Ingram Micro 2013 Annual Report Download - page 45

Table of Contents
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In 000s, except per share data)
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Our suppliers generally warrant the products distributed by us and allow returns of defective products, including those that have been returned to us by
our customers. We generally do not independently warrant the products we distribute; however, local laws might impose warranty obligations upon
distributors (such as in the case of supplier liquidation). We are obligated to provide warranty protection for sales of certain IT products within the European
Union (“EU”) for up to two years as required under the EU directive where vendors have not affirmatively agreed to provide pass-through protection. In
addition, we warrant the services we provide, products that we build-to-order from components purchased from other sources, and our own branded products.
Provision for estimated warranty costs is recorded at the time of sale and periodically adjusted to reflect actual experience. Warranty expense and the related
obligations are not material to our consolidated financial statements.
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Financial statements of our foreign subsidiaries, for which the functional currency is the local currency, are translated into U.S. dollars using the
exchange rate at each balance sheet date for assets and liabilities and a weighted average exchange rate for each period for statement of income items.
Translation adjustments are recorded in accumulated other comprehensive income, a component of stockholders’ equity. The functional currency of a few
operations within our Europe, Asia-Pacific and Latin America regions is the U.S. dollar; accordingly, the monetary assets and liabilities of these subsidiaries
are remeasured into U.S. dollars at the exchange rate in effect at the balance sheet date. Revenues, expenses, gains or losses are remeasured at the average
exchange rate for the period, and nonmonetary assets and liabilities are remeasured at historical rates. The resultant remeasurement gains and losses of these
operations as well as gains and losses from foreign currency transactions are included in the consolidated statement of income.
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We consider all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents.
Book overdrafts of $347,837 and $415,207 as of December 28, 2013 and December 29, 2012, respectively, represent checks issued on disbursement
bank accounts but not yet paid by such banks. These amounts are classified as accounts payable in our consolidated balance sheet. We typically fund these
overdrafts through normal collections of funds or transfers from bank balances at other financial institutions. Under the terms of our facilities with the
banks, the respective financial institutions are not legally obligated to honor the book overdraft balances as of December 28, 2013 and December 29, 2012, or
any balance on any given date.
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We have several uncommitted factoring programs under which trade accounts receivable of two large customers may be sold, without recourse, to
financial institutions. Available capacity under these programs is dependent on the level of our trade accounts receivable eligible to be sold into these programs
and the financial institutions’ willingness to purchase such receivables. At December 28, 2013 and December 29, 2012, we had a total of $381,451 and
$242,626, respectively, of trade accounts receivable sold to and held by the financial institutions under these programs. Factoring fees of $2,851, $3,822
and $3,068 incurred in 2013, 2012 and 2011, respectively, related to the sale of trade accounts receivable under both facilities are included in “other” in the
other expense (income) section of our consolidated statement of income.
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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.
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