Ingram Micro 2008 Annual Report Download - page 31

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In May 2007, we received a “Wells Notice” from the SEC, which indicated that the SEC staff intends to
recommend an administrative proceeding against the company seeking disgorgement and prejudgment interest,
though no dollar amounts were specified in the notice. The staff contends that the company failed to maintain
adequate books and records relating to certain of our transactions with McAfee Inc. (formerly Network Associates,
Inc.), and was a cause of McAfee’s own securities-laws violations relating to the filing of reports and maintenance
of books and records. During the second quarter of 2007, we recorded a reserve of $15.0 million for the current best
estimate of the probable loss associated with this matter based on discussions with the SEC staff concerning the
issues raised in the Wells Notice. No resolution with the SEC has been reached at this point, however, and there can
be no assurance that such discussions will result in a resolution of these issues. When the matter is resolved, the final
disposition and the related cash payment may exceed the current accrual for the best estimate of probable loss. At
this time, it is also not possible to accurately predict the timing of a resolution. We have responded to the Wells
Notice and continue to cooperate fully with the SEC on this matter, which was first disclosed during the third quarter
of 2004.
We and one of our subsidiaries are defendants in two separate lawsuits arising out of the bankruptcy of Refco,
Inc., and its subsidiaries and affiliates (collectively, “Refco”). Both actions are currently pending in the U.S. District
Court for the Southern District of New York. In August 2007, the trustee of the Refco Litigation Trust filed suit
against Grant Thornton LLP, Mayer Brown Rowe & Maw, LLP, Phillip Bennett, and numerous other individuals
and entities (the “Kirschner action”), claiming damage to the bankrupt Refco entities in the amount of $2 billion. Of
its forty-four claims for relief, the Kirschner action contains a single claim against us and our subsidiary, alleging
that loan transactions between the subsidiary and Refco in early 2000 and early 2001 aided and abetted the common
law fraud of Bennett and other defendants, resulting in damage to Refco in August 2004when it effected a leveraged
buyout in which it incurred substantial new debt while distributing assets to Refco insiders. In March 2008, the
liquidators of numerous Cayman Island-based hedge funds filed suit (the “Krys action”) against many of the same
defendants named in the Kirschner action, as well as others. The Krys action alleges that we and our subsidiary
aided and abetted the fraud and breach of fiduciary duty of Refco insiders and others by participating in the above
loan transactions, causing damage to the hedge funds in an unspecified amount. We intend to vigorously defend
these cases and do not expect the final disposition of either to have a material adverse effect on our consolidated
financial position, results of operations, or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by
this report, through the solicitation of proxies or otherwise.
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