Arrow Electronics Announces Sales and Earnings at Highest Level in 3 Years.MELVILLE, N.Y. -- Arrow Electronics Arrow Electronics NYSE: ARW is a Fortune 500 company headquartered in Melville, New York. This company specializes in products and services of electronic components and computer products. , Inc. (NYSE NYSE See: New York Stock Exchange :ARW ARW Air Refueling Wing ARW Advanced Research Workshop ARW Associated Resume Writers ARW Army Ranger Wing (Irish Special Forces) ARW American Revolutionary War ARW Angle Random Walk ARW Aeroelastic Research Wing ) today reported second quarter 2004 net income of $66.9 million ($.58 and $.55 per share on a basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, respectively) on sales of $2.75 billion, compared with net income of $6.8 million ($.07 per share) on sales of $2.12 billion in the second quarter of 2003. The company's results include a number of items outlined below that impact their comparability. A reconciliation of these items is provided under the heading "Certain Non-GAAP Financial Information." Excluding those items, net income for the quarter ended June June: see month. 30, 2004 would have been $69.2 million ($.60 and $.57 per share on a basic and diluted basis, respectively) and net income for the quarter ended June 30, 2003 would have been $16.8 million ($.17 per share). Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: second quarter 2004 operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $126.7 million, excluding the items impacting comparability, was up 19% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and up 129% over last year's second quarter, marking the seventh consecutive sequential One after the other in some consecutive order such as by name or number. increase and the sixth consecutive quarterly year-on-year increase. Operating income as a percentage of sales, excluding the previously mentioned items, increased by 60 basis points sequentially and 200 basis points year-on-year, marking the fifth consecutive increase for both. "The second quarter was very strong with year-on-year sales growth in our components businesses of over 28% in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , 21% in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). in local currencies, and 46% in Asia/Pacific," said William William, crown prince of GermanyWilliam or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack E. Mitchell Mitchell, city (1990 pop. 13,798), seat of Davison co., SE S.Dak.; inc. 1881. Mitchell is a trade, distribution, and shipping center for a dairy and livestock area. , President and Chief Executive Officer of Arrow ARROW Australian Research Repositories Online to the World (Clayton, Vic, Australia) ARROW Active Resistance to the Roots of War ARROW Antiresonant Reflecting Optical Waveguide , "and our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. computer products business grew 25% year-on-year on an adjusted basis." Worldwide components sales of $2.04 billion were up approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 1% from $2.03 billion in the March quarter and up 30% from $1.57 billion in last year's second quarter. Operating income as a percentage of sales was 5.9%, up 50 basis points sequentially and up 240 basis points from last year's second quarter. "Successful execution of our customer-focused strategies combined with increased operating efficiencies has enabled us to continue to deliver exceptional results," said Mr. Mitchell. "Sales in the North American Components group were up 28% over last year, with operating income dollars up 177%. Operating income, both in dollars and as a percentage of sales, was at its highest levels in twelve quarters," added Mr. Mitchell. Arrow's European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. sales decreased 1% sequentially, yet operating income was up 18% in local currencies. Compared with last year, sales were up 15%, with operating income nearly doubling in local currencies. "Our businesses in Europe continue to post strong results," said Mr. Mitchell, "and while sales were down on a sequential basis due in part to fewer shipping days in the second quarter, the seasonal decline in our business was much less than what we have seen in the past several years." Sales in the Asia/Pacific region increased 9% over the first quarter, and 46% from last year. "We have clearly stated that the Asia/Pacific region is a priority for us, and our execution of our customized strategies is enabling us to continue to grow at a significant pace," said Mr. Mitchell. Worldwide computer products sales totaled $706.9 million, up 10% from the first quarter and up 29% over last year. Operating income as a percentage of sales was 4.5%, up 130 basis points sequentially and up 110 basis points over last year's second quarter. "Our North American Computer Products business posted record results with sales up 10% on an adjusted basis sequentially and up 25% on an adjusted basis from last year's second quarter." added Mr. Mitchell. "This marked our 12th consecutive quarter of year-over-year earnings growth." The company's results for the second quarter of 2004 and 2003 include the items outlined below that impact their comparability: --During the second quarter of 2004, the company repurchased an additional $141.7 million accreted value accreted value The current value of an original-issue discount bond, taking into account imputed interest that has accumulated. of its zero coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer convertible debentures Convertible Debenture Any type of debenture that can be converted into some other security. Notes: For example, a convertible bond can be converted into stock. due in 2021, which could have been initially put to the company in February February: see month. 2006. The related loss on the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. , including the premium paid and the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of related deferred financing costs, aggregated $7.1 million ($4.2 million net of taxes or $.04 and $.03 per share on a basic and diluted basis, respectively). --During the second quarter of 2004, the company recorded a net restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). gain of $1.2 million ($1.9 million net of taxes or $.02 and $.01 per share on a basic and diluted basis, respectively). Included in this amount is a $2.9 million gain on the sale of the Brookhaven, New York
The Town of Brookhaven is located in central Suffolk County, New York, USA, and stretches from the North Shore to the South Shore of Long Island. logistics logistics In military science, all the activities of armed-force units in support of combat units, including transport, supply, communications, and medical aid. The term, first used by Henri Jomini, Alfred Thayer Mahan, and others, was adopted by the U.S. center offset, in part, primarily by personnel costs from previously announced restructurings. --During the second quarter of 2003, the company repurchased $14.6 million of its 8.2% senior notes scheduled to mature in the fourth quarter of 2003. The related loss on the repurchase, including the premium paid and the write-off of related deferred financing costs, aggregated $.4 million ($.2 million net of taxes). --During the second quarter of 2003, the company recorded restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $14.6 million ($9.7 million net of taxes or $.10 per share). "I am extremely pleased with the performance of each of our operating groups and the results we delivered in the second quarter," said Mr. Mitchell. "We are well positioned to continue to drive improving sales and operating income levels," he added. "Based upon all of the information known to us today, we expect third quarter revenues to be between $2.60 billion and $2.70 billion - an increase of 24% to 29% over last year's third quarter - with earnings per share, excluding charges, in the range of $.45 to $.49 per share on a diluted basis," said Mr. Mitchell. Six-Month Results Arrow's net income for the first six months of 2004 was $96.4 million ($.87 and $.82 per share on a basic and diluted basis, respectively) on sales of $5.43 billion, compared with net income of $5.9 million ($.06 per share) on sales of $4.10 billion in the first six months of 2003. Net income for the first six months of 2004 includes the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. net restructuring charges (gain) and the charge associated with the loss on prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. of debt. Additionally, during the first quarter of 2004, restructuring charges of $8.8 million ($6.5 million net of taxes or $.06 and $.05 per share on a basic and diluted basis, respectively) were recorded. Also, the company repurchased, through a series of transactions, $250.0 million principal amount of its 8.7% senior notes due in October October: see month. 2005 and $91.9 million accreted value of its zero coupon convertible debentures due in 2021. As a result of these repurchases, a loss on prepayment of debt of $23.7 million ($14.2 million net of taxes or $.13 and $.12 per share on a basic and diluted basis, respectively) was recorded in the first quarter of 2004. Excluding these items, net income would have been $119.4 million ($1.08 and $1.01 per share on a basic and diluted basis, respectively) for the six months ended June 30, 2004. Net income for the first six months of 2003 includes the aforementioned charges as well as an integration charge of $6.9 million ($4.8 million net of taxes or $.05 per share) related to the acquisition and integration of Pioneer-Standard's IED Noun 1. IED - an explosive device that is improvised I.E.D., improvised explosive device explosive device - device that bursts with sudden violence from internal energy business, a restructuring charge of $6.6 million ($4.7 million net of taxes or $.05 per share), and a charge of $2.9 million ($1.8 million net of taxes or $.02 per share) related to the repurchase of $84.8 million of the company's 8.2% senior notes. Excluding these items, net income would have been $26.9 million ($.27 per share). Arrow Electronics is a major global provider of products, services, and solutions to industrial and commercial users of electronic components and computer products. Headquartered in Melville, New York Melville is a hamlet and census-designated place in the town of Huntington in Suffolk County on Long Island, New York, in the United States. As of the 2000 census, 14,533 people resided there. , Arrow serves as a supply channel partner for more than 600 suppliers and 150,000 original equipment manufacturers, contract manufacturers, and commercial customers through a global network of more than 200 locations in 41 countries and territories. Certain Non-GAAP Financial Information In addition to disclosing results that are determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), the company provides certain non-GAAP financial information relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc operating income, net income and net income per basic and diluted share, each as adjusted for certain charges, gain, and losses that the company believes impact the comparability of its results of operations. These charges, gain, and losses arise out of the company's acquisitions of other companies, the sale of property, the company's efficiency enhancement initiatives, and the prepayment of debt. Reconciliations of the company's non-GAAP financial information to GAAP are set forth in the table below. The company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the company's operating performance and underlying trends in the company's business because management considers the charges, gain, and losses referred to above to be outside the company's core operating results. This non-GAAP financial information is among the primary indicators management uses as a basis for evaluating the company's financial and operating performance. In addition, the company's Board of Directors uses this non-GAAP financial information in evaluating management performance and setting management compensation. The presentation of this additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for, or alternative to, operating income, net income and net income per basic and diluted share determined in accordance with GAAP. Analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with, data presented in accordance with GAAP.
ARROW ELECTRONICS, INC.
EARNINGS RECONCILIATION
(In thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2004 2003 2004 2003
--------- -------- --------- ---------
Operating income, as reported $127,933 $40,855 $225,696 $75,630
Restructuring charges (gain) (1,241) 14,552 7,577 21,242
Integration charge - - - 6,904
--------- -------- --------- ---------
Operating income, as adjusted $126,692 $55,407 $233,273 $103,776
========= ======== ========= =========
Net income, as reported $66,859 $6,827 $96,384 $5,922
Restructuring charges (gain) (1,914) 9,734 4,581 14,407
Integration charge - - - 4,822
Loss on prepayment of debt 4,216 233 18,407 1,759
--------- -------- --------- ---------
Net income, as adjusted $69,161 $16,794 $119,372 $26,910
========= ======== ========= =========
Net income per basic share,
as reported $.58 $.07 $.87 $.06
Restructuring charges (gain) (.02) .10 .04 .14
Integration charge - - - .05
Loss on prepayment of debt .04 - .17 .02
--------- -------- --------- ---------
Net income per basic share,
as adjusted $.60 $.17 $1.08 $.27
========= ======== ========= =========
Net income per diluted share,
as reported* $.55 $.07 $.82 $.06
Restructuring charges (gain) (.01) .10 .04 .14
Integration charge - - - .05
Loss on prepayment of debt .03 - .15 .02
--------- -------- --------- ---------
Net income per diluted share,
as adjusted* $.57 $.17 $1.01 $.27
========= ======== ========= =========
* In computing net income per diluted share for the three and six
months ended June 30, 2004, net income was increased by $2,536 and
$5,906, respectively, for interest (net of taxes) related to the
zero coupon convertible debentures which are dilutive common stock
equivalents. In addition, the diluted weighted average number of
shares outstanding for the three and six months ended June 30,
2004 includes 9,892 shares and 11,659 shares, respectively,
related to the zero coupon convertible debentures.
Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor" for forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . This press release contains forward-looking statements that are subject to certain risks and uncertainties which could cause actual results or facts to differ materially from such statements for a variety of reasons including, but not limited to: industry conditions, changes in product supply, pricing, and customer demand, competition, other vagaries in the computer and electronic components markets, changes in relationships with key suppliers, the effects of additional actions taken to lower costs, the ability of the company to generate additional cash flow and the other risks described from time to time in the company's reports to the Securities and Exchange Commission (including the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Quarterly Reports on Form 10-Q Form 10-Q See 10-Q. ). Forward-looking statements are those statements, which are not statements of historical fact. You can identify these forward-looking statements by forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. words such as "expects," "anticipates," "intends," "plans," "may," "will," "believes," "seeks," "estimates," and similar expressions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any forward-looking statements.
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2004 2003 2004 2003
----------- ----------- ----------- -----------
Sales $2,750,236 $2,123,139 $5,425,694 $4,103,244
----------- ----------- ----------- -----------
Costs and expenses:
Cost of products sold 2,299,202 1,768,036 4,551,440 3,413,084
Selling, general and
administrative
expenses 307,534 281,651 605,956 551,427
Depreciation and
amortization 16,808 18,045 35,025 34,957
Restructuring charges
(gain) (1,241) 14,552 7,577 21,242
Integration charge - - - 6,904
----------- ----------- ----------- -----------
2,622,303 2,082,284 5,199,998 4,027,614
----------- ----------- ----------- -----------
Operating income 127,933 40,855 225,696 75,630
Equity in earnings of
affiliated companies 901 1,070 1,346 1,385
Loss on prepayment of debt 7,051 390 30,781 2,942
Interest expense, net 24,493 31,869 55,213 65,165
----------- ----------- ----------- -----------
Income before income taxes
and minority interest 97,290 9,666 141,048 8,908
Provision for income taxes 30,000 2,653 44,082 2,698
----------- ----------- ----------- -----------
Income before minority
interest 67,290 7,013 96,966 6,210
Minority interest 431 186 582 288
----------- ----------- ----------- -----------
Net income $66,859 $6,827 $96,384 $5,922
=========== =========== =========== ===========
Net income per share:
Basic $.58 $.07 $.87 $.06
=========== =========== =========== ===========
Diluted $.55 $.07 $.82 $.06
=========== =========== =========== ===========
Average number of
shares outstanding:
Basic 114,917 100,127 110,764 100,036
Diluted 126,698 100,980 124,198 100,744
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
June 30, December 31,
2004 2003
-------------- ---------------
Assets
------
Current assets:
Cash and short-term investments $261,947 $612,404
Accounts receivable, net 2,008,812 1,770,690
Inventories 1,519,292 1,327,523
Prepaid expenses and other assets 62,708 59,030
-------------- ---------------
Total current assets 3,852,759 3,769,647
Property, plant and equipment, net 264,193 288,129
Investments in affiliated companies 37,957 36,738
Cost in excess of net assets of
companies acquired 924,172 923,256
Other assets 277,245 315,218
-------------- ---------------
Total assets $5,356,326 $5,332,988
============== ===============
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable $1,308,172 $1,211,724
Accrued expenses 389,635 414,551
Short-term borrowings 13,136 14,349
-------------- ---------------
Total current liabilities 1,710,943 1,640,624
Long-term debt 1,539,047 2,016,627
Other liabilities 164,732 170,406
Shareholders' equity 1,941,604 1,505,331
-------------- ---------------
Total liabilities and
shareholders' equity $5,356,326 $5,332,988
============== ===============
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2004(A) 2003(B) 2004(C) 2003(D)
----------- ----------- ----------- -----------
Sales:
Components $2,043,329 $1,574,148 $4,077,182 $3,064,439
Computer products 706,907 548,991 1,348,512 1,038,805
----------- ----------- ----------- -----------
Consolidated $2,750,236 $2,123,139 $5,425,694 $4,103,244
=========== =========== =========== ===========
Operating income:
Components $119,882 $55,214 $230,322 $104,749
Computer products 31,694 18,675 52,312 34,291
Corporate (23,643) (33,034) (56,938) (63,410)
----------- ----------- ----------- -----------
Consolidated $127,933 $40,855 $225,696 $75,630
=========== =========== =========== ===========
(A) Includes a net restructuring gain of $1.2 million.
(B) Includes a restructuring charge of $14.6 million.
(C) Includes net restructuring charges of $7.6 million.
(D) Includes restructuring charges of $21.2 million and an integration
charge of $6.9 million.
This interim report is subject to independent audit at year-end.
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