Ingram Micro 2010 Annual Report Download - page 25

regulations; and issues not discovered in our due diligence process. Our operations may be adversely impacted by
an acquisition that (i) is not suited for us, (ii) is improperly executed, or (iii) substantially increases our debt. Any of
these factors could adversely affect our operating results or financial condition.
We have $81,992 of identifiable net intangible assets recorded in connection with various acquisitions as of
January 1, 2011. If our future results of operations are negatively impacted by any of the risk factors noted herein or
other unforeseen events, we may have to recognize an impairment charge relating to our long-lived assets or
identifiable intangible assets, which would adversely affect our results of operations.
Substantial defaults by our customers or the loss of significant customers could have a negative impact
on our business, results of operations, financial condition or liquidity. As is customary in many industries, we
extend credit to our customers for a significant portion of our net sales. Customers have a period of time, generally
30 to 45 days after date of invoice, to make payment. We are subject to the risk that our customers will not pay for
the products they have purchased. The risk that we may be unable to collect on receivables may increase if our
customers experience decreases in demand for their products and services or otherwise become less stable, due to
adverse economic conditions. If there is a substantial deterioration in the collectability of our receivables or if we
cannot obtain credit insurance at reasonable rates, are unable to collect under existing credit insurance policies, or
fail to take other actions to adequately mitigate such credit risk, our earnings, cash flows and our ability to utilize
receivable-based financing could deteriorate. In addition, our customers do not have an obligation to make
purchases from us. In the event a significant customer decides to make its purchases from another distributor,
experiences a significant change in demand from its own customer base, becomes financially unstable, or is
acquired by another company, our revenues, and our ability to access rebates from vendors may be negatively
impacted, resulting in an adverse effect on our business or results of operations.
Changes in, or interpretations of, tax rules and regulations, changes in mix of our business amongst
different tax jurisdictions, and deterioration of the performance of our business may adversely affect our
effective income tax rates or operating margins and we may be required to pay additional taxes and/or tax
assessments, as well as record valuation allowances relating to our deferred tax assets. We are subject to both
income and transaction-based taxes in substantially all countries and jurisdictions in which we operate. Unan-
ticipated changes to our effective income tax rate could adversely affect our future earnings and cash flows. Our
effective income tax rate in the future could be adversely affected by changes in the mix of earnings in countries
with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes to our
operating structure, changes in tax laws and the discovery of new information in the course of our tax return
preparation process.
Likewise, unanticipated changes to our transaction tax liabilities could adversely affect our future results of
operations, cash flows and our competitive position. We engage in a high volume of transactions where multiple
types of consumption, commercial and service taxes are potentially applicable. An inability to appropriately
identify, charge, remit and document such taxes, along with an inconsistency in the application of these taxes by the
applicable taxing authorities, may negatively impact our gross and operating margins, financial position or cash
flows.
We are subject to the continuous examination of both our income and transaction tax returns by the Internal
Revenue Service and other domestic and foreign tax authorities. While we regularly evaluate our tax contingencies
and uncertain tax positions to determine the adequacy of our provision for income and other taxes based on the
technical merits and the likelihood of success resulting from tax examinations, any adverse outcome from these
continuous examinations may have an adverse effect on our operating results and financial position.
Changes in our credit rating or other market factors, such as adverse capital and credit market
conditions or reductions in cash flow from operations, may affect our ability to meet liquidity needs, reduce
access to capital, and/or increase our costs of borrowing. Our business requires significant levels of capital to
finance accounts receivable and product inventory that is not financed by trade creditors. This is especially true
when our business is expanding, including through acquisitions, but we still have substantial demand for capital
even during periods of stagnant or declining net sales. In order to continue operating our business, we will continue
to need access to capital, including debt financing and inbound and outbound flooring and draft discounting
facilities. In addition, changes in payment terms with either suppliers or customers could increase our capital
17