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Arrow Electronics Reports Record Q4

MELVILLE, NY — Arrow Electronics, Inc. today reported fourth-quarter 2010 net income of $157.9 million ($1.37 and $1.34 per share on a basic and diluted basis, respectively) on sales of $5.24 billion, compared with net income of $63.1 million ($.53 and $.52 per share on a basic and diluted basis, respectively) on sales of $4.20 billion in the fourth quarter of 2009. Cash flow from operations for the quarter ended December 31, 2010 was $462 million.

Arrow's net income for 2010 was $479.6 million ($4.06 and $4.01 per share on a basic and diluted basis, respectively) on sales of $18.74 billion, compared with net income of $123.5 million ($1.03 per share on both a basic and diluted basis) on sales of $14.68 billion in 2009. Cash flow from operations for the year ended December 31, 2010 was $221 million.

The company's results for 2010 and 2009 include a number of items that impact their comparability. A complete reconciliation of these items is provided under the heading “Certain Non-GAAP Financial Information.” Excluding those items, on a non-GAAP basis, net income for the quarter ended December 31, 2010, would have been $151.6 million ($1.31 and $1.29 per share on a basic and diluted basis, respectively) and net income for the quarter ended December 31, 2009, would have been $77.5 million ($.65 and $.64 per share on a basic and diluted basis, respectively). For 2010, net income would have been $493.5 million ($4.18 and $4.13 per share on a basic and diluted basis, respectively) and $202.5 million ($1.69 and $1.68 per share on a basic and diluted basis, respectively) for 2009.

“We finished 2010 with a very strong close, reporting record revenue and earnings per share and extremely strong cash flow generation in a period of substantial growth,” said Michael J. Long, chairman, president, and chief executive officer. “Our organic strategy is simple – gain profitable market share, optimize gross profit and increase operational efficiency; and our M&A strategy is to expand our services portfolio and increase our addressable market. We have been successful in all of these areas throughout 2010, which has resulted in enhanced shareholder value.”

“Our results clearly demonstrate that we emerged from the downturn as an even stronger company,” said Paul J. Reilly, executive vice president, finance and operations and chief financial officer. “Going forward, we expect to continue to deliver strong results as we gain share in the markets we serve, create opportunities for Arrow in new markets, and execute on our sales excellence strategy.”

Global components fourth quarter sales of $3.34 billion increased 29 percent year over year. “In global components, our teams in every region continue to maximize our global reach and leverage our unmatched technology line card, while continually improving go-to-market efficiency. Over the last 12 months, we saw exceptionally strong sales growth in all regions. During this time, we also experienced noteworthy expansion in key vertical markets and again demonstrated good improvements in our working capital management,” Mr. Long said.

Global enterprise computing solutions (“ECS”) fourth quarter sales of $1.89 billion increased 18 percent year over year. “In the face of challenging market conditions at the beginning of the year, the ECS team delivered strong performance in 2010 and had an exceptional fourth quarter. There is no question that growth has returned to this business and we are well positioned heading into 2011. By gaining market share, expanding our line card, and acquiring strategic businesses, ECS is transforming its business model into one with a more dynamic and diversified customer and supplier base,” Mr. Long said.

The company's results for 2010 and 2009 include the items outlined below that impact their comparability:

  • restructuring, integration, and other charges of $6.1 million ($5.5 million net of related taxes or $.05 per share on both a basic and diluted basis) in the fourth quarter of 2010 and $24.7 million ($14.5 million net of related taxes or $.12 per share on a both basic and diluted basis) in the fourth quarter of 2009;
  • restructuring, integration, and other charges of $33.5 million ($24.6 million net of related taxes or $.21 per share on both a basic and diluted basis) in 2010 and $105.5 million ($75.7 million net of related taxes or $.63 per share on a both basic and diluted basis) in 2009;
  • a net reduction of the provision for income taxes of $9.4 million ($.08 per share on a basic and diluted basis, respectively) and a reduction in interest expense of $3.8 million ($2.3 million net of related taxes or $.02 per share on both a basic and diluted basis) in the fourth quarter and full year 2010 primarily related to the settlement of certain income tax matters covering multiple years; and
  • a loss on prepayment of debt of $1.6 million ($1.0 million net of related taxes or $.01 per share on both a basic and diluted basis) in 2010 and $5.3 million ($3.2 million net of related taxes or $.03 per share on both a basic and diluted basis) in 2009.

“Looking ahead, we believe that total first quarter sales will be between $4.75 and $5.15 billion, with global components sales between $3.55 and $3.75 billion and global enterprise computing solutions sales between $1.2 and $1.4 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $1.06 to $1.16,” said Mr. Reilly. The company's first quarter guidance does not include the pending acquisition of the RF, Wireless & Power Division of Richardson Electronics, Ltd.

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