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8-K - FORM 8-K - INGRAM MICRO INCd486090d8k.htm

Exhibit 99.1

For More Information Contact:

 

Investors:    Media:   
Damon Wright (714) 382-5013    Lisa Zwick (949) 230-8794   
damon.wright@ingrammicro.com    lisa.zwick@ingrammicro.com   

INGRAM MICRO REPORTS 2012 FOURTH QUARTER FINANCIAL RESULTS

Achieves Record Quarterly Revenue and Gross Profit

BrightPoint Contributes $1 Billion to Revenues and is

4 Cents Accretive to EPS, Excluding Acquisition Related Costs

SANTA ANA, Calif., Feb. 13, 2013 — Ingram Micro Inc. (NYSE: IM), the world’s largest wholesale technology distributor and a global leader in IT supply-chain, mobile device lifecycle services and logistics solutions, today announced financial results for the fourth quarter ended December 29, 2012.

Worldwide sales of $11.38 billion were an all-time quarterly record, increasing 14 percent in U.S. dollars when compared with $9.95 billion in the fourth quarter last year. The translation effect of foreign currencies had a negative impact of one percent on worldwide sales growth as compared with the prior year. The company’s recently completed acquisitions of Brightpoint, Inc. and Aptec Holdings Ltd. contributed approximately $1 billion and $75 million, respectively, to the quarter’s revenues. BrightPoint’s contribution to the company’s fourth quarter revenues is for the period of October 16, 2012 through the end of the quarter, reflecting BrightPoint’s acquisition by Ingram Micro on October 15, 2012.

Worldwide gross profit also hit an all-time quarterly record of $661.2 million (5.81 percent of total sales), compared with $554.3 million (5.57 percent of total sales) in the 2011 fourth quarter. BrightPoint was accretive to 2012 fourth quarter gross profit as a percentage of revenue by approximately 45 basis points. 2011 fourth quarter gross profit as a percentage of revenue benefited by approximately 30 basis points from favorable pricing on hard disk drives.

Operating income was $167.9 million (1.48 percent of total sales), which includes $8.6 million, or 8 basis points, in restructuring and acquisition-related costs as discussed below, as well as an additional $8.2 million, or 7 basis points, in amortization of intangibles related to the acquisition of BrightPoint. This compares to 2011 fourth quarter operating income of $176.1 million (1.77 percent of total sales), which benefited by approximately 30 basis points from favorable pricing on hard disk drives.


2012 fourth quarter net income was $101.4 million, or 66 cents per diluted share, which includes an aggregate net negative impact of 7 cents per diluted share resulting from the following items:

 

   

A negative impact from acquisition costs totaling approximately $8.6 million pretax, or 4 cents per diluted share, consisting primarily of legal, consulting and due diligence costs associated with the acquisition and integration of BrightPoint, as well as restructuring costs associated with other expense reduction programs; and

 

   

A net negative after tax charge of $4.7 million, or 3 cents per diluted share, related to:

 

   

A charge of $41.8 million for a valuation allowance recorded against deferred tax assets in Australia driven by the continuing losses generated in that business unit;

 

   

A benefit of $30.0 million related to the partial release of a valuation allowance that had previously been recorded against foreign tax credit carryforwards maintained in the U.S., which the company now believes will be realized based on inclusion of new foreign earnings, including BrightPoint’s cumulative non-U.S. earnings;

 

   

A benefit of $4.9 million in Spain where the operation has generated cumulative pre-tax profits over the last three years and has now released the valuation allowance that had previously been recorded against our deferred tax assets in that country; and

 

   

A benefit of $2.2 million, driven largely by the realization of previously unrecognized tax benefits due to the expiry of the respective statutes of limitation in the jurisdictions in which the benefits were claimed.

2011 fourth quarter net income was $104.9 million, or 68 cents per diluted share, including the $0.02 per diluted share negative impact of reorganization charges recorded in the quarter. Net income for the fourth quarter of the prior year benefited from favorable pricing on hard disk drives.

Further detail can be found in the financial statements and schedules attached to this news release or at www.ingrammicro.com.

Key 2012 fourth quarter highlights:

 

   

North America revenues were up 6 percent, the highest sales in more than a decade, led by double digit growth in the company’s key SMB market and very strong sales in the company’s higher margin specialty divisions.

 

   

Latin America delivered all-time record fourth quarter revenues on growth of 5 percent in U.S. dollars and led the company in operating income as a percentage of sales, which came in at 275 basis points.

 

   

Asia Pacific achieved a fourth quarter sales record, increasing revenue 11 percent over last year, as India and China continued to deliver double digit growth. The acquisition of Aptec contributed approximately 4 percentage points of the growth.


   

Europe had a strong close to the quarter, with the region performing relatively well given the continued uncertainty surrounding the macro-economic environment and a highly competitive selling environment. European quarterly revenues were down 4 percent in U.S. dollars and 1 percent in local currencies, when compared to last year.

 

   

BrightPoint had solid revenues and delivered accretion contribution above the company’s expectations entering the quarter. The integration team quickly captured near-term cost synergy opportunities helping lead to accretion to earnings per diluted share of $0.04, excluding acquisition related costs.

 

   

Working capital days were 23, towards the lower end of the company’s targeted range of 22 to 26 days.

“Our fourth quarter financial performance confirmed our improved execution, as the entire company responded well to the challenge to drive a sense of urgency, better execution and increased profitability across the organization,” said Alain Monié, president and chief executive officer, Ingram Micro Inc. “We are clearly executing better against our key strategic initiatives and we are beginning to see early returns from our organic investments into areas such as enterprise computing and IM Logistics, as well as from our acquisitions to drive growth in higher value markets.

“While we are entering 2013 well-positioned to drive better returns on capital and reasonable revenue growth across the business, there are several key objectives on which we must deliver,” Monié said. “We must return Australia to a profitable, growing business. We also must continue to execute on the integration of BrightPoint and realization of cost and revenue synergies. We will maintain our historic focus on operational excellence, while combining improvements in returns on invested capital with revenue growth. Additionally, we will continue to examine opportunities to free up and reallocate capital from underperforming businesses into areas of better returns. Our overriding objective is to drive sustainable, long-term shareholder returns.”

Bill Humes, chief operating and financial officer, commented: “Our associates around the world – including those joining us from recent acquisitions – did a great job responding to challenging market dynamics and delivered strong financial results for the quarter, including solid management of working capital. The integration of BrightPoint is progressing well and we were successful in rapidly capturing early cost synergies, which helped drive fourth quarter accretion to earnings from that business above our expectations entering the quarter. We continue to expect to drive annual cost synergies from the BrightPoint acquisition of at least $55 million for 2014 and accretion to non-GAAP earnings per diluted share of at least $0.18 in 2013 and $0.35 in 2014, excluding one-time charges and integration costs, but including additional amortization of intangibles of approximately $37 million.”


Twelve-Month Period

For the twelve months ended December 29, 2012, worldwide sales were $37.8 billion, with gross profit of $2.04 billion (5.38 percent of total sales), compared with worldwide sales of $36.3 billion, with gross profit of $1.91 billion (5.25 percent of total sales) for last year’s twelve-month period. Twelve-month net income for 2012 was $306.0 million, or $1.99 per diluted share, versus $244.2 million, or $1.53 per diluted share, for the 2011 twelve-month period.

Outlook

For the 2013 year, the company currently expects worldwide consolidated revenue growth in the low teens, which includes the contribution of BrightPoint. The company affirms its expectations for BrightPoint to be accretive to 2013 earnings by at least 18 cents per diluted share, which includes absorbing approximately $37 million, or 17 cents per diluted share, in additional amortization of intangibles, but excludes integration costs.

For the 2013 first quarter, the company currently expects to experience a seasonal sequential decline in worldwide consolidated revenue consistent with the past two years and expects a seasonal sequential decline in gross margin due primarily to lower contribution from Ingram Micro logistics services.

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) 455-2260 (toll-free within the United States and Canada) or (719) 325-2494 (other countries), passcode “3928426.”

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 (888) 203-1112 or (719) 457-0820 outside the United States and Canada, passcode “3928426.”

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 have made and expect to continue to make investments in new businesses and initiatives, including acquisitions, which could disrupt our business and have an adverse effect on our operating results; (2) 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 earnings; (3) changes in macro-economic 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; (4) we continually experience intense competition across all markets for our products and services; (5) we operate a global business that exposes us to risks associated with conducting business in multiple jurisdictions; (6) our failure to adequately adapt to IT industry changes could negatively impact our future operating results; (7) 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; (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 the 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 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. We also face a variety of risks associated with our recently completed acquisition of Brightpoint, Inc., Aptec and Promark, including: management’s ability to execute its plans, strategies and objectives for future operations, including the execution of integration plans; growth of the mobility industry, the government contracts business, and in new and untapped markets in geographies outside the U.S.; and other uncertainties or unknown, underestimated and/or undisclosed commitments or liabilities; and our ability to achieve the expected benefits and manage the costs of the integrations of recent acquisitions.

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 December 31, 2011 and Form 10-Q for the fiscal quarter ended September 29, 2012; other risks or uncertainties may be detailed from time to time in Ingram Micro’s future SEC filings.

About Ingram Micro Inc.

Ingram Micro is the world’s largest wholesale technology distributor and a global leader in IT supply-chain, mobile device lifecycle services and logistics solutions. 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 and mobile solutions, technical support, financial services and product aggregation and distribution. The company is the only global broad-based IT distributor, serving 145 countries on six continents with the world’s most comprehensive portfolio of IT products and services. Visit www.ingrammicro.com.

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© 2013 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)

 

     December 29,
2012
     December 31,
2011
 

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 595,147       $ 891,403   

Trade accounts receivable, net

     5,457,299         4,465,329   

Inventory

     3,591,543         2,942,164   

Other current assets

     522,390         319,506   
  

 

 

    

 

 

 

Total current assets

     10,166,379         8,618,402   

Property and equipment, net

     481,324         323,261   

Goodwill

     428,401         —     

Intangible assets, net

     372,482         73,330   

Other assets

     31,862         131,523   
  

 

 

    

 

 

 

Total assets

   $ 11,480,448       $ 9,146,516   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

   $ 6,065,159       $ 4,893,437   

Accrued expenses

     585,404         524,010   

Short-term debt and current maturities of long-term debt

     111,268         92,428   
  

 

 

    

 

 

 

Total current liabilities

     6,761,831         5,509,875   

Long-term debt, less current maturities

     943,275         300,000   

Other liabilities

     164,089         63,864   
  

 

 

    

 

 

 

Total liabilities

     7,869,195         5,873,739   

Stockholders’ equity

     3,611,253         3,272,777   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 11,480,448       $ 9,146,516   
  

 

 

    

 

 

 


Ingram Micro Inc.

Consolidated Statement of Income

(Amounts in 000s, except per share data)

(Unaudited)

 

     Thirteen Weeks Ended  
     December 29,
2012
    December 31,
2011
 

Net sales

   $ 11,379,882      $ 9,952,944   

Cost of sales

     10,718,672        9,398,686   
  

 

 

   

 

 

 

Gross profit

     661,210        554,258   
  

 

 

   

 

 

 

Operating expenses:

    

Selling, general and administrative

     477,797        370,830   

Amortization of intangible assets

     12,534        3,119   

Reorganization costs

     3,012        4,244   
  

 

 

   

 

 

 
     493,343        378,193   
  

 

 

   

 

 

 

Income from operations

     167,867        176,065   

Interest and other:

    

Interest income

     (2,805     (1,617

Interest expense

     17,438        11,948   

Net foreign currency exchange loss

     982        6,102   

Other

     3,142        4,082   
  

 

 

   

 

 

 
     18,757        20,515   
  

 

 

   

 

 

 

Income before income taxes

     149,110        155,550   

Provision for income taxes

     47,759        50,677   
  

 

 

   

 

 

 

Net income

   $ 101,351      $ 104,873   
  

 

 

   

 

 

 

Diluted earnings per share

   $ 0.66      $ 0.68   
  

 

 

   

 

 

 

Diluted weighted average shares outstanding

     153,280        153,399   
  

 

 

   

 

 

 


Ingram Micro Inc.

Consolidated Statement of Income

(Amounts in 000s, except per share data)

(Unaudited)

 

     Fifty-two Weeks Ended  
     December 29,
2012
    December 31,
2011
 

Net sales

   $ 37,827,299      $ 36,328,701   

Cost of sales

     35,791,910        34,420,419   
  

 

 

   

 

 

 

Gross profit

     2,035,389        1,908,282   
  

 

 

   

 

 

 

Operating expenses:

    

Selling, general and administrative

     1,542,650        1,431,955   

Amortization of intangible assets

     20,711        12,550   

Reorganization costs

     9,676        5,131   
  

 

 

   

 

 

 
     1,573,037        1,449,636   
  

 

 

   

 

 

 

Income from operations

     462,352        458,646   

Interest and other:

    

Interest income

     (10,216     (5,673

Interest expense

     55,690        52,509   

Net foreign currency exchange loss

     10,546        4,789   

Loss from settlement of interest rate swap and senior unsecured term loan

     —           5,624   

Other

     10,148        13,526   
  

 

 

   

 

 

 
     66,168        70,775   
  

 

 

   

 

 

 

Income before income taxes

     396,184        387,871   

Provision for income taxes

     90,275        143,631   
  

 

 

   

 

 

 

Net income

   $ 305,909      $ 244,240   
  

 

 

   

 

 

 

Diluted earnings per share

   $ 1.99      $ 1.53   
  

 

 

   

 

 

 

Diluted weighted average shares outstanding

     153,717        159,588   
  

 

 

   

 

 

 


Ingram Micro Inc.

Supplementary Information

Income from Operations

(Amounts in 000s)

(Unaudited)

 

     Thirteen Weeks Ended December 29, 2012  
     Net Sales      Operating
Income
    Operating
Margin
 

North America

   $ 4,463,704       $ 78,376        1.76

Europe

     3,087,189         51,867        1.68

Asia-Pacific

     2,184,897         15,166        0.69

Latin America

     602,718         16,572        2.75

BrightPoint

     1,041,374         11,290        1.08

Stock-based compensation expense

     —            (5,404     —      
  

 

 

    

 

 

   

Consolidated Total

   $ 11,379,882       $ 167,867        1.48
  

 

 

    

 

 

   
     Thirteen Weeks Ended December 31, 2011  
     Net Sales      Operating
Income
    Operating
Margin
 

North America

   $ 4,213,965       $ 90,171        2.14

Europe

     3,201,636         71,112        2.22

Asia-Pacific

     1,964,865         14,025        0.71

Latin America

     572,478         6,500        1.14

Stock-based compensation expense

     —            (5,743     —      
  

 

 

    

 

 

   

Consolidated Total

   $ 9,952,944       $ 176,065        1.77
  

 

 

    

 

 

   


Ingram Micro Inc.

Supplementary Information

Income from Operations

(Amounts in 000s)

(Unaudited)

 

     Fifty-two Weeks Ended December 29, 2012  
     Net Sales      Operating
Income
    Operating
Margin
 

North America

   $ 15,880,103       $ 283,689        1.79

Europe

     10,614,811         103,278        0.97

Asia-Pacific

     8,347,170         53,613        0.64

Latin America

     1,943,841         37,700        1.94

BrightPoint

     1,041,374         11,290        1.08

Stock-based compensation expense

     —            (27,218     —      
  

 

 

    

 

 

   

Consolidated Total

   $ 37,827,299       $ 462,352        1.22
  

 

 

    

 

 

   
     Fifty-two Weeks Ended December 31, 2011  
     Net Sales      Operating
Income
    Operating
Margin
 

North America

   $ 15,250,560       $ 281,155        1.84

Europe

     11,371,043         136,306        1.20

Asia-Pacific

     7,920,649         46,508        0.59

Latin America

     1,786,449         25,488        1.43

Stock-based compensation expense

     —            (30,811     —      
  

 

 

    

 

 

   

Consolidated Total

   $ 36,328,701       $ 458,646        1.26