Arrow Electronics Inc. (ARW) filed Quarterly Report for the period ended 2009-10-03.
Arrow Electronics Inc. is the world's largest distributor of electronic components and computer products to industrial and commercial customers. The company is a major global provider of products services and solutions to industrial and commercial users of electronic components and computer products. The company offers sales service and technical support capabilities that not only enable the company to provide the most powerful line card to their customers but to be their strategic business partner as well. Through a wide range of value-added services the company assists their customers reduce their time to market lower their total cost of ownership and enhance their overall competitiveness. Arrow Electronics Inc. has a market cap of $3.3 billion; its shares were traded at around $27.62 with a P/E ratio of 14 and P/S ratio of 0.2. Arrow Electronics Inc. had an annual average earning growth of 0.7% over the past 10 years.
Highlight of Business Operations:
The company recorded restructuring and integration charges of $37.6 million ($29.1 million net of related taxes or $.24 per share on both a basic and diluted basis) and $80.9 million ($61.3 million net of related taxes or $.51 per share on both a basic and diluted basis) for the third quarter and first nine months of 2009, respectively.
Included in the restructuring and integration charges for the third quarter and first nine months of 2009 are restructuring charges of $35.3 million and $78.8 million, respectively, related to initiatives taken by the company to improve operating efficiencies. These actions are expected to reduce costs by approximately $127.0 million per annum, with approximately $25.0 million and $45.0 million realized in the third quarter and first nine months of 2009, respectively. Also, included in the restructuring and integration charges for the third quarter and first nine months of 2009 are restructuring charges of $2.3 million and $3.3 million, respectively, and integration credits of $.1 million and $1.2 million, respectively, related to adjustments to reserves established through restructuring and integration charges in prior periods.
The company recorded restructuring and integration charges of $11.0 million ($7.6 million net of related taxes or $.06 per share on both a basic and diluted basis) and $25.7 million ($17.7 million net of related taxes or $.15 per share on both a basic and diluted basis) for the third quarter and first nine months of 2008, respectively.
The company recorded operating income of $45.1 million and $157.5 million in the third quarter and first nine months of 2009, respectively, as compared with operating income of $131.8 million and $440.9 million in the year-earlier periods. Included in operating income for the third quarter and first nine months of 2009 were the previously discussed restructuring and integration charges of $37.6 million and $80.9 million, respectively. Included in operating income for the third quarter and first nine months of 2008 were the previously discussed restructuring and integration charges of $11.0 million and $25.7 million, respectively, and a charge related to the preference claim from 2001 of $12.9 million for the first nine months of 2008.
The company recorded net income attributable to shareholders of $12.6 million and $60.4 million in the third quarter and first nine months of 2009, respectively, compared with net income attributable to shareholders of $76.1 million and $258.2 million in the year-earlier periods. Included in net income attributable to shareholders for the third quarter and first nine months of 2009 were the previously discussed restructuring and integration charges of $29.1 million and $61.3 million, respectively. Also included in net income attributable to shareholders for both the third quarter and first nine months of 2009 was the previously discussed loss on prepayment of debt of $3.2 million. Included in net income for both the third quarter and first nine months of 2008 were the previously discussed restructuring and integration charges of $7.6 million and $17.7 million, respectively. Also included in net income for the first nine months of 2008 was the previously discussed charge related to the preference claim from 2001 of $7.8 million. Excluding the above-mentioned items, the decrease in net income attributable to shareholders was primarily the result of the sales declines in the global ECS business segment and the more profitable global components businesses in North America and Europe, as well as competitive pricing pressure impacting gross profit margins. These decreases were offset, in part, by a reduction in selling, general and administrative expenses due to the company’s continuing efforts to streamline and simplify processes and to reduce expenses in response to the decline in sales due to the worldwide economic recession, as well as a reduction in net interest and other financing expense.
The net amount of cash provided by financing activities during the first nine months of 2009 was $128.8 million. The primary sources of cash from financing activities were $297.4 million of net proceeds from a note offering and $3.1 million of proceeds from the exercise of stock options. The primary use of cash for financing activities during the first nine months of 2009 included $135.7 million of repurchases of senior notes, a $32.0 million decrease in short-term borrowings, $2.3 million of repurchases of common stock, and a $1.7 million shortfall in tax benefits from stock-based compensation arrangements.
ARW is in the portfolios of Robert Rodriguez of FPA Capital, Arnold Schneider of Schneider Capital Management, David Dreman of Dreman Value Management, NWQ Managers of NWQ Investment Management Co.
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