Arrow Electronics Posts Fourth Quarter Results.Business Editors/High-Tech Writers MELVILLE, N.Y.--(BUSINESS WIRE)--Feb. 20, 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 fourth quarter 2002 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 of $8.9 million ($.09 per share) on sales of $1.89 billion, compared with net income from continuing operations of $6.5 million ($.07 per share) on sales of $2.02 billion in last year's fourth quarter. During the fourth quarter, the company repurchased $79 million of its 8.2% senior notes due to mature in the fourth quarter of 2003. As a result, the company incurred an extraordinary charge of $1.3 million net of taxes ($.01 per share). Including the extraordinary charge, the company reported net income of $7.6 million ($.08 per share) in the fourth quarter of 2002. 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 fourth quarter results was $.2 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. . Including the net income from discontinued operations, net income in the fourth quarter of 2001 was $6.6 million. 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 Statement of Financial Accounting Standards No. 142, the company's 2002 results no longer reflect the amortization of goodwill. If last year's fourth quarter results were restated to reflect the elimination of goodwill amortization, earnings would have increased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.11 per share. Worldwide computer products sales from continuing operations totaled $573.7 million, 15.7% ahead of the third quarter and 6.1% below the prior year. 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. from continuing computer products activities, as a percentage of sales, was 4.1%. "We are very pleased by the performance of 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, whose strategy of focusing on the mid-range
Daniel, book of the Bible. It combines "court" tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C. W. Duval Duval is a surname, literally translating from french to english as 'of the valley', and may refer to
ARROW Active Resistance to the Roots of War ARROW Antiresonant Reflecting Optical Waveguide . "Operating income for the mid-range businesses in the seasonally strong fourth quarter was in excess of 5% of sales, while sales of these businesses were 22% ahead of the third quarter and 11% over the prior year." Worldwide components revenue of $1.32 billion was flat with the third quarter, but down 6.6% from the prior year's fourth quarter. Operating income for the quarter was 3% of sales. "Business activity levels in our North American components businesses slowed in the back half of December December: see month. ," said Mr. Duval, "but the fourth quarter was the best of the year for our Asia/Pac business, with sales of core components rising 15% over the third quarter. Although 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). remains a difficult market, our European Europeanemanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. businesses remain among our most profitable." The Hart-Scott-Rodino waiting period has expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. and the company expects to complete its previously-announced acquisition 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 at the end of February February: see month. . The company remains confident that it will achieve at least $60 million in annual cost savings from the combination of IED and its own North American components businesses and that this acquisition will add at least $.20 per share to earnings in the first full year following the combination (even assuming sales attrition Attrition The reduction in staff and employees in a company through normal means, such as retirement and resignation. This is natural in any business and industry. Notes: of as much as 20% to 25%). The company noted that it generated $65 million in free cash flow during the quarter, bringing the total generated during the past eight quarters to over $2.2 billion. Cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments at the end of the fourth quarter exceeded $690 million. The company expects to use an estimated $285 million to fund the purchase of Pioneer's IED business. Recently, the company has taken a series of additional steps 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 its cost structure by at least $40 million annually. The majority of the financial impact of these actions will be reflected in the company's results in the second quarter. The company will record a related special 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 $12 to $15 million, before taxes, in its first quarter results. Full Year Results Arrow's net income from continuing operations for 2002 was $12.1 million ($.12 per share) on sales of $7.4 billion. During 2002 the company repurchased $398.2 million of senior notes due to mature in the fourth quarter of 2003. As a result, the company incurred an extraordinary charge of $12.9 million net of taxes ($.13 per share). Also in 2002, the company recorded a charge of $5.4 million ($3.2 million net of taxes or $.03 per share) of severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs associated with the resignation of the company's former chief executive officer in June June: see month. 2002. In May 2002 the company sold its Gates/Arrow commodity computer products business. As the company has exited the commodity computer products business, this business is accounted for as a discontinued operation in accordance with Statement of Financial Accounting Standards No. 144, "Accounting for 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. or Disposal of Long-Lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. Assets." Accordingly, its results have been included in the 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: statement of operations See Income statement. as a single line item and all prior period information has been restated to reflect this presentation. Included in the twelve month results for 2002 is a net loss of $5.9 million ($.06 per share) related to the discontinued operation. The company adopted 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. ," effective January January: see month. 1, 2002. In accordance with the transitional rules of this pronouncement, the company completed its evaluation of the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of goodwill and determined that the carrying value exceeded the fair value in certain instances. As a result of this new pronouncement, the company recorded an impairment charge of $603.7 million ($6.05 and $5.97 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), which has been recorded as a cumulative effect of change in accounting principle. The net loss for the year ended December 31, 2002, including the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. items, was $610.5 million ($6.12 and $6.04 per share on a basic and diluted basis, respectively). Arrow's net loss from continuing operations for 2001 was $75.6 million ($.77 per share on a basic and diluted basis) on sales of $9.49 billion. Included in 2001's results were 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). costs and other special charges of $227.6 million ($145.1 million net of taxes or $1.47 per share) associated with headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reductions, the consolidation or closing of certain facilities, valuation adjustments to inventory and Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the investments, and the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of certain customer engagements. Also included was an integration charge of $9.4 million ($5.7 million net of taxes or $.06 per share) related to costs incurred in connection with the acquisition and integration of Wyle WYLE is a commercial television station in Florence, Alabama, broadcasting locally on channel 26 as an affiliate of Jewelry TV. Founded April 19, 1986, the station is owned by ETC Communications Inc. WYLE has been silent since February 8, 2007 due to financial difficulties. Electronics. Excluding the restructuring costs and other special charges and the integration charge, net income from continuing operations for 2001 would have been $75.2 million, $.77, and $.75 per share on a basic and diluted basis, respectively. Also included in last year's results was net income of $1.8 million related to discontinued operations. Including the results of the discontinued operation, the net loss and net loss per share in 2001 were $73.8 million and $.75 per share on a basic and diluted basis. As previously mentioned, the company's results no longer reflect the amortization of goodwill. If last year's results were restated to reflect the elimination of goodwill amortization, earnings per share would have increased by approximately $.42 per share. 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 175,000 original equipment manufacturers, contract manufacturers, and commercial customers through more than 200 sales facilities and 23 distribution centers in 40 countries. Detailed information about Arrow's operations can be found at www.arrow.com. 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 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. " 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 Year Ended
December 31, December 31,
---------------------- ----------------------
2002 2001 2002(A) 2001(B)
---- ---- ------- -------
Sales $1,890,959 $2,020,899 $7,390,154 $9,487,292
Costs and expenses:
Cost of products sold 1,574,128 1,686,886 6,130,581 8,004,657
Selling, general and
administrative
expenses 256,569 251,594 1,020,527 1,125,099
Depreciation and
amortization 15,641 31,159 66,141 118,344
Restructuring costs
and other
special charges - - - 77,147
Severance charge - - 5,375 -
Integration charge - - - 9,375
---------- --------- ---------- ----------
1,846,338 1,969,639 7,222,624 9,334,622
---------- --------- ---------- ----------
Operating income 44,621 51,260 167,530 152,670
Equity in earnings
(loss) of affiliated
companies 641 1,130 2,607 (1,203)
Loss on investments - - - 53,000
Interest expense 32,145 41,794 152,590 210,561
---------- --------- ---------- ----------
Earnings (loss) before
income taxes and
minority interest 13,117 10,596 17,547 (112,094)
Provision for (benefit
from) income taxes 4,591 4,577 6,166 (35,228)
---------- --------- ---------- ----------
Earnings (loss) before
minority interest 8,526 6,019 11,381 (76,866)
Minority interest (376) (435) (706) (1,279)
---------- --------- ---------- ----------
Earnings (loss) from
continuing operations 8,902 6,454 12,087 (75,587)
Income (loss) from
discontinued
operations, net of
taxes (including
loss from disposal
of $6,120, net of
tax benefit of
$4,114, in 2002)(C) - 175 (5,911) 1,761
---------- --------- ---------- ----------
Earnings (loss) before
extraordinary item 8,902 6,629 6,176 (73,826)
Extraordinary item,
net of taxes (D) (1,308) - (12,949) -
---------- --------- ---------- ----------
Income (loss) before
cumulative effect
of change in
accounting
principle 7,594 6,629 (6,773) (73,826)
Cumulative effect of
change in accounting
principle (E) - - (603,709) -
---------- --------- ---------- ----------
Net income (loss) $ 7,594 $ 6,629 $ (610,482) $ (73,826)
========== ========= ========== ==========
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------ ------------------
2002 2001 2002(A) 2001(B)
---- ---- ------- -------
Net income (loss) per basic share:
Income (loss) from continuing
operations $ .09 $ .07 $ .12 $ (.77)
Income (loss) from
discontinued operations - - (.06) .02
Loss from extraordinary item (.01) - (.13) -
Cumulative effect of change
in accounting
principle - - (6.05) -
-------- -------- -------- -------
Net income (loss) per basic
share $ .08 $ .07 $ (6.12) $ (.75)
======== ======== ======== =======
Net income (loss) per diluted
share:
Income (loss) from continuing
operations $ .09 $ .07 $ .12 $ (.77)
Income (loss) from
discontinued operations - - (.06) .02
Loss from extraordinary item (.01) - (.13) -
Cumulative effect of change
in accounting principle - - (5.97) -
-------- -------- -------- -------
Net income (loss) per diluted
share $ .08 $ .07 $ (6.04) $ (.75)
======== ======== ======== =======
Average number of shares
outstanding:
Basic 99,921 99,071 99,786 98,384
Diluted 100,441 100,441 101,068 98,384
See accompanying footnotes.
ARROW ELECTRONICS, INC.
FOOTNOTES
(A) Excluding the severance charge of $5.4 million ($3.2 million
net of taxes), net income and net income per share from
continuing operations would have been $15.3 million and $.15
on a basic and diluted basis, respectively, for the year ended
December 31, 2002.
(B) Excluding the restructuring costs and other special charges
totaling $227.6 million ($145.1 million net of taxes) and the
integration charge of $9.4 million ($5.7 million net of
taxes), net income and net income per share from continuing
operations would have been $75.2 million, $.77, and $.75 on a
basic and diluted basis, respectively, for the year ended
December 31, 2001.
(C) In May 2002, the company sold substantially all of the assets
of Gates/Arrow Distributing ("Gates/Arrow"), a business unit
within the company's North American Computer Product 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.
Included in the year end results for 2002 is a net loss of
$5.9 million ($.06 per share on a basic and diluted basis),
reflecting the results of the discontinued operation and the
related loss on its sale.
(D) During 2002, the company repurchased $250 million of its 6.45%
senior notes and $148.2 million of its 8.20% senior notes, due
in the fourth quarter of 2003. The premiums paid in connection
with those transactions and the related deferred financing
costs and discounts totaled $12.9 million, net of taxes ($.13
per share on a basic and diluted basis), and have been
recorded as an extraordinary item.
(E) 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 ($6.05
and $5.97 per share on a basic and diluted basis,
respectively). The company has recorded the impairment charge
as a cumulative effect of a change in accounting principle.
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
December 31, December 31,
2002 2001
------------ ------------
Assets
Current assets:
Cash and short-term investments $ 694,092 $ 556,861
Accounts receivable, net 1,378,562 1,389,882
Inventories 1,201,271 1,372,797
Other 59,810 52,892
Assets from discontinued operations - 98,954
---------- ----------
Total current assets 3,333,735 3,471,386
Property, plant and equipment, net 299,518 301,195
Investments in affiliated companies 32,527 32,917
Cost in excess of net assets of companies
acquired, net of amortization 748,368 1,224,283
Other assets 253,457 326,024
Assets from discontinued operations - 3,179
---------- ----------
$4,667,605 $5,358,984
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 917,271 $ 641,454
Accrued expenses 258,774 342,670
Short-term borrowings 286,348 37,289
Liabilities from discontinued operations - 25,572
---------- ----------
Total current liabilities 1,462,393 1,046,985
Long-term debt 1,807,113 2,441,983
Other 162,850 103,555
Shareholders' equity 1,235,249 1,766,461
---------- ----------
$4,667,605 $5,358,984
========== ==========
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended Year Ended
December 31, December 31,
--------------------- -----------------------
2002 2001 2002(A) 2001(B)
---- ---- ------- -------
Sales:
Components $1,317,213 $1,409,903 $5,322,196 $7,153,171
Computer products 573,746 610,996 2,067,958 2,334,121
---------- ---------- ---------- ----------
Consolidated $1,890,959 $2,020,899 $7,390,154 $9,487,292
========== ========== ========== ==========
Operating income:
Components $ 39,331 $ 60,592 $ 183,680 $ 415,966
Computer products 23,610 20,585 58,501 43,912
Corporate (18,320) (29,917) (74,651) (307,208)
---------- ---------- ---------- ----------
Consolidated $ 44,621 $ 51,260 $ 167,530 $ 152,670
========== ========== ========== ==========
(A) Excluding the severance charge of $5.4 million, operating
income would have been $172.9 million for the year ended
December 31, 2002.
(B) Excluding the restructuring costs and other special charges of
$227.6 million ($174.6 million in operating income) and the
integration charge of $9.4 million, operating income would
have been $336.7 million for the year ended December 31, 2001.
The company has redefined certain of its reportable segments. The
prior periods have been restated for comparative purposes.
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