Ingram Micro 2010 Annual Report Download - page 59

Earnings Per Share
We report a dual presentation of Basic Earnings Per Share (“Basic EPS”) and Diluted Earnings Per Share
(“Diluted EPS”). Basic EPS excludes dilution and is computed by dividing net income (loss) by the weighted
average number of common shares outstanding during the reported period. Diluted EPS uses the treasury stock
method or the if-converted method, where applicable, to compute the potential dilution that would occur if stock-
based awards and other commitments to issue common stock were exercised.
The computation of Basic EPS and Diluted EPS is as follows:
2010 2009 2008
Fiscal Year Ended
Net income (loss) .................................. $318,060 $202,138 $(394,921)
Weighted average shares (in 000s) . . . ................... 160,504 162,993 166,543
Basic earnings (loss) per share ........................ $ 1.98 $ 1.24 $ (2.37)
Weighted average shares (in 000s) including the dilutive effect
of stock-based awards (3,357 and 2,573 for 2010 and 2009,
respectively) .................................... 163,861 165,566 166,543
Diluted earnings (loss) per share ....................... $ 1.94 $ 1.22 $ (2.37)
There were approximately 5,266,000 and 9,455,000 outstanding stock-based awards in 2010 and 2009,
respectively, which were not included in the computation of Diluted EPS because the exercise price was greater than
the average market price of the Class A Common Stock, thereby resulting in an antidilutive effect. There were
approximately 12,048,000 outstanding stock-based awards in 2008, all of which were excluded from the com-
putation of diluted EPS because of our net loss that year.
Income Taxes
We estimate income taxes in each of the taxing jurisdictions in which we operate. This process involves
estimating the actual current tax expense together with assessing the future tax impact of any differences resulting
from the different treatment of certain items, such as the timing for recognizing revenues and expenses for tax and
financial reporting purposes. These differences may result in deferred tax assets and liabilities, which are included
in the consolidated balance sheet. We are required to assess the likelihood that the deferred tax assets, which include
net operating loss carryforwards, tax credits and temporary differences that are expected to be deductible in future
years, will be recoverable from future taxable income. In making that assessment, we consider, among other things,
future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which
we operate and prudent and feasible tax planning strategies. If, based upon available evidence, recovery of the full
amount of the deferred tax assets is not likely, we provide a valuation allowance on any amount not likely to be
realized. Changes in events or variances from expectations could lead us to revise our estimate of the amount of our
deferred tax assets ultimately expected to be realized in the future, which could result in the provision of an
additional valuation allowance or reduction thereof. Our effective tax rate includes the impact of not providing taxes
on undistributed foreign earnings considered indefinitely reinvested. Material changes in our estimates of cash,
working capital and long-term investment requirements in the various jurisdictions in which we do business could
impact our effective tax rate if such indefinitely reinvested policy is altered.
The provision for tax liabilities and recognition of tax benefits involves evaluations and judgments of
uncertainties in the interpretation of complex tax regulations by various taxing authorities. In situations involving
uncertain tax positions related to income tax matters, we do not recognize benefits unless it is more likely than not
that they will be sustained. As additional information becomes available, or these uncertainties are resolved with the
51
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)