For More Information Contact:
Media Relations: Investor Relations:
Jennifer Baier Marchetta Kim Strohm
Ingram Micro Inc. Ingram Micro Inc.
714-382-2692 714-382-4400
[email protected] [email protected]
INGRAM MICRO POSTS NET INCOME OF $39 MILLION
INCREASING 146 PERCENT FOR THIRD QUARTER 2000
Company improves market position and increases profit,
demonstrating continued commitment to transforming the
value proposition for the technology distribution industry
SANTA ANA, Calif., Oct. 26, 2000-- Ingram Micro Inc. (NYSE: IM), the largest
global wholesale provider of technology products and services, today announced
financial results for its third quarter ended Sept. 30, 2000. Net income for the
period was $38.9 million or $0.26 per share, an increase of 146 percent compared
to net income in the third quarter 1999 of $15.8 million or $0.11 per share. The
significant improvement in the company's profitability was driven largely by its
gross profit margin, which increased 33 basis points to 5.13 percent of net
sales compared to the third quarter 1999.
"We did not compromise on our decision to build value with our
customers and vendors, and they responded favorably," said Kent B. Foster,
chairman and chief executive officer, Ingram Micro Inc. "Ingram Micro improved
its market position and drove profitability throughout the organization, with
the U.S. region being exceptionally strong. These third quarter results also
demonstrate the leadership of Ingram Micro in encouraging stronger growth and
performance for the technology distribution industry."
Net sales for the third quarter 2000 grew 13 percent to $7.56 billion.
For the same period, net sales in the U.S. region grew 17 percent to a record
$4.74 billion. Net sales in the European region grew 13 percent in local
currencies but, due to the increased weakness of the euro, declined 2 percent in
U.S. dollars to $1.61 billion. For geographic regions outside the United States
and Europe, net sales increased 17 percent to $1.21 billion. Global e-commerce
sales represented 25 percent of total sales during the quarter, which would
annualize to more than $7.5 billion.
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2/2/2 Ingram Micro Posts Q3 2000 Financial Results
"As a global organization, Ingram Micro has a clear focus on the right
priorities, which has produced better operating results and an enhanced customer
experience overall," Foster said. "This is helping manage the challenges posed
by the European market, while allowing the company to capitalize on its strength
in handling large commercial accounts. We see more opportunity for greater
profit, especially in growth areas, such as products and services for small and
midsize businesses and emerging technologies."
Consolidated income from operations for the third quarter 2000
increased 65 percent to $87.2 million as compared to the same period last year,
primarily led by continued significant improvement in operating performance for
the United States. The U.S. region delivered $81.2 million of income from
operations, improving 70 percent over prior year levels. Despite market
challenges, the European region delivered $1.3 million of income from operations
compared to a loss in last year's third quarter. The Canadian, Latin American
and Asia-Pacific regions combined delivered $4.7 million of income from
operations for the third quarter 2000, compared to $10.1 million for the third
quarter 1999. The Canadian and Latin American regions delivered solid operating
results, while the Asia-Pacific region experienced a more competitive market
environment with a decline in gross margins impacting its operating
contribution.
Depreciation expense was $21.9 million, and amortization was $5.6
million for the third quarter 2000, resulting in earnings before interest,
income tax, depreciation and amortization (EBITDA) of $114.7 million.
Year-to-date Financial Results
For the first three quarters of 2000, the company's net sales grew 12
percent, reaching $22.65 billion. Net income was $168.3 million or $1.13 per
share, compared to net income for the first three quarters of 1999 of $108.4
million or $0.73 per share. Totals for Ingram Micro's net income include gains
from the sale of securities in the first quarter 2000 and from the repurchase of
company debentures. Excluding these gains, net income was $96.6 million or $0.65
per share for the first three quarters of 2000, compared to $104.7 million or
$0.70 per share for the same period in 1999.
Sound Balance Sheet Management
"Ingram Micro has the strongest balance sheet in the technology
distribution industry," said Michael J. Grainger, chief financial officer
worldwide, Ingram Micro Inc. "For the past several quarters the company has been
successful in effectively managing its working capital needs, contributing to an
increasingly stronger financial position."
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3/3/3 Ingram Micro Posts Q3 2000 Financial Results
During the third quarter, the company increased inventory turns, while
maintaining recent levels of trade payables and consistency in day sales
outstanding with its customers. This allowed Ingram Micro to reduce its working
capital requirements. As a result, balance sheet debt declined for the fourth
quarter in a row, producing a balance sheet debt-to-capitalization ratio of 34
percent. This debt-to-capitalization ratio is the lowest since the third quarter
of 1997, and was achieved with 85 percent growth in sales to $7.6 billion in
this quarter from $4.1 billion in the third quarter three years ago.
Business Outlook for the Fourth Quarter 2000
The following statements are based on current expectations. These statements are
forward-looking; actual results may differ materially.
|X| The company expects sales for the fourth quarter 2000 to increase over
sales in the same quarter of 1999 at a percentage rate in the low
double-digits in local currencies, based on current internal estimates.
Actual sales growth could be impacted by additional changes in the market
demand for technology products, major changes in currency valuation
relative to the U.S. dollar, changes in the sales channel strategy for
major vendors or constraints in product availability.
|X| After achieving an increase in gross margin of 43 basis points since the
first quarter 2000 and posting gross margins of 5.13 percent of sales for
the third quarter, the company's current outlook for gross margin in the
fourth quarter 2000 is a continued, but more gradual, improvement as the
market absorbs and responds to the significant changes implemented by the
company this year. Depending on market conditions, the company's objective
to maintain or expand gross margins may impact its ability to grow sales at
a low double-digit rate in local currencies.
|X| The company's fourth quarter typically has a seasonal increase in sales,
with a corresponding seasonal increase in operating expense. The company
has historically achieved an improvement in operating productivity as a
percentage of sales from the third to the fourth quarters. If Ingram Micro
achieves its current sales goals, the company expects to achieve operating
productivity improvements from the third quarter to the fourth quarter 2000
that are in line with historical results.
|X| A higher level of sales in the fourth quarter also will increase the
interest expense in line with sales growth, as Ingram Micro finances
additional receivables generated by the new business.
|X| The company expects the tax rate for the fourth quarter to remain
approximately in line with the range the company has experienced in the
first three quarters of 2000.
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4/4/4 Ingram Micro Posts Q3 2000 Financial Results
"Our customers and vendors rely on Ingram Micro to increase efficiencies and
reduce costs in the supply chain," Grainger said. "They also recognize our
potential to provide new services, helping them capture additional market share
and increase the profit potential for their businesses. This confidence in the
value of Ingram Micro's services is an important factor in our effort to realize
continued improvement in profitability and to achieve consensus earnings per
share for the fourth quarter, consistent with our achievement in the third
quarter."
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; the potential for continued restrictive vendor terms and conditions;
the potential decline as well as seasonal variations in demand for Ingram
Micro's products; unavailability of adequate capital; management of growth;
reliability of information systems; foreign currency fluctuations; 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 termination of subsidized
floor plan financing.
Ingram Micro has 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 January 1, 2000; other risks or uncertainties may be
detailed from time to time in Ingram Micro's future SEC filings.
More Information About Ingram Micro's Financial Results
Additional information about Ingram Micro's third quarter financial
results will be presented in a conference call on Thursday, Oct. 26, 2000,
scheduled for 5 p.m. EST (2 p.m. PST). To listen to the conference call via
telephone, call 888/928-9177 or 212/287-1620 (outside the United States or
Canada). The call password is "Ingram Micro." Following the conclusion of the
conference call, an audio file of the call will be posted for approximately one
week on the Financials page of the Ingram Micro Web site, located at
www.ingrammicro.com. A recorded version of the conference call also will be
available via telephone at 7 p.m. EST (4 p.m. PST) for approximately one week.
To hear the recording, call 800/678-3180 or 402/220-3063 (outside the United
States or Canada).
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5/5/5 Ingram Micro Posts Q3 2000 Financial Results
About Ingram Micro Inc.
Ingram Micro Inc. is the largest global wholesale provider of
technology solutions, products and services. The company operates in 34
countries with sales exceeding $30 billion for the past four reported quarters.
Ingram Micro's global regions offer e-commerce solutions, logistics services,
and technology product distribution and marketing to more than 175,000
technology solution providers and manufacturers. The company is focused on
maximizing shareowner value and achieving customer satisfaction by continuously
innovating the information technology supply chain. Visit www.ingrammicro.com.
# # #
00-46
(C)2000 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.
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INGRAM MICRO INC.
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CONSOLIDATED BALANCE SHEET
(Dollars in 000s)
(Unaudited)
September 30, January 1,
2000 2000
------------- --------------
ASSETS
Current assets:
<S> <C> <C>
Cash ............................................... $ 109,618 $ 128,152
Investment in available-for-sale securities ........ -- 142,338
Accounts receivable, including retained interest
in securitized receivables, net .................. 2,855,305 2,853,509
Inventories ........................................ 2,591,887 3,471,565
Other current assets ............................... 340,583 373,365
---------- ----------
Total current assets ........................... 5,897,393 6,968,929
Investment in available-for-sale securities .......... 138,807 474,525
Property and equipment, net .......................... 323,007 316,643
Goodwill, net ........................................ 430,431 455,473
Other ................................................ 61,179 56,357
---------- ----------
Total assets ....................................... $6,850,817 $8,271,927
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $3,590,436 $4,322,303
Accrued expenses ................................... 331,656 317,283
Current maturities of long-term debt ............... 32,042 31,020
---------- ----------
Total current liabilities ...................... 3,954,134 4,670,606
Convertible debentures ............................... 376,497 440,943
Other long-term debt ................................. 538,396 876,172
Deferred income taxes and other liabilities .......... 136,464 317,361
---------- ----------
Total liabilities .............................. 5,005,491 6,305,082
Stockholders' equity ................................. 1,845,326 1,966,845
---------- ----------
Total liabilities and stockholders' equity ......... $6,850,817 $8,271,927
========== ==========
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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 Thirty-nine Weeks Ended
September 30, October 2, September 30, October 2,
2000 1999 2000 1999
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales .......................... $ 7,558,652 $ 6,710,093 $ 22,650,061 $ 20,240,181
Cost of sales ...................... 7,170,801 6,388,205 21,534,502 19,191,211
------------- ------------- ------------- -------------
Gross profit ....................... 387,851 321,888 1,115,559 1,048,970
Selling, general and
administrative expenses .......... 300,692 266,447 881,478 792,131
------------- ------------- ------------- -------------
Income from operations before
reorganization costs ............ 87,159 55,441 234,081 256,839
Reorganization costs ............... -- 2,675 -- 10,959
------------- ------------- ------------- -------------
Income from operations ............. 87,159 52,766 234,081 245,880
Interest and other (income) expenses 24,259 28,015 (34,358) 80,364
------------- ------------- ------------- -------------
Income before income taxes ......... 62,900 24,751 268,439 165,516
Provision for income taxes ......... 24,059 8,913 102,538 60,863
------------- ------------- ------------- -------------
Income before extraordinary items .. 38,841 15,838 165,901 104,653
Extraordinary gain on repurchase
of debentures (net of $60,$0,
taxes, respectively) ............ 98 -- 2,414 3,778
------------- ------------- ------------- -------------
Net income ......................... $ 38,939 $ 15,838 $ 168,315 $ 108,431
============= ============= ============= =============
Diluted earnings per share ......... $ 0.26 $ 0.11 $ 1.13 $ 0.73
============= ============= ============= ============
Diluted weighted average
shares outstanding .............. 149,632,660 148,042,324 148,762,669 148,098,240
============= ============= ============= =============
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