CompUSA 2015 Annual Report Download - page 16

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Table of Contents
·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.
OurUnitedStatesrevolvingcreditagreementcontainscovenantsrestrictingorlimitingourabilityto,amongotherthings:
·incuradditionaldebt
·createorpermitliensonassets
·makecapitalexpendituresorinvestments
·paydividends
Ifwefailtocomplywiththecovenantsandotherrequirementssetforthinthecreditagreement,wewouldbeindefaultandwouldneedtonegotiatea
waiver agreement with the lenders.  Failure to agree on such a waiver could result in the lenders terminating the credit agreement and demanding
repaymentofanyoutstandingborrowings,whichcouldadverselyaffectourcashpositionandadverselyaffecttheavailabilityoffinancingtous,which
couldmateriallyimpactouroperations.
·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.
AsofDecember31,2015,wehadapproximately1,700employeeslocatedinEuropeandAsia.Wehaveworkers’councilsrepresentingtheemployees
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
collaborativelywiththe legalrepresentativesoftheemployees to effect anychangestolabor arrangements. Forexample,mostof ouremployeesin
Europearerepresentedbyunionsorworkers’councilsthatmustapprovecertainchangesinconditionsofemployment,includingsalariesandbenefits
and staff changes, and may impede efforts to restructure our workforce. Although we believe that we have a good working relationship with our
employees,astrike,workstoppageorslowdownbyouremployeesorsignificantdisputewithouremployeescouldresultinasignificantdisruptionof
ouroperationsorhigherongoinglaborcosts.
·The failure to timely and satisfactorily process manufacturers’ and our own rebate programs could negatively impact our customer satisfaction levels .
Similartoothercompaniesinthetechnologyproductsindustry,weadvertisemanufacturers’mail-inrebatesonmanyproductsweselland,insome
cases,offerourownrebates.Theserebatesareprocessedthroughthirdpartyvendorsandinhouse.Iftheserebatesarenotprocessedinatimelyand
satisfactorymannerbyeitherthirdpartyvendorsorourinhouseoperations,ourreputationinthemarketplacecouldbenegativelyimpacted.
·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, servicesolutions and electronics industry in which EMEAparticipates is highly price competitive and grossprofit margins are
narrowandvariable.TheCompany’sabilitytofurtherreducepricesinreactiontocompetitivepressureislimited.Additionally,grossmarginsand
operatingmarginsareaffectedbychangesinfactorssuchasvendorpricing,vendorrebateand/orpriceprotectionprograms,productreturnrights,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
mitigatethesepricingpressuresandresultantdeclinesinsalesandgrossprofitmarginwithcostreductionsinotherareasorexpansionintonewproduct
lines.Ifweareunabletoproportionatelymitigatetheseconditionsouroperatingresultsandfinancialconditionmaysuffer.
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