Ingram Micro 2010 Annual Report Download - page 28

• 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;
• the impact of acquisitions and divestitures;
• the occurrence of unexpected events or the resolution of existing uncertainties, including, but not limited to,
litigation, regulatory matters, or uncertain tax positions;
• the loss or consolidation of one or more of our major suppliers or customers;
• product supply constraints; and
• interest rate fluctuations and/or credit market volatility, which may increase our borrowing costs and may
influence the willingness or ability of customers and end-users to purchase products and services.
These historical variations in our business may not be indicative of future trends in the near term. Our narrow
operating margins may magnify the impact of the foregoing factors on our operating results. We believe that you
should not rely on period-to-period comparisons of our operating results as an indication of future performance. In
addition, the results of any quarterly period are not indicative of results to be expected for a full fiscal year.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our corporate headquarters is located in Santa Ana, California. We support our global operations through an
extensive sales and administrative office and distribution network throughout North America, EMEA, Asia Pacific
and Latin America. As of January 1, 2011 we operated 100 distribution centers worldwide (greater than 5,000
square feet in size).
As of January 1, 2011, we leased substantially all our facilities on varying terms. We do not anticipate any
material difficulties with the renewal of any of our leases when they expire or in securing replacement facilities on
commercially reasonable terms. We also own several facilities, the most significant of which is part of our office/
distribution facilities in Straubing, Germany.
ITEM 3. LEGAL PROCEEDINGS
Our Brazilian subsidiary has been assessed for commercial taxes on its purchases of imported software for the
period January to September 2002. The principal amount of the tax assessed for this period was 12,700 Brazilian
reais. Although we believe we have valid defenses to the payment of the assessed taxes, as well as any amounts due
for the unassessed period from October 2002 to December 2005, after consultation with counsel, it is our opinion
that it is probable that we may be required to pay all or some of these taxes and we had established a liability for
these taxes assessable through December 2005. Legislation enacted in February 2007 provides that such taxes are
not assessable on software imports after January 1, 2006. Accordingly, in 2007, we recorded a net charge to cost of
sales of $30,134. In the fourth quarters of 2010, 2009 and 2008, we released a portion of this commercial tax reserve
amounting to $9,112, $9,758 and $8,224, respectively (15,500, 17,100 and 19,600 Brazilian reais at a December
2010 exchange rate of 1.666, December 2009 exchange rate of 1.741 and December 2008 exchange rate of 2.330
Brazilian reais to the U.S. dollar, respectively). These partial reserve releases were related to the unassessed periods
from January through December 2005, January through December 2004 and January through December 2003,
respectively, for which it is our opinion, after consultation with counsel, that the statute of limitations for an
assessment from Brazilian tax authorities has expired. The remaining amount of liability at January 1, 2011 and
January 2, 2010 was 12,700 Brazilian reais and 28,200 Brazilian reais, respectively (approximately $7,600 and
$16,200 at January 1, 2011 and January 2, 2010, respectively, based on the exchange rate prevailing on those dates
of 1.666 and 1.741 Brazilian reais, respectively, to the U.S. dollar).
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