Ingram Micro 2008 Annual Report Download - page 77

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In 2007, the Company issued a guarantee to a third party that provides financing to a limited number of the
Company’s customers, which accounted for less than 1% of the Company’s North American net sales for both 2008
and 2007. The guarantee requires the Company to reimburse the third party for defaults by these customers up to an
aggregate of $5,000. The fair value of this guarantee has been recognized as cost of sales to these customers and is
included in other accrued liabilities.
In December 2008, the Company renewed its agreement with a third-party provider of IToutsourcing services
through December 2013. The services to be provided include mainframe, major server, desktop and enterprise
storage operations, wide-area and local-area network support and engineering; systems management services; help
desk services; and worldwide voice/PBX. This agreement is cancelable at the option of the Company subject to
payment of termination fees.
The Company has an agreement with a leading global business process outsource service provider. The
services provided to the Company’s North America operations include selected functions in finance and shared
services, customer service, vendor management, technical support and inside sales (excluding field sales and
management positions). This agreement expires in September 2010, but is cancelable at the option of the Company
subject to payment of termination fees. The Company also has an agreement with a leading global IT outsource
service provider. The services provided to the Company’s North America operations include certain IT functions
related to its application development functions. This agreement expires in August 2011 and may be terminated by
the Company subject to payment of termination fees.
The Company also leases the majority of its facilities and certain equipment under noncancelable operating
leases. Rental expense, including obligations related to IToutsourcing services, for the years ended 2008, 2007 and
2006 was $159,667, $143,034 and $118,979, respectively.
Future minimum rental commitments on operating leases that have remaining noncancelable lease terms in
excess of one year as well as minimum contractual payments under the IT and business process outsourcing
agreements as of January 3, 2009 were as follows:
2009 ............................................................... $ 95,422
2010 ............................................................... 79,133
2011 ............................................................... 56,131
2012 ............................................................... 40,155
2013 ............................................................... 29,304
Thereafter ........................................................... 24,088
$342,233
The above minimum payments have not been reduced by minimum sublease rental income of $17,135 due in
the future under noncancelable sublease agreements as follows: $2,703, $2,604, $2,635, $2,635, $2,550 and $4,008
in 2009, 2010, 2011, 2012, 2013 and thereafter, respectively.
Note 11 — Segment Information
The Company operates predominantly in a single industry segment as a distributor of IT products and supply
chain solutions worldwide. The Company’s operating segments are based on geographic location, and the measure
of segment profit is income from operations. The Company does not allocate stock-based compensation recognized
(see Note 12 to consolidated financial statements) to its operating units; therefore, the Company is reporting this as a
separate amount.
Geographic areas in which the Company operated during 2008 include North America (United States and
Canada), EMEA (Austria, Belgium, Denmark, Finland, France, Germany, Hungary, Italy, The Netherlands,
Norway, South Africa, Spain, Sweden, Switzerland, and the United Kingdom), Asia-Pacific (Australia, The
67
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)