecreditlines.Inaddition,inrecentyearsglobalfinancialmarketshaveexperienced
diminishedliquidityandlendingconstraints.Ourabilitytoobtainfutureand/orincreasedfinancingtosatisfyourrequirementsasourbusinessexpands
couldbeadverselyaffectedbyeconomicandmarketconditions,creditavailabilityandlenderperceptionofourCompanyandindustry.Althoughour
currentcreditfacilityexpiresinOctober2016,wecurrentlyhavenoreasontobelievethatwewillnotbeabletoreneworreplaceourfacilitieswhen
theyreachmaturity.
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