Ingram Micro 2010 Annual Report Download - page 56

purchase such receivables. At January 1, 2011, we had a total of $112,484 of trade accounts receivable sold to and
held by the financial institutions under these programs.
Inventory
Our inventory consists of finished goods purchased from various vendors for resale. Inventory is stated at the
lower of average cost or market, and is determined from the price we pay vendors, including freight and duties. We
do not include labor, overhead or other general or administrative costs in our inventory.
Property and Equipment
Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated
useful lives noted below. We also capitalize computer software costs that meet both the definition of internal-use
software and defined criteria for capitalization. Leasehold improvements are amortized over the shorter of the lease
term or the estimated useful life. Depreciable lives of property and equipment are as follows:
Buildings ........................................................... 40years
Leasehold improvements................................................ 3-17 years
Distribution equipment ................................................. 5-10 years
Computer equipment and software ........................................ 3-7years
Maintenance, repairs and minor renewals are charged to expense as incurred. Additions, major renewals and
betterments to property and equipment are capitalized.
Long-Lived and Intangible Assets
We assess potential impairments to our long-lived assets when events or changes in circumstances indicate that
the carrying amount may not be fully recoverable. If required, an impairment loss is recognized as the difference
between the carrying value and the fair value of the assets. The gross carrying amount of the finite-lived identifiable
intangible assets of $179,267 and $172,363 at January 1, 2011 and January 2, 2010, respectively, are amortized over
their remaining estimated lives ranging up to 17 years. The net carrying amount was $81,992 and $92,054 at
January 1, 2011 and January 2, 2010, respectively. Amortization expense was $16,743, $17,270 and $15,877 for
2010, 2009 and 2008, respectively.
Our impairment analyses for 2010, 2009 and 2008 yielded no impairments to our long-lived and other
identifiable intangible assets.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in
an acquisition and should be reviewed at least annually for potential impairment.
In the fourth quarter of 2008, consistent with the drastic decline in the capital markets in general, we
experienced a similar decline in the market value of our common stock. As a result, our market capitalization was
significantly lower than the book value of our company. We conducted goodwill impairment tests in each of our
regional reporting units that had goodwill during the fourth quarter of 2008, which coincided with the timing of our
normal annual impairment test. In performing this test, we, among other things, consulted an independent valuation
advisor. The results of the tests indicated that the goodwill of each of the North America, EMEA and Asia Pacific
reporting units was fully impaired. As a result, we recorded a charge of $742,653 in the fourth quarter of 2008,
which was made up of $243,190, $24,125 and $475,338 in carrying value of goodwill, prior to the impairment, in
North America, EMEA and Asia Pacific, respectively. This noncash charge significantly impacted our equity and
results of operations for 2008, but did not impact our ongoing business operations, liquidity, cash flow or
compliance with covenants for our credit facilities.
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)