Ingram Micro 2008 Annual Report Download - page 41

The following table sets forth certain items from our consolidated statement of income as a percentage of net
sales, for each of the fiscal years indicated.
2008 2007 2006
Net sales............................................... 100.00% 100.00% 100.00%
Cost of sales ............................................ 94.35 94.55 94.63
Gross profit ............................................ 5.65 5.45 5.37
Operating expenses:
Selling, general and administrative .......................... 4.41 4.18 4.03
Impairment of goodwill .................................. 2.16 — —
Reorganization costs (credits) ............................. 0.05 (0.00) (0.01)
Income (loss) from operations ............................... (0.97) 1.27 1.35
Other expense, net ....................................... 0.14 0.17 0.18
Income (loss) before income taxes ............................ (1.11) 1.10 1.17
Provision for income taxes ................................. 0.04 0.31 0.32
Net income (loss) ........................................ (1.15)% 0.79% 0.85%
Results of Operations for the Years Ended January 3, 2009, December 29, 2007 and December 30, 2006
Our consolidated net sales were $34.36 billion, $35.05 billion and $31.36 billion in 2008, 2007 and 2006,
respectively. The decline in our consolidated net sales of 2.0% in 2008 compared to 2007 primarily reflects the
overall decline in demand for technology products and services globally resulting from the severe economic
downturn. The softness in demand initially surfaced in North America and EMEA early in 2008, and spread to the
larger economies of Asia-Pacific in the second quarter of 2008. By the end of 2008, the weak macroeconomic
environment has spread to substantially all of our business units in each region. The sluggish demand for technology
products and services is expected to continue, and may worsen, over the near term. Our proactive steps towalk away
from unprofitable business also had a negative impact on our worldwide sales growth. These negative trends were
partially offset by the translation impact of the strengthening foreign currencies versus the U.S. dollar when
compared to the exchange rates in the prior year period, which contributed approximately two percentage-points of
the worldwide growth. The growth in our consolidated net sales of 11.8% in 2007 compared to 2006 reflected the
robust growth in our Asia-Pacific region, a continued strong demand environment for IT products and services
across most economies in which we operate globally, the translation impact of the strengthening foreign currencies
compared to the U.S. dollar (which contributed approximately five percentage-points to year-over-year growth in
2007) and additional revenue arising from our recent acquisitions, particularly VPN Dynamics and Securematics in
March 2007 and DBL in June 2007.
Net sales from our North American operations were $14.19 billion, $13.92 billion and $13.58 billion in 2008,
2007 and 2006, respectively. The year-over-year growth trends in North America net sales of 1.9% and 2.5% in 2008
and 2007, respectively, primarily reflects a weakening overall demand for IT products and services over the three
year period, which became more pronounced in 2008 as the economy in the region continued to soften. The growth
in 2008 was positively impacted by the revenue contribution of approximately one percentage-point arising from a
full year of operations of the DBL acquisition, which closed in June 2007, while 2007 was positively impacted by
the acquisitions of VPN Dynamics and Securematics in March and DBL in June of the same year, which contributed
approximately two percentage-points to the revenue growth over 2006. Net sales from our EMEA operations were
$11.53 billion, $12.44 billion and $10.75 billion in 2008, 2007 and 2006. The decline in our EMEA net sales of
7.3% in 2008 compared to 2007 primarily reflects the soft demand for technology products and services in Europe,
our deliberate actions to exit or turn away unprofitable business and market reaction to our freight cost recovery
efforts, partially offset by the appreciation of European currencies compared to the U.S. dollar, which contributed
approximately five percentage-points positive impact compared to 2007. The growth in our EMEA net sales of
15.7% in 2007 compared to 2006 reflected steady demand for IT products and services in the region. The
appreciation of relatively stronger European currencies compared to the U.S. dollar contributed approximately
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