Ingram Micro 2011 Annual Report Download - page 28

We have made and expect to continue to make investments in new business strategies and initiatives,
including acquisitions, which could disrupt our business and have an adverse effect on our operating
results. Such investments may involve significant risks and uncertainties, including distraction of management’s
attention away from normal business operations; insufficient revenue generation to offset liabilities assumed and
expenses associated with the strategy; difficulty in the integration of acquired businesses, including new
employees, business systems and technology; inability to adapt to challenges of new markets, including
geographies, products and services, or to attract new sources of profitable business from expansion of products or
services; exposure to new 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 had $73,330 of identifiable net intangible assets recorded in connection with various acquisitions as of
December 31, 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.
Unanticipated 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
18