Ingram Micro 2010 Annual Report Download - page 54

INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Currency in 000s, except per share data)
Note 1 — Organization and Basis of Presentation
Ingram Micro Inc. and its subsidiaries are primarily engaged in the distribution of information technology
(“IT”) products and supply chain solutions worldwide. Ingram Micro Inc. and its subsidiaries operate in North
America, Europe, Middle East and Africa (“EMEA”), Asia Pacific and Latin America.
Note 2 — Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements include the accounts of Ingram Micro Inc. and its subsidiaries. All
significant intercompany accounts and transactions have been eliminated in consolidation. Unless the context
otherwise requires, the use of the terms “Ingram Micro,” “we,” “us” and “our” in these notes to consolidated
financial statements refers to Ingram Micro Inc. and its subsidiaries.
Fiscal Year
Our fiscal year is a 52- or 53-week period ending on the Saturday nearest to December 31. All references
herein to “2010,” “2009,” and “2008” represent the 52- or 53-week fiscal years ended January 1, 2011 (52-weeks),
January 2, 2010 (52-weeks) and January 3, 2009 (53-weeks), respectively.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America (“U.S.”) requires us to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported
amounts of revenue and expenses during the reporting period. Significant estimates primarily relate to the realizable
value of accounts receivable, vendor programs, inventory, goodwill, intangible and other long-lived assets, income
taxes and contingencies and litigation. Actual results could differ from these estimates.
Revenue Recognition
Revenue is recognized when: an arrangement exists; delivery has occurred, including transfer of title and risk
of loss for product sales, or services have been rendered for service revenues; the price to the buyer is fixed or
determinable; and collection is reasonably assured. Service revenues represent less than 10% of total net sales for
2010, 2009 and 2008. We, under specific conditions, permit our customers to return or exchange products. The
provision for estimated sales returns is recorded concurrently with the recognition of revenue. The net impact on
gross margin from estimated sales returns is included in allowances against trade accounts receivable in the
consolidated balance sheet. We also have limited contractual relationships with certain of our customers and
suppliers whereby we assume an agency relationship in the transaction. In such arrangements, we recognize the net
fee associated with serving as an agent in sales.
Vendor Programs
Funds received from vendors for price protection, product rebates, marketing/promotion, infrastructure reim-
bursement and meet-competition programs are recorded as adjustments to product costs, revenue, or selling, general
and administrative (“SG&A”) expenses according to the nature of the program. Some of these programs may extend
over one or more quarterly reporting periods. We accrue rebates or other vendor incentives as earned based on sales of
qualifying products or as services are provided in accordance with the terms of the related program.
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