Ingram Micro 2001 Annual Report Download - page 24

Notes to Consolidated Financial Statements
(Dollars in 000s, except per share data)
on November 15, 2001 and ending on the termination date of the swap agreement. At December 29, 2001, the marked-to-market value of
the interest rate swap amounted to $6,070, which is recorded in other assets with an offsetting adjustment to the hedged debt, bringing
the total carrying value of the Senior Subordinated Notes to $204,899.
Annual maturities of the Company’s long-term debt as of December 29, 2001 are as follows: $252,803 in 2002, $405 in 2003, and $204,899 in 2008.
Note 8 - Income Taxes
The components of income (loss) before taxes and extraordinary item consist of the following:
Fiscal Year 2001 2000 1999
United States $ 17,163 $ 332,24 1 $ 275,013
Foreign (1,228) 30,268 15,480
Total$15,935 $ 362,509 $ 290,493
The provision for (benefit from) income taxes consists of the following:
Fiscal Year 2001 2000 1999
Current:
Federal $ (15,165) $ 55,038 $ 62,832
State (6,656) 4,626 8
Foreign 20,856 28,335 25,488
(965) 87,999 88,328
Deferred:
Federal 2 1,1 50 58,418 32,801
State 7,827 6,537 7,847
Foreign (21,424) (14,1 98) (18,124)
7,553 50,757 22,524
Provision for income taxes $ 6,588 $ 138,756 $ 1 10,852
Deferred income taxes reflect the tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of the Company’s net deferred tax assets and liabilities are as follows:
Fiscal Year End 2001 2000
Net deferred tax assets and (liabilities):
Net operating loss carryforwards $ 71,1 97 $ 50,983
Allowance on accounts receivable 10,159 18,093
Inventories (2,537) 6,246
Tax credit carryforwards 26,839 26,301
Realized gain on available-for-sale securities not currently taxable (118,229) (118,229)
Depreciation and amortization (50,1 1 1) (33,625)
Other (8,969) (7,350)
(71,651) (57,581)
Unrealized gain on available-for-sale securities 428 (10,801)
Total $(71,223) $ (68,382)
Net current deferred tax assets of $9,707 and $26,297 were included in other current assets at December 29, 2001 and December 30, 2000,
respectively. Net non-current deferred tax liabilities of $80,930 and $94,679 were included in other liabilities at December 29, 2001 and December
30, 2000, respectively.
The Company has recorded deferred tax liabilities totaling $118,229 in 2001 and 2000 associated with realized gains on available-for-sale securities
relating to its sales of Softbank common stock (see Note 2). The Softbank common stock was sold in the public market by one of the Company’s
foreign subsidiaries, which is located in a low-tax jurisdiction. At the time of the sale, the Company concluded that U.S. taxes were not currently
payable on the gains based on its internal assessment and opinions received from the Company’s advisors. However, in situations involving
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Notes to Consolidated Financial Statements
(Dollars in 000s, except per share data)
Note 7 - Long-Term Debt
The Company’s long-term debt was comprised of the following:
Fiscal Year End 2001 2000
Revolving credit facilities and other long-term debt $ 252,803 $ 325,583
Convertible debentures 405 220,035
Senior subordinated notes 204,899 -
458,107 545,618
Current maturities of long-term debt (252,803) (42,774)
$205,304 $502,844
The Company has a revolving senior credit facility with a bank syndicate providing an aggregate credit availability of $500,000. Under
this senior credit facility, the Company is required to comply with certain financial covenants, including minimum tangible net worth,
restrictions on funded debt and interest coverage. This senior credit facility also restricts the amount of dividends the Company can
pay as well as the amount of common stock that it can repurchase annually. This senior credit facility expires in October 2002. At
December 29, 2001 and December 30, 2000, the Company had $2,000 and $1,984, respectively, in outstanding borrowings under this
credit facility. At December 30, 2000, the Company also had $73,500 outstanding under credit facilities that have since expired.
The Company also has additional lines of credit, commercial paper, short-term overdraft facilities, and other credit facilities with various
financial institutions worldwide which provide for borrowing capacity aggregating $584,626 and $751,640 at December 29, 2001 and
December 30, 2000, respectively. Most of these arrangements are on an uncommitted basis and are reviewed periodically for renewal. At
December 29, 2001 and December 30, 2000, the Company had $250,803 and $250,099, respectively, outstanding under these facilities. The
weighted average interest rate on the outstanding borrowings under these credit facilities was 5.20% and 6.67% per annum at December
29, 2001 and December 30, 2000, respectively.
On June 9, 1998, the Company sold $1,330,000 aggregate principal amount at maturity of its Zero Coupon Convertible Senior Debentures
due 2018 in a private placement. Gross proceeds from the offering were $460,400, which represented a yield to maturity of 5.375% per
annum. In 2000, the Company repurchased convertible debentures with carrying values of $235,219 for $231,330 in cash, resulting in an
extraordinary gain of $2,420, net of taxes of $1,469. In 2001, the Company repurchased more than 99% of the remaining outstanding
convertible debentures with a total carrying value of $220,733 for $224,977 in cash, resulting in an extraordinary loss of $2,610, net of tax
benefits of $1,634 million. At December 29, 2001 and December 30, 2000, the Company’s remaining convertible debentures had an
outstanding balance of $405 and $220,035, respectively, and were convertible into approximately 5,000 shares and 3,100,000 shares,
respectively, of its Class A Common Stock.
On August 16, 2001, the Company sold $200,000 of 9.875% Senior Subordinated Notes due 2008 to qualified institutional buyers pursuant
to Rule 144A and Regulation S under the Securities Act of 1933, as amended, at an issue price of 99.382%, resulting in cash proceeds of
approximately $195,084 (net of issuance costs of approximately $3,680). The Company subsequently registered the exchange of these
Senior Subordinated Notes under the Securities Act of 1933, as amended. Under the terms of these notes, the Company is required to
comply with certain restrictive covenants, including restrictions on the incurrence of additional indebtedness, the amount of dividends
the Company can pay and the amount of capital stock the Company can repurchase.
Interest on the notes is payable semi-annually in arrears on February 15 and August 15, commencing on February 15, 2002. The Company
may redeem any of the notes beginning on August 15, 2005 with an initial redemption price of 104.938% of their principal amount
plus accrued interest. The redemption price of the notes will be 102.469% plus accrued interest beginning on August 15, 2006 and will be
100% of their principal amount plus accrued interest beginning on August 15, 2007. In addition, on or before August 15, 2004, the Company
may redeem up to 35% of the notes at a redemption price of 109.875% of their principal amount plus accrued interest using the proceeds
from sales of certain kinds of capital stock. The Company may make such redemption only if at least 65% of the aggregate principal
amount of notes originally issued remain outstanding.
On August 16, 2001, the Company also entered into interest rate swap agreements with two financial institutions, the effect of which was
to swap the Company’s fixed rate obligation on the Company’s Senior Subordinated Notes for a floating rate obligation based on 90-day
LIBOR plus 4.260%. All other financial terms of the interest rate swap agreement are identical to those of the Senior Subordinated Notes,
except for the quarterly payment of interest, which will be on November 15, February 15, May 15 and August 15 in each year, commencing