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Table of Contents
Restructuring, Integration and Impairment Charges
The Company has been subject to the financial impact of integrating acquired businesses and charges related to
business reorganizations. In connection with such events, management is required to make estimates about the
financial impact of such matters that are inherently uncertain. Accrued liabilities and reserves are established to cover
the cost of severance, facility consolidation and closure, lease termination fees, inventory adjustments based upon
acquisition-related termination of supplier agreements and/or the re-evaluation of the acquired working capital assets
(inventory and accounts receivable), and write-down of other acquired assets including goodwill. Actual amounts
incurred could be different from those estimated.
Additionally, in assessing the Company’s goodwill for impairment the Company is required to make significant
assumptions about the future cash flows and overall performance of its reporting units. The Company is also required
to make judgments regarding the evaluation of changes in events or circumstances that would more likely than not
reduce the fair value of any of its reporting units below its carrying value, the results of which would determine
whether an interim test must be performed. Should these assumptions or judgments change in the future based upon
market conditions or should the structure of the Company’s reporting units change based upon changes in business
strategy, the Company may be required to record additional impairment charges to its remaining goodwill. See
Impairment Charges
in this MD&A for further discussion of the Company’s evaluation of goodwill impairment in
fiscal 2009.
Contingencies and Litigation
From time to time, the Company may become liable with respect to pending and threatened litigation, tax,
environmental and other matters. Management does not anticipate that any contingent matters will have a material
adverse impact on the Company’s financial condition, liquidity or results of operations.
Revenue Recognition
The Company does not consider revenue recognition to be a critical accounting policy due to the nature of its
business in which revenues are generally recognized when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the sales price is fixed or determinable and collectibility is reasonably
assured. Generally, these criteria are met upon the actual shipment of product to the customer. Accordingly, other
than for estimates related to possible returns of products from customers, discounts or rebates, the recording of
revenue does not require significant judgments or estimates. Provisions for returns are estimated based on historical
sales returns, credit memo analysis and other known factors. Provisions are made for discounts and rebates, which
are primarily volume-based, and are generally based on historical trends and anticipated customer buying patterns.
Finally, revenues from maintenance contracts, which are deferred and recognized in income over the life of the
agreement, are not material to the consolidated results of operations of the Company.
Recently Issued Accounting Pronouncements
See Note 1 in the Notes to Consolidated Financial Statements contained in Item 15 of this Report for the
discussion of recently issued accounting pronouncements.
Liquidity and Capital Resources
Cash Flows
Cash Flows from Operating Activities
During fiscal 2009, the Company generated $1.1 billion of cash from operating activities as compared with
$453.6 million in fiscal 2008. These results are comprised of: (1) cash flow generated from net income excluding
non-cash and other reconciling items, which includes the add-
back of depreciation and amortization, deferred income
taxes, stock-based compensation, non-cash impairment charges, gain on sale of assets, and other non-cash items
(primarily the provision for doubtful accounts and periodic pension costs) and (2) cash flow generated from a
reduction of working capital, excluding cash and cash equivalents. Cash generated from working capital during fiscal
2009 was the result of $709.9 million in collection of receivables, a $483.5 million reduction in inventory;
28