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Arrow Electronics Inc. Reports Operating Results (10-Q)

October 28, 2010 | About:
10qk

10qk

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Arrow Electronics Inc. (ARW) filed Quarterly Report for the period ended 2010-10-02.

Arrow Electronics Inc. has a market cap of $3.42 billion; its shares were traded at around $29.36 with a P/E ratio of 10.4 and P/S ratio of 0.2. ARW is in the portfolios of Robert Rodriguez of FPA Capital, First Pacific Advisors of First Pacific Advisors, LLC, Arnold Schneider of Schneider Capital Management, Paul Tudor Jones of The Tudor Group, Louis Moore Bacon of Moore Capital Management, LP, David Dreman of Dreman Value Management, NWQ Managers of NWQ Investment Management Co, Pioneer Investments, Chuck Royce of Royce& Associates, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Consolidated sales for the third quarter and first nine months of 2010 increased by $986.0 million, or 26.9%, and $3.03 billion, or 28.9%, compared with the year-earlier periods. The increase was driven by an increase in the global components business segment sales of $896.3 million, or 35.3%, and $2.67 billion, or 37.3%, for the third quarter and first nine months of 2010, respectively, and an increase in the global ECS business segment sales of $89.7 million, or 7.9%, and $358.6 million, or 10.8%, for the third quarter and first nine months of 2010, respectively. On a pro forma basis, which includes Shared, Converge, and Petsche as though these acquisitions occurred on January 1, 2009, consolidated sales for the third quarter and first nine months of 2010 increased 22.2% and 25.4%, respectively. The translation of the company's international financial statements into U.S. dollars resulted in a reduction in consolidated sales of $75.1 million and $53.8 million for the third quarter and first nine months of 2010, compared with the year-earlier periods, due to a stronger U.S. dollar. Excluding the impact of foreign currency, the company's consolidated sales increased by 29.5% for both the third quarter and first nine months of 2010, respectively.

The company recorded restructuring, integration, and other charges of $14.3 million ($9.5 million net of related taxes or $.08 per share on both a basic and diluted basis) and $27.4 million ($19.1 million net of related taxes or $.16 per share on both a basic and diluted basis) for the third quarter and first nine months of 2010, respectively. Included in the restructuring, integration, and other charges for the third quarter and first nine months of 2010 are restructuring charges of $8.4 million and $19.4 million, respectively, related to initiatives taken by the company to improve operating efficiencies. Also included in the restructuring, integration, and other charges for the third quarter and first nine months of 2010 are charges of $.3 million and $1.4 million, respectively, related to restructuring and integration actions taken in prior periods and acquisition-related expenses of $5.6 million and $6.6 million, respectively.

The company recorded restructuring, integration, and other 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, integration, and other 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. Also, included in the restructuring, integration, and other charges for the third quarter and first nine months of 2009 are charges of $2.3 million and $2.1 million, respectively, related to restructuring and integration actions taken in prior periods.

The company recorded operating income of $184.5 million and $519.0 million in the third quarter and first nine months of 2010, respectively, as compared with operating income of $45.1 million and $157.5 million in the year-earlier periods. Included in operating income for the third quarter and first nine months of 2010 were the previously discussed restructuring, integration, and other charges of $14.3 million and $27.4 million, respectively. 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.

The net amount of cash provided by financing activities during the first nine months of 2010 was $163.6 million. The primary sources of cash from financing activities during the first nine months of 2010 were $360.4 million of proceeds for revolving credit facility borrowings, $3.2 million of proceeds from the exercise of stock options, and $1.7 million related to excess tax benefits from stock-based compensation arrangements. The primary use of cash for financing activities included $131.3 million of repurchases of common stock, a $69.5 million repayment of senior notes, and a $.9 million decrease in short-term and other borrowings.

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.

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