Ingram Micro 2008 Annual Report Download - page 59

The Company sells products purchased from many vendors, but generated approximately 23%, 23% and 22% ofits
net sales in fiscal years 2008, 2007 and 2006, respectively, from products purchased from Hewlett-Packard Company.
There were no other vendors that represented 10% or more of the Company’s net sales in each of the last three years.
Warranties
The Company’s suppliers generally warrant the products distributed by the Company and allow returns of
defective products, including those that have been returned to the Company by its customers. The Company
generally does not independently warrant the products it distributes; however, local laws might impose warranty
obligations upon distributors (such as in the case of supplier liquidation). The Company is obligated to provide
warranty protection for sales of certain IT products within the European Union (“EU”) for up to two years as
required under the EU directive where vendors have not affirmatively agreed to provide pass-through protection. In
addition, the Company warrants its services, products that it builds-to-order from components purchased from other
sources, and its own branded products. Provision for estimated warranty costs is recorded at the time of sale and
periodically adjusted to reflect actual experience. Warranty expense and the related obligations are not material to
the Company’s consolidated financial statements.
Foreign Currency Translation and Remeasurement
Financial statements of foreign subsidiaries, for which the functional currency is the local currency, are
translated into U.S. dollars using the exchange rate at each balance sheet date for assets and liabilities and a
weighted average exchange rate for each period for statement of income items. Translation adjustments are
recorded in accumulated other comprehensive income, a component of stockholders’ equity. The functional
currency of the Company’s operations in Latin America and certain operations within the Company’s Asia-Pacific
and EMEA regions is the U.S. dollar; accordingly, the monetary assets and liabilities of these subsidiaries are
translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues, expenses, gains or
losses are translated at the average exchange rate for the period, and nonmonetary assets and liabilities are translated
at historical rates. The resultant remeasurement gains and losses of these operations as well as gains and losses from
foreign currency transactions are included in the consolidated statement of income.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less to be cash
equivalents.
Book overdrafts of $315,033 and $326,027 as of January 3, 2009 and December 29, 2007, respectively,
represent checks issued that had not been presented for payment to the banks and are classified as accounts payable
in the Company’s consolidated balance sheet. The Company typically funds these overdrafts through normal
collections of funds or transfers from bank balances at other financial institutions. Under the terms of the
Company’s facilities with its banks, the respective financial institutions are not legally obligated to honor the
book overdraft balances as of January 3, 2009 and December 29, 2007, or any balance on any given date.
For the fifty-three weeks ended January 3, 2009, the Company revised the presentation of changes in book
overdrafts from a financing activity to an operating activity in its consolidated statement of cash flows with a
conforming change to the prior period presentation. The effect of this change increased the cash provided by
operating activities for 2007 and 2006 from $285,948 and $50,672, respectively, as previously disclosed in the prior
year Annual Report on Form 10-K, to $327,814 and $92,844, respectively, with a corresponding decrease in the
cash flows provided by financing activities for 2007 and 2006 from $87,770 and $52,678, respectively, to $45,904
and $10,506, respectively.
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)