Ingram Micro 2011 Annual Report Download - page 30

We cannot predict what losses we might incur in litigation matters and contingencies that we may be
involved with from time to time. There are various claims, lawsuits and pending actions against us. It is our
opinion that the ultimate resolution of these matters will not have a material adverse effect on our consolidated
financial position, results of operations or cash flows. However, we can make no assurances that we will
ultimately be successful in our defense of any of these matters. See Part I, Item 3, “Legal Proceedings,” in this
Form 10-K for a discussion of our material legal matters.
We may incur material litigation, regulatory or operational costs or expenses, and may be impacted in
our marketing efforts, as a result of new environmental regulations or private intellectual property
enforcement disputes. We already operate in or may expand into markets which could subject us to
environmental laws that may have a material adverse effect on our business, including the European Union
Waste Electrical and Electronic Equipment Directive as enacted by individual European Union countries and
other similar legislation adopted in North America, which make producers of electrical goods, including
computers and printers, responsible for collection, recycling, treatment and disposal of recovered products. We
may also be prohibited from marketing products, could be forced to market products without desirable features,
or could incur substantial costs to defend legal actions, including where third parties claim that we or vendors
who may have indemnified us are infringing upon their intellectual property rights. In recent years, individuals
and groups have begun purchasing intellectual property assets for the sole purpose of making claims of
infringement and attempting to extract settlements from target companies. Even if we believe that such
infringement claims are without merit, the claims can be time-consuming and costly to defend and divert
management’s attention and resources away from our business. Claims of intellectual property infringement also
might require us to enter into costly settlements or pay costly damage awards, or face a temporary or permanent
injunction prohibiting us from marketing or selling certain products. Even if we have an agreement to indemnify
us against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations to
us.
We face a variety of risks in our reliance on third-party service companies, including shipping
companies for the delivery of our products and outsourcing arrangements. We rely almost entirely on
arrangements with third-party shipping and freight forwarding companies for the delivery of our products. The
termination of our arrangements with one or more of these third-party shipping companies, or the failure or
inability of one or more of these third-party shipping companies to deliver products from suppliers to us or
products from us to our customers, could disrupt our business and harm our reputation and operating results.
In addition, we have outsourced various transaction-oriented service and support functions to business
process outsource providers. We have also outsourced a significant portion of our IT infrastructure function and
certain IT application development functions to third-party providers. We may outsource additional functions to
third-party providers. Our reliance on third-party providers to provide service to us, our customers and suppliers
and for our IT requirements to support our business could result in significant disruptions and costs to our
operations, including damaging our relationships with our suppliers and customers, if these third-party providers
do not meet their obligations to adequately maintain an appropriate level of service for the outsourced functions
or fail to adequately support our IT requirements. As a result of our outsourcing activities, it may also be more
difficult to recruit and retain qualified employees for our business needs.
Changes in accounting rules could adversely affect our future operating results. Our consolidated
financial statements are prepared in accordance with U.S. generally accepted accounting principles. These
principles are subject to interpretation by various governing bodies, including the Financial Accounting
Standards Board and the SEC, who create and interpret appropriate accounting standards. Future periodic
assessments required by current or new accounting standards may result in additional noncash charges and/or
changes in presentation or disclosure. A change from current accounting standards could have a significant
adverse effect on our financial position or results of operations.
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