-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AtUt7JR4FCyfVuK58HjpqcQxGBlun2lGFH5kSCu3wX+xB6DjiW1AmGkxebFDkoCk FPR/Dx903/MQcC1scICtMQ== 0000007536-97-000011.txt : 19970811 0000007536-97-000011.hdr.sgml : 19970811 ACCESSION NUMBER: 0000007536-97-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 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: 97653965 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, 1997 ------------- 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 incorporation or organization) Identification 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: 48,985,482 shares outstanding at August 1, 1997. PART I. FINANCIAL INFORMATION Item 1. Financial Statements. --------------------- ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
Six Months Ended Three Months Ended June 30, June 30, ---------------------- ---------------------- 1997 1996 1997 1996 ---- ---- ---- ---- Sales $3,704,075 $3,304,968 $1,848,742 $1,601,651 ---------- ---------- ---------- ---------- Costs and expenses: Cost of products sold 3,125,124 2,757,816 1,555,352 1,336,315 Selling, general and administrative expenses 345,758 307,215 173,983 151,135 Depreciation and amortization 20,834 18,354 11,145 9,301 ---------- ---------- ---------- ---------- 3,491,716 3,083,385 1,740,480 1,496,751 ---------- ---------- ---------- ---------- Operating income 212,359 221,583 108,262 104,900 Equity in earnings (loss) of affiliated company 532 (28) 234 73 Interest expense 30,048 21,150 16,103 9,842 ---------- ---------- ---------- ---------- Earnings before income 182,843 200,405 92,393 95,131 taxes and minority interest Provision for income taxes 74,991 79,172 37,799 37,441 ---------- ---------- ---------- ---------- Earnings before minority interest 107,852 121,233 54,594 57,960 Minority interest 5,779 10,329 2,815 3,593 ---------- ---------- ---------- ---------- Net income $ 102,073 $ 110,904 $ 51,779 $ 54,097 ========== ========== ========== ========== Net income per common share $2.02 $2.16 $1.03 $1.05 ===== ===== ===== ===== Average number of common shares and common share equivalents outstanding 50,468 51,463 50,404 51,672 ====== ====== ====== ====== See accompanying notes.
ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
June 30, December 31, 1997 1996 ----------- ------------ (Unaudited) ASSETS - ------ Current assets: Cash and short-term investments $ 115,138 $ 136,400 Accounts receivable, less allowance for doubtful accounts ($43,006 in 1997 and $39,753 in 1996) 1,130,313 902,878 Inventories 1,200,404 1,044,841 Prepaid expenses and other assets 34,786 36,004 ---------- ---------- Total current assets 2,480,641 2,120,123 Property, plant and equipment at cost: Land 8,695 8,712 Buildings and improvements 75,094 77,257 Machinery and equipment 141,268 127,633 ---------- ---------- 225,057 213,602 Less accumulated depreciation and amortization (106,145) (98,377) ---------- ---------- 118,912 115,225 Investment in affiliated company 34,732 34,200 Cost in excess of net assets of companies acquired, net of amortization ($62,563 in 1997 and $57,802 in 1996) 585,535 388,787 Other assets 58,306 52,016 ---------- ---------- $3,278,126 $2,710,351 ========== ========== See accompanying notes.
ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS) June 30, December 31, 1997 1996 ----------- ------------ (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 610,644 $ 594,474 Accrued expenses 208,305 180,129 Short-term borrowings, including current maturities of long-term debt 101,046 71,504 ---------- ---------- Total current liabilities 919,995 846,107 Long-term debt 857,930 344,562 Deferred income taxes and other liabilities 69,351 68,488 Minority interest 70,111 92,712 Shareholders' equity: Common stock, par value $1: Authorized - 120,000,000 shares Issued - 51,474,820 shares in 1997 and 51,196,385 shares in 1996 51,475 51,196 Capital in excess of par value 559,354 549,913 Retained earnings 907,415 805,342 Foreign currency translation adjustment (26,113) 8,753 ---------- ---------- 1,492,131 1,415,204 Less: Treasury stock (2,194,091 shares in 1997 and 1,069,699 shares in 1996) 113,610 49,065 Unamortized employee stock awards 17,782 7,657 ---------- ---------- 1,360,739 1,358,482 ---------- ---------- $3,278,126 $2,710,351 ========== ========== See accompanying notes.
ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS) Six Months Ended June 30, ---------------------- 1997 1996 ---- ---- (Unaudited) Cash flows from operating activities: Net income $102,073 $110,904 Adjustments to reconcile net income to net cash provided by (used for) operations: Minority interest in earnings 5,779 10,329 Depreciation and amortization 22,861 19,434 Equity in undistributed (earnings) loss of affiliated company (532) 28 Deferred income taxes 6,995 5,611 Change in assets and liabilities, net of effects of acquired businesses: Accounts receivable (152,191) (37,035) Inventories (72,836) (10,002) Prepaid expenses and other assets (446) 3,683 Accounts payable (36,857) (43,408) Accrued expenses 4,210 (8,889) Other 2,528 4,735 -------- -------- Net cash provided by (used for) operating activities (118,416) 55,390 -------- -------- Cash flows from investing activities: Acquisition of property, plant and equipment, net (14,000) (17,288) Cash consideration paid for acquired businesses (341,194) (12,425) -------- -------- Net cash used for investing activities (355,194) (29,713) -------- -------- Cash flows from financing activities: Change in short-term borrowings 33,029 (9,442) Change in credit facilities 114,948 (42,738) Repayment of long-term debt (1,541) (501) Proceeds from long-term debt 400,822 966 Proceeds from exercise of stock options 11,394 7,631 Distribution to minority partners (11,874) (9,379) Purchases of common stock (83,276) - -------- -------- Net cash provided by (used for) financing activities 463,502 (53,463) -------- -------- Effect of exchange rate changes on cash (11,154) (3,555) -------- -------- Net decrease in cash and short-term investments (21,262) (31,341) Cash and short-term investments at beginning of period 136,400 93,947 -------- -------- Cash and short-term investments at end of period $115,138 $ 62,606 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Income taxes $ 56,146 $ 68,997 Interest 17,421 23,156 See accompanying notes.
ARROW ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 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, 1996 and the notes thereto. The results of operations for the interim periods are not necessarily indicative of results for the full year. Note B -- Stock repurchase program - ---------------------------------- In July 1997, the company's Board of Directors renewed the stock repurchase program initiated last year and authorized management to purchase, from time to time, up to an additional $50 million of the company's common stock. Over the past year, Arrow has acquired over 2.8 million shares of its common stock at a cost of $150 million. 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 1997 increased 12 percent and 15 percent, respectively, compared with the year-earlier periods. This sales growth was principally due to increased activity levels in North America and the Asia/Pacific region and the acquisition of the volume electronic businesses (FES Group) of Premier Farnell plc, offset, in part, by a stronger U.S. dollar. Excluding the FES Group, sales for the six months and second quarter of 1997 increased approximately 6 percent and 8 percent, respectively, compared with the year-earlier periods. Operating income - ---------------- The company recorded operating income of $212.4 million and $108.3 million in the first six months and second quarter of 1997, respectively, compared with $221.6 million and $104.9 million, respectively, in the year-earlier periods. The decrease in operating income in the first half of 1997 principally reflects the impact of lower gross profit margins caused by competitive pricing pressures, offset, in part, by increased sales and the acquisition of the FES Group. The improvement in operating income in the second quarter of 1997, compared with the year-earlier period, reflects the impact of increased consolidated sales coupled with a reduction in lower- margin microprocessor sales, offset, in part, by lower gross profit margins due to competitive pricing pressures. Interest expense - ---------------- Interest expense of $30.0 million and $16.1 million in the first six months and second quarter of 1997, respectively, increased from $21.2 million during the first six months of 1996 and $9.8 million in the comparable quarter of 1996. The increase from the first six months and second quarter of 1996 is a result of acquisitions, principally the FES Group, and the repurchase of the company's common stock, offset, in part, by lower interest rates. Income taxes - ------------ During the first six months and second quarter of 1997, the company recorded a provision for taxes at an effective tax rate of 41 percent and 40.9 percent, respectively, compared with 39.5 percent during the first six months of 1996 and 39.3 percent in the comparable quarter of 1996. The increase in the provision is due to increased earnings in countries with higher marginal tax rates. Net income - ---------- The company recorded net income of $102.1 million and $51.8 million in the first six months and second quarter of 1997, respectively, compared with $110.9 million in the first six months of 1996 and $54.1 million in the second quarter of 1996. The decrease in net income for the first six months is due to decreased operating income as well as an increase in interest expense offset, in part, by a decrease in the provision for income taxes and lower minority interest. The decrease in net income for the second quarter is attributable to an increase in interest expense, offset, in part, by higher operating income. 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 75.7 percent and 78.1 percent at June 30, 1997 and 1996, respectively. The net amount of cash used by the company's operating activities during the first six months of 1997 was $118.4 million, principally reflecting increased working capital requirements supporting higher sales. The net amount of cash used for investing activities was $355.2 million including approximately $341.2 million for investments and acquisitions. The net amount of cash provided by financing activities was $463.5 million, principally reflecting the $393 million of proceeds from the issuance in January 1997 of the company's senior notes and senior debentures and increases in the company's credit facilities, offset, in part, by the purchase of the company's common stock. The net amount of cash provided by the company's operating activities during the first six months of 1996 was $55.4 million, principally reflecting increased earnings offset, in part, by an increase in working capital requirements. The net amount of cash used for investing activities was $29.7 million, including $12.4 million for various acquisitions. The net amount of cash used for financing activities was $53.5 million, principally reflecting the reduction in the company's borrowings. 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 1998. Item 4. Submission of Matters to a Vote of Security Holders. --------------------------------------------------- (a) The company's Annual Meeting of Shareholders was held on May 14, 1997 (the "Annual Meeting") and was adjourned until May 16, 1997 with respect to the vote on item (ii) below. (b) The matters voted upon at the Annual Meeting and the results of the voting were as follows: (i) The following individuals were elected by the shareholders to serve as Directors: Board Member In Favor Withheld - ------------ ---------- -------- Daniel W. Duval 43,871,046 111,910 Carlo Giersch 43,852,878 130,078 Stephen P. Kaufman 43,852,951 130,005 Gaynor N. Kelley 43,865,116 117,840 Roger King 43,400,647 582,309 Robert E. Klatell 43,862,416 120,540 Karen Gordon Mills 43,868,474 114,482 Richard S. Rosenbloom 43,872,231 110,725 Robert S. Throop 43,852,692 130,264 John C. Waddell 43,853,011 129,945 (ii) The amendment to increase the number of authorized shares from 6,000,000 to 10,500,000 shares of common stock to be issued pursuant to options awarded under the Arrow Stock Option Plan and to make certain other modifications to the plan was voted upon as follows: 28,312,238 shares in favor; 9,698,943 shares against; 2,025,124 shares abstaining; and 3,946,651 broker no votes. (iii) The amendment to increase the number of authorized shares from 1,480,000 to 1,980,000 shares of common stock to be awarded under the Arrow Restricted Stock Plan and to make certain other modifications to the plan was voted upon as follows: 30,202,284 shares in favor; 8,026,446 shares against; 220,506 shares abstaining; and 5,533,720 broker no votes. (iv) The adoption of the Arrow Non-Employee Directors Stock Option Plan was voted upon as follows: 32,315,252 shares in favor; 5,905,598 shares against; 228,386 shares abstaining; and 5,533,720 broker no votes. (v) The adoption of the Arrow Non-Employee Directors Deferral Plan was voted upon as follows: 33,178,975 shares in favor; 5,042,554 shares against; 227,707 shares abstaining; and 5,533,720 broker no votes. (vi) The appointment of Ernst & Young LLP as auditors of the company was voted upon as follows: 43,893,469 shares in favor; 40,813 shares against; and 48,674 shares abstaining. 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. 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 7, 1997 By:/s/ Gerald Luterman ------------------- Gerald Luterman Senior Vice President and Chief Financial Officer Date: August 7, 1997 By:/s/ Paul J. Reilly ------------------ Paul J. Reilly Vice President and Corporate Controller EX-11 2 COMPUTATION OF EARNINGS PER SHARE 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, ------------------ ------------------ 1997 1996 1997 1996 -------- -------- ------- ------- Primary - ------- Average shares of common stock outstanding 49,636 50,828 49,644 50,948 Net effect of dilutive stock options - based on the treasury method 832 635 760 724 -------- -------- ------- ------- Total 50,468 51,463 50,404 51,672 ======== ======== ======= ======= Net income $102,073 $110,904 $51,779 $54,097 ======== ======== ======= ======= Per share amount $ 2.02 $ 2.16 $ 1.03 $ 1.05 ======== ======== ======= ======= Fully Diluted (A) - ----------------- Average shares of common stock outstanding 49,636 50,828 49,644 50,948 Net effect of dilutive stock options - based on the treasury method 832 641 760 728 -------- -------- ------- ------- Total 50,468 51,469 50,404 51,676 ======== ======== ======= ======= Net income $102,073 $110,904 $51,779 $54,097 ======== ======== ======= ======= Per share amount $ 2.02 $ 2.16 $ 1.03 $ 1.05 ======== ======== ======= ======= (A) This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11), although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 1997 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S.DOLLARS DEC-31-1997 JAN-1-1997 JUN-30-1997 6-MOS 1 115,138 0 1,130,313 43,006 1,200,404 2,480,641 225,057 106,145 3,278,126 919,995 857,930 0 0 51,475 1,309,264 3,278,126 3,704,075 3,704,075 3,125,124 3,491,716 0 6,408 30,048 182,843 74,991 102,073 0 0 0 102,073 2.02 2.02
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