Ingram Micro 2010 Annual Report Download - page 55

We sell products purchased from many vendors, but generated approximately 23%, 24% and 23% of our net
sales in fiscal years 2010, 2009 and 2008, respectively, from products purchased from Hewlett-Packard Company.
There were no other vendors whose products represented 10% or more of our net sales for each of the last three
fiscal years.
Warranties
Our suppliers generally warrant the products distributed by us and allow returns of defective products,
including those that have been returned to us by our customers. We generally do not independently warrant the
products we distribute; however, local laws might impose warranty obligations upon distributors (such as in the case
of supplier liquidation). We are 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, we warrant the services we provide, products that we
build-to-order from components purchased from other sources, and our 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 our consolidated financial statements.
Foreign Currency Translation and Remeasurement
Financial statements of our 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 several operations within our EMEA, Asia Pacific and Latin America regions is the U.S. dollar;
accordingly, the monetary assets and liabilities of these subsidiaries are translated into U.S. dollar 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
We consider all highly liquid investments with original maturities of three months or less to be cash
equivalents.
Book overdrafts of $517,107 and $411,944 as of January 1, 2011 and January 2, 2010, respectively, represent
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. We typically fund these overdrafts through normal collections
of funds or transfers from bank balances at other financial institutions. Under the terms of our facilities with the
banks, the respective financial institutions are not legally obligated to honor the book overdraft balances as of
January 1, 2011 and January 2, 2010, or any balance on any given date.
Trade Accounts Receivable Factoring Programs
In July 2010, we entered into an uncommitted factoring program in North America under which trade accounts
receivable of one large customer may be sold, without recourse, to a financial institution. The program’s total
amount of receivables that may be factored cannot exceed $150,000. In the same month, we also entered into an
uncommitted factoring program in EMEA under which trade accounts receivable of another large customer may be
sold, without recourse, to a financial institution. The program’s total amount of receivables that may be factored
cannot exceed A40,000, or approximately $53,000 at January 1, 2011. Available capacity under these programs is
dependent on the amount of trade accounts receivable already sold to and held by the financial institutions, the level
of our trade accounts receivable eligible to be sold into these programs and the financial institutions’ willingness to
47
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)