Ingram Micro 2013 Annual Report Download - page 48

Table of Contents
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In 000s, except per share data)
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We account for repurchased shares of common stock as treasury stock. Treasury shares are recorded at cost and are included as a component of
stockholders’ equity in our consolidated balance sheet.
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Comprehensive income consists primarily of our net income, foreign currency translation adjustments and, fair value adjustments to our interest rate
swap agreement designated as a cash flow hedge, which we settled in September 2011.
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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 by the weighted average number of common shares outstanding during the reported period. Diluted EPS uses the
treasury stock method to compute the potential dilution that could 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:
Fiscal Year Ended
2013
2012
2011
Net income $310,583
$305,909
$244,240
Weighted average shares 152,900
150,654
155,882
Basic earnings per share $2.03
$2.03
$1.57
Weighted average shares including the dilutive effect of stock-based awards
(3,372, 3,063 and 3,706 for 2013, 2012 and 2011, respectively) 156,272
153,717
159,588
Diluted earnings per share $1.99
$1.99
$ 1.53
There were approximately 2,069, 3,487 and 2,671 stock-based awards in 2013, 2012 and 2011, 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.
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We estimate income taxes in each of the taxing jurisdictions in which we operate. This process involves estimating our 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 versus financial reporting purposes. These differences may result in deferred tax assets and liabilities, which are included in our consolidated
balance sheet. We are required to assess the likelihood that our 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 the nature
of the deferred tax assets and related statutory limits on utilization, recent operating results, 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.
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 we no longer consider our foreign earnings to be indefinitely reinvested.
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 their
sustainability is deemed more likely than not. As additional information becomes available, or these uncertainties are resolved with the taxing authorities,
revisions to these liabilities or benefits may be required, resulting in additional provision for or benefit from income taxes reflected in our consolidated
statement of income.
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