Arrow Electronics Hits Bulls Eye in Profits

It’s difficult to make financial data sound sexy, so let’s just cut to the chase. Arrow Electronics, a global provider of products and services to industrial and commercial users of electronic components and computer products has reported fourth quarter 2006 net income of $128.1 million on sales of $3.49 billion, compared with net income of $74.4 million on sales of $2.96 billion in the fourth quarter of 2005. Consolidated sales grew 18% over the fourth quarter of 2005, or 8% on a pro forma basis including the impact of acquisitions. Part of the reason for growth in the fourth quarter of 2006 included settling tax matters covering multiple years. This resulted in a reduction in income taxes of $46.2 million and related interest expense of $6.9 million in the fourth quarter. The impact on net income was an increase of $50.4 million, of which $1.9 million related to the fourth quarter of 2006. During the fourth quarter of 2006, the company made the decision to expand and accelerate a strategic initiative that includes the introduction of a worldwide ERP system. The impact on net income was a decrease of $3.6 million. During the fourth quarter of 2006, the company completed the valuation of acquisitions completed in the fourth quarter of 2005. Accordingly, the company recorded the related amortization expense for the full year in the fourth quarter of 2006. The impact on net income was a decrease of $1.6 million, of which $.4 million related to the fourth quarter of 2006. The company recorded restructuring charges and costs associated with pre-acquisition warranty and environmental claims. The impact of these various items was a decrease of $7.8 million in net income. Excluding the aforementioned items, net income for the quarter ended December 31, 2006 would have been $92.2 million. Arrow saw sales at record levels in 2006 with market share gains in all of its businesses. Arrow’s net income for 2006 was $388.3 million on sales of $13.58 billion, compared with net income of $253.6 million on sales of $11.16 billion for 2005.