Ingram Micro 2010 Annual Report Download - page 60

taxing authorities, revisions to these liabilities or benefits may be required, resulting in additional provision for or
benefit from income taxes reflected in our consolidated statement of income.
Accounting for Stock-Based Compensation
We use the Black-Scholes option-pricing model to determine the fair value of stock options and the closing
market price of our common stock on the date of the grant to determine the fair value of our restricted stock and
restricted stock units. Stock-based compensation expense is recorded for all stock options, restricted stock and
restricted stock units that are ultimately expected to vest as the requisite service is rendered. We recognize these
compensation costs, net of an estimated forfeiture rate, on a straight-line basis over the requisite service period of
the award, which is the vesting term of outstanding stock-based awards. We estimate the forfeiture rate based on our
historical experience during the preceding five fiscal years.
New Accounting Standards
In October 2009, the FASB issued a new accounting standard related to revenue recognition in multiple-
deliverable revenue arrangements and certain arrangements that include software elements. This standard elim-
inates the residual method of revenue allocation by requiring entities to allocate revenue in an arrangement using
estimated selling prices of the delivered goods and services based on a selling price hierarchy. The FASB also issued
a new accounting standard in October 2009, which changes revenue recognition for tangible products containing
software and hardware elements. Under this standard, tangible products containing software and hardware that
function together to deliver the tangible products’ essential functionality are scoped out of the existing software
revenue recognition guidance and will be accounted for under the multiple-element arrangements revenue
recognition guidance discussed above. Both standards are effective for us beginning January 2, 2011 (the first
day of fiscal 2011). Our adoption of this standard is not expected to have a material impact on our consolidated
financial position, results of operations or cash flows.
In January 2010, the FASB issued a guidance which amends and clarifies existing guidance related to fair value
measurements and disclosures. This guidance requires new disclosures for (1) transfers in and out of Level 1 and
Level 2 categories and the reasons for such transfers; and (2) the separate presentation of purchases, sales, issuances
and settlement in the Level 3 reconciliation. It also clarifies guidance around disaggregation and disclosures of
inputs and valuation techniques for Level 2 and Level 3 fair value measurements. We adopted this guidance
effective the first quarter of fiscal 2010, except for the new disclosures in the Level 3 reconciliation. The Level 3
disclosure requirement is effective for us beginning January 2, 2011 (the first day of fiscal 2011), which is not
expected to have a material impact on our disclosures.
Note 3 — Reorganization Costs
In the second half of 2008 and through 2009, we implemented cost-reduction programs in all of our regions to
align our level of operating expenses with declines in sales volume resulting from the economic downturn. We
incurred net charges in 2009 and 2008 of $34,083 and $17,029, respectively, for reorganization costs, and $3,553
and $1,544, respectively, for other costs associated with these reorganization actions that were charged to SG&A
expenses. Our reorganization costs incurred in 2009, which totaled $31,385 ($18,180 in North America, $9,456 in
EMEA, $3,416 in Asia Pacific and $333 in Latin America) were comprised of: employee termination benefits for
workforce reductions of approximately 980 employees (525 in North America, 305 in EMEA, 130 in Asia Pacific
and 20 in Latin America); and costs related to lease liabilities, net of estimated sublease income for the exited
facilities in North America, EMEA and Asia Pacific. Also included in 2009 is an increase to reorganization
liabilities of $2,698 primarily for higher than expected costs to settle lease obligations related to actions taken in
previous years. In 2009, other costs associated with the reorganization actions totaled $3,553 ($3,134 in North
America, $261 in EMEA and $158 in Asia Pacific) charged to SG&A expenses, comprised primarily of accelerated
depreciation of fixed assets related to exited facilities, retention costs, consulting, legal and other expenses
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INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)