Ingram Micro 2013 Annual Report Download - page 31

Table of Contents
Our consolidated operating margin declined four basis points from 2011 primarily due to the higher reorganization costs and integration costs noted
previously.
In North America, the decrease in our operating margin in 2012 compared to 2011 was largely due to integration costs associated with the integration of
operations with BrightPoint.
The decrease in our European operating margin in 2012 compared to 2011 was largely due to the continued softness in the economic environment in
region, particularly in Southern Europe and the Benelux regions. In addition, our 2011 European operating margin benefited by approximately 20 basis points
from a favorable inventory position and pricing on hard disk drives due to product shortages caused by the 2011 flooding in Thailand.
Although our Asia-Pacific operating margin increased in 2012, it was lower than recent years, largely reflecting the impact of disruptions in our
Australian business.
The year-over-year increase in our Latin American operating margin in 2012 primarily reflected continued sales growth in the region and improvements
in our Brazilian operations.
Net other expense consisted primarily of interest income and expense, foreign currency exchange gains and losses, and other non-operating gains and
losses. We incurred net other expense of $66,168 in 2012 and $70,775 in 2011. The decrease in 2012 compared to 2011 was primarily attributable to the
loss recognized in 2011 of $5,624 from the termination of our cash flow hedge and write-off of the remaining unamortized deferred financing costs related to
the settlement of our senior unsecured term loan in September 2011, offset partially by higher interest expense in 2012 as a result of the $300,000 in public
debt issued in August 2012 and other increases in debt, which were primarily associated with our acquisition of BrightPoint, as well as higher net foreign-
currency losses in 2012.
Our provision for income taxes in 2012 and 2011 was $90,275 and $143,631, respectively. Our effective tax rate in 2012 and 2011 was 22.8% and
37.0%, respectively. The year-over-year decrease in the effective tax rate in 2012 is largely driven by the net discrete tax benefits totaling $34,890, or 8.8
percentage points of decrease in the effective tax rate for the year recorded in 2012, which was discussed above. The tax provision in 2011 included a
provision of $24,810 or approximately 6.4 percentage points related to a valuation allowance recorded against all of our deferred tax assets in Brazil. The
remaining variations in effective tax rate were primarily attributable to a change in the mix of profit among different tax jurisdictions and losses in certain tax
jurisdictions in which we were not able to record a tax benefit due to uncertainty of realizability.
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