CompUSA 2015 Annual Report Download - page 27

Table of Contents
Income Taxes. We are subject to taxation from
federal, state and foreign jurisdictions and the
determination of our tax provision is complex and
requiressignificantmanagementjudgment.

WeconductoperationsinnumerousU.S.statesand
foreign locations. Our effective tax rate depends
upon the geographic distribution of our pre-tax
incomeorlossesamonglocationswithvaryingtax
rates and rules. As the geographic mix of our pre-
taxresultsamongvarioustaxjurisdictionschanges,
the effective tax rate may vary from period to
period.Wearealsosubjecttoperiodicexamination
fromdomesticandforeigntaxauthoritiesregarding
the amount of taxes due. These examinations
includequestionsregardingthetimingandamount
of deductions and the allocation of income among
various tax jurisdictions. We establish as needed,
and periodically reevaluate, an estimated income
tax reserve on our consolidated balance sheet to
provide for the possibility of adverse outcomes in
income tax proceedings. While management
believes that we have identified all reasonably
identifiableexposuresandwhetherornotareserve
is appropriate, it is possible that additional
exposuresexistand/orthatexposuresmaybesettled
atamountsdifferentthantheamountsreserved.
 The determination of deferred tax assets and
liabilities and any valuation allowances that might
be necessary requires management to make
significant judgments concerning the ability to
realizenetdeferredtaxassets.Therealizationofnet
deferredtaxassetsisdependentuponthegeneration
of future taxable income. In estimating future
taxable income there are judgments and
uncertaintiesrelatedtothedevelopmentofforecasts
offutureresultsthatmaynotbereliable.Significant
managementjudgmentisalsonecessarytoevaluate
theoperatingenvironmentandeconomicconditions
thatexisttodevelopaforecastforareportingunit.
Where management has determined that it is more
likely than not that some portion or the entire
deferred tax asset will not be realized, we have
providedavaluationallowance.Iftherealizationof
thosedeferredtaxassetsinthefutureisconsidered
morelikelythannot,anadjustmenttothedeferred
tax assets would increase net income in the period
suchdeterminationismade.
 We have not made any material changes to our
incometaxpolicyinthepastthreeyearsandwedo
not anticipate making any material changes tothis
policyinthefuture.

We do not believe it is reasonably likely that the
estimates or assumptions used to determine our
deferred tax assets and liabilities and related
valuation allowances will change materially in the
future. However if our estimates are materially
differentthanouractualexperiencewecouldhave
amaterialgainorlossadjustment.

In2015the Company recorded non-cashvaluation
allowances against the deferred tax assets of
certainof its subsidiaries inEuropeandCanada in
theamountofapproximately$0.8million.

During the fourth quarter of 2014 the Company
recordedanon-cashvaluationallowanceagainstits
deferred assets in the U.K. of approximately $1.7
million.

    
Special charges. Wehaverecordedreorganization,
restructuringandotherchargesinthepastandcould
in the future commence further reorganization,
restructuring and other activities which result in
recognitioninchargestoincome.
 The recording of reorganization, restructuring and
other charges may involve  assumptions and
judgments about future costs and timing for
amounts  related to personnel terminations, stay
bonuses, lease termination costs, lease sublet
revenues, outplacement services, contract
terminationcosts,assetimpairments and other exit
costs. Management may estimate these costs using
existing contractual and other data or may rely on
thirdpartyexpertdata.
 When we incur a liability related to these actions,
we estimate and record all appropriate expenses.
We do not believe it is reasonably likely that the
estimates or assumptions used to determine our
reorganization,restructuringandotherchargeswill
change materially in the future. However if our
estimates are materially different than our actual
experience we could have a material gain or loss
adjustment.

The Company recorded special charges of $27.9
million, $15.9 million and $16.2 million in
continuing operations related to reorganization,
restructuring and asset impairment and other
charges for the years ended 2015, 2014 and 2013,
respectively.

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