"Company could be exposed to losses in excess of amounts recorded" ???

[tomh20]

I was reading over Circuit City's 2005 annual report and there is a section that states:

Inventory is comprised of finished goods held for sale and is stated at the lower of cost or market. Cost is determined by the average cost method. The company estimates the realizable value of inventory based on assumptions about forecasted consumer demand, market conditions and obsolence. If the estimated realizable value is less than cost, the inventory value is reduced to its estimated realizable value. If estimates regarding consumer demand and market conditions are inaccurate or unexpected changes in technology affect demand, the company could be exposed to losses in excess of amounts recorded.

What exactly does that last (bold) line mean, and why would they say that?

I understand the first half of the sentence but the part that confuses me is: "the company could be exposed to losses in excess of amounts recorded"

Thanks in advance.

 

[Some Random Guy]

"If nobody will buy outdated foreign electronics, we may have to pay somebody to haul them away"