Exhibit 99.1
For More Information Contact:
Media: Investors:
Ingram Micro Inc. Ingram Micro Inc.
Jennifer Baier (714) 382-2692 Ria Marie Carlson (714) 382-4400
Jennifer.baier@ingrammicro.com ria.carlson@ingrammicro.com
Jayne Merritt (714) 382-2037 Lisa Mueller (714) 382-2012
Jayne.merritt@ingrammicro.com Lisa.Mueller@ingrammicro.com
Note: Presentation slides, found at www.ingrammicro.com/corp, will accompany
the company's conference call today at 5 p.m. EDT (2 p.m. PDT).
INGRAM MICRO REPORTS
FIRST QUARTER 2003 RESULTS
SANTA ANA, Calif., April 29, 2003 -- Ingram Micro Inc. (NYSE: IM), the
world's largest wholesale provider of technology products and supply chain
management services, today announced financial results for the first quarter of
fiscal year 2003 (ended March 29, 2003).
Sales for the quarter were $5.47 billion, a decline of 2.5 percent versus
sales of $5.62 billion in the year-ago quarter.
First-quarter net income based on generally accepted accounting principles
(GAAP) was $10.1 million or $0.07 per diluted share. This compares to a GAAP
net loss of $265.4 million in the first quarter of 2002, which was primarily
attributable to the company's adoption of a new accounting standard, Statement
of Financial Accounting Standard No. 142, "Goodwill and Other Intangible
Assets" (SFAS 142). Before the cumulative effect of the adoption of this new
accounting standard, net income for the first quarter of 2002 was $15.5 million
or $0.10 per diluted share.
On a non-GAAP basis, net income excluding major-program costs increased 72
percent over the prior year to $23.2 million or $0.15 per diluted share.
Major-program costs of $20.2 million ($13.1 million net of tax) were primarily
related to the company's profit-enhancement program announced on Sept. 18,
2002. In the year-ago quarter, net income excluding special items was $13.5
million or $0.09 per diluted share, which excluded reorganization costs of $3.4
million ($2.1 million net of tax) and gains on the sale of securities totaling
$6.5 million ($4.1 million net of tax).
"We continue to navigate this tough demand environment with skill and
leadership," said Kent B. Foster, chairman and chief executive officer, Ingram
Micro Inc. "The flexibility of our operating model is evident. Despite slightly
lower sales compared to last year, we've made substantial improvements in our
earnings and operating income excluding major-program costs. We delivered sales
and earnings excluding major-program costs within the range of guidance we
issued in February."
Additional First Quarter Highlights
For additional detail regarding the results outlined below, please refer to the
financial statements attached to this news release. Details on major-program
costs and special items are also explained later in this release.
Regional Sales
o North American sales were 50 percent of the worldwide total or $2.75
billion, a decline of 11.6 percent versus the year-ago quarter and
6.9 percent sequentially.
o European sales were approximately 35 percent of the total or $1.93
billion, a 9.6 percent increase versus a year ago (but approximately
a nine percent decrease in local currencies) and a decrease of 7.0
percent sequentially.
o Sales in the Other International regions (Latin America and
Asia-Pacific) were 15 percent of the total or $790 million, an
increase of 6.8 percent versus a year ago and a 7.7 percent decline
sequentially.
Gross Margin
o On a GAAP basis, the gross margin was flat with the prior year at
5.41 percent.
o Gross margin excluding major-program costs was 5.42 percent, a one
basis point improvement over the first quarter a year ago.
Operating Expenses
o On a GAAP basis, total operating expenses were $269.1 million or 4.92
percent of revenues versus $272.8 million or 4.86 percent of revenues
in the year-ago quarter. Operating expenses on a GAAP basis were
significantly impacted by the major-program costs associated with the
company's profit-enhancement program.
o Operating expenses excluding major-program costs were $249.4 million
or 4.56 percent of revenues, a reduction of 7.4 percent or 24 basis
points versus operating expenses excluding reorganization costs of
$269.4 million or 4.80 percent of revenues posted in the year-ago
quarter.
Operating Income - Worldwide
o On a GAAP basis, income from operations was $27.1 million or 0.49
percent of revenues compared to $30.8 million or 0.55 percent of
revenues in the year-ago quarter.
o Income from operations excluding major-program costs increased 38
percent or 25 basis points to $47.3 million or 0.86 percent of
revenues from income from operations excluding reorganization costs
of $34.2 million or 0.61 percent of revenues a year ago.
Operating Income - North America
o On a GAAP basis, income from operations was $14.9 million or 0.54
percent of revenues versus $23.3 million or 0.75 percent of revenues
in the year-ago quarter.
o Operating income excluding major-program costs was $26.8 million or
0.97 percent of revenues, 10 percent and 19 basis points higher than
operating income excluding reorganization costs of $24.3 million or
0.78 percent of revenues in the year-ago quarter.
Operating Income - Europe
o On a GAAP basis, income from operations was $11.4 million or 0.59
percent of revenues versus $12.7 million or 0.72 percent of revenues
in the year-ago quarter.
o Operating income excluding major-program costs increased 39.2 percent
or 21 basis points to $19.5 million or 1.01 percent of revenues from
operating income excluding reorganization costs of $14.0 million or
0.80 percent of revenues in the year-ago quarter.
Operating Income - Other International (Latin America and Asia-Pacific)
o On a GAAP basis, income from operations was $805,000 or 0.10 percent
of revenues versus an operating loss of $5.2 million in the year-ago
quarter.
o Operating income excluding major-program costs was $977,000 or 0.12
percent of revenues, compared with an operating loss excluding
reorganization costs of $4.1 million a year ago.
Depreciation and Capital Expenditures
o Total depreciation (including accelerated depreciation of $5.1
million, a component of our major-program costs) was $23.0 million.
o Capital expenditures were approximately $11.5 million.
Balance Sheet Items
o Inventory was $1.49 billion, 1 percent lower than a year ago.
Inventory turns and days on hand, at 14 and 26 respectively, were
stable sequentially and versus last year.
o Total debt on a GAAP basis was $429 million or 21 percent of
capitalization, compared to debt of $348 million or 18 percent of
capitalization at the end of last year's first quarter. Including the
$72 million associated with the company's off-balance sheet accounts
receivable financing programs, total debt on a non-GAAP basis was
$501 million, relatively flat with a year ago, with a
debt-to-capitalization ratio of 23 percent versus 24 percent a year
ago.
"Our profit-enhancement efforts are driving our financial improvements,"
said Thomas A. Madden, executive vice president and chief financial officer,
Ingram Micro Inc. "The geographic consolidations implemented last year, along
with a strong focus on gross margins, contributed to Europe's 39 percent
increase in operating income excluding major-program costs. In North America,
the initiatives we implemented over the last few months helped us cut the
worldwide expense ratio by 24 basis points (excluding major-program costs) in a
soft-demand environment. In our Other International regions, we downsized
several of our unprofitable Latin American operations, while Asia-Pacific
benefited from our earlier infrastructure investments and experienced strong
top-line growth."
Detail on Major-Program Costs and Special Items
Major-program costs for the first quarter totaled $20.2 million before
taxes, of which $19.7 million were recorded as operating expenses, including:
1) reorganization costs of $11.9 million primarily for facility consolidations
and workforce reductions throughout the world; and 2) $7.8 million of period
costs primarily comprised of accelerated depreciation of fixed assets and asset
write-offs associated with the planned exit of facilities and outsourcing of
our IT infrastructure, relocation and transition costs, and other related
costs. In addition, $0.5 million in inventory and losses related to the exit of
certain markets were recorded as cost of sales.
Approximately $11.9 million of these costs were directly associated with
the profit-enhancement program announced on Sept. 18, 2002. At that time, the
company indicated that additional costs in connection with new opportunities
may be incurred. In the first quarter, the company incurred an additional $8.3
million primarily in connection with further consolidation of the Nordic areas
of Europe, which were not part of the original profit-enhancement program.
These actions will lead to additional operating income improvements for the
European region toward the end of this year.
For comparison purposes, reorganization costs in the first quarter of 2002
were $3.4 million before taxes, primarily related to facility consolidations
and workforce reductions. Additionally in the year-ago quarter, the company
posted a $6.5 million (pre-tax) gain on the sale of securities and recorded a
one-time, non-cash charge of $280.9 million, net of income taxes, for the
cumulative effect of the adoption of a new accounting standard (SFAS 142).
Financial results excluding these costs and items, as well as those
including off-balance sheet debt, are considered non-GAAP and are presented as
supplemental information to enhance the public's understanding of, and
highlight trends in, the company's financial results excluding reorganization
costs, major-program costs and special items, as well as other financial
metrics such as accounts receivables, days of sales outstanding and total
borrowings including off-balance sheet debt. Ingram Micro's management utilizes
these non-GAAP financial measures, along with primary GAAP measures, in
analyzing and measuring the performance of the company's core operations.
Outlook for the Second Quarter
The following statements are based on the company's current expectations
and internal forecasts. 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 second quarter ending June 28,
2003, sales are expected to range from $4.9 billion to $5.1 billion, with net
income excluding any major-program costs and other special items ranging from
$14 million to $19 million, or $0.09 to $0.12 per diluted share.
"Our outlook for the second quarter is influenced by softer demand in
North America," said Madden. "Within this environment, we intend to maintain
our gross-margin achievements through intelligent, strategic pricing decisions
and strong management of vendor programs. Our operations in Europe and the
Other International regions are not experiencing similar market dynamics."
The company's net results, required to be reported based on GAAP, will
likely differ significantly from this forecast because of major-program costs
related to the profit-enhancement program, announced on Sept. 18, 2002, or
other actions that may be implemented. The company's major-program costs, and
therefore GAAP earnings, in any one quarter cannot be reasonably estimated.
"As the industry leader, we must ensure that IT distribution is
appropriately recognized for the value it brings to the supply chain," said
Foster. "We have a heritage of doing what is right for our company and our
industry, including taking a leadership role in lifting gross margins three
years ago. At the same time, we are diligent in generating opportunities for
profitable growth and pursuing avenues that will secure our future."
Conference Call and Webcast
Additional information about Ingram Micro's financial results will be
presented in a conference call with presentation slides today at 5 p.m. EDT. To
listen to the conference call, visit the company's Web site at
www.ingrammicro.com/corp (Investor Relations section) or call (888) 455-0750
(toll-free within the United States and Canada) or (630) 395-0024 (other
countries) and mention "Ingram Micro." The accompanying presentation slides
also will be available at www.ingrammicro.com/corp (Investor Relations
section).
The replay of the conference call and presentation slides will be
available for one week at www.ingrammicro.com/corp (Investor Relations section)
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,
including but not limited to statements about future sales levels, margins,
restructuring charges, major-program costs, cost savings, operating
efficiencies, and profitability, 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: (1) the company's failure
to achieve the objectives of its profit enhancement program as announced in
September 2002 or other process or organizational changes, in whole or in part,
or delays in implementing components of the program; (2) intense competition,
regionally and internationally, including competition from alternative business
models, such as manufacturer-to-end-user selling, may lead to reduced prices,
lower sales or reduced sales growth, lower gross margins, extended payment
terms with customers, increased capital investment and interest costs, bad debt
risks and product supply shortages; (3) termination of a supply or services
agreement with a major supplier or customer or a significant change in supplier
terms or conditions of sale; (4) failure of information systems and/or failure
to successfully transition certain components of the company's IT
infrastructure to its third-party provider could result in significant
disruption to business or additional cost, or may not generate the intended
level of cost savings; (5) disruptions in business operations due to
reorganization activities; (6) 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; (7) losses resulting from significant credit exposure to
reseller customers and negative trends in their businesses; (8) rapid product
improvement and technological change and resulting obsolescence risks; (9)
possible disruption in commercial activities in Asia-Pacific, Canada and other
regions as a result of Severe Acute Respiratory Syndrome (SARS); (10) possible
disruption in commercial activities caused by terrorist activity or armed
conflict, including changes in logistics and security arrangements as a result
thereof, and reduced customer demand; (11) dependence on key individuals and
inability to retain personnel; (12) reductions in credit ratings and/or
unavailability of adequate capital; (13) interest rate and foreign currency
fluctuations; (14) adverse impact of governmental controls and actions or
political or economic instability could adversely affect foreign operations;
(15) failure to attract new sources of business from expansion of products or
services or entry into new markets; (16) inability to manage future adverse
industry trends; (17) difficulties and risks associated with integrating
operations and personnel in acquisitions; (18) future periodic assessments
required by current or new accounting standards may result in additional
charges; and (19) 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 28, 2002; other risks or uncertainties may be
detailed from time to time in Ingram Micro's future SEC filings. Ingram Micro
disclaims any duty to update any forward-looking statements.
About Ingram Micro Inc.
As the world's leading wholesale provider of technology products and
supply chain management services, Ingram Micro is the best way to get
technology from the people who make it to the people who use it. Visit
www.ingrammicro.com/corp.
# # #
03-17
(C)2003 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)
March 29, December 28,
2003 2002
--------------------------------
ASSETS
Current Assets:
Cash $ 295,025 $ 387,513
Accounts receivable, including retained
interest in securitized receivables, net 2,096,764 2,354,906
Inventories 1,488,238 1,564,065
Other current assets 277,117 293,902
--------------------------------
Total current assets 4,157,144 4,600,386
Property and equipment, net 238,832 250,244
Goodwill 238,903 233,922
Other 54,035 59,802
--------------------------------
Total assets $ 4,688,914 $ 5,144,354
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,241,961 $ 2,623,188
Accrued expenses 262,895 438,787
Current maturities of long-term debt 192,484 124,894
--------------------------------
Total current liabilities 2,697,340 3,186,869
Long-term debt, less current maturities 236,588 241,052
Deferred income taxes and other liabilities 96,699 80,444
--------------------------------
Total liabilities 3,030,627 3,508,365
Stockholders' equity 1,658,287 1,635,989
--------------------------------
Total liabilities and stockholders' equity $ 4,688,914 $ 5,144,354
================================
Ingram Micro Inc.
Consolidated Statement of Income
(Dollars in 000s, except per share data)
(Unaudited)
Thirteen Weeks Ended March 29, 2003
---------------------------------------------------------------
Impact of
Reorganization
Costs and Other Non-GAAP
As Reported Major-Program Financial
Under GAAP Costs (a) Measure
---------------------------------------------------------------
Net sales $ 5,474,214 $ - $ 5,474,214
Costs of sales 5,177,982 (443) 5,177,539
---------------------------------------------------------------
Gross profit 296,232 443 296,675
---------------------------------------------------------------
Operating expenses:
Selling, general and
administrative 257,202 (7,780) 249,422
Reorganization costs 11,939 (11,939) -
---------------------------------------------------------------
269,141 (19,719) 249,422
---------------------------------------------------------------
Income from operations 27,091 20,162 47,253
Interest and other 11,602 - 11,602
---------------------------------------------------------------
Income before income taxes 15,489 20,162 35,651
Provision for income taxes 5,421 7,057 12,478
---------------------------------------------------------------
Net income $ 10,068 $ 13,105 $ 23,173
===============================================================
Diluted earnings per share:
Net income $ 0.07 $ 0.08 $ 0.15
Diluted weighted average
shares outstanding 151,217,211 151,217,211 151,217,211
===============================================================
Thirteen Weeks Ended March 30, 2002
---------------------------------------------------------------
Impact of
Reorganization
Costs and Other Non-GAAP
As Reported Major-Program Financial
Under GAAP Costs (a) Measure
---------------------------------------------------------------
Net sales $ 5,616,551 $ - $ 5,616,551
Costs of sales 5,312,884 - 5,312,884
---------------------------------------------------------------
Gross profit 303,667 - 303,667
---------------------------------------------------------------
Operating expenses:
Selling, general and
administrative 269,419 - 269,419
Reorganization costs 3,410 (3,410) -
---------------------------------------------------------------
272,829 (3,410) 269,419
---------------------------------------------------------------
Income from operations 30,838 3,410 34,248
Interest and other 6,303 6,535 12,838
---------------------------------------------------------------
Income before income taxes
and cumulative effect of
adoption of a new
accounting standard 24,535 (3,125) 21,410
Provision for income taxes 9,078 (1,156) 7,922
---------------------------------------------------------------
Income before cumulative
effect of adoption of a
new accounting standard 15,457 (1,969) 13,488
Cumulative effect of
adoption of a new
accounting standard,
net of income taxes (280,861) 280,861 -
---------------------------------------------------------------
Net income (loss) $ (265,404) $ 278,892 $ 13,488
===============================================================
Diluted earnings (loss)
per share:
Income before cumulative
effect of adoption of a
new accounting standard $ 0.10 $ (0.01) $ 0.09
Cumulative effect of
adoption of a new
accounting standard (1.84) 1.84 -
---------------------------------------------------------------
Net income (loss) $ (1.74) $ 1.83 $ 0.09
===============================================================
Diluted weighted average
shares outstanding 152,689,927 152,689,927 152,689,927
===============================================================
(a) Major-program costs in 2003 include reorganization costs of $11,939 for
workforce reductions throughout the world and facility consolidations in
Europe; $7,780 charged to selling, general and administrative expenses,
primarily comprised of accelerated depreciation of fixed assets associated
with the planned exit of facilities and outsourcing of our IT
infrastructure, relocation and transition costs, and other related costs;
and $443 recorded as cost of sales, comprised of incremental inventory
losses caused by the exit of certain markets.
(b) Reorganization costs of $3,410 in 2002 included costs for workforce
reductions throughout the world and facility consolidations in Europe and
Other International.
Ingram Micro Inc.
Consolidated Income From Operations
(Dollars in 000s)
(Unaudited)
Thirteen Weeks Ended March 29, 2003
-----------------------------------------------------------------
Impact of
Reorganization
Costs and Other Non-GAAP
As Reported Major-Program Financial
Under GAAP Costs Measure
-----------------------------------------------------------------
North America $ 14,851 $ 11,908 $ 26,759
Europe 11,435 8,082 19,517
Other International 805 172 977
-----------------------------------------------------------------
$ 27,091 $ 20,162 $ 47,253
=================================================================
Thirteen Weeks Ended March 29, 2003
-----------------------------------------------------------------
Impact of
Reorganization
Costs and Other Non-GAAP
As Reported Major-Program Financial
Under GAAP Costs Measure
-----------------------------------------------------------------
North America $ 23,342 $ 996 $ 24,338
Europe 12,742 1,262 14,004
Other International (5,246) 1,152 (4,094)
-----------------------------------------------------------------
$ 30,838 $ 3,410 $ 34,248
=================================================================