Ingram Micro 2006 Annual Report Download - page 76

of commercial paper or the back-up liquidity providers, if not replaced, or (b) failure to meet certain defined
eligibility criteria for the trade accounts receivable, such as receivables remaining assignable and free of liens and
dispute or set-off rights. In addition, in certain situations, the Company could lose access to all or part of its
financing with respect to the European facility that matures in January 2009 as a result of a rescission of its
authorization to collect the receivables by the relevant supplier under applicable local law. Based on the Company’s
assessment of the duration of these programs, the history and strength of the financial partners involved, other
historical data, various remedies available to the Company under these programs, and the remoteness of such
contingencies, the Company believes that it is unlikely that any of these risks will materialize in the near term.
The Company has a $175,000 revolving senior unsecured credit facility with a bank syndicate that matures in
July 2008. The interest rate on the revolving senior unsecured credit facility is based on LIBOR, plus a
predetermined margin that is based on our debt ratings and our leverage ratio. At December 30, 2006 and
December 31, 2005, the Company had no borrowings under this credit facility. This credit facility may also be used
to support letters of credit. At December 30, 2006 and December 31, 2005, letters of credit of $30,633 and $21,235,
respectively, were issued to certain vendors and financial institutions to support purchases by the Company’s
subsidiaries, payment of insurance premiums and flooring arrangements. The Company’s available capacity under
the agreement is reduced by the amount of any issued and outstanding letters of credit.
The Company has a 100,000 Australian dollar, or approximately $79,000 at December 30, 2006, senior
unsecured credit facility with a bank syndicate that matures in December 2008. The interest rate on this credit
facility is based on Australian or New Zealand short-term bank indicator rates, depending on the funding currency,
plus a predetermined margin that is based on our debt ratings and our leverage ratio. At December 30, 2006 and
December 31, 2005, the Company had borrowings of $0 and $14,357, respectively, under this credit facility. This
credit facility may also be used to support letters of credit. The Company’s available capacity under the agreement is
reduced by the amount of any issued and outstanding letters of credit. At December 30, 2006 and December 31,
2005, no letters of credit were issued.
The Company also has additional lines of credit, short-term overdraft facilities and other credit facilities with
various financial institutions worldwide, which provide for borrowing capacity aggregating approximately
$796,000 at December 30, 2006. Most of these arrangements are on an uncommitted basis and are reviewed
periodically for renewal. At December 30, 2006 and December 31, 2005, the Company had $238,808 and $134,860,
respectively, outstanding under these facilities. Borrowings under certain of these facilities are secured by collateral
deposits of $35,000 at December 30, 2006, which are included in other current assets. At December 30, 2006 and
December 31, 2005, letters of credit totaling approximately $36,864 and $53,367, respectively, were issued
principally to certain vendors to support purchases by the Company’s subsidiaries. The issuance of these letters of
credit reduces its available capacity under these agreements by the same amount. The weighted average interest rate
on the outstanding borrowings under these facilities was 6.4% and 6.1% per annum at December 30, 2006 and
December 31, 2005, respectively.
The Company is required to comply with certain financial covenants under some of its financing facilities,
including minimum tangible net worth, restrictions on funded debt and interest coverage and trade accounts
receivable portfolio performance covenants, including metrics related to receivables and payables. The Company is
also restricted in the amount of additional indebtedness it can incur, dividends it can pay, as well as the amount of
common stock that it can repurchase annually. At December 30, 2006, the Company was in compliance with all
material covenants or other requirements set forth in the credit agreements or other agreements with the Company’s
creditors discussed above.
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)