View:
Room 4561
December 30, 2005
Larry C. Boyd
Senior Vice President, Secretary and
General Counsel
Ingram Micro Inc.
1600 E. St. Andrew Place
Santa Ana, CA 92705
Re: Ingram Micro Inc.
Form 10-K For the Year Ended January 1, 2005
Forms 10-Q For the Quarterly Periods Ended April 2, July 2
and
October 1, 2005
Forms 8-K Filed on April 28, July 28 and October 27,
2005
File No. 001-12203
Dear Mr. Boyd,
We have reviewed the above referenced filings and have the
following comments. Please note that we have limited our review
to
the matters addressed in the comments below. We may ask you to
provide us with supplemental information so we may better
understand
your disclosures. Please be as detailed as necessary in your
explanations. After reviewing this information, we may raise
additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for Fiscal Year Ended January 1, 2005
Note 2 - Significant Accounting Policies
Revenue Recognition, page 43
1. We note that under "specific conditions" you permit customers
to
return or exchange products and have the following comments:
a. Tell us how your accounting for these return rights complies
with
each of the criteria set forth in paragraph 6 of SFAS 48.
Describe
the nature of the specific conditions and indicate whether these
are
included in all of your standard agreements. In addition, your
response should address SAB Topic 13A(4)(b);
b. With regard to the valuation allowance presented in Schedule II
(page 70), identify the different allowances included in the
amount
presented. That is, it appears that the allowance includes
amounts
for doubtful accounts and for sales returns. Tell us, on a
disaggregated basis, the amounts related to each allowance, for
each
period presented and what consideration you have given to
separately
presenting these amounts.
2. You state that revenue is recognized when the price to the
buyer
is determinable. Describe the factors that can affect the price
and
describe circumstances where the price could not be determined.
In
this regard, tell us whether you offer price protection or
incentive
programs to your customers and if so, the accounting model(s) you
follow in recording such transactions (i.e. EITF 01-9 or SFAS 48)
and
the significance of amounts recorded in all periods presented.
Describe the nature of each program and what rights your customers
have to receive price protection, either explicitly through
contractual terms or implicitly as a result of your historical
practices.
3. With regard to your discussion on page 64 of your arrangements
with certain finance companies that provide inventory-financing
facilities for your customers, tell us the following:
a. Whether such arrangements require you to guarantee your
customers`
performance under the arrangements. To the extent that such
guarantees exist, tell us the total amount of your guarantees and
describe your consideration of whether the noncontingent element
of
any such guarantee, that is, your obligation to stand ready to
perform under the guarantee, should be recognized as a separate
element of your sales arrangements. Refer to paragraph 9 of FIN
45.
b. How your accounting policies for revenue recognition have
considered your assistance in providing financing to resellers,
and
in some cases, their end-users, to finance sales of your
inventory.
That is, tell us how you have considered how your participation in
these financing arrangements impacts whether your arrangements
contain a fixed and determinable fee.
c. Further, you state that the company`s repurchase obligations
relating to inventory cannot be reasonably estimated. Indicate
why
you believe that your inability to estimate the obligation does
not
affect the timing of revenue recognition. That is, explain why
you
believe that the price is determinable upon shipment of the
product.
Vendor Programs, page 43
4. With regard to the funds you receive from vendors for price
protection, product rebates, marketing, training, product returns,
infrastructure reimbursement, promotions and other programs, tell
us
the following:
a. Describe the specific nature of each type of vendor program,
including a discussion of your accounting for each program and the
timing surrounding the receipt and recognition of program
payments.
b. Discuss how your accounting policies comply with EITF 02-16 and
describe the financial statement impact, if any, following your
adoption of this standard.
c. Identify all balance sheet accounts associated with, and
impacted
by, each program. Tell us the balances in each account for each
period presented.
d. Quantify the amounts recognized, in each period presented, for
each program and identify the income statement classifications
where
realization is reflected.
e. Describe your consideration of disclosing the impact of these
programs within your discussion of results of operations and
liquidity disclosures within MD&A.
Note 8 - Income Taxes, page 61
5. Explain why the deferred tax assets for the "allowance on
accounts
receivable" increased while the reported account was relatively
unchanged. Indicate whether the applicable tax rate used to
calculate the deferred tax assets changed. See paragraph 18 of
SFAS
109. If so, explain how this event or trend is addressed in your
MD&A. In addition, tell us how you determined the amount of
deferred
tax assets associated with the Net Operating Loss to classify as
current and non-current. Indicate why you believe that the
classifications are proper. Compare the amount of NOL utilized in
the prior two years to the amount classified as non-current.
Form 10-Q for the Quarterly Period Ended October 1, 2005.
6. We note that you adjusted the purchase price allocation
associated
with the acquisition of Tech Pacific to reflect additional
liabilities. Explain why you adjusted goodwill to record the
additional liabilities. If a liability had been recorded
originally
as part of the purchase price allocation, indicate how your
accounting for the restructuring accrual complies with EITF 95-3.
In
this regard, tell us why this adjustment should not be expensed
instead.
Forms 8-K filed on April 28, July 28 and October 27, 2005
7. The purpose of your non-GAAP income statement appears to be to
reconcile non-GAAP net income to GAAP net income. Your
presentation,
however, presents numerous adjusted line items and subtotals, each
of
which constitutes a separate non-GAAP measure that must be
justified
and individually reconciled to fully conform to the requirements
of
Item 10(e)(1)(i) of Regulation S-K. Either delete the non-GAAP
statement of operations from all future press releases or expand
to
present detailed and specific disclosure of the following for each
non-GAAP measure:
i. The substantive reasons why management believes the non-GAAP
measure provides useful information to investors;
ii. The specific manner in which management uses the non-GAAP
measure
to conduct or evaluate its business;
iii. The economic substance behind management`s decision to use
the
measure; and
iv. The material limitations associated with the use of the non-
GAAP
measure as compared to the use of the most directly comparable
GAAP
measure and the manner in which management compensates for these
limitations when using the non-GAAP measure.
* * * * *
As appropriate, please amend your filings and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. Please submit all correspondence and
supplemental
materials on EDGAR as required by Rule 101 of Regulation S-T. You
may wish to provide us with marked copies of any amendment to
expedite our review. Please furnish a cover letter with any
amendment that keys your responses to our comments and provides
any
requested information. Detailed cover letters greatly facilitate
our
review. Please understand that we may have additional comments
after
reviewing any amendment and your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Tamara Tangen at (202) 551-3443 if you have
any
questions regarding our comments on the financial statements and
related matters. Please contact me at (202) 551-3488 with any
other
questions.
Sincerely,
Stephen G. Krikorian
Branch Chief - Accounting
Larry C. Boyd
Ingram Micro Inc.
December 30, 2005
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