Ingram Micro 2011 Annual Report Download - page 63

INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(In 000s, except per share data)
The computation of Basic EPS and Diluted EPS is as follows:
Fiscal Year Ended
2011 2010 2009
Net income .......................................... $244,240 $318,060 $202,138
Weighted average shares ............................... 155,882 160,504 162,993
Basic earnings per share ................................ $ 1.57 $ 1.98 $ 1.24
Weighted average shares including the dilutive effect of stock-
based awards (3,706, 3,357 and 2,573 for 2011, 2010 and
2009, respectively) .................................. 159,588 163,861 165,566
Diluted earnings per share .............................. $ 1.53 $ 1.94 $ 1.22
There were approximately 2,671, 5,266 and 9,455 stock-based awards in 2011, 2010 and 2009, respectively,
which were not included in the computation of Diluted EPS because the exercise price was greater than the
average market price of the Class A Common Stock, thereby resulting in an antidilutive effect.
Income Taxes
We estimate income taxes in each of the taxing jurisdictions in which we operate. This process involves
estimating our actual current tax expense together with assessing the future tax impact of any differences
resulting from the different treatment of certain items, such as the timing for recognizing revenues and expenses
for tax versus financial reporting purposes. These differences may result in deferred tax assets and liabilities,
which are included in our consolidated balance sheet. We are required to assess the likelihood that our deferred
tax assets, which include net operating loss carryforwards, tax credits and temporary differences that are
expected to be deductible in future years, will be recoverable from future taxable income. In making that
assessment, we consider the nature of the deferred tax assets and related statutory limits on utilization, recent
operating results, future market growth, forecasted earnings, future taxable income, the mix of earnings in the
jurisdictions in which we operate and prudent and feasible tax planning strategies. If, based upon available
evidence, recovery of the full amount of the deferred tax assets is not likely, we provide a valuation allowance on
any amount not likely to be realized. In that regard, we recorded a charge of $24,810 in the third quarter of 2011
to provide a valuation allowance on our deferred tax assets in Brazil, primarily as a result of the continued losses
incurred in that country. Our effective tax rate includes the impact of not providing taxes on undistributed foreign
earnings considered indefinitely reinvested. Material changes in our estimates of cash, working capital and long-
term investment requirements in the various jurisdictions in which we do business could impact our effective tax
rate if we no longer consider our foreign earnings to be indefinitely reinvested.
The provision for tax liabilities and recognition of tax benefits involves evaluations and judgments of
uncertainties in the interpretation of complex tax regulations by various taxing authorities. In situations involving
uncertain tax positions related to income tax matters, we do not recognize benefits unless their sustainability is
deemed more likely than not. As additional information becomes available, or these uncertainties are resolved
with the 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.
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