Arrow Electronics Posts First Quarter Results.Business Editors/High-Tech Writers MELVILLE, N.Y.--(BUSINESS WIRE)--April 22, 2003 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 a first quarter 2003 net loss of $.9 million ($.01 per share) on sales of $1.98 billion, compared with a net loss of $600.9 million ($6.04 and $5.93 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 $1.84 billion in last year's first quarter. The company's results for the first quarter of 2003 include a number of items that impact the comparability of those results to prior periods: -- In the first quarter, 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 initiated a series of actions to make its organizational structure  This article has no lead section.To comply with Wikipedia's lead section guidelines, one should be written. , systems, and processes 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. more efficient, the net result of which will be to reduce the company's cost structure by $40 million annually. The impact of these actions will begin to be reflected in the company's results during the second quarter, and the company expects that a majority of the targeted cost savings will be achieved by June June: see month. 30, 2003. The company has recorded a restructuring charge 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 $6.7 million ($4.7 million after taxes or $.05 per share) in the first quarter and anticipates recording additional charges of between $5 and $8 million in the second quarter. -- Also included in the first quarter is a special charge of $6.9 million ($4.8 million after taxes or $.05 per share) associated with the acquisition and integration of the Industrial Electronics Distribution ("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 of Pioneer-Standard Electronics Inc. at the end of February February: see month. . -- During the first quarter, the company repurchased $70 million of its 8.2% notes that mature in the fourth quarter of 2003. The premium paid, along with 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 issuance costs, resulted in a charge of $2.6 million ($1.5 million after taxes or $.01 per share). Under newly-effective accounting rules, the premium paid to 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. a company's debt is no longer recorded as an extraordinary charge. Excluding the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. items, net income for the quarter ended March 31, 2003 was $10.1 million ($.10 per share). Last year's first quarter results include a charge of $603.7 million ($6.07 and $5.96 per basic and diluted share, respectively) related to the company's adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," which has been recorded as a cumulative effect of change in accounting principle as of January January: see month. 1, 2002. Also, in the second quarter of 2002, the company sold its Gates/Arrow commodity computer products business, the sale of which has been accounted for as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Included in last year's first quarter results was $.7 million of net income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. ($.01 per share). Excluding the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge and the net income from discontinued operations, net income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the in last year's first quarter was $2.1 million or $.02 per share. Worldwide components revenue of $1.49 billion was up 13% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen and 11% over last year's first quarter, with increases posted in all regions around the world. Excluding foreign exchange and the estimated impact of the IED business, components revenue grew 9% from the fourth quarter and 4% from last year's first quarter. 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. as a percentage of sales was 3.4%, up 40 basis points sequentially but down 30 basis points from last year's first quarter. "We completed the acquisition of Pioneer's IED at the end of February," said William William, crown prince of Germany William 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, "and successfully integrated that business into Arrow over the ensuing en·sue intr.v. en·sued, en·su·ing, en·sues 1. To follow as a consequence or result. See Synonyms at follow. 2. To take place subsequently. weekend." "As a result, our first quarter includes an estimated one to two cents of earnings per share from the acquisition," he added. Worldwide computer products sales totaled $490 million, down 15% from the seasonally strong fourth quarter but 1% over last year's first quarter. Operating income was 3.2% of sales, down 90 basis points sequentially, but up 80 basis points over last year's first quarter. "Our North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Computer Products businesses performed very well, building on the momentum generated last year as we continue our strategic focus on the mid-range
Arrow Electronics is one of the world's largest distributors of electronic components and computer products and a leading provider of services to the electronics industry. 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 over 150,000 original equipment manufacturers, contract manufacturers, and commercial customers through more than 190 sales facilities and 21 distribution centers in 40 countries. Detailed information about Arrow's operations can be found at www.arrow.com. Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Results 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). ), Arrow also discloses pro forma or non-GAAP results of operations that exclude certain items. Arrow discloses such pro forma information in order to reflect underlying operating performance and to permit shareholders and other readers to better assess the company's operating results. Such information is provided as a complement to results provided in accordance with GAAP. 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 are 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 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. ). 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
March 31,
----------------------
2003 2002
---- ----
Sales $1,980,105 $1,844,539
---------- ----------
Costs and expenses:
Cost of products sold 1,645,048 1,530,007
Selling, general and administrative expenses 269,776 252,190
Depreciation and amortization 16,912 17,671
Restructuring charge 6,690 -
Integration charge 6,904 -
---------- ----------
1,945,330 1,799,868
---------- ----------
Operating income 34,775 44,671
Equity in earnings of affiliated companies 315 153
Loss on prepayment of debt 2,552 -
Interest expense 33,296 41,242
---------- ----------
Income (loss) before income taxes and
minority interest (758) 3,582
Provision for income taxes 45 1,371
---------- ----------
Income (loss) before minority interest (803) 2,211
Minority interest 102 126
---------- ----------
Income (loss) from continuing operations (905) 2,085
Income from discontinued operations, net of
taxes (A) - 699
---------- ----------
Income (loss) before cumulative effect of
change in accounting principle (905) 2,784
========== ==========
Cumulative effect of change in accounting
principle (B) - (603,709)
---------- ----------
Net loss $ (905) $ (600,925)
========== ==========
Net loss per basic share:
Income (loss) from continuing operations $ (.01) $ .02
Income from discontinued operations (A) - .01
Cumulative effect of change in accounting
principle (B) - (6.07)
---------- -----------
Net loss per basic share $ (.01) $ (6.04)
========== ===========
Net loss per diluted share:
Income (loss) from continuing operations $ (.01) $ .02
Income from discontinued operations (A) - .01
Cumulative effect of change in accounting
principle (B) - (5.96)
---------- -----------
Net loss per diluted share $ (.01) $ (5.93)
========== ===========
Average number of shares outstanding:
Basic 99,902 99,535
Diluted 99,902 101,266
See accompanying footnotes.
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
FOOTNOTES
(A) In May 2002, the company sold substantially all of the assets of
Gates/Arrow Distributing, a business unit within the company's
North American Computer Products group that sells commodity
computer products such as printers, monitors, other peripherals,
and software to value-added resellers in North America. This
business is accounted for as a discontinued operation in
accordance with Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived
Assets." Accordingly, its results have been included in the
consolidated statement of operations as a single line item and all
prior period information has been restated to reflect this
presentation.
(B) The company adopted Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets," as of January 1,
2002. As a result of the evaluation process, the company recorded
an impairment charge of $603.7 million ($6.07 and $5.96 per share
on a basic and diluted basis, respectively). In accordance with
the transitional rules, the company has recorded the impairment
charge as a cumulative effect of change in accounting principle
effective with the first quarter of 2002.
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
March 31, December 31,
2003 2002
------------ ------------
Assets
Current assets:
Cash and short-term investments $ 341,332 $ 694,092
Accounts receivable, net 1,525,287 1,378,562
Inventories 1,328,264 1,201,271
Other 59,792 59,810
------------- ------------
Total current assets 3,254,675 3,333,735
Property, plant and equipment, net 297,517 299,518
Investments in affiliated companies 32,744 32,527
Cost in excess of net assets of
companies acquired, net of
amortization 821,929 748,368
Other assets 271,745 253,457
------------- ------------
$ 4,678,610 $4,667,605
============= ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 961,086 $ 917,271
Accrued expenses 284,900 258,774
Short-term borrowings, including
current portion of long-term debt 221,225 286,348
------------- ------------
Total current liabilities 1,467,211 1,462,393
Long-term debt 1,816,900 1,807,113
Other 162,791 162,850
Shareholders' equity 1,231,708 1,235,249
------------- ------------
$ 4,678,610 $4,667,605
============= ============
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended
March 31,
-------------------------
2003(A) 2002
------- ----
Sales:
Components $1,490,291 $1,349,267
Computer products 489,814 495,272
---------- ----------
Consolidated $1,980,105 $1,844,539
========== ==========
Operating income:
Components $ 50,620 $ 49,851
Computer products 15,616 11,756
Corporate (31,461) (16,936)
---------- ----------
Consolidated $ 34,775 $ 44,671
========== ==========
(A) Includes a restructuring charge of $6.7 million and an integration
charge of $6.9 million related to the acquisition and integration
of the Industrial Electronics Distribution (IED) business of
Pioneer-Standard Electronics Inc.
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
EARNINGS RECONCILIATION
(In thousands except per share data)
Three Months Ended
March 31,
-------------------
2003 2002
---- ----
Net loss, as reported $ (905) $(600,925)
Income from discontinued operations,
net of taxes - (699)
Restructuring charge, net of taxes 4,673 -
Integration charge, net of taxes 4,822 -
Loss on prepayment of debt, net of taxes 1,526 -
Cumulative effect of change in accounting
principle - 603,709
-------- ----------
Net income, as adjusted $10,116 $ 2,085
======== ==========
Net loss per diluted share, as reported $ (.01) $ (5.93)
Income from discontinued operations - (.01)
Restructuring charge .05 -
Integration charge .05 -
Loss on prepayment of debt .01 -
Cumulative effect of change in accounting
principle - 5.96
-------- ----------
Net income per diluted share, as adjusted $ .10 $ .02
======== ==========
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