Press Release Details

MELVILLE, N.Y., Apr 27, 2011 (BUSINESS WIRE) -- Arrow Electronics, Inc. (NYSE: ARW) today reported first-quarter 2011 net income of $136.3 million ($1.18 and $1.16 per share on a basic and diluted basis, respectively) on sales of $5.22 billion, compared with net income of $87.0 million ($.72 and $.71 per share on a basic and diluted basis, respectively) on sales of $4.24 billion in the first quarter of 2010.

The company's results for the first quarters of 2011 and 2010 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 April 2, 2011 would have been $146.0 million ($1.27 and $1.24 per share on a basic and diluted basis, respectively) and net income for the quarter ended April 3, 2010 would have been $92.6 million ($.77 and $.76 per share on a basic and diluted basis, respectively). Pro forma for acquisitions and excluding the impact of foreign exchange, sales increased 10% year over year.

"Our growth strategy and the related momentum we built throughout the second half of 2009 and 2010 have carried over into the first quarter of 2011, with the Arrow team generating the strongest first-quarter results in our history. Revenue and earnings per share came in well ahead of our expectations, driven by strength in both of our business segments," said Michael J. Long, chairman, president, and chief executive officer. "We are focused on accelerating the growth in our core businesses, while expanding our geographic reach, product portfolio, and services capabilities. We are very optimistic about the long-term outlook for our businesses around the globe and believe there is immense opportunity in the technology industry."

"Acquisitions were accretive to EPS and are tracking to our projections. Gross profit margin, operating expense as a percentage of sales, and operating income margin for our legacy businesses all showed significant improvement compared to last year," said Paul J. Reilly, executive vice president, finance and operations and chief financial officer. "Our returns this quarter again demonstrated our unwavering commitment to creating shareholder value. Return on working capital and return on invested capital advanced 240 basis points and 190 basis points, respectively, to nearly 32% and to 14%."

Global components sales of $3.89 billion increased 24 percent year over year. "We saw outstanding performance in all of our regions, with our core business showing very robust growth trends ahead of normal seasonality. Our recent acquisitions have complemented the core and are also driving growth in new markets and product sets. We are excited about the opportunities that lay ahead for global components and would expect to continue to outgrow the market with the strong start we have in 2011," Mr. Long said.

Global enterprise computing solutions ("ECS") sales of $1.34 billion increased 21 percent year over year, representing a record level of first-quarter revenue. "Sales were in line with the high end of normal seasonality, and we saw excellent year-over-year growth in industry-standard servers, storage, and services. We remain very optimistic about the outlook for the ECS business, as we have diversified into a number of faster growing markets, such as security, networking, and virtualization, and are well positioned to capitalize on the next wave of IT spending growth," said Mr. Long.

The company's results for the first quarters of 2011 and 2010 include the items outlined below that impact their comparability:

• restructuring, integration, and other charges of $9.6 million ($7.2 million net of related taxes or $.06 per share on both a basic and diluted basis) in 2011 and $7.4 million ($5.5 million net of related taxes or $.05 per share on a both basic and diluted basis) in 2010;
• the company recorded a charge of $5.9 million ($3.6 million net of related taxes or $.03 per share on both a basic and diluted basis) in connection with the settlement of a legal matter in 2011; and
• the company recognized a gain on bargain purchase of $1.8 million ($1.1 million net of related taxes or $.01 per share on both a basic and diluted basis) related to the acquisition of Nu Horizons Electronics in 2011.

GUIDANCE

"Looking ahead, we believe that total second-quarter sales will be between $5.55 and $5.95 billion, with global components sales between $4.0 and $4.2 billion and global enterprise computing solutions sales between $1.55 and $1.75 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $1.30 to $1.40," said Mr. Reilly.

Please refer to the CFO commentary as a supplement to the company's earnings release, which can be found at www.arrow.com/investor.

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 over 1,200 suppliers and 115,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 340 locations in 52 countries.

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 primarily out of the company's efficiency enhancement initiatives, acquisitions, and settlement of 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.

SOURCE: Arrow Electronics, Inc.

Arrow Electronics, Inc.
Michael Taunton, 631-847-5680
Vice President & Treasurer
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Paul J. Reilly, 631-847-1872
Executive Vice President, Finance and Operations & Chief Financial Officer
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Media:
John Hourigan, 303-824-4586
Director, Corporate Communications