IRVINE, CA--(Marketwired - Oct 27, 2016) - Ingram Micro Inc. (NYSE: IM) today announced financial results for the third quarter ended Oct. 1, 2016.

"During the third quarter of this year we continued to deliver robust improvement in gross and operating margins leading to the strongest earnings per share for a third quarter in more than a decade," said Alain Monié, Ingram Micro CEO. "We see further stabilization in market demand across most of the globe and our teams continue to leverage our investments in productivity and services to deliver improved bottom line results and growth in a number of areas as we benefit from the broadest solutions portfolio and widest geographic reach in the industry."

Monié added, "We continue to make progress on our transaction to join the HNA Group and remain on track to close this year."

Third Quarter Results of Operations
Worldwide 2016 third quarter sales of $10.2 billion decreased 3 percent in USD, with gross margin increasing 69 basis points year-over-year to 7.0 percent. This compares to sales of $10.5 billion with gross margin of 6.31 percent in the 2015 third quarter. The translation of foreign currencies versus last year had a negative impact of 1 percentage point on worldwide sales. Additionally, 2016 third quarter worldwide sales were negatively impacted versus last year by nearly $120 million, or 1 percent, related to the company negotiating a favorable change in contract terms with some customers in Europe, which leads to recognizing these sales on a net versus a gross basis as the company did in the third quarter of last year. Recent acquisitions contributed approximately 2 percentage points of growth to 2016 third quarter worldwide sales. Strong gross margin expansion was the result of a focus on driving a better mix of higher value sales, including increased contribution from services, as well as from recent acquisitions.

2016 third quarter GAAP operating income was $137 million, or 1.34 percent of revenue, compared to 2015 third quarter GAAP operating income of $119 million, or 1.14 percent of revenue. 2016 third quarter GAAP earnings per diluted share were 52 cents, compared to GAAP earnings per diluted share of 42 cents in the year-earlier period. 

2016 third quarter non-GAAP operating income was $177 million, or 1.73 percent of revenue, a 13 basis point increase when compared to 2015 third quarter non-GAAP operating income of $169 million, or 1.60 percent of revenue. 2016 third quarter non-GAAP earnings per diluted share were up 6 percent to 71 cents, when compared to non-GAAP earnings per diluted share of 67 cents in the year-earlier period. Compared to the same period in 2015, the translation of foreign currencies negatively impacted 2016 third quarter non-GAAP earnings by 1 cent per diluted share. A better mix of high value business and solid operating leverage across most regions more than offset continued strategic investments.

On a GAAP basis, return on invested capital for the trailing 12 months was 7.7 percent compared to 6.3 percent in the 2015 third quarter. On a non-GAAP basis, return on invested capital for the trailing 12 month period was 10.9 percent, more than 300 basis points above the company weighted average cost of capital, and up compared to 10.6 percent in the similar trailing 12 month period last year.

Conference Call and Webcast
As noted in the press release issued on February 17, 2016, due to the company's pending acquisition by Tianjin Tianhai whereby the company will join HNA Group, the company will not be holding a conference call to discuss its 2016 third quarter financial results nor will it be providing a financial outlook.

Non-GAAP Disclosures
In addition to GAAP results, Ingram Micro is reporting non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share and non-GAAP return on invested capital. These non-GAAP measures exclude charges associated with reorganization, acquisitions, integration and transition costs, including those associated with the company's previously announced cost savings programs, and the amortization of intangible assets. These non-GAAP financial measures also exclude a benefit in the fourth quarter of 2014 related to the receipt of an LCD flat panel class action settlement, a charge in the 2015 second and fourth quarters related to an impairment of internally developed software resulting from the company's decision to stop its global ERP deployment, a charge in the 2015 third quarter for an estimated settlement of employee related taxes assessed in Europe, a loss on the sale of affiliate and a gain related to a legal settlement in the 2016 second quarter. Non-GAAP net income and non-GAAP earnings per diluted share also exclude the impact of foreign exchange gains or losses related to the translation effect on Euro-based inventory purchases in Ingram Micro's pan-European entity. 

The non-GAAP measures noted above are primary indicators that Ingram Micro's management uses internally to conduct and measure its business and evaluate the performance of its consolidated operations and operating segments. Ingram Micro's management believes these non-GAAP financial measures are useful because they provide meaningful comparisons to prior periods and an alternate view of the impact of acquired businesses. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP. These non-GAAP financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting Ingram Micro's business. A material limitation associated with these non-GAAP measures as compared to the GAAP measures is that they may not be comparable to other companies with similarly titled items that present related measures differently. The non-GAAP measures should be considered as a supplement to, and not as a substitute for or superior to, the corresponding measures calculated in accordance with GAAP.

A reconciliation of GAAP to non-GAAP financial measures for the periods presented is attached to this press release.

About Ingram Micro Inc.
Ingram Micro helps businesses realize the promise of technology™. It delivers a full spectrum of global technology and supply chain services to businesses around the world. Deep expertise in technology solutions, mobility, cloud, and supply chain solutions enables its business partners to operate efficiently and successfully in the markets they serve. More at www.ingrammicro.com.

Cautionary Statement for the Purpose of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995
The matters in this communication that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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) our acquisition and investment strategies may not produce the expected benefits, which may adversely affect results of operations; (2) changes in macro-economic and geopolitical conditions can affect our business and results of operations; (3) failure to retain and recruit key personnel would harm our ability to meet key objectives; (4) we are dependent on a variety of information systems, which, if not properly functioning, and available, or if we experience system security breaches, data protection breaches, or other cyber-attacks and security risks to our associates, could adversely disrupt our business and harm our reputation and net sales; (5) we operate a global business that exposes us to risks associated with conducting business in multiple jurisdictions; (6) we may become involved in intellectual property disputes that could cause us to incur substantial costs, divert the efforts of management or require us to pay substantial damages or licensing fees; (7) our failure to adequately adapt to industry changes could negatively impact our future operating results; (8) we continually experience intense competition across all markets for our products and services; (9) termination of a key 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) substantial defaults by our customers or the loss of significant customers could negatively impact our business, results of operations, financial condition or liquidity; (11) 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; (12) our goodwill and identifiable intangible assets could become impaired, which could reduce the value of our assets and reduce our net income in the year in which the write-off occurs; (13) 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; (14) we cannot predict the outcome of litigation matters and other contingencies that we may be involved with from time to time; (15) our failure to comply with the requirements of environmental regulations could adversely affect our business; (16) 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; (17) changes in accounting rules could adversely affect our future operating results; (18) our quarterly results have fluctuated significantly; (19) despite its global presence, Ingram Micro may fail to proactively identify and tap into emerging markets and geographies; (20) our acquisition by Tianjin Tianhai / the HNA Group may not be timely completed, if completed at all; and (21) prior to the completion of our acquisition by Tianjin Tianhai / the HNA Group, our business experiencing disruptions due to transaction-related uncertainty or other factors making it more difficult to maintain relationships with vendors, customers, licensees, other business partners or governmental entities, or retain key employees. We have historically instituted, and will continue to institute, changes to our strategies, operations and processes in an effort to address and mitigate risks; however, there are no assurances 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 our SEC filings, and specifically to Item 1A-Risk Factors, of our latest Annual Report on Form 10-K.

© 2016 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)
				October 1,			January 2,
				2016			2016
ASSETS
	Current assets:
		Cash and cash equivalents		$	689,076		$	935,267
		Trade accounts receivable, net			5,270,505			5,663,754
		Inventory			3,839,219			3,457,016
		Other current assets			556,152			475,813
			Total current assets		10,354,952			10,531,850
	Property and equipment, net				384,610			381,414
	Goodwill				946,289			843,001
	Intangible assets, net				429,035			374,674
	Other assets				179,055			169,750
		Total assets		$	12,293,941		$	12,300,689
LIABILITIES AND STOCKHOLDERS' EQUITY
	Current liabilities:
		Accounts payable		$	6,024,197		$	6,353,511
		Accrued expenses			639,727			620,501
		Short-term debt and current maturities of long-term debt			534,213			134,103
			Total current liabilities		7,198,137			7,108,115
	Long-term debt, less current maturities				792,576			1,090,702
	Other liabilities				162,436			134,086
			Total liabilities		8,153,149			8,332,903
	Stockholders' equity				4,140,792			3,967,786
		Total liabilities and stockholders' equity		$	12,293,941		$	12,300,689

Ingram Micro Inc.
Consolidated Statement of Income
(Amounts in 000s, except per share data)
(Unaudited)
		Thirteen Weeks Ended
		October 1, 2016				October 3, 2015
Net sales		$	10,226,826			$	10,515,880
Cost of sales			9,511,447				9,852,297
Gross profit			715,379				663,583
Operating expenses:
	Selling, general and administrative		550,270				510,990
	Amortization of intangible assets		20,574				14,206
	Reorganization costs		7,471				18,958
			578,315				544,154
Income from operations			137,064				119,429
Other expense (income):
	Interest income		(1,956	)			(991	)
	Interest expense		19,640				18,429
	Net foreign currency exchange loss		3,728				12,264
	Other		3,020				313
			24,432				30,015
Income before income taxes			112,632				89,414
Provision for income taxes			34,109				24,492
Net income		$	78,523			$	64,922
Diluted earnings per share		$	0.52			$	0.42
Diluted weighted average shares outstanding			151,918				154,742

Ingram Micro Inc.
Consolidated Statement of Income
(Amounts in 000s, except per share data)
(Unaudited)
		Thirty-nine Weeks Ended
		October 1, 2016				October 3, 2015
Net sales		$	29,686,033			$	31,713,584
Cost of sales			27,620,012				29,775,715
Gross profit			2,066,021				1,937,869
Operating expenses:
	Selling, general and administrative		1,673,279				1,526,340
	Amortization of intangible assets		73,220				47,226
	Reorganization costs		31,727				29,234
	Impairment of internally developed software		-				115,856
	Loss on sale of affiliate		14,878				-
			1,793,104				1,718,656
Income from operations			272,917				219,213
Other expense (income):
	Interest income		(5,214	)			(2,650	)
	Interest expense		58,264				61,799
	Net foreign currency exchange loss		12,842				26,540
	Other		10,218				7,256
			76,110				92,945
Income before income taxes			196,807				126,268
Provision for income taxes			61,733				52,364
Net income		$	135,074			$	73,904
Diluted earnings per share		$	0.89			$	0.47
Diluted weighted average shares outstanding			151,836				158,016

Ingram Micro Inc.
Consolidated Statement of Cash Flows
(Amounts in 000s)
(Unaudited)
					Thirty-nine Weeks Ended
					October 1, 2016				October 3, 2015
Cash flows from operating activities:
	Net income				$	135,074			$	73,904
	Adjustments to reconcile net income to cash (used) provided by operating activities:
		Depreciation and amortization				151,374				113,435
		Stock-based compensation				29,564				28,291
		Excess tax benefit from stock-based compensation				(8,437	)			(4,334	)
		Gain on sale of property and equipment				(1,606	)			(272	)
		Impairment of internally developed software				-				115,856
		Loss on sale of affiliate				14,878				-
		Noncash charges for interest and bond discount amortization				2,500				2,212
		Deferred income taxes				(1,152	)			1,553
		Changes in operating assets and liabilities, net of effects of acquisitions:
			Trade accounts receivable			529,205				1,078,501
			Inventory			(355,948	)			400,880
			Other current assets			(63,572	)			(107,241	)
			Accounts payable			(400,839	)			(663,616	)
			Change in book overdrafts			(61,653	)			(70,825	)
			Accrued expenses			(106,288	)			(2,463	)
		Cash (used) provided by operating activities				(136,900	)			965,881
Cash flows from investing activities:
	Capital expenditures					(80,229	)			(99,022	)
	Sale of marketable securities, net					4,700				5,000
	Proceeds from sale of property and equipment					1,237				1,145
	Proceeds from sale of affiliate					27,847				-
	Acquisitions, net of cash acquired					(173,311	)			(100,855	)
		Cash used by investing activities				(219,756	)			(193,732	)
Cash flows from financing activities:
	Proceeds from exercise of stock options					3,296				10,279
	Repurchase of Class A Common Stock					-				(205,608	)
	Excess tax benefit from stock-based compensation					8,437				4,334
	Other consideration for acquisitions					(2,091	)			(2,358	)
	Dividends paid to shareholders					-				(15,196	)
	Net proceeds from (repayments of) revolving and other credit facilities					87,160				(301,156	)
		Cash provided (used) by financing activities				96,802				(509,705	)
Effect of exchange rate changes on cash and cash equivalents						13,663				(9,904	)
Increase (decrease) in cash and cash equivalents						(246,191	)			252,540
Cash and cash equivalents, beginning of period						935,267				692,777
Cash and cash equivalents, end of period					$	689,076			$	945,317

Ingram Micro Inc.

Supplementary Information

Income from Operations - Reconciliation of GAAP to Non-GAAP Information

(Amounts in Millions)

(Unaudited)

			Thirteen Weeks Ended October 1, 2016
			North America				Europe				Asia-Pacific				Latin America				Stock-based Compensation				Consolidated Total
Net Sales			$	4,522.0			$	2,748.2			$	2,318.2			$	638.4			$	-			$	10,226.8
GAAP Operating Income			$	91.7			$	2.5			$	41.0			$	11.6			$	(9.7	)		$	137.1
Reorganization, integration and transition costs				11.8				5.6				0.0				1.5				-				18.9
Amortization of intangible assets				10.2				8.7				1.8				(0.1	)			-				20.6
	Non-GAAP Operating Income		$	113.7			$	16.8			$	42.8			$	13.0			$	(9.7	)		$	176.6
GAAP Operating Margin				2.03	%			0.09	%			1.77	%			1.82	%							1.34	%
Non-GAAP Operating Margin				2.51	%			0.61	%			1.85	%			2.04	%							1.73	%

 

			Thirteen Weeks Ended October 3, 2015
			North America				Europe				Asia-Pacific				Latin America				Stock-based Compensation				Consolidated Total
Net Sales			$	4,477.1			$	2,928.5			$	2,528.1			$	582.2			$	-			$	10,515.9
GAAP Operating Income			$	88.7			$	2.6			$	31.8			$	7.1			$	(10.8	)		$	119.4
Reorganization, integration and transition costs				14.3				7.7				7.0				1.3				-				30.3
Amortization of intangible assets				8.1				3.2				2.0				0.9				-				14.2
Estimated settlement of employee related taxes				-				4.7				-				-				-				4.7
	Non-GAAP Operating Income		$	111.1			$	18.2			$	40.8			$	9.3			$	(10.8	)		$	168.6
GAAP Operating Margin				1.98	%			0.09	%			1.26	%			1.21	%							1.14	%
Non-GAAP Operating Margin				2.48	%			0.62	%			1.61	%			1.59	%							1.60	%

Ingram Micro Inc.

Supplementary Information

Income from Operations - Reconciliation of GAAP to Non-GAAP Information

(Amounts in Millions)

(Unaudited)

			Thirty-nine Weeks Ended October 1, 2016
			North America				Europe				Asia-Pacific				Latin America				Stock-based Compensation				Impairment of Internally Developed Software				Loss on Sale of Affiliate				Consolidated Total
Net Sales			$	12,837.7			$	8,189.5			$	6,769.7			$	1,889.1			$	-			$	-			$	-			$	29,686.0
GAAP Operating Income (Loss)			$	219.1			$	(21.2	)		$	94.9			$	24.6			$	(29.6	)		$	-			$	(14.9	)		$	272.9
Reorganization, integration and transition costs				45.7				26.7				1.2				4.2				-				-				-				77.8
Amortization of intangible assets				35.9				28.0				5.8				3.6				-				-				-				73.3
Loss on sale of affiliate				-				-				-				-				-				-				14.9				14.9
Settlement of a class action lawsuit				(3.8	)			-				-				-				-				-				-				(3.8	)
	Non-GAAP Operating Income		$	296.9			$	33.5			$	101.9			$	32.4			$	(29.6	)		$	-			$	-			$	435.1
GAAP Operating Margin				1.71	%			(0.26	%)			1.40	%			1.30	%															0.92	%
Non-GAAP Operating Margin				2.31	%			0.41	%			1.51	%			1.72	%															1.47	%
			Thirty-nine Weeks Ended October 3, 2015
			North America				Europe				Asia-Pacific				Latin America				Stock-based Compensation				Impairment of Internally Developed Software								Consolidated Total
Net Sales			$	13,537.2			$	8,857.8			$	7,553.9			$	1,764.7			$	-			$	-							$	31,713.6
GAAP Operating Income			$	223.6			$	20.9			$	94.4			$	24.5			$	(28.3	)		$	(115.9	)						$	219.2
Reorganization, integration and transition costs				28.6				15.9				9.3				3.5				-				-								57.3
Amortization of intangible assets				28.9				11.3				5.7				1.3				-				-								47.2
Estimated settlement of employee related taxes				-				4.7				-				-				-				-								4.7
Impairment of internally developed software				-				-				-				-				-				115.9								115.9
	Non-GAAP Operating Income		$	281.1			$	52.8			$	109.4			$	29.3			$	(28.3	)		$	-							$	444.3
GAAP Operating Margin				1.65	%			0.24	%			1.25	%			1.39	%															0.69	%
Non-GAAP Operating Margin				2.08	%			0.60	%			1.45	%			1.66	%															1.40	%

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions, except per share data)
(Unaudited)
			Thirteen Weeks Ended October 1, 2016
						Diluted
			Net Income			Earnings per Share (a)
As Reported Under GAAP			$	78.5		$	0.52
	Reorganization, integration and transition costs			13.4			0.09
	Amortization of intangible assets			14.6			0.09
	Pan-Europe foreign currency exchange loss			0.9			0.01
Non-GAAP Financial Measure			$	107.4		$	0.71
				Thirteen Weeks Ended October 3, 2015
							Diluted
				Net Income			Earnings per Share (a)
As Reported Under GAAP			$	64.9		$	0.42
	Reorganization, integration and transition costs			22.4			0.15
	Amortization of intangible assets			10.5			0.07
	Estimated settlement of employee related taxes			3.5			0.02
	Pan-Europe foreign currency exchange loss			1.7			0.01
Non-GAAP Financial Measure			$	103.0		$	0.67

(a)		Amounts above are net of applicable income taxes and per share impacts are calculated by dividing net income amount by the diluted weighted average shares outstanding of 151.9 and 154.7 for the thirteen weeks ended October 1, 2016 and October 3, 2015, respectively.

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions, except per share data)
(Unaudited)
			Thirty-nine Weeks Ended October 1, 2016
							Diluted
			Net Income				Earnings per Share (a)
As Reported Under GAAP			$	135.1			$	0.89
	Reorganization, integration and transition costs			56.0				0.37
	Amortization of intangible assets			52.3				0.34
	Loss on sale of affiliate			10.2				0.07
	Settlement of a class action lawsuit			(2.6	)			(0.02	)
	Pan-Europe foreign currency exchange loss			1.1				0.01
Non-GAAP Financial Measure			$	252.1			$	1.66
			Thirty-nine Weeks Ended October 3, 2015
							Diluted
			Net Income				Earnings per Share (a)
As Reported Under GAAP			$	73.9			$	0.47
	Reorganization, integration and transition costs			42.1				0.27
	Amortization of intangible assets			34.4				0.22
	Estimated settlement of employee related taxes			3.5				0.02
	Impairment of internally developed software			99.7				0.63
	Pan-Europe foreign currency exchange loss			5.2				0.03
Non-GAAP Financial Measure			$	258.8			$	1.64

(a)		Amounts above are net of applicable income taxes and per share impacts are calculated by dividing net income amount by the diluted weighted average shares outstanding of 151.8 and 158.0 for the thirty-nine weeks ended October 1, 2016 and October 3, 2015, respectively.

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)
		Fifty-two Weeks Ended October 1, 2016
		As Reported Under		Special		Non-GAAP
		GAAP		Items*		Financial Measure
Income from operations		$469.0		$205.3		$674.3
Effective tax rate		28.0%		31.9%		29.2%
NOPAT (a)		$337.5		$139.9		$477.4
Average invested capital (b)		$4,370.9				$4,370.9
Return on invested capital (c)		7.7%				10.9%

(a)		NOPAT is net operating profit after tax for the trailing twelve month period ended October 1, 2016, and is calculated by reducing income from operations by the effective tax rate for the period (provision for income taxes divided by income before income taxes).
(b)		Average invested capital equals the average of equity plus debt less cash as of the beginning and end of each quarter in the period.
(c)		Return on invested capital is defined as the trailing twelve months net operating profit after tax divided by the average invested capital.
*		Special items include reorganization, acquisitions, integration and transition costs, including those associated with the company's previously announced cost savings programs, and the amortization of intangible assets. They also include a loss of $15 million on the sale of affiliate, a gain of $4 million related to a legal settlement and a charge of $5 million related to an impairment of internally developed software.

Ingram Micro Inc.
Supplementary Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(Amounts in Millions)
(Unaudited)
		Fifty-three Weeks Ended October 3, 2015
		As Reported Under GAAP		Special Items*		Non-GAAP Financial Measure
Income from operations		$420.2		$270.6		$690.8
Effective tax rate		30.0%		24.8%		28.0%
NOPAT (a)		$294.2		$203.4		$497.6
Average invested capital (b)		$4,687.4				$4,687.4
Return on invested capital (c)		6.3%				10.6%

(a)		NOPAT is net operating profit after tax for the trailing twelve month period ended October 3, 2015, and is calculated by reducing income from operations by the effective tax rate for the period (provision for income taxes divided by income before income taxes).
(b)		Average invested capital equals the average of equity plus debt less cash as of the beginning and end of each quarter in the period.
(c)		Return on invested capital is defined as the trailing twelve months net operating profit after tax divided by the average invested capital.
*		Special items include reorganization, acquisitions, integration and transition costs, including those associated with the company's previously announced cost savings programs, and the amortization of intangible assets. They also include a charge of $5 million for an estimated settlement of employee benefit taxes assessed in Europe, a charge of $116 million related to an impairment of internally developed software resulting from the company's decision to stop its global ERP deployment and a benefit of $3 million related to the receipt of an LCD flat panel class action settlement in 2014.