Ingram Micro 2013 Annual Report Download - page 24

Table of Contents
well as our debt and cash levels. However, our debt and/or cash levels may fluctuate significantly on a day-to-day basis due to the timing of customer receipts
and periodic payments to vendors. A higher concentration of payments received from customers toward the end of each month, combined with the timing of
payments we make to our vendors, typically yields lower debt balances and higher cash balances at our period-ends than is the case throughout the quarter or
year. Our future debt requirements may increase and/or our cash levels may decrease to support growth in our overall level of business, changes in our
required working capital profile, or to fund acquisitions, share repurchases or other investments in the business.
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We are currently in the process of migrating our operations from our legacy proprietary system that was developed in the late-1980s to SAP in a phased,
country-by-country approach. We have deployed SAP in several operations globally beginning in 2009 with our last deployment in early 2013 in
Colombia. Due to challenges in our earlier round of implementations, additional deployments have been on hold as we continue to address certain
improvements within the system to better address our internal and customer needs. We are continuing to evaluate our schedule for deploying the enterprise
system in additional locations. While we will adjust the deployment schedule as required to best serve our customers, we can make no assurances that we will
not have disruptions, delays and/or negative business impacts from forthcoming deployments.
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In order to further enhance our ability to innovate and respond to market needs with greater speed and efficiency, on February 13, 2014 we announced a
plan to proceed with a global organizational effectiveness program that involves three critical aspects:
1. Aligning and leveraging our infrastructure globally with our evolving businesses, opportunities and resources;
2. De-layering and simplifying the organization to enable us to be more nimble, responsive and collaborative; and
3. Maintaining investments in expertise and capabilities to continue to transform our business mix in faster growing, higher margin businesses.
As a result of the alignment and de-layering programs, we expect annual savings between $80,000 and $100,000. Restructuring, integration and other
reorganization costs associated with these programs are expected to be between $80,000 and $100,000, which includes $8,000 in costs associated with
implementation of initiatives that occurred in the fourth quarter of 2013. The majority of the costs are expected to be incurred in the first half of 2014. We
anticipate the majority of the cost savings beginning to occur in the second half of 2014 and the full run rate of savings to be realized in 2015.
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The discussions and analyses of our consolidated financial condition and results of operations are based on our consolidated financial statements,
which have been prepared in conformity with U.S. generally accepted accounting principles ("U.S. GAAP"). The preparation of these financial statements
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of significant contingent assets and
liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. On an ongoing basis, we review and
evaluate our estimates and assumptions, including, but not limited to, those that relate to trade accounts receivable; vendor programs; inventory; goodwill,
intangible assets and other long-lived assets; income taxes; and contingencies and litigation. Our estimates are based on our historical experience and a variety
of other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making our judgments about the
carrying values of assets and liabilities that are not readily available from other sources. Although we believe our estimates, judgments and assumptions are
appropriate and reasonable based upon available information, these assessments are subject to a wide range of sensitivities. Therefore, actual results could
differ from these estimates.
We believe that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the
portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective and complex judgments often as
a result of the need to make estimates about the effect of matters that are inherently uncertain.
•   — Our trade accounts receivable reflect a large number of customers dispersed across wide geographic areas, none of
which accounted for 10% or more of our consolidated net sales during the three years ended December 28, 2013. We provide allowances for doubtful
accounts on our trade accounts receivable for estimated losses resulting from the inability of our customers to make required payments. Changes in the
financial condition of our customers or other unanticipated events, which may affect their ability to make payments, could result in charges for
additional allowances exceeding our expectations. Our estimates are influenced by the following considerations: a continuing credit evaluation of our
customers’ financial condition; aging of trade accounts receivable, individually and in the aggregate; the extent of credit insurance coverage; the value
and adequacy of collateral received from our customers in certain circumstances; our historical loss experience; and changes in credit risk and capital
availability of our customers resulting from economic conditions.
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