Exhibit 99.1
For More Information Contact:
Media Relations: Investor Relations:
Jennifer Baier or Cambria Morgan Ria Marie Carlson or Lisa Mueller
Ingram Micro Inc. Ingram Micro Inc.
(714) 382-2692 or (714) 382-2190 (714) 382-4400 or (714) 382-2012
Cambria_Morgan@benjamingroup.com ler@ingrammicro.com
INGRAM MICRO REPORTS SECOND QUARTER 2002 RESULTS
Net income before reorganization costs exceed expectations
Revenues in-line with guidance issued in April
SANTA ANA, Calif., July 31, 2002-- 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 29, 2002.
Net income before reorganization costs for the second quarter was $12.2
million or $0.08 per share versus $2.6 million or $0.02 per share in the
comparable period last year. Including reorganization costs of $5.4 million
($3.4 million after taxes), primarily related to facility consolidations and
workforce reductions, net income was $8.8 million or $0.06 per share, compared
to a net loss of $12.0 million or $0.08 per share in the year-ago quarter. Net
sales were $5.35 billion versus $6.02 billion in the second quarter of last
year, a decline of 11 percent.
"Our solid results demonstrate our firm commitment to consistent financial
achievement," said Kent B. Foster, chairman and chief executive officer, Ingram
Micro Inc. "The income before reorganization costs exceeded the guidance we
issued April 25 and the consensus estimate of financial analysts, while revenues
were at the top end of our forecasted range. At the same time, we continued to
make significant improvements in other key metrics. Gross margin hit 5.48
percent - the highest level since 1998 - and we continued to reduce operating
expenses and inventory levels. We believe that a resurgence in IT demand is
inevitable and we are taking action now to position this company for long-term
profitable growth."
Additional Second Quarter Highlights
o The gross margin of 5.48 percent reflects an increase of 23 basis points
versus a year ago and seven basis points sequentially.
o Operating expenses (excluding reorganization costs) were $261.8 million -
$30 million less than the year-ago quarter and $7.6 million less than the
first quarter of this year - a steady improvement as restructuring and
process improvement programs continued to show results. In the prior year,
operating expenses included approximately $5.0 million for goodwill
amortization, which was eliminated based on new accounting rules adopted
during the first quarter of 2002.
2/2/2 Ingram Micro Reports Second Quarter 2002 Results
o Income from operations before reorganization costs increased 31 percent to
$31.3 million versus $23.9 million a year ago.
o Earnings before interest, income taxes, depreciation and amortization
(EBITDA) was $52.7 million, excluding reorganization costs, compared with
$53.5 million a year ago.
o Depreciation was $21.4 million and capital expenditures were $17.1 million.
o Cash and cash equivalents rose to $477 million at June 29, 2002.
o Inventory was $1.45 billion, 17 percent lower than a year ago. Inventory
turns and days on hand were stable sequentially at 14 and 26, respectively,
improvements over the 13 turns and 28 days reported a year ago.
o Total debt (including off-balance sheet debt of $174 million associated
with accounts receivable financing programs) was $510 million, 31 percent
lower than the $735-million total debt a year ago. The total
debt-to-capitalization ratio (including the off-balance sheet financing)
was 24 percent versus 28 percent a year ago. Net debt (total debt less cash
and cash equivalents) was less than $33 million, or two percent of related
total capitalization.
"The company's bottom-line performance this quarter was driven by our
continued concentration on increasing gross margins and reducing our cost
structure," said Thomas A. Madden, executive vice president and chief financial
officer, Ingram Micro Inc. "We intend to improve our overall profitability until
it reaches a best-in-class status, as we did with our balance sheet and gross
margins. We are streamlining the business through reorganization and business
process improvement programs, while simultaneously developing opportunities for
profitable growth."
Sales comparisons continue to be affected by the slower demand for IT
products experienced worldwide. North American sales were 55 percent of the
worldwide total or $2.96 billion, 20 percent lower than the $3.69 billion in the
second quarter of last year. Sales in Europe were 30 percent of the total at
$1.61 billion versus $1.57 billion a year ago, an increase of two percent in
U.S. dollars but a decline of two percent in local currencies. For the Latin
America and Asia-Pacific regions combined, net sales increased four percent to
$783 million (15 percent of the total) versus $752 million last year.
The 31 percent increase in worldwide operating income (excluding
reorganization costs), despite the decrease in sales, is a direct result of the
company's intense focus on improving profitability, with operating margins
growing to 0.58 percent of revenues from 0.40 percent a year ago.
In North America, operating income before reorganization costs grew,
despite the sales decline, to 0.91 percent of revenues or $27.0 million, an
increase of 11 percent sequentially and four percent versus the $25.9 million or
0.70 percent of revenues posted in the second quarter of last year. European
operating income before reorganization costs was $184,000 versus $1.7 million a
year ago. The Latin America and Asia-Pacific regions delivered aggregated
operating profits before reorganization costs of $4.2 million
3/3/3 Ingram Micro Reports Second Quarter 2002 Results
compared with a loss of $3.7 million a year ago, reflecting operating
improvements within the Asia-Pacific region.
Six-month Results
For the six months ended June 29, 2002, net sales were $10.97 billion, a
decline of 17 percent versus the similar period a year ago. Regional six-month
sales were $6.07 billion for North America, $3.37 billion for Europe and $1.52
billion for the other international regions. Gross margin was 5.44 percent, 14
basis points higher than the first six months of last year. Worldwide operating
income before reorganization costs was $65.6 million versus $94.3 million in the
six-month period of a year ago. Regionally, six-month operating income before
reorganization costs for North America was $51.3 million; Europe was $14.2
million; and for the other international regions was $67,000. Including
reorganization costs, a gain on the sale of securities and the cumulative effect
of accounting changes, the company posted a six-month net loss of $256.6
million. Excluding these items, six-month net income was $25.7 million.
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
Securities and Exchange Commission.
According to the company's forecast for the third quarter ending September
28, 2002, sales are expected to range from $5.30 billion to $5.45 billion, with
net income before any reorganization costs, major cost-reduction program
expenses and special items ranging from $13.5 million to $17.0 million, or $0.09
to $0.11 per diluted share.
"Our sales guidance reflects the seasonal patterns we described last
quarter," said Foster. "At the time, we explained that typically sales in the
third quarter are sequentially flat, followed by a single-digit increase in the
fourth quarter. Although we do not expect a return of strong IT demand in the
immediate future, we are continuing our intense focus on profitability and
shareowner value. We are pursuing several profit-enhancement initiatives that we
believe will significantly improve the company's operating results. We are
developing these opportunities now and expect to disclose information regarding
these plans later in the third quarter."
The company already has taken certain actions during the third quarter,
such as the recent decision to close its configuration center in Memphis, Tenn.
This action and additional profit-enhancement initiatives will result in the
incurrence of reorganization costs, other major cost-reduction program expenses
and other charges in the third quarter. These costs have not been determined and
have been excluded from the company's outlook.
Conference Call and Webcast
Additional information about Ingram Micro's 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 (415) 228-4834 (other countries) and mention "Ingram Micro."
To listen to the call via a live audio Webcast, visit the Investor Relations
page of the Ingram Micro Web site, located at www.ingrammicro.com/corp. The
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
and 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 in the U.S., Canada and internationally;
the continuation or worsening of the severe downturn in economic conditions
(particularly purchases of technology products); future terrorist or military
actions; continued pricing and margin pressures; failure to adjust costs in a
timely fashion in response to a sudden decrease in demand; 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
technology products and services; unavailability of adequate capital; inability
to manage future adverse industry trends; failure of information systems;
significant credit loss resulting from significant credit exposure to reseller
customers and negative trends in their businesses; interest rate and foreign
currency fluctuations; adverse impact of governmental controls and actions and
political or economic instability on foreign operations; changes in local,
regional, and global economic conditions and practices; dependence on key
individuals and inability to retain personnel; product supply shortages; the
potential termination of a supply agreement with a major supplier; difficulties
and risks associated with integrating operations and personnel in acquisitions;
disruptions due to reorganization activities; rapid product improvement and
technological change and resulting obsolescence risks; and dependence on
independent shipping companies.
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 year ended December 29, 2001; other risks or
uncertainties may be detailed from time to time in Ingram Micro's future SEC
filings.
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 37
countries
with sales of more than $25 billion for the fiscal year 2001. Ingram Micro's
global regions provide the distribution of technology products and services,
marketing development and supply chain management services to nearly 170,000
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.
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INGRAM MICRO INC.
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CONSOLIDATED BALANCE SHEET
(Dollars in 000s)
(Unaudited)
June 29, December 29,
2002 2001
---------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 477,243 $ 273,059
Investment in available-for-sale securities -- 24,031
Accounts receivable, including
retained in securitized receivables, net 2,032,015 2,297,957
Inventories 1,445,754 1,623,628
Other current assets 209,846 238,171
---------- ----------
Total current assets 4,164,858 4,456,846
Property and equipment, net 299,984 303,833
Goodwill, net 231,794 508,227
Other 46,763 33,101
---------- ----------
Total assets $4,743,399 $5,302,007
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,287,646 $2,607,145
Accrued expenses 387,486 279,669
Current maturities of long-term debt 125,116 252,803
---------- ----------
Total current liabilities 2,800,248 3,139,617
Convertible debentures 415 405
Senior subordinated notes 210,743 204,899
Other 84,804 89,788
---------- ----------
Total liabilities 3,096,210 3,434,709
Stockholders' equity 1,647,189 1,867,298
---------- ----------
Total liabilities and stockholders' equity $4,743,399 $5,302,007
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INGRAM MICRO INC.
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CONSOLIDATED STATEMENT OF INCOME
(Dollars in 000s, except per share data)
(Unaudited)
Thirteen Weeks Ended Twenty-six Weeks Ended
----------------------------- ------------------------------
June 29, 2002 June 30, 2001 June 29, 2002 June 30, 2001
------------- ------------- ------------- -------------
Net sales $ 5,352,774 $ 6,017,276 $ 10,969,325 $ 13,210,765
Cost of sales 5,059,683 5,701,666 10,372,567 12,510,960
------------- ------------- -------------- --------------
Gross profit 293,091 315,610 596,758 699,805
Selling, general and administrative
expenses 261,780 291,736 531,199 605,461
------------- ------------- -------------- --------------
Income from operations before
reorganization costs 31,311 23,874 65,559 94,344
Reorganization costs 5,370 19,056 8,780 19,056
------------- ------------- -------------- --------------
Income from operations 25,941 4,818 56,779 75,288
Other income (expense):
Gain on sale of available-for-sale
securities -- -- (6,535) --
Interest and other 11,949 19,518 24,787 47,014
------------- ------------- -------------- --------------
11,949 19,518 18,252 47,014
------------- ------------- -------------- --------------
Income (loss) before income taxes,
extraordinary item and cumulative
effect of adoption of a new
accounting standard 13,992 (14,700) 38,527 28,274
Provision for (benefit from) income taxes 5,177 (5,292) 14,255 11,253
------------- ------------- -------------- --------------
Income (loss) before extraordinary
item and cumulative effect
of adoption of a new accounting
standard 8,815 (9,408) 24,272 17,021
Extraordinary loss on repurchase of
debentures, net of income taxes -- (2,610) -- (2,610)
Cumulative effect of adoption of a new
accounting standard, of income taxes -- -- (280,861) --
------------- ------------- -------------- --------------
Net income (loss) $ 8,815 $ (12,018) $ (256,589) $ 14,411
------------- ------------- -------------- --------------
Diluted earnings (loss) per share
Income (loss) before extraordinary
item and cumulative effect of
adoption of a new accounting standard $ 0.06 $ (0.06) $ 0.16 $ 0.12
Extraordinary loss on repurchase of
debentures -- (0.02) -- (0.02)
Cumulative effect of adoption of a new
accounting standard -- -- (1.84) --
------------- ------------- -------------- -------------
Net income (loss) $ 0.06 $ (0.08) $ (1.68) $ 0.10
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Diluted weighted average shares
outstanding 151,935,976 147,131,965 152,300,027 149,510,569
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