-- Record Full-Year Sales and Earnings Per Share --

-- Fourth-Quarter Earnings Per Share of $1.81; Non-GAAP Earnings Per Share of $2.00 --

CENTENNIAL, Colo.--(BUSINESS WIRE)-- Arrow Electronics, Inc. (NYSE: ARW) today reported fourth-quarter 2016 net income of $165 million, or $1.81 per share on a diluted basis, compared with net income of $158 million, or $1.69 per share on a diluted basis, in the fourth quarter of 2015. Excluding certain items1, net income would have been $182 million, or $2.00 per share on a diluted basis, in the fourth quarter of 2016, compared with net income of $182 million, or $1.94 per share on a diluted basis, in the fourth quarter of 2015. Fourth-quarter sales of $6.44 billion decreased 5 percent from sales of $6.75 billion in the prior year. In the fourth quarter of 2016, changes in foreign currencies had negative impacts on growth of approximately $91 million or 1 percent on sales and $.04 or 2 percent on earnings per share on a diluted basis compared to the fourth quarter of 2015.

“Our digital transformation and IoT solutions spanning from sensor to sunset helped drive record full-year sales and earnings per share,” said Michael J. Long, chairman, president, and chief executive officer. “Our customers value our comprehensive portfolio of electronic components and embedded computing, datacenter, cloud, and reverse logistics solutions.”

Global components fourth-quarter sales of $4 billion grew 9 percent year over year. Fourth-quarter sales, as adjusted, grew 10 percent year over year. Americas components sales grew 4 percent year over year. Asia-Pacific components sales grew 22 percent year over year. Europe components sales declined 1 percent year over year. Sales in the region, as adjusted, grew 2 percent year over year. “Global components sales exceeded the high end of our expectations and were propelled by our investments in customer-facing sales and engineering resources,” said Mr. Long.

Global enterprise computing solutions fourth-quarter sales of $2.45 billion declined 21 percent year over year. Sales when compared to the fourth quarter of 2015 were unfavorably impacted by approximately $250 million due to a later calendar start to the fourth quarter of 2016, and by approximately $250 million from a decrease in hardware sales offset by an increase in software sales, which are recognized on a net basis. “Full-year 2016 global enterprise computing solutions operating income grew 4 percent year over year, and we believe this is the best measure of our business,” added Mr. Long.

FULL-YEAR RESULTS

Arrow’s net income for 2016 was $523 million, or $5.68 per share on a diluted basis, compared with net income of $498 million, or $5.20 per share on a diluted basis, in 2015. Excluding certain items1, net income would have been $610 million, or $6.63 per share on a diluted basis, in 2016 compared with net income of $592 million, or $6.19 per share on a diluted basis, in 2015. In 2016, sales of $23.83 billion increased 2 percent from sales of $23.28 billion in 2015. In 2016, changes in foreign currencies had negative impacts on growth of approximately $202 million, or 1 percent on sales, and $.08, or 1 percent, on earnings per share on a diluted basis compared to 2015.

“We delivered record results in 2016, and our business is increasingly differentiated from the competition. We have a built a solid foundation for 2017 and into the future,” said Mr. Long.

“Cash flow from operations was $356 million in 2016 approximating our cash flow target,” said Chris Stansbury, senior vice president and chief financial officer. “In the fourth quarter we reduced net leverage and we returned approximately $49 million to shareholders through our stock repurchase program. In 2016 we returned approximately $200 million to shareholders through our stock repurchase program. We had approximately $520 million of remaining authorization under our share repurchase programs at the end of the year.”

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.

GUIDANCE

“As we look to the first quarter, we believe that total sales will be between $5.375 billion and $5.775 billion, with global components sales between $3.775 billion and $3.975 billion, and global enterprise computing solutions sales between $1.6 billion and $1.8 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.18 to $1.30, and earnings per share on a diluted basis, excluding any charges, to be in the range of $1.37 to $1.49 per share. Our guidance assumes an average tax rate in the range of 27 to 29 percent and average diluted shares outstanding are expected to be 91 million. We are expecting the average USD-to-Euro exchange rate for the first quarter to be approximately $1.07 to €1. We estimate changes in foreign currencies will have negative impacts on growth of approximately $70 million, or 1 percent on sales, and $.03, or 2 percent, on earnings per share on a diluted basis compared to the first quarter of 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 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 for 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), loss on prepayment of debt, and (gain)/loss on investments. 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.

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
			Quarter Ended								Year Ended
			December 31, 2016				December 31, 2015				December 31, 2016				December 31, 2015
Sales			$	6,442,891			$	6,751,342			$	23,825,261			$	23,282,020
Costs and expenses:
Cost of sales				5,619,543				5,912,376				20,681,062				20,246,770
Selling, general, and administrative expenses				518,329				529,089				2,052,863				1,986,249
Depreciation and amortization				37,679				37,900				159,195				155,754
Restructuring, integration, and other charges				12,441				17,666				73,602				68,765
				6,187,992				6,497,031				22,966,722				22,457,538
Operating income				254,899				254,311				858,539				824,482
Equity in earnings of affiliated companies				2,179				2,147				7,573				7,037
Gain on sale of investment				—				—				—				2,008
Loss on prepayment of debt				—				—				—				2,943
Interest and other financing expense, net				38,887				34,442				150,715				135,401
Other expense, net				—				1,500				—				3,000
Income before income taxes				218,191				220,516				715,397				692,183
Provision for income taxes				53,233				61,108				190,674				191,697
Consolidated net income				164,958				159,408				524,723				500,486
Noncontrolling interests				440				916				1,973				2,760
Net income attributable to shareholders			$	164,518			$	158,492			$	522,750			$	497,726
Net income per share:
Basic				1.84				1.71				5.75				5.26
Diluted				1.81				1.69				5.68				5.20
Weighted average shares outstanding:
Basic				89,596				92,731				90,960				94,608
Diluted				90,692				94,039				92,033				95,686

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
			December 31, 2016					December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents			$	534,320				$	273,090
Accounts receivable, net				6,746,687					6,161,418
Inventories, net				2,855,645					2,466,490
Other current assets				180,069					285,473
Total current assets				10,316,721					9,186,471
Property, plant, and equipment, at cost:
Land				23,456					23,547
Buildings and improvements				175,141					162,011
Machinery and equipment				1,297,657					1,250,115
				1,496,254					1,435,673
Less: Accumulated depreciation and amortization				(739,955	)				(735,495	)
Property, plant, and equipment, net				756,299					700,178
Investments in affiliated companies				88,401					73,376
Intangible assets, net				336,882					389,326
Goodwill				2,392,220					2,368,832
Other assets				315,843					303,747
Total assets			$	14,206,366				$	13,021,930
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable			$	5,774,151				$	5,192,665
Accrued expenses				821,244					819,463
Short-term borrowings, including current portion of long-term debt				93,827					44,024
Total current liabilities				6,689,222					6,056,152
Long-term debt				2,696,334					2,380,575
Other liabilities				355,190					390,392
Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized – 160,000 shares in both 2016 and 2015
Issued – 125,424 shares in both 2016 and 2015				125,424					125,424
Capital in excess of par value				1,112,114					1,107,314
Treasury stock (36,511 and 34,501 shares in 2016 and 2015, respectively), at cost				(1,637,476	)				(1,480,069	)
Retained earnings				5,197,230					4,674,480
Accumulated other comprehensive loss				(383,854	)				(284,706	)
Total shareholders' equity				4,413,438					4,142,443
Noncontrolling interests				52,182					52,368
Total equity				4,465,620					4,194,811
Total liabilities and equity			$	14,206,366				$	13,021,930

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
			Quarter Ended
			December 31, 2016					December 31, 2015
Cash flows from operating activities:
Consolidated net income			$	164,958				$	159,408
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization				37,679					37,900
Amortization of stock-based compensation				10,042					13,491
Equity in earnings of affiliated companies				(2,179	)				(2,147	)
Deferred income taxes				(2,061	)				(21,048	)
Excess tax benefits from stock-based compensation arrangements				(96	)				(48	)
Other				1,508					2,837
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable				(972,399	)				(1,125,272	)
Inventories				(286,306	)				2,100
Accounts payable				1,095,530					1,352,100
Accrued expenses				149,935					128,867
Other assets and liabilities				23,443					(4,053	)
Net cash provided by operating activities				220,054					544,135
Cash flows from investing activities:
Purchase price adjustment (cash consideration paid for acquired businesses)				4,195					(1,821	)
Acquisition of property, plant, and equipment				(38,354	)				(41,744	)
Proceeds from sale of facilities				—					3,496
Net cash used for investing activities				(34,159	)				(40,069	)
Cash flows from financing activities:
Change in short-term and other borrowings				16,743					(42,576	)
Repayment of long-term bank borrowings, net				(7,000	)				(366,700	)
Proceeds from exercise of stock options				2,281					178
Excess tax benefits from stock-based compensation arrangements				96					48
Repurchases of common stock				(49,268	)				(149,833	)
Other				(190	)				(1,937	)
Net cash used for financing activities				(37,338	)				(560,820	)
Effect of exchange rate changes on cash				1,348					(6,900	)
Net increase (decrease) in cash and cash equivalents				149,905					(63,654	)
Cash and cash equivalents at beginning of period				384,415					336,744
Cash and cash equivalents at end of period			$	534,320				$	273,090

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
			Year Ended
			December 31, 2016					December 31, 2015
Cash flows from operating activities:
Consolidated net income			$	524,723				$	500,486
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization				159,195					155,754
Amortization of stock-based compensation				39,825					47,274
Equity in earnings of affiliated companies				(7,573	)				(7,037	)
Deferred income taxes				28,130					5,833
Gain on sale of investment				—					(2,008	)
Excess tax benefits from stock-based compensation arrangements				(5,049	)				(5,911	)
Other				5,972					10,894
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable				(636,944	)				(68,990	)
Inventories				(403,980	)				(42,790	)
Accounts payable				582,165					33,398
Accrued expenses				47,020					56,139
Other assets and liabilities				22,322					(27,963	)
Net cash provided by operating activities				355,806					655,079
Cash flows from investing activities:
Cash consideration paid for acquired businesses				(64,751	)				(514,731	)
Acquisition of property, plant, and equipment				(164,695	)				(154,800	)
Proceeds from sale of facilities				—					3,496
Proceeds from sale of investment				—					2,008
Other				(12,000	)				—
Net cash used for investing activities				(241,446	)				(664,027	)
Cash flows from financing activities:
Change in short-term and other borrowings				48,684					(46,645	)
Proceeds from (repayment of) long-term bank borrowings, net				313,000					(128,000	)
Net proceeds from note offering				—					688,162
Redemption of notes				—					(254,313	)
Proceeds from exercise of stock options				18,967					14,900
Excess tax benefits from stock-based compensation arrangements				5,049					5,911
Repurchases of common stock				(216,446	)				(356,434	)
Other				(3,190	)				(7,768	)
Net cash provided by (used for) financing activities				166,064					(84,187	)
Effect of exchange rate changes on cash				(19,194	)				(34,130	)
Net increase (decrease) in cash and cash equivalents				261,230					(127,265	)
Cash and cash equivalents at beginning of period				273,090					400,355
Cash and cash equivalents at end of period			$	534,320				$	273,090

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
			Quarter Ended
			December 31, 2016				December 31, 2015					% Change
Consolidated sales, as reported			$	6,442,891			$	6,751,342				(4.6	)	%
Impact of changes in foreign currencies				—				(91,058	)
Impact of acquisitions				—				66,777
Consolidated sales, as adjusted			$	6,442,891			$	6,727,061				(4.2	)	%
Global components sales, as reported			$	3,995,491			$	3,668,804				8.9		%
Impact of changes in foreign currencies				—				(26,949	)
Impact of acquisitions				—				4,850
Global components sales, as adjusted			$	3,995,491			$	3,646,705				9.6		%
Europe components sales, as reported			$	963,349			$	972,125				(0.9	)	%
Impact of changes in foreign currencies				—				(28,341	)
Impact of acquisitions				—				143
Europe components sales, as adjusted			$	963,349			$	943,927				2.1		%
Asia components sales, as reported			$	1,487,816			$	1,215,242				22.4		%
Impact of changes in foreign currencies				—				786
Impact of acquisitions				—				—
Asia components sales, as adjusted			$	1,487,816			$	1,216,028				22.4		%
Global ECS sales, as reported			$	2,447,400			$	3,082,538				(20.6	)	%
Impact of changes in foreign currencies				—				(64,108	)
Impact of acquisitions				—				61,927
Global ECS sales, as adjusted			$	2,447,400			$	3,080,357				(20.5	)	%
Europe ECS sales, as reported			$	818,363			$	1,054,926				(22.4	)	%
Impact of changes in foreign currencies				—				(70,254	)
Impact of acquisitions				—				—
Europe ECS sales, as adjusted			$	818,363			$	984,672				(16.9	)	%
Americas ECS sales, as reported			$	1,629,037			$	2,027,612				(19.7	)	%
Impact of changes in foreign currencies				—				6,145
Impact of acquisitions				—				61,927
Americas ECS sales, as adjusted			$	1,629,037			$	2,095,684				(22.3	)	%

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
			Year Ended
			December 31, 2016				December 31, 2015					% Change
Consolidated sales, as reported			$	23,825,261			$	23,282,020				2.3		%
Impact of changes in foreign currencies				—				(201,764	)
Impact of acquisitions				48,148				680,798
Consolidated sales, as adjusted			$	23,873,409			$	23,761,054				0.5		%
Global components sales, as reported			$	15,408,839			$	14,405,793				7.0		%
Impact of changes in foreign currencies				—				(79,175	)
Impact of acquisitions				9,711				338,553
Global components sales, as adjusted			$	15,418,550			$	14,665,171				5.1		%
Europe components sales, as reported			$	4,086,607			$	3,874,744				5.5		%
Impact of changes in foreign currencies				—				(52,718	)
Impact of acquisitions				—				104,634
Europe components sales, as adjusted			$	4,086,607			$	3,926,660				4.1		%
Asia components sales, as reported			$	5,400,429			$	4,720,210				14.4		%
Impact of changes in foreign currencies				—				(22,458	)
Impact of acquisitions				—				211,745
Asia components sales, as adjusted			$	5,400,429			$	4,909,497				10.0		%
Global ECS sales, as reported			$	8,416,422			$	8,876,227				(5.2	)%
Impact of changes in foreign currencies				—				(122,589	)
Impact of acquisitions				38,437				342,245
Global ECS sales, as adjusted			$	8,454,859			$	9,095,883				(7.0	)	%
Europe ECS sales, as reported			$	2,686,078			$	2,913,995				(7.8	)	%
Impact of changes in foreign currencies				—				(111,522	)
Impact of acquisitions				—				—
Europe ECS sales, as adjusted			$	2,686,078			$	2,802,473				(4.2	)	%
Americas ECS sales, as reported			$	5,730,344			$	5,962,232				(3.9	)	%
Impact of changes in foreign currencies				—				(11,067	)
Impact of acquisitions				38,437				342,245
Americas ECS sales, as adjusted			$	5,768,781			$	6,293,410				(8.3	)	%

ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Three months ended December 31, 2016
			ReportedGAAPmeasure					Intangibleamortizationexpense				Restructuring& Integrationcharges				Other*				Non-GAAPmeasure
Operating income			$	254,899				$	13,634			$	12,441			$	—			$	280,974
Income before income taxes				218,191					13,634				12,441				—				244,266
Provision for income taxes				53,233					4,870				3,733				—				61,836
Consolidated net income				164,958					8,764				8,708				—				182,430
Noncontrolling interests				440					336				—				—				776
Net income attributable to shareholders			$	164,518				$	8,428			$	8,708			$	—			$	181,654
Net income per diluted share				1.81					0.09				0.10				—				2.00
Effective tax rate				24.4	%																25.3	%
Three months ended December 31, 2015
			ReportedGAAPmeasure					Intangibleamortizationexpense				Restructuring& Integrationcharges				Other*				Non-GAAPmeasure
Operating income			$	254,311					11,743				17,666				—				283,720
Income before income taxes				220,516					11,743				17,666				1,500				251,425
Provision for income taxes				61,108					2,206				4,467				579				68,360
Consolidated net income				159,408					9,537				13,199				921				183,065
Noncontrolling interests				916					—				—				—				916
Net income attributable to shareholders			$	158,492					9,537				13,199				921				182,149
Net income per diluted share				1.69					0.10				0.14				0.01				1.94
Effective tax rate				27.7	%																27.2	%
Year Ended December 31, 2016
			ReportedGAAPmeasure					Intangibleamortizationexpense				Restructuring& Integrationcharges				Other*				Non-GAAPmeasure
Operating income			$	858,539					54,886				73,602				—				987,027
Income before income taxes				715,397					54,886				73,602				—				843,885
Provision for income taxes				190,674					17,226				22,977				—				230,877
Consolidated net income				524,723					37,660				50,625				—				613,008
Noncontrolling interests				1,973					1,275				—				—				3,248
Net income attributable to shareholders			$	522,750					36,385				50,625				—				609,760
Net income per diluted share				5.68					0.40				0.55				—				6.63
Effective tax rate				26.7	%																27.4	%
Year Ended December 31, 2015
			ReportedGAAPmeasure					Intangibleamortizationexpense				Restructuring& Integrationcharges				Other*				Non-GAAPmeasure
Operating income			$	824,482					51,036				68,765				—				944,283
Income before income taxes				692,183					51,036				68,765				3,935				815,919
Provision for income taxes				191,697					9,780				17,461				1,952				220,890
Consolidated net income				500,486					41,256				51,304				1,983				595,029
Noncontrolling interests				2,760					—				—				—				2,760
Net income attributable to shareholders			$	497,726					41,256				51,304				1,983				592,269
Net income per diluted share				5.20					0.43				0.54				0.02				6.19
Effective tax rate				27.7	%																27.1	%
*Other includes gain/loss on sale of investments and loss on prepayment of debt.

ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
			Quarter Ended										Year Ended
			December 31, 2016					December 31, 2015					December 31, 2016					December 31, 2015
Sales:
Global components			$	3,995,491				$	3,668,804				$	15,408,839				$	14,405,793
Global ECS				2,447,400					3,082,538					8,416,422					8,876,227
Consolidated			$	6,442,891				$	6,751,342				$	23,825,261				$	23,282,020
Operating income (loss):
Global components			$	161,804				$	149,940				$	686,466				$	649,396
Global ECS				158,011					173,919					441,803					424,063
Corporate (a)				(64,916	)				(69,548	)				(269,730	)				(248,977	)
Consolidated			$	254,899				$	254,311				$	858,539				$	824,482

(a)		Includes restructuring, integration, and other charges of $12.4 million and $73.6 million for the fourth quarter and Year Ended 2016 and $17.7 million and $68.8 million for the fourth quarter and Year Ended 2015, respectively.

NON-GAAP SEGMENT RECONCILIATION
			Quarter Ended									Year Ended
			December 31, 2016				December 31, 2015					December 31, 2016					December 31, 2015
Global components operating income, as reported			$161,804				$	149,940				$	686,466				$	649,396
Intangible assets amortization expense			7,497				6,657					31,621					27,125
Global components operating income, as adjusted			$169,301				$	156,597				$	718,087				$	676,521
Global ECS operating income, as reported			$158,011				$	173,919				$	441,803				$	424,063
Intangible assets amortization expense			6,137				5,086					23,265					23,911
Global ECS operating income, as adjusted			$164,148				$	179,005				$	465,068				$	447,974

View source version on businesswire.com: http://www.businesswire.com/news/home/20170207005618/en/

Arrow Electronics, Inc.

Steven O’Brien,

Vice President, Investor Relations

303-824-4544

or

Media Contact:

John Hourigan,

Vice President, Global Communications

303-824-4586

Source: Arrow Electronics, Inc.

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