MELVILLE, N.Y.--(BUSINESS WIRE)--Jul. 29, 2009-- Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2009 net income of $21.1 million ($.18 per share on both a basic and diluted basis) on sales of $3.39 billion, compared with net income of $96.2 million ($.79 per share on both a basic and diluted basis) on sales of $4.35 billion in the second quarter of 2008. Sales decreased 22 percent year over year. Pro forma to include the impact of the acquisition of LOGIX S.A. (“LOGIX”), sales decreased 23 percent year over year.

The company's results for the second 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 July 4, 2009, would have been $37.2 million ($.31 per share on both a basic and diluted basis) and net income for the quarter ended June 30, 2008, would have been $102.1 million ($.84 per share on both a basic and diluted basis).

“This quarter’s results were at the high end of our updated expectations, and we delivered on our commitment to radically simplify the business while remaining focused on our long-term goals. We continue to invest in opportunities to enhance our growth and enable us to become a more efficient and productive organization, despite the challenges of a weakening economy,” said Michael J. Long, chief executive officer. “Our cash flow generation remains exceptional, with more than $300 million in cash from operations generated in the second quarter and over $1 billion in the last 12 months, which enables us to capitalize on opportunities that present themselves.”

Global enterprise computing solutions (“ECS”) sales of $1.12 billion decreased 19 percent year over year. Pro forma to include the impact of the acquisition of LOGIX, sales decreased 24 percent year over year. “ECS sales were at the low end of our expectations, due to lower demand and IT spending, as capital-intensive projects continue to be highly scrutinized. With strong operating margins and cash flow, we remain confident that our strategy of portfolio diversification will continue to provide benefits, as the need for complex technology systems to provide security and storage solutions has not diminished despite the macro headwinds,” Mr. Long said.

Global components sales of $2.27 billion decreased 23 percent year over year. “In global components, our revenue results exceeded the midpoint of our expectations, driven by strength in Asia as well as a solid finish to the month of June for our North American business. The European economies remain weak and we continue to see significant year-over-year declines in the pace of business activity,” Mr. Long said.

“While pleased with our second-quarter performance, we also realize that the cost savings we have generated to date have not been enough to offset both the sales declines and margin pressure we have experienced during this downturn,” added Paul J. Reilly, executive vice president and chief financial officer. “Given the market realities we are faced with, we have an additional $100 million in annual cost reductions that are expected to be implemented in the second half of 2009, primarily in our European operations. We believe these actions are necessary to properly position our company to move forward with our long-term objectives, and should result in business simplification and alignment with market opportunities.”

The company's results for the second quarter of 2009 and 2008 include the items outlined below that impact their comparability:

• During the second quarter of 2009, the company recorded restructuring and integration charges of $19.3 million ($16.1 million net of related taxes or $.13 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies.
• During the second quarter of 2008, the company recorded restructuring and integration charges of $8.2 million ($5.9 million net of related taxes or $.05 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies.

SIX-MONTH RESULTS

Arrow’s net income for the first six months of 2009 was $47.8 million ($.40 per share on both a basic and diluted basis) on sales of $6.81 billion, compared with net income of $182.1 million ($1.49 and $1.48 per share on a basic and diluted basis, respectively) on sales of $8.38 billion in the first six months of 2008. Sales in the first six months of 2009 decreased 19 percent year over year. Pro forma to include the impact of the acquisition of LOGIX, sales decreased 21 percent year over year.

Net income for the first six months of 2009 includes restructuring and integration charges of $43.3 million ($32.2 million net of related taxes or $.27 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies. Excluding these items, net income would have been $80.0 million ($.67 per share on both a basic and diluted basis) for the first six months of 2009.

Net income for the first six months of 2008 includes restructuring and integration charges of $14.7 million ($10.1 million net of related taxes or $.08 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 basis and diluted basis). Excluding these items, net income would have been $200.0 million ($1.64 and $1.63 per share on a basic and diluted basis, respectively) for the first six months of 2008.

GUIDANCE

“Looking ahead, we believe that total third-quarter sales will be between $3.1 and $3.7 billion, with global component sales between $2.1 and $2.5 billion and global enterprise computing solutions sales between $1.0 and $1.2 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $.25 to $.37. Our guidance assumes that the average Euro to USD exchange rate for the third quarter is 1.41 to 1, compared with an average exchange rate of 1.50 to 1 in the third quarter of 2008,” Mr. Reilly said.

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 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.

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.

(A) Effective January 1, 2009, the company adopted Statement of Financial Accounting Standards No. 160. 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.

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