Arrow Electronics (ARW) 8-K Arrow Electronics Reports Second-Quarter 2016 Results

Exhibit 99.1

Arrow Electronics Reports Second-Quarter 2016 Results

-- Margins Expand Over Prior Year --

-- Earnings Per Share of $1.45; Non-GAAP Earnings Per Share of $1.65 --

CENTENNIAL, Colo.--(BUSINESS WIRE)--August 2, 2016--Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2016 net income of $134.3 million, or $1.45 per share on a diluted basis, compared with net income of $123.9 million, or $1.28 per share on a diluted basis, in the second quarter of 2015. Excluding certain items¹, net income would have been $152.7 million, or $1.65 per share on a diluted basis, in the second quarter of 2016, compared with net income of $148.9 million, or $1.54 per share on a diluted basis, in the second quarter of 2015. Second-quarter sales of $5.97 billion increased 2 percent from sales of $5.83 billion in the prior year. Second-quarter sales, adjusted for the impact of acquisitions, were flat year over year.

“By increasingly delivering more complex solutions, we capture a greater reward. That was evidenced by our margin performance,” said Michael J. Long, chairman, president, and chief executive officer. “Our core businesses remain healthy, and we made significant progress in the quarter with respect to our digital transformation, expanding our cloud solutions, and capturing the opportunities afforded by IoT to sell the capabilities of our entire enterprise.”

Global components second-quarter sales of $3.83 billion grew 4 percent year over year. Second-quarter sales, as adjusted, grew 1 percent year over year. Americas components sales were flat year over year. Europe components sales grew 7 percent year over year. Sales in the region, as adjusted, grew 3 percent year over year. Asia-Pacific components sales grew 5 percent year over year. Sales in the region, as adjusted, were flat year over year.

Global enterprise computing solutions second-quarter sales of $2.14 billion were flat year over year. Americas sales declined 2 percent year over year. Sales in the region, as adjusted, declined 6 percent year over year. Europe sales grew 6 percent year over year. Sales in the region, as adjusted, grew 4 percent year over year. “Our software-led solutions drove enterprise computing solutions operating income up 10 percent year over year, and we believe this is the best measure of the momentum in our business,” added Mr. Long.

“Cash flow from operations was $148 million in the second quarter as we continue to exceed our cash flow target,” said Chris Stansbury, senior vice president and chief financial officer. “During the quarter, we returned approximately $31 million to shareholders through our stock repurchase program. We had approximately $286 million of remaining authorization under our share repurchase programs at the end of the second quarter.”

SIX-MONTH RESULTS

Arrow’s net income for the first six months of 2016 was $240.5 million, or $2.59 per share on a diluted basis, compared with net income of $230 million, or $2.37 per share on a diluted basis in the first six months of 2015. Excluding certain items¹, net income would have been $285 million, or $3.07 per share on a diluted basis, in the first six months of 2016 compared with net income of $276.7 million, or $2.86 per share on a diluted basis, in the first six months of 2015. In the first six months of 2016, sales of $11.45 billion increased 6 percent from sales of $10.83 billion in the first six months of 2015.

___________________________
1 A reconciliation of non-GAAP adjusted financial measures, including sales, as adjusted, operating income, as adjusted, net income attributable to shareholders, as adjusted, and net income per share, as adjusted, to GAAP financial measures is presented in the reconciliation tables included herein.

GUIDANCE

“As we look to the third quarter, we believe that total sales will be between $5.65 billion and $6.05 billion, with global components sales between $3.725 billion and $3.925 billion, and global enterprise computing solutions sales between $1.925 billion and $2.125 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.23 to $1.35, and earnings per share on a diluted basis, excluding any charges, to be in the range of $1.45 to $1.57 per share. Our guidance assumes an average tax rate in the range of 27 to 29 percent and average diluted shares outstanding are expected to be 92.5 million. We are expecting the average USD-to-Euro exchange rate for the third quarter to be approximately $1.11 to €1,” said Mr. Stansbury.

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

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. Arrow serves as a supply channel partner for more than 100,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 460 locations serving over 85 countries.

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 enterprise computing solutions markets, changes in relationships with key suppliers, increased profit margin pressure, the effects of additional actions taken to become more efficient or lower costs, risks related to the integration of acquired businesses, changes in legal and regulatory matters, 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.

For a further discussion of factors to consider in connection with these forward-looking statements, investors should refer to Item 1A Risk Factors of the company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Certain Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, operating income, net income attributable to shareholders, and net income per basic and diluted share. The company provides sales on a non-GAAP basis adjusted for the impact of changes in foreign currencies and the impact of acquisitions by adjusting the company's operating results for businesses acquired, including the amortization expense related to acquired intangible assets, as if the acquisitions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions"). Operating income, net income attributable to shareholders, and net income per basic and diluted share are adjusted for certain charges, credits, gains, and losses that the company believes impact the comparability of its results of operations. These charges, credits, gains, and losses arise out of the company’s efficiency enhancement initiatives, acquisitions (including intangible assets amortization expense), loss on prepayment of debt, and (gain)/loss on investments. A reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the tables 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 these items 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, sales, 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. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (Unaudited)
	Quarter Ended				Six Months Ended
	July 2, 2016		June 27, 2015		July 2, 2016		June 27, 2015
Sales	$	5,972,101	$	5,829,989	$	11,446,278	$	10,832,374
Costs and expenses:
Cost of sales		5,173,310		5,061,394		9,898,589		9,378,457
Selling, general, and administrative expenses		518,704		504,754		1,024,517		959,284
Depreciation and amortization		40,389		39,751		81,322		76,913
Restructuring, integration, and other charges		16,106		17,147		36,894		33,343
		5,748,509		5,623,046		11,041,322		10,447,997
Operating income		223,592		206,943		404,956		384,377
Equity in earnings of affiliated companies		2,227		1,903		4,083		3,216
Interest and other financing expense, net		39,024		34,696		74,599		65,550
Other expense, net		-		1,500		-		2,435
Income before income taxes		186,795		172,650		334,440		319,608
Provision for income taxes		51,457		47,967		92,510		88,834
Consolidated net income		135,338		124,683		241,930		230,774
Noncontrolling interests		1,068		751		1,425		784
Net income attributable to shareholders	$	134,270	$	123,932	$	240,505	$	229,990
Net income per share:
Basic	$	1.46	$	1.30	$	2.62	$	2.40
Diluted	$	1.45	$	1.28	$	2.59	$	2.37
Weighted average shares outstanding:
Basic		91,782		95,638		91,647		95,776
Diluted		92,693		96,649		92,771		96,874

ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands except par value)
	July 2, 2016			December 31, 2015
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	495,771		$	273,090
Accounts receivable, net		5,704,633			6,161,418
Inventories, net		2,504,121			2,466,490
Other current assets		331,159			285,473
Total current assets		9,035,684			9,186,471
Property, plant, and equipment, at cost:
Land		23,723			23,547
Buildings and improvements		171,125			162,011
Machinery and equipment		1,322,470			1,250,115
		1,517,318			1,435,673
Less: Accumulated depreciation and amortization		(779,767	)		(735,495	)
Property, plant, and equipment, net		737,551			700,178
Investments in affiliated companies		75,985			73,376
Intangible assets, net		365,603			389,326
Cost in excess of net assets of companies acquired		2,418,958			2,368,832
Other assets		313,025			303,747
Total assets	$	12,946,806		$	13,021,930
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	4,644,655		$	5,192,665
Accrued expenses		701,960			819,463
Short-term borrowings, including current portion of long-term debt		111,259			44,024
Total current liabilities		5,457,874			6,056,152
Long-term debt		2,619,003			2,380,575
Other liabilities		421,048			390,392
Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized – 160,000 shares in both 2016 and 2015
Issued – 125,424 shares in both 2016 and 2015		125,424			125,424
Capital in excess of par value		1,092,323			1,107,314
Treasury stock (34,073 and 34,501 shares in 2016 and 2015, respectively), at cost		(1,475,671	)		(1,480,069	)
Retained earnings		4,914,985			4,674,480
Accumulated other comprehensive loss		(262,560	)		(284,706	)
Total shareholders' equity		4,394,501			4,142,443
Noncontrolling interests		54,380			52,368
Total equity		4,448,881			4,194,811
Total liabilities and equity	$	12,946,806		$	13,021,930

ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Quarter Ended
	July 2, 2016			June 27, 2015
Cash flows from operating activities:
Consolidated net income	$	135,338		$	124,683
Adjustments to reconcile consolidated net income to net cash used for operations:
Depreciation and amortization		40,389			39,751
Amortization of stock-based compensation		10,398			12,086
Equity in earnings of affiliated companies		(2,227	)		(1,903	)
Deferred income taxes		5,114			14,115
Excess tax benefits from stock-based compensation arrangements		(807	)		(185	)
Other		1,492			2,844
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable		(467,492	)		143,882
Inventories		(67,101	)		(131,399	)
Accounts payable		429,416			259,287
Accrued expenses		45,952			9,790
Other assets and liabilities		17,448			(11,917	)
Net cash provided by operating activities		147,920			461,034
Cash flows from investing activities:
Cash consideration paid for acquired businesses		1,017			(337,585	)
Acquisition of property, plant, and equipment		(39,075	)		(37,670	)
Other		(12,000	)		-
Net cash used for investing activities		(50,058	)		(375,255	)
Cash flows from financing activities:
Change in short-term and other borrowings		67,141			(5,051	)
Proceeds from (repayment of)long-term bank borrowings, net		(32,000	)		82,800
Proceeds from exercise of stock options		9,139			1,898
Excess tax benefits from stock-based compensation arrangements		807			185
Repurchases of common stock		(28,149	)		(77,863	)
Net cash provided by financing activities		16,938			1,969
Effect of exchange rate changes on cash		(13,684	)		6,680
Net increase in cash and cash equivalents		101,116			94,428
Cash and cash equivalents at beginning of period		394,655			305,293
Cash and cash equivalents at end of period	$	495,771		$	399,721

ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Six Months Ended
		July 2, 2016			June 27, 2015
Cash flows from operating activities:
Consolidated net income	$	241,930		$	230,774
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		81,322			76,913
Amortization of stock-based compensation		19,275			22,006
Equity in earnings of affiliated companies		(4,083	)		(3,216	)
Deferred income taxes		27,669			26,506
Excess tax benefits from stock-based compensation arrangements		(4,939	)		(5,842	)
Other		2,954			4,574
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable		529,246			1,079,153
Inventories		(22,490	)		(82,825	)
Accounts payable		(606,678	)		(1,020,150	)
Accrued expenses		(114,741	)		(99,366	)
Other assets and liabilities		(38,137	)		(9,089	)
Net cash provided by operating activities		111,328			219,438
Cash flows from investing activities:
Cash consideration paid for acquired businesses		(45,473	)		(470,674	)
Acquisition of property, plant, and equipment		(88,336	)		(68,820	)
Other		(12,000	)		2,008
Net cash used for investing activities		(145,809	)		(537,486	)
Cash flows from financing activities:
Change in short-term and other borrowings		67,611			(3,817	)
Proceeds from long-term bank borrowings, net		233,000			34,400
Net proceeds from note offering		-			688,162
Redemption of notes		-			(254,313	)
Proceeds from exercise of stock options		14,844			14,474
Excess tax benefits from stock-based compensation arrangements		4,939			5,842
Repurchases of common stock		(46,833	)		(156,424	)
Other		(3,000	)		(3,000	)
Net cash provided by financing activities		270,561			325,324
Effect of exchange rate changes on cash		(13,399	)		(7,910	)
Net increase (decrease) in cash and cash equivalents		222,681			(634	)
Cash and cash equivalents at beginning of year		273,090			400,355
Cash and cash equivalents at end of year	$	495,771		$	399,721

ARROW ELECTRONICS, INC. NON-GAAP SALES RECONCILIATION (In thousands) (Unaudited)
	Quarter Ended
	July 2, 2016		June 27, 2015			% Change
Consolidated sales, as reported	$	5,972,101	$	5,829,989		2.4	%
Impact of changes in foreign currencies		-		(1,309	)
Impact of acquisitions		-		163,354
Consolidated sales, as adjusted	$	5,972,101	$	5,992,034		(0.3	%)
Global components sales, as reported	$	3,832,972	$	3,698,175		3.6	%
Impact of changes in foreign currencies		-		(6,292	)
Impact of acquisitions		-		96,352
Global components sales, as adjusted	$	3,832,972	$	3,788,235		1.2	%
Europe components sales, as reported	$	1,056,691	$	986,735		7.1	%
Impact of changes in foreign currencies		-		10,728
Impact of acquisitions		-		24,584
Europe components sales, as adjusted	$	1,056,691	$	1,022,047		3.4	%
Asia components sales, as reported	$	1,298,429	$	1,237,865		4.9	%
Impact of changes in foreign currencies		-		(15,840	)
Impact of acquisitions		-		71,768
Asia components sales, as adjusted	$	1,298,429	$	1,293,793		0.4	%
Global ECS sales, as reported	$	2,139,129	$	2,131,814		0.3	%
Impact of changes in foreign currencies		-		4,983
Impact of acquisitions		-		67,002
Global ECS sales, as adjusted	$	2,139,129	$	2,203,799		(2.9	%)
Europe ECS sales, as reported	$	720,335	$	678,278		6.2	%
Impact of changes in foreign currencies		-		13,608
Impact of acquisitions		-		-
Europe ECS sales, as adjusted	$	720,335	$	691,886		4.1	%
Americas ECS sales, as reported	$	1,418,794	$	1,453,536		(2.4	%)
Impact of changes in foreign currencies		-		(8,624	)
Impact of acquisitions		-		67,002
Americas ECS sales, as adjusted	$	1,418,794	$	1,511,914		(6.2	%)

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
	Six Months Ended
	July 2, 2016		June 27, 2015			% Change
Consolidated sales, as reported	$	11,446,278	$	10,832,374		5.7	%
Impact of changes in foreign currencies		-		(61,267	)
Impact of acquisitions		38,437		531,508
Consolidated sales, as adjusted	$	11,484,715	$	11,302,615		1.6	%
Global components sales, as reported	$	7,508,901	$	7,044,938		6.6	%
Impact of changes in foreign currencies		-		(46,059	)
Impact of acquisitions		-		313,757
Global components sales, as adjusted	$	7,508,901	$	7,312,636		2.7	%
Europe components sales, as reported	$	2,115,123	$	1,909,996		10.7	%
Impact of changes in foreign currencies		-		(12,803	)
Impact of acquisitions		-		98,666
Europe components sales, as adjusted	$	2,115,123	$	1,995,859		6.0	%
Asia components sales, as reported	$	2,476,297	$	2,263,779		9.4	%
Impact of changes in foreign currencies		-		(28,218	)
Impact of acquisitions		-		211,745
Asia components sales, as adjusted	$	2,476,297	$	2,447,306		1.2	%
Global ECS sales, as reported	$	3,937,377	$	3,787,436		4.0	%
Impact of changes in foreign currencies		-		(15,208	)
Impact of acquisitions		38,437		217,751
Global ECS sales, as adjusted	$	3,975,814	$	3,989,979		(0.4	%)
Europe ECS sales, as reported	$	1,327,783	$	1,259,941		5.4	%
Impact of changes in foreign currencies		-		6,108
Impact of acquisitions		-		-
Europe ECS sales, as adjusted	$	1,327,783	$	1,266,049		4.9	%
Americas ECS sales, as reported	$	2,609,594	$	2,527,495		3.2	%
Impact of changes in foreign currencies		-		(21,317	)
Impact of acquisitions		38,437		217,751
Americas ECS sales, as adjusted	$	2,648,031	$	2,723,929		(2.8	%)

ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
	Quarter Ended						Six Months Ended
	July 2, 2016			June 27, 2015			July 2, 2016			June 27, 2015
Operating income, as reported	$	223,592		$	206,943		$	404,956		$	384,377
Intangible assets amortization expense		14,446			13,917			27,359			25,024
Restructuring, integration, and other charges		16,106			17,147			36,894			33,343
Operating income, as adjusted	$	254,144		$	238,007		$	469,209		$	442,744
Net income attributable to shareholders, as reported	$	134,270		$	123,932		$	240,505		$	229,990
Intangible assets amortization expense		13,562			13,917			26,475			25,024
Restructuring, integration, and other charges		16,106			17,147			36,894			33,343
Loss on prepayment of debt		-			-			-			2,943
(Gain)/loss on investments		-			1,500			-			(508	)
Tax effect		(11,197	)		(7,579	)		(18,910	)		(14,079	)
Net income attributable to shareholders, as adjusted	$	152,741		$	148,917		$	284,964		$	276,713
Net income per basic share, as reported	$	1.46		$	1.30		$	2.62		$	2.40
Intangible assets amortization expense		.15			.15			.29			.26
Restructuring, integration, and other charges		.18			.18			.40			.35
Loss on prepayment of debt		-			-			-			.03
(Gain)/loss on investments		-			.02			-			-
Tax effect		(.12	)		(.08	)		(.21	)		(.15	)
Net income per basic share, as adjusted	$	1.66		$	1.56		$	3.11		$	2.89
Net income per diluted share, as reported	$	1.45		$	1.28		$	2.59		$	2.37
Intangible assets amortization expense		.15			.14			.29			.26
Restructuring, integration, and other charges		.17			.18			.40			.34
Loss on prepayment of debt		-			-			-			.03
(Gain)/loss on investments		-			.02			-			-
Tax effect		(.12	)		(.08	)		(.20	)		(.15	)
Net income per diluted share, as adjusted	$	1.65		$	1.54		$	3.07		$	2.86

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.

ARROW ELECTRONICS, INC. SEGMENT INFORMATION (In thousands) (Unaudited)
	Quarter Ended						Six Months Ended
	July 2, 2016			June 27, 2015			July 2, 2016			June 27, 2015
Sales:
Global components	$	3,832,972		$	3,698,175		$	7,508,901		$	7,044,938
Global ECS		2,139,129			2,131,814			3,937,377			3,787,436
Consolidated	$	5,972,101		$	5,829,989		$	11,446,278		$	10,832,374
Operating income (loss):
Global components	$	178,385		$	169,817		$	349,155		$	334,712
Global ECS		109,399			98,394			187,611			165,911
Corporate (a)		(64,192	)		(61,268	)		(131,810	)		(116,246	)
Consolidated	$	223,592		$	206,943		$	404,956		$	384,377

(a) Includes restructuring, integration, and other charges of $16.1 million and $36.9
million for the second quarter and six months ended 2016 and $17.1 million and $33.3
million for the second quarter and six months ended 2015, respectively.

NON-GAAP SEGMENT RECONCILIATION
	Quarter Ended				Six Months Ended
	July 2, 2016		June 27, 2015		July 2, 2016		June 27, 2015
Global components operating income, as reported	$	178,385	$	169,817	$	349,155	$	334,712
Intangible assets amortization expense		8,545		7,146		16,445		12,928
Global components operating income, as adjusted	$	186,930	$	176,963	$	365,600	$	374,640
Global ECS operating income, as reported	$	109,399	$	98,394	$	187,611	$	165,911
Intangible assets amortization expense		5,901		6,771		10,914		12,096
Global ECS operating income, as adjusted	$	115,300	$	105,165	$	198,525	$	178,007

CONTACT:
Arrow Electronics, Inc.
Steven O’Brien, 303-824-4544
Director, Investor Relations
or
Media Contact:
John Hourigan, 303-824-4586
Vice President, Global Communications