-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, lXkAlF7vvuVYGvEZJ9eqNH/aLCTztrA0ChPxt7aY6E/4QWTxOi+l9b7Y3te0Q302 YNh4pDECHpYcfHwrEWgDVQ== 0000007536-95-000008.txt : 19950814 0000007536-95-000008.hdr.sgml : 19950814 ACCESSION NUMBER: 0000007536-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARROW ELECTRONICS INC CENTRAL INDEX KEY: 0000007536 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 111806155 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04482 FILM NUMBER: 95561378 BUSINESS ADDRESS: STREET 1: 25 HUB DR CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5163911300 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-4482 ARROW ELECTRONICS, INC. (Exact name of Registrant as specified in its charter) New York 11-1806155 (State or other jurisdiction of (I.R.S. Employer Identifi- incorporation or organization) cation Number) 25 Hub Drive, Melville, New York 11747 (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code (516) 391-1300 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, $1 par value: 46,718,867 shares outstanding at August 4, 1995. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
Six Months Ended Three Months Ended June 30 June 30 1995 1994 1995 1994 Sales $2,898,566 $2,231,670 $1,458,213 $1,113,991 Costs and expenses: Cost of products sold 2,389,398 1,832,724 1,195,375 912,629 Selling, general and administrative expens 287,011 241,707 146,373 123,391 Depreciation and amortization 15,552 12,959 7,781 6,431 2,691,961 2,087,390 1,349,529 1,042,451 Operating income 206,605 144,280 108,684 71,540 Equity in earnings of affiliated company 1,770 - 1,026 - Interest expense 22,186 18,990 11,079 9,547 Earnings before income taxes and minority interest 186,189 125,290 98,631 61,993 Provision for income taxes 76,373 50,666 40,440 24,991 Earnings before minority interest 109,816 74,624 58,191 37,002 Minority interest 13,213 8,342 6,439 4,099 Net income $ 96,603 $ 66,282 $ 51,752 $ 32,903 Primary $2.05 $1.42 $1.09 $.71 Fully diluted $1.93 $1.36 $1.03 $.68 Average number of common shares and common share equivalents outstanding: Primary 47,065 46,566 47,294 46,556 Fully diluted 51,039 50,342 51,199 50,332 See accompanying notes.
-2- ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
June 30, December 31, 1995 1994 (Unaudited) ASSETS Current assets: Cash and short-term investments $ 76,230 $ 105,606 Accounts receivable, less allowance for doubtful accounts ($34,328 in 1995 and $31,132 in 1994) 860,085 697,021 Inventories 846,614 725,436 Prepaid expenses and other assets 34,491 30,180 Total current assets 1,817,420 1,558,243 Property, plant and equipment at cost: Land 11,962 11,970 Buildings and improvements 63,899 53,962 Machinery and equipment 101,560 84,740 177,421 150,672 Less: accumulated depreciation and amortization 67,001 60,857 110,420 89,815 Investment in affiliated company 30,383 - Cost in excess of net assets of companies acquired, less accumulated amortization ($43,046 in 1995 and $36,057 in 1994) 389,268 334,297 Other assets 57,010 56,419 $2,404,501 $2,038,774 See accompanying notes.
-3- ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
June 30, December 31, 1995 1994 (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 441,911 $ 411,766 Accrued expenses 242,476 191,574 Short-term borrowings, including current maturities of long-term debt 127,787 86,123 Total current liabilities 812,174 689,463 Long-term debt 337,354 224,398 Deferred income taxes and other liabilities 69,186 56,335 Subordinated debentures 125,000 125,000 Minority interest 94,970 105,693 Shareholders' equity: Common stock, par value $1: Authorized - 80,000,000 shares Issued - 46,676,022 shares in 1995 and 46,167,913 shares in 1994 46,676 46,168 Capital in excess of par value 404,204 388,913 Retained earnings 496,692 400,089 Foreign currency translation adjustment 24,453 6,367 972,025 841,537 Less: Unamortized employee stock awards 6,208 3,652 and other 965,817 837,885 $2,404,501 $2,038,774 See accompanying notes.
-4- ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (IN THOUSANDS) (UNAUDITED)
Six Months Ended June 30, 1995 1994 Cash flows from operating activities: Net income $ 96,603 $ 66,282 Adjustments to reconcile net income to net cash provided by (used for) operations: Minority interest in earnings 13,213 8,342 Depreciation and amortization 16,512 14,098 Equity in undistributed earnings of affiliated company (1,770) - Deferred income taxes 7,891 3,637 Change in assets and liabilities, net of effects of acquired businesses: Accounts receivable (140,641) (57,171) Inventories (92,255) (24,696) Prepaid expenses and other assets (3,122) 1,158 Accounts payable 16,699 51,414 Accrued expenses 36,562 (6,072) Other (1,609) (7,017) Net cash provided by (used for) operating activities (51,917) 49,975 Cash flows from investing activities: Acquisitions of property, plant and equipment, net (26,050) (8,227) Cash consideration paid for acquired businesses (85,932) (80,623) Repayment by affiliate - 7,730 Collection of notes receivable from officers - 1,140 Net cash (used for) investing activities (111,982) (79,980) Cash flows from financing activities: Change in short term borrowings 36,812 12,330 Proceeds from credit facilities 99,512 8,811 Repayment of long-term debt (15,784) (1,329) Proceeds from long-term debt 22,651 14,351 Proceeds from exercise of stock options 9,014 3,537 Distribution to partners (27,178) (7,696) Financing fees paid (115) (200) Net cash provided by financing activities 124,912 29,804 Effect of exchange rate changes on cash 9,611 3,712 Net increase (decrease) in cash and short-term investments (29,376) 3,511 Cash and short-term investments at beginning of period 105,606 80,962 Cash and short-term investments from affiliate at beginning of period - 1,112 Cash and short-term investments at end of period $ 76,230 $ 85,585 Supplemental disclosures of cash flow information Cash paid during the period: Income taxes $ 47,371 $ 24,654 Interest $ 22,277 $ 22,085 See accompanying notes.
-5- ARROW ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1995 (UNAUDITED) Note A -- Basis of presentation The accompanying consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position and results of operations at and for the periods presented. Such financial statements do not include all the information or footnotes necessary for a complete presentation and, accordingly, should be read in conjunction with the company's audited consolidated financial statements for the year ended December 31, 1994 and the notes thereto. The results of operations for the interim periods are not necessarily indicative of results for the full year. In 1994, the company completed the acquisition of Gates/FA Distributing, Inc. ("Gates") and Anthem Electronics, Inc. ("Anthem") in transactions accounted for as poolings of interests. Accordingly, the 1994 consolidated statements of income and cash flows have been restated to include the operations of Gates and Anthem. Note B -- Net income per common share Net income per common share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding. For the six months ended June 30, 1995 and 1994, the average number of common stock equivalents was 660,324 and 630,852, respectively. For the quarter ended June 30, 1995 and 1994, the average number of common stock equivalents was 748,823 and 555,694, respectively. Net income per common share on a fully diluted basis assumes that the 5-3/4% convertible subordinated debentures were converted to common stock at the beginning of the period and the related interest expense, net of taxes, was eliminated. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Sales Consolidated sales for the six months and second quarter of 1995 increased 29.9% and 30.9% compared with year-earlier periods. This sales growth was principally due to increased activity levels in each of the company's distribution groups throughout the world and, to a lesser extent, acquisitions in Europe and the Pacific Rim. -6- Operating income The company recorded operating income of $206.6 million and $108.7 million in the first six months and second quarter of 1995, respectively, compared with $144.3 million and $71.5 million, respectively, in the year-earlier periods. The improvement in operating income reflects the impact of increased sales, acquisitions, and the benefits of economies of scale resulting from the integration of Anthem and Gates with Arrow. Interest expense Interest expense of $22.2 million and $11.1 million in the first six months and second quarter of 1995, respectively, increased from $19 million during the first six months of 1994 and $9.5 million in the comparable quarter of 1994. The increase from the first six months and second quarter of 1994 reflects the incremental interest associated with businesses acquired subsequent to the second quarter of 1994. Income taxes During the first six months and second quarter of 1995 the company recorded a provision for taxes at an effective tax rate of 41% compared with 40.4% and 40.3%, respectively, in the year-earlier periods. Net income The company recorded net income of $96.6 million and $51.8 million in the first six months and second quarter of 1995, respectively, compared with $66.3 million in the first six months of 1994 and $32.9 million in the second quarter of 1994. The increase in net income over the year-earlier periods is due to increased sales and lower operating expenses as a percentage of sales offset in part by an increase in interest expense as previously discussed. Liquidity and capital resources The company maintains a high level of current assets, primarily accounts receivable and inventories. Consolidated current assets as a percentage of total assets were approximately 75.6% and 78.5% at June 30, 1995 and 1994, respectively (excluding, in 1994, the effect of the investments in net assets of acquired businesses). The net amount of cash used for the company's operating activities during the first six months of 1995 was $51.9 million, principally reflecting increased working capital requirements supporting higher sales. The net amount of cash used for investing activities was $112 million, including $85.9 million for various acquisitions. The net amount of cash provided by financing activities was $124.9 million, principally reflecting the company's U.S. credit agreements and German bank borrowings, offset in part by distributions to partners and the net repayment of debt. -7- The net amount of cash provided by the company's operating activities during the first six months of 1994 was $50 million, principally reflecting increased earnings. The net amount of cash used for investing activities was $80 million, including approximately $80.6 million for various acquisitions. The net amount of cash provided by financing activities was $29.8 million, principally reflecting the company's U.S. credit agreements and German bank borrowings, offset in part by the net payment of debt. The company believes that its working capital, funds available under its credit agreements, and additional funds generated from operations will be sufficient to satisfy its cash requirements at least through 1996. Item 4. Submission of Matters to a Vote of Security Holders. (a) The company's Annual Meeting of Shareholders was held on May 9, 1995 (the "Annual Meeting"). (b) The matters voted upon at the Annual Meeting and the results of the voting were as follows: (i) The shareholders voted 42,312,015 shares in favor and 16,003 shares against the appointment of Ernst & Young as auditors of the company. (ii) The following individuals were elected by the shareholders to serve as Directors: Shares Board Member In Favor Against Daniel W. Duval 42,304,964 58,203 Carlo Giersch 42,179,006 184,161 Stephen P. Kaufman 42,177,803 185,364 Lawrence R. Kem 42,301,812 61,355 Roger King 42,282,745 80,422 Robert E. Klatell 42,178,686 184,481 Steven W. Menefee 42,179,449 183,718 Karen Gordon Mills 42,300,996 62,171 Anne Pol 42,295,543 67,624 Richard S. Rosenbloom 42,307,043 56,124 Robert S. Throop 42,178,284 184,883 John C. Waddell 42,305,566 57,601 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. 11 - Statement Re: Computation of Earnings Per Share (b) Reports on Form 8-K. None -8- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ARROW ELECTRONICS, INC. Date: August 11, 1995 By:/s/ Robert E. Klatell Robert E. Klatell Senior Vice President and Chief Financial Officer Date: August 11, 1995 By:/s/ Paul J. Reilly Paul J. Reilly Controller -9- EX-11 2 Exhibit 11 ARROW ELECTRONICS, INC. STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE (In thousands except per share data)
Six Months Ended Three Months Ended June 30 June 30 1995 1994 1995 1994 Primary Average shares of common stock outstanding 46,405 45,936 46,545 46,001 Net effect of dilutive stock options-based on the treasury method 660 630 749 555 Total 47,065 46,566 47,294 46,556 Net income $96,603 $66,282 $51,752 $32,903 Per share amount $ 2.05 $ 1.42 $ 1.09 $ .71 Fully Diluted Average shares of common stock outstanding 46,405 45,936 46,545 46,001 Net effect of dilutive stock options-based on the treasury method 860 632 880 557 Assumed conversion of 5-3/4% convertible subordinated debentures 3,774 3,774 3,774 3,774 Total 51,039 50,342 51,199 50,332 Net income $96,603 $66,282 $51,752 $32,903 Add interest on 5-3/4% convertible subordinated debentures, net of income tax effect 2,156 2,156 1,078 1,078 Total $98,759 $68,438 $52,830 $33,981 Per share amount $ 1.93 $ 1.36 $ 1.03 $ .68
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 1995 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 U.S. DOLLARS DEC-31-1995 JAN-1-1995 JUN-30-1995 6-MOS 1 76,230 0 860,085 34,328 846,614 1,817,420 177,421 67,001 2,404,501 812,174 462,354 0 0 46,676 919,141 2,404,501 2,898,566 2,898,566 2,389,398 2,691,961 0 5,468 22,186 186,189 76,373 96,603 0 0 0 96,603 2.05 1.93
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