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Ingram Micro, Inc.
(714)
566-1000
1600
E. ST. ANDREW PLACE
SANTA
ANA, CA 92705
www.ingrammicro.com
Sales
$22.6
billion
Business Description
Ingram Micro, a Fortune 100 company, is the largest sales, marketing, and
logistics provider for the Information Technology (“IT”) industry worldwide.
We are more than a conduit between suppliers and resellers. We create value
in the IT market by extending the reach of our technology partners,
capturing market share for resellers and suppliers, creating innovative
solutions and providing efficient fulfillment of IT products and services.
With a broad range of products and services, quick and efficient order
fulfillment, and consistent accurate and on-time delivery, we create
operating efficiencies for our resellers and suppliers around the world.
Products
We distribute and market hundreds of thousands of IT products worldwide from
the industry’s premier computer hardware suppliers, networking equipment
suppliers, and software publishers worldwide. Product assortments vary by
market, and the suppliers’ relative contribution to our sales also varies
from country to country. On a worldwide basis, our revenue mix by product
category has remained relatively stable over the past several years,
although it may fluctuate between and within different operating regions.
Over the past several years, our product category revenues on a consolidated
basis have generally been within the following ranges:
• Networking: 10-15%
• Software: 15-20%
• Systems: 20-25%
• Peripherals: 40-45%
Networking. We define our networking category as the software and hardware
that, when combined, link two or more IT systems together — regardless of
their geographic proximity. We offer a variety of networking products such
as communications products (IP communications, and modems), routers,
switches, hubs, wireless local area networks, wireless wide area networks,
network interface cards, video conferencing, network-attached storage,
storage area networks, and security hardware (firewalls, intrusion
detection, encryption, and appliances).
Software. We define our software category as a broad variety of applications
containing computer instructions or data that can be stored electronically.
We offer a variety of software products such as business application
software, operating system software, entertainment software, middleware,
developer software tools, and security software (firewalls, intrusion
detection, and encryption).
Systems. We define our systems category as self-standing computer systems
capable of functioning independently. We offer a variety of systems such as
servers, desktops, portable personal computers, tablet personal computers,
and personal digital assistants.
Peripherals. We define our peripherals category as all products or services
that can be used in conjunction with computer systems that are not
considered networking or software. We offer a variety of peripherals
products including printers, scanners, displays, projectors, monitors,
panels, mass storage, and tape. We also include other products and services
in this category including components (processors, motherboards, hard
drives, and memory), supplies and accessories (ink and toner supplies,
paper, carrying cases, and anti-glare screens), consumer electronic products
(cell phones, digital cameras, digital video disc (“DVD”) players, game
consoles, and televisions), and services (such as installation services,
professional services, service provider and carrier services, warranties and
support, configuration and assembly, packaged services, and mobile
communication service).
Suppliers
Our worldwide suppliers include leading computer hardware suppliers,
networking equipment suppliers, and software publishers such as 3Com, Acer,
Cisco Systems, Inc., Computer Associates, Epson, Fujitsu Siemens Computers,
Hewlett-Packard, IBM, Intel, Iomega, InFocus, Lexmark, Maxtor, Microsoft,
NEC-Mitsubishi, Novell, palmOne, Philips, Seagate, Sony Electronics Inc.,
Sprint, Symantec, Toshiba, VERITAS Software Corporation, ViewSonic
Corporation, Western Digital and Xerox. We generated approximately 40%, 41%
and 44% of our net sales in fiscal 2003, 2002 and 2001, respectively, from
products purchased from our top three vendors. Hewlett-Packard Company, or
HP, and Compaq Computer Company, which was acquired by HP in 2002, were
treated for this purpose as a single combined company since the beginning of
fiscal 2001 and represents more than 10% of our net sales in each of the
last three years.
Our suppliers generally warrant the products we distribute and allow returns
of defective products, including those returned to us by our customers. We
do not independently warrant the products we distribute; however, we do
warrant our services and the products that we build to order from components
purchased from other sources. Provision for estimated warranty costs is
recorded at the time of sale and periodically adjusted to reflect actual
experience. Historically, warranty expense has not been material.
We have written distribution agreements with many of our suppliers; however,
these agreements usually provide for nonexclusive distribution rights and
often include territorial restrictions that limit the countries in which we
can distribute the products. The agreements are also generally short term,
subject to periodic renewal, and often contain provisions permitting
termination by either party without cause upon relatively short notice. A
supplier who elects to terminate a distribution agreement generally will
repurchase its products carried in the distributor’s inventory.
Our business, like that of other distributors, is subject to the risk that
the value of our inventory will be affected adversely by suppliers’ price
reductions or by technological changes affecting the usefulness or
desirability of the products comprising the inventory. It is the policy of
many suppliers of IT products to offer distributors like us, who purchase
directly from them, limited protection from the loss in value of inventory
due to technological change or a supplier’s price reductions. Under many of
these agreements, the distributor is restricted to a designated period of
time in which products may be returned for credit or exchanged for other
products or during which price protection credits may be claimed. We take
various actions, including monitoring our inventory levels and controlling
the timing of purchases, to maximize our protection under supplier programs
and reduce our inventory risk. However, no assurance can be given that
current protective terms and conditions will continue or that they will
adequately protect us against declines in inventory value, or that they will
not be revised in such a manner as to adversely impact our ability to obtain
price protection. In addition, suppliers may become insolvent and unable to
fulfill their protection obligations to us. We are subject to the risk that
our inventory values may decline and protective terms under supplier
agreements may not adequately cover the decline in values.
Services
In addition to our broad array of products, we also offer a number of supply
chain management services to our suppliers and resellers. Services related
to our distribution business include: sales and marketing, customer care,
financial services, and logistics. Our sales and marketing services include
business development and outsourced marketing services, demand generation
programs for suppliers and resellers, market research and business
intelligence, retail merchandising, and software licensing services. Our
customer care services include call center support and pre- and
post-technical support. Our financial services include credit and collection
management services and tailored financing programs. We also offer
end-to-end supply chain services to suppliers and resellers through our
Ingram Micro Logistics division which vary depending on regional
requirements and can include end-to-end order management and fulfillment,
retail logistics merchandizing, warehousing and storage, contract
manufacturing, distribution center services, product procurement, reverse
logistics, transportation management, customer care, tailored financing
programs, marketing services, and other outsourcing services. We believe
that our logistics services enable our customers to leverage our
distribution infrastructure and better focus on their core competencies.
Some of our supply chain management clients include CompUSA, Intuit, Iomega,
Microsoft and Targus Group in North America and NCR and WStore in Europe.
One of the most important services we offer is the variety of ways customers
can connect to our IMpulse system electronically. Customers can connect to
us and access our core distribution functions such as sales, purchasing,
distribution center systems, and back office functions such as accounts
payable, accounts receivable, and customer service. This connectivity can be
done through our website, www.ingrammicro.com, Electronic Data Interchange
(“EDI”), InsideLineTM (reseller web enablement), XML (Extensible Mark-up
Language), and Click2License (automated volume licensing tool). We also
offer extensive reporting to our Ingram Micro Logistics clients and
distribution customers covering information such as product receipts,
product availability, stock status, ordering, order status, and returns.
In order to increase customer satisfaction and expand these outsourcing
opportunities by providing best-in-class solutions, we have entered into
various strategic alliances in areas such as e-commerce, transportation, and
marketing services. By leveraging our core competencies to offer these
services, we enable our clients to reduce their fixed investments while at
the same time accessing our latest technology and world-class customer
service metrics. Our agreements with these customers are generally for a
number of years, although either party usually may terminate the agreement
after a relatively short notice period.
We also offer professional and technical services across North America
through our Ingram Micro Service Network (“IMSN”), which serves as a
collaboration and partnership platform for over 530 VAR organizations. IMSN
enables VARs to expand their geographic reach and service capabilities by
providing a fully managed nationwide technical support and service
management solution owned and operated by Ingram Micro. IMSN is comprised of
over 10,000 certified technicians in 800 North American markets throughout
the United States, Canada, and Puerto Rico. Our partners work together to
provide world-class IT business solutions and support to end customers
including application services; consulting; hardware and software support;
installation, moves, adds, and changes; migration services; local area
network and wide area network services; network design, integration and
implementation; and outsourcing services.
Although services represent one of the initiatives of our long-term
strategy, they have contributed less than 10% of our revenues in the past
and may not reach that level in the near term.
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