Ingram Micro 2008 Annual Report Download - page 28

geographical coverage, and broad scope of products, suppliers, and customers, we are dependent in large part on our
ability to retain the services of our key management, sales, IT, operational, and finance personnel. Our continued
success is also dependent upon our ability to retain and recruit other qualified employees, including highly skilled
technical, managerial, and marketing personnel, to meet our needs. Competition for qualified personnel is intense.
We may not be successful in attracting and retaining the personnel we require, which could have a material adverse
effect on our business. In addition, we have recently reduced our personnel in various geographies and functions
through our restructuring and outsourcing activities. These reductions could negatively impact our relationships
with our workforce, or make hiring other employees more difficult. In addition, failure to meet performance targets
for the company may result in reduced levels of incentive compensation, which may affect our ability to retain key
personnel. Additionally, changes in workforce, including government regulations, collective bargaining agreements
or the availability of qualified personnel could disrupt operations or increase our operating cost structure.
We face a variety of risks with outsourcing arrangements. We have outsourced various transaction-oriented
service and support functions in North America to a leading global business process outsource provider outside the
United States. We have also outsourced a significant portion of our IT infrastructure function and certain IT
application development functions to third-party providers. We may outsource additional functions to third-party
providers. Our reliance on third-party providers to provide service to us, our customers and suppliers and for our IT
requirements to support our business could result in significant disruptions and costs to our operations, including
damaging our relationships with our suppliers and customers, if these third-party providers do not meet their
obligations to adequately maintain an appropriate level of service for the outsourced functions or fail to adequately
support our IT requirements. As a result of our outsourcing activities, it may also be more difficult to recruit and
retain qualified employees for our business needs.
Changes in accounting rules could adversely affect our future operating results. Our consolidated
financial statements are prepared in accordance with U.S. generally accepted accounting principles. These
principles are subject to interpretation by various governing bodies, including the FASB and the SEC, who create
and interpret appropriate accounting standards. Future periodic assessments required by current or new accounting
standards may result in additional non-cash charges and/or changes in presentation or disclosure. A change from
current accounting standards could have a significant adverse effect on our financial position or results of
operations.
Our quarterly results have fluctuated significantly. Our quarterly operating results have fluctuated
significantly in the past and will likely continue to do so in the future as a result of:
• general deterioration in economic or geopolitical conditions, including changes in legislation and regulatory
environments in which we operate;
• competitive conditions in our industry, which may impact the prices charged and terms and conditions
imposed by our suppliers and/or competitors and the prices we charge our customers, which in turn may
negatively impact our revenues and/or gross margins;
• seasonal variations in the demand for our products and services, which historically have included lower
demand in Europe during the summer months, worldwide pre-holiday stocking in the retail channel during
the September-to-December period and the seasonal increase in demand for our North American fee-based
logistics related services in the fourth quarter, which affects our operating expenses and margins;
• changes in product mix, including entry or expansion into new markets, as well as the exit or retraction of
certain business;
• the impact of and possible disruption caused by reorganization actions and efforts to improve our IT
capabilities, as well as the related expenses and/or charges;
• currency fluctuations in countries in which we operate;
• variations in our levels of excess inventory and doubtful accounts, and changes in the terms of vendor-
sponsored programs such as price protection and return rights;
• changes in the level of our operating expenses;
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