Exhibit 99.1
Arrow Electronics Posts First Quarter Results
MELVILLE, N.Y.--(BUSINESS WIRE)--April 22, 2003--Arrow
Electronics, Inc. (NYSE:ARW) today reported a first quarter 2003 net
loss of $.9 million ($.01 per share) on sales of $1.98 billion,
compared with a net loss of $600.9 million ($6.04 and $5.93 per share
on a basic and diluted basis, respectively) on sales of $1.84 billion
in last year's first quarter. The company's results for the first
quarter of 2003 include a number of items that impact the
comparability of those results to prior periods:
-- In the first quarter, Arrow initiated a series of actions to
make its organizational structure, systems, and processes in
North America more efficient, the net result of which will be
to reduce the company's cost structure by $40 million
annually. The impact of these actions will begin to be
reflected in the company's results during the second quarter,
and the company expects that a majority of the targeted cost
savings will be achieved by June 30, 2003. The company has
recorded a restructuring charge of $6.7 million ($4.7 million
after taxes or $.05 per share) in the first quarter and
anticipates recording additional charges of between $5 and $8
million in the second quarter.
-- Also included in the first quarter is a special charge of $6.9
million ($4.8 million after taxes or $.05 per share)
associated with the acquisition and integration of the
Industrial Electronics Distribution ("IED") business of
Pioneer-Standard Electronics Inc. at the end of February.
-- During the first quarter, the company repurchased $70 million
of its 8.2% notes that mature in the fourth quarter of 2003.
The premium paid, along with the write-off of related deferred
issuance costs, resulted in a charge of $2.6 million ($1.5
million after taxes or $.01 per share). Under newly-effective
accounting rules, the premium paid to repurchase a company's
debt is no longer recorded as an extraordinary charge.
Excluding the aforementioned items, net income for the quarter
ended March 31, 2003 was $10.1 million ($.10 per share).
Last year's first quarter results include a charge of $603.7
million ($6.07 and $5.96 per basic and diluted share, respectively)
related to the company's adoption of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets," which has
been recorded as a cumulative effect of change in accounting principle
as of January 1, 2002. Also, in the second quarter of 2002, the
company sold its Gates/Arrow commodity computer products business, the
sale of which has been accounted for as a discontinued operation.
Included in last year's first quarter results was $.7 million of net
income from discontinued operations ($.01 per share). Excluding the
impairment charge and the net income from discontinued operations, net
income from continuing operations in last year's first quarter was
$2.1 million or $.02 per share.
Worldwide components revenue of $1.49 billion was up 13%
sequentially and 11% over last year's first quarter, with increases
posted in all regions around the world. Excluding foreign exchange and
the estimated impact of the IED business, components revenue grew 9%
from the fourth quarter and 4% from last year's first quarter.
Operating income as a percentage of sales was 3.4%, up 40 basis points
sequentially but down 30 basis points from last year's first quarter.
"We completed the acquisition of Pioneer's IED at the end of
February," said William E. Mitchell, President and Chief Executive
Officer of Arrow, "and successfully integrated that business into
Arrow over the ensuing weekend." "As a result, our first quarter
includes an estimated one to two cents of earnings per share from the
acquisition," he added.
Worldwide computer products sales totaled $490 million, down 15%
from the seasonally strong fourth quarter but 1% over last year's
first quarter. Operating income was 3.2% of sales, down 90 basis
points sequentially, but up 80 basis points over last year's first
quarter.
"Our North American Computer Products businesses performed very
well, building on the momentum generated last year as we continue our
strategic focus on the mid-range product offerings of IBM, H-P, and
Sun," Mr. Mitchell said. "Operating income increased by more than 58%
over last year's first quarter."
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, Arrow serves as a supply channel partner for more than 600
suppliers and over 150,000 original equipment manufacturers, contract
manufacturers, and commercial customers through more than 190 sales
facilities and 21 distribution centers in 40 countries. Detailed
information about Arrow's operations can be found at www.arrow.com.
Pro Forma Results
In addition to disclosing results that are determined in
accordance with Generally Accepted Accounting Principles (GAAP), Arrow
also discloses pro forma or non-GAAP results of operations that
exclude certain items. Arrow discloses such pro forma information in
order to reflect underlying operating performance and to permit
shareholders and other readers to better assess the company's
operating results. Such information is provided as a complement to
results provided in accordance with GAAP.
Safe Harbor
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements. 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).
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
March 31,
----------------------
2003 2002
---- ----
Sales $1,980,105 $1,844,539
---------- ----------
Costs and expenses:
Cost of products sold 1,645,048 1,530,007
Selling, general and administrative expenses 269,776 252,190
Depreciation and amortization 16,912 17,671
Restructuring charge 6,690 -
Integration charge 6,904 -
---------- ----------
1,945,330 1,799,868
---------- ----------
Operating income 34,775 44,671
Equity in earnings of affiliated companies 315 153
Loss on prepayment of debt 2,552 -
Interest expense 33,296 41,242
---------- ----------
Income (loss) before income taxes and
minority interest (758) 3,582
Provision for income taxes 45 1,371
---------- ----------
Income (loss) before minority interest (803) 2,211
Minority interest 102 126
---------- ----------
Income (loss) from continuing operations (905) 2,085
Income from discontinued operations, net of
taxes (A) - 699
---------- ----------
Income (loss) before cumulative effect of
change in accounting principle (905) 2,784
========== ==========
Cumulative effect of change in accounting
principle (B) - (603,709)
---------- ----------
Net loss $ (905) $ (600,925)
========== ==========
Net loss per basic share:
Income (loss) from continuing operations $ (.01) $ .02
Income from discontinued operations (A) - .01
Cumulative effect of change in accounting
principle (B) - (6.07)
---------- -----------
Net loss per basic share $ (.01) $ (6.04)
========== ===========
Net loss per diluted share:
Income (loss) from continuing operations $ (.01) $ .02
Income from discontinued operations (A) - .01
Cumulative effect of change in accounting
principle (B) - (5.96)
---------- -----------
Net loss per diluted share $ (.01) $ (5.93)
========== ===========
Average number of shares outstanding:
Basic 99,902 99,535
Diluted 99,902 101,266
See accompanying footnotes.
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
FOOTNOTES
(A) In May 2002, the company sold substantially all of the assets of
Gates/Arrow Distributing, a business unit within the company's
North American Computer Products 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.
(B) 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 ($6.07 and $5.96 per share
on a basic and diluted basis, respectively). In accordance with
the transitional rules, the company has recorded the impairment
charge as a cumulative effect of change in accounting principle
effective with the first quarter of 2002.
ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
March 31, December 31,
2003 2002
------------ ------------
Assets
Current assets:
Cash and short-term investments $ 341,332 $ 694,092
Accounts receivable, net 1,525,287 1,378,562
Inventories 1,328,264 1,201,271
Other 59,792 59,810
------------- ------------
Total current assets 3,254,675 3,333,735
Property, plant and equipment, net 297,517 299,518
Investments in affiliated companies 32,744 32,527
Cost in excess of net assets of
companies acquired, net of
amortization 821,929 748,368
Other assets 271,745 253,457
------------- ------------
$ 4,678,610 $4,667,605
============= ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 961,086 $ 917,271
Accrued expenses 284,900 258,774
Short-term borrowings, including
current portion of long-term debt 221,225 286,348
------------- ------------
Total current liabilities 1,467,211 1,462,393
Long-term debt 1,816,900 1,807,113
Other 162,791 162,850
Shareholders' equity 1,231,708 1,235,249
------------- ------------
$ 4,678,610 $4,667,605
============= ============
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended
March 31,
-------------------------
2003(A) 2002
------- ----
Sales:
Components $1,490,291 $1,349,267
Computer products 489,814 495,272
---------- ----------
Consolidated $1,980,105 $1,844,539
========== ==========
Operating income:
Components $ 50,620 $ 49,851
Computer products 15,616 11,756
Corporate (31,461) (16,936)
---------- ----------
Consolidated $ 34,775 $ 44,671
========== ==========
(A) Includes a restructuring charge of $6.7 million and an integration
charge of $6.9 million related to the acquisition and integration
of the Industrial Electronics Distribution (IED) business of
Pioneer-Standard Electronics Inc.
This interim report is subject to independent audit at year-end.
ARROW ELECTRONICS, INC.
EARNINGS RECONCILIATION
(In thousands except per share data)
Three Months Ended
March 31,
-------------------
2003 2002
---- ----
Net loss, as reported $ (905) $(600,925)
Income from discontinued operations,
net of taxes - (699)
Restructuring charge, net of taxes 4,673 -
Integration charge, net of taxes 4,822 -
Loss on prepayment of debt, net of taxes 1,526 -
Cumulative effect of change in accounting
principle - 603,709
-------- ----------
Net income, as adjusted $10,116 $ 2,085
======== ==========
Net loss per diluted share, as reported $ (.01) $ (5.93)
Income from discontinued operations - (.01)
Restructuring charge .05 -
Integration charge .05 -
Loss on prepayment of debt .01 -
Cumulative effect of change in accounting
principle - 5.96
-------- ----------
Net income per diluted share, as adjusted $ .10 $ .02
======== ==========
CONTACT: Arrow Electronics, Inc.
Robert E. Klatell
Executive Vice President
631-847-1830
or
Eileen M. O'Connor
Vice President, Investor Relations
631-847-5740