SANTA ANA, Calif., July 28, 2011 /PRNewswire/ -- Ingram Micro Inc.
(NYSE: IM), the world’s largest technology distributor and
supply-chain services provider, today announced financial results
for the second quarter of 2011, which ended on July 2, 2011.
Worldwide sales increased 7 percent to $8.75 billion from the $8.16 billion reported in the second quarter of
last year. The translation effect of foreign currencies had a
positive impact of approximately six percentage points on the
prior-year comparison.
Net income was $59.7 million, or
$0.37 per diluted share, compared
with $67.7 million or $0.41 per diluted share in the second quarter of
2010. The decline in net income is primarily related to business
disruptions associated with transitioning to the new enterprise
system in Australia, as the
company previously disclosed. The system and process issues
were largely resolved in the second quarter and the company is now
focused on regaining Australian market share.
“Demand for commercial technology products has moderated but
remains solid throughout the world,” said Gregory Spierkel, chief
executive officer, Ingram Micro Inc. “Stability in the small
and medium business markets is offset by soft consumer demand in
Europe and parts of Asia-Pacific, which we first began to notice
late last year.”
Spierkel continued: “In this environment, we continue to
focus on business enhancements – from infrastructure improvements
to growth initiatives – that will drive better service for our
business partners. The most significant of these improvements
is our global migration to a new enterprise system, which will
ultimately accelerate decision-making and enhance customer service
with real-time, comprehensive data. This new system is
critical to our strategy of being a highly efficient, globally
unified logistics provider, and we believe the long-term benefits
outweigh the challenges we encountered in Australia. In other strategic initiatives, we
launched our new cloud marketplace during the quarter and we’re
encouraged by our early market position and the favorable response
from our partners, with scores of vendors and solutions on
board.”
Additional Second Quarter Highlights
Further detail can be found in the financial statements and
schedules attached to this news release or at
www.ingrammicro.com.
Regional Sales
- North America sales
increased 6 percent to $3.76 billion
(43 percent of total sales), the highest second-quarter sales level
in more than a decade. North America sales were $3.56 billion in the prior-year quarter.
- Europe, Middle East and Africa (EMEA) sales grew 11 percent to
$2.64 billion (30 percent of total
sales), compared with $2.37 billion
in last year’s second quarter. The translation effect of European
currencies had a positive impact of approximately 13 percentage
points on year-over-year growth.
- Asia-Pacific sales
increased 5 percent to $1.96 billion
(22 percent of total sales), versus $1.87
billion reported in last year’s second quarter. The
translation effect of regional currencies had a positive impact of
approximately eight percentage points on year-over-year
growth.
- Latin America sales
increased 7 percent to $387 million
(five percent of total sales), compared with $360 million reported a year ago. The translation
effect of regional currencies had a positive impact of
approximately six percentage points on year-over-year growth.
Gross Margin
Gross margin was 5.25 percent, a sequential increase of four
basis points and an 11-basis-point decrease compared with the
second quarter last year. The year-over-year decline is
primarily related to the system-implementation complications in
Australia, as well as weakness in
some Asian and European consumer markets.
Operating Expenses
Operating expenses totaled $362.1
million or 4.14 percent of sales, compared with $332.9 million or 4.08 percent of sales in last
year’s second quarter. More than half of the year-over-year
increase, or approximately $16
million, is attributable to the translation effect of
strengthening foreign currencies. The remainder is primarily
attributable to merit compensation increases for the company’s
employees, as well as continued investments in strategic growth
initiatives and system enhancements.
Operating Income
Worldwide operating income totaled $97.1
million or 1.11 percent of total sales, compared with
$104.6 million or 1.28 percent of
total sales last year.
- North America operating
income grew 24 percent to $67.6
million or 1.80 percent of North
America sales, from $54.7
million or 1.54 percent in the year-ago quarter, due
primarily to solid gross margins and operating leverage on the
region’s sales growth.
- EMEA operating income was $16.9
million or 0.64 percent of EMEA sales, compared with
$22.3 million or 0.94 percent in the
prior-year period. The decline is primarily attributable to
softer retail demand in certain markets and the company’s continued
investment in system enhancements.
- Asia-Pacific operating
income was $16.5 million or 0.84
percent of Asia-Pacific sales,
compared with $29.8 million or 1.60
percent of Asia-Pacific sales in
the prior-year period. The decline is the result of disruptions in
our Australian business caused by complications migrating to a new
enterprise system. Excluding Australia, the region’s sales grew at a
double-digit pace with operating margins exceeding those of a year
ago.
- Latin America operating
income was $6.5 million or 1.68
percent of Latin America sales,
compared with $4.8 million or 1.34
percent of Latin America sales in
the prior-year period. The increase over the prior year is
attributable to improved performances in Mexico and in the company’s Miami export operations.
Stock-based compensation expense was $10.3 million versus $7.0
million in the prior-year period. Stock-based
compensation is presented as a separate reconciling amount in the
company’s segment reporting in both periods and is not included in
the regional operating results, but is included in the total
worldwide operating results.
Interest and other expenses were $13.3 million compared to $9.9 million in the prior-year quarter. The
year-over-year increase is primarily due to higher interest expense
as a result of the $300 million in
public debt issued in August of last year. The second quarter
of 2011 includes a net gain of $2.5
million related to the foreign-currency translation impact
on Euro-based inventory purchases in our pan-European entity, which
designates the United States
dollar as its functional currency. This gain is a function of
the timing of currency fluctuations within the quarter and includes
a reversal of a majority of the $4.2
million foreign exchange loss recorded in the first quarter
of 2011.
The effective tax rate was 28.7 percent, compared with
28.5 percent in the 2010 second quarter. Under United States
accounting rules for income taxes, quarterly effective tax rates
may vary significantly depending on the actual operating results in
the various tax jurisdictions.
Total depreciation and amortization was $14.2 million and capital expenditures
totaled $28.0 million.
Balance Sheet Highlights
- The cash and cash equivalents balance at July 2, 2011 was $1.37
billion, compared with $1.16
billion at year-end 2010.
- Total debt at quarter-end was $642.6
million, essentially flat with year-end 2010.
Debt-to-capitalization was 16 percent, also flat with
year-end 2010.
- Inventory was $3.08 billion, or
34 days on hand, versus $2.91 billion
or 29 days on hand at the end of 2010, driven primarily by the
previously noted softness in consumer and retail markets.
- Working capital days were 24 versus 22 at year-end 2010, with
the increase primarily attributable to higher levels of
inventory.
Share Repurchases
During the second quarter, the company purchased 4.0 million
shares of stock for an aggregate of $75
million. An additional 4.2 million shares were
purchased for $75 million in July.
Since the 3-year, $400 million
repurchase program was announced on October
28, 2010, 8.3 million shares have been purchased to date for
an aggregate of $150.9 million.
“I’m pleased with our sequential improvements in gross margins
and working capital,” said William
Humes, senior executive vice president and chief financial
officer. “These items, along with prudent expense management,
will continue to be key areas of focus and should improve over
time.”
Six-Month Period
For the six months ended July 2,
2011, worldwide sales were $17.47
billion, an increase of 8 percent over $16.25 billion for last year’s six-month period.
Sales were $7.27 billion for
North America (a 6 percent
increase versus the prior-year period); $5.52 billion for EMEA (an increase of 10
percent); $3.90 billion for
Asia-Pacific (an increase of 7
percent); and $794 million for
Latin America (a 9 percent
increase).
Worldwide operating income for the first six months of 2011 was
$197.2 million (1.13 percent of total
sales), compared with $210.3 million
(1.29 percent of total sales) in the same period last year.
Six-month net income for 2011 was $116.0
million or $0.71 per diluted
share, versus $138.1 million, or
$0.83 per diluted share for the 2010
six-month period.
Outlook
“In the third quarter, we expect global technology demand to
remain relatively consistent with the second quarter,” said
Spierkel. “Our sequential sales growth should be roughly in
line with historical seasonality, resulting in continued
year-over-year revenue growth. The Australian business should
deliver some sequential improvement but will continue to lag last
year’s results. Third-quarter expenses may experience the negative
effect of currency translation as foreign currencies continue to
strengthen compared to last year. ”
Spierkel added: “Longer term, we believe our investments
in system enhancements and other strategic initiatives will result
in a more diverse, efficient and truly global company. I’m
confident that our efforts today will lead the way to enhanced
service for our customers and a more competitive and profitable
company for our shareholders.”
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. ET. To listen to the
conference call webcast and view the accompanying presentation
slides, visit the company’s website at 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) 839-8501(other countries),
passcode “Ingram Micro.”
The replay of the conference call with presentation slides will
be available for one week at 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 are based on current management expectations. Certain
risks may cause such expectations to not be achieved and, in turn,
may have a material adverse effect on Ingram Micro's business,
financial condition and results of operations. Ingram Micro
disclaims any duty to update any forward-looking statements.
Important risk factors that could cause actual results to differ
materially from those discussed in the forward-looking statements
include, without limitation: (1) we are dependent on a variety of
information systems, which, if not properly functioning, or
unavailable, could adversely disrupt our business and harm our
reputation and net sales; (2) changes in macroeconomic conditions
may negatively impact a number of risk factors which, individually
or in the aggregate, could adversely affect our results of
operations, financial condition and cash flows;(3) we continually
experience intense competition across all markets for our products
and services; (4) we operate a global business that exposes us to
risks associated with conducting business in multiple
jurisdictions; (5) our failure to adequately adapt to IT industry
changes could negatively impact our future operating results; (6)
terminations of a supply or services agreement or a significant
change in supplier terms or conditions of sale could negatively
affect our operating margins, revenue or the level of capital
required to fund our operations; (7) we have made and expect to
continue to make investments in new business strategies and
initiatives, including acquisitions, which could disrupt our
business and have an adverse effect on our operating results; (8)
substantial defaults by our customers or the loss of significant
customers could have a negative impact on our business, results of
operations, financial condition or liquidity; (9) changes in, or
interpretations of, tax rules and regulations, changes in mix of
our business amongst different tax jurisdictions, and deterioration
of the performance of our business may adversely affect our
effective income tax rates or operating margins and we may be
required to pay additional taxes and/or tax assessments, as well as
record valuation allowances relating to our deferred tax assets;
(10) changes in our credit rating or other market factors such as
adverse capital and credit market conditions or reductions in cash
flow from operations may affect our ability to meet liquidity
needs, reduce access to capital, and/or increase our costs of
borrowing; (11) failure to retain and recruit key personnel would
harm our ability to meet key objectives; (12) we cannot predict
with certainty what loss we might incur as a result of litigation
matters and contingencies that we may be involved with from time to
time; (13) we may incur material litigation, regulatory or
operational costs or expenses, and may be frustrated in our
marketing efforts, as a result of new environmental regulations or
private intellectual property enforcement disputes; (14) we face a
variety of risks in our reliance on third-party service companies,
including shipping companies for the delivery of our products and
outsourcing arrangements; (15) changes in accounting rules could
adversely affect our future operating results; and (16) our
quarterly results have fluctuated significantly.
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 fiscal year ended
January 1, 2011; other risks or
uncertainties may be detailed from time to time in Ingram Micro's
future SEC filings.
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,
technical and financial support, managed and cloud-based services,
and product aggregation and distribution. The company is the only
global broad-based IT distributor, serving more than 150 countries
on six continents with the world’s most comprehensive portfolio of
IT products and services. Visit www.ingrammicro.com.
© 2011 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
|
|
(Amounts in
000s)
|
|
(Unaudited)
|
|
|
|
|
|
|
July
2,
|
January
1,
|
|
|
2011
|
2011
|
|
|
|
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash
equivalents
|
$ 1,366,772
|
$ 1,155,551
|
|
Trade accounts receivable,
net
|
3,591,589
|
4,138,629
|
|
Inventory
|
3,076,075
|
2,914,525
|
|
Other current
assets
|
352,190
|
381,383
|
|
|
|
|
|
Total current
assets
|
8,386,626
|
8,590,088
|
|
|
|
|
|
Property and equipment,
net
|
291,670
|
247,395
|
|
Intangible assets,
net
|
81,177
|
81,992
|
|
Other assets
|
159,745
|
164,557
|
|
|
|
|
|
Total assets
|
$ 8,919,218
|
$ 9,084,032
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$ 4,263,033
|
$ 4,593,694
|
|
Accrued
expenses
|
513,189
|
536,218
|
|
Short-term debt and
current maturities of long-term debt
|
120,207
|
105,274
|
|
|
|
|
|
Total current
liabilities
|
4,896,429
|
5,235,186
|
|
|
|
|
|
Long-term debt, less
current maturities
|
522,414
|
531,127
|
|
Other
liabilities
|
80,391
|
76,537
|
|
|
|
|
|
Total
liabilities
|
5,499,234
|
5,842,850
|
|
|
|
|
|
Stockholders'
equity
|
3,419,984
|
3,241,182
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$ 8,919,218
|
$ 9,084,032
|
|
|
|
|
Ingram Micro
Inc.
|
|
Consolidated
Statement of Income
|
|
(Amounts in
000s, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Thirteen
Weeks Ended
|
|
|
July 2,
2011
|
|
July 3,
2010
|
|
|
|
|
|
|
Net sales
|
$ 8,749,025
|
|
$ 8,156,328
|
|
|
|
|
|
|
Cost of sales
|
8,289,793
|
|
7,718,875
|
|
Gross profit
|
459,232
|
|
437,453
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Selling, general and
administrative
|
362,084
|
|
333,066
|
|
Reorganization
credits
|
-
|
|
(189)
|
|
|
362,084
|
|
332,877
|
|
|
|
|
|
|
Income from
operations
|
97,148
|
|
104,576
|
|
|
|
|
|
|
Interest and other
|
13,326
|
|
9,853
|
|
|
|
|
|
|
Income before income
taxes
|
83,822
|
|
94,723
|
|
|
|
|
|
|
Provision for income
taxes
|
24,091
|
|
26,996
|
|
|
|
|
|
|
Net income
|
$
59,731
|
|
$
67,727
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
0.37
|
|
$
0.41
|
|
|
|
|
|
|
Diluted weighted
average
|
|
|
|
|
shares
outstanding
|
162,673
|
|
165,437
|
|
|
|
|
|
Ingram Micro
Inc.
|
|
Consolidated
Statement of Income
|
|
(Amounts in
000s, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Twenty-six
Weeks Ended
|
|
|
July 2,
2011
|
|
July 3,
2010
|
|
|
|
|
|
|
Net sales
|
$ 17,472,737
|
|
$ 16,252,282
|
|
|
|
|
|
|
Cost of sales
|
16,559,433
|
|
15,373,367
|
|
Gross profit
|
913,304
|
|
878,915
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Selling, general and
administrative
|
716,371
|
|
669,008
|
|
Reorganization
credits
|
(269)
|
|
(358)
|
|
|
716,102
|
|
668,650
|
|
|
|
|
|
|
Income from
operations
|
197,202
|
|
210,265
|
|
|
|
|
|
|
Interest and other
|
31,975
|
|
18,310
|
|
|
|
|
|
|
Income before income
taxes
|
165,227
|
|
191,955
|
|
|
|
|
|
|
Provision for income
taxes
|
49,186
|
|
53,900
|
|
|
|
|
|
|
Net income
|
$
116,041
|
|
$
138,055
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
0.71
|
|
$
0.83
|
|
|
|
|
|
|
Diluted weighted
average
|
|
|
|
|
shares
outstanding
|
163,828
|
|
167,069
|
|
|
|
|
|
Ingram Micro
Inc.
|
|
Supplementary
Information
|
|
Income from
Operations
|
|
(Amounts in
000s)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen
Weeks Ended July 2, 2011
|
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
3,760,429
|
|
$
67,589
|
|
1.80%
|
|
EMEA
|
|
|
2,640,120
|
|
16,914
|
|
0.64%
|
|
Asia-Pacific
|
|
|
1,961,844
|
|
16,496
|
|
0.84%
|
|
Latin America
|
|
|
386,632
|
|
6,480
|
|
1.68%
|
|
Stock-based compensation
expense
|
|
-
|
|
(10,331)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
|
|
$
8,749,025
|
|
$
97,148
|
|
1.11%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen Weeks Ended July
3, 2010
|
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
3,558,789
|
|
$
54,708
|
|
1.54%
|
|
EMEA
|
|
|
2,371,505
|
|
22,290
|
|
0.94%
|
|
Asia-Pacific
|
|
|
1,866,141
|
|
29,787
|
|
1.60%
|
|
Latin America
|
|
|
359,893
|
|
4,825
|
|
1.34%
|
|
Stock-based compensation
expense
|
|
-
|
|
(7,034)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
|
|
$
8,156,328
|
|
$
104,576
|
|
1.28%
|
|
|
|
|
|
|
|
|
|
Ingram Micro
Inc.
|
|
Supplementary
Information
|
|
Income from
Operations
|
|
(Amounts in
000s)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six Weeks Ended
July 2, 2011
|
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
7,266,862
|
|
$
126,736
|
|
1.74%
|
|
EMEA
|
|
|
5,516,354
|
|
48,997
|
|
0.89%
|
|
Asia-Pacific
|
|
|
3,895,840
|
|
24,710
|
|
0.63%
|
|
Latin America
|
|
|
793,681
|
|
12,747
|
|
1.61%
|
|
Stock-based compensation
expense
|
|
-
|
|
(15,988)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
|
|
$
17,472,737
|
|
$
197,202
|
|
1.13%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twenty-six Weeks Ended
July 3, 2010
|
|
|
|
|
|
|
Operating
|
|
Operating
|
|
|
|
|
Net
Sales
|
|
Income
|
|
Margin
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
|
$
6,850,775
|
|
$
96,624
|
|
1.41%
|
|
EMEA
|
|
|
5,036,915
|
|
57,151
|
|
1.13%
|
|
Asia-Pacific
|
|
|
3,634,540
|
|
56,314
|
|
1.55%
|
|
Latin America
|
|
|
730,052
|
|
11,241
|
|
1.54%
|
|
Stock-based compensation
expense
|
|
-
|
|
(11,065)
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Total
|
|
|
$
16,252,282
|
|
$
210,265
|
|
1.29%
|
|
|
|
|
|
|
|
|
|
(Logo: http://photos.prnewswire.com/prnh/20100107/IMLOGO)
SOURCE Ingram Micro Inc.