Ingram Micro 2006 Annual Report Download - page 49

2006 2005 2004
Operating income and operating margin by geographic
region:
North America ................................. $225.2 1.7% $157.6 1.3% $130.3 1.1%
Europe....................................... 126.8 1.2 143.4 1.4 129.8 1.3
Asia-Pacific ................................... 69.4 1.3 39.8 0.8 9.8 0.4
Latin America ................................. 29.9 2.0 21.4 1.6 13.5 1.2
Stock-based compensation expense recognized under
FAS 123R .................................. (28.9) — — — — —
Total ........................................ $422.4 1.4% $362.2 1.3% $283.4 1.1%
We sell products purchased from many vendors, but generated approximately 22%, 23%, and 22% of our net
sales in fiscal years 2006, 2005 and 2004, respectively, from products purchased from Hewlett-Packard Company.
There were no other vendors that represented 10% or more of our net sales in each of the last three years.
The following table sets forth certain items from our consolidated statement of income as a percentage of net
sales, for each of the fiscal years indicated.
2006 2005 2004
Net sales ................................................. 100.0% 100.0% 100.0%
Cost of sales .............................................. 94.6 94.5 94.5
Gross profit ............................................... 5.4 5.5 5.5
Operating expenses:
Selling, general and administrative ............................ 4.0 4.1 4.4
Reorganization costs (credits) ................................ (0.0) 0.1 (0.0)
Income from operations ...................................... 1.4 1.3 1.1
Other expense, net .......................................... 0.2 0.2 0.1
Income before income taxes ................................... 1.2 1.1 1.0
Provision for income taxes .................................... 0.3 0.3 0.2
Net income ............................................... 0.9% 0.8% 0.8%
Results of Operations for the Years Ended December 30, 2006, December 31, 2005 and January 1, 2005
Our consolidated net sales were $31.4 billion, $28.8 billion and $25.5 billion in 2006, 2005 and 2004,
respectively. The year-over-year growth in our consolidated net sales of 9% and 13% in 2006 and 2005, respectively,
primarily reflects the improving demand environment for IT products and services across most economies in which
we operate globally and additional revenue arising from the acquisitions of Nimax in July 2004, Tech Pacific in
November 2004 and AVAD in July 2005. However, competitive pricing pressures, the expansion of a direct sales
strategy by one or more of our major vendors, changes in terms and conditions by our vendors and/or softening of
demand could adversely affect the current improvements in our revenues and profitability over the near term.
Net sales from our North American operations were $13.6 billion, $12.2 billion and $11.8 billion in 2006, 2005
and 2004, respectively. The year-over-year growth in our North American net sales of 11.2% and 3.7% in 2006 and
2005, respectively, reflects the improving demand for IT products and services in the region in 2006, as well as the
additional revenue arising from the acquisition of AVAD in July 2005 and gains from our growth-enhancement
initiatives in the region. Net sales from our European operations were $10.8 billion, $10.4 billion and $9.8 billion in
2006, 2005 and 2004. The year-over-year growth in European net sales of 3.2% and 5.9% in 2006 and 2005,
respectively, reflects the slightly improved demand for IT products and services across the region. In 2006, the
translation impact of the relatively stronger European currencies compared to the U.S. dollar resulted in an increase
in net sales of approximately 2%; while in 2005, the translation impact of the European currencies had a negative
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