Ingram Micro 2008 Annual Report Download - page 25

associated with international activities, including environmental and trade protection laws, policies and measures;
tariffs; export license requirements; enforcement of the Foreign Corrupt Practices Act, or similar laws of other
jurisdictions on our business activities outside the Unites States; other regulatory requirements; economic and labor
conditions; political or social unrest; economic instability or natural disasters in a specific country or region, such as
hurricanes and tsunamis; health or similar issues such as the outbreak of the avian flu; tax laws in various
jurisdictions around the world (as experienced in our Brazilian subsidiary); and difficulties in staffing and managing
international operations.
We are exposed to market risk primarily related to foreign currencies and interest rates. In particular, we are
exposed to changes in the value of the U.S. dollar versus the local currency in which the products are sold and goods
and services are purchased, including devaluation and revaluation of local currencies. We manage our exposure to
fluctuations in the value of currencies and interest rates using a variety of financial instruments. Although we
believe that our exposures are appropriately diversified across counterparties and that these counterparties are
creditworthy financial institutions and we monitor the creditworthiness of our counterparties, we are exposed to
credit loss in the event of nonperformance by our counterparties to foreign exchange and interest rate swap contracts
and we may not be able to adequately mitigate all foreign currency related risks.
We have made and expect to continue to make investments in new business strategies and initiatives,
including acquisitions and continued enhancements to information systems, process and procedures and
infrastructure on a global basis,which could disrupt our business and have an adverse effect on our operating
results. Such endeavors may involve significant risks and uncertainties, including distraction of management’s
attention away from normal business operations; insufficient revenue generation to offset liabilities assumed and
expenses associated with the strategy; difficulty in the integration of acquired businesses, including new employees,
business systems and technology; inability to adapt to challenges of new markets, including geographies, products
and services, or to attract new sources of profitable business from expansion of products or services; exposure to
new regulations; and issues not discovered in our due diligence process. Our operations may be adversely impacted
by an acquisition that (i) is not suited for us, (ii) is improperly executed, or (iii) substantially increases our debt. All
these factors could adversely affect our operating results or financial condition.
We are dependent on a variety of information systems and a failure of these systems could disrupt our
business and harm our reputation and net sales. We depend on a variety of information systems for our
operations, including our centralized IMpulse information processing system, which supports many of our
operational functions such as inventory management, order processing, shipping, receiving, and accounting.
Because IMpulse is comprised of a number of legacy, internally developed applications, it can be harder to upgrade,
and may not be adaptable to commercially available software. Also, we may acquire other businesses having
information systems and records which may be converted and integrated into current Ingram Micro information
systems. Although we have not in the past experienced material system-wide failures or downtime of any of our
information systems used around the world, we have experienced failures in certain specific geographies. Failures
or significant downtime for any of our information systems could prevent us from placing product orders with
vendors or recording inventory received, taking customer orders, printing product pick-lists, and/or shipping and
invoicing for product sold. It could also prevent customers from accessing our price and product availability
information.
In order to support future growth of the company, we continue to review our business needs and are making
continuous improvements, including standardization where appropriate of business processes, and technology
upgrades to our information systems, including software applications and electronic interfaces with our business
partners. This can be a lengthy and expensive process that may result in a significant diversion of resources from
other operations. In implementing these enhancements, we may experience greater-than-acceptable difficulty or
costs; we may also experience significant disruptions in our business, which could have a material adverse effect on
our financial results and operations, particularly if we were to replace a substantial portion of our current systems
and processes. In addition, we offer no assurance that competitors will not develop superior systems or that we will
be able to meet evolving market requirements by upgrading our current systems at a reasonable cost, or at all.
Finally, we also rely on the Internet for a significant percentage of our orders and information exchanges with
our customers. The Internet and individual websites have experienced a number of disruptions and slowdowns,
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