Ingram Micro 2000 Annual Report Download - page 42

|.3 5
INGRAM MICRO
Foreign currency translation and remeasurement
Financial statements of foreign subsidiaries,for which the functional currency is the local cur rency, are translated into United
States (“U.S.”) dollars using the exchange rate at each balance sheet date for assets and liabilities and a weighted average exchange
rate for each period for statement of income items.Translation adjustments are recorded in accumulated other comprehensive
income, a component of stockholders’ equity.The functional currency of the Company’s subsidiaries in Latin America and certain
countries within the Company’s Asian operations is the U.S.dollar; accordingly, the monetary assets and liabilities of these sub-
sidiaries are translated into U.S.dollars at the exchange rate in effect at the balance sheet date. Revenues, expenses, gains or losses
are translated at the average exchange rate for the period, and nonmonetary assets and liabilities are translated at historical rates.
The resultant remeasurement gains and losses of these subsidiaries are recognized in the consolidated statement of income. Gains
and losses from foreign currency transactions are included in the consolidated statement of income.
Fair value of financial instruments
The carrying amounts of cash, accounts receivable, accounts payable and other accrued expenses approximate fair value
because of the short maturity of these items.The carrying amounts of outstanding debt issued pursuant to bank credit agreements
approximate fair value because interest rates over the relative term of these instruments approximate current market interest rates.
The estimated fair value of the Zero Coupon Convertible Debentures including original issue discount was $219,323 and $388,939
at December 30, 2000 and January 1, 2000, respectively, based upon quoted market prices.The carrying value at December 30,
2000 and January 1,2000 was $220,035 and $440,943, respectively.
Cash
The Company considers all highly liquid investments with ori ginal mat u rities of three months or less to be cash equiva l e n t s . B o o k
overdrafts of $184,945 and $140,149 as of December 30, 2000 and Ja n u a ry 1, 2 0 0 0 , re s p e c t i ve ly, a re included in accounts paya bl e.
Inventories
Inventories are stated at the lower of average cost or market.
Long-lived assets
The Company assesses potential impairments to its long-lived and intangible assets when there is evidence that events or
changes in circumstances have made recovery of the asset’s carrying value unlikely. An impairment loss would be recognized when
the sum of the expected, undiscounted future net cash flows is less than the carrying amount of the asset.The amount of an impair-
ment loss would be recognized as the excess of the asset’s carrying value over the fair value.
Property and equipment
Property and equipment are recorded at cost and depreciated using the straight-line method over the following estimated
useful lives.The Company also capitalizes computer software costs that meet both the definition of internal-use software and
defined criteria for capitalization in accordance with Statement of Position 98-1,“Accounting for the Costs of Computer Software
D e veloped or Obtained for Internal Use.” Leasehold improvements are amortized over the shorter of the lease term or the estimat e d
useful life:
Buildings 40 year s
Leasehold impro vements 3–17 year s
Distribution equipment 5–7 year s
Computer equipment and software 2–5 year s
Maintenance, repairs and minor renewals are charged to expense as incurred.Additions, major renewals and betterments to
property and equipment are capitalized.