Ingram Micro 2000 Annual Report Download - page 36

The following table sets forth the estimated maximum potential one-day loss in fair va l u e, c a l c u l ated using the VaR model (in
m i l l i o n s ) .The increase in VaR from interest rate sensitive financial instruments reflects an increase in the notional value of such
i n s t ruments from Ja n u a ry 1, 2000 to December 30, 2 0 0 0 .The Company believes that the hypothetical loss in fair value of its deri v a-
t i v es would be offset by gains in the value of the underlying transactions being hedged.
Interest Rate Currency
Sensitive Sensitive
Financial Financial Combined
Instruments Instruments Portfolio
VaR as of December 30, 2000 $ 1 1 . 7 $ 0.1 $ 1 0 . 2
VaR as of January 1, 2000 4 . 5 0.6 4 . 4
E u r o c o n v e rs i o n
On Ja n u a ry 1, 1 9 9 9 , a single curre n cy called the euro was introduced in Euro p e.Tw e l ve of the 15 member countries of the
E u ropean Union have adopted the euro as their common legal curre n cy. F i xed conve rsion rates between these part i c i p ating countri e s ’
existing currencies (the “ l e g a cy currencies”) and the euro have been establ i s h e d .The legacy currencies are scheduled to remain legal
tender as denominations of the euro until at least Ja n u a ry 1, 2002 (but not later than July 1, 2 0 0 2 ) .D u r ing this transition peri o d ,
p a rties may settle transactions using either the euro or a part i c i p ating country ’s legacy curre n cy. B e ginning in Ja n u a ry 2002, n ew
e u ro - d e n o m i n ated bills and coins will be issued and legacy currencies will be withdrawn from circulat i o n .The Company has imple-
mented plans to address the issues raised by the euro curre n cy conve rs i o n .These plans include, among others , the need to adapt
computer inform ation systems and business processes and equipment to accommodate euro - d e n o m i n ated transactions; the need to
a n a l yze the legal and contractual implications on contracts; and the ability of the Company ’s customers and ve n d o rs to accommodat e
e u ro - d e n o m i n ated transactions on a timely basis. Since the implementation of the euro on Ja n u a ry 1, 1 9 9 9 , the Company has experi-
enced improved efficiencies in its cash management pro gram in Europe as all intracompany transactions within part i c i p ating countri e s
a re conducted in euro s. In addition, the Company has reduced hedging activities in Europe for transactions conducted between euro
p a rt i c i p ating countri e s. Since the Company ’s inform ation systems and processes generally accommodate multiple curre n c i e s ,t h e
C o m p a ny anticipates that modifications to its inform ation systems, equipment and processes will be made on a timely basis and does
not expect any fa i l u res which would have a mat e r ial adve rse effect on the Company ’s financial position or results of operations or
t h at the costs of such modifications will have a mat e rial effect on the Company ’s financial position or results of operat i o n s.
C a u t i o n a r y s t a t e m e n t s f o r p u r p o s e s o f t h e s a f e h a r b o r p r o v i s i o n s o f t h e p r i v a t e
s e c u r i t i e s l i t i g a t i o n r e f o r m a c t o f 1 9 9 5
The matters in this Annual Report that are forward-looking statements are based on current management expectations that
involve certain risks, including without limitation: intense competition;continued pricing and margin pressures; failure to adjust
costs in response to a sudden decrease in demand; the potential for continued restrictive vendor terms and conditions; the potential
decline as well as seasonal variations in demand for the Company’s products and services; unavailability of adequate capital; manage-
ment of growth; reliability of information systems;interest rate and foreign currency fluctuations; impact of governmental controls
and political or economic instability on foreign operations; changes in local, regional, and global economic conditions and practices;
dependency on key individuals; product supply shortages;the potential termination of a supply agreement with a major supplier;
acquisitions;rapid product improvement and technological change, and resulting obsolescence risks; risk of credit loss; dependency
on independent shipping companies; and the changes in terms of subsidized floor plan financing.
The Company has instituted and continues to institute changes to its strategies, operations and processes to address these risk
factors and to mitigate their impact on the Company’s results of operations and financial condition. However, no assurances can be
given that the Company will be successful in these efforts. For a further discussion of these and other significant factors to consider
in connection with forward-looking statements concerning the Company, reference is made to Exhibit 99.01 of the Company’s
Annual Report on Form 10-K for the fiscal year ended December 30, 2000; other risks or uncertainties may be detailed from time
to time in the Company’s future SEC filings.
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INGRAM MICRO