CompUSA 2015 Annual Report Download - page 16
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·If we fail to observe certain restrictions and covenants under our credit facilities the lenders could refuse to waive such default, terminate the credit
facility and demand immediate repayment, which would adversely affect our cash position and materially adversely affect our operations.
OurUnitedStatesrevolvingcreditagreementcontainscovenantsrestrictingorlimitingourabilityto,amongotherthings:
·incuradditionaldebt
·createorpermitliensonassets
·makecapitalexpendituresorinvestments
·paydividends
Ifwefailtocomplywiththecovenantsandotherrequirementssetforthinthecreditagreement,wewouldbeindefaultandwouldneedtonegotiatea
waiver agreement with the lenders. Failure to agree on such a waiver could result in the lenders terminating the credit agreement and demanding
repaymentofanyoutstandingborrowings,whichcouldadverselyaffectourcashpositionandadverselyaffecttheavailabilityoffinancingtous,which
couldmateriallyimpactouroperations.
·Our European employees are represented by unions or workers’ councils or are employed subject to local laws that are less favorable to employers
than the laws of the U.S.
AsofDecember31,2015,wehadapproximately1,700employeeslocatedinEuropeandAsia.Wehaveworkers’councilsrepresentingtheemployees
of our France, Germany, and Netherlands operations, and trade unions representing our employees in Italy and Sweden and elected employee
representatives for our employees in the United Kingdom and Spain. Most of these European employees are employed in countries in which
employment laws provide greater bargaining or other rights to employees than the laws of the U.S. Such employment rights require us to work
collaborativelywiththe legalrepresentativesoftheemployees to effect anychangestolabor arrangements. Forexample,mostof ouremployeesin
Europearerepresentedbyunionsorworkers’councilsthatmustapprovecertainchangesinconditionsofemployment,includingsalariesandbenefits
and staff changes, and may impede efforts to restructure our workforce. Although we believe that we have a good working relationship with our
employees,astrike,workstoppageorslowdownbyouremployeesorsignificantdisputewithouremployeescouldresultinasignificantdisruptionof
ouroperationsorhigherongoinglaborcosts.
·The failure to timely and satisfactorily process manufacturers’ and our own rebate programs could negatively impact our customer satisfaction levels .
Similartoothercompaniesinthetechnologyproductsindustry,weadvertisemanufacturers’mail-inrebatesonmanyproductsweselland,insome
cases,offerourownrebates.Theserebatesareprocessedthroughthirdpartyvendorsandinhouse.Iftheserebatesarenotprocessedinatimelyand
satisfactorymannerbyeitherthirdpartyvendorsorourinhouseoperations,ourreputationinthemarketplacecouldbenegativelyimpacted.
·We may be unable to reduce prices in reaction to competitive pressures, or implement cost reductions or new product line expansion to address gross
profit and operating margin pressures; failure to mitigate these pressures could adversely affect our operating results and financial condition .
The B2B computer, servicesolutions and electronics industry in which EMEAparticipates is highly price competitive and grossprofit margins are
narrowandvariable.TheCompany’sabilitytofurtherreducepricesinreactiontocompetitivepressureislimited.Additionally,grossmarginsand
operatingmarginsareaffectedbychangesinfactorssuchasvendorpricing,vendorrebateand/orpriceprotectionprograms,productreturnrights,and
product mix. In 2015 pricing pressure continued to be prevalent in the markets we serve and we expect this to continue. We may not be able to
mitigatethesepricingpressuresandresultantdeclinesinsalesandgrossprofitmarginwithcostreductionsinotherareasorexpansionintonewproduct
lines.Ifweareunabletoproportionatelymitigatetheseconditionsouroperatingresultsandfinancialconditionmaysuffer.
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