EX-99.1 2 q42018pressreleaseexhibit9.htm EXHIBIT 99.1 Exhibit
ARROW ELECTRONICS. INC.
9201 E. DRY CREEK ROAD
CENTENNIAL, CO 80112
303-824-4000
 
NEWS

Exhibit 99.1
Arrow Electronics Reports Fourth-Quarter and Year-End 2018 Results
-- Record Fourth-Quarter and Full-Year Sales, Gross Profit and Operating Income --
-- Full-Year 2018 Sales Advanced $3 Billion Over Full-Year 2017 --
CENTENNIAL, Colo.--(BUSINESS WIRE)-Feb. 7, 2019--Arrow Electronics, Inc. (NYSE:ARW) today reported fourth-quarter 2018 sales of $7.92 billion, an increase of 5 percent from sales of $7.54 billion in the fourth quarter of 2017. Fourth-quarter net income of $231 million, or $2.63 per share on a diluted basis, compared with net income of $54 million, or $.60 per share on a diluted basis, in the fourth quarter of 2017. Excluding certain items1, net income would have been $225 million, or $2.57 per share on a diluted basis, in the fourth quarter of 2018, compared with net income of $222 million, or $2.49 per share on a diluted basis, in the fourth quarter of 2017. In the fourth quarter of 2018, changes in foreign currencies had negative impacts on growth of approximately $107 million or 2 percent on sales and $.06 or 3 percent on earnings per share on a diluted basis compared to the fourth quarter of 2017.
“We are helping customers create, make, and manage their electronic products at unmatched scale. This is driving tremendous growth for our suppliers, and for Arrow, as evidenced by our second consecutive year of growing sales by more than $3 billion,” said Michael J. Long, chairman, president, and chief executive officer. “We are proud to be enabling next-generation technologies and products that are making our world better.”
Global components fourth-quarter sales of $5.26 billion increased 6 percent year over year. Americas components sales increased 5 percent year over year. Europe components sales increased 9 percent year over year. Sales in the region, as adjusted, increased 13 percent year over year. Asia-Pacific components sales increased 7 percent year over year. “We are well-aligned to the long-term trends of growing electronic content in key end markets such as transportation, industrial, and aerospace and defense,” said Mr. Long.
Global enterprise computing solutions fourth-quarter sales of $2.66 billion increased 2 percent year over year. Global enterprise computing solutions sales, as adjusted, increased 6 percent year over year. Americas sales increased 4 percent year over year. Sales in the region, as adjusted, increased 9 percent year over year. Europe sales decreased 1 percent year over year. Sales in the region, as adjusted, were flat year over year. “We have positioned the company to lead the edge computing paradigm with our leading software, hardware, and security capabilities,” added Mr. Long.
FULL-YEAR RESULTS
Full-year 2018 sales of $29.68 billion increased 12 percent from sales of $26.55 billion in 2017. Net income for 2018 was $716 million, or $8.10 per share on a diluted basis, compared with net income of $402 million, or $4.48 per share on a diluted basis, in 2017. Excluding certain items1, net income would have been $781 million, or $8.83 per share on a diluted basis, in 2018 compared with net income of $674 million, or $7.51 per share on a diluted basis, in 2017. In 2018, changes in foreign currencies had positive impacts on growth of approximately $252 million, or 1 percent on sales, and $.06, or 1 percent, on earnings per share on a diluted basis compared to 2017.
“We executed well in 2018, and continue to see good returns on our organic investments. Operating income, excluding certain items1, increased 16 percent compared to a 12 percent increase in sales. Fourth-quarter cash flow from operations was $263 million as our business model generates substantial cash in lower growth environments,” said Chris Stansbury, senior vice president and chief financial officer. “In the fourth quarter, we reduced leverage, and we returned approximately $150 million to shareholders through our stock repurchase program. With the recent authorization of an additional $600 million of repurchases, we had approximately $729 million of remaining authorization under our share repurchase programs at the end of the year.”









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.

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GUIDANCE
“As we look to the first quarter, we believe that total sales will be between $6.775 billion and $7.175 billion, with global components sales between $4.975 billion and $5.175 billion, and global enterprise computing solutions sales between $1.8 billion and $2.0 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.61 to $1.73, and earnings per share on a diluted basis, excluding certain items1, to be in the range of $1.84 to $1.96 per share. Our guidance assumes an average tax rate at the high end of the long-term range of 23.5 to 25.5 percent, and average diluted shares outstanding of 87 million. We are expecting interest expense will total approximately $58 million. We are expecting the average USD-to-Euro exchange rate for the first quarter to be approximately $1.14 to €1. We estimate changes in foreign currencies will have a negative impact on growth of approximately $160 million, or 2 percent on sales, and $.08, or 4 percent, on earnings per share on a diluted basis compared to the first quarter of 2018,” 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 guides innovation forward for over 200,000 leading technology manufacturers and service providers. With 2018 sales of $30 billion, Arrow develops technology solutions that improve business and daily life. Learn more at fiveyearsout.com.
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, 2018.
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/dispositions by adjusting the company's operating results, including the amortization expense related to acquired/disposed intangible assets, as if the acquisitions/dispositions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions" and "impact of dispositions"). Operating income, net income attributable to shareholders, and net income per basic and diluted share are adjusted to exclude identifiable intangible amortization, restructuring, integration, and other charges, and 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/dispositions (including intangible assets amortization expense), the impact of tax reform, and financing activities. 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.

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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
 
(Unaudited)
 
(Unaudited / Adjusted)
 
 
 
(Adjusted)
Sales
$
7,918,182

 
$
7,539,449

 
$
29,676,768

 
$
26,554,563

Cost of sales
6,942,812

 
6,610,269

 
25,975,856

 
23,197,595

Gross profit
975,370

 
929,180

 
3,700,912

 
3,356,968

Operating expenses:
 
 
 
 
 
 
 
Selling, general, and administrative expenses
583,943

 
562,082

 
2,303,051

 
2,162,045

Depreciation and amortization
47,183

 
40,503

 
186,384

 
153,599

Loss on disposition of businesses, net
—

 
21,000

 
3,604

 
21,000

Restructuring, integration, and other charges
9,864

 
18,771

 
60,361

 
74,588

 
640,990

 
642,356

 
2,553,400

 
2,411,232

Operating income
334,380

 
286,824

 
1,147,512

 
945,736

Equity in earnings (losses) of affiliated companies
(1,524
)
 
559

 
(2,332
)
 
3,424

Gain (loss) on investments, net

(10,221
)
 
2,207

 
(14,166
)
 
(6,577
)
Loss on extinguishment of debt
—

 
—

 
—

 
59,545

Employee benefit plan expense
3,086

 
18,322

 
6,870

 
23,869

Interest and other financing expense, net
54,584

 
44,354

 
214,771

 
165,252

Income before income taxes
264,965

 
226,914

 
909,373

 
693,917

Provision for income taxes
32,474

 
171,413

 
187,799

 
286,541

Consolidated net income
232,491

 
55,501

 
721,574

 
407,376

Noncontrolling interests
1,838

 
1,848

 
5,379

 
5,200

Net income attributable to shareholders
$
230,653

 
$
53,653

 
$
716,195

 
$
402,176

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
2.66

 
$
0.61

 
$
8.19

 
$
4.54

Diluted
$
2.63

 
$
0.60

 
$
8.10

 
$
4.48

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
86,559

 
88,120

 
87,476

 
88,681

Diluted
87,561

 
89,278

 
88,444

 
89,766


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ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
 
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
 
(Adjusted)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
509,327

 
$
730,083

Accounts receivable, net
8,945,463

 
8,125,588

Inventories
3,878,678

 
3,302,518

Other current assets
274,832

 
256,028

Total current assets
13,608,300

 
12,414,217

Property, plant, and equipment, at cost:
 
 
 
Land
7,882

 
12,866

Buildings and improvements
158,712

 
160,664

Machinery and equipment
1,425,933

 
1,330,730

 
1,592,527

 
1,504,260

Less: Accumulated depreciation and amortization
(767,827
)
 
(665,785
)
Property, plant, and equipment, net
824,700

 
838,475

Investments in affiliated companies
83,693

 
88,347

Intangible assets, net
372,644

 
286,215

Goodwill
2,624,690

 
2,470,047

Other assets
270,418

 
361,966

Total assets
$
17,784,445

 
$
16,459,267

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
7,631,879

 
$
6,756,830

Accrued expenses
912,292

 
841,675

Short-term borrowings, including current portion of long-term debt
246,257

 
356,806

Total current liabilities
8,790,428

 
7,955,311

Long-term debt
3,239,115

 
2,933,045

Other liabilities
378,536

 
572,971

Equity:
 
 
 
Shareholders' equity:
 
 
 
Common stock, par value $1:
 
 
 
Authorized – 160,000 shares in both 2018 and 2017
 
 
 
Issued – 125,424 shares in both 2018 and 2017
125,424

 
125,424

Capital in excess of par value
1,135,934

 
1,114,167

Treasury stock (40,233 and 37,733 shares in 2018 and 2017, respectively), at cost
(1,972,254
)
 
(1,762,239
)
Retained earnings
6,335,335

 
5,596,786

Accumulated other comprehensive loss
(299,449
)
 
(124,883
)
Total shareholders' equity
5,324,990

 
4,949,255

Noncontrolling interests
51,376

 
48,685

Total equity
5,376,366

 
4,997,940

Total liabilities and equity
$
17,784,445

 
$
16,459,267


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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Quarter Ended
 
December 31, 2018
 
December 31, 2017
Cash flows from operating activities:
 
 
 
Consolidated net income
$
232,491

 
$
55,501

Adjustments to reconcile consolidated net income to net cash provided by operations:
 
 
 
Depreciation and amortization
47,183

 
40,503

Amortization of stock-based compensation
8,134

 
8,821

Equity in (earnings) losses of affiliated companies
1,524

 
(559
)
Deferred income taxes
(16,533
)
 
25,150

(Gain) loss on investment, net
10,221

 
(1,484
)
Loss on disposition of businesses, net
—

 
21,000

Other
3,142

 
3,051

Change in assets and liabilities, net of effects of acquired and disposed businesses:
 
 
 
Accounts receivable
(752,891
)
 
(1,052,808
)
Inventories
(162,825
)
 
(118,709
)
Accounts payable
764,726

 
930,406

Accrued expenses
96,946

 
37,254

Other assets and liabilities
31,016

 
174,652

Net cash provided by operating activities
263,134

 
122,778

 
 
 
 
Cash flows from investing activities:
 
 
 
Acquisition of property, plant, and equipment
(30,439
)
 
(54,352
)
Proceeds from sale of property, plant, and equipment
5,421

 
—

Cash paid for customer relationship intangible asset
(20,000
)
 
—

Other
(2,500
)
 
(3,147
)
Net cash used for investing activities
(47,518
)
 
(57,499
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Change in short-term and other borrowings
88,034

 
(26,893
)
Proceeds from (repayment of) long-term bank borrowings, net
(114,120
)
 
130,526

Proceeds from exercise of stock options
900

 
772

Repurchases of common stock
(150,132
)
 
(25,114
)
Other
—

 
(3,942
)
Net cash provided by (used for) financing activities
(175,318
)
 
75,349

Effect of exchange rate changes on cash
(5,162
)
 
5,116

Net increase in cash and cash equivalents
35,136

 
145,744

Cash and cash equivalents at beginning of period
474,191

 
584,339

Cash and cash equivalents at end of period
$
509,327

 
$
730,083


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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
Year Ended
 
December 31, 2018
 
December 31, 2017
Cash flows from operating activities:
 
 
 
Consolidated net income
$
721,574

 
$
407,376

Adjustments to reconcile consolidated net income to net cash provided by operations:
 
 
 
Depreciation and amortization
186,384

 
153,599

Amortization of stock-based compensation
46,238

 
39,122

Equity in (earnings) losses of affiliated companies
2,332

 
(3,424
)
Loss on extinguishment of debt
—

 
59,545

Deferred income taxes
1,236

 
38,412

(Gain) loss on investment, net
14,166

 
8,020

Loss on disposition of businesses, net
3,604

 
21,000

Impairment of property, plant and equipment
—

 
4,761

Other
9,198

 
5,705

Change in assets and liabilities, net of effects of acquired and disposed businesses:
 
 
 
Accounts receivable
(1,007,308
)
 
(1,079,094
)
Inventories
(618,875
)
 
(379,835
)
Accounts payable
936,423

 
816,602

Accrued expenses
112,123

 
(5,013
)
Other assets and liabilities
(134,405
)
 
37,781

Net cash provided by operating activities
272,690

 
124,557

 
 
 
 
Cash flows from investing activities:
 
 
 
Cash consideration paid for acquired businesses, net of cash acquired
(331,563
)
 
(3,628
)
Proceeds from disposition of businesses

32,013

 
—

Acquisition of property, plant, and equipment
(135,336
)
 
(203,949
)
Proceeds from sale of property, plant and equipment
5,421

 
24,433

Cash paid for customer relationship intangible asset
(20,000
)
 
—

Other
(13,500
)
 
(5,614
)
Net cash used for investing activities
(462,965
)
 
(188,758
)
 
 
 
 
Cash flows from financing activities:
 
 

Change in short-term and other borrowings
192,192

 
(41,316
)
Proceeds from long-term bank borrowings, net
306,635

 
47,760

Proceeds from note offering, net
—

 
986,203

Redemption of notes
(300,000
)
 
(558,887
)
Proceeds from exercise of stock options
8,819

 
22,195

Repurchases of common stock
(243,305
)
 
(174,239
)
Purchase of shares from noncontrolling interest
—

 
(23,350
)
Other
(1,174
)
 
(1,620
)
Net cash provided by (used for) financing activities
(36,833
)
 
256,746

Effect of exchange rate changes on cash
6,352

 
3,218

Net increase (decrease) in cash and cash equivalents
(220,756
)
 
195,763

Cash and cash equivalents at beginning of period
730,083

 
534,320

Cash and cash equivalents at end of period
$
509,327

 
$
730,083


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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
 
Quarter Ended
 
 
 
December 31, 2018
 
December 31, 2017
 
% Change
 
 
 
 
 
 
Consolidated sales, as reported
$
7,918,182

 
$
7,539,449

 
5.0
 %
Impact of changes in foreign currencies
—

 
(106,649
)
 
 
Impact of acquisitions
—

 
47,020

 
 
Impact of dispositions
—

 
(58,282
)
 
 
Consolidated sales, as adjusted
$
7,918,182

 
$
7,421,538

 
6.7
 %
 
 
 
 
 
 
Global components sales, as reported
$
5,261,477

 
$
4,944,942

 
6.4
 %
Impact of changes in foreign currencies
—

 
(58,957
)
 
 
Impact of acquisitions
—

 
21,314

 
 
Global components sales, as adjusted
$
5,261,477

 
$
4,907,299

 
7.2
 %
 
 
 
 
 
 
Americas components sales, as reported
$
2,021,033

 
$
1,929,827

 
4.7
 %
Impact of changes in foreign currencies
—

 
(3,536
)
 
 
Impact of acquisitions
—

 
21,314

 
 
Americas components sales, as adjusted
$
2,021,033

 
$
1,947,605

 
3.8
 %
 
 
 
 
 
 
Europe components sales, as reported
$
1,407,429

 
$
1,296,142

 
8.6
 %
Impact of changes in foreign currencies
—

 
(47,249
)
 
 
Impact of acquisitions
—

 
—

 
 
Europe components sales, as adjusted
$
1,407,429

 
$
1,248,893

 
12.7
 %
 
 
 
 
 
 
Asia components sales, as reported
$
1,833,015

 
$
1,718,973

 
6.6
 %
Impact of changes in foreign currencies
—

 
(8,172
)
 
 
Impact of acquisitions
—

 
—

 
 
Asia components sales, as adjusted
$
1,833,015

 
$
1,710,801

 
7.1
 %
 
 
 
 
 
 
Global ECS sales, as reported
$
2,656,705

 
$
2,594,507

 
2.4
 %
Impact of changes in foreign currencies
—

 
(47,692
)
 
 
Impact of acquisitions
—

 
25,706

 
 
Impact of dispositions
—

 
(58,282
)
 
 
Global ECS sales, as adjusted
$
2,656,705

 
$
2,514,239

 
5.7
 %
 
 
 
 
 
 
Europe ECS sales, as reported
$
954,343

 
$
965,216

 
(1.1
)%
Impact of changes in foreign currencies
—

 
(33,786
)
 
 
Impact of acquisitions
—

 
25,706

 
 
Impact of dispositions
—

 
(1,108
)
 
 
Europe ECS sales, as adjusted
$
954,343

 
$
956,028

 
(0.2
)%
 
 
 
 
 
 
Americas ECS sales, as reported
$
1,702,362

 
$
1,629,291

 
4.5
 %
Impact of changes in foreign currencies
—

 
(13,906
)
 
 
Impact of acquisitions
—

 
—

 
 
Impact of dispositions
—

 
(57,174
)
 
 
Americas ECS sales, as adjusted
$
1,702,362

 
$
1,558,211

 
9.3
 %

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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
 
 
 
 
 
Year Ended
 
 
 
December 31, 2018
 
December 31, 2017
 
% Change
 
 
 
 
 
 
Consolidated sales, as reported
$
29,676,768

 
$
26,554,563

 
11.8
%
Impact of changes in foreign currencies
—

 
251,644

 
 
Impact of acquisitions
—

 
157,772

 
 
Impact of dispositions
(27,493
)
 
(229,845
)
 
 
Consolidated sales, as adjusted
$
29,649,275

 
$
26,734,134

 
10.9
%
 
 
 
 
 
 
Global components sales, as reported
$
20,856,851

 
$
18,330,456

 
13.8
%
Impact of changes in foreign currencies
—

 
174,214

 
 
Impact of acquisitions
—

 
84,789

 
 
Global components sales, as adjusted
$
20,856,851

 
$
18,589,459

 
12.2
%
 
 
 
 
 
 
Americas components sales, as reported
$
7,816,533

 
$
7,010,385

 
11.5
%
Impact of changes in foreign currencies
—

 
(6,533
)
 
 
Impact of acquisitions
—

 
84,789

 
 
Americas components sales, as adjusted
$
7,816,533

 
$
7,088,641

 
10.3
%
 
 
 
 
 
 
Europe components sales, as reported
$
5,733,222

 
$
4,868,862

 
17.8
%
Impact of changes in foreign currencies
—

 
164,573

 
 
Impact of acquisitions
—

 
—

 
 
Europe components sales, as adjusted
$
5,733,222

 
$
5,033,435

 
13.9
%
 
 
 
 
 
 
Asia components sales, as reported
$
7,307,096

 
$
6,451,209

 
13.3
%
Impact of changes in foreign currencies
—

 
16,174

 
 
Impact of acquisitions
—

 
—

 
 
Asia components sales, as adjusted
$
7,307,096

 
$
6,467,383

 
13.0
%
 
 
 
 
 
 
Global ECS sales, as reported
$
8,819,917

 
$
8,224,107

 
7.2
%
Impact of changes in foreign currencies
—

 
77,430

 
 
Impact of acquisitions
—

 
72,983

 
 
Impact of dispositions
(27,493
)
 
(229,845
)
 
 
Global ECS sales, as adjusted
$
8,792,424

 
$
8,144,675

 
8.0
%
 
 
 
 
 
 
Europe ECS sales, as reported
$
3,077,391

 
$
2,835,219

 
8.5
%
Impact of changes in foreign currencies
—

 
95,447

 
 
Impact of acquisitions
—

 
72,983

 
 
Impact of dispositions
—

 
(3,991
)
 
 
Europe ECS sales, as adjusted
$
3,077,391

 
$
2,999,658

 
2.6
%
 
 
 
 
 
 
Americas ECS sales, as reported
$
5,742,526

 
$
5,388,888

 
6.6
%
Impact of changes in foreign currencies
—

 
(18,017
)
 
 
Impact of acquisitions
—

 
—

 
 
Impact of dispositions
(27,493
)
 
(225,854
)
 
 
Americas ECS sales, as adjusted
$
5,715,033

 
$
5,145,017

 
11.1
%

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ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
 
Three months ended December 31, 2018

Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Impact of the Tax Act
 
Other*
 
Non-GAAP
measure
Operating income
$
334,380

 
12,261

 
$
9,864

 
$
—

 
—

 
$
356,505

Income before income taxes
264,965

 
12,261

 
9,864

 
—

 
11,886

 
298,976

Provision for income taxes
32,474

 
3,437

 
4,514

 
28,323

 
3,025

 
71,773

Consolidated net income
232,491

 
8,824

 
5,350

 
(28,323
)
 
8,861

 
227,203

Noncontrolling interests
1,838

 
142

 
—

 
—

 
—

 
1,980

Net income attributable to shareholders
$
230,653

 
$
8,682

 
$
5,350

 
$
(28,323
)
 
$
8,861

 
$
225,223

Net income per diluted share
$
2.63

 
$
0.10

 
$
0.06

 
$
(0.32
)
 
$
0.10

 
$
2.57

Effective tax rate
12.3
%
 

 

 
 
 

 
24.0
%
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31, 2017 (Adjusted)

Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Impact of the Tax Act
 
Other**
 
Non-GAAP
measure
Operating income
$
286,824

 
12,162

 
$
18,771

 
$
—

 
21,000

 
$
338,757

Income before income taxes
226,914

 
12,162

 
18,771

 
—

 
35,499

 
293,346

Provision for income taxes
171,413

 
4,321

 
4,509

 
(124,748
)
 
13,713

 
69,208

Consolidated net income
55,501

 
7,841

 
14,262

 
124,748

 
21,786

 
224,138

Noncontrolling interests
1,848

 
147

 
—

 
—

 
—

 
1,995

Net income attributable to shareholders
$
53,653

 
$
7,694

 
$
14,262

 
$
124,748

 
$
21,786

 
$
222,143

Net income per diluted share
$
0.60

 
$
0.09

 
$
0.16

 
$
1.40

 
$
0.24

 
$
2.49

Effective tax rate
75.5
%
 

 

 
 
 

 
23.6
%
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2018

Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Impact of the Tax Act
 
Other**
 
Non-GAAP
measure
Operating income
$
1,147,512

 
$
49,356

 
$
60,361

 
$
—

 
$
3,604

 
$
1,260,833

Income before income taxes
909,373

 
49,356

 
60,361

 
—

 
19,435

 
1,038,525

Provision for income taxes
187,799

 
13,458

 
17,299

 
28,323

 
4,678

 
251,557

Consolidated net income
721,574

 
35,898

 
43,062

 
(28,323
)
 
14,757

 
786,968

Noncontrolling interests
5,379

 
589

 
—

 
—

 
—

 
5,968

Net income attributable to shareholders
$
716,195

 
$
35,309

 
$
43,062

 
$
(28,323
)
 
$
14,757

 
$
781,000

Net income per diluted share****
$
8.10

 
$
0.40

 
$
0.49

 
$
(0.32
)
 
$
0.17

 
$
8.83

Effective tax rate
20.7
%
 

 

 
 
 

 
24.2
%
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2017 (Adjusted)

Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Impact of the Tax Act
 
Other***
 
Non-GAAP
measure
Operating income
$
945,736

 
50,071

 
$
74,588

 
$
—

 
21,000

 
$
1,091,395

Income before income taxes
693,917

 
50,071

 
74,588

 
—

 
103,828

 
922,404

Provision for income taxes
286,541

 
17,744

 
22,401

 
(124,748
)
 
40,070

 
242,008

Consolidated net income
407,376

 
32,327

 
52,187

 
124,748

 
63,758

 
680,396

Noncontrolling interests
5,200

 
701

 
—

 
—

 
—

 
5,901

Net income attributable to shareholders
$
402,176

 
$
31,626

 
$
52,187

 
$
124,748

 
$
63,758

 
$
674,495

Net income per diluted share
$
4.48

 
$
0.35

 
$
0.58

 
$
1.39

 
$
0.71

 
$
7.51

Effective tax rate
41.3
%
 

 

 
 
 

 
26.2
%
 
 
 
 
 
 
 
 
 
 
 
 
*Other includes gain/loss on investments, net, and pension settlement.
**Other includes gain/loss on investments, net, pension settlement, and loss on disposition of businesses, net.
***Other includes gain/loss on investments, net, pension settlement, loss on disposition of businesses, net, and loss on extinguishment of debt.
****The sum of the components for diluted EPS as adjusted may not agree to totals as presented due to rounding.

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ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
 
 
 
 
 
Quarter Ended
 
Year Ended
 
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Sales:
 
 
 
 
 
 
 
Global components
$
5,261,477

 
$
4,944,942

 
$
20,856,851

 
$
18,330,456

Global ECS
2,656,705

 
2,594,507

 
8,819,917

 
8,224,107

Consolidated
$
7,918,182

 
$
7,539,449

 
$
29,676,768

 
$
26,554,563

Operating income (loss):
 
 
 
 
 
 
 
Global components
$
252,313

 
$
217,337

 
$
1,007,638

 
$
801,027

Global ECS
152,195

 
161,755

 
427,605

 
444,710

Corporate (a)
(70,128
)
 
(92,268
)
 
(287,731
)
 
(300,001
)
Consolidated
$
334,380

 
$
286,824

 
$
1,147,512

 
$
945,736


(a)
Includes restructuring, integration, and other charges of $9.9 million and $60.4 million for the fourth quarter and year ended December 31, 2018 and $18.8 million and $74.6 million for the fourth quarter and year ended December 31, 2017, respectively.

NON-GAAP SEGMENT RECONCILIATION
 
 
 
 
 
Quarter Ended
 
Year Ended
 
December 31, 2018

December 31, 2017
 
December 31, 2018
 
December 31, 2017
Global components operating income, as reported
$
252,313

 
$
217,337

 
$
1,007,638

 
$
801,027

Intangible assets amortization expense
9,368

 
6,515

 
35,367

 
27,725

Global components operating income, as adjusted
$
261,681

 
$
223,852

 
$
1,043,005

 
$
828,752

Global ECS operating income, as reported
$
152,195

 
$
161,755

 
$
427,605

 
$
444,710

Intangible assets amortization expense
2,893

 
5,647

 
13,989

 
22,346

Global ECS operating income, as adjusted
$
155,088

 
$
167,402

 
$
441,594

 
$
467,056






Contact:            Steven O’Brien,
Vice President, Investor Relations
303-824-4544




Media Contact:        John Hourigan,
Vice President, Global Communications
303-824-4586


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