Moody's changes Ingram Micro outlook to stable

Moody's Investors Service said it changed the ratings outlook for Ingram Micro Inc. to stable from negative, citing the company's demonstrated ability to survive difficult operating conditions.

The agency confirmed the Ba2 rating on the company's $200 million of 9.875% senior subordinated global notes due 2008.

Moody's said the company's reorganization plan and subsequent profit enhancement program, while entailing significant restructuring charges, have contributed to Ingram Micro's ability to maintain or even increase gross profit and operating margins despite the protracted electronics downturn. Further, throughout the period, Ingram Micro has generated positive operating and free cash flow.

The company has also managed working capital effectively, using the cash freed from investment in trade receivables and inventory to reduce long-term debt.

Thus, even if end user demand remains subdued, the company's financial condition is unlikely to deteriorate, the agency said.

The stable outlook reflects Moody's expectation that over the next year to 18 months Ingram Micro will maintain its current gross profit and operating margins and continue to manage effectively its investment in trade receivables and inventory as the information technology sector recovers.

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