Ingram Micro 2010 Annual Report Download - page 35

up of $243,190, $24,125 and $475,338 in carrying value of goodwill, prior to the impairment, in North
America, EMEA and Asia Pacific, respectively. This noncash charge significantly impacted our equity and
results of operations for 2008, but did not impact our ongoing business operations, liquidity, cash flow or
compliance with covenants of our credit facilities.
Our 2009 acquisitions of VAD and Vantex in Asia Pacific yielded additional goodwill of $2,490. In light of
the continued weak demand for IT products and services in Asia Pacific and globally in 2009, the fair value
of our Asia Pacific reporting unit continued to be below the carrying value of its assets. As such, we recorded
a charge for the full impairment of the newly recorded goodwill from these two acquisitions in 2009.
We also assess potential impairment of our other identifiable intangible assets and other long-lived assets
when there is evidence that recent events or changes in circumstances such as significant changes in the
manner of use of the asset, negative industry or economic trends, and significant underperformance relative
to historical or projected future operating results, have made recovery of an asset’s carrying value unlikely.
We conducted impairment tests of our intangible assets and other long-lived assets in the fourth quarter of
2010 and 2009. Our results indicated that the carrying value of these assets was recoverable from
undiscounted cash flows and no impairment was indicated.
•Income Taxes — As part of the process of preparing our consolidated financial statements, we estimate our
income taxes in each of the taxing jurisdictions in which we operate. This process involves estimating our
actual current tax expense together with assessing the future tax impact of any differences resulting from the
different treatment of certain items, such as the timing for recognizing revenues and expenses for tax and
financial reporting purposes. These differences may result in deferred tax assets and liabilities, which are
included in our consolidated balance sheet. We are required to assess the likelihood that our deferred tax
assets, which include net operating loss carryforwards, tax credits and temporary differences that are
expected to be deductible in future years, will be recoverable from future taxable income. In making that
assessment, we consider, among other things, future market growth, forecasted earnings, future taxable
income, the mix of earnings in the jurisdictions in which we operate and prudent and feasible tax planning
strategies. If, based upon available evidence, recovery of the full amount of the deferred tax assets is not
likely, we provide a valuation allowance on any amount not likely to be realized. Changes in events or
variances from expectations could lead us to revise our estimate of the amount of our deferred tax assets
ultimately expected to be realized in the future, which could result in the provision of an additional valuation
allowance or reduction thereof. Our effective tax rate includes the impact of not providing taxes on
undistributed foreign earnings considered indefinitely reinvested. Material changes in our estimates of cash,
working capital and long-term investment requirements in the various jurisdictions in which we do business
could impact our effective tax rate if such indefinitely reinvested policy is altered.
The provision for tax liabilities and recognition of tax benefits involves evaluations and judgments of
uncertainties in the interpretation of complex tax regulations by various taxing authorities. In situations
involving uncertain tax positions related to income tax matters, we do not recognize benefits unless it is
more likely than not that they will be sustained. As additional information becomes available, or these
uncertainties are resolved with the taxing authorities, revisions to these liabilities or benefits may be
required, resulting in additional provision for or benefit from income taxes reflected in our consolidated
statement of income.
•Contingencies and Litigation — There are various claims, lawsuits and pending actions against us,
including those noted in Part I, Item 3. If a loss arising from these actions is probable and can be reasonably
estimated, we record the amount of the estimated loss. If the loss is estimated using a range within which no
point is more probable than another, the minimum estimated liability is recorded. As additional information
becomes available, we reassess any potential liability related to these actions and may need to revise our
estimates. Ultimate resolution of these matters could materially impact our consolidated results of oper-
ations, cash flows or financial position (see Note 10 to our consolidated financial statements).
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