Ingram Micro 2006 Annual Report Download - page 80

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All sums expressed are based upon an exchange rate prevailing on December 30, 2006 of 2.138 Brazilian reais to the
U.S. dollar. The Company will continue to vigorously pursue administrative and judicial action to challenge the
current, and any subsequent assessments. However, the Company can make no assurances that it will ultimately be
successful in defending any such assessments, if made.
The Company received an informal inquiry from the SEC during the third quarter of 2004. The SEC’s focus to
date has been related to certain transactions with McAfee, Inc. (formerly Network Associates, Inc. or NAI) from
1998 through 2000. The Company also received subpoenas from the U.S. Attorney’s office for the Northern District
of California (“Department of Justice”) in connection with its grand jury investigation of NAI, which seek
information concerning these transactions. On January 4, 2006, McAfee and the SEC made public the terms of a
settlement they had reached with respect to McAfee. The Company continues to cooperate fully with the SEC and
the Department of Justice in their inquiries. The Company has engaged in discussions with the SEC toward a
possible resolution of matters concerning these NAI-related transactions. The Company cannot predict with
certainty the outcome of these discussions, nor their timing, nor can it reasonably estimate the amount of any loss or
range of loss that might be incurred as a result of the resolution of these matters with the SEC and the Department of
Justice. Such amounts may be material to the Company’s consolidated results of operations or cash flows.
In December 2002, the Company 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 the option of the Company
subject to payment of termination fees.
In September 2005, the Company 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
the option of the Company subject to payment of termination fees.
In August 2006, the Company 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 the Company’s application
development functions. This agreement expires in August 2011 and may be terminated by the Company subject to
payment of termination fees.
The Company also leases the majority of its facilities and certain equipment under noncancelable operating
leases. Renewal and purchase options at fair values exist for a substantial portion of the leases. Rental expense,
including obligations related to IT outsourcing services, for the years ended 2006, 2005 and 2004 was $118,979,
$111,342 and $110,826, respectively.
Future minimum rental commitments on operating leases that have remaining noncancelable lease terms in
excess of one year as well as minimum contractual payments under the IT and business process outsourcing
agreements as of December 30, 2006 were as follows:
2007 ............................................................... $ 93,482
2008 ............................................................... 85,006
2009 ............................................................... 80,583
2010 ............................................................... 54,582
2011 ............................................................... 35,552
Thereafter ........................................................... 56,150
$405,355
56
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)