Arrow Electronics Posts Third Quarter Results.Business Editors MELVILLE, N.Y.--(BUSINESS WIRE)--Oct. 24, 2002 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 third quarter 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 $.5 million ($.01 per share) on sales of $1.81 billion, compared with a net loss from continuing operations, excluding the 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 described below, of $14.9 million ($.15 per share) on sales of $2.01 billion in last year's third quarter. As previously announced, during the third quarter of 2002 the company incurred an extraordinary charge of $11.6 million ($.12 per share) associated with the early retirement of bonds due in the fourth quarter of 2003. Including the extraordinary charge, the company reported a net loss of $11.1 million ($.11 per share) in the third quarter of 2002. Last year's third quarter included restructuring costs and other special charges totaling $227.6 million ($145.1 million after 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. Including this charge, the net loss from continuing operations in last year's third quarter was $160 million ($1.62 per share). Also included in last year's third quarter results was $.9 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, the net loss in the third quarter of 2001 was $159.1 million ($1.61 per share). 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 recent changes to U.S. 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 , the company's 2002 results no longer reflect the amortization of goodwill. If last year's third quarter results were restated to reflect the elimination of goodwill amortization, the net loss would have decreased by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.10 per share. "We were generally pleased to have remained marginally mar·gin·al adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. profitable on an operating basis in the face of the continued general worldwide economic malaise malaise /mal·aise/ (mal-az´) a vague feeling of discomfort. mal·aise n. A vague feeling of bodily discomfort, as at the beginning of an illness. ," said Daniel Daniel, book of the Bible 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 , "especially in light of the impact of Europe's traditional extended summer holiday period." "Each of our operating groups around the world continues to focus on improving operating efficiencies and controlling costs while ensuring that we remain well-positioned to benefit from the inevitable recovery in our industry," he added. The company noted that it generated $90 million in free cash flow during the quarter, bringing the total generated during the past seven quarters to nearly $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 third quarter exceeded $700 million. Worldwide components revenue of $1.32 billion was down 1.9% when compared with the second quarter, and 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. was 3.4% of sales. Worldwide computer products sales from continuing operations totaled $496 million, down 1.4% from the second quarter. Operating income from continuing computer products activities, as a percentage of sales, was 2.1%. Nine Month Results Arrow's net income from continuing operations for the first nine months of 2002 was $3.2 million ($.03 per share) on sales of $5.5 billion. Included therein was $5.4 million ($3.2 million after 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. Excluding these costs, net income from continuing operations would have been $6.4 million ($.06 per share). 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 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. 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 nine month results for 2002 is a net loss of $5.9 million ($.06 per share), reflecting the results of the discontinued operation and the related loss on its sale. As previously discussed, during the third quarter of 2002 the company incurred an extraordinary charge of $11.6 million ($.12 per share) in connection with the early retirement of bonds due in the fourth quarter of 2003. 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 per share), which has been recorded as a cumulative effect of change in accounting principle. The net loss for the nine months ended September September: see month. 30, 2002, after giving consideration to the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. items, was $618.1 million ($6.20 per share). Arrow's net loss from continuing operations for the first nine months of 2001 was $82 million ($.84 per share) on sales of $7.47 billion. Included therein were the aforementioned restructuring costs and other special charges of $227.6 million ($145.1 million after taxes or $1.47 per share) and an integration charge of $9.4 million ($5.7 million after 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 the first nine months of 2001 would have been $68.8 million ($.69 per share). Also included in last year's nine month results was net income of $1.6 million related to discontinued operations. Including the net income from discontinued operations, the net loss in the first nine months of 2001 was $80.5 million ($.82 per share). As previously mentioned, the company's results no longer reflect the amortization of goodwill. If last year's nine month results were restated to reflect the elimination of goodwill amortization, earnings per share would have increased by approximately $.31 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 Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2002 2001(A) 2002(B) 2001(C)
---- ------- ------- -------
Sales $1,811,339 $2,014,029 $5,499,195 $7,466,393
---------- ---------- ---------- ----------
Costs and expenses:
Cost of products sold 1,502,717 1,791,700 4,556,453 6,317,771
Selling, general and
administrative
expenses 254,610 267,144 763,958 873,505
Depreciation and
amortization 16,190 29,016 50,500 87,185
Restructuring costs
and other special
charges - 77,147 - 77,147
Severance charge - - 5,375 -
Integration charge - - - 9,375
---------- ---------- ---------- ----------
1,773,517 2,165,007 5,376,286 7,364,983
---------- ---------- ---------- ----------
Operating income (loss) 37,822 (150,978) 122,909 101,410
Equity in earnings
(losses) of affiliated
companies 1,000 (940) 1,966 (2,333)
Loss on investments - 53,000 - 53,000
Interest expense 38,373 48,695 120,445 168,767
---------- ---------- ---------- ----------
Earnings (losses)
before income taxes
and minority interest 449 (253,613) 4,430 (122,690)
Provision for (benefit
from) income taxes 171 (93,065) 1,575 (39,805)
---------- ----------- ---------- -----------
Earnings (losses)
before minority
interest 278 (160,548) 2,855 (82,885)
Minority interest (246) (581) (330) (844)
---------- ---------- ---------- ----------
Earnings (losses) from
continuing operations 524 (159,967) 3,185 (82,041)
Income (loss) from
discontinued operations,
net of taxes (including
loss from disposal
of $6,120, net of
tax benefit of
$4,114, in 2002)
(D) - 879 (5,911) 1,586
---------- ---------- ---------- ----------
Earnings (losses) before
extraordinary item 524 (159,088) (2,726) (80,455)
Extraordinary item, net
of taxes (E) (11,641) - (11,641) -
---------- ---------- ---------- ----------
Losses before cumulative
effect of change in
accounting principle (11,117) (159,088) (14,367) (80,455)
Cumulative effect of
change in accounting
principle (F) - - (603,709) -
---------- ---------- ---------- ----------
Net loss $ (11,117) $ (159,088) $ (618,076) $ (80,455)
========== ========== ========== ==========
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2002 2001(A) 2002(B) 2001(C)
---- ------- ------- -------
Net income (loss) per
basic and diluted
share:
Income (loss) from
continuing operations $ .01 $(1.62) $ .03 $(.84)
Income (loss) from
discontinued
operations - .01 (.06) .02
Loss from
extraordinary item (.12) - (.12) -
Cumulative effect of
change in accounting
principle - - (6.05) -
----- ------ ------ -----
Net loss per basic and
diluted share $(.11) $(1.61) $(6.20) $(.82)
===== ====== ====== =====
Average number of
shares outstanding:
Basic 99,874 98,515 99,737 98,147
Diluted 99,874 98,515 99,737 98,147
This interim report is subject to independent audit at year-end.
See accompanying footnotes.
ARROW ELECTRONICS, INC.
FOOTNOTES
(A) Excluding the restructuring costs and other special charges
totaling $227.6 million ($145.1 million after taxes), net
loss and net loss per share from continuing operations
would have been $14.9 million and $.15 on a basic and
diluted basis, respectively, for the three months ended
September 30, 2001.
(B) Excluding the severance charge of $5.4 million ($3.2
million after taxes), net income and net income per share
from continuing operations would have been $6.4 million and
$.06 on a basic and diluted basis, respectively, for the
nine months ended September 30, 2002.
(C) Excluding the restructuring costs and other special charges
totaling $227.6 million ($145.1 million after taxes) and
the integration charge of $9.4 million ($5.7 million after
taxes), net income and net income per share from continuing
operations would have been $68.8 million, $.70 and $.69 on
a basic and diluted basis, respectively, for the nine
months ended September 30, 2001.
(D) 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 nine month
results for 2002 is a net loss of $5.9 million ($.06 per
share), reflecting the results of the discontinued
operation and the related loss on its sale.
(E) During the third quarter of 2002, the company repurchased
senior notes due in the fourth quarter of 2003. The premium
paid and the related deferred financing costs written off
related to this transaction totaled $11.6 million after
taxes ($.12 per share) and have been recorded as an
extraordinary item.
(F) 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 per share). The company has recorded
the impairment charge as a cumulative effect of change in
accounting principle.
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
September 30, December 31,
2002 2001
------------- ------------
Assets
Current assets:
Cash and short-term investments $ 717,820 $ 556,861
Accounts receivable, net 1,353,665 1,389,882
Inventories 1,180,146 1,372,797
Other 68,219 52,892
Assets from discontinued operations - 98,954
---------- ----------
Total current assets 3,319,850 3,471,386
Property, plant and equipment, net 292,955 301,195
Investments in affiliated companies 34,420 32,917
Cost in excess of net assets of companies
acquired, net of amortization for 2001 747,579 1,224,283
Other assets 299,709 326,024
Assets from discontinued operations - 3,179
---------- ----------
$4,694,513 $5,358,984
========== ==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 847,390 $ 641,454
Accrued expenses 360,808 342,670
Short-term borrowings 9,578 37,289
Liabilities from discontinued operations - 25,572
---------- ----------
Total current liabilities 1,217,776 1,046,985
Long-term debt 2,145,832 2,441,983
Other 110,897 103,555
Shareholders' equity 1,220,008 1,766,461
---------- ----------
$4,694,513 $5,358,984
========== ==========
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2002 2001(A) 2002(B) 2001(C)
---- ------- ------- -------
Sales:
Components $1,315,337 $1,467,808 $4,004,983 $5,743,268
Computer products 496,002 546,221 1,494,212 1,723,125
---------- ---------- ---------- ----------
Consolidated $1,811,339 $2,014,029 $5,499,195 $7,466,393
========== ========== ========== ==========
Operating income:
Components $ 44,380 $ 47,075 $ 144,444 $ 354,803
Computer products 10,237 8,078 34,796 23,898
Corporate (16,795) (206,131) (56,331) (277,291)
---------- ---------- ---------- ----------
Consolidated $ 37,822 $ (150,978) $ 122,909 $ 101,410
========== ========== ========== ==========
(A) Excluding the restructuring costs and other special
charges of $227.6 million ($174.6 million in operating
income), operating income would have been $23.6
million for the three months ended September 30, 2001.
(B) Excluding the severance charge of $5.4 million,
operating income would have been $128.3 million for
the nine months ended September 30, 2002.
(C) 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 $285.4 million for
the nine months ended September 30, 2001.
The company has redefined certain of its reportable segments. The
prior periods have been restated for comparative purposes.
This interim report is subject to independent audit at year-end.
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