Ingram Micro 2010 Annual Report Download - page 58

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Fair Value Measurement
The carrying amounts of our cash equivalents, trade accounts receivable, marketable trading securities
(included in other current assets in our consolidated balance sheet), accounts payable and other accrued expenses
approximate fair value because of the short maturity of these items. Our U.S., EMEA and Asia Pacific revolving
trade accounts receivable-backed financing programs bear interest at variable rates based on designated commercial
paper rates and local reference rates, respectively, plus a predetermined fixed margin. The interest rates of our
revolving unsecured credit facilities and other debt are dependent upon the local short-term bank indicator rate for a
particular currency, which also reset regularly. The carrying amounts of all these facilities approximate their fair
value because of the revolving nature of the borrowings and because the all-in rate (consisting of variable rates and
fixed margin) adjusts regularly to reflect current market rates with appropriate consideration for our credit profile.
The outstanding balance of $234,375 on our senior unsecured term loan bears interest at a rate based on LIBOR plus
a margin. The LIBOR rate of this facility resets monthly. The margin, which is generally fixed, may be adjusted
based on our debt ratings and leverage ratio. Such adjustments would reflect our credit profile and would be deemed
to result in interest rates materially consistent with available market rates. We have an interest rate swap agreement
for a notional amount at January 1, 2011 of $184,375 of the above term loan principal amount, the effect of which is
to swap the LIBOR portion for $184,375 of the floating-rate obligation for a fixed-rate obligation. The notional
amount on the interest rate swap agreement reduces by $3,125 quarterly since November 2009, consistent with the
maturity schedule of the senior unsecured term loan. We account for the interest rate swap agreement as a cash flow
hedge. At January 1, 2011 and January 2, 2010, the mark-to-market value of the interest rate swap amounted to
$9,252 and $9,662, respectively, and was recorded as an increase to our outstanding debt with a corresponding
adjustment to other comprehensive income. As such, the carrying value of the debt approximates its fair value. The
margin related to the unhedged principal of $50,000 of the senior unsecured term loan adjusts regularly based on
LIBOR plus a margin based on our debt ratings and leverage ratio. As such, the carrying value of the variable rate
portion of the debt approximates its fair value.
Our senior unsecured notes issued in August 2010 (see Note 6) had a fair value of approximately $302,000 at
January 1, 2011.
Treasury Stock
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.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity (net assets) of a business enterprise during a
period from transactions and other events and circumstances from nonowner sources and is comprised of net
income (loss) and other comprehensive income (loss).
The components of comprehensive income (loss) are as follows:
2010 2009 2008
Fiscal Year Ended
Net income (loss) .................................. $318,060 $202,138 $(394,921)
Changes in foreign currency translation adjustments and
other .......................................... (952) 94,274 (186,061)
Comprehensive income (loss) ......................... $317,108 $296,412 $(580,982)
Accumulated other comprehensive income included in stockholders’ equity totaled $168,013 and $168,965 at
January 1, 2011 and January 2, 2010, respectively, and consisted primarily of foreign currency translation
adjustments and fair value adjustments to our interest rate swap agreement (see Note 6).
50
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)