CompUSA 2015 Annual Report Download - page 24

Table of Contents
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The primary component of our operating expenses historically has been employee-related costs, which includes items such as wages, commissions, bonuses,
employeebenefitsandstockoptionexpenses.Wecontinuallyassessouroperationstoensurethattheyareefficient,alignedwithmarketconditionsandresponsive
tocustomerneeds.
Inthediscussionofourresultsofoperationswerefertobusinesstobusinesschannelsalesandperiodtoperiodconstant currency comparisons.   Sales in the
IndustrialProductssegment,EuropeanTechnologyProductsandCorporateandotherareconsideredtobeB2Bsales.IntheNorthAmericanTechnologyProducts
business, we consider business to business (“B2B”) channel sales to be sales made direct to other businesses and government /public sector entities through
managedbusinessrelationships,outboundcallcentersandextranets.Consumer(“B2C”)channelsalesaresalesfromretailstores,consumerwebsites,inboundcall
centersandtelevisionshoppingchannels.Constantcurrencyreferstotheadjustmentoftheresultsofourforeignoperations toexclude theeffects ofperiodto
periodfluctuationsincurrencyexchangerates.
Critical Accounting Policies and Estimates
OursignificantaccountingpoliciesaredescribedinNote1totheConsolidatedFinancialStatementsincludedinItem15ofthisForm10-K.Certainaccounting
policiesrequiretheapplicationofsignificantjudgmentbymanagementinselectingtheappropriateassumptionsforcalculatingfinancialestimates.Bytheirnature,
thesejudgmentsaresubjecttoaninherentdegreeofuncertainty,andasaresult,actualresultscoulddiffermateriallyfromthoseestimates.Thesejudgmentsare
basedonhistoricalexperience, observationoftrendsintheindustry,informationprovidedbycustomersandinformationavailablefromotheroutsidesources,as
appropriate.Managementbelievesthatfullconsiderationhasbeengiventoallrelevantcircumstances thatwemaybesubjectto,andthe consolidatedfinancial
statements of the Company accurately reflect management’s best estimate of the consolidated results of operations, financial position and cash flows of the
Companyfortheyearspresented.Weidentifybelowanumberofpoliciesthatentailsignificantjudgmentsorestimates,theassumptionsandorjudgmentsusedto
determinethoseestimatesandthepotentialeffectsonreportedfinancialresultsifactualresultsdiffermateriallyfromtheseestimates.
Accountingpolicy  Assumptionsanduncertainties  Quantificationandanalysisofeffecton
actualresultsifestimatesdiffermaterially
Revenue Recognition. We recognize product sales
whenpersuasiveevidenceofanorderarrangement
exists,deliveryhasoccurred,thesalespriceisfixed
or determinable and collectability is reasonably
assured.Generally,thesecriteriaaremetatthetime
ofreceipt by customers whentitle and riskofloss
both are transferred, except in our Industrial
Products segment where title and risk pass at time
ofshipment. Sales arepresentednetofreturns and
allowances,rebatesandsalesincentives.Reserves
for estimated returns and allowances are provided
when sales are recorded, based on historical
experienceandcurrenttrends.
 Our revenue recognition policy contains
assumptions and judgments made by management
related to the timing and amounts of future sales
returns. Sales returns are estimated based upon
historicalexperienceandcurrentknowntrends.
 We have not made any material changes to our
sales return reserve policy in the past three years
and we do not anticipate making any material
changestothispolicyinthefuture.Howeverifour
estimates are materially different than our actual
experience we could have a material gain or loss
adjustment.
    
Allowance for Doubtful Accounts Receivable .We
recordanallowancefordoubtfulaccountstoreflect
our estimate of the collectability of our trade
accounts receivable. While bad debt allowances
have been within expectations and the provisions
established,therecan be no guarantee that wewill
continuetoexperiencethesameallowanceratewe
haveinthepast.

 Our allowance for doubtful accounts policy
contains assumptions and judgments made by
management related to collectability of aged
accounts receivable and chargebacks from credit
card sales. We evaluate the collectability of
accounts receivable based on a combination of
factors,includingananalysisoftheageofcustomer
accounts and our historical experience with
accounts receivable write-offs. The analysis also
includes the financial condition of a specific
customer or industry, and general economic
conditions.Incircumstanceswhereweareawareof
customer credit card charge-backs or a specific
customer’s inability to meet its financial
obligations, a specific reserve for bad debts
applicable to amounts due to reduce the net
recognized receivable to the amount management
reasonablybelieveswillbecollectedisrecorded.In
those situations with ongoing discussions, the
amount of bad debt recognized is based on the
statusofthediscussions.
 We have not made any material changes to our
allowancefor doubtful accounts receivablereserve
policy in the past three years and we do not
anticipate making any material changes to this
policy in the future. However if our estimates are
materially different than our actual experience we
couldhaveamaterialgainorlossadjustment.

A change of 10% in our allowance for doubtful
accounts reserve at December 31, 2015 would
impactnetincomebyapproximately$1.0million.
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