Double-digit growth in worldwide sales and net income SANTA ANA,
Calif., Oct. 25 /PRNewswire-FirstCall/ -- Ingram Micro Inc.
(NYSE:IM), the world's largest technology distributor, today
announced financial results for the third quarter of 2007, which
ended Sept. 29, 2007. Worldwide sales for the third quarter were
$8.61 billion, a 15 percent increase over the $7.51 billion posted
in the year-ago period and an all-time record for a third quarter.
The translation impact of the relatively stronger foreign
currencies had an approximate five percentage-point positive effect
on comparisons to the prior year. Third-quarter net income
increased 24 percent to $72.4 million, or $0.41 per diluted share,
compared with $58.5 million, or $0.34 per diluted share, in the
prior-year period. "We're pleased to deliver another
record-breaking quarter," said Gregory M. Spierkel, chief executive
officer, Ingram Micro Inc. "Our record sales were driven primarily
by robust growth in Asia-Pacific and Europe. Both regions achieved
third-quarter records in sales and operating income. In
Asia-Pacific, strong economies and our proactive business
improvements helped us generate 81-percent operating income growth
on a 36-percent sales increase. European demand was firm throughout
the quarter, fueled by a strong back-to- school season in many
countries. North America and Latin America operations both posted
meaningful revenue growth, consistent with investments in expansion
initiatives. Our global portfolio of operations continues to drive
financial performance, allowing us to exceed our guidance range and
analysts' estimates for sales and earnings per share." Additional
Third-Quarter Highlights For more detail regarding the results
outlined below, please refer to the financial statements and
schedules attached to this news release or visit
http://www.ingrammicro.com/. Regional Sales -- North American sales
were $3.50 billion (41 percent of total revenues), an increase of 4
percent versus the $3.37 billion reported in the year-ago quarter.
As described in the first six months of this year, warranty sales
on behalf of vendors are now recognized as net fees, rather than
gross revenues and cost of sales as reported in the prior-year
period, which had an approximate four percent negative impact on
year-over-year sales comparisons. -- Europe, Middle East and Africa
(EMEA) sales were $2.86 billion (33 percent of total revenues), an
increase of 18 percent versus $2.43 billion in the year-ago period.
The translation impact of the relatively stronger European
currencies had an approximate eight percentage-point impact on
comparisons to the prior year. -- Asia-Pacific sales were $1.86
billion (22 percent of total revenues), an increase of 36 percent
versus the $1.36 billion reported in the year-ago quarter. The
translation impact of the relatively stronger regional currencies
had an approximate 12-percentage point impact on comparisons to the
prior year. -- Latin American sales were $382 million (4 percent of
total revenues), an increase of 9 percent versus the $349 million
reported in the year-ago quarter. Gross Margin Gross margin in the
2007 third quarter was 5.52 percent, an increase of 12 basis points
versus the prior-year quarter, driven primarily by the positive
impact from the net reporting of warranty contract sales discussed
previously. Sequentially, gross margin improved 11 basis points
versus the second quarter of 2007. Operating Expenses Total
operating expenses were $364.0 million, or 4.23 percent of
revenues, versus $311.9 million, or 4.15 percent of revenues, in
the year-ago quarter. In the current quarter, the net reporting of
warranty sales, as described above, had an unfavorable impact on
operating expenses as a percentage of revenues of approximately
seven basis points. Operating Income Worldwide operating income was
$111.0 million, or 1.29 percent of revenues, as compared to $93.8
million or 1.25 percent of revenues in the year-ago quarter. --
North American operating income was $55.4 million, or 1.58 percent
of revenues, versus $55.3 million, or 1.64 percent of revenues, in
the year-ago quarter. -- EMEA operating income was $29.0 million,
or 1.01 percent of revenues, versus $23.6 million, or 0.97 percent
of revenues, in the year-ago quarter. -- Asia-Pacific operating
income was $30.6 million, or 1.65 percent of revenues, versus $16.9
million, or 1.24 percent of revenues, in the year-ago quarter. --
Latin American operating income was $4.4 million, or 1.15 percent
of revenues, versus $4.6 million, or 1.31 percent of revenues in
the year-ago quarter. -- Stock-based compensation expense, which
amounted to $8.4 million in the current quarter and $6.5 million in
the prior-year quarter, is presented as a separate reconciling
amount in the company's segment reporting in both periods. As such,
these expenses are not included in the regional operating results,
but are included in the worldwide operating results. * Other
expenses, net, for the quarter were $12.5 million, versus $12.6
million in the year-ago period. * The effective tax rate was 26.5
percent versus 28 percent in the prior-year quarter. The favorable
movement in the tax rate was driven primarily by changes in the
profit mix across geographies. * Total depreciation and
amortization was $16.0 million. * Capital expenditures were $11.2
million. Balance Sheet * The cash balance at the end of the quarter
was $580 million, an increase of $246 million versus the end of
2006. Total debt was $625 million, an increase of $115 million from
year-end. Debt-to-capitalization was 16 percent, compared with 15
percent at year-end. * Inventory was $2.73 billion or 30 days on
hand compared with $2.68 billion or 29 days on hand at the end of
the year. The increase in inventory days was due to product
purchases as the company prepares for the seasonally active fourth
quarter, as well as the impact on revenue and cost of sales from
the reclassification of warranty sales, as described above. *
Working capital days were 24, an increase of 2 days from year-end
2006, but flat sequentially. "We've made excellent progress toward
developing four profitable, solidly performing businesses
throughout the world," said William D. Humes, executive vice
president and chief financial officer, Ingram Micro Inc. "Looking
forward, our focus is on further improvement. We haven't yet fully
leveraged some of our diversification efforts and infrastructure
investments. Working capital increased in preparation for a
seasonally stronger fourth quarter and from a greater mix of retail
business from our consumer electronic initiatives. While we're
pleased with our double-digit growth in sales and profits, we are
intently focused on opportunities to enhance our results -- both in
our core business and through expansion -- which will drive even
greater strength in the future." Nine-Month Period For the nine
months ended Sept. 29, 2007, worldwide sales were $25.04 billion,
an 11 percent increase over the $22.50 billion reported a year ago.
Regional sales were $10.09 billion for North America (a 2 percent
increase versus the prior-year period, with the warranty
reclassification unfavorably impacting comparisons by four
percentage points); $8.69 billion for Europe, (an increase of 16
percent, to which the translation impact of stronger European
currencies had an approximate nine percentage-point positive effect
on comparisons to the prior year); $5.19 billion for Asia-Pacific
(an increase of 29 percent); and $1.07 billion for Latin America
(an increase of 3 percent). Worldwide operating income for the
nine-month period was $270.4 million, or 1.08 percent of revenues,
which included the previously disclosed first- quarter charge of
approximately $33.8 million (approximately 0.13 percent of
revenues) for Brazilian commercial taxes and a second-quarter
charge of $15 million (approximately 0.06 percent of revenues) for
an SEC-related matter. In the year-ago period, operating income was
$280.8 million, or 1.25 percent of revenues. Nine-month net income
was $161.8 million, or $0.92 per diluted share, which included the
first-quarter charge for commercial taxes in Brazil of $33.8
million after tax or $0.19 per diluted share and the second-quarter
charge for the SEC matter of $9.2 million after tax or $0.05 per
diluted share. These charges totaled $43.0 million after tax or
$0.24 per diluted share for the nine-month period. In the year-ago
period, net income was $174.0 million, or $1.03 per diluted share.
Outlook for the Fourth 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
guidance for the fourth quarter ending Dec. 29, 2007: * Sales are
expected to range from $9.70 billion to $9.95 billion. * Net income
is expected to range from $103 million to $108 million, or $0.58 to
$0.61 per diluted share. * The weighted average shares outstanding
is expected to be approximately 178 million and an effective tax
rate of approximately 27 percent is estimated for the fourth
quarter. "Fourth-quarter sales are expected to reach the highest
quarterly levels in company history," said Spierkel. "We expect
solid top-line growth in every region, with worldwide net income
growth of up to 18 percent compared to the year-ago period. Sales
in Asia-Pacific and Europe should remain robust, with more modest
growth in the Americas. Technology deployment continues to be a key
business enabler, particularly in the small to medium business
markets we serve. We feel good about our ability to tap that demand
throughout the world, and we plan to stay ahead of the market
through innovation, diversification and continuous improvement."
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 webcast and view the accompanying presentation
slides, visit the company's Web site at http://www.ingrammicro.com/
(Investor Relations section). The conference call is also
accessible by telephone at (888) 455-0750 (toll-free within the
United States and Canada) or (210) 795-2680 (other countries). The
replay of the conference call with presentation slides will be
available for one week at http://www.ingrammicro.com/ (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 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 broad-based IT distributor with operations in Asia.
Visit http://www.ingrammicro.com/. (C)2007 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 29, December 30, 2007 2006 ASSETS Current assets: Cash
$579,779 $333,339 Trade accounts receivable, net 3,718,448
3,316,723 Inventories 2,728,575 2,682,558 Other current assets
515,014 413,453 Total current assets 7,541,816 6,746,073 Property
and equipment, net 177,489 171,435 Goodwill 733,037 643,714 Other
147,629 143,085 Total assets $8,599,971 $7,704,307 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$4,055,241 $3,788,605 Accrued expenses 580,346 440,383 Current
maturities of long-term debt 252,880 238,793 Total current
liabilities 4,888,467 4,467,781 Long-term debt, less current
maturities 371,700 270,714 Other liabilities 71,784 45,337 Total
liabilities 5,331,951 4,783,832 Stockholders' equity 3,268,020
2,920,475 Total liabilities and stockholders' equity $8,599,971
$7,704,307 Ingram Micro Inc. Consolidated Statement of Income
(Dollars in 000s, except per share data) (Unaudited) Thirteen Weeks
Ended September 29, 2007 September 30, 2006 Net sales $8,607,877
$7,510,273 Costs of sales 8,132,940 7,104,558 Gross profit 474,937
405,715 Operating expenses: Selling, general and administrative
364,136 313,022 Reorganization credits (176) (1,155) 363,960
311,867 Income from operations 110,977 93,848 Interest and other
12,461 12,566 Income before income taxes 98,516 81,282 Provision
for income taxes 26,106 22,759 Net income $72,410 $58,523 Diluted
earnings per share: Net income $0.41 $0.34 Diluted weighted average
shares outstanding 177,533,621 169,711,655 Ingram Micro Inc.
Consolidated Statement of Income (Dollars in 000s, except per share
data) (Unaudited) Thirty-nine Weeks Ended September 29, 2007
September 30, 2006 Net sales $25,039,652 $22,504,684 Costs of sales
23,713,128 21,301,766 Gross profit 1,326,524 1,202,918 Operating
expenses: Selling, general and administrative 1,057,232 923,858
Reorganization credits (1,091) (1,704) 1,056,141 922,154 Income
from operations 270,383 280,764 Interest and other 43,003 39,064
Income before income taxes 227,380 241,700 Provision for income
taxes 65,590 67,676 Net income $161,790 $174,024 Diluted earnings
per share: Net income $0.92 $1.03 Diluted weighted average shares
outstanding 176,473,420 169,635,969 Ingram Micro Inc. Supplementary
Information Income from Operations (Dollars in 000s) (Unaudited)
Thirteen Weeks Ended September 29, 2007 Operating Operating Net
Sales Income Margin North America $3,504,591 $55,382 1.58% EMEA
2,864,312 28,990 1.01% Asia-Pacific 1,857,303 30,649 1.65% Latin
America 381,671 4,371 1.15% Reconciling amount (stock-based
compensation under SFAS 123R) -- (8,415) -- Consolidated Total
$8,607,877 $110,977 1.29% Thirteen Weeks Ended September 30, 2006
Operating Operating Net Sales Income Margin North America
$3,374,748 $55,299 1.64% EMEA 2,425,073 23,593 0.97% Asia-Pacific
1,361,631 16,934 1.24% Latin America 348,821 4,553 1.31%
Reconciling amount (stock-based compensation under SFAS 123R) --
(6,531) -- Consolidated Total $7,510,273 $93,848 1.25% Ingram Micro
Inc. Supplementary Information Income from Operations (Dollars in
000s) (Unaudited) Thirty-nine Weeks Ended September 29, 2007
Operating Operating Margin Net Sales Income (Loss) (Loss) North
America $10,089,526 $150,941 (a) 1.50% EMEA 8,688,475 86,868 1.00%
Asia-Pacific 5,190,594 81,379 1.57% Latin America 1,071,057
(20,493)(b) (1.91%) Reconciling amount (stock-based compensation
under SFAS 123R) -- (28,312) -- Consolidated Total $25,039,652
$270,383 1.08% Thirty-nine Weeks Ended September 30, 2006 Operating
Operating Net Sales Income Margin North America $9,908,507 $160,551
1.62% EMEA 7,521,891 77,672 1.03% Asia-Pacific 4,036,830 46,580
1.15% Latin America 1,037,456 18,135 1.75% Reconciling amount
(stock-based compensation under SFAS 123R) -- (22,174) --
Consolidated Total $22,504,684 $280,764 1.25% (a) The income from
operations recorded in North America for the thirty-nine weeks
ended September 29, 2007 includes a reserve for estimated losses of
$15,000 associated with the SEC matter regarding certain
transactions with McAfee, Inc. (formerly NAI) from 1998 through
2000 (0.15% of North America net sales and 0.06% of consolidated
net sales). (b) The loss from operations recorded in Latin America
for the thirty-nine weeks ended September 29, 2007 includes a
commercial tax charge of $33,754 in Brazil (3.15% of Latin America
net sales and 0.13% of consolidated net sales). DATASOURCE: Ingram
Micro Inc. CONTACT: Investors, Ria Marie Carlson, +1-714-382-4400,
, or Kay Leyba, +1-714-382-4175, , or Media, Rekha Parthasarathy,
+1-714-382-1319, , all of Ingram Micro Inc. Web site:
http://www.ingrammicro.com/
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