ARROW ELECTRONICS INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 2, 2017

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EX-99.2 - EXHIBIT 99.2 - ARROW ELECTRONICS INCq32017cfocommentaryfinal.htm
8-K - 8-K - ARROW ELECTRONICS INCq320178-kpressrelease.htm
ARROW ELECTRONICS. INC.
9201 E. DRY CREEKROAD
CENTENNIAL, CO 80112
303-824-4000
 
NEWS


Exhibit 99.1
Arrow Electronics Reports Third-Quarter Results
-- Record Third-Quarter Sales, Gross Profit and Earnings per Share --
-- Third-Quarter Earnings per Share Up 17 Percent Year over Year --
CENTENNIAL, Colo.--(BUSINESS WIRE)-Nov. 2, 2017--Arrow Electronics, Inc. (NYSE:ARW) today reported third-quarter 2017 sales of $6.95 billion, an increase of 17 percent from sales of $5.94 billion in the third quarter of 2016. Third-quarter net income of $135 million, or $1.50 per share on a diluted basis, compared with net income of $118 million, or $1.28 per share on a diluted basis, in the third quarter of 2016. Excluding certain items1, net income would have been $163 million, or $1.82 per share on a diluted basis, in the third quarter of 2017, compared with net income of $143 million, or $1.56 per share on a diluted basis, in the third quarter of 2016.
“We are capitalizing on tremendous growth opportunities for the business, and are delivering successful outcomes to both our customers and suppliers. Our ability to provide solutions spanning from sensor to sunset of electronic products’ lifecycles is unmatched in the distribution and the broader technology industries,” said Michael J. Long, chairman, president, and chief executive officer. “Our third straight quarter of record results highlights our leadership position.”
Global components third-quarter sales of $4.86 billion grew 25 percent year over year. Americas components sales grew 24 percent year over year. Asia-Pacific components sales grew 24 percent year over year. Europe components sales grew 25 percent year over year. Sales in the region, as adjusted, grew 19 percent year over year. Global components third-quarter operating income grew 21 percent year over year and grew 20 percent year over year excluding amortization of intangibles expense. “As we expected, we have started to capture leverage on our market share gains as evidenced by our accelerating profit growth,” said Mr. Long.
Global enterprise computing solutions third-quarter sales of $2.09 billion grew 3 percent year over year. Europe enterprise computing solutions sales grew 16 percent year over year. Sales in the region, as adjusted, grew 11 percent year over year. Americas enterprise computing solutions sales declined 2 percent year over year. Global enterprise computing solutions third-quarter operating income declined 1 percent year over year and declined 2 percent year over year excluding amortization of intangibles expense. “Continued growth in our infrastructure software and cloud portfolio along with growth in servers drove sales higher this quarter, and we remain confident in our strategy to return to profitable growth in enterprise computing solutions,” added Mr. Long.
“Third-quarter cash flow from operations was $135 million. We made substantial investments to support our rapid growth this year, and our disciplined approach to working capital management allowed us to start seeing significant cash returns on those investments,” said Chris Stansbury, senior vice president and chief financial officer. “We remain committed to returning excess cash to shareholders. During the third quarter we returned approximately $25 million to shareholders through our stock repurchase program. We had approximately $384 million of remaining authorization under our share repurchase program at the end of the third quarter.”
NINE-MONTH RESULTS
In the first nine months of 2017, sales of $19.18 billion increased 10 percent from sales of $17.38 billion in the first nine months of 2016. Net income for the first nine months of 2017 was $348 million, or $3.87 per share on a diluted basis, compared with net income of $358 million, or $3.87 per share on a diluted basis in the first nine months of 2016. Excluding certain items1, net income would have been $455 million, or $5.06 per share on a diluted basis, in the first nine months of 2017 compared with net income of $428 million, or $4.63 per share on a diluted basis, in the first nine months of 2016.









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 fourth quarter, we believe that total sales will be between $7.2 billion and $7.6 billion, with global components sales between $4.75 billion and $4.95 billion, and global enterprise computing solutions sales between $2.45 billion and $2.65 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.86 to $2.02, and earnings per share on a diluted basis, excluding certain items1, to be in the range of $2.21 to $2.37 per share. Our guidance assumes interest expense will be approximately $44 million. The increase compared to the third quarter is due to slightly higher interest rates on our new long-term borrowings compared to our short-term borrowings, as well as normal, higher intra-quarter borrowings to support our seasonally largest quarter. Our guidance also assumes an average tax rate of 27 to 29 percent and average diluted shares outstanding are expected to be 89 million. We are expecting the average USD-to-Euro exchange rate for the fourth quarter to be approximately $1.18 to €1. At the midpoints of our fourth-quarter guidance ranges, full-year 2017 sales would total approximately $26.58 billion, and would grow 12 percent compared to full-year 2016. Full-year 2017 earnings per share, on a diluted basis, excluding certain items1, would total approximately $7.35 and would grow 11 percent compared to full-year 2016,” 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 (www.arrow.com) is a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Arrow serves as a supply channel partner for more than 125,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 465 locations serving over 90 countries.
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 Dec. 31, 2016.
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, income, or expense on a non-GAAP basis adjusted for the impact of changes in foreign currencies and the impact of acquisitions by adjusting the company's operating results for businesses acquired, including the amortization expense related to acquired intangible assets, as if the acquisitions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions"). 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 (including intangible assets amortization expense), 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)
(Unaudited)
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Nine Months Ended
 
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
 
 
 
 
 
 
 
 
Sales
$
6,953,740

 
$
5,936,092

 
$
19,178,638

 
$
17,382,370

Cost of sales
6,110,382

 
5,162,930

 
16,751,427

 
15,061,519

Gross profit
843,358

 
773,162

 
2,427,211

 
2,320,851

Operating expenses:
 
 
 
 
 
 
 
Selling, general, and administrative expenses
552,896

 
510,017

 
1,600,762

 
1,534,534

Depreciation and amortization
38,574

 
40,194

 
113,096

 
121,516

Restructuring, integration, and other charges
15,896

 
24,267

 
55,817

 
61,161

 
607,366

 
574,478

 
1,769,675

 
1,717,211

Operating income
235,992

 
198,684

 
657,536

 
603,640

Equity in earnings of affiliated companies
1,216

 
1,311

 
2,865

 
5,394

Loss on investment, net
15,000

 
—

 
14,250

 
—

Loss on extinguishment of debt
786

 
—

 
59,545

 
—

Interest and other financing expense, net
39,748

 
37,229

 
120,179

 
111,828

Income before income taxes
181,674

 
162,766

 
466,427

 
497,206

Provision for income taxes
46,199

 
44,931

 
114,998

 
137,441

Consolidated net income
135,475

 
117,835

 
351,429

 
359,765

Noncontrolling interests
845

 
108

 
3,352

 
1,533

Net income attributable to shareholders
$
134,630

 
$
117,727

 
$
348,077

 
$
358,232

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
1.52

 
$
1.29

 
$
3.92

 
$
3.92

Diluted
$
1.50

 
$
1.28

 
$
3.87

 
$
3.87

 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 
 
 
 
 
Basic
88,453

 
90,937

 
88,870

 
91,412

Diluted
89,540

 
91,938

 
89,936

 
92,487



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ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
 
 
 
 
 
September 30, 2017
 
December 31, 2016
 
(Unaudited)

 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
584,339

 
$
534,320

Accounts receivable, net
7,070,629

 
6,746,687

Inventories
3,168,769

 
2,855,645

Other current assets
215,431

 
180,069

Total current assets
11,039,168

 
10,316,721

Property, plant, and equipment, at cost:
 

 
 

Land
12,852

 
23,456

Buildings and improvements
158,865

 
175,141

Machinery and equipment
1,306,891

 
1,297,657

 
1,478,608

 
1,496,254

Less: Accumulated depreciation and amortization
(663,229
)
 
(739,955
)
Property, plant, and equipment, net
815,379

 
756,299

Investments in affiliated companies
86,626

 
88,401

Intangible assets, net
307,385

 
336,882

Goodwill
2,470,576

 
2,392,220

Other assets
337,832

 
315,843

Total assets
$
15,056,966

 
$
14,206,366

LIABILITIES AND EQUITY
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
5,799,723

 
$
5,774,151

Accrued expenses
799,066

 
821,244

Short-term borrowings, including current portion of long-term debt
380,208

 
93,827

Total current liabilities
6,978,997

 
6,689,222

Long-term debt
2,802,960

 
2,696,334

Other liabilities
349,717

 
355,190

Commitments and contingencies (Note L)


 


Equity:
 

 
 

Shareholders' equity:
 

 
 

Common stock, par value $1:
 

 
 

Authorized - 160,000 shares in both 2017 and 2016
 

 
 

Issued - 125,424 shares in both 2017 and 2016
125,424

 
125,424

Capital in excess of par value
1,107,125

 
1,112,114

Treasury stock (37,463 and 36,511 shares in 2017 and 2016, respectively), at cost
(1,739,473
)
 
(1,637,476
)
Retained earnings
5,545,307

 
5,197,230

Accumulated other comprehensive loss
(159,315
)
 
(383,854
)
Total shareholders' equity
4,879,068

 
4,413,438

Noncontrolling interests
46,224

 
52,182

Total equity
4,925,292

 
4,465,620

Total liabilities and equity
$
15,056,966

 
$
14,206,366



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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Quarter Ended
 
September 30, 2017
 
October 1, 2016
Cash flows from operating activities:
 
 
 
Consolidated net income
$
135,475

 
$
117,835

Adjustments to reconcile consolidated net income to net cash provided by operations:
 
 
 
Depreciation and amortization
38,574

 
40,194

Amortization of stock-based compensation
8,910

 
10,508

Equity in earnings of affiliated companies
(1,216
)
 
(1,311
)
Loss on extinguishment of debt
786

 
—

Deferred income taxes
1,437

 
2,522

Loss on investments, net
14,250

 
—

Other
2,207

 
1,510

Change in assets and liabilities, net of effects of acquired businesses:
 
 
 
Accounts receivable
(457,037
)
 
(193,791
)
Inventories
(105,875
)
 
(95,184
)
Accounts payable
487,904

 
93,313

Accrued expenses
48,291

 
11,826

Other assets and liabilities
(38,817
)
 
38,199

Net cash provided by operating activities
134,889

 
25,621


 
 
 
Cash flows from investing activities:
 
 
 
Cash consideration paid for acquired businesses
(1,094
)
 
(23,473
)
Acquisition of property, plant, and equipment
(47,691
)
 
(38,005
)
Other
533

 
—

Net cash used for investing activities
(48,252
)
 
(61,478
)

 
 
 
Cash flows from financing activities:
 
 
 
Change in short-term and other borrowings
(54,697
)
 
(35,670
)
Proceeds from (repayments of) long-term bank borrowings, net
(324,584
)
 
87,000

Proceeds from note offerings, net
492,519

 
—

Redemption of notes
2,214

 
—

Proceeds from exercise of stock options
726

 
1,842

Repurchases of common stock
(25,462
)
 
(120,345
)
Other
(675
)
 
(1,183
)
Net cash provided by (used for) financing activities
90,041

 
(68,356
)
Effect of exchange rate changes on cash
(12,257
)
 
(7,143
)
Net increase (decrease) in cash and cash equivalents
164,421

 
(111,356
)
Cash and cash equivalents at beginning of period
419,918

 
495,771

Cash and cash equivalents at end of period
$
584,339

 
$
384,415



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ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Nine Months Ended
 
September 30, 2017
 
October 1, 2016
Cash flows from operating activities:
 
 
 
Consolidated net income
$
351,429

 
$
359,765

Adjustments to reconcile consolidated net income to net cash provided by operations:

 

Depreciation and amortization
113,096

 
121,516

Amortization of stock-based compensation
30,301

 
29,783

Equity in earnings of affiliated companies
(2,865
)
 
(5,394
)
Loss on extinguishment of debt
59,545

 
—

Deferred income taxes
13,262

 
30,191

Loss on investments, net
14,250

 
—

Other
7,415

 
4,464

Change in assets and liabilities, net of effects of acquired businesses:

 

Accounts receivable
(59,084
)
 
335,455

Inventories
(255,820
)
 
(117,674
)
Accounts payable
(113,804
)
 
(513,365
)
Accrued expenses
(41,810
)
 
(102,915
)
Other assets and liabilities
(114,136
)
 
(1,121
)
Net cash provided by operating activities
1,779

 
140,705


 
 
 
Cash flows from investing activities:
 
 
 
Cash consideration paid for acquired businesses
(3,628
)
 
(68,946
)
Acquisition of property, plant, and equipment
(149,597
)
 
(126,341
)
Proceeds from sale of property, plant, and equipment
24,433

 
—

Other
(2,467
)
 
(12,000
)
Net cash used for investing activities
(131,259
)
 
(207,287
)

 
 
 
Cash flows from financing activities:
 
 
 
Change in short-term and other borrowings
(14,423
)
 
31,941

Proceeds from (repayments of) long-term bank borrowings, net
(82,766
)
 
320,000

Proceeds from note offerings, net
987,144

 
—

Redemption of notes
(555,886
)
 
—

Proceeds from exercise of stock options
21,423

 
16,686

Repurchases of common stock
(149,125
)
 
(167,178
)
Purchase of shares from noncontrolling interest
(23,350
)
 
—

Other
(1,620
)
 
(3,000
)
Net cash provided by financing activities
181,397

 
198,449

Effect of exchange rate changes on cash
(1,898
)
 
(20,542
)
Net increase in cash and cash equivalents
50,019

 
111,325

Cash and cash equivalents at beginning of period
534,320

 
273,090

Cash and cash equivalents at end of period
$
584,339

 
$
384,415


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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
 
Quarter Ended
 
 
 
September 30, 2017
 
October 1, 2016
 
% Change
 
 
 
 
 
 
Consolidated sales, as reported
$
6,953,740

 
$
5,936,092

 
17.1
 %
Impact of changes in foreign currencies
—

 
82,751

 
 
Impact of acquisitions
—

 
1,387

 
 
Consolidated sales, as adjusted
$
6,953,740

 
$
6,020,230

 
15.5
 %
 
 
 
 
 
 
Global components sales, as reported
$
4,864,361

 
$
3,904,447

 
24.6
 %
Impact of changes in foreign currencies
—

 
55,516

 
 
Impact of acquisitions
—

 
1,387

 
 
Global components sales, as adjusted
$
4,864,361

 
$
3,961,350

 
22.8
 %
 
 
 
 
 
 
Europe components sales, as reported
$
1,262,048

 
$
1,008,135

 
25.2
 %
Impact of changes in foreign currencies
—

 
48,533

 
 
Impact of acquisitions
—

 
—

 
 
Europe components sales, as adjusted
$
1,262,048

 
$
1,056,668

 
19.4
 %
 
 
 
 
 
 
Asia components sales, as reported
$
1,785,541

 
$
1,436,316

 
24.3
 %
Impact of changes in foreign currencies
—

 
6,497

 
 
Impact of acquisitions
—

 
—

 
 
Asia components sales, as adjusted
$
1,785,541

 
$
1,442,813

 
23.8
 %
 
 
 
 
 


Global ECS sales, as reported
$
2,089,379

 
$
2,031,645

 
2.8
 %
Impact of changes in foreign currencies
—

 
27,235

 
 
Impact of acquisitions
—

 
—

 
 
Global ECS sales, as adjusted
$
2,089,379

 
$
2,058,880

 
1.5
 %
 
 
 
 
 
 
Europe ECS sales, as reported
$
624,393

 
$
539,932

 
15.6
 %
Impact of changes in foreign currencies
—

 
21,589

 
 
Impact of acquisitions
—

 
—

 
 
Europe ECS sales, as adjusted
$
624,393

 
$
561,521

 
11.2
 %
 
 
 
 
 
 
Americas ECS sales, as reported
$
1,464,986

 
$
1,491,713

 
(1.8
)%
Impact of changes in foreign currencies
—

 
5,646

 
 
Impact of acquisitions
—

 
—

 
 
Americas ECS sales, as adjusted
$
1,464,986

 
$
1,497,359

 
(2.2
)%















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ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
 
Nine Months Ended
 
 
 
September 30, 2017
 
October 1, 2016
 
% Change
 
 
 
 
 
 
Consolidated sales, as reported
$
19,178,638

 
$
17,382,370

 
10.3
 %
Impact of changes in foreign currencies
—

 
(47,238
)
 

Impact of acquisitions
—

 
48,148

 

Consolidated sales, as adjusted
$
19,178,638

 
$
17,383,280

 
10.3
 %
 
 
 
 
 
 
Global components sales, as reported
$
13,385,514

 
$
11,413,348

 
17.3
 %
Impact of changes in foreign currencies
—

 
(13,155
)
 

Impact of acquisitions
—

 
9,711

 

Global components sales, as adjusted
$
13,385,514

 
$
11,409,904

 
17.3
 %
 
 
 
 
 
 
Europe components sales, as reported
$
3,572,720

 
$
3,123,258

 
14.4
 %
Impact of changes in foreign currencies
—

 
(29,236
)
 

Impact of acquisitions
—

 
—

 

Europe components sales, as adjusted
$
3,572,720

 
$
3,094,022

 
15.5
 %
 
 
 
 
 
 
Asia components sales, as reported
$
4,732,236

 
$
3,912,613

 
20.9
 %
Impact of changes in foreign currencies
—

 
14,100

 

Impact of acquisitions
—

 
—

 

Asia components sales, as adjusted
$
4,732,236

 
$
3,926,713

 
20.5
 %
 
 
 
 
 
 
Global ECS sales, as reported
$
5,793,124

 
$
5,969,022

 
(2.9
)%
Impact of changes in foreign currencies
—

 
(34,082
)
 

Impact of acquisitions
—

 
38,437

 

Global ECS sales, as adjusted
$
5,793,124

 
$
5,973,377

 
(3.0
)%
 
 
 
 
 
 
Europe ECS sales, as reported
$
1,833,611

 
$
1,867,715

 
(1.8
)%
Impact of changes in foreign currencies
—

 
(44,291
)
 

Impact of acquisitions
—

 
—

 

Europe ECS sales, as adjusted
$
1,833,611

 
$
1,823,424

 
0.6
 %
 
 
 
 
 
 
Americas ECS sales, as reported
$
3,959,513

 
$
4,101,307

 
(3.5
)%
Impact of changes in foreign currencies
—

 
10,209

 

Impact of acquisitions
—

 
38,437

 

Americas ECS sales, as adjusted
$
3,959,513

 
$
4,149,953

 
(4.6
)%


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ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
 
Three months ended September 30, 2017
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other*
 
Non-GAAP
measure
Operating income
$
235,992

 
$
12,645

 
$
15,896

 
$
—

 
$
264,533

Income before income taxes
181,674

 
12,645

 
15,896

 
15,786

 
226,001

Provision for income taxes
46,199

 
4,474

 
5,319

 
6,089

 
62,081

Consolidated net income
135,475

 
8,171

 
10,577

 
9,697

 
163,920

Noncontrolling interests
845

 
146

 
—

 
—

 
991

Net income attributable to shareholders
$
134,630

 
$
8,025

 
$
10,577

 
$
9,697

 
$
162,929

Net income per diluted share
1.50

 
0.09

 
0.12

 
0.11

 
1.82

Effective tax rate
25.4
%
 

 

 

 
27.5
%
 
 
 
 
 
 
 
 
 
 
Three months ended October 1, 2016
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other
 
Non-GAAP
measure
Operating income
198,684


13,893


24,267


—


236,844

Income before income taxes
162,766


13,893


24,267


—


200,926

Provision for income taxes
44,931


4,959


7,439


—


57,329

Consolidated net income
117,835


8,934


16,828


—


143,597

Noncontrolling interests
108


347


—


—


455

Net income attributable to shareholders
$
117,727


8,587


16,828


—


143,142

Net income per diluted share**
1.28


0.09


0.18


—


1.56

Effective tax rate
27.6
%







28.5
%
 
 
 
 
 
 
 
 
 
 
Nine months ended September 30, 2017
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other*
 
Non-GAAP
measure
Operating income
$
657,536

 
37,909

 
55,817

 
—

 
751,262

Income before income taxes
466,427

 
37,909

 
55,817

 
73,795

 
633,948

Provision for income taxes
114,998

 
13,423

 
17,892

 
28,466

 
174,779

Consolidated net income
351,429

 
24,486

 
37,925

 
45,329

 
459,169

Noncontrolling interests
3,352

 
554

 
—

 
—

 
3,906

Net income attributable to shareholders
$
348,077

 
23,932

 
37,925

 
45,329

 
455,263

Net income per diluted share
3.87

 
0.27

 
0.42

 
0.50

 
5.06

Effective tax rate
24.7
%
 
 
 
 
 
 
 
27.6
%
 
 
 
 
 
 
 
 
 
 
Nine months ended October 1, 2016
 
Reported
GAAP
measure
 
Intangible
amortization
expense
 
Restructuring
& Integration
charges
 
Other
 
Non-GAAP
measure
Operating income
$
603,640

 
41,252

 
61,161

 
—

 
706,053

Income before income taxes
497,206

 
41,252

 
61,161

 
—

 
599,619

Provision for income taxes
137,441

 
12,357

 
19,242

 
—

 
169,040

Consolidated net income
359,765

 
28,895

 
41,919

 
—

 
430,579

Noncontrolling interests
1,533

 
940

 
—

 
—

 
2,473

Net income attributable to shareholders
$
358,232

 
27,955

 
41,919

 
—

 
428,106

Net income per diluted share**
3.87

 
0.30

 
0.45

 
—

 
4.63

Effective tax rate
27.6
%
 
 
 
 
 
 
 
28.2
%
 
 
 
 
 
 
 
 
 
 
* Other includes loss on extinguishment of debt and loss on investment.
**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
 
Nine Months Ended
 
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
Sales:
 
 
 
 
 
 
 
Global components
$
4,864,361

 
$
3,904,447

 
$
13,385,514

 
$
11,413,348

Global ECS
2,089,379

 
2,031,645

 
5,793,124

 
5,969,022

Consolidated
$
6,953,740

 
$
5,936,092

 
$
19,178,638

 
$
17,382,370

Operating income (loss):
 
 
 
 
 
 
 
Global components
$
212,993

 
$
175,507

 
$
583,690

 
$
524,662

Global ECS
94,797

 
96,181

 
282,379

 
283,792

Corporate (a)
(71,798
)
 
(73,004
)
 
(208,533
)
 
(204,814
)
Consolidated
$
235,992

 
$
198,684

 
$
657,536

 
$
603,640


(a)
Includes restructuring, integration, and other charges of $15.9 million and $55.8 million for the third quarter and first nine months of 2017, and $24.3 million and $61.2 million for the third quarter and first nine months of 2016, respectively.

NON-GAAP SEGMENT RECONCILIATION
 
 
 
 
 
Quarter Ended
 
Nine Months Ended
 
September 30, 2017
 
October 1, 2016
 
September 30, 2017
 
October 1, 2016
Global components operating income, as reported
$
212,993

 
$
175,507

 
$
583,690

 
$
524,662

Intangible assets amortization expense
6,984

 
7,679

 
21,210

 
24,124

Global components operating income, as adjusted
$
219,977

 
$
183,186

 
$
604,900

 
$
548,786

Global ECS operating income, as reported
$
94,797

 
$
96,181

 
$
282,379

 
$
283,792

Intangible assets amortization expense
5,661

 
6,214

 
16,699

 
17,128

Global ECS operating income, as adjusted
$
100,458

 
$
102,395

 
$
299,078

 
$
300,920





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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ARROW ELECTRONICS INC Reports