Ingram Micro Fortifies Consumer Electronics Presence With Acquisition of DBL Distributing
June 13 2007 - 10:00AM
PR Newswire (US)
World's Largest Technology Distributor Expands its Consumer
Electronics Portfolio by Purchasing a Leading U.S. Provider of
Accessories SANTA ANA, Calif., June 13 /PRNewswire/ -- Ingram Micro
Inc. (NYSE:IM), the world's largest technology distributor,
strengthened its position in the consumer electronics market today
with the signing of a definitive agreement to acquire certain net
assets of DBL Distributing Inc., one of the nation's top
distributors of consumer electronics (CE) accessories and related
products. "Our acquisition of DBL Distributing is another step
forward in Ingram Micro's consumer electronics strategy," said Greg
Spierkel, chief executive officer, Ingram Micro Inc. "This strategy
positions Ingram Micro at the forefront of two significant trends:
the continuing convergence of commercial and consumer technologies
and the growing importance of retailers in the marketplace. The
transaction is an example of how we plan to deploy capital in the
future -- through strategic acquisitions that spur growth, enhance
profitability and expand our addressable market." DBL Distributing,
based in Scottsdale, Ariz. with approximately 350 employees, offers
a comprehensive mix of more than 17,000 consumer electronics
products to thousands of independent retailers across the United
States. The company reported 2006 sales of nearly $300 million,
following four years of double-digit sales growth, with gross and
operating margins double those of Ingram Micro's core distribution
business. "While our purchase of AVAD two years ago made us leaders
in the custom installation market, the acquisition of DBL makes us
leaders in the independent retail market," said Keith Bradley,
president, Ingram Micro North America. "This acquisition provides
us with a complementary portfolio of products and services for a
new and expansive customer base. We plan to leverage this
opportunity by cross-selling our current selection of information
technology products to DBL's customers as well as offer our
customers access to DBL's extensive CE accessory products." Bradley
added that DBL Distributing will operate as a wholly owned
subsidiary of Ingram Micro Inc., maintaining the same brand name,
business model and management structure to ease the transition for
customers and vendor partners of both companies. "DBL Distributing
is excited to be a part of Ingram Micro and at the prospect of
being able to offer a wider range of information technology
products to our customer base," said David Lorsch, president and
CEO of DBL Distributing. "Our world-class management team led the
company to 18 straight years of impressive annual growth, and we're
looking forward to joining with Ingram Micro to provide the
necessary resources and capital to help us continue this legacy."
The agreement calls for a purchase price of $96 million, subject to
final working capital adjustments, and will be financed through
existing borrowing capacity. The transaction is expected to be
nominally accretive to earnings per share in 2007, building to
approximately $0.03 and $0.06 in 2008 and 2009, respectively, which
assumes annual non-cash amortization expense for intangibles of
approximately $3.0 million and a combined U.S. federal and state
income tax rate of 40 percent. DBL Distributing publishes the most
comprehensive CE wholesale catalog in the industry, highlighting a
vendor base that includes renowned CE brands such as Philips,
Samsung and Sony. As part of this transaction, Ingram Micro has
also purchased NXG Technology, DBL's own exclusive brand of custom
audio and video installation products. The NXG brand includes two
complete lines of audio/video cables, three complete lines of
in-wall and indoor/outdoor speakers and a complete offering of
in-wall volume controls and A/V selectors. 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 revenues, sales levels, operating income,
margins, stock-based compensation expense, integration costs, cost
synergies, operating efficiencies, profitability, market share and
rates of return, are based on current management expectations that
involve certain risks which, if realized, in whole or in part,
could cause such expectations to fail to be achieved and have a
material adverse effect on Ingram Micro's business, financial
condition and results of operations, including, without limitation:
(1) intense competition, regionally and internationally, including
competition from alternative business models, such as
manufacturer-to-end-user selling, which 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; (2)
integration of our acquired businesses and similar transactions
involve various risks and difficulties -- our operations may be
adversely impacted by an acquisition that (i) is not suited for us,
(ii) is improperly executed, or (iii) substantially increases our
debt; (3) foreign exchange rate fluctuations, devaluation of a
foreign currency, adverse governmental controls or actions,
political or economic instability, or disruption of a foreign
market, and other related risks of our international operations may
adversely impact our operations in that country or globally; (4) we
may not achieve the objectives of our process improvement efforts
or be able to adequately adjust our cost structure in a timely
fashion to remain competitive, which may cause our profitability to
suffer; (5) our failure to attract new sources of profitable
business from expansion of products or services or risks associated
with entry into new markets, including geographies, products and
services, could negatively impact our future operating results; (6)
an interruption or failure of or disruptions due to changes to our
information systems or subversion of access or other system
controls may result in a significant loss of business, assets, or
competitive information and may adversely impact our results of
operations; (7) significant changes in supplier terms, such as
higher thresholds on sales volume before distributors may qualify
for discounts and/or rebates, the overall reduction in the amount
of incentives available, reduction or termination of price
protection, return levels, or other inventory management programs,
or reductions in payment terms, may adversely impact our results of
operations or financial condition; (8) termination of a supply or
services agreement with a major supplier or product supply
shortages may adversely impact our results of operations; (9)
changes in, or interpretations of, tax rules and regulations may
adversely affect our effective tax rates or we may be required to
pay additional tax assessments; (10) we cannot predict with
certainty, the outcome of the SEC and U.S. Attorney's inquiries or
assessments by Brazilian taxing authorities; (11) if there is a
downturn in economic conditions for an extended period of time, it
will likely have an adverse impact on our business; (12) we may
experience loss of business from one or more significant customers,
and an increased risk of credit loss as a result of reseller
customers' businesses being negatively impacted by dramatic changes
in the information technology products and services industry as
well as intense competition among resellers -- increased losses, if
any, may not be covered by credit insurance or we may not be able
to obtain credit insurance at reasonable rates or at all; (13)
rapid product improvement and technological change resulting in
inventory obsolescence or changes in demand may result in a decline
in value of a portion of our inventory; (14) future terrorist or
military actions could result in disruption to our operations or
loss of assets, in certain markets or globally; (15) the loss of a
key executive officer or other key employees, or changes affecting
the work force such as government regulations, collective
bargaining agreements or the limited availability of qualified
personnel, could disrupt operations or increase our cost structure;
(16) changes in our credit rating or other market factors may
increase our interest expense or other costs of capital, or capital
may not be available to us on acceptable terms to fund our working
capital needs; (17) our failure to adequately adapt to industry
changes and to manage potential growth and/or contractions could
negatively impact our future operating results; (18) future
periodic assessments required by current or new accounting
standards such as those relating to long-lived assets, goodwill and
other intangible assets and expensing of stock options may result
in additional non-cash charges; (19) seasonal variations in the
demand for products and services, as well as the introduction of
new products, may cause variations in our quarterly results; and
(20) the failure of certain shipping companies to deliver product
to us, or from us to our customers, may adversely impact our
results of operations. 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 Item 1A
Risk Factors of Ingram Micro's Annual Report on Form 10-K for the
year ended December 30, 2006; 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 a vital link in the
technology value chain, Ingram Micro creates sales and
profitability opportunities for vendors and resellers through
unique marketing programs, outsourced logistics services, technical
support, financial services, and product aggregation and
distribution. The company serves more than 150 countries and is the
only global broadline IT distributor with operations in Asia. Visit
http://www.ingrammicro.com/. About DBL Distributing Inc. DBL
Distributing, Inc. is one of the nation's top distributors of
consumer electronics accessories and related products, with more
than 30,000 retail customers nationwide. Headquartered in a
custom-built 144,000 square foot facility in Scottsdale, Arizona,
DBL carries more than 17,000 products from nearly 400 quality
manufacturers. DBL offers same-day shipping for orders placed by
5:00 p.m. MST, a best price for 1 or 100 piece policy and has a "no
minimum" order policy. DBL's business strategy proves that
customers come first. For more information please visit
http://www.dbldistributing.com/, or call (800) 733-6766.
DATASOURCE: Ingram Micro Inc. CONTACT: Media, Jim Trainor,
+1-714-382-2378, , or Rekha Parthasarathy, +1-714-382-1319, , or
Investors, Ria Marie Carlson, +1-714-382-4400, , or Kay Leyba,
+1-714-382-4175, , all of Ingram Micro Inc. Web site:
http://www.ingrammicro.com/ http://www.dbldistributing.com/
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