CompUSA 2015 Annual Report Download - page 57

Table of Contents
Stock Based Compensation —Thefair valueof employee share optionsis recognized in expense over the vesting periodof the options, using the graded
attributionmethod.ThefairvalueofemployeeshareoptionsisdeterminedonthedateofgrantusingtheBlack-Scholesoptionpricingmodel.TheCompany
hasusedhistoricalvolatilityinitsestimateofexpectedvolatility.Theexpectedliferepresentstheperiodoftime(inyears)forwhichtheoptionsgrantedare
expectedtobeoutstanding.Therisk-freeinterestrateisbasedontheU.S.Treasuryyieldcurve.Stock-basedcompensationexpenseincludesanestimatefor
forfeituresandisrecognizedovertheexpectedtermoftheaward.
Net Income (Loss) Per Common Share –Netincomepercommonshare - basic iscalculatedbasedupontheweightedaverage number of common shares
outstanding during the respective periods presented using the two class method of computing earnings per share. The two class method was used as the
Companyhasoutstandingrestrictedstockwithrightstodividendparticipationforunvestedshares.Netincomepercommonshare-dilutedwascalculated
based upon the weighted average number of common shares outstanding and included the equivalent shares for dilutive options outstanding during the
respectiveperiods,includingunvestedoptions.ThedilutiveeffectofoutstandingoptionsandrestrictedstockissuedbytheCompanyisreflectedinnetincome
pershare-dilutedusingthetreasurystockmethod.Underthetreasurystockmethod,optionswillonlyhaveadilutiveeffectwhentheaveragemarketpriceof
commonstockduringtheperiodexceedstheexercisepriceoftheoptions.
Basic and diluted net loss per share was the same for each period presented as the inclusion of all potential shares of common stock of the Company
outstanding would have been anti‑dilutive.  The weighted average number of stock options and restricted stock awards outstanding excluded from the
computationofdilutedearnings(loss)persharewas1.0millionshares,0.8millionsharesand1.3millionsharesfortheyearsendedDecember31,2015,2014
and2013,respectively,duetotheirantidilutiveeffect.
Employee Benefit Plans - The Company’s U.S. subsidiaries participate in a defined contribution 401(k) plan covering substantially all U.S. employees.
Employees may invest 1% or more of their eligible compensation, limited to maximum amounts as determined by the Internal Revenue Service.  The
Companyprovidesamatchingcontributiontotheplan,determinedasapercentageoftheemployees’contributions.AggregateexpensetotheCompanyfor
contributionstosuchplanswasapproximately$0.9millionin2015,2014and2013,respectivelyandoftheseamounts,NATGoperationsexpensewas$0.4
million,$0.5millionand$0.5millionineachof2015,2014and2013,respectively.
Fair Value Measurements - Financial instruments consist primarily of investments in cash, trade accounts receivable, debt and accounts payable.  The
CompanyestimatesthefairvalueoffinancialinstrumentsbasedoninterestratesavailabletotheCompany.AtDecember31,2015and2014,thecarrying
amountsofcash,accountsreceivableandaccountspayableareconsideredtoberepresentativeoftheirrespectivefairvaluesduetotheirshort-termnature.
CashisclassifiedasLevel1withinthefairvaluehierarchy.TheCompany’sdebtisconsideredtoberepresentativeofitsfairvaluebecauseofitsvariable
interestrate.Theweightedaverageinterestrateonshort-termborrowingswas 4.3%,4.3%,and4.3%in2015,2014and2013,respectively.
The fair value of goodwill, non-amortizing intangibles and long lived assets is measured in connection with the Company’s annual impairment testing as
discussedabove.

Significant Concentrations - Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and accounts
receivable.TheCompany’sexcesscashbalancesareinvestedwithmoneycenterbanks.Concentrationsofcreditriskwithrespecttoaccountsreceivableare
limitedduetothe largenumberof customersandtheir geographicdispersioncomprisingtheCompany’scustomer base.The Companyalsoperformson-
goingcreditevaluationsandmaintainsallowancesforpotentiallossesaswarranted.
The Company purchases substantially all of our products and components directly from manufacturers and large wholesale distributors.  Two vendors
accountedfor10%ormoreofourpurchasesin2015and2014:onevendoraccountedfor12.2%and12.6%,respectively;anothervendoraccountedfor10.9%
and11.6%,respectively.In2013,onevendoraccountedfor13.9%ofourpurchases.ExcludingNATGoperations,novendoraccountedfor10%ormoreof
ourpurchasesin2015,2014or2013.

55