Ingram Micro 2013 Annual Report Download - page 44

Table of Contents
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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, supply chain services and
mobile device lifecycle services worldwide. Ingram Micro Inc. and its subsidiaries operate in North America, Europe, Asia-Pacific, Middle East and Africa,
and Latin America. Beginning in 2012, we added a reportable segment for mobility which reflects our acquisition of Brightpoint, Inc. (“BrightPoint”).
Note 2 — Significant Accounting Policies
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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 the consolidated financial statements refers to Ingram Micro Inc. and its subsidiaries.
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Our fiscal year is a 52- or 53-week period ending on the Saturday nearest to December 31. All references herein to “2013,” “2012,” and “2011” represent
the 52-week fiscal years ended December 28, 2013, December 29, 2012 and December 31, 2011, respectively.
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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. We review our estimates and assumptions on an on-going basis.
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.
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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 2013, 2012 and 2011. 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 as revenues the net fee associated with serving as
an agent.
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Funds received from vendors for price protection, product rebates, marketing/promotion, infrastructure reimbursement 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.
We sell products purchased from many vendors, but generated approximately 15%, 18% and 21% of our net sales in 2013, 2012 and 2011,
respectively, from products purchased from Hewlett-Packard Company, and approximately 10% of our consolidated net sales in 2012 from products
purchased from Apple Inc. The year-over-year decreases in products purchased from these vendors, as a percentage of net sales, for the periods discussed
above reflects the higher mix of products purchased from other vendors as a result of changes in the market in general and our acquisition of BrightPoint
which does not have significant products purchased from these vendors. There were no other vendors whose products represented 10% or more of our net sales
for each of the last three fiscal years.
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