Ingram Micro 2010 Annual Report Download - page 42

capital decreases, which generally results in increases in cash flows generated from operating activities. The
following is a detailed discussion of our cash flows for 2010, 2009 and 2008.
Our cash and cash equivalents totaled $1,155,551 and $910,936 at January 1, 2011 and January 2, 2010,
respectively. The higher cash and cash equivalents level at January 1, 2011 compared to January 2, 2010, primarily
reflects the ongoing generation of profits from the business excluding noncash items and the net proceeds from
issuance of our $300,000 senior unsecured notes, partially offset by: our investment in the business in the form of
net working capital to address our year-over-year sales growth; our repurchases of Class A Common Stock; net
repayments of debt; and investments in acquisitions and property and equipment. As of January 1, 2011 and
January 2, 2010, we have book overdrafts of $517,107 and $411,944, respectively, representing checks issued on
disbursement bank accounts but not yet paid by such banks. These amounts are classified as accounts payable in our
consolidated balance sheet and are typically paid by the banks in a relatively short period of time. We have closely
managed our overall working capital investment in 2010 and 2009 and our low level of working capital days
achieved as of January 1, 2011 and January 2, 2010 was at the low end or better than our targeted range. Our
investment in working capital may increase in future periods. For instance, we recently have and may continue to
pursue profitable sales and market share growth and/or new business opportunities through targeted investment in
working capital. This could include our strategic pursuit of additional early pay discounts on trade accounts payable
or purchase discounts on inventory, or we may allow extended payment terms or larger credit lines to certain
customers. While each of these factors may yield net additional investment in working capital, as well as sales
growth and/or improved profitability, we also continue to manage the risks associated with these strategies and the
optimization of our resulting returns on invested capital.
Operating activities provided net cash of $179,322, $240,801, and $553,944 in 2010, 2009 and 2008,
respectively. As noted above, our cash flows from operations are significantly affected by net working capital
which is in turn impacted by both fluctuations in volume of sales, as well as normal period-to-period variations in
days of working capital outstanding due to the timing of collections from customers, movement of inventory and
payments to vendors. The net cash provided by operating activities in 2010 principally reflects our net income
before noncash charges, offset partially by an increase in our net working capital. The principal driver of the
investment is the previously discussed higher sales volumes in 2010, as our working capital days outstanding were
relatively consistent at the end of both 2010 and 2009. The net cash provided by operating activities in 2009 also
principally reflects our net income before noncash charges, partially offset by an increase in our net working capital.
The increase in net working capital reflects higher levels of sales to close out the fourth quarter of 2009 compared to
the end of 2008 as we began to see some positive trends in the macroeconomic environment by the end of 2009
compared to the end of 2008. Conversely, in 2008 our sales volumes were contracting significantly through the end
of the year, which yielded a net decrease in working capital investment. This impact, when added to our net income
before noncash charges, generated our largest cash flow from operations for the three years presented herein.
Investing activities used net cash of $79,351, $99,908 and $61,437 in 2010, 2009 and 2008, respectively. The
net cash used by investing activities in 2010 was primarily due to capital expenditures of $76,292 and cash payments
primarily related to the acquisitions of Albora, interAct and Asiasoft totaling $8,329. The net cash used by investing
activities in 2009 was primarily due to capital expenditures of $68,667 and cash payments primarily related to the
acquisitions of CCD, VAD and Vantex totaling $35,415. The net cash used by investing activities in 2008 was
primarily due to capital expenditures of $81,359 and cash payments related to acquisitions of $12,347, partially
offset by the collection of collateral deposits. The capital expenditures for 2010, 2009 and 2008 were primarily for
expected investments to enhance our underlying infrastructure and IT systems. We presently estimate that our
capital expenditures will approximate $100,000 in 2011 for ongoing investments to support existing infrastructure
and continued enhancements in our IT systems and equipment for a new warehouse in our Australian operation.
Financing activities provided net cash of $146,357 in 2010 and used net cash of $51,178 and $271,351 in 2009
and 2008, respectively. The net cash provided by financing activities in 2010 primarily reflects $297,152 in net
proceeds from the issuance of our $300,000 senior unsecured notes due in 2017 and $38,439 in proceeds from the
exercise of stock options, partially offset by the repurchase of Class A Common Stock of $152,285 under our stock
repurchase programs, and net repayments of $40,672 on our debt facilities and senior unsecured term loan. The net
cash used by financing activities in 2009 primarily reflects net repayments of $89,898 on our debt facilities and our
senior unsecured term loan, partially offset by $34,635 in proceeds from the exercise of stock options. The net cash
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