Electronics Production | October 25, 2006
Strong growth for Arrow
Arrow Electronics, Inc. today reported third quarter 2006 net income of $85.9 million ($.70 per share on both a basic and diluted basis) on sales of $3.45 billion, compared with net income of $63.5 million ($.54 and $.52 per share on a basic and diluted basis, respectively) on sales of $2.71 billion in the third quarter of 2005.
Consolidated sales grew 27% over the third quarter of 2005 or 17% on a pro forma basis, including Ultra Source Technology Corp. and DNSint.com AG in the third quarter of 2005. The company's results for the third quarters of 2006 and 2005 include a number of items outlined below that impact their comparability. A reconciliation of these items is provided under the heading "Certain Non-GAAP Financial Information." Excluding those items, net income for the quarter ended September 30, 2006 would have been $87.0 million ($.71 per share on both a basic and diluted basis) and net income for the quarter ended September 30, 2005 would have been $63.8 million ($.54 and $.52 per share on a basic and diluted basis, respectively). Included in the results for the third quarter of 2006 is $3.4 million ($2.2 million net of related taxes or $.02 per share on both a basic and diluted basis) related to the expensing of stock options in accordance with the provisions of Financial Accounting Standards Board Statement No. 123 (revised 2004), "Share Based Payment" ("FASB Statement No. 123(R)"). No such charge was recorded in 2005. Operating income in the third quarter of 2006 and 2005 was $152.5 million and $118.2 million, respectively. Excluding the items impacting comparability included in the reconciliation provided under the heading "Certain Non-GAAP Financial Information," third quarter 2006 operating income would have been $154.3 million, up 30% over last year's $118.4 million. Operating income as a percentage of sales, excluding the previously mentioned items and the impact of acquisitions, increased by 50 basis points year-over-year. "We again delivered strong results across all of our businesses, further demonstrating our consistent record of executing on the fundamentals of our business strategy," said William E. Mitchell, Chairman, President and Chief Executive Officer. "Sales reached a record third quarter level and operating income, earnings per share, and return on invested capital showed strong year-over-year improvement for the fifth consecutive quarter." Worldwide components sales and operating income both increased 29% over last year. Sales on a pro forma basis, including Ultra Source Technology Corp. in the third quarter of 2005, increased 20% year-over-year. "Each of our components businesses around the world achieved good year-over-year increases in sales and operating income," stated Mr. Mitchell. "Sales in North America and Europe were at record third quarter levels, and Asia/Pacific sales broke records again with significant improvements in profitability," added Mr. Mitchell. Worldwide computer products sales increased 22% year-over-year, while operating income increased 8% over last year. Sales for the Enterprise Computing Solutions business on a pro forma basis, including DNSint.com AG in the third quarter of 2005, increased 7% year-over-year. "Our enterprise computing business continued to demonstrate strong profitability and returns. Growth was driven by strong performance in storage and industry standard servers in North America, and software in our European enterprise business," said Mr. Mitchell. The company's results for the third quarter of 2006 and 2005 include the items outlined below that impact their comparability:
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