New ETF Book by Larry Connors - Click here to read more
Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2009 net income of $12.6 million ($.10 per share on both a basic and diluted basis) on sales of $3.67 billion, compared with net income of $76.1 million ($.64 and $.63 per share on a basic and diluted basis, respectively) on sales of $4.30 billion in the third quarter of 2008.
The company's results for the third quarters of 2009 and 2008 include a number of items outlined below that impact their comparability. A complete reconciliation of these items is provided under the heading "Certain Non-GAAP Financial Information." Excluding those items, on a non-GAAP basis, net income for the quarter ended October 3, 2009, would have been $44.9 million ($.37 per share on both a basic and diluted basis) and net income for the quarter ended September 30, 2008, would have been $83.7 million ($.70 per share on both a basic and diluted basis).
"Our execution this quarter was excellent, exceeding our expectations for revenue, earnings per share, and cash flow. We continue to control well those things that we can, no matter the economic environment," said Michael J. Long, chief executive officer. "We continued to deliver on our commitment to simplify the business while remaining focused on our long-term goals to maximize sales and profitable market share growth."
Global components sales of $2.54 billion decreased 15 percent year over year. "Global components revenue exceeded our expectations with double-digit increases sequentially across all geographies. Year-over-year sales declines have begun to moderate in both North America and Europe, and Asia continues to post sales gains. We are well positioned to take advantage of opportunities in the marketplace and will continue to grow profits and gain market share across this business," Mr. Long said.
Global enterprise computing solutions ("ECS") sales of $1.13 billion decreased 14 percent year over year. "ECS sales were ahead of the midpoint of our expectations and above normal seasonality, fueled by a strong federal government year-end, as well as sequential increases in storage and services. In our worldwide server business the year-over-year declines have moderated," Mr. Long said.
The company's results for the third quarter of 2009 and 2008 include the items outlined below that impact their comparability:
-- During the third quarter of 2009, the company recorded restructuring and integration charges of $37.6 million ($29.1 million net of related taxes or $.24 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies. These charges are part of the company's cost reduction initiatives announced in the fourth quarter of 2008 and second quarter of 2009, which are expected to be $275 million in permanent and temporary annual savings.
-- During the third quarter of 2009, the company recorded a loss on prepayment of debt of $5.3 million ($3.2 million net of related taxes or $.03 per share on both a basic and diluted basis) related to the repurchase of $130.5 million principal amount of its 9.15% senior notes due 2010.
-- During the third quarter of 2008, the company recorded restructuring and integration charges of $11.0 million ($7.6 million net of related taxes or $.06 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies.
NINE-MONTH RESULTS
Arrow's net income for the first nine months of 2009 was $60.4 million ($.50 per share on both a basic and diluted basis) on sales of $10.5 billion, compared with net income of $258.2 million ($2.13 and $2.11 per share on a basic and diluted basis, respectively) on sales of $12.7 billion in the first nine months of 2008.
Net income for the first nine months of 2009 includes restructuring and integration charges of $80.9 million ($61.3 million net of related taxes or $.51 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies and a loss on prepayment of debt of $5.3 million ($3.2 million net of related taxes or $.03 per share on both a basic and diluted basis) related to the repurchase of $130.5 million principal amount of its 9.15% senior notes due 2010. Excluding these items, net income would have been $124.9 million ($1.04 per share on both a basic and diluted basis) for the first nine months of 2009.
Net income for the first nine months of 2008 includes restructuring and integration charges of $25.7 million ($17.7 million net of related taxes or $.15 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies and a charge, including legal fees, related to a preference claim from 2001 of $12.9 million ($7.8 million net of related taxes or $.06 per share on both a basic and diluted basis). Excluding these items, net income would have been $283.7 million ($2.34 and $2.32 per share on a basic and diluted basis, respectively) for the first nine months of 2008.
GUIDANCE
"Looking ahead, we believe that total fourth-quarter sales will be between $3.65 and $4.25 billion, with global component sales between $2.25 and $2.65 billion and global enterprise computing solutions sales between $1.4 and $1.6 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $.44 to $.56," said Paul J. Reilly, executive vice president and chief financial officer.
Arrow Electronics (www.arrow.com) is a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Headquartered in Melville, N.Y., Arrow serves as a supply channel partner for approximately 800 suppliers and 130,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 340 locations in 53 countries and territories.
Certain Non-GAAP Financial Information
In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles ("GAAP"), the company provides certain non-GAAP financial information relating to operating income, net income and net income per basic and diluted share, each as adjusted for certain charges, credits and losses that the company believes impact the comparability of its results of operations. These charges, credits and losses arise out of the company's efficiency enhancement initiatives, prepayment of debt, and certain legal matters. A reconciliation of the company's non-GAAP financial information to GAAP is 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, credits 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 may use 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 with, data presented in accordance with GAAP.
ARROW ELECTRONICS, INC.
EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
October 3, September 30, October 3, September 30,
2009 2008 2009 2008
Operating income, as reported $ 45,056 $ 131,776 $ 157,491 $ 440,877
Restructuring and integration charges 37,583 11,037 80,853 25,711
Preference claim from 2001 - - - 12,941
Operating income, as adjusted $ 82,639 $ 142,813 $ 238,344 $ 479,529
Net income attributable to shareholders, as reported $ 12,581 $ 76,070 $ 60,419 $ 258,156
Restructuring and integration charges 29,075 7,635 61,268 17,723
Loss on prepayment of debt 3,228 - 3,228 -
Preference claim from 2001 - - - 7,822
Net income attributable to shareholders, as adjusted $ 44,884 $ 83,705 $ 124,915 $ 283,701
Net income per basic share, as reported .10 $ .64 $ .50 $ 2.13
Restructuring and integration charges .24 .06 .51 .15
Loss on prepayment of debt .03 - .03 -
Preference claim from 2001 - - - .06
Net income per basic share, as adjusted $ .37 $ .70 $ 1.04 $ 2.34
Net income per diluted share, as reported $ .10 $ .63 $ .50 $ 2.11
Restructuring and integration charges .24 .06 .51 .15
Loss on prepayment of debt .03 - .03 -
Preference claim from 2001 - - - .06
Net income per diluted share, as adjusted $ .37 $ .70 $ 1.04 $ 2.32
The sum of the components for basic and diluted net income per share, as adjusted, may not agree to totals, as presented, due to rounding.
Information Relating to Forward-Looking Statements
This press release includes forward-looking statements that are subject to numerous assumptions, 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, the company's implementation of its new enterprise resource planning system, changes in product supply, pricing and customer demand, competition, other vagaries in the global components and global ECS markets, changes in relationships with key suppliers, increased profit margin pressure, the effects of additional actions taken to become more efficient or lower costs, and the company's ability to generate additional cash flow. Forward-looking statements are those statements, which are not statements of historical fact. These forward-looking statements can be identified by forward-looking 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 of the forward-looking statements.
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
Quarter Ended Nine Months Ended
October 3, September 30, October 3, September 30,
2009 2008 2009 2008
Sales $ 3,671,865 $ 4,295,314 $ 10,481,116 $ 12,671,282
Costs and expenses:
Cost of products sold 3,250,804 3,731,459 9,226,865 10,908,665
Selling, general and administrative expenses 321,503 403,542 965,645 1,230,893
Depreciation and amortization 16,919 17,500 50,262 52,195
Restructuring and integration charges 37,583 11,037 80,853 25,711
Preference claim from 2001 - - - 12,941
3,626,809 4,163,538 10,323,625 12,230,405
Operating income 45,056 131,776 157,491 440,877
Equity in earnings of affiliated companies 1,883 2,073 3,233 5,359
Loss on prepayment of debt 5,312 - 5,312 -
Interest and other financing expense, net 18,033 24,809 58,150 74,010
Income before income taxes 23,594 109,040 97,262 372,226
Provision for income taxes 11,018 32,863 36,868 113,801
Consolidated net income 12,576 76,177 60,394 258,425
Noncontrolling interests (5 ) 107 (25 ) 269
Net income attributable to shareholders $ 12,581 $ 76,070 $ 60,419 $ 258,156
Net income per share:
Basic $ .10 $ .64 $ .50 $ 2.13
Diluted $ .10 $ .63 $ .50 $ 2.11
Average number of shares outstanding:
Basic 119,888 119,541 119,745 121,226
Diluted 120,785 120,384 120,238 122,118
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
October 3, December 31,
2009 2008(A)
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,150,770 $ 451,272
Accounts receivable, net 2,707,968 3,087,290
Inventories 1,308,345 1,626,559
Prepaid expenses and other assets 180,805 180,647
Total current assets 5,347,888 5,345,768
Property, plant and equipment, at cost:
Land 25,276 25,127
Buildings and improvements 147,773 147,138
Machinery and equipment 781,131 698,156
954,180 870,421
Less: Accumulated depreciation and amortization (492,867 ) (459,881 )
Property, plant and equipment, net 461,313 410,540
Investments in affiliated companies 51,290 46,788
Cost in excess of net assets of companies acquired 908,894 905,848
Other assets 405,990 409,341
Total assets $ 7,175,375 $ 7,118,285
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,298,893 $ 2,459,922
Accrued expenses 362,327 455,547
Short-term borrowings, including current portion of long-term debt 141,417 52,893
Total current liabilities 2,802,637 2,968,362
Long-term debt 1,278,007 1,223,985
Other liabilities 248,053 248,888
Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized - 160,000 shares in 2009 and 2008
Issued - 125,287 and 125,048 shares in 2009 and 2008, respectively 125,287 125,048
Capital in excess of par value 1,044,504 1,035,302
Treasury stock (5,516 and 5,740 shares in 2009 and 2008, (181,041 ) (190,273 )
respectively), at cost
Retained earnings 1,631,424 1,571,005
Foreign currency translation adjustment 245,437 172,528
Other (19,248 ) (36,912 )
Total shareholders' equity 2,846,363 2,676,698
Noncontrolling interests 315 352
Total equity 2,846,678 2,677,050
Total liabilities and equity $ 7,175,375 $ 7,118,285
(A) Effective January 1, 2009, the company adopted Accounting Standards
Codification Topic 810-10-65. To conform to the current period
presentation, prior period balances of accumulated undistributed
earnings related to noncontrolling interests in less-than-wholly
owned subsidiaries were reclassified from other liabilities to a
component of equity.
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Quarter Ended
October 3, September 30,
2009 2008
Cash flows from operating activities:
Consolidated net income $ 12,576 $ 76,177
Adjustments to reconcile consolidated net income to net cash
provided by operations:
Depreciation and amortization 16,919 17,500
Amortization of stock-based compensation 6,172 3,343
Amortization of deferred financing costs and discount on notes 571 474
Equity in earnings of affiliated companies (1,883 ) (2,073 )
Deferred income taxes 4,266 14,007
Restructuring and integration charge 29,075 7,635
Loss on prepayment of debt 3,228 -
Excess tax benefits from stock-based compensation arrangements (416 ) 3
Change in assets and liabilities, net of effects of acquired
businesses:
Accounts receivable (132,864 ) 177,072
Inventories 67,435 87,631
Prepaid expenses and other assets 11,891 7,225
Accounts payable 95,638 (156,186 )
Accrued expenses (15,065 ) (7,667 )
Other 14,787 (22,914 )
Net cash provided by operating activities 112,330 202,227
Cash flows from investing activities:
Acquisition of property, plant and equipment (26,653 ) (43,148 )
Cash consideration paid for acquired businesses - (46,751 )
Other - (172 )
Net cash used for investing activities (26,653 ) (90,071 )
Cash flows from financing activities:
Change in short-term borrowings (24,500 ) (18,796 )
Repayment of revolving credit facility borrowings - (1,564,300 )
Proceeds from revolving credit facility borrowings - 1,444,972
Repurchase of senior notes (135,658 ) -
Net proceeds from note offering 297,430 -
Proceeds from exercise of stock options 2,232 1,537
Excess tax benefits from stock-based compensation arrangements 416 (3 )
Repurchases of common stock (178 ) (13,102 )
Net cash provided by (used for) financing activities 139,742 (149,692 )
Effect of exchange rate changes on cash 16,924 (3,510 )
Net increase (decrease) in cash and cash equivalents 242,343 (41,046 )
Cash and cash equivalents at beginning of period 908,427 284,483
Cash and cash equivalents at end of period $ 1,150,770 $ 243,437
ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
October 3, September 30,
2009 2008
Cash flows from operating activities:
Consolidated net income $ 60,394 $ 258,425
Adjustments to reconcile consolidated net income to net cash
provided by operations:
Depreciation and amortization 50,262 52,195
Amortization of stock-based compensation 19,219 13,017
Amortization of deferred financing costs and discount on 1,681 1,616
notes
Equity in earnings of affiliated companies (3,233 ) (5,359 )
Deferred income taxes 21,933 11,251
Restructuring and integration charge 61,268 17,723
Preference claim from 2001 - 7,822
Loss on prepayment of debt 3,228 -
Excess tax benefits from stock-based compensation 1,741 (228 )
arrangements
Change in assets and liabilities, net of effects of acquired
businesses:
Accounts receivable 413,790 332,617
Inventories 331,098 (40,092 )
Prepaid expenses and other assets 3,118 (6,976 )
Accounts payable (157,827 ) (313,281 )
Accrued expenses (158,527 ) 51,560
Other 1,174 (36,255 )
Net cash provided by operating activities 649,319 344,035
Cash flows from investing activities:
Acquisition of property, plant and equipment (99,022 ) (112,519 )
Cash consideration paid for acquired businesses - (319,865 )
Proceeds from sale of facilities 1,153 -
Other (272 ) (380 )
Net cash used for investing activities (98,141 ) (432,764 )
Cash flows from financing activities:
Change in short-term borrowings (32,009 ) (10,512 )
Repayment of revolving credit facility borrowings (29,400 ) (2,988,950 )
Proceeds from revolving credit facility borrowings 29,400 2,988,649
Repurchase of senior notes (135,658 ) -
Net proceeds from note offering 297,430 -
Proceeds from exercise of stock options 3,069 4,371
Excess tax benefits from stock-based compensation arrangements (1,741 ) 228
Repurchases of common stock (2,323 ) (115,763 )
Net cash provided by (used for) financing activities 128,768 (121,977 )
Effect of exchange rate changes on cash 19,552 6,412
Net increase (decrease) in cash and cash equivalents 699,498 (204,294 )
Cash and cash equivalents at beginning of period 451,272 447,731
Cash and cash equivalents at end of period $ 1,150,770 $ 243,437
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
Quarter Ended Nine Months Ended
October 3, September 30, October 3, September 30,
2009 2008 2009 2008
Sales:
Global components $ 2,541,339 $ 2,988,950 $ 7,157,921 $ 8,869,394
Global ECS 1,130,526 1,306,364 3,323,195 3,801,888
Consolidated $ 3,671,865 $ 4,295,314 $ 10,481,116 $ 12,671,282
Operating income (loss):
Global components $ 81,507 $ 138,389 $ 215,598 $ 446,020
Global ECS 32,359 39,653 98,846 131,437
Corporate (a) (68,810 ) (46,266 ) (156,953 ) (136,580 )
Consolidated $ 45,056 $ 131,776 $ 157,491 $ 440,877
(a) Includes restructuring and integration charges of $37.6 million and
$80.9 million for the third quarter and first nine months of 2009
and $11.0 million and $25.7 million for the third quarter and first
nine months of 2008, respectively. Also includes a charge of $12.9
million related to the preference claim from 2001 for the first nine
months of 2008.
SOURCE: Arrow Electronics, Inc.
Arrow Electronics, Inc. Michael Taunton, 631-847-5680 Vice President & Treasurer or Paul J. Reilly, 631-847-1872 Executive Vice President & Chief Financial Officer or Media: John Hourigan, 303-824-4586 Director, External Communications
More News:
Market Updates |
Stock Alerts |
All Trading News |
Stock Index
About TradingMarkets | Contact | Advertise | Careers | Link to Us | Site Map | Help | Terms & Conditions | Privacy Policy | Return Policy | Testimonials | Feedback
The Connors Group, Inc. ("Company") is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. The analysts and employees or affiliates of Company may hold positions in the stocks, currencies or industries discussed here. You understand and acknowledge that there is a very high degree of risk involved in trading securities and/or currencies. The Company, the authors, the publisher, and all affiliates of Company assume no responsibility or liability for your trading and investment results. Factual statements on the Company's website, or in its publications, are made as of the date stated and are subject to change without notice.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results of any individual trader or trading system published by Company are not indicative of future returns by that trader or system, and are not indicative of future returns which be realized by you. In addition, the indicators, strategies, columns, articles and all other features of Company's products (collectively, the "Information") are provided for informational and educational purposes only and should not be construed as investment advice. Examples presented on Company's website are for educational purposes only. Such set-ups are not solicitations of any order to buy or sell. Accordingly, you should not rely solely on the Information in making any investment. Rather, you should use the Information only as a starting point for doing additional independent research in order to allow you to form your own opinion regarding investments. You should always check with your licensed financial advisor and tax advisor to determine the suitability of any investment.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING AND MAY NOT BE IMPACTED BY BROKERAGE AND OTHER SLIPPAGE FEES. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
The Connors Group, Inc.
10 Exchange Place, Suite 1800
Jersey City, NJ 07302
© Copyright 2009 The Connors Group, Inc.