Ingram Micro 1999 Annual Report Download - page 41

3399
Ingram Micro
Annual Report
The composition of Basic EPS and Diluted EPS is as follows:
1999 1998 1997
Income before extraordinary item $179,641 $245,175 $193,640
Weighted average shares 143,404,207 139,263,810 135,764,053
Basic earnings per share before extraordinary item $1.25 $1.76 $1.43
Weighted average shares including the dilutive effect
of stock options (4,380,505; 10,274,060; and 10,543,479
for Fiscal 1999, 1998, and 1997, respectively) 147,784,712 149,537,870 146,307,532
Diluted earnings per share before extraordinary item $1.21 $1.64 $1.32
At January 1, 2000 and January 2, 1999, there were $440,943 and $473,475, respectively, in Zero Coupon Convertible
Debentures that were convertible into 6,427,721 and 7,308,350 shares of Class A Common Stock (see Note 7). In 1999 and 1998,
these potential shares were excluded from the computation of Diluted EPS because their effect would be antidilutive.Additionally,
there were approximately 3,483,000, 388,000, and 262,000 options in 1999, 1998, and 1997, respectively, that 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.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133,
“Accounting for Derivative Instruments and Hedging Activities” (“FAS 133”), which will become effective for the Company in fiscal
2001. FAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives), and for hedging activities. The Company does not expect the
adoption of FAS 133 to have a material impact on its reported consolidated financial condition or results of operations.
Reclassifications
Certain prior year balances have been reclassified to conform with the current year presentation.
Note 3 — Reorganization Costs
In February 1999, the Company initiated a plan primarily in the U.S., but also in Europe, to streamline operations and
reorganize resources to increase flexibility and service and maximize cost savings and operational efficiencies.This reorganization
plan included several organizational and structural changes, including the closing of the Company’s California-based consolidation
center and certain other redundant locations, realignment of the Company’s sales force and the creation of a product management
organization that integrates purchasing, vendor services, and product marketing functions, as well as a realignment of administrative
functions and processes throughout the U.S. organization and in certain of the Company’s European operations. In addition, during
the fourth quarter of 1999, further organizational and strategic changes were implemented in the Company’s assembly and custom-
configuration operations including the selection of an outsource partner to produce unbranded systems and the reallocation of
resources to the Company’s custom-configuration services capabilities.
In connection with these reorganization efforts, the Company recorded a charge of $20,305 for the fiscal year ended January 1,
2000.The reorganization charge included $12,322 in employee termination benefits for approximately 597 employees, $6,381
for the write-off of software used in the production of unbranded systems, $1,284 for closing and consolidation of redundant
facilities relating primarily to excess lease costs net of estimated sublease income, net of adjustments, and $318 for other costs
associated with the reorganization, net of adjustments. This initiative is substantially complete at January 1, 2000.