Ingram Micro 2006 Annual Report Download - page 57

(4) The total capacity amount in the table above represents the maximum capacity available under these programs.
Our actual capacity is dependent upon the actual amount of eligible trade accounts receivable that may be
transferred or sold into these programs. As of December 30, 2006 our actual aggregate capacity under these
programs based on eligible accounts receivable was approximately $158 million.
(5) In December 2002, we entered into an agreement with a third-party provider of IT outsourcing services. The
services to be provided include mainframe, major server, desktop and enterprise storage operations, wide-area
and local-area network support and engineering; systems management services; help desk services; and
worldwide voice/PBX. This agreement expires in December 2009, but is cancelable at our option subject to
payment of termination fees. In September 2005, we entered into an agreement with a leading global business
process outsource service provider. The services to be provided include selected North America positions in
finance and shared services, customer service, vendor management and selected U.S. positions in technical
support and inside sales (excluding field sales and management positions). This agreement expires in
September 2010, but is cancelable at our option subject to payment of termination fees. In August 2006,
we entered into an agreement with a leading global IT outsource service provider. The services to be provided
include certain IT positions in North America related to our application development functions. This agreement
expires in August 2011 and may be terminated by us subject to payment of termination fees. Additionally, we
lease the majority of our facilities and certain equipment under noncancelable operating leases. Renewal and
purchase options at fair values exist for a substantial portion of the leases. Amounts in this table represent future
minimum payments on operating leases that have remaining noncancelable lease terms in excess of one year as
well as under the IT and business process outsourcing agreements.
Our employee benefit plans permit eligible employees to make contributions up to certain limits, which are
matched by us at stipulated percentages. Because our commitment under these plans is not a fixed amount, they
have not been included in the contractual obligations table.
Other Matters
In December 1998, we purchased 2,972,400 shares of common stock of SOFTBANK Corp. (“Softbank”) for
approximately $50.3 million. During December 1999, we sold approximately 35% of our original investment in
Softbank common stock for approximately $230.1 million, resulting in a pre-tax gain of approximately $201.3 million,
net of expenses. In January 2000, we sold an additional approximately 15% of our original holdings in Softbank
common stock for approximately $119.2 million, resulting in a pre-tax gain of approximately $111.5 million, net of
expenses. In March 2002, we sold our remaining shares of Softbank common stock for approximately $31.8 million,
resulting in a pre-tax gain of $6.5 million, net of expenses. We generally used the proceeds from these sales to reduce
existing indebtedness. The realized gains, net of expenses, associated with the sales of Softbank common stock in
March 2002, January 2000 and December 1999 totaled $4.1 million, $69.4 million and $125.2 million, respectively,
net of deferred taxes of $2.4 million, $42.1 million and $76.1 million, respectively (see Note 8 to our consolidated
financial statements).
The Softbank common stock was sold in the public market by certain of our foreign subsidiaries, which are
located in a low-tax jurisdiction. At the time of sale, we concluded that U.S. taxes were not currently payable on the
gains based on our internal assessment and opinions received from our outside advisors. However, because of
uncertainties in the interpretation of complex tax regulations by various taxing authorities, we provided for tax
liabilities on this matter based on the level of opinions received from our outside advisors and our internal
assessment. In 2005, we settled and paid tax liabilities of $4.2 million associated with these gains with certain state
tax jurisdictions and favorably resolved and reversed tax liabilities of $2.4 million for such tax jurisdictions. At
December 31, 2005, we had remaining tax liabilities of $2.5 million ($2.7 million including estimated interest),
related to the gains realized on the sales of Softbank common stock. In 2006, we settled and paid tax liabilities of
$1.9 million with the U.S. Internal Revenue Service (the “IRS”) and favorably resolved and reversed the remaining
tax liabilities of $0.8 million. At December 30, 2006, we had no remaining tax liabilities associated with these gains.
Our federal tax returns for fiscal years through 2000 have been closed. The IRS has substantially concluded
examining our federal tax returns for fiscal years 2001 to 2003. As a large corporate filer, we expect our federal tax
returns to be subject to recurring review by the IRS.
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