Ingram Micro 2006 Annual Report Download - page 17

Dear Fellow Shareholders:
At Ingram Micro, we are setting ourselves apart from our competition through our strategy of growth and
diversification, improved operations and efficiencies, and sound management and execution. It’s a difference
that is making our company stronger, more agile and better prepared for the opportunities and challenges
that are part of the exciting, constantly changing world of technology.
These efforts drove strong financial results. With record annual sales of $31.4 billion and record net income
of $266 million, we surpassed our historical peak levels reached in the high-tech boom of the late ‘90s.
Annual sales grew nine percent, well above the rate of the overall IT market, and all four of our regions were
solidly profitable, generating annual operating margins at or above 118 basis points. At the close of fiscal
2006, we had achieved 13 consecutive quarters of meeting or exceeding our guidance, an accomplishment
which also sets us apart from our competition.
Driving our success is a seasoned team of managers and associates. With so many collective years of
experience in technology, distribution and logistics, our people are a proven competitive advantage in which
we continue to invest. We instituted the Six Sigma methodology throughout the company several years
ago and have saved millions of dollars by finding the most appropriate, efficient processes in multiple areas
of our business. This constant-improvement philosophy and never-ending quest to find ways of differentiating
our company from others in the marketplace is part of our culture. That makes us an invaluable resource
to both our customers and suppliers by helping to make them more profitable.
To distinguish ourselves, we are constantly innovating, cultivating new ideas and identifying new opportuni-
ties in adjacent technologies and markets. Diversification not only drives greater sales and profits, but it also
allows us to overcome the challenges of a single market, vendor or product segment. In 2006, we continued
with this strategy, becoming the only data capture/point of sale distributor with a reach into all four
regions as a result of our acquisition of SymTech, the leading Nordic distributor of these technologies. At the
same time, as our homes and businesses become more automated through the convergence of data and
entertainment, we opened 10 new, high-end consumer electronics showrooms through our AVAD business unit.
In the case of SymTech and AVAD, as with other recent acquisitions, we had the foresight, resources and
expertise to prudently move into new markets and, in turn, build a stronger, more agile technology distributor.
In 2006, we further differentiated ourselves from the typical technology distributor by recognizing that
services will play a critical role in our continued growth and success. Through our proprietary Ingram Micro
Services Network, managed services offerings, mobility carrier contracts, back-end logistics and targeted
marketing programs that build access to prosperous end-user markets, we’ve long been a leader in bringing
complete solutions to our customers.
As an early adopter of an expanded services platform, we understand that technology services are strategically
significant for many reasons. First, overall spending for IT services is expected to surpass that of products
for the next several years. Second, services enhance our gross margin profile with no inventory risk. Third,
services allow us to bring additional value to our reseller’s clients, making it more likely our customers will
Our strategy of differentiation led us to a successful year in 2006. From a robust
logistics engine to extensive product and service offerings, we continued to draw
a clear line of distinction between the company and our peers.
Ingram Micro AR06 p.14 -15