-----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, FWMJTGiU5jmUBPw0/01euLgISjv0hL8WjiV3pRGNgnIRAHxKbB/OIsezR9XL7/IF W73tv2RIvOdRE1MRmg4D7Q== 0001157523-06-010280.txt : 20061025 0001157523-06-010280.hdr.sgml : 20061025 20061025111011 ACCESSION NUMBER: 0001157523-06-010280 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061025 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061025 DATE AS OF CHANGE: 20061025 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04482 FILM NUMBER: 061161874 BUSINESS ADDRESS: STREET 1: 25 HUB DR CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5163911300 MAIL ADDRESS: STREET 1: 50 MARCUS DR CITY: MELVILLE STATE: NY ZIP: 11747 8-K 1 a5258057.txt ARROW ELECTRONICS, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): October 25, 2006 ---------------- ARROW ELECTRONICS, INC. ----------------------- (Exact Name of Registrant as Specified in Charter) NEW YORK 1-4482 11-1806155 -------- ------ ---------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 50 MARCUS DRIVE, MELVILLE, NEW YORK 11747 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) Zip Code Registrant's telephone number, including area code: (631) 847-2000 -------------- Not Applicable -------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On October 25, 2006, the Registrant issued a press release announcing the Registrant's third quarter 2006 earnings. A copy of the press release is attached hereto as an Exhibit (99.1). The information in this Current Report on Form 8-K and the Exhibit attached hereto is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (c) EXHIBITS 99.1 press release dated October 25, 2006. 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 hereunto duly authorized. ARROW ELECTRONICS, INC. Date: October 25, 2006 By: /s/Peter S. Brown ----------------- Name: Peter S. Brown Title: Senior Vice President EXHIBIT INDEX Exhibit Description - ------- ----------- 99.1 Press release issued by Arrow Electronics, Inc., dated October 25, 2006. EX-99.1 2 a5258057ex99_1.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Arrow Electronics' Net Income Soars 35% on Strong Growth -- Revenues Advance 27% to Record Third Quarter Level -- MELVILLE, N.Y.--(BUSINESS WIRE)--Oct. 25, 2006--Arrow Electronics, Inc. (NYSE:ARW) today reported third quarter 2006 net income of $85.9 million ($.70 per share on both a basic and diluted basis) on sales of $3.45 billion, compared with net income of $63.5 million ($.54 and $.52 per share on a basic and diluted basis, respectively) on sales of $2.71 billion in the third quarter of 2005. Consolidated sales grew 27% over the third quarter of 2005 or 17% on a pro forma basis, including Ultra Source Technology Corp. and DNSint.com AG in the third quarter of 2005. The company's results for the third quarters of 2006 and 2005 include a number of items outlined below that impact their comparability. A reconciliation of these items is provided under the heading "Certain Non-GAAP Financial Information." Excluding those items, net income for the quarter ended September 30, 2006 would have been $87.0 million ($.71 per share on both a basic and diluted basis) and net income for the quarter ended September 30, 2005 would have been $63.8 million ($.54 and $.52 per share on a basic and diluted basis, respectively). Included in the results for the third quarter of 2006 is $3.4 million ($2.2 million net of related taxes or $.02 per share on both a basic and diluted basis) related to the expensing of stock options in accordance with the provisions of Financial Accounting Standards Board Statement No. 123 (revised 2004), "Share Based Payment" ("FASB Statement No. 123(R)"). No such charge was recorded in 2005. Operating income in the third quarter of 2006 and 2005 was $152.5 million and $118.2 million, respectively. Excluding the items impacting comparability included in the reconciliation provided under the heading "Certain Non-GAAP Financial Information," third quarter 2006 operating income would have been $154.3 million, up 30% over last year's $118.4 million. Operating income as a percentage of sales, excluding the previously mentioned items and the impact of acquisitions, increased by 50 basis points year-over-year. "We again delivered strong results across all of our businesses, further demonstrating our consistent record of executing on the fundamentals of our business strategy," said William E. Mitchell, Chairman, President and Chief Executive Officer. "Sales reached a record third quarter level and operating income, earnings per share, and return on invested capital showed strong year-over-year improvement for the fifth consecutive quarter." Worldwide components sales and operating income both increased 29% over last year. Sales on a pro forma basis, including Ultra Source Technology Corp. in the third quarter of 2005, increased 20% year-over-year. "Each of our components businesses around the world achieved good year-over-year increases in sales and operating income," stated Mr. Mitchell. "Sales in North America and Europe were at record third quarter levels, and Asia/Pacific sales broke records again with significant improvements in profitability," added Mr. Mitchell. Worldwide computer products sales increased 22% year-over-year, while operating income increased 8% over last year. Sales for the Enterprise Computing Solutions business on a pro forma basis, including DNSint.com AG in the third quarter of 2005, increased 7% year-over-year. "Our enterprise computing business continued to demonstrate strong profitability and returns. Growth was driven by strong performance in storage and industry standard servers in North America, and software in our European enterprise business," said Mr. Mitchell. The company's results for the third quarter of 2006 and 2005 include the items outlined below that impact their comparability: -- During the third quarter of 2006, the company recorded $1.8 million ($1.1 million net of related taxes or $.01 per share on both a basic and diluted basis) of restructuring charges related to actions the company has committed to take in an ongoing effort to improve its operating efficiencies, which include $.4 million related to previously announced actions. These actions, in the aggregate, are expected to generate annual cost savings of approximately $10 million beginning in 2007. The estimated restructuring charges to be recorded over the next several quarters associated with these actions total approximately $1 to $3 million. -- During the third quarter of 2005, in connection with previously-announced restructuring initiatives, the company recorded a net charge of $.1 million (a gain of $.4 million net of related taxes or $.01 per share on both a basic and diluted basis). Included in the restructuring charge is a gain on the sale of a property that, because of existing capital tax loss carry-forwards, will not be taxed. -- During the third quarter of 2005, the company repurchased, through a series of transactions, $57.8 million accreted value of its zero coupon convertible debentures due in 2021, which could have been put to the company in February 2006 ("convertible debentures"). The related loss on the repurchases, including the premium paid and the write-off of related deferred financing costs, aggregated $1.1 million ($.7 million net of related taxes or $.01 per share on both a basic and diluted basis). "Based upon the information known to us today, we believe that sales in the fourth quarter will be between $3.425 and $3.625 billion," said Paul J. Reilly, Senior Vice President and Chief Financial Officer. "We expect continued stability in our worldwide components businesses, driven by our core small and mid-sized customer base. Due to elevated inventory levels in our large customer segment, growth is expected to be somewhat slower than the accelerated rates we experienced in North America and Europe during the first half of 2006, resulting in worldwide components sales between $2.675 and $2.8 billion. We anticipate continued growth in storage, security and infrastructure software, and industry standard servers while we expect the traditional seasonal growth in our enterprise business to be tempered by the continued weakness in the proprietary server market, resulting in worldwide computer products sales between $750 and $825 million. Earnings per share, on a diluted basis, including the impact of expensing stock options in accordance with FASB Statement No. 123(R) estimated at approximately $.02 per share, are expected to be in the range of $.71 to $.75, excluding any charges. Excluding the impact of restructuring and other charges, and the expensing of stock options, diluted earnings per share for the fourth quarter are expected to increase 16% to 22% from last year's fourth quarter," added Mr. Reilly. NINE MONTH RESULTS Arrow's net income for the first nine months of 2006 was $260.3 million ($2.14 and $2.12 per share on a basic and diluted basis, respectively) on sales of $10.08 billion, compared with net income of $179.2 million ($1.53 and $1.48 per share on a basic and diluted basis, respectively) on sales of $8.20 billion in the first nine months of 2005. Included in the results for the first nine months of 2006 is $9.6 million ($6.2 million net of related taxes or $.05 per share on both a basic and diluted basis) related to the expensing of stock options in accordance with the provisions of FASB Statement No. 123(R). Net income for the first nine months of 2006 includes restructuring charges of $6.4 million ($3.9 million net of related taxes or $.03 per share on both a basic and diluted basis) related to the aforementioned actions to continue improving its operating efficiencies and a loss on prepayment of debt of $2.6 million ($1.6 million net of related taxes or $.01 per share on both a basic and diluted basis) on the redemption of the total amount outstanding of $283.2 million principal amount ($156.4 million accreted value) of its convertible debentures and on the repurchase of $4.1 million principal amount of its 7% Senior Notes due in January 2007. Excluding these items, net income would have been $265.7 million ($2.19 and $2.16 per share on a basic and diluted basis, respectively) for the first nine months of 2006. Net income for the first nine months of 2005 includes restructuring charges of $9.0 million ($5.0 million net of related taxes or $.03 per share on both a basic and diluted basis), an acquisition indemnification credit of $1.7 million ($1.3 million net of related taxes or $.01 per share on a basic basis), a loss on the prepayment of debt of $3.2 million ($1.9 million net of related taxes or $.02 and $.01 per share on a basic and diluted basis, respectively) and a write-down of an investment of $3.0 million ($.03 per share on both a basic and diluted basis) related to an other-than-temporary decline in the fair value of an investment in accordance with Financial Accounting Standards Board Statement No. 115 and Emerging Issues Task Force No. 03-1. Excluding these items, net income would have been $187.9 million ($1.60 and $1.55 per share on a basic and diluted basis, respectively) for the first nine months of 2005. Arrow Electronics is a major global provider of products, services and solutions to industrial and commercial users of electronic components and computer products. Headquartered in Melville, New York, Arrow serves as a supply channel partner for nearly 600 suppliers and more than 130,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of over 270 locations in 53 countries and territories. 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 out of the company's efficiency enhancement initiatives, the company's acquisitions of other companies, the prepayment of debt, and the write-down of an investment. 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. ARROW ELECTRONICS, INC. EARNINGS RECONCILIATION (In thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, -------------------- -------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Operating income, as reported $152,472 $118,238 $464,846 $345,489 Restructuring charges 1,779 112 6,418 8,997 Acquisition indemnification credit - - - (1,672) --------- --------- --------- --------- Operating income, as adjusted $154,251 $118,350 $471,264 $352,814 --------- --------- --------- --------- Net income, as reported $ 85,918 $ 63,523 $260,260 $179,163 Restructuring charges (gain) 1,101 (442) 3,915 5,016 Acquisition indemnification credit - - - (1,267) Loss on prepayment of debt - 672 1,558 1,919 Write-down of investment - - - 3,019 --------- --------- --------- --------- Net income, as adjusted $ 87,019 $ 63,753 $265,733 $187,850 --------- --------- --------- --------- Net income per basic share, as reported $ .70 $ .54 $ 2.14 $ 1.53 Restructuring charges (gain) .01 (.01) .03 .03 Acquisition indemnification credit - - - (.01) Loss on prepayment of debt - .01 .01 .02 Write-down of investment - - - .03 --------- --------- --------- --------- Net income per basic share, as adjusted $ .71 $ .54 $ 2.19 $ 1.60 --------- --------- --------- --------- Net income per diluted share, as reported* $ .70 $ .52 $ 2.12 $ 1.48 Restructuring charges (gain) .01 (.01) .03 .03 Loss on prepayment of debt - .01 .01 .01 Write-down of investment - - - .03 --------- --------- --------- --------- Net income per diluted share, as adjusted $ .71 $ .52 $ 2.16 $ 1.55 --------- --------- --------- --------- 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. Effective January 1, 2006, the company adopted the provisions of Financial Accounting Standards Board Statement No. 123 (revised 2004), "Share Based Payment" ("FASB Statement No. 123(R)"). The company adopted the modified prospective transition method provided for under FASB Statement No. 123(R) and, accordingly, has not restated prior period amounts. As a result of adopting FASB Statement No. 123(R), the company recorded a charge of $3,403 ($2,239 net of related taxes or $.02 per share on both a basic and diluted basis) and $9,559 ($6,175 net of related taxes or $.05 per share on both a basic and diluted basis) for the third quarter and first nine months of 2006, respectively, related to the expensing of stock options. The pre-tax compensation expense is included in selling, general and administrative expenses. * In computing net income per diluted share for the first nine months of 2006, net income was increased by $524 for interest (net of taxes) related to the zero coupon convertible debentures ("convertible debentures") which are dilutive common stock equivalents. In addition, the diluted average number of shares outstanding for the first nine months of 2006 includes 623 shares related to the convertible debentures. In computing net income per diluted share for the third quarter and first nine months of 2005, net income was increased by $1,059 and $4,285, respectively, for interest (net of taxes) related to the convertible debentures which are dilutive common stock equivalents. In addition, the diluted average number of shares outstanding for the third quarter and first nine months of 2005 includes 3,844 shares and 5,412 shares, respectively, related to the convertible debentures. Information Relating to Forward-Looking Statements This report 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 ongoing planned implementation of its new global financial system and new enterprise resource planning system, changes in product supply, pricing and customer demand, competition, other vagaries in the electronic components and computer products 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. 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. ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------- 2006 2005 2006 2005 ----------- ----------- ------------ ----------- Sales $3,454,297 $2,710,168 $10,083,792 $8,204,586 ----------- ----------- ------------ ----------- Costs and expenses: Cost of products sold 2,946,214 2,290,912 8,563,742 6,911,768 Selling, general and administrative expenses 342,951 290,376 1,015,607 903,454 Depreciation and amortization 10,881 10,530 33,179 36,550 Restructuring charges 1,779 112 6,418 8,997 Acquisition indemnification credit - - - (1,672) ----------- ----------- ------------ ----------- 3,301,825 2,591,930 9,618,946 7,859,097 ----------- ----------- ------------ ----------- Operating income 152,472 118,238 464,846 345,489 Equity in earnings of affiliated companies 1,550 1,373 3,540 3,013 Loss on prepayment of debt - 1,123 2,605 3,209 Write-down of investment - - - 3,019 Interest expense, net 25,869 22,291 73,831 70,766 ----------- ----------- ------------ ----------- Income before income taxes and minority interest 128,153 96,197 391,950 271,508 Provision for income taxes 42,097 32,399 130,834 91,770 ----------- ----------- ------------ ----------- Income before minority interest 86,056 63,798 261,116 179,738 Minority interest 138 275 856 575 ----------- ----------- ------------ ----------- Net income $ 85,918 $ 63,523 $ 260,260 $ 179,163 ----------- ----------- ------------ ----------- Net income per share: Basic $ .70 $ .54 $ 2.14 $ 1.53 ----------- ----------- ------------ ----------- Diluted $ .70 $ .52 $ 2.12 $ 1.48 ----------- ----------- ------------ ----------- Average number of shares outstanding: Basic 122,053 118,594 121,493 117,265 Diluted 122,850 124,162 123,179 124,010 This interim report is subject to independent audit at year-end. ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands except par value) September 30, December 31, 2006 2005 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 252,851 $ 580,661 Accounts receivable, net 2,637,248 2,316,932 Inventories 1,628,486 1,494,982 Prepaid expenses and other assets 141,234 124,899 ------------- ------------ Total current assets 4,659,819 4,517,474 ------------- ------------ Property, plant and equipment, at cost: Land 41,867 41,855 Buildings and improvements 163,529 160,012 Machinery and equipment 462,455 426,239 ------------- ------------ 667,851 628,106 Less:Accumulated depreciation and amortization (417,405) (392,641) ------------- ------------ Property, plant and equipment, net 250,446 235,465 ------------- ------------ Investments in affiliated companies 39,035 38,959 Cost in excess of net assets of companies acquired 1,117,130 1,053,266 Other assets 216,596 199,753 ------------- ------------ Total assets $ 6,283,026 $ 6,044,917 ------------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,537,704 $ 1,628,568 Accrued expenses 500,405 434,644 Short-term borrowings, including current portion of long-term debt 292,376 268,666 ------------- ------------ Total current liabilities 2,330,485 2,331,878 ------------- ------------ Long-term debt 964,993 1,138,981 ------------- ------------ Other liabilities 196,850 201,172 ------------- ------------ Shareholders' equity: Common stock, par value $1: Authorized - 160,000 shares in 2006 and 2005 Issued - 122,358 and 120,286 shares in 2006 and 2005, respectively 122,386 120,286 Capital in excess of par value 933,846 861,880 Retained earnings 1,659,675 1,399,415 Foreign currency translation adjustment 92,649 13,308 ------------- ------------ 2,808,556 2,394,889 Less: Treasury stock (226 and 272 shares in 2006 and 2005, respectively), at cost (6,039) (7,278) Unamortized employee stock awards - (2,395) Other (11,819) (12,330) ------------- ------------ Total shareholders' equity 2,790,698 2,372,886 ------------- ------------ Total liabilities and shareholders' equity $ 6,283,026 $ 6,044,917 ------------- ------------ This interim report is subject to independent audit at year-end. ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three Months Ended September 30, --------------------- 2006 2005 ---------- --------- Cash flows from operating activities: Net income $ 85,918 $ 63,523 Adjustments to reconcile net income to net cash provided by (used for) operations: Depreciation and amortization 10,881 10,530 Accretion of discount on zero coupon convertible debentures - 1,771 Amortization of deferred financing costs and discount on notes 520 911 Amortization of restricted stock and performance awards 2,617 2,199 Amortization of employee stock options 3,403 - Excess tax benefits from stock-based compensation arrangements (55) - Equity in earnings of affiliated companies (1,550) (1,373) Deferred income taxes (17,640) (611) Restructuring charges 1,101 (442) Loss on prepayment of debt - 672 Minority interest 138 275 Change in assets and liabilities, net of effects of acquired businesses: Accounts receivable (20,929) 55,183 Inventories 199,811 (22,236) Prepaid expenses and other assets 12,423 1,051 Accounts payable (342,457) (64,574) Accrued expenses 29,319 32,490 Other 385 571 ---------- --------- Net cash provided by (used for) operating activities (36,115) 79,940 ---------- --------- Cash flows from investing activities: Acquisition of property, plant and equipment (14,130) (15,225) Proceeds from sale of facilities - 18,353 Cash consideration paid for acquired businesses - (22,163) Other 510 1,113 ---------- --------- Net cash used for investing activities (13,620) (17,922) ---------- --------- Cash flows from financing activities: Change in short-term borrowings (29,087) (457) Change in long-term debt 92 (101) Repurchase of zero coupon convertible debentures - (57,948) Proceeds from exercise of stock options 587 33,792 Excess tax benefits from stock-based compensation arrangements 55 - ---------- --------- Net cash used for financing activities (28,353) (24,714) ---------- --------- Effect of exchange rate changes on cash 1,090 150 ---------- --------- Net increase (decrease) in cash and cash equivalents (76,998) 37,454 Cash and cash equivalents at beginning of period 329,849 616,213 ---------- --------- Cash and cash equivalents at end of period $ 252,851 $653,667 ---------- --------- This interim report is subject to independent audit at year-end. ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended September 30, ---------------------- 2006 2005 ---------- ---------- Cash flows from operating activities: Net income $ 260,260 $ 179,163 Adjustments to reconcile net income to net cash provided by (used for) operations: Depreciation and amortization 33,179 36,550 Accretion of discount on zero coupon convertible debentures 876 7,166 Amortization of deferred financing costs and discount on notes 2,152 2,796 Amortization of restricted stock and performance awards 6,743 5,209 Amortization of employee stock options 9,559 - Excess tax benefits from stock-based compensation arrangements (6,486) - Equity in earnings of affiliated companies (3,540) (3,013) Deferred income taxes (20,235) 94 Restructuring charges 3,915 5,016 Loss on prepayment of debt 1,558 1,919 Minority interest 856 575 Acquisition indemnification credit - (1,267) Write-down of investment - 3,019 Change in assets and liabilities, net of effects of acquired businesses: Accounts receivable (267,820) (152,656) Inventories (102,568) 57,221 Prepaid expenses and other assets (10,739) (5,072) Accounts payable (122,696) 156,910 Accrued expenses 43,572 1,977 Other 4,453 447 ---------- ---------- Net cash provided by (used for) operating activities (166,961) 296,054 ---------- ---------- Cash flows from investing activities: Acquisition of property, plant and equipment (41,670) (19,789) Proceeds from sale of facilities - 18,353 Cash consideration paid for acquired businesses (19,460) (24,624) Purchase of short-term investments - (230,456) Proceeds from sale of short-term investments - 389,056 Other 3,593 4,824 ---------- ---------- Net cash provided by (used for) investing activities (57,537) 137,364 ---------- ---------- Cash flows from financing activities: Change in short-term borrowings 9,449 9,036 Change in long-term debt (15,632) (2,037) Repurchase of senior notes (4,268) - Repurchase of zero coupon convertible debentures (156,330) (152,449) Proceeds from exercise of stock options 53,705 69,355 Excess tax benefits from stock-based compensation arrangements 6,486 - ---------- ---------- Net cash used for financing activities (106,590) (76,095) ---------- ---------- Effect of exchange rate changes on cash 3,278 (8,950) ---------- ---------- Net increase (decrease) in cash and cash equivalents (327,810) 348,373 Cash and cash equivalents at beginning of period 580,661 305,294 ---------- ---------- Cash and cash equivalents at end of period $ 252,851 $ 653,667 ---------- ---------- This interim report is subject to independent audit at year-end. ARROW ELECTRONICS, INC. SEGMENT INFORMATION (In thousands) Three Months Ended Nine Months Ended September 30, September 30, ------------------------ ------------------------- 2006 2005 2006 2005 ----------- ----------- ------------ ----------- Sales: Electronic Components $2,793,436 $2,167,284 $ 8,159,403 $6,523,175 Computer Products 660,861 542,884 1,924,389 1,681,411 ----------- ----------- ------------ ----------- Consolidated $3,454,297 $2,710,168 $10,083,792 $8,204,586 ----------- ----------- ------------ ----------- Operating income: Electronic Components $ 148,896 $ 115,046 $ 459,845 $ 333,290 Computer Products 28,965 26,780 82,804 86,190 Corporate (a) (25,389) (23,588) (77,803) (73,991) ----------- ----------- ------------ ----------- Consolidated $ 152,472 $ 118,238 $ 464,846 $ 345,489 ----------- ----------- ------------ ----------- Effective January 1, 2006, the OEM Computing Solutions business, which was previously included in the worldwide computer products business, has been transitioned into the company's worldwide components business to further leverage customer overlap and to take advantage of greater opportunities for selling synergies. Prior period segment data has been adjusted to conform with the current period presentation. (a) Includes restructuring charges of $1.8 million and $6.4 million for the third quarter and first nine months of 2006, respectively. Includes restructuring charges of $.1 million and $9.0 million for the third quarter and first nine months of 2005, respectively, as well as an acquisition indemnification credit of $1.7 million for the first nine months of 2005. This interim report is subject to independent audit at year-end. CONTACT: Arrow Electronics, Inc. Ira M. Birns, 631-847-1657 Vice President & Treasurer or Paul J. Reilly, 631-847-1872 Senior Vice President & Chief Financial Officer or Media: Jacqueline F. Strayer, 631-847-2101 Vice President, Corporate Communications -----END PRIVACY-ENHANCED MESSAGE-----