Arrow Electronics 2001 Annual Report Download

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ARROW ELECTRONICS, INC.
2001 ANNUAL REPORT

Table of contents

  • Page 1
    ... INNOVATES ERN UER T E UE INN INNOVATES E RT R N OVE EU ER INN T IN I E R V I ER T T I IN IN V SE VI ER SE E J E C INNOVATES E R N OVE EJE U T C UT T H EXECUTES F Ü RT A H U ARROW ELECTRONICS, INC. 2001 ANNUAL REPORT

  • Page 2
    ... England Estonia Finland France Germany Greece Hungary Ireland Employees 3,900 Sales locations 80 Distribution centers 9 Israel Italy Netherlands Norway Poland Portugal Slovenia South Africa Spain Sweden Switzerland Turkey Countries/ Territories Australia China Hong Kong India Malaysia New Zealand...

  • Page 3
    ... 202 sales locations and 23 distribution centers in 40 countries and territories, Arrow is much more than a supplier of parts and products. Design services, materials planning, inventory management, programming and assembly services, and a comprehensive suite of online supply chain tools highlight...

  • Page 4
    ... with manufacturing facilities in the North American and Asia/Pacific regions-to Europe, where we added six new locations to extend our local sales and marketing presence-to North America, where we opened a new 430,000-square-foot distribution and programming center in Reno, Nevada. Finding New Ways...

  • Page 5
    .... In 2001, we launched a suite of Internet design and supply chain services, including Arrow Risk Manager, Arrow Alert, and Arrow Collaborator. These interactive and real-time resources prevent costly design delays, provide immediate notification of changes to components, pipeline product for...

  • Page 6
    ... line. Our sales and marketing teams follow the customer's requirements, from the time the order is placed to the moment the product arrives. Our worldwide network of distribution centers ships 37 million units each day, with delivery scheduled for the precise moment the component is required by...

  • Page 7
    ..., Arrow employees transferred the entire contents of a primary distribution center to a new facility in Reno, Nevada, moving more than 85,000 part bins containing close to 43 million parts in a matter of days, with no interruption in service. In the late fall, Arrow North American Computer Products...

  • Page 8
    ... capacity, Arrow opened a new 9,000-square-foot, full-service programming center in Penang, Malaysia to serve the growing demand for programmable devices in Asia. In the Americas, we relocated a major programming and distribution center to a new 430,000-square-foot facility in Reno, Nevada, nearly...

  • Page 9
    ... their entire product development and production cycles. The Arrow integrated suite of online supply chain management tools is one example of developing new services by finding the points in our customers' design and supply chain where information and software tools would speed time to market. Today...

  • Page 10
    ..., respectively, associated with the realignment of the North American Components Operations and the acquisition and integration of the volume electronic component distribution businesses of Premier Farnell plc. Excluding these charges, operating income, net income, and earnings per share on a basic...

  • Page 11
    ... acquisition and integration of Richey Electronics, Inc. ("Richey") and the electronics distribution group of Bell Industries, Inc. ("EDG"). This increase in operating income was a result of increased sales in the electronic components businesses around the world and increased gross profit margins...

  • Page 12
    ... of higher sales, improved gross profit margins in the electronic components operations in the latter part of 1999, and improved operating efficiencies resulting from the integration of Richey and EDG into the company offset, in part, by lower gross profit margins in the computer products operations...

  • Page 13
    ... and require that working capital, net worth, and certain other financial ratios be maintained at designated levels. In addition, in the event that the company's credit rating is reduced to non-investment grade by either Standard & Poor's or Moody's Investors Service, Inc., the company would no...

  • Page 14
    ..., principally reflecting increased accounts receivable due to accelerated sales growth in the fourth quarter offset, in part, by earnings for the year. The net amount of cash used for investing activities was $543.3 million, including $459.1 million for the acquisitions of Richey, EDG, Industrade AG...

  • Page 15
    ...flows and earnings and investments in businesses in Europe, the Asia/Pacific region, and Latin and South America are not hedged as in many instances there are natural offsetting positions. The translation of the financial statements of the non-North American operations is impacted by fluctuations in...

  • Page 16
    ... (In thousands except per share data) Years Ended December 31, Sales Costs and expenses Cost of products sold Selling, general, and administrative expenses Depreciation and amortization Restructuring costs and other special charges Integration charge 2001 $10,127,604 8,609,448 1,156,687 118,344 77...

  • Page 17
    ...-term investments Accounts receivable, net Inventories Prepaid expenses and other assets Total current assets Property, plant and equipment at...stock (3,998,063 and 5,405,918 shares in 2001 and 2000, respectively), at cost Unamortized employee stock awards Other Total shareholders' equity $ 665,363...

  • Page 18
    ... from investing activities Acquisition of property, plant and equipment Cash consideration paid for acquired businesses Investments in affiliates Issuance of note receivable Net cash used for investing activities Cash flows from financing activities Sale of accounts receivable under securitization...

  • Page 19
    ... Unrealized loss on securities Comprehensive loss Exercise of stock options Tax benefits related to exercise of stock options Restricted stock awards, net Amortization of employee stock awards Other Balance at December 31, 2001 See accompanying notes. Capital in Excess of Par Value $506,002...

  • Page 20
    .... The company's operations are classified into two reportable business segments, the distribution of electronic components and the distribution of computer products. Revenue Recognition The company recognizes revenue in accordance with SEC Staff Accounting Bulletin No. 101, "Revenue Recognition in...

  • Page 21
    ..."), part of the electronics distribution businesses of Germany-based E.ON AG (formerly VEBA AG), and the open computing alliance subsidiary of Merisel, Inc., one of the leading distributors of Sun Microsystems products in North America. In addition, the company acquired Tekelec Europe, one of Europe...

  • Page 22
    ... 2000 exceeded the net assets acquired by $356,488,000. 3 Investments During 2001, the company acquired an additional interest in Marubun Corporation, the largest non-affiliated franchised distributor of electronic components and supply chain services in Japan. This investment is accounted for using...

  • Page 23
    ... and require that working capital, net worth, and certain other financial ratios be maintained at designated levels. In addition, in the event that the company's credit rating is reduced to non-investment grade by either Standard & Poor's or Moody's Investors Service, Inc., the company would no...

  • Page 24
    ... rate State taxes, net of federal benefit Foreign tax rate differential Non-deductible goodwill Other 2001 $(38,253) (10,243) 1,812 11,741 754 $(34,189) 2000 $213,546 15,663 4,953 8,537 5,496 $248,195 1999 $ 80,921 7,873 2,860 6,904 3,230 $101,788 For financial reporting purposes, earnings (loss...

  • Page 25
    ... shares outstanding for basic EPS Net effect of dilutive stock options and restricted stock awards Weighted average shares outstanding for diluted EPS Basic EPS Diluted EPS(c) 9 Employee Stock Plans Restricted Stock Plan Under the terms of the Arrow Electronics, Inc. Restricted Stock Plan (the...

  • Page 26
    ...enables most North American employees to acquire shares of the company's common stock. Contributions, which are determined by the board of directors, are in the form of common stock or cash which is used to purchase the company's common stock for the benefit of participating employees. Contributions...

  • Page 27
    ...plan Funded status Unamortized net loss Net amount recognized Weighted average assumptions Discount rate Expected return on assets 2001 $75,866 $76,564 $ 698 7,446 2000 $ 75,321 $80,219 $ 4,899 1,636 $ 6,535 7.50% 8.50% 11 Lease Commitments The company leases certain office, distribution, and other...

  • Page 28
    ...original equipment manufacturers. Operating income for the electronic components and computer products segments excludes the effect of special charges relating to the integration of acquired businesses and restructuring costs. Computer products includes North American Computer Products together with...

  • Page 29
    ...Earnings (loss) per share Basic Diluted 2000 Sales Gross profit Net income Earnings per share Basic Diluted First Quarter Second Quarter Third Quarter Fourth Quarter Report of Ernst & Young LLP, Independent Auditors The Board of Directors and Shareholders Arrow Electronics, Inc. We have audited the...

  • Page 30
    ...Executive Offices 25 Hub Drive Melville, New York 11747-3509 Independent Auditors Ernst & Young LLP 787 Seventh Avenue New York, New York 10019-6018 Transfer Agent and Registrar Mellon Investor Services, L.L.C. Overpeck Centre 85 Challenger Road Ridgefield Park, New Jersey 07660-2104 Price Range of...

  • Page 31
    ... Tam Vice President Ira M. Birns Treasurer Operating Group Officers Arrow Americas Components Jan M. Salsgiver President Paul Buckley President, Arrow Contract Manufacturing Services Distribution Group David E. Hoffmann Vice President and Managing Director, Latin and South American Components Group...

  • Page 32
    25 HUB DRIVE MELVILLE, NY 11747-3509 www.arrow.com