Exhibit 99.1
For More Information Contact:
Media Relations: Investor Relations:
Jennifer Baier or Marie Meoli 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
marie_meoli@benjamingroup.com Lisa.Mueller@ingrammicro.com
INGRAM MICRO REPORTS THIRD QUARTER 2002 RESULTS
SANTA ANA, Calif., Oct. 29, 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 third quarter
ended Sept. 28, 2002.
During the quarter, the company announced a comprehensive profit
enhancement program that is expected to generate $160 million of annualized
operating income improvements by the first quarter of 2004. Major-program costs
are expected to total approximately $140 million, of which approximately
two-thirds will be recorded in the second half of 2002. In the third quarter,
major-program costs charged to operating income were $45.1 million before taxes
($28.4 million net of taxes).
Including these major-program costs, the company posted a net loss of $8.3
million or $0.06 per share, compared to a net loss of $13.3 million or $0.09
per share in the third quarter of 2001. Excluding these costs, net income was
$20.1 million or $0.13 per share - exceeding the company's guidance updated on
Sept. 18, 2002 - versus $5.4 million or $0.04 per share, excluding
reorganization costs and special items, in the comparable period last year.
Sales totaled $5.60 billion - also surpassing the range of guidance - a
4.0 percent decline compared to the $5.83 billion one year ago, but a 4.6
percent increase sequentially.
"As we emphasized in last month's announcement of our profit enhancement
plan, we intend to achieve best-in-class status in every performance measure,"
said Kent B. Foster, chairman and chief executive officer, Ingram Micro Inc.
"Our third-quarter results bring us closer to this goal. Excluding
major-program costs, gross margin increased 18 basis points, operating margin
increased 32 basis points and operating expenses as a percent of revenues
improved 14 basis points compared to last year. Although the economic
environment continues to be challenging, we are making sustainable improvements
that create significant earnings leverage and capture opportunities for
long-term success."
Additional Third Quarter Highlights
o Gross margin, excluding major-program costs, was 5.45 percent, compared
with 5.27 percent one year ago and 5.48 percent in the second quarter of
2002.
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2/2/2 Ingram Micro Reports Third Quarter 2002 Results
o Operating expenses, excluding major-program costs, were $262.4
million or 4.69 percent of revenues, compared with $282.2 million or
4.83 percent of revenues in the year-ago quarter and $261.8 million
or 4.89 percent of revenues in the previous quarter. In the prior
year, operating expenses included approximately $5.3 million for
goodwill amortization, which was eliminated based on new accounting
rules adopted during the first quarter of 2002.
o Income from operations excluding major-program costs increased 67
percent to $42.5 million or 0.76 percent of revenues from $25.5
million or 0.44 percent of revenues in last year's third quarter.
Sequentially, income from operations increased 36 percent from the
$31.3 million or 0.58 percent of revenues reported in the second
quarter. Including major-program costs, the company posted an
operating loss of $2.6 million in the third quarter of 2002.
o Depreciation was $32.4 million, including $11.5 million of
accelerated depreciation primarily associated with the company's
planned facility consolidations. Capital expenditures were $9.8
million.
o Earnings before interest, income taxes, depreciation and amortization
(EBITDA) were $63.5 million, excluding major-program costs, compared
with $54.7 million a year ago.
o Cash and cash equivalents were $387.3 million at the end of the
quarter.
o Inventory was $1.50 billion, 8 percent lower than a year ago.
Inventory turns, at 14, were stable sequentially and versus last
year. Inventory days on hand were 26, flat sequentially but a one-day
improvement compared to the 27 days reported a year ago.
o Total debt (including off-balance sheet debt of $90.0 million
associated with accounts receivable financing programs) was $417.8
million, 33 percent lower than the $624.4 million total debt 12
months ago. The total debt-to-capitalization ratio (including the
accounts receivable financing) was 20 percent versus 25 percent a
year ago. Net debt (total debt less cash and cash equivalents) was
$30.5 million, or 2 percent of related total capitalization.
Thomas A. Madden, executive vice president and chief financial officer,
Ingram Micro Inc., said that Microsoft's software upgrade program, which
expired on July 31, contributed incremental revenues for the quarter but had
lower-than-average gross margins. "Our sales achievement was complemented by a
continued focus on profitability and working capital management, with key
operating and balance sheet metrics improving over last year," he added.
"Operating income, excluding major-program costs, increased sequentially and
over last year, while debt levels are the lowest in our history as a public
company. Additionally, the recent strength of the euro clouded our continued
progress in reducing operating expenses. If the exchange rates had remained at
second quarter levels, operating expenses would have declined $3.7 million
sequentially."
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3/3/3 Ingram Micro Reports Third Quarter 2002 Results
Regional Results
North American sales were 55 percent of the worldwide total or $3.10
billion, 12.1 percent lower than the $3.52 billion in the year-ago quarter, but
a 4.8 percent sequential increase. Sales in Europe were approximately 31
percent of the total at $1.70 billion, an 11.3 percent increase versus a year
ago (1.6 percent in local currencies) and a sequential increase of 5.7 percent
(flat in local currencies). For the Latin America and Asia-Pacific regions
combined, net sales of $797 million (14 percent of the total) increased 2.3
percent over the prior year and 1.8 percent sequentially.
North American operating income, excluding major-program costs, increased
55 percent sequentially and 35 percent versus a year ago - growing to $41.7
million or 1.34 percent of revenues from $30.8 million or 0.87 percent of
revenues in the third quarter of last year. The European region posted an
operating loss, excluding major-program costs, of $1.5 million, an improvement
over the $2.7 million operating loss in the year-ago period. The Latin America
and Asia-Pacific regions generated aggregated operating profits of $2.4
million, before major-program costs, compared with a loss of $2.6 million a
year ago, reflecting continued operating improvements within the Asia-Pacific
region. Including major-program costs, North American operating income was $7.4
million versus $8.7 million in the year-ago quarter; the European operating
loss was $12.0 million versus a loss of $7.0 million a year ago; and the other
regions posted aggregated operating income of $2.0 million versus a loss of
$7.4 million in the third quarter of 2001.
Nine-month Results
For the nine months ended Sept. 28, 2002, net sales were $16.57 billion, a
decline of 13.0 percent versus the similar period a year ago. Regional
nine-month sales were $9.17 billion for North America, $5.08 billion for Europe
and $2.32 billion for the other international regions. The gross margin, before
major-program costs of $1.2 million, was 5.44 percent, 15 basis points higher
than the first nine months of last year, or 5.43 percent including the
major-program costs. Worldwide operating income before major-program costs was
$108.1 million ($54.2 million including major-program costs) versus $119.8
million in the nine-month period of a year ago ($69.6 million including all
costs). Regionally, nine-month operating income before major-program costs for
North America was $93.0 million ($55.1 million including major-program costs);
Europe was $12.7 million (or a $970,000 loss including major-program costs);
and for the other international regions was $2.4 million ($31,000 including
major-program costs).
Detail on Major-Program Costs and Special Items
The quarter's major-program costs of $45.1 million before taxes include:
1) reorganization costs of $22.8 million for facility consolidations and
workforce reductions throughout the world; 2) $21.1 million, charged to
selling, general and administrative expenses, primarily comprised of
accelerated depreciation of fixed assets
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4/4/4 Ingram Micro Reports Third Quarter 2002 Results
associated with the planned exit of facilities, consulting fees directly
associated with the profit enhancement plan and certain other related costs;
and 3) the remaining $1.2 million was recorded as cost of sales.
Major-program costs and special items during the nine-month period
included reorganization and other costs of $53.9 million, a gain on the sale of
securities of $6.5 million and a one-time, non-cash charge of $280.9 million,
net of taxes, recorded in the first quarter of 2002, for the cumulative effect
of adopting Statement of Financial Accounting Standard No. 142, "Goodwill and
Other Intangible Assets." Including all these items, the company posted a
nine-month net loss of $264.9 million. Excluding all special items, nine-month
net income was $45.8 million.
For comparison purposes, reorganization costs and special items in the
third quarter of 2001 totaled $31.1 million before tax, including $11.7 million
of reorganization costs, $10.2 million for the write-off of capitalized
software and $9.2 million related to reserves recorded for claims filed with
one of the company's prior credit insurance companies, which was liquidated.
For the nine-month period in 2001, special items also included $19.1 million
associated with second-quarter restructuring actions and an extraordinary loss
of $2.6 million (net of taxes) on the repurchase of the company's convertible
debentures.
Outlook for the Fourth 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 fourth quarter ending Dec. 28,
2002, sales are expected to range from $5.75 billion to $5.90 billion, with net
income before any major-program expenses and other special items ranging from
$26 million to $29 million, or $0.17 to $0.19 per diluted share.
"We still expect sequential sales to experience a normal seasonal
increase, despite the third-quarter surge in software licensing sales," said
Foster. "Our profit enhancement program is on track and generating the results
we expected so far. We are making the changes that are right for our business
while continuing to focus on profitable growth. Our commitment to shareowner
value and profitability is unwavering. We are dedicated to being the leader in
everything that we do."
Conference Call and Webcast
Additional information about Ingram Micro's financial results will be
presented in a conference call today at 5 p.m. EST. To listen to the conference
call via telephone, call (888) 455-0750 (toll-free within the United States and
Canada) or (630) 395-0018 (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).
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5/5/5 Ingram Micro Reports Third Quarter 2002 Results
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 which if
realized, in whole or in part, could have a material adverse effect on Ingram
Micro's business, financial condition and results of operations, including,
without limitation: the Company's failure to achieve intended cost reductions
or profit improvement objectives under its recently announced profit
enhancement program; disruptions in business operations due to reorganization
activities; potential material decline in net sales if major suppliers
significantly increase the level of business they transact directly with
end-users and/or resellers in different product categories, customer segments,
and/or geographies; potential decline in net sales and/or gross margins if the
Company is not able to pass through to customers the impact of adverse changes
in sales terms and conditions with major suppliers; potential termination of a
supply or services agreement with a major supplier or customer; dependence on
key individuals and inability to retain personnel; the continuation or
worsening of the severe downturn in economic conditions (particularly purchases
of technology products) and failure to adjust costs in a timely fashion in
response to a sudden decrease in demand; losses resulting from significant
credit exposure to reseller customers and negative trends in their businesses;
continued pricing and margin pressures and intense competition within regional
markets and internationally; future terrorist or military actions; reductions
in credit ratings and/or unavailability of adequate capital; inability to
manage future adverse industry trends; failure of information systems; interest
rate and foreign currency fluctuations; adverse impact of governmental controls
and actions and political or economic instability on foreign operations;
product supply shortages; difficulties and risks associated with integrating
operations and personnel in acquisitions; 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 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 leading wholesale provider of technology products
and supply chain management services in the world. With sales of more than $25
billion for the fiscal year 2001, the company provides the best way to get
technology from the people who make it to the people who use it. Visit
www.ingrammicro.com/corp.
# # #
02-24
(C)2002 Ingram Micro Inc. All rights reserved. Ingram Micro and the registered
Ingram Micro logo are trademarks used under license by Ingram Micro Inc.
INGRAM MICRO INC.
===============================================================================
CONSOLIDATED BALANCE SHEET
(Dollars in 000s)
(Unaudited)
September 28, December 29,
2002 2001
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 387,341 $ 273,059
Investment in available-for-sale securities - 24,031
Accounts receivable, including retained
interest in securitized receivables, net 2,116,170 2,297,957
Inventories 1,500,903 1,623,628
Other current assets 207,909 238,171
------------ ------------
Total current assets 4,212,323 4,456,846
Property and equipment, net 270,349 303,833
Goodwill, net 231,720 508,227
Other 51,271 33,101
------------ ------------
Total assets $ 4,765,663 $ 5,302,007
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,350,402 $ 2,607,145
Accrued expenses 374,593 279,669
Current maturities of long-term debt 95,624 252,803
------------ ------------
Total current liabilities 2,820,619 3,139,617
Convertible debentures 421 405
Senior subordinated notes 216,131 204,899
Other long-term debt 15,647 -
Deferred income taxes and other liabilities 79,420 89,788
------------ ------------
Total liabilities 3,132,238 3,434,709
Stockholders' equity 1,633,425 1,867,298
------------ ------------
Total liabilities and stockholders' equity $ 4,765,663 $ 5,302,007
============ ============
INGRAM MICRO INC.
===============================================================================
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Dollars in 000s, except per share data)
(Unaudited)
Thirteen Weeks Ended September 28, 2002
---------------------------------------------------
Impact of Major-
Program Costs and
As Reported (a) Special Items (b) Pro Forma
--------------- ----------------- -------------
Net sales $ 5,600,231 $ - $ 5,600,231
Cost of sales 5,296,538 1,241 5,295,297
------------- ------------- -------------
Gross profit 303,693 (1,241) 304,934
Operating expenses:
Selling, general and administrative 283,469 21,084 262,385
Reorganization costs 22,807 22,807 -
Special items - - -
------------- ------------- -------------
306,276 43,891 262,385
------------- ------------- -------------
Income (loss) from operations (2,583) (45,132) 42,549
Interest and other 10,624 - 10,624
------------- ------------- -------------
Income (loss) before income taxes (13,207) (45,132) 31,925
Provision for (benefit from) income taxes (4,886) (16,698) 11,812
------------- ------------- -------------
Net income (loss) $ (8,321) $ (28,434) $ 20,113
============= ============= =============
Diluted earnings (loss) per share:
Net income (loss) $ (0.06) $ (0.19) $ 0.13
============= ============= =============
Diluted weighted average shares
outstanding 150,498,529 150,498,529 150,498,529
============= ============= =============
Thirteen Weeks Ended September 29, 2001
--------------------------------------------------
Impact of Major-
Program Costs and
As Reported (a) Special Items (c) Pro Forma
--------------- ----------------- -------------
Net sales $ 5,833,417 $ - $ 5,833,417
Cost of sales 5,525,777 - 5,525,777
------------- ------------- -------------
Gross profit 307,640 - 307,640
Operating expenses:
Selling, general and administrative 282,172 - 282,172
Reorganization costs 11,745 11,745 -
Special items 19,393 19,393 -
------------- ------------- -------------
313,310 31,138 282,172
------------- ------------- -------------
Income (loss) from operations (5,670) (31,138) 25,468
Interest and other 16,398 - 16,398
------------- ------------- -------------
Income (loss) before income taxes (22,068) (31,138) 9,070
Provision for (benefit from) income taxes (8,739) (12,340) 3,601
------------- ------------- -------------
Net income (loss) $ (13,329) $ (18,798) $ 5,469
============= ============= =============
Diluted earnings (loss) per share:
Net income (loss) $ (0.09) $ (0.13) $ 0.04
============= ============= =============
Diluted weighted average shares
outstanding 147,791,050 147,791,050 147,791,050
============= ============= =============
(a) Reported in accordance with Generally Accepted Accounting Principles.
(b) Major-program costs in 2002 include reorganization costs of $22,807 for
facility consolidations and workforce reductions throughout the world;
$21,084 charged to selling, general and adminstrative expenses, primarily
comprised of accelerated depreciation of fixed assets associated with the
planned exit of facilities, consulting fees directly associated with the
profit-enhancement plan and certain other related costs; and $1,241
recorded as cost of sales, comprised of incremental inventory-related
costs caused by the exit of certain markets.
(c) Reorganization costs and special items in 2001 included $11,745 of
reorganization costs; $10,227 for the write-off of capitalized software;
and $9,166 related to reserves recorded for claims filed with one of the
Company's prior credit insurance companies, which was liquidated.
INGRAM MICRO INC.
===============================================================================
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(Dollars in 000s, except per share data)
(Unaudited)
Thirty-nine Weeks Ended September 28, 2002
--------------------------------------------------------
Impact of Major-
Program Costs and
As Reported (a) Special Items (b) Pro Forma
---------------- ---------------- ----------------
Net sales $ 16,569,556 $ - $ 16,569,556
Cost of sales 15,669,105 1,241 15,667,864
---------------- ---------------- ----------------
Gross profit 900,451 (1,241) 901,692
Operating expenses:
Selling, general and administrative 814,668 21,084 793,584
Reorganization costs 31,587 31,587 -
Special items - - -
---------------- ---------------- ----------------
846,255 52,671 793,584
---------------- ---------------- ----------------
Income (loss) from operations 54,196 (53,912) 108,108
Other income (expense):
Gain on sale of available-for-sale securities (6,535) (6,535) -
Interest and other 35,411 - 35,411
---------------- ---------------- ----------------
28,876 (6,535) 35,411
---------------- ---------------- ----------------
Income (loss) before income taxes, extraordinary item
and cumulative effect of adoption of a new
accounting standard 25,320 (47,377) 72,697
Provision for (benefit from) income taxes 9,369 (17,529) 26,898
---------------- ---------------- ----------------
Income (loss) before extraordinary item and cumulative
effect of adoption of a new accounting standard 15,951 (29,848) 45,799
Extraordinary loss on repurchase of debentures,
net of income taxes - - -
Cumulative effect of adoption of a new accounting
standard, net of income taxes (280,861) (280,861) -
---------------- ---------------- ----------------
Net income (loss) $ (264,910) $ (310,709) $ 45,799
================ ================ ================
Diluted earnings (loss) per share:
Income (loss) before extraordinary item and cumulative
effect of adoption of a new accounting standard $ 0.10 $ (0.20) $ 0.30
Extraordinary loss on repurchase of debentures - - -
Cumulative effect of adoption of a new
accounting standard (1.84) (1.84) -
---------------- ---------------- ----------------
Net income (loss) $ (1.74) $ (2.04) $ 0.30
================ ================ ================
Diluted weighted average shares outstanding 152,237,216 152,237,216 152,237,216
================ ================ ================
Thirty-nine Weeks Ended September 29, 2001
--------------------------------------------------------
Impact of Major-
Program Costs and
As Reported (a) Special Items (c) Pro Forma
---------------- ---------------- ----------------
Net sales $ 19,044,182 $ - $ 19,044,182
Cost of sales 18,036,737 - 18,036,737
---------------- ---------------- ----------------
Gross profit 1,007,445 - 1,007,445
Operating expenses:
Selling, general and administrative 887,633 - 887,633
Reorganization costs 30,801 30,801 -
Special items 19,393 19,393 -
---------------- ---------------- ----------------
937,827 50,194 887,633
---------------- ---------------- ----------------
Income (loss) from operations 69,618 (50,194) 119,812
Other income (expense):
Gain on sale of available-for-sale securities - - -
Interest and other 63,412 - 63,412
---------------- ---------------- ----------------
63,412 - 63,412
---------------- ---------------- ----------------
Income (loss) before income taxes, extraordinary item
and cumulative effect of adoption of a new
accounting standard 6,206 (50,194) 56,400
Provision for (benefit from) income taxes 2,514 (19,428) 21,942
---------------- ---------------- ----------------
Income (loss) before extraordinary item and cumulative
effect of adoption of a new accounting standard 3,692 (30,766) 34,458
Extraordinary loss on repurchase of debentures,
net of income taxes (2,610) (2,610) -
Cumulative effect of adoption of a new accounting
standard, net of income taxes - - -
---------------- ---------------- ----------------
Net income (loss) $ 1,082 $ (33,376) $ 34,458
================ ================ ================
Diluted earnings (loss) per share:
Income (loss) before extraordinary item and cumulative
effect of adoption of a new accounting standard $ 0.03 $ (0.20) $ 0.23
Extraordinary loss on repurchase of debentures (0.02) (0.02) -
Cumulative effect of adoption of a new
accounting standard - - -
---------------- ---------------- ----------------
Net income (loss) $ 0.01 $ (0.22) $ 0.23
================ ================ ================
Diluted weighted average shares outstanding 149,602,060 149,602,060 149,602,060
================ ================ ================
(a) Reported in accordance with Generally Accepted Accounting Principles.
(b) Major-program costs and special items in 2002 include reorganization costs
of $31,587 for facility consolidations and workforce reductions throughout
the world; $21,084 charged to selling, general and administrative
expenses, primarily comprised of accelerated depreciation of fixed assets
associated with the planned exit of facilities, consulting fees directly
associated with the profit-enhancement plan and certain other related
costs; $1,241 recorded as cost of sales, comprised of incremental
inventory-related costs caused by the exit of certain markets; gain of
$6,535 on the sale of securities; and a one-time, non-cash charge of
$280,861 (net of taxes), recorded in the first quarter of 2002 for the
cumulative effect of adopting Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets."
(c) Reorganization costs and special items in 2001 included $30,801 of
reorganization costs; $10,227 for the write-off of capitalized software;
and $9,166 related to reserves recorded for claims filed with one of the
Company's prior credit insurance companies, which was liquidated; and an
extraordinary loss of $2,610 (net of taxes) on the repurchase of
debentures.