Ingram Micro Reports Fourth-Quarter and Full-Year 2008 Results
Gross margins hit highest fourth-quarter level in 10 years
Balance sheet remains strong with record cash balance for a year-end
Cash flow from operations exceeds $550 million for the year
Goodwill impairment charge recorded
SANTA ANA, Calif., Feb. 18 /PRNewswire-FirstCall/ -- Ingram Micro Inc. (NYSE: IM), the world's largest technology distributor, today announced financial results for the fourth quarter and fiscal year of 2008, which ended Jan. 3, 2009.
Worldwide sales for the fourth quarter were $8.68 billion, 13 percent lower than the $10.01 billion in the prior-year period. The sales decline is attributable to the translation effect of relatively weaker foreign currencies, which had a six-percentage-point negative impact, as well as softer demand caused by the weak macroeconomic environment. Sales for the 2008 fiscal year were $34.36 billion, a two-percent decrease versus 2007, to which the translation impact of stronger foreign currencies had an approximate two-percent positive impact.
Fourth-quarter results include a non-cash charge of $742.6 million ($659.8 million after tax or $4.07 per diluted share), for the impairment of goodwill, which is explained in greater detail below. Including this charge, the company posted a net loss of $564.3 million or $3.48 per diluted share.
Non-GAAP net income, which excludes the goodwill impairment charge and related tax benefits, was $95.5 million or $0.59 per diluted share. Both GAAP and non-GAAP results include the following items aggregating to a net benefit of $0.02 per diluted share:
-- A benefit recorded in cost of sales of $8.2 million, or $0.05 per
diluted share, related to the release of a portion of the reserves for
commercial taxes on software imports into Brazil. The released reserves
are tied to the 2003 calendar year, for which the statute of limitations
for an assessment has expired.
-- Costs of approximately $6.8 million or $0.03 per diluted share, related
to expense-reduction programs primarily in North America and Europe.
In the prior-year fourth quarter, net income was $114.1 million or $0.64 per diluted share, which included the following benefits totaling $0.03 per diluted share: a $3.6 million ($0.02 per diluted share) release of a portion of the reserves related to the commercial taxes on software imports into Brazil related to the period from October through December 2002; and a gain of approximately $2.9 million (approximately $0.01 per diluted share) from the sale of the company's Asian semiconductor business.
"While the economy continued to challenge us in the fourth quarter, our focus on enhancing gross margin and reducing expenses helped us deliver solid operational results," said Gregory M. Spierkel, chief executive officer, Ingram Micro Inc. "Every region concentrated on driving profitability. The results were evident. Excluding goodwill impairment charges, our non-GAAP operating margin in Asia Pacific hit a record high, EMEA's improved more than 100 basis points sequentially and North America's 168 basis points approached fourth-quarter levels of recent years. I'm pleased with our ability to adapt to changing market conditions."
Additional Fourth-Quarter Highlights
For additional detail regarding the results outlined below, please refer to the financial statements and schedules attached to this news release or visit www.ingrammicro.com.
As indicated above, the company recorded a charge of $742.6 million ($659.8 million net of tax benefits) in the fourth quarter of 2008 related to the impairment of goodwill in accordance with Statement of Financial Accounting Standards No. 142 ("SFAS 142"). Similar to the experience of many companies, Ingram Micro's market capitalization eroded in the fourth quarter when compared to previous periods and was significantly below book value, primarily due to the depressed macroeconomic environment and volatility in the equity markets. As a result of the company's impairment tests, a charge was recorded for all of its goodwill. The company's reporting units under SFAS 142 are its geographic segments and the goodwill impairment charges totaled $243.2 million, $24.1 million and $475.3 million in North America, EMEA and Asia Pacific, respectively. There is no recorded goodwill in Latin America. This non-cash charge does not impact the company's ongoing business operations, liquidity or covenants for its credit facilities.
Regional Sales
-- North America sales were $3.80 billion (44 percent of total revenues), a
decrease of one percent versus the $3.83 billion reported in the
year-ago quarter. Stable demand throughout most of the region's
distribution business was offset by weakness in the consumer electronics
space.
-- Europe, Middle East and Africa (EMEA) sales were $2.95 billion (34
percent of total revenues), a decrease of 21 percent versus the $3.75
billion in the year-ago quarter. The translation impact of the
relatively weaker European currencies had an approximate
10-percentage-point negative effect on comparisons to the prior year.
Efforts in the second half of 2008 to deliberately exit or turn away
unprofitable business, coupled with weak demand for technology products,
contributed to the year-over-year decline in sales.
-- Asia-Pacific sales were $1.49 billion (17 percent of total revenues), a
decrease of 23 percent versus the $1.94 billion reported in the year-ago
quarter. The translation impact of the relatively weaker regional
currencies had an approximate 10-percentage-point negative effect on
comparisons to the prior year. The sales decline was attributable to
softer demand across most of the region's economies, combined with
proactive efforts to turn away or exit unprofitable business.
-- Latin America sales were $455 million (5 percent of total revenues), a
decrease of 5 percent versus the $481 million in the year-ago quarter.
Gross Margin
Gross margin was 5.92 percent, an increase of 10 basis points versus the prior-year quarter. The partial releases of commercial tax reserves in Brazil, described above, had a positive fourth-quarter impact of nine basis points in 2008 and four basis points in 2007. The year-over-year gross margin improvement is driven primarily by growth in the company's fee-for-service logistics business, the exit or improvement of underperforming business relationships and ongoing changes in customer and product mix.
Operating Expenses
Total operating expenses including the goodwill impairment charge were $1.1 billion. Non-GAAP operating expenses excluding this charge were $368.8 million, or 4.25 percent of revenues, which includes $6.8 million (0.08 percent of revenues) in severance and other costs related to the company's expense-reduction programs. Operating expenses in the year-ago quarter were $406.7 million, or 4.06 percent of revenues. The increase in operating expenses as a percentage of revenues is primarily attributable to the additional labor to support growth in the fee-for-service logistics business, as well as lower sales levels compared to the prior year.
Operating Income
The company posted an operating loss of $597.1 million including the goodwill impairment charge described above. Non-GAAP operating income excluding this charge was $145.5 million or 1.68 percent of revenues which includes the expense-reduction costs and the release of Brazilian commercial tax reserves described above. The net benefit related to the partial release of Brazilian commercial tax reserves and the expense-reduction program costs, as described above, had a two-basis-point impact.
In the year-ago quarter, operating income was $176.0 million or 1.76 percent of revenues, which included a six-basis-point positive impact from the release of a portion of the company's Brazilian commercial tax reserves and the gain on the sale of the Asian semiconductor business, as described above.
-- North America posted an operating loss of $179.5 million, including the
$243.2 million goodwill impairment charge. Non-GAAP operating income
excluding this charge was $63.7 million or 1.68 percent of revenues,
which includes $0.3 million (0.01 percent of revenues) in
expense-reduction program costs. In the prior year, operating income
was $68.9 million or 1.80 percent of revenues.
-- EMEA operating income was $4.3 million, including the $24.1 million
goodwill impairment charge. Non-GAAP operating income excluding this
charge was $28.4 million or 0.96 percent of revenues, which includes
$6.5 million (0.22 percent of revenues) in expense-reduction program
costs. In the year-ago quarter, operating income was $64.7 million or
1.72 percent of revenues. While market weakness continues to dampen the
region's operating margin, the sequential increase of sales, in
concert with efforts to reduce operating expenses, have resulted in a
114-basis-point increase in non-GAAP operating margin over the third
quarter of 2008.
-- Asia-Pacific posted an operating loss of $444.1 million including the
$475.3 million goodwill impairment charge. Non-GAAP operating income
excluding this charge was $31.2 million or 2.10 percent of revenues,
compared to $35.9 million or 1.85 percent in the year-ago quarter. The
prior-year quarter included a gain of $2.9 million, or 15 basis points
of revenues, on the sale of the semiconductor business in Asia.
-- Latin America operating income was $21.5 million or 4.74 percent of
revenues, which includes a benefit of $8.2 million or 181 basis points
of revenues related to the previously described release of a portion of
the company's commercial tax reserve in Brazil. In the year-ago
quarter, operating income was $16.1 million or 3.35 percent of revenues,
which also included a partial release of the commercial tax reserve in
Brazil of $3.6 million or 75 basis points of revenues.
-- During the fourth quarter of 2008, accruals for long-term incentive
compensation programs tied to performance-based restricted stock units
were reduced, yielding a net benefit to operating income of $0.7 million
(0.01 percent of consolidated revenues) for the quarter. This compares
to stock-based compensation expense of $9.6 million (0.10 percent of
consolidated revenues) in the fourth quarter of 2007. The impacts of
the stock-based incentive programs are presented as separate reconciling
amounts in the company's segment reporting in both periods and
therefore are included in the worldwide, but not regional, operating
results.
Other expenses for the quarter were $14.3 million versus $18.2 million in the year-ago period, primarily driven by lower debt levels and declining interest rates.
The tax benefit was $47.2 million versus a tax provision of $43.7 million in the prior-year quarter. The change in provision reflects deferred tax benefits of $82.9 million associated with the $742.6 million charge for the impairment of goodwill (a substantial portion of which is not deductible for tax purposes), the lower level of earnings and the release of certain tax reserves upon the completion of an income tax audit. These factors are partially offset by adjustments to the valuation allowances placed against the company's deferred tax assets in certain European business units.
Total depreciation and amortization was $16.1 million.
Capital expenditures were approximately $37.0 million.
Balance Sheet
-- The cash balance at year end was $763 million, an increase of $184
million over the balance at the end of 2007.
-- Total debt was $478 million, a decrease of $45 million from year-end
2007. Debt-to-capitalization was 15% versus 13% at the end of last
year. The increase over the previous year is due to lower book equity
resulting primarily from the goodwill impairment charge.
-- The company repurchased approximately 4.0 million shares during the
fourth quarter of 2008, for an aggregate amount of $53 million. Since
the inception of the program in November 2007, the company has purchased
15.3 million shares for an aggregate amount of $247.4 million. In light
of the current economic environment, the company has temporarily
suspended its stock repurchase program but may resume purchases under
the program when conditions improve.
-- Inventory was $2.31 billion compared to $2.77 billion at the end of the
prior year. Days of inventory outstanding were 28, an increase of one
day compared to year-end 2007.
-- Working capital days were 22, flat when compared to year-end 2007.
"Earning the decade's highest gross margin level in this economic climate, in addition to reducing our selling, general and administrative expenses, demonstrates our efforts to tightly manage gross margin and control costs," said William D. Humes, executive vice president and chief financial officer, Ingram Micro Inc. "Our balance sheet remains a bright spot. We ended 2008 with cash exceeding debt, while cash flow from operations was more than $550 million for the year, a significant increase over the nearly $330 million generated in 2007, which provides a strong foundation for these uncertain economic times. Ingram Micro's financial strength is an attractive choice for our vendor partners that may have concerns doing business with competitors with challenged liquidity and capital resources."
Fiscal Year Results
Of the $34.36 billion in worldwide sales, North America contributed $14.19 billion (a two-percent increase versus the prior year); EMEA contributed $11.53 billion (a decrease of 7 percent, to which the translation impact of stronger European currencies had an approximate five-percentage-point positive effect on comparisons to the prior year); Asia-Pacific contributed $6.90 billion (a decrease of 3 percent versus the prior year); and Latin America contributed $1.73 billion (an increase of 12 percent versus the prior year).
The company posted a worldwide operating loss for the 2008 fiscal year of $332.2 million which includes the goodwill impairment charge of $742.6 million or 2.16 percent of revenues. Non-GAAP operating income excluding this charge was $410.5 million, or 1.19 percent of revenues, which included the following items aggregating to a charge of $10.4 million or 0.03 percent of revenues:
-- Expense-reduction program costs of $18.6 million (0.05 percent of
revenues);
-- A benefit of $8.2 million (0.02 percent of revenues) related to the
partial release of the Brazilian tax reserve.
In the year-ago period, operating income was $446.4 million, or 1.27 percent of revenues, which included the following items aggregating to a charge of $42.2 million or 0.12 percent of revenues:
-- A net charge for Brazilian commercial taxes of $30.1 million (0.09
percent of revenues);
-- A charge of $15.0 million (0.04 percent of revenues) related to the
previously disclosed United States Securities and Exchange Commission
(SEC) matter;
-- A gain on the sale of the semiconductor business in Asia of $2.9 million
(0.01 percent of revenues).
The company posted a net loss of $394.9 million or $2.37 per diluted share for the 2008 fiscal year, which included the goodwill impairment charge of $742.6 million ($659.8 million after tax or $3.96 per diluted share) discussed previously. Non-GAAP net income excluding this charge was $264.9 million or $1.59 per diluted share which included the net charges described above totaling $0.03 per diluted share. In the year-ago period, net income was $275.9 million, or $1.56 per diluted share, which included the prior-year charges described above totaling $0.21 per diluted share.
Capital expenditures for the full year were $81.4 million, while total depreciation and amortization was $68.4 million.
Outlook
"Our team drove sales to the second-highest level in our history and delivered one of the best operational performances of this decade, despite the economy," said Spierkel. "I'm proud of their achievements, but our work is far from over. We expect 2009 to be even more challenging. Demand continues to soften across most of the countries in which we operate and the stronger dollar is also creating a translation headwind, affecting prior-year sales comparisons. Based on our sales figures to date, we expect first-quarter sales to experience a year-over-year percentage decline in the low-to-mid twenties, which includes the translation impact of relatively weaker foreign currencies."
Spierkel added: "We continue to make adjustments to improve profitability and position us for the future. We've made good progress on our expense-reduction program. However, we expect it will be difficult to reduce expenses in line with the pace of the current sales decline. We are taking additional actions in the first half of 2009 to accelerate this alignment, including further restructuring actions in Europe and North America. These actions are expected to generate savings of approximately $100 million to $120 million annually, reaching the full run-rate at the end of 2009. Total restructuring and other related costs associated with these actions are expected to range from approximately $45 million to $65 million. We will continue to pursue opportunities to enhance gross margin - such as the improvement of unprofitable business relationships and a greater mix of higher-margin businesses - to partially offset the lag in expense reductions.
"This company has proven that it can excel in challenging times," Spierkel continued. "We have what it takes to continue our track record of achievement - a strong financial position, outstanding relationships with vendors and reseller customers, breadth of expertise and geographies, and an outstanding team. The near-term will be bumpy for most companies, including Ingram Micro. Fortunately, our fiscal conservatism will serve us well as we tackle the difficulties of the current recession."
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 Web cast and view the accompanying presentation slides, visit the company's Web site 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).
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, including but not limited to statements about economic conditions, capital resources, cost reduction actions, revenues, operating income, margins, expenses, integration costs, operating efficiencies, profitability, market share and rates of return, 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) difficult conditions in the global economy in general have affected our business and results of operations and these conditions are not expected to improve in the near future and may worsen; (2) changes in our credit rating or other market factors such as continued adverse capital and credit market conditions may significantly affect our ability to meet liquidity needs through reduced access to capital, or it may increase our cost of borrowing; (3) our failure to adequately adapt to economic and industry changes and to manage prolonged contractions could negatively impact our future operating results; (4) if our business does not perform well, we may be required to recognize further impairments of our intangible or other long-lived assets or establish a valuation allowance against our deferred income tax assets, which could adversely affect our results of operations or financial condition; (5) we continually experience intense competition across all markets for our products and services, which may intensity in a more difficult global economy; (6) we operate a global business that exposes us to risks associated with international activities; (7) we have made and expect to continue to make investments in new business strategies and initiatives, including acquisitions and continued enhancements to information systems, process and procedures and infrastructure on a global basis, which could disrupt our business and have an adverse effect on our operating results; (8) we are dependent on a variety of information systems and a failure of these systems could disrupt our business and harm our reputation and net sales; (9) 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; (10) changes in, or interpretations of, tax rules and regulations may adversely affect our effective tax rates or operating margins and we may be required to pay additional tax assessments; (11) we cannot predict with certainty what loss we might incur as a result of the SEC inquiry we have received s as well as other litigation matters and contingencies that we may be involved with from time to time; (12) we may incur material litigation, regulatory or operating costs or expenses, and may be frustrated in our marketing efforts, as a result of new environmental regulations or private intellectual property enforcement disputes; (13) future terrorist or military actions could result in disruption to our operations or loss of assets, in certain markets or globally; (14) 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; (15) we face a variety of risks with outsourcing arrangements; (16) changes in accounting rules could adversely affect our future operating results; (17) our quarterly results have fluctuated significantly; and (18) we are dependent on third-party shipping companies for the delivery of our products.
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 Quarterly Report on Form 10-Q for the quarterly period ended September 27, 2008; 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 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 www.ingrammicro.com.
2009 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)
January 3, 2009 December 29, 2007
--------------- -----------------
ASSETS
Current assets:
Cash $763,495 $579,626
Trade accounts receivable, net 3,179,455 4,054,824
Inventories 2,306,617 2,766,148
Other current assets 425,270 520,069
---------- ----------
Total current assets 6,674,837 7,920,667
Property and equipment, net 202,142 181,416
Goodwill - 733,481
Other assets 206,494 139,437
---------- ----------
Total assets $7,083,473 $8,975,001
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,427,362 $4,349,700
Accrued expenses 485,573 602,295
Current maturities of long-term
debt 118,506 135,616
---------- ----------
Total current liabilities 4,031,441 5,087,611
Long-term debt, less current
maturities 359,882 387,500
Other liabilities 36,305 72,948
---------- ----------
Total liabilities 4,427,628 5,548,059
Stockholders' equity 2,655,845 3,426,942
---------- ----------
Total liabilities and
stockholders' equity $7,083,473 $8,975,001
========== ==========
Ingram Micro Inc.
Consolidated Statement of Income
(Dollars in 000s, except per share data)
(Unaudited)
Fourteen Thirteen
Weeks Ended Weeks Ended
January 3, 2009 December 29, 2007
--------------- -----------------
Net sales $8,684,517 $10,007,437
Cost of sales 8,170,211 (a) 9,424,663 (b)
----------- -----------
Gross profit 514,306 582,774
----------- -----------
Operating expenses:
Selling, general and
administrative 361,993 406,737
Impairment of goodwill 742,653 -
Reorganization costs 6,802 (a) -
----------- -----------
1,111,448 406,737
----------- -----------
Income (loss) from operations (597,142) 176,037
Interest and other 14,323 18,179
----------- -----------
Income (loss) before income
taxes (611,465) 157,858
Provision for (benefit from)
income taxes (47,180) 43,740
----------- -----------
Net income (loss) $(564,285) $114,118
=========== ===========
Diluted earnings (loss) per
share $(3.48) $0.64
=========== ===========
Diluted weighted average
shares outstanding 161,929,448 178,303,743
=========== ===========
(a) The fourteen weeks ended January 3, 2009 includes charges of $6,802
(0.08% of consolidated net sales) to operating expenses comprised
of: $281 in North America (0.01% of North America net sales),
$6,506 in EMEA (0.22% of EMEA net sales) and $15 in Asia-Pacific,
primarily for reorganization costs associated with headcount
reductions and facility consolidations; as well as a benefit
of $8,224 (1.81% of Latin America net sales and 0.09% of
consolidated net sales) recorded to cost of sales related to
the release of a portion of the reserve for Brazilian commercial
taxes for which the statute of limitations has expired.
(b) The thirteen weeks ended December 29, 2007 includes a benefit of
$3,620 (0.75% of Latin America net sales and 0.04% of consolidated
net sales) recorded to cost of sales related to the release of a
portion of the reserve for Brazilian commercial taxes for which
the statute of limitations has expired.
Ingram Micro Inc.
Consolidated Statement of Income
(Dollars in 000s, except per share data)
(Unaudited)
Fifty-three Fifty-two
Weeks Ended Weeks Ended
January 3, 2009 December 29, 2007
--------------- -----------------
Net sales $34,362,152 $35,047,089
Cost of sales 32,422,061 (a) 33,137,791 (b)
----------- -----------
Gross profit 1,940,091 1,909,298
----------- -----------
Operating expenses:
Selling, general and
administrative 1,512,578 (a) 1,463,969 (c)
Impairment of goodwill 742,653 -
Reorganization costs
(credits) 17,029 (a) (1,091)
----------- -----------
2,272,260 1,462,878
----------- -----------
Income (loss) from operations (332,169) 446,420
Interest and other 49,969 61,182
----------- -----------
Income (loss) before income
taxes (382,138) 385,238
Provision for income taxes 12,783 109,330
----------- -----------
Net income (loss) $(394,921) $275,908
=========== ===========
Diluted earnings (loss) per share: $(2.37) $1.56
=========== ===========
Diluted weighted average
shares outstanding 166,542,541 176,951,694
=========== ===========
(a) The fifty-three weeks ended January 3, 2009 includes net charges
of $18,573 (0.05% of consolidated net sales) to operating expenses
comprised of: $1,838 in North America (0.01% of North America net
sales), $16,444 in EMEA (0.14% of EMEA net sales) and $291 in
Asia-Pacific, primarily for reorganization costs associated with
headcount reductions and facility consolidations; as well as
a benefit of $8,224 (0.48% of Latin America net sales and 0.02%
of consolidated net sales) recorded to cost of sales related to
the release of a portion of the reserve for Brazilian commercial
taxes for which the statute of limitations has expired.
(b) The fifty-two weeks ended December 29, 2007 includes a Brazilian
commercial taxes of $30,134 (1.94% of Latin America net sales
and 0.09% of consolidated net sales), net of the fourth quarter
reversal of a portion of the reserve, recorded to cost of sales,
for which the statute of limitations has expired.
(c) The fifty-two weeks ended December 29, 2007 includes a charge to
operating expenses to reserve for estimated losses of $15,000
(0.11% of North America net sales and 0.04% of consolidated net
sales) associated with the SEC matter regarding certain
transactions with McAfee, Inc. (formerly NAI) from 1998
through 2000.
Ingram Micro Inc.
Supplementary Information
Reconciliation of Non-GAAP to GAAP Financial Measures
(Dollars in 000s, except per share data)
(Unaudited)
Fourteen Weeks Ended January 3, 2009
------------------------------------
Non-GAAP
As Reported Impairment of Financial
Under GAAP Goodwill (a) Measure
----------- ------------- ---------
Operating expenses (b) $1,111,448 $(742,653) $368,795
Income (loss) from operations (597,142) 742,653 145,511
Income (loss) before income
taxes (611,465) 742,653 131,188
Provision for (benefit from)
income taxes (47,180) 82,873 35,693
Net income (loss) (564,285) 659,780 95,495
Basic and diluted earnings
(loss) per share $(3.48) $4.07 $0.59
(a) Reflects charge for impairment of goodwill, net of tax benefits
Per share impact is calculated by dividing the net amount by the
basic weighted average shares outstanding of 161,929,448.
(b) As a percentage of net sales, GAAP operating expenses for the
thirteen weeks ended January 3, 2009 represent 12.80% and
non-GAAP operating expenses represent 4.25%.
Ingram Micro Inc.
Supplementary Information
Reconciliation of Non-GAAP to GAAP Financial Measures
(Dollars in 000s, except per share data)
(Unaudited)
Fifty-three Weeks Ended January 3, 2009
---------------------------------------
Non-GAAP
As Reported Impairment of Financial
Under GAAP Goodwill (a) Measure
------------ ------------- --------
Operating expenses (b) $2,272,260 $(742,653) $1,529,607
Income (loss) from operations (332,169) 742,653 410,484
Income (loss) before income
taxes (382,138) 742,653 360,515
Provision for income taxes 12,783 82,873 95,656
Net income (loss) (394,921) 659,780 264,859
Basic and diluted earnings
(loss) per share $(2.37) $3.96 $1.59
(a) Reflects charge for impairment of goodwill, net of tax benefits.
Per share impact is calculated by dividing the net amount by the
basic weighted average shares outstanding of 166,542,541.
(b) As a percentage of net sales, GAAP operating expenses for the
fifty-three weeks ended January 3, 2009 represent 6.61% and
non-GAAP operating expenses represent 4.45%.
Ingram Micro Inc.
Supplementary Information
Income (Loss) from Operations
(Dollars in 000s)
(Unaudited)
Fourteen Weeks Ended January 3, 2009 (a)
-------------------------------------------
Non-GAAP
Operating Impairment Operating
Net Sales Income (Loss) of Goodwill Income
----------- -------------- ------------ -------
North America $3,796,364 $(179,506) $243,190 $63,684
EMEA 2,946,263 4,255 24,125 28,380
Asia-Pacific 1,487,225 (444,104) 475,338 31,234
Latin America 454,665 21,529 - 21,529
Reconciling amount
(stock-based
compensation
under SFAS 123R) - 684 - 684
---------- --------- -------- --------
Consolidated $8,684,517 $(597,142) $742,653 $145,511
========== ========= ======== ========
Non-GAAP
Operating Impairment Operating
Margin (Loss) of Goodwill Margin(b)
-------------- ------------ ---------
North America (4.73%) 6.41% 1.68%
EMEA 0.14% 0.82% 0.96%
Asia-Pacific (29.86%) 31.96% 2.10%
Latin America 4.74% - 4.74%
Reconciling amount
(stock-based compensation
under SFAS 123R) - - -
Consolidated (6.88%) 8.55% 1.68%
Thirteen Weeks Ended December 29, 2007(c)
-------------------------------------------
Operating Operating
Net Sales Income Margin
------------ ---------- ---------
North America $3,833,660 $68,895 1.80%
EMEA 3,750,168 64,661 1.72%
Asia-Pacific 1,942,823 35,926 1.85%
Latin America 480,786 16,119 3.35%
Reconciling amount
(stock-based compensation
under SFAS 123R) - (9,564) -
----------- ----------
Consolidated $10,007,437 $176,037 1.76%
=========== ==========
(a) The fourteen weeks ended January 3, 2009 includes charges of $6,802
(0.08% of consolidated net sales) to operating expenses comprised
of: $281 in North America (0.01% of North America net sales),
$6,506 in EMEA (0.22% of EMEA net sales) and $15 in Asia-Pacific,
primarily for reorganization costs associated with headcount
reductions and facility consolidations; as well as a benefit of
$8,224 (1.81% of Latin America net sales and 0.09% of consolidated
net sales) recorded to cost of sales related to the release of a
portion of the reserve for Brazilian commercial taxes for which the
statute of limitations has expired.
(b) Non-GAAP operating margin is calculated by dividing non-GAAP
operating income by net sales.
(c) The thirteen weeks ended December 29, 2007 includes a benefit of
$3,620 in Latin America (0.75% of Latin America net sales and
0.04% of consolidated net sales) recorded to cost of sales related
to the release of a portion of the reserve for Brazilian
commercial taxes for which the statute of limitations has expired.
Ingram Micro Inc.
Supplementary Information
Income (Loss) from Operations
(Dollars in 000s)
(Unaudited)
Fifty-three Weeks Ended January 3, 2009 (a)
----------------------------------------------
Non-GAAP
Operating Impairment Operating
Net Sales Income (Loss) of Goodwill Income
---------- ------------- ----------- ---------
North America $14,191,995 $(49,011) $243,190 $194,179
EMEA 11,534,968 42,014 24,125 66,139
Asia-Pacific 6,904,640 (353,518) 475,338 121,820
Latin America 1,730,549 43,191 - 43,191
Reconciling amount
(stock-based
compensation
under SFAS 123R) - (14,845) - (14,845)
----------- ---------- ---------- ---------
Consolidated $34,362,152 $(332,169) $742,653 $410,484
=========== ========== ========== =========
Non-GAAP
Operating Impairment Operating
Margin (Loss) of Goodwill Margin (b)
-------------- ------------- -----------
North America (0.34%) 1.71% 1.37%
EMEA 0.36% 0.21% 0.57%
Asia-Pacific (5.12%) 6.88% 1.76%
Latin America 2.50% - 2.50%
Reconciling amount
(stock-based compensation
under SFAS 123R) - - -
Consolidated (0.97%) 2.16% 1.19%
Fifty-two Weeks Ended December 29, 2007 (c)
-------------------------------------------
Operating Operating
Net Sales Income (Loss) Margin (Loss)
--------- ------------- -------------
North America $13,923,186 $219,835 1.58%
EMEA 12,438,644 151,529 1.22%
Asia-Pacific 7,133,417 117,306 1.64%
Latin America 1,551,842 (4,375) (0.28%)
Reconciling amount
(stock-based
compensation
under SFAS 123R) - (37,875) -
----------- --------
Consolidated $35,047,089 $446,420 1.27%
=========== ========
(a) The fifty-three weeks ended January 3, 2009 includes net charges of
$18,573 (0.05% of consolidated net sales) to operating expenses
comprised of: $1,838 in North America (0.01% of North America net
sales), $16,444 in EMEA (0.14% of EMEA net sales) and $291 in
Asia-Pacific, primarily for reorganization costs associated with
headcount reductions and facility consolidations; as well as a
benefit of $8,224 (0.48% of Latin America net sales and 0.02% of
consolidated net sales) recorded in cost of sales related to the
release of a portion of the reserve for Brazilian commercial taxes
for which the statute of limitations has expired.
(b) Non-GAAP operating margin is calculated by dividing non-GAAP
operating income by net sales.
(c) The fifty-two weeks ended December 29, 2007 included a charge to
operating expenses to reserve for estimated losses of $15,000
in North America (0.11% of North America net sales and 0.04% of
consolidated net sales) associated with the SEC matter regarding
transactions with McAfee, Inc. (formerly NAI) from 1998 through
2000 and a charge for Brazilian commercial taxes of $30,134 in
Latin America (1.94% of Latin America net sales and 0.09% of
consolidated net sales), net of fourth quarter reversal of a
portion of the reserve, recorded to cost of sales, for which
the statute of limitations has expired.
SOURCE Ingram Micro Inc.
Released February 18, 2009