Ingram Micro 2010 Annual Report Download - page 23

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We operate a global business that exposes us to risks associated with conducting business in multiple
jurisdictions. We have operations in 26 countries, and sell our products and services to resellers in approximately
150 countries. A large portion of our revenue is derived from our international operations. As a result, our operating
results and financial condition could be significantly affected by risks associated with conducting business in
multiple jurisdictions, including, but not limited to, the following:
• environmental and trade protection laws, policies and measures;
• import and export duties and value-added taxes;
• compliance with foreign and domestic import and export regulations and anticorruption laws, including the
U.S. Foreign Corrupt Practices Act, or similar laws of other jurisdictions on our business activities outside
the U.S., the failure of which could result in severe penalties including monetary fines, criminal proceedings
and suspension of export privileges;
• regulatory requirements and prohibitions that differ between jurisdictions;
• differing employment practices and labor issues;
• political instability, terrorism and potential military conflicts or civilian unrest;
• economic instability in a specific country or region;
• earthquakes, power shortages, telecommunications failures, water shortages, tsunamis, floods, hurricanes,
typhoons, fires, extreme weather conditions, medical epidemics or pandemics and other natural or manmade
disasters or business interruptions in a region or specific country;
• complex and changing tax laws and regulations in various jurisdictions;
• the risk of non-compliance with local laws;
• potential restrictions on our ability to repatriate funds from our foreign subsidiaries cost effectively or at all; and
• difficulties in staffing and managing international operations.
The potential criminal penalties for violations of export regulations and anti-corruption laws, particularly the
U.S. Foreign Corrupt Practices Act, data privacy laws and environmental laws and regulations in many jurisdic-
tions, create heightened risks for our international operations. In the event that a governing regulatory body
determined that we have violated applicable export regulations or anti-corruption laws, we could be fined
significant sums, incur sizable legal defense costs and/or our export capabilities could be restricted, which could
have a material and adverse effect on our business and reputation. While we have and will continue to adopt
measures designed to promote compliance with these laws, we cannot be assured that such measures will be
adequate or that our business will not be materially and adversely impacted in the event of an alleged violation.
Additionally, 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,
through our ongoing monitoring procedures, these counterparties are creditworthy financial institutions, 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.
Our failure to adequately adapt to IT industry changes could negatively impact our future operating
results. The IT products industry is subject to rapid technological change, new and enhanced product specification
requirements, evolving industry standards and changes in the way technology products are distributed and/or
managed. Suppliers may give us limited or no access to new products being introduced. Changes may cause
inventory in stock to decline substantially in value or to become obsolete, regardless of the general economic
environment. Although it is the policy of many suppliers of IT products to offer distributors like us, who purchase
directly from them, limited protection from the loss in value of inventory due to technological change or such
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