For More Information Contact:
Media Relations: Investor Relations:
Jennifer Baier Marchetta Ria Marie Carlson
Ingram Micro Inc. Ingram Micro Inc.
(714) 382-2692 (714) 382-4400
jennifer.marchetta@ingrammicro.com ria.carlson@ingrammicro.com
INGRAM MICRO REPORTS SECOND QUARTER 2001 RESULTS
Significant Improvements Made in
Reducing Operating Expenses, Strengthening Balance Sheet
SANTA ANA, Calif., July 31, 2001-- Ingram Micro Inc. (NYSE: IM), the largest
global wholesale provider of technology products and supply chain management
services, today announced financial results for the second quarter ended June
30, 2001.
"The slow economic environment did not hamper our efforts to streamline
operations and prepare for more profitable growth," said Kent B. Foster,
chairman and chief executive officer, Ingram Micro Inc. "During the quarter, we
made significant improvements to our cost structure, held relatively steady
with gross margins and further strengthened our balance sheet."
Second Quarter Highlights
o Net sales were $6.0 billion, hitting the high end of the company's
revised forecast, versus $7.3 billion in the second quarter of last
year.
o Gross margin improved 29 basis points, to 5.25 percent from 4.96
percent in the second quarter of 2000. Sequentially, the gross margin
was within nine basis points of the prior quarter.
o Operating expenses were reduced $22 million versus the first quarter
of this year.
o Income from operations, before reorganization costs, was $23.9
million, compared with $76.4 million in the same period last year.
o Pre-tax income, before reorganization costs and extraordinary items,
was $4.4 million, exceeding the revised forecast.
o Net income before reorganization costs and extraordinary items was
$2.6 million or $0.02 per share. Including all charges and
extraordinary items, the company posted a net loss of $12.0 million
or $0.08 per share versus net income of $33.2 million or $0.22 per
share in the same period last year.
o Inventory, at $1.75 billion, was reduced $559 million, or 24 percent,
since the end of the first quarter of 2001 and nearly $1.2 billion,
or 40 percent, since the end of 2000.
-- more --
2-2-2 Ingram Micro Reports Second Quarter 2001 results
o Total debt, including off-balance sheet debt, was $735 million,
approximately half the levels at year-end 2000. The total
debt-to-capitalization ratio of 28 percent is the lowest since the
company's initial public offering in 1996.
As we forecasted on June 13, sales in the second quarter were negatively
affected by the sluggish demand for technology products. Worldwide net sales
were down 17.5 percent, or approximately 16 percent before the adjustment for
European exchange rates, compared with the year-ago quarter. In the U.S.
region, net sales declined 24 percent to $3.39 billion, or 57 percent of the
worldwide total. Sales in Europe, at $1.57 billion (26 percent of the total),
remained relatively flat in local currencies but declined 8 percent in U.S.
dollars. For geographic regions outside the United States and Europe, net sales
fell 7 percent to $1.05 billion (17 percent of the total).
"Average daily sales in the U.S. remained stable through most of May and
June," said Michael J. Grainger, president and chief operating officer, Ingram
Micro Inc. "As we previously reported, the tough economic environment moved
beyond the United States during this time, with sales declining first in Canada
and the U.K., followed by Scandinavia. Nevertheless in Europe we were able to
maintain last year's sales levels in local currencies. Latin America exceeded
sales expectations and experienced year-over-year growth."
The demand slump also affected operating income, which declined 69 percent
versus a year ago, excluding reorganization costs. Income from operations was
approximately $22.4 million in the U.S. and $1.7 million in Europe, down 65
percent and 75 percent, respectively. The other geographic regions posted an
aggregate operating loss of approximately $144,000, a sequential improvement,
with operating profits in the Canadian and Latin American regions offset by
losses in the developing Asia Pacific region.
"Improving operating efficiencies without sacrificing customer service is
our highest priority," added Grainger. "Operating expenses in the second
quarter were approximately $30 million less than in the fourth quarter of 2000,
and this does not include the full financial benefits of the reorganization
announced last month. Reductions were made thoughtfully and the customer
response has been overwhelmingly positive. We intend to make additional,
carefully planned improvements throughout the rest of the year."
Second quarter depreciation expense was $24.7 million and amortization was
$4.9 million, resulting in earnings before interest, income tax, depreciation
and amortization (EBITDA) of $53.5 million, excluding reorganization costs.
-- more --
3-3-3 Ingram Micro Reports Second Quarter 2001 results
The reorganization costs, which totaled $19.1 million pre-tax or
approximately $12.0 million net of tax, include costs related to the headcount
reductions and facility closures announced last month, as well as other
worldwide actions taken throughout the quarter. Also posted in the quarter was
an extraordinary loss of $2.6 million, net of tax effects, on the repurchase of
Ingram Micro's zero coupon convertible debentures. In June, the company
repurchased more than 99 percent of the debentures, at the option of the
holders, for approximately $225 million in cash.
Six-month Results
For the six-month period ended June 30, 2001, net sales totaled $13.2
billion, a decline of 12.5 percent or 11 percent before the adjustment for
European exchange rates versus the comparable period a year ago. Regional
six-month sales were $7.3 billion in the U.S.; $3.6 billion in Europe; and $2.3
billion in the other geographic regions. Gross margin improved 48 basis points,
from 4.82 percent in the comparable period to 5.30 percent. Income from
operations before reorganization costs was $94.3 million. Net income, before
reorganization costs, gain on sale of securities and extraordinary items, was
$29.0 million compared with $57.7 million in 2000. Including all charges and
extraordinary items, six-month net income was $14.4 million or $0.10 per share
in 2001 versus $129.4 million or $0.87 in 2000, which includes gains from the
sale of securities in the first quarter of 2000 and from the repurchase of
debentures.
Balance Sheet Results
The company's balance sheet metrics continued to improve in the quarter.
Inventory turns were 13, a historic high, and inventory days on hand were 28
versus 34 a year ago. Total debt, including off-balance sheet debt, was at a
four-year low, resulting in a total debt-to-capitalization ratio of 28 percent,
which is the lowest in the technology distribution industry.
Outlook for the Third Quarter
The following statements are based on the company's current expectations
and internal plan. These statements are forward-looking and actual results may
differ materially, as outlined in the company's periodic filings with the SEC.
According to the company's forecast for the third quarter ending September
29, 2001, sales are expected to range from $5.7 to $6.0 billion, with net
income before any non-recurring items ranging from break-even to $6.0 million,
or $0.04 per diluted share.
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4-4-4 Ingram Micro Reports Second Quarter 2001 results
"The economic environment requires a cautious revenue outlook," said
Foster. "Despite the soft demand, we will continue to strengthen key areas of
our business. Additional reductions in operating expenses will create a more
competitive cost structure, while our ongoing discipline with gross margins and
inventory management will enhance profitability. We will continue to find
opportunities to spur growth, such as the introduction of emerging technologies
and fee-based services. We are determined to enhance our leadership position in
the technology distribution industry."
More Information About Ingram Micro's Financial Results
Additional information about Ingram Micro's second quarter financial
results will be presented in a conference call today at 5 p.m. EDT. To listen
to the conference call via telephone, call (888) 455-0750 (toll-free within the
United States and Canada) or (712) 257-0401 (other countries) and mention
"Ingram Micro." A live Web-cast of the conference call will also be available
on the Investor Relations page of the Ingram Micro Web site, located at
www.ingrammicro.com/corp. A replay of the conference call will be available for
one week through the Web site or by calling (800) 678-3180 or (402) 220-3063
(outside the United States or Canada).
Cautionary Statement for the Purpose of the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995
The matters in this press release that are forward-looking statements are
based on current management expectations that involve certain risks, including,
without limitation: intense competition; continued pricing and margin
pressures; failure to adjust costs in response to a sudden decrease in demand;
the downturn in economic conditions continues or worsens; the potential for
declines in inventory values and continued restrictive vendor terms and
conditions; the potential decline as well as seasonal variations in demand for
Ingram Micro's products and services; unavailability of adequate capital;
management of growth; failure of information systems; interest rate and foreign
currency fluctuations; impact of governmental controls and political or
economic instability on foreign operations; changes in local, regional, and
global economic conditions and practices; dependency on key individuals;
product supply shortages; the potential termination of a supply agreement with
a major supplier; acquisitions; rapid product improvement and technological
change and resulting obsolescence risks; risk of credit loss; dependency on
independent shipping companies; and the changes in terms of subsidized floor
plan financing.
Ingram Micro has instituted in the past and continues to institute changes
to its strategies, operations and processes to address these risk factors and
to mitigate their impact on Ingram Micro's results of operations and financial
condition. However, no assurances can be given that Ingram Micro will be
successful in these efforts. For a further discussion of these and other
significant factors to consider in connection with forward-looking statements
concerning Ingram Micro, reference is made to Exhibit 99.01 of Ingram Micro's
Annual Report on Form 10-K for the fiscal year ended December 30, 2000; other
risks or uncertainties may be detailed from time to time in Ingram Micro's
future SEC filings.
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5-5-5 Ingram Micro Reports Second Quarter 2001 results
About Ingram Micro Inc.
Ingram Micro Inc. is the largest global wholesale provider of technology
products and supply chain management services. The company operates in 36
countries with sales of $30.7 billion for the fiscal year 2000. Ingram Micro's
global regions provide the distribution of technology products and services,
marketing development and supply chain management services to more than 175,000
technology solution providers and 1,700 manufacturers. The company is focused
on maximizing shareowner value and achieving customer satisfaction through
innovation in the information technology supply chain. Visit
www.ingrammicro.com/corp.
# # #
01-24
(C)2001 Ingram Micro Inc. All rights reserved. Ingram Micro is a trademark used
under license by Ingram Micro Inc. All other logos, brand names and product
names are trademarks of their respective companies.
INGRAM MICRO INC.
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
(Dollars in 000s)
(Unaudited)
June 30, December 30,
2001 2000
------------ ------------
ASSETS
Current assets:
Cash $ 118,753 $ 150,560
Investment in available-for-sale securities 48,765 52,897
Accounts receivable, including retained
interest in securitized receivables, net 2,273,082 2,352,672
Inventories 1,752,243 2,919,117
Other current assets 292,292 294,838
------------ ------------
Total current assets 4,485,135 5,770,084
Property and equipment, net 336,138 350,829
Goodwill, net 412,765 430,853
Other 54,528 57,216
------------ ------------
Total assets $ 5,288,566 $ 6,608,982
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,483,302 $ 3,725,080
Accrued expenses 300,275 350,111
Current maturities of long-term debt 23,477 42,774
------------ ------------
Total current liabilities 2,807,054 4,117,965
Convertible debentures 394 220,035
Other long-term debt 512,109 282,809
Other 96,580 113,781
------------ ------------
Total liabilities 3,416,137 4,734,590
Stockholders' equity 1,872,429 1,874,392
------------ ------------
Total liabilities and stockholders' equity $ 5,288,566 $ 6,608,982
============ ============
INGRAM MICRO INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in 000s, except per share data)
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
June 30, July 1, June 30, July 1,
2001 2000 2001 2000
----------- ----------- ----------- -----------
Net sales $6,017,276 $7,295,059 $13,210,765 $15,091,409
Cost of sales 5,701,666 6,933,547 12,510,960 14,363,701
----------- ----------- ----------- -----------
Gross profit 315,610 361,512 699,805 727,708
Selling, general and
administrative
expenses 291,736 285,121 605,461 580,786
----------- ----------- ----------- -----------
Income from operations
before reorganization
costs 23,874 76,391 94,344 146,922
Reorganization costs 19,056 -- 19,056 --
----------- ----------- ----------- -----------
Income from operations 4,818 76,391 75,288 146,922
Interest and other
expense (income) 19,518 22,832 47,014 (58,617)
----------- ----------- ----------- -----------
Income (loss) before
income taxes (14,700) 53,559 28,274 205,539
Provision for
income taxes (5,292) 20,503 11,253 78,479
----------- ----------- ----------- -----------
Income (loss) before
extraordinary items (9,408) 33,056 17,021 127,060
Extraordinary (loss)
gain on repurchase
of debentures (net of
($1,634), $113, ($1,634)
and $1,408 in income
taxes, respectively) (2,610) 187 (2,610) 2,316
----------- ----------- ----------- -----------
Net income (loss) $(12,018) $33,243 $14,411 $129,376
=========== =========== =========== ===========
Diluted earnings
per share $(0.08) $0.22 $0.10 $0.87
=========== =========== =========== ===========
Diluted weighted
average shares
outstanding 147,131,965 149,700,725 149,510,569 148,435,200
=========== =========== =========== ===========