Ingram Micro 2013 Annual Report Download - page 27

Table of Contents
2013
2012
Net sales 100.00%
100.00%
Cost of sales 94.15
94.62
Gross profit 5.85
5.38
Operating expenses:
Selling, general and administrative 4.45
4.08
Amortization of intangible assets 0.11
0.05
Reorganization costs 0.08
0.03
Income from operations 1.21
1.22
Other expense, net 0.19
0.17
Income before income taxes 1.02
1.05
Provision for income taxes 0.29
0.24
Net income 0.73%
0.81%
The 12.5 percent increase in our consolidated net sales for the year ended December 28, 2013 compared to the year ended December 29, 2012, largely
reflects our acquisitions which contributed approximately ten percentage points of our growth in consolidated revenue. In addition, net sales in 2013 reflected
solid growth in Latin America, North America, and parts of Asia-Pacific, particularly in India and Australia, while demand was relatively soft in much of
Europe and China. The translation impact of foreign currencies relative to the U.S. dollar did not have a material impact on our consolidated net sales.
The 3.5 percent increase in our North American net sales reflects strategic management of growth and pricing in various segments as the region
continues to face competitive pricing pressure. Revenue growth was driven by advanced solutions and specialty divisions with particular strength in storage,
infrastructure systems and networking, as well as strength in our key small and medium-sized business, or SMB, market in the U.S. Additionally, Canada
grew revenues by 4%, driven by strong sales of advanced solutions and an improved retail market.
The 2.2 percent increase in our European net sales largely reflects the favorable translation impact of stronger local currencies which contributed
approximately three percentage points of increase. The overall region was relatively flat in local currency reflecting solid growth in France, the U.K. and the
Netherlands, particularly in the SMB market, offset by declines in Germany and Belgium primarily due to slower demand in consumer markets and the
impact of continued challenging macro-economic conditions.
The 4.2 percent increase in our Asia-Pacific net sales largely reflects the acquisition of Aptec, which contributed approximately four percentage points to
the region's overall growth. India generated double digit growth supported by increases across multiple product lines, including handsets and networking
solutions. Additionally, Australia's revenue grew for the fourth quarter in a row, despite an overall declining IT market across many sectors in the country.
This growth was partially offset by China where revenue declined primarily due to lower sales of tablets, which was a large driver of China’s double digit
growth last year, as well as a weaker overall IT spending environment. In addition, the translation impact of weaker local currencies contributed approximately
two percentage points of decline.
The 5.6 percent increase in Latin American net sales reflects continued improvement in Brazil and relatively strong growth in Chile. Revenues were
relatively flat in Mexico in local currencies and Miami export had a slight decline. Brazil continued to improve its market position and increase share. In
Mexico, sales were impacted by delays in government spending and a slowdown in consumer spending in the first half of the year, while Miami export
experienced a slowdown throughout the year in certain consumer-related products which benefited from new product launches in the prior year. The translation
impact of foreign currencies relative to the U.S. dollar had a negative impact of approximately one percentage point on the region's net sales.
Our BrightPoint net sales for 2012 reflect only the period from the date of acquisition, October 15, 2012, through December 29, 2012 compared to a
full year of revenue in 2013. The business continues to make strong contributions, adding new logistics contracts and new distribution agreements with
leading original equipment manufacturers (“OEM”), offsetting some share shift we experienced with some of our existing OEMs, particularly in Asia-Pacific.
Gross margin increased 47 basis points in 2013 compared to 2012 reflecting the higher mix of mobility logistics services due to the acquisition of
BrightPoint and improved performance in our higher margin advanced solutions and specialty businesses and fee-for-service logistics business. These benefits
helped offset the dilutive impact of a more competitive selling environment in the U.S. and many countries in Europe. 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
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