Ingram Micro 2001 Annual Report Download - page 25

Notes to Consolidated Financial Statements
(Dollars in 000s, except per share data)
Note 11 - Segment Information
The Company operates predominantly in a single industry segment as a distributor of information technology products and services.
The Company’s operating segments are based on geographic location, and the measure of segment profit is income from operations.
The accounting policies of the segments are the same as those described in the summary of significant accounting policies. Geographic
areas in which the Company operates include the United States, Europe (Austria, Belgium, Denmark, Finland, France, Germany, Hungary,
Italy, The Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, and the United Kingdom) and Other international (Australia,
The People’s Republic of China [including Hong Kong], India, Malaysia, New Zealand, Singapore, Thailand, Canada, Argentina, Brazil, Chile,
Mexico, and Peru). Inter-geographic sales primarily represent intercompany sales which are accounted for based on established sales
prices between the related companies and are eliminated in consolidation.
Financial information by geographic segments is as follows:
As of and for the Fiscal Year Ended 2001 2000 1999
Net sales
United States
Sales to unaffiliated customers $ 13,507,066 $ 18,452,069 $ 16,813,414
Intergeographic sales 169,452 192,339 183,208
Europe 7,156,840 7,472,266 7,344,142
Other international 4,523,027 4,790,814 3,911,086
Eliminations of intergeographic sales (169,452) (192,339) (183,208)
Total $ 25,1 86,933 $ 30,7 1 5,149 $ 28,068,642
Income (loss) from operations
United States $ 84,859 $ 279,457 $ 143,496
Europe 13,642 51,104 19,1 1 8
Other international (5,57 1) 22,876 37,390
Total $ 92,930 $ 353,437 $ 200,004
Identifiable assets
United States $ 3,114,90 1 $ 4,083,399 $ 5,827,382
Europe 1,264,1 64 1,514,109 1,644,354
Other international 922,942 1,01 1,474 800,1 9 1
Total$5,302,007 $ 6,608,982 $ 8,271,927
Capital expenditures
United States $ 59,85 1 $ 97,965 $ 93,059
Europe 14,598 34,839 27,192
Other international 11,989 13,300 15,009
Total$86,438 $ 146,104 $ 135,260
Depreciation
United States $ 67,1 29 $ 60,608 $ 49,1 74
Europe 17,257 16,610 17,522
Other international 9,63 1 9,253 8,005
Total $ 94,017 $ 86,471 $ 74,701
Amortization
United States $ 5,754 $ 5,557 $ 5,645
Europe 3,300 5,467 6,146
Other international 11,909 11,015 11,109
Total $ 20,963 $ 22,039 $ 22,900
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Notes to Consolidated Financial Statements
(Dollars in 000s, except per share data)
uncertainties in the interpretation of complex tax regulations by various taxing authorities, the Company provides for deferred tax liabilities unless the
Company considers it probable that taxes will not be due. The level of opinions received from the Company’s advisors and its internal assessment
did not allow it to reach that conclusion on this matter. Although the Company reviews its assessments in these matters on a regular basis, the
Company cannot currently determine when this matter will be finally resolved with the taxing authorities or if taxes will be ultimately paid.
The Company’s federal income tax returns through fiscal year 1996 have been audited and closed. The U.S. IRS has initiated its audit of the
Company’s federal income tax returns for fiscal years 1997 through 1999.
Reconciliation of income taxes at the statutory U.S. federal income tax rate to the Company’s provision for income taxes is as follows:
2001 2000 1999
U.S. statutory rate $ 5,577 $ 126,878 $ 101,673
State income taxes, net of federal income tax benefit 1,1 7 1 1 1,1 63 7,855
Foreign rates less than statutory rate (4,537) (2,968) (3,1 64)
Goodwill 4,352 4,73 1 4,572
Other 25 (1,048) (84)
Provision for income taxes $ 6,588 $ 138,756 $ 110,852
At December 29, 2001, the Company had foreign net operating tax loss carryforwards of approximately $245,509 of which approximately
$203,101 had no expiration date. The remaining foreign net operating tax loss carryforwards expire through the year 2011.
The Company does not provide for income taxes on undistributed earnings of foreign subsidiaries as such earnings are intended to be
permanently reinvested in those operations.
Note 9 - Transactions with Related Parties
The Company has loans receivable from certain of its executives and associates. These loans, ranging up to $500, have interest rates ranging
from 0.0% to 6.75% per annum and are payable from 15 days to five years. At December 29, 2001 and December 30, 2000, the Company’s
loan receivable balance was $1,598 and $1,811, respectively.
Note 10 - Commitments and Contingencies
There are various claims, lawsuits and pending actions against the Company incident to the Company’s operations. It is the opinion of
management that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial
position or results of operations.
As is customary in the IT distribution industry, the Company has arrangements with certain finance companies that provide inventory
financing facilities for its customers. In conjunction with certain of these arrangements, the Company has agreements with the finance
companies that would require it to repurchase certain inventory, which might be repossessed, from the customers by the finance companies.
Due to various reasons, including among other items, the lack of information regarding the amount of saleable inventory purchased from
the Company still on hand with the customer at any point in time, the Company’s repurchase obligations relating to inventory cannot be
reasonably estimated. Repurchases of inventory by the Company under these arrangements have been insignificant to date.
The Company leases the majority of its facilities and certain equipment under noncancelable operating leases. Renewal and purchase
options at fair values exist for a substantial portion of the leases. Rental expense for the years ended 2001, 2000, and 1999 was $105,299,
$102,334, and $82,781, respectively.
Future minimum rental commitments on operating leases that have remaining noncancelable lease terms in excess of one year as of
December 29, 2001 were as follows:
2002 $76,074
2003 63,879
2004 59,903
2005 54,736
2006 47,823
Thereafter 231,233
$533,648
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