Ingram Micro 2006 Annual Report Download - page 25

PART I
ITEM 1. BUSINESS
The following discussion includes forward-looking statements, including but not limited to, management’s
expectations of competition; revenues, margin, expenses and other operating results or ratios; contingencies and
litigation; operating efficiencies; economic conditions; cost savings; capital expenditures; liquidity; capital
requirements; acquisitions and integration costs; operating models; exchange rate fluctuations and rates of return.
In evaluating our business, readers should carefully consider the important factors discussed under “Risk Factors.”
We disclaim any duty to update any forward-looking statements.
Introduction
Ingram Micro, a Fortune 100 company, is the largest global information technology (“IT”) wholesale
distributor by net sales, providing sales, marketing, and logistics services for the IT industry worldwide. Ingram
Micro provides a vital link in the IT supply chain by generating demand and developing markets for our technology
partners. While we remain focused on continuing to build our core IT distribution business, we also are developing
an increasing presence in adjacent technology product categories, such as consumer electronics (“CE”), automatic
identification and data capture (“AIDC”), point-of-sale (“POS”), radio frequency identification (“RFID”) and
mobility technologies to broaden our product lines and market presence. We create value in the market by extending
the reach of our technology partners, capturing market share for resellers and suppliers, creating innovative
solutions comprised of both technology products and services, offering credit facilities, and providing efficient
fulfillment of IT products and services. With a broad range of products and an array of services, we create operating
efficiencies for our partners around the world.
History
We began business in 1979, operating as Micro D Inc., a California corporation. Through a series of
acquisitions, mergers and organic growth over the past twenty years, Ingram Micro’s global footprint and product
breadth have been expanded and strengthened in North America, Europe, Asia-Pacific, and Latin America. In June
2006 we purchased the assets of SymTech Nordic AS (“SymTech”), the leading Nordic distributor of AIDC and
POS technologies, complementing the September 2004 acquisition of U.S.-based Nimax Inc., which was recently
renamed Ingram Micro Data Capture/POS Division, and the launch of AIDC/POS/RFID divisions in our Latin
American and Asia-Pacific regions within the last two years. Our July 2005 purchase of certain assets of AVAD, the
leading distributor for solutions providers and custom installers serving the home automation and entertainment
market in the United States, accelerated our entry into the adjacent CE market. Our November 2004 acquisition of
all the outstanding shares of Techpac Holdings Limited (“Tech Pacific”), one of Asia-Pacific’s largest IT
distributors, provided us with a strong presence in the growing Asia-Pacific region.
Industry
The worldwide technology products and services distribution industry generally consists of two types of
business: traditional distribution business and the fee-based supply chain services business. Within the traditional
distribution model, the distributor buys, holds title to, and sells products and/or services to resellers who, in turn,
typically sell directly to end-users, or other resellers. Product manufacturers and publishers, which we collectively
call suppliers or vendors, sell directly to distributors, resellers and end-users. While some vendors have elected to
pursue direct sales strategies for particular customer and product segments, we believe that suppliers continue to
embrace traditional distributors that have a global presence and are able to manage a large number of products and
multiple resellers worldwide and to deliver products to market in an efficient manner. Resellers in the traditional
distribution model are able to build efficiencies and reduce costs by depending on distributors for a number of
services, including product availability, marketing, credit, technical support, and inventory management, which
includes direct shipment to end-users and, in some cases, allows end-users to directly access distributors’ inventory
data. Those distributors that work with resellers to offer enhanced value-added solutions and services customized to
the needs of their specific customer base are better able to succeed in this environment.
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