SANTA ANA, Calif., July 2, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- Ingram Micro Inc.
(NYSE: IM), the world's largest technology distributor, is recording a charge
of $15 million in its second quarter ended June 30, 2007, to reserve for
estimated losses associated with a previously disclosed inquiry by the United
States Securities and Exchange Commission (SEC) regarding certain transactions
with McAfee, Inc. (formerly Network Associates Inc.) during 1998 through 2000.
On May 21, 2007, Ingram Micro disclosed that it received a "Wells Notice"
from the SEC, which indicated that the commission's staff intends to recommend
an administrative proceeding. The staff contends that the company failed to
maintain adequate books and records relating to certain of its transactions
with McAfee, and was a cause of McAfee's own securities-laws violations
relating to the filing of reports and maintenance of books and records. Based
on ongoing discussions with the SEC staff concerning the issues raised in the
Wells Notice, the company has determined that it should record a reserve of
$15 million -- approximately $9 million net of taxes or $0.05 per diluted
share -- based upon the company's current estimate of loss it expects to incur
associated with a final resolution of this matter. No resolution with the SEC
has been reached at this point, however, and there can be no assurance that
such discussions will result in a resolution of these issues. When the matter
is resolved, the final disposition may exceed the current amount estimated and
reserved. It is not possible to accurately predict the timing of a resolution
and final disposition at this time.
The company has responded to the Wells Notice and continues to cooperate
fully with the SEC in its inquiry, which was first disclosed during the third
quarter of 2004. On January 4, 2006, McAfee and the SEC made public the terms
of a settlement they had reached.
As a result of this charge, the company is adjusting its net income
guidance for the second quarter ended June 30, 2007. Net income including
this charge is now expected to range from $50 million to $56 million, or $0.29
to $0.32 per diluted share. Second-quarter revenue guidance is not affected
by this charge.
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 future revenues, sales levels,
operating income, margins, stock-based compensation expense, integration
costs, cost synergies, operating efficiencies, profitability, market share and
rates of return, are based on current management expectations that involve
certain risks which, if realized, in whole or in part, could cause such
expectations to fail to be achieved and have a material adverse effect on
Ingram Micro's business, financial condition and results of operations,
including, without limitation: (1) intense competition, regionally and
internationally, including competition from alternative business models, such
as manufacturer-to-end-user selling, which may lead to reduced prices, lower
sales or reduced sales growth, lower gross margins, extended payment terms
with customers, increased capital investment and interest costs, bad debt
risks and product supply shortages; (2) integration of our acquired businesses
and similar transactions involve various risks and difficulties -- our
operations may be adversely impacted by an acquisition that (i) is not suited
for us, (ii) is improperly executed, or (iii) substantially increases our
debt; (3) foreign exchange rate fluctuations, devaluation of a foreign
currency, adverse governmental controls or actions, political or economic
instability, or disruption of a foreign market, and other related risks of our
international operations may adversely impact our operations in that country
or globally; (4) we may not achieve the objectives of our process improvement
efforts or be able to adequately adjust our cost structure in a timely fashion
to remain competitive, which may cause our profitability to suffer; (5) our
failure to attract new sources of profitable business from expansion of
products or services or risks associated with entry into new markets,
including geographies, products and services, could negatively impact our
future operating results; (6) an interruption or failure of or disruptions due
to changes to our information systems or subversion of access or other system
controls may result in a significant loss of business, assets, or competitive
information and may adversely impact our results of operations; (7)
significant changes in supplier terms, such as higher thresholds on sales
volume before distributors may qualify for discounts and/or rebates, the
overall reduction in the amount of incentives available, reduction or
termination of price protection, return levels, or other inventory management
programs, or reductions in payment terms, may adversely impact our results of
operations or financial condition; (8) termination of a supply or services
agreement with a major supplier or product supply shortages may adversely
impact our results of operations; (9) changes in, or interpretations of, tax
rules and regulations may adversely affect our effective tax rates or we may
be required to pay additional tax assessments; (10) we cannot predict with
certainty, the outcome of the SEC and U.S. Attorney's inquiries or assessments
by Brazilian taxing authorities; (11) if there is a downturn in economic
conditions for an extended period of time, it will likely have an adverse
impact on our business; (12) we may experience loss of business from one or
more significant customers, and an increased risk of credit loss as a result
of reseller customers' businesses being negatively impacted by dramatic
changes in the information technology products and services industry as well
as intense competition among resellers -- increased losses, if any, may not be
covered by credit insurance or we may not be able to obtain credit insurance
at reasonable rates or at all; (13) rapid product improvement and
technological change resulting in inventory obsolescence or changes in demand
may result in a decline in value of a portion of our inventory; (14) future
terrorist or military actions could result in disruption to our operations or
loss of assets, in certain markets or globally; (15) 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; (16) changes in our credit rating or other market
factors may increase our interest expense or other costs of capital, or
capital may not be available to us on acceptable terms to fund our working
capital needs; (17) our failure to adequately adapt to industry changes and to
manage potential growth and/or contractions could negatively impact our future
operating results; (18) future periodic assessments required by current or new
accounting standards such as those relating to long-lived assets, goodwill and
other intangible assets and expensing of stock options may result in
additional non-cash charges; (19) seasonal variations in the demand for
products and services, as well as the introduction of new products, may cause
variations in our quarterly results; and (20) the failure of certain shipping
companies to deliver product to us, or from us to our customers, may adversely
impact our results of operations.
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 year ended December 30, 2006; other risks or
uncertainties may be detailed from time to time in Ingram Micro's future SEC
filings. Ingram Micro disclaims any duty to update any forward-looking
statements.
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 http://www.ingrammicro.com.
(C) 2007 Ingram Micro Inc. All rights reserved. Ingram Micro and the
registered Ingram Micro logo are trademarks used under license by Ingram Micro
Inc.
SOURCE Ingram Micro Inc.
Media, Jim Trainor, +1-714-382-2378, jim.trainor@ingrammicro.com, or Rekha
Parthasarathy, +1-714-382-1319, rekha@ingrammicro.com, or Investors, Ria Marie
Carlson, +1-714-382-4400, ria.carlson@ingrammicro.com, all of Ingram Micro Inc.
http://www.ingrammicro.com
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