Ingram Micro 2011 Annual Report Download - page 42

respectively, representing year-over-year increases of 11.8% and 9.3% in 2011 and 2010, respectively. The year-
over-year translation impact of strengthening EMEA, Asia-Pacific and Latin American currencies relative to the
U.S. dollar contributed approximately five, five and one percentage points of the year-over-year increase in the
respective region’s net sales. The combined translation impacts of these foreign currencies contributed
approximately three percentage points of the year-over-year increase in our consolidated net sales. The remaining
increase in our consolidated and regional net sales in 2011 compared to 2010 primarily reflected a generally
stable level of demand for technology products and services across a number of the markets in which we operate
with greater strength coming from our North and Latin American regions. However, this was offset in part by
soft demand, particularly in consumer markets in EMEA and parts of Asia-Pacific, business disruptions in
Australia due to the system deployment beginning in February 2011 and the slower than expected market-share
recovery in that country since then, which negatively impacted our year-over-year Asia-Pacific region and
consolidated net sales by approximately nine and two percentage points, respectively. Our acquisitions in 2010
and 2011 did not have a material impact in comparing our year-over-year regional and consolidated sales growth.
The significant increase in our consolidated and regional net sales in 2010 compared to 2009 primarily
reflected solid demand for technology products and services brought about by the improving global economy, as
well as our continued global efforts to expand our line card and enhance our service levels with customers we
serve in the IT market allowing us to grow consolidated net sales back to their pre-recession levels. The
translation impact of the fluctuations in foreign currencies compared to the U.S. dollar negatively impacted our
EMEA regional net sales by approximately four percentage points in 2010 compared to 2009 and positively
impacted our regional net sales by approximately eight percentage points in Asia-Pacific and approximately six
percentage points in Latin America. Foreign currency exchange rates did not have a material impact in
comparing our consolidated net sales in 2010 to 2009, as the general strengthening of currencies in Asia-Pacific
and Latin America were offset by an overall weakening of European currencies. Our small but strategic
acquisitions in the second quarter of 2009 through the third quarter of 2010 did not have a material impact in
comparing our year-over-year regional and consolidated net sales growth.
Our gross margin was 5.25% in 2011, 5.47% in 2010 and 5.66% in 2009. The gross margin in 2010 and
2009 included the positive impact of $9,112 and $9,758, respectively, or three basis points of consolidated net
sales for both years, from partial releases of our commercial tax reserve in Brazil as the statute of limitations for
assessment for those years had expired. The decline in gross margin in 2011 reflects the negative impact of
approximately seven basis points primarily resulting from the disruption in our Australian operations, as well as
competitive pricing dynamics driven in part by the weakness in several European and Asian markets, greater mix
of lower gross margin products, such as tablets, and higher sales in lower gross margin geographies due to more
rapid growth in emerging markets such as China and India. These factors were partially offset by our favorable
inventory position and pricing on hard disk drives due to product shortages caused by the flooding in Thailand in
the fourth quarter of 2011, which yielded an approximate eight basis point positive gross margin impact for the
full year. The 19 basis point gross margin decline in 2010 compared to 2009 is primarily driven by a greater mix
of lower gross-margin products and geographies and a competitive pricing environment, as well as our strategic
decision to use gross margin as one component of our efforts to drive sales growth and thereby generate higher
operating leverage. We continuously evaluate and modify our pricing policies and certain terms, conditions and
credit offered to our customers to reflect those being imposed by our vendors and general market conditions. We
may experience fluctuations in our sales growth in the near term, or these modifications may negatively impact
our gross margin. In addition, increased competition and any further retractions or softness in economies
throughout the world may hinder our ability to maintain and/or improve gross margins from the levels realized in
recent periods.
Total SG&A expenses were $1,444,505, $1,406,721 and $1,337,696 in 2011, 2010 and 2009, respectively.
Total SG&A expenses as a percentage of net sales were 3.98%, 4.07% and 4.53% in 2011, 2010 and 2009,
respectively. Our SG&A expenses, as a percentage of net sales, declined in 2011 compared to 2010, primarily
due to leverage on the higher volume of net sales and cost control measures throughout our business in 2011.
Total SG&A expenses increased $37,784 or 2.7% in 2011 compared to 2010. The single biggest driver of this
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