Ingram Micro 2013 Annual Report Download - page 47

Table of Contents
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In 000s, except per share data)
key personnel, strategy, vendors, or customers, negative or declining cash flows, or a decline in actual or planned revenue or earnings compared with actual
and projected results of relevant prior periods.
The changes in the carrying amount of goodwill for 2013 are as follows:
North
America
Asia-
Pacific
BrightPoint
Total
Balance at December 31, 2011 $ —
$ —
$ —
$ —
Acquisitions 4,555
4,951
418,895
428,401
Balance at December 29, 2012 $4,555
$4,951
$418,895
$428,401
Acquisitions 105,064
—
—
105,064
Adjustments/reclassifications (800)
1,671
(6,810)
(5,939)
Balance at December 28, 2013 $108,819
$6,622
$ 412,085
$527,526
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Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, trade
accounts receivable from customers and vendors, and derivative financial instruments. Our cash and cash equivalents are deposited and/or invested with
various financial institutions globally that are monitored by us regularly for credit quality. Our trade accounts receivable reflect a large number of customers
and dispersed across wide geographic areas, none of which has accounted for 10% or more of our consolidated net sales in 2013, 2012 and 2011 and no
customer accounts receivable balance was greater than 10% of our total trade accounts receivable at December 28, 2013 nor December 29, 2012. We perform
ongoing credit evaluations of our customers’ financial conditions, obtain credit insurance in many locations and require collateral in certain circumstances. We
maintain an allowance for estimated credit losses.
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We operate in various locations around the world. We reduce our exposure to fluctuations in foreign exchange rates by creating offsetting positions
through the use of derivative financial instruments in situations where there are not offsetting balances that create a natural hedge. The market risk related to
the foreign exchange agreements is offset by changes in the valuation of the underlying items being hedged. In accordance with our policy, we do not use
derivative financial instruments for trading or speculative purposes, nor are we a party to leveraged derivatives.
Foreign exchange risk is managed primarily by using forward contracts to hedge foreign currency-denominated receivables, payables and intercompany
loans and expenses. Interest rate swaps and forward contracts are used to hedge foreign currency-denominated principal and interest payments related to
intercompany loans.
All derivatives are recorded in our consolidated balance sheet at fair value. The estimated fair value of derivative financial instruments represents the
amount required to enter into similar offsetting contracts with similar remaining maturities based on market-derived prices. Changes in the fair value of
derivatives not designated as hedging instruments are recorded in current earnings. Changes in the fair value of derivatives designated as hedging instruments
are reflected in accumulated other comprehensive income.
The notional amount of forward exchange contracts is the amount of foreign currency bought or sold at maturity. The notional amount of interest rate
swaps is the underlying principal amount used in determining the interest payments exchanged over the life of the swap. Notional amounts are indicative of the
extent of our involvement in the various types and uses of derivative financial instruments but are not a measure of our exposure to credit or market risks
through our use of derivatives.
Credit exposure for derivative financial instruments is limited to the amounts, if any, by which the counterparties’ obligations under the contracts exceed
our obligations to the counterparties. We manage the potential risk of credit losses through careful evaluation of counterparty credit standing, selection of
counterparties from a limited group of financial institutions and other contract provisions including collateral deposits.
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