UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| (Mark One) | ||||
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE | |||
| ACT OF 1934 | ||||
For the quarterly period ended June 28, 2003
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE | |
| ACT OF 1934 |
For the transition period from ___________ to ___________
Commission file number: 1-12203
Ingram Micro Inc.
| Delaware | 62-1644402 | |
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
1600 E. St. Andrew Place, Santa Ana, California 92705-4931
(Address, including zip code, of principal executive offices)
(714) 566-1000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No o
The Registrant had 151,074,247 shares of Class A Common Stock, par value $.01 per share, outstanding at June 28, 2003.
INGRAM MICRO INC.
INDEX
| Pages | ||||||||
| Part I. | Financial Information |
|||||||
| Item 1. | Financial Statements |
|||||||
Consolidated Balance Sheet at June 28, 2003 and December 28, 2002 |
3 | |||||||
Consolidated Statement of Income for the thirteen and twenty-six weeks
ended June 28, 2003 and June 29, 2002 |
4 | |||||||
Consolidated Statement of Cash Flows for the twenty-six weeks
ended June 28, 2003 and June 29, 2002 |
5 | |||||||
Notes to Consolidated Financial Statements |
6-18 | |||||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition
and Results of Operations |
19-28 | ||||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
28 | ||||||
| Item 4. | Controls and Procedures |
28 | ||||||
| Part II. | Other Information |
|||||||
| Item 1. | Legal Proceedings |
29 | ||||||
| Item 2. | Changes in Securities and Use of Proceeds |
29 | ||||||
| Item 3. | Defaults Upon Senior Securities |
29 | ||||||
| Item 4. | Submission of Matters to a Vote of Security Holders |
29 | ||||||
| Item 5. | Other Information |
30 | ||||||
| Item 6. | Exhibits and Reports on Form 8-K |
30 | ||||||
| Signatures | 31 | |||||||
| Certifications | 33-36 | |||||||
2
Part I. Financial Information
Item 1. Financial Statements
INGRAM MICRO INC.
CONSOLIDATED BALANCE SHEET
(Dollars in 000’s, except per share data)
| June 28, | December 28, | ||||||||||
| 2003 | 2002 | ||||||||||
| (Unaudited) | |||||||||||
ASSETS |
|||||||||||
Current assets: |
|||||||||||
Cash and cash equivalents |
$ | 371,324 | $ | 387,513 | |||||||
Accounts receivable: |
|||||||||||
Trade receivables |
1,427,946 | 1,770,988 | |||||||||
Retained interest in securitized receivables |
546,201 | 583,918 | |||||||||
Total accounts receivable (less
allowances of $85,542 and $89,889) |
1,974,147 | 2,354,906 | |||||||||
Inventories |
1,402,076 | 1,564,065 | |||||||||
Other current assets |
303,395 | 293,902 | |||||||||
Total current assets |
4,050,942 | 4,600,386 | |||||||||
Property and equipment, net |
227,276 | 250,244 | |||||||||
Goodwill |
241,538 | 233,922 | |||||||||
Other |
61,431 | 59,802 | |||||||||
Total assets |
$ | 4,581,187 | $ | 5,144,354 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||
Current liabilities: |
|||||||||||
Accounts payable |
$ | 2,046,444 | $ | 2,623,188 | |||||||
Accrued expenses |
306,621 | 438,787 | |||||||||
Current maturities of long-term debt |
197,983 | 124,894 | |||||||||
Total current liabilities |
2,551,048 | 3,186,869 | |||||||||
Long-term debt, less current maturities |
244,928 | 241,052 | |||||||||
Deferred income taxes and other liabilities |
89,583 | 80,444 | |||||||||
Total liabilities |
2,885,559 | 3,508,365 | |||||||||
Commitments and contingencies (Note 9) |
|||||||||||
Stockholders’ equity: |
|||||||||||
Preferred Stock, $0.01 par value, 25,000,000 shares
authorized; no shares issued and outstanding |
— | — | |||||||||
Class A Common Stock, $0.01 par value, 500,000,000 shares
authorized; 151,074,247 and 150,778,355
shares issued and outstanding |
1,511 | 1,508 | |||||||||
Class B Common Stock, $0.01 par value, 135,000,000 shares
authorized; no shares issued and outstanding |
— | — | |||||||||
Additional paid-in capital |
710,956 | 707,689 | |||||||||
Retained earnings |
974,327 | 952,753 | |||||||||
Accumulated other comprehensive income (loss) |
9,340 | (25,548 | ) | ||||||||
Unearned compensation |
(506 | ) | (413 | ) | |||||||
Total stockholders’ equity |
1,695,628 | 1,635,989 | |||||||||
Total liabilities and stockholders’ equity |
$ | 4,581,187 | $ | 5,144,354 | |||||||
See accompanying notes to these consolidated financial statements.
3
INGRAM MICRO INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollars in 000s, except per share data)
(Unaudited)
| Thirteen Weeks Ended | Twenty-six Weeks Ended | ||||||||||||||||
| June 28, | June 29, | June 28, | June 29, | ||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
Net sales |
$ | 5,170,635 | $ | 5,352,774 | $ | 10,644,849 | $ | 10,969,325 | |||||||||
Cost of sales |
4,889,240 | 5,059,683 | 10,067,222 | 10,372,567 | |||||||||||||
Gross profit |
281,395 | 293,091 | 577,627 | 596,758 | |||||||||||||
Operating expenses: |
|||||||||||||||||
Selling, general and administrative |
252,781 | 261,780 | 509,983 | 531,199 | |||||||||||||
Reorganization costs |
1,292 | 5,370 | 13,231 | 8,780 | |||||||||||||
| 254,073 | 267,150 | 523,214 | 539,979 | ||||||||||||||
Income from operations |
27,322 | 25,941 | 54,413 | 56,779 | |||||||||||||
Other expense (income): |
|||||||||||||||||
Interest income |
(2,697 | ) | (3,402 | ) | (5,634 | ) | (6,678 | ) | |||||||||
Interest expense |
9,149 | 8,205 | 16,068 | 15,249 | |||||||||||||
Losses on sales of receivables |
2,368 | 2,145 | 6,685 | 4,858 | |||||||||||||
Net foreign currency exchange loss |
512 | 3,054 | 2,375 | 7,284 | |||||||||||||
Gain on sale of available-for-sale securities |
— | — | — | (6,535 | ) | ||||||||||||
Other |
289 | 1,947 | 1,729 | 4,074 | |||||||||||||
| 9,621 | 11,949 | 21,223 | 18,252 | ||||||||||||||
Income before income taxes and cumulative effect
of adoption of a new accounting standard |
17,701 | 13,992 | 33,190 | 38,527 | |||||||||||||
Provision for income taxes |
6,195 | 5,177 | 11,616 | 14,255 | |||||||||||||
Income before cumulative effect of adoption of
a new accounting standard |
11,506 | 8,815 | 21,574 | 24,272 | |||||||||||||
Cumulative effect of adoption of a new accounting
standard, net of $(2,633) in income taxes |
— | — | — | (280,861 | ) | ||||||||||||
Net income (loss) |
$ | 11,506 | $ | 8,815 | $ | 21,574 | $ | (256,589 | ) | ||||||||
Basic earnings per share: |
|||||||||||||||||
Income before cumulative effect of
adoption of a new accounting standard |
$ | 0.08 | $ | 0.06 | $ | 0.14 | $ | 0.16 | |||||||||
Cumulative effect of adoption of a new
accounting standard |
— | — | — | (1.87 | ) | ||||||||||||
Net income (loss) |
$ | 0.08 | $ | 0.06 | $ | 0.14 | $ | (1.71 | ) | ||||||||
Diluted earnings per share: |
|||||||||||||||||
Income before cumulative effect of
adoption of a new accounting standard |
$ | 0.08 | $ | 0.06 | $ | 0.14 | $ | 0.16 | |||||||||
Cumulative effect of adoption of a new
accounting standard |
— | — | — | (1.84 | ) | ||||||||||||
Net income (loss) |
$ | 0.08 | $ | 0.06 | $ | 0.14 | $ | (1.68 | ) | ||||||||
See accompanying notes to these consolidated financial statements.
4
INGRAM MICRO INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in 000’s)
(Unaudited)
| Twenty-six Weeks Ended | |||||||||||
| June 28, | June 29, | ||||||||||
| 2003 | 2002 | ||||||||||
Cash flows from operating activities: |
|||||||||||
Net income (loss) |
$ | 21,574 | $ | (256,589 | ) | ||||||
Adjustments to reconcile net income (loss) to cash provided
(used) by operating activities: |
|||||||||||
Cumulative effect of adoption of a new accounting standard,
net of income taxes |
— | 280,861 | |||||||||
Depreciation |
42,712 | 41,917 | |||||||||
Noncash charges for impairments and losses on disposals
of property and equipment |
4,675 | 1,763 | |||||||||
Noncash charges for interest and compensation |
1,883 | 668 | |||||||||
Deferred income taxes |
17,913 | (15,746 | ) | ||||||||
Pre-tax gain on sale of available-for-sale securities |
— | (6,535 | ) | ||||||||
Loss on sale of a business |
5,067 | — | |||||||||
Changes in operating assets and liabilities, net of effects
of acquisitions: |
|||||||||||
Changes in amounts sold under accounts receivable programs |
(3,000 | ) | (48,657 | ) | |||||||
Accounts receivable |
478,257 | 419,803 | |||||||||
Inventories |
211,298 | 230,463 | |||||||||
Other current assets |
(5,788 | ) | 49,225 | ||||||||
Accounts payable |
(652,000 | ) | (399,944 | ) | |||||||
Accrued expenses |
(188,554 | ) | 39,125 | ||||||||
Cash provided (used) by operating activities |
(65,963 | ) | 336,354 | ||||||||
Cash flows from investing activities: |
|||||||||||
Purchases of property and equipment |
(17,938 | ) | (32,756 | ) | |||||||
Acquisitions, net of cash acquired |
(9,416 | ) | (6,095 | ) | |||||||
Net proceeds from sale of available-for-sale securities |
— | 31,840 | |||||||||
Other |
1,542 | 1,478 | |||||||||
Cash used by investing activities |
(25,812 | ) | (5,533 | ) | |||||||
Cash flows from financing activities: |
|||||||||||
Proceeds from exercise of stock options |
1,412 | 8,717 | |||||||||
Net proceeds from (repayments of) debt |
68,784 | (140,224 | ) | ||||||||
Cash provided (used) by financing activities |
70,196 | (131,507 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents |
5,390 | 4,870 | |||||||||
Increase (decrease) in cash and cash equivalents |
(16,189 | ) | 204,184 | ||||||||
Cash and cash equivalents, beginning of period |
387,513 | 273,059 | |||||||||
Cash and cash equivalents, end of period |
$ | 371,324 | $ | 477,243 | |||||||
See accompanying notes to these consolidated financial statements.
5
INGRAM MICRO INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in 000’s, except per share data)
(Unaudited)
Note 1 – Organization and Basis of Presentation
Ingram Micro Inc. (“Ingram Micro”) and its subsidiaries are primarily engaged in the distribution of information technology (“IT”) products and supply chain management services worldwide. Ingram Micro operates in North America, Europe, Latin America and Asia-Pacific.
The consolidated financial statements include the accounts of Ingram Micro and its subsidiaries (collectively referred to herein as the “Company”). These financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying unaudited consolidated financial statements contain all material adjustments (consisting of only normal, recurring adjustments) necessary to fairly state the financial position of the Company as of June 28, 2003, and its results of operations and cash flows for the thirteen and twenty-six weeks ended June 28, 2003 and June 29, 2002. All significant intercompany accounts and transactions have been eliminated in consolidation. As permitted under the applicable rules and regulations of the SEC, these financial statements do not include all disclosures and footnotes normally included with annual consolidated financial statements and, accordingly, should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 28, 2002. The results of operations for the thirteen and twenty-six weeks ended June 28, 2003 may not be indicative of the results of operations that can be expected for the full year.
Note 2 – Earnings Per Share
The Company reports a dual presentation of Basic Earnings per Share (“Basic EPS”) and Diluted Earnings per Share (“Diluted EPS”). Basic EPS excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the reported period. Diluted EPS reflects the potential dilution that could occur if stock options, warrants, and other commitments to issue common stock were exercised using the treasury stock method or the if-converted method, where applicable.
The computation of Basic EPS and Diluted EPS is as follows:
| Thirteen Weeks Ended | Twenty-six Weeks Ended | |||||||||||||||
| June 28, | June 29, | June 28, | June 29, | |||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||
Income before cumulative effect of adoption
of a new accounting standard |
$ | 11,506 | $ | 8,815 | $ | 21,574 | $ | 24,272 | ||||||||
Weighted average shares |
151,002,849 | 150,054,322 | 150,956,859 | 149,827,780 | ||||||||||||
Basic earnings per share before cumulative
effect of adoption of a new accounting
standard |
$ | 0.08 | $ | 0.06 | $ | 0.14 | $ | 0.16 | ||||||||
Weighted average shares, including the dilutive
effect of stock options and warrants
(243,429
and 1,881,654 for the thirteen weeks ended
June 28, 2003 and June 29, 2002,
respectively, and 279,648 and 2,472,247 for
the twenty-six weeks ended June 28, 2003
and June 29, 2002, respectively) |
151,246,278 | 151,935,976 | 151,236,507 | 152,300,027 | ||||||||||||