-----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, S7FtapSyDgkvkW194LJSpgnZXkgfvjW3z32lO3KPbbnA5AzOIFn1Sqviqrg4Penk 98rN0wm5DYqiJAKgODx4EA== 0000007536-96-000009.txt : 19960812 0000007536-96-000009.hdr.sgml : 19960812 ACCESSION NUMBER: 0000007536-96-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NYSE 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04482 FILM NUMBER: 96606327 BUSINESS ADDRESS: STREET 1: 25 HUB DR CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 5163911300 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 ------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------- ------------ Commission file number 1-4482 ------ ARROW ELECTRONICS, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) New York 11-1806155 ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 25 Hub Drive, Melville, New York 11747 -------------------------------- ----------------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code (516) 391-1300 ------------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, $1 par value: 51,022,842 shares outstanding at August 2, 1996. ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 2 - ------------------------------------------------------------------------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements. ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
Six Months Ended Three Months Ended June 30, June 30, . ----------------------- ---------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Sales $3,304,968 $2,898,566 $1,601,651 $1,458,213 ---------- ---------- ---------- ---------- Costs and expenses: Cost of products sold 2,757,816 2,389,398 1,336,315 1,195,375 Selling, general and administrative expenses 307,215 287,011 151,135 146,373 Depreciation and amortization 18,354 15,552 9,301 7,781 ---------- ---------- ---------- --------- 3,083,385 2,691,961 1,496,751 1,349,529 ---------- ---------- ---------- --------- Operating income 221,583 206,605 104,900 108,684 Equity in earnings (loss) of affiliated company (28) 1,770 73 1,026 Interest expense 21,150 22,186 9,842 11,079 ---------- ---------- ---------- --------- Earnings before income taxes and minority interest 200,405 186,189 95,131 98,631 Provision for income taxes 79,172 76,373 37,441 40,440 ---------- ---------- ---------- --------- Earnings before minority interest 121,233 109,816 57,690 58,191 Minority interest 10,329 13,213 3,593 6,439 ---------- ---------- ---------- ---------- Net income $ 110,904 $ 96,603 $ 54,097 $ 51,752 ========== ========== ========== ========== Net income per common share: Primary $2.16 $2.05 $1.05 $1.09 ========== ========== ========== ========== Fully diluted $2.16 $1.93 $1.05 $1.03 ========== ========== ========== ========== ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 3 - ---------------------------------------------------------------------------- Average number of common shares and common share equivalents outstanding: Primary 51,463 47,065 51,672 47,294 ========== ========== ========= ========== Fully diluted 51,463 51,039 51,672 51,199 ========== ========== ========= ========== See accompanying notes.
ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 4 - ------------------------------------------------------------------------- ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
June 30, December 31, 1996 1995 ---------- ------------ (Unaudited) ASSETS Current assets: Cash and short-term investments $ 62,606 $ 93,947 Accounts receivable, less allowance for doubtful accounts ($39,404 in 1996 and $38,670 in 1995) 982,250 940,049 Inventories 1,045,043 1,039,111 Prepaid expenses and other assets 29,179 31,610 ---------- ---------- Total current assets 2,119,078 2,104,717 Property, plant and equipment at cost: Land 14,525 14,527 Buildings and improvements 66,888 63,857 Machinery and equipment 126,741 112,883 ---------- ---------- 208,154 191,267 Less accumulated depreciation and amortization 85,034 73,932 ---------- ---------- 123,120 117,335 Investment in affiliated company 36,003 36,031 Cost in excess of net assets of companies acquired, net of amortization ($52,274 in 1996 and $48,085 in 1995) 373,496 379,171 Other assets 62,234 63,762 ---------- ---------- $2,713,931 $2,701,016 ========== ========== See accompanying notes.
ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 5 - ------------------------------------------------------------------------- ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
June 30, December 31, 1996 1995 ----------- ------------ (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 517,598 $ 561,834 Accrued expenses 201,852 207,738 Short-term borrowings, including current maturities of long-term debt 115,362 117,085 ---------- ----------- Total current liabilities 834,812 886,657 Long-term debt 404,030 451,706 Deferred income taxes and other liabilities 93,219 68,992 Minority interest 73,318 97,780 Shareholders equity: Common stock, par value $1: Authorized - 120,000,000 shares in 1996 and 80,000,000 shares in 1995 Issued - 51,028,449 shares in 1996 and 50,647,826 shares in 1995 51,028 50,648 Capital in excess of par value 543,649 530,324 Retained earnings 713,537 602,633 Foreign currency translation adjustment 8,657 18,398 ---------- ---------- 1,316,871 1,202,003 Less: Unamortized employee stock awards and other 8,319 6,122 ---------- ---------- 1,308,552 1,195,881 ---------- ---------- $2,713,931 $2,701,016 ========== ========== See accompanying notes.
ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 6 - ------------------------------------------------------------------------- ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS)
Six Months Ended June 30, ------------------------- 1996 1995 ---- ---- (Unaudited) Cash flows from operating activities: Net income $110,904 $ 96,603 Adjustments to reconcile net income to net cash provided by (used for) operations: Minority interest in earnings 10,329 13,213 Depreciation and amortization 19,434 16,512 Equity in undistributed (earnings) loss of affiliated company 28 (1,770) Deferred income taxes 5,611 7,891 Change in assets and liabilities, net of effects of acquired businesses: Accounts receivable (37,035) (140,641) Inventories (10,002) (92,255) Prepaid expenses and other assets 3,683 (3,122) Accounts payable (43,408) 16,699 Accrued expenses (8,889) 35,800 Other 4,735 (847) -------- ------- Net cash provided by (used for) operating activities 55,390 (51,917) -------- ------- Cash flows from investing activities: Acquisition of property, plant and equipment, net (17,288) (26,050) Cash consideration paid for acquired businesses (12,425) (57,334) Investment in affiliate - (28,598) -------- ------- Net cash used for investing activities (29,713) (111,982) -------- ------- Cash flows from financing activities: Change in short-term borrowings (9,442) 36,812 -------- -------- Change in credit facilities (42,738) 99,397 Repayment of long-term debt (501) (15,784) Proceeds from long-term debt 966 22,651 Proceeds from exercise of stock options 7,631 9,014 Distribution to minority partners (9,379) (27,178) --------- ------- Net cash provided by (used for) financing activities (53,463) 124,912 -------- ------- Effect of exchange rate changes on cash (3,555) 9,611 -------- ------- ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 7 - ------------------------------------------------------------------------- Net decrease in cash and short-term investments (31,341) (29,376) Cash and short-term investments at beginning of period 93,947 105,606 -------- -------- Cash and short-term investments at end of period $ 62,606 $ 76,230 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the period for: Income taxes $ 68,997 $ 47,371 Interest 23,156 22,277 See accompanying notes.
ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 8 - -------------------------------------------------------------------------- ARROW ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1996 Note A -- Basis of presentation - ------------------------------- The accompanying consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position and results of operations at and for the periods presented. Such financial statements do not include all the information or footnotes necessary for a complete presentation and, accordingly, should be read in conjunction with the company's audited consolidated financial statements for the year ended December 31, 1995 and the notes thereto. The results of operations for the interim periods are not necessarily indicative of results for the full year. Note B -- Authorized shares and net income per common share - ----------------------------------------------------------- In May 1996, the shareholders approved an amendment to increase the number of authorized shares from 80,000,000 to 120,000,000 shares of common stock. Net income per common share is based upon the weighted average number of shares of common stock and common stock equivalents outstanding. For the six months ended June 30, 1996 and 1995, the average number of common stock equivalents was 634,767 and 660,324, respectively. For the quarter ended June 30, 1996 and 1995, the average number of common stock equivalents was 723,752 and 748,823, respectively. In October 1995, the company's 5-3/4% convertible subordinated debentures (the debentures) were converted into common stock. Net income per common share for 1995, on a fully diluted basis, assumes that the debentures we converted to common stock at the beginning of the period and the related interest expense, net of taxes, was eliminated. Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations. - -------------------- Sales - ----- Consolidated sales for the six months and second quarter of 1996 increased 14 percent and 10 percent, respectively, compared with the year-earlier periods. This sales growth was principally due to increased activity levels in each of the company's distribution groups throughout the world. ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 9 - -------------------------------------------------------------------------------- Operating income - ---------------- The company recorded operating income of $221.6 million and $104.9 million in the first six months and second quarter of 1996, respectively, compared with $206.6 million and $108.7 million, respectively, in the year-earlier periods. The improvement in operating income in the first half of 1996, compared with the year-earlier period, reflects the impact of increased sales and the benefits of continuing economies of scale offset, in part, by a decline in gross profit margins. The reduction in operating income in the second quarter of 1996, compared with the year-earlier period, is primarily due to the decrease in gross profits in Europe due to competitive pricing pressures, offset, in part, by continued operating efficiencies. Interest expense - ---------------- Interest expense of $21.2 million and $9.8 million in the first six months and second quarter of 1996, respectively, decreased from $22.2 million during the first six months of 1995 and $11.1 million in the comparable quarter of 1995. The decrease from the first six months and second quarter of 1995 reflects the conversion of the debentures in October 1995, and lower borrowings resulting from improved working capital usage offset, in part, by an increase in interest rates. Income taxes - ------------ During the first six months and second quarter of 1996, the company recorded a provision for taxes at an effective tax rate of 39.5 percent and 39.3 percent, respectively, compared with 41 percent in the year-earlier periods. The decrease in the provision is due to increased earnings in countries with lower marginal tax rates. Net income - ---------- The company recorded net income of $110.9 million and $54.1 million in the first six months and second quarter of 1996, respectively, compared with $96.6 million in the first six months of 1995 and $51.8 million in the second quarter of 1995. The increase in net income for the first six months is due to increased operating income as well as a decrease in interest expense, the provision for the income taxes, and minority interests. The increase in net income for second quarter is attributable to lower operating income offset by decreases in interest expense, the provision for income taxes, and minority interest. Liquidity and capital resources - ------------------------------- The company maintains a high level of current assets, primarily accounts receivable and inventories. Consolidated current assets as a percentage of total assets were approximately 78.1 percent and 75.6 percent at June 30, 1996 and 1995, respectively. ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 10 - -------------------------------------------------------------------------------- The net amount of cash provided by the company's operating activities during the first six months of 1996 was $55.4 million, principally reflecting increased earnings offset, in part, by an increase in working capital requirements. The net amount of cash used for investing activities was $29.7 million, including $17.3 million for various capital expenditures. The net amount of cash used for financing activities was $53.5 million, principally reflecting the reduction in the company's borrowings. The net amount of cash used for the company's operating activities during the first six months of 1995 was $51.9 million, principally reflecting increased working capital requirements supporting higher sales. The net amount of cash used for investing activities was $112 million, including $85.9 million for various investments and acquisitions. The net amount of cash provided by financing activities was $124.9 million, principally reflecting the company's borrowings to finance investments, acquisitions, distributions to partners, and the net repayment of debt. The company believes that its working capital, funds available under its credit agreements, and additional funds generated from operations will be sufficient to satisfy its cash requirements at least through 1997. The company announced that its Board of Directors has authorized management to implement a stock repurchase program under which Arrow may purchase, from time to time, at least $100 million of the company's common stock. The purchases will be made in the open market or in privately negotiated transactions, as determined by management. The timing and amount of the purchases will depend, among other matters, on market conditions and corporate requirements. ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 11 - -------------------------------------------------------------------------------- Item 4. Submission of Matters to a Vote of Security Holders. --------------------------------------------------- (a) The company's Annual Meeting of Shareholders was held on May 14, 1996 (the Annual Meeting). (b) The matters voted upon at the Annual Meeting and the results of the voting were as follows: (i) The following individuals were elected by the shareholders to serve as directors: Board Member In Favor Withheld - --------------- ---------- ------- Daniel W. Duval 43,313,967 309,555 Carlo Giersch 43,213,673 409,849 Stephen P. Kaufman 43,222,616 400,906 Roger King 42,878,839 744,683 Robert E. Klatell 43,228,348 395,174 Karen Gordon Mills 43,289,380 334,142 Richard S. Rosenbloom 43,312,343 311,179 Robert S. Throop 43,228,658 394,864 John C. Waddell 43,329,188 294,334 (ii) The amendment to increase the number of authorized shares from 80,000,000 to 120,000,000 shares of common stock was voted upon as follows: 42,222,613 shares in favor; 1,230,110 shares against; and 170,799 shares abstaining. (iii) The appointment of Ernst & Young LLP as auditors of the company was voted upon as follows: The shareholders voted 43,559,839; shares in favor; 30,490 shares against; and 33,193 shares abstaining. There were no broker non-votes regarding any of the above matters. Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------ (a) Exhibits (11) Statement Re: Computation of Earnings Per Share (b) Reports on Form 8-K. None. ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 12 - -------------------------------------------------------------------------------- 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 thereunto duly authorized. ARROW ELECTRONICS, INC. Date: August 7, 1996 By:/s/ Gerald Luterman ---------------------- Gerald Luterman Senior Vice President and Chief Financial Officer Date: August 7, 1996 By:/s/ Paul J. Reilly ---------------------- Paul J. Reilly Vice President and Corporate Controller ARROW ELECTRONICS, INC. June 30, 1996 FORM 10Q Page 13 - -------------------------------------------------------------------------------- EX-11 2 COMPUTATION OF EARNINGS PER SHARE Exhibit 11 ARROW ELECTRONICS, INC. STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE (IN THOUSANDS EXCEPT PER SHARE DATA)
Six Months Ended Three Months Ended June 30 June 30 ------------------ ------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Primary Average shares of common stock outstanding 50,828 46,405 50,948 46,545 Net effect of dilutive stock options - based on the treasury method 635 660 724 749 -------- ------- ------- ------- Total 51,463 47,065 51,672 47,294 ======== ======= ======= ======= Net income $110,904 $96,603 $54,096 $51,752 ======== ======= ======= ======= Per share amount $ 2.16 $ 2.05 $ 1.05 $ 1.09 ======== ======= ======= ======= Fully Diluted Average shares of common stock outstanding 50,828 46,405 50,948 46,545 Net effect of dilutive stock options - based on the treasury method 641 860 728 880 Assumed conversion of 5-3/4% convertible subordinated debentures - 3,774 - 3,774 -------- ------- ------- ------- Total 51,469 51,039 51,676 51,199 ======== ======= ======= ======= Net income $110,904 $96,603 $54,096 $51,752 Add interest on 5-3/4% convertible subordinated debentures, net of income tax effect - 2,156 - 1,078 -------- ------- ------- ------- Total $110,904 $98,759 $54,096 $52,830 ======== ======= ======= ======= Per share amount $ 2.16(A) $ 1.93 $ 1.05(A) $ 1.03 ======== ======= ======= ======= (A) This calculation is submitted in accordance with Regulation S-K, Item 601(b)(11), although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%.
EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE 1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S.DOLLARS DEC-31-1996 JAN-1-1996 JUN-30-1996 6-MOS 1 62,606 0 982,250 39,404 1,045,043 2,119,078 208,154 85,034 2,713,931 834,812 404,030 0 0 51,028 1,257,524 2,713,931 3,304,968 3,304,968 2,757,816 3,083,385 0 9,725 21,150 200,405 79,172 110,904 0 0 0 110,904 2.16 2.16
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