Ingram Micro 2011 Annual Report Download - page 38

Acquisitions
We have complemented our internal growth initiatives with strategic business acquisitions over the past five
years and will continue to evaluate potential acquisitions consistent with our growth strategy. During this period,
we have expanded our value-added distribution of AIDC/POS solutions through acquisitions of the distribution
businesses of Eurequat SAS, Intertrade A.F. AG, and Paradigm Distribution Ltd. in EMEA, and Vantex
Technology Distribution Limited, or Vantex, and the Cantechs Group in Asia-Pacific. We have expanded our
presence in the mid-range enterprise market through the acquisitions of Aretê Sistemas S.A., or Aretê,
Computacenter Distribution, or CCD, Albora Soluciones SL, or Albora, and interAct BVBA, or interAct, in
EMEA and Value Added Distributors Limited, or VAD, and Asiasoft Hong Kong Limited, or Asiasoft, in Asia-
Pacific. We have also expanded our presence in the consumer electronics market in North America through the
acquisition of DBL Distributing Inc. in the U.S., and our networking products and services offerings through the
acquisitions of VPN Dynamics Inc. and Securematics Inc. in the U.S.
Working Capital and Debt
The IT products and services distribution business is working capital intensive. Our business requires
significant levels of working capital, primarily trade accounts receivable and inventory, which is partially
financed by vendor trade accounts payable. As a general rule, our net investment in working capital increases
when sales volumes increase. Conversely, this level of investment tends to decline in times of declining sales.
For our working capital needs, we rely heavily on trade credit from vendors, and also on trade accounts
receivable financing programs and debt facilities. Due to our narrow operating margins, we maintain a strong
focus on management of working capital and cash provided by operations, as well as our debt and cash levels.
However, our debt and/or cash levels may fluctuate significantly on a day-to-day basis due to timing of customer
receipts and periodic payments to vendors. A higher concentration of payments received from customers toward
the end of each month, combined with the timing of payments we make to our vendors, typically yields lower
debt balances and higher cash balances at our period-ends than is the case throughout the quarter or year. Our
future debt requirements may increase and/or our cash levels may decrease to support growth in our overall level
of business, changes in our required working capital profile, or to fund acquisitions, share repurchases or other
investments in the business.
Our Critical Accounting Policies and Estimates
The discussions and analyses of our consolidated financial condition and results of operations are based on
our consolidated financial statements, which have been prepared in conformity with accounting principles
generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities, disclosure of significant contingent assets
and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting
period. On an ongoing basis, we review and evaluate our estimates and assumptions, including, but not limited
to, those that relate to trade accounts receivable; vendor programs; inventory; goodwill, intangible and other
long-lived assets; income taxes; and contingencies and litigation. Our estimates are based on our historical
experience and a variety of other assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making our judgments about the carrying values of assets and liabilities that
are not readily available from other sources. Although we believe our estimates, judgments and assumptions are
appropriate and reasonable based upon available information, these assessments are subject to a wide range of
sensitivities. Therefore, actual results could differ from these estimates.
We believe the following critical accounting policies are affected by our judgments, estimates and/or
assumptions used in the preparation of our consolidated financial statements.
•Trade Accounts Receivable — We provide allowances for doubtful accounts on our trade accounts
receivable for estimated losses resulting from the inability of our customers to make required payments.
Changes in the financial condition of our customers or other unanticipated events, which may affect their
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