Arrow Electronics Investor Day Presentation

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    Arrow Electronics Investor Day Presentation - Presentation Transcript

    1. INVESTOR DAY 2008 Delivering today while building for the future
    2. WELCOME Sabrina Weaver Director, Investor Relations
    3. AGENDA SESSION I 8:00 – 10:00 Welcome Sabrina Weaver Strategic Overview Bill Mitchell Arrow’s Transformation Mike Long Global ECS Rich Severa Supplier Insights Sean Kerins, HPQ/NTAP/VMW 10:00 – 10:15 Coffee Break SESSION II 10:15 – Noon Global Components Kurt Colehower Supplier Insights Brian McNally, FSL/NSM Financial Review Paul Reilly Final Q&A All Closing Remarks Bill Mitchell Noon Lunch
    4. SAFE HARBOR STATEMENT Some of the comments to be made during this morning’s session may include forward- looking statements, including statements addressing future financial results, that are subject to a number of risks and uncertainties that 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 ongoing planned implementation of its new global financial system and new enterprise resource planning system, changes in product supply, pricing and customer demand, competition, other vagaries in the electronic components and computer products markets, changes in relationships with key suppliers, increased profit margin pressure, the effects of additional actions taken to become more efficient or lower costs, the company’s ability to generate additional cash flow and the other risks described from time to time in the company’s reports to the Securities and Exchange Commission (including the company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q). Forward-looking statements are those statements, which are not statements of historical fact. You can identify these forward-looking statements 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.
    5. STRATEGIC OVERVIEW Bill Mitchell Chairman & CEO
    6. KEY AREAS OF FOCUS FOR TODAY Our vision and strategy for the future Arrow’s Transformation – 3 Key Elements Diversification of ECS product portfolio and geographic profile Drive to achieve economies of scale, geographic expansion (Europe, Asia), new capabilities (software, midmarket) – CHANGE THE GAME All aimed at VALUE ADD portion of market Global Components The largest components business – $11Bn Strong opportunities for growth – customer (SMB), geography (Asia Pac), markets (lighting, military, industrial, medical, transportation), products (PEMCO, analog) Global Systems Implementation Timeline Benefits Financial Strategy Geographic and product line mix impact on our financial targets
    7. WE POWER THE SUPPLY CHAIN Arrow is in the center of a $420Bn market. We touch all geographies, all technologies, and all end markets. We connect key players in unique, value enhancing and sustainable ways ECS - $5Bn* Components - $11Bn* OUR REACH 50 countries and territories 28** countries and territories across North America, across North America Worldwide Presence Europe, and Asia-Pacific and Europe 50 Countries & Territories Complex configuration, Complex supply chain vertical market expertise, solutions, demand creation, OUR SERVICES technical augmentation, design/engineering support, Arrow = Value Added Services OUR PRODUCTS solutions labs, net new materials mgmt, vertical demand creation market expertise, financing Unmatched Line Card > 600 Suppliers OUR PRODUCTS Analog, Discrete, Mission critical solutions: Unmatched Line Card Programmables, Logic, Enterprise servers, storage, Memory, and PEMCO software, and services Approximately 700 OUR CUSTOMERS SMB focus in broad end Value Added Resellers markets via OEM’s and (VARs) with SMB focus Diverse Customer Base CM’s: Key focus in serving multiple end 140,000 Customers industrial, automotive, markets medical, aerospace *2007 sales **Pro forma to include LOGIX
    8. ARROW STRATEGY AT A GLANCE We have the right strategy in place to outgrow the market and achieve industry-leading profitability GROW THE OPERATIONAL FINANCIAL SHARED BUSINESS EXCELLENCE STRENGTH LEADERSHIP Increase efficiency Pursue Build the Arrow team Consistently and productivity opportunities, both to drive forward our generate cash, earn while ensuring organically and future goals by ROIC>WACC and, flawless execution through acquisition, attracting, training, grow profits faster for our business to grow faster than and retaining the than sales partners industry’s top talent the market
    9. “May you live in interesting times” Unverified Chinese proverb (or curse)
    10. CURRENT ECONOMIC BACKDROP We have built in flexibility to adjust to changing market conditions The current economic backdrop is uncertain Collapse of Bear Stearns; total losses of banks now exceed $300Bn Dollar fell below ¥100 for first time; record low against Euro Spread between “junk” bonds and American Treasuries exceeded 800 points for the first time in 5 years The outlook - ??? In response, we continue to manage our business cautiously and prudently, yet we will seize opportunities as they arise
    11. WELL POSITIONED IN CURRENT ENVIRONMENT We have fundamentally changed the way our company is run Tech Bust Today $2-2.50 in an extreme EARNINGS FLOOR $.15 downside scenario Strongest balance sheet in BALANCE SHEET $3Bn in net debt and 65% 10 yrs, net debt/cap ~20% net debt/cap WC/Sales of 15% WC/Sales of 25% WORKING CAPITAL Cash flow positive Cash generation only in CASH FLOW throughout the cycle down cycles Muted cyclicality Volatile patterns SUPPLY CHAIN
    12. DIVERSE REVENUE STREAM ECS now represents almost a third of our revenues and further offsets semi cyclicality Segment Revenue ($Bn) 2004 2007* 20% 30% 70% 80% Global Enterprise Computing Solutions Global Components *Includes KeyLink and related procurement agreement revenues for a full year
    13. DIVERSE REVENUE STREAM Our footprint is geographically diverse with a truly global presence GLOBAL GLOBAL TOTAL COMPONENTS ECS ARROW 2004 Revenue ($Bn) Almost 50% of sales 2004 Revenue ($Bn) 2004 Revenue ($Bn) 14% 11% are outside of NA $1.2 $1.2 Asia/Pacific $3.9 components from 14% $2.2 $6.1 $3.4 to 22% $3.4 46% 40% Accretive to OI 32% 57% and ROIC as we reach our targeted 2007 Revenue ($Bn) 2007 Revenue ($Bn) 2007 Revenue ($Bn) level of profitability 18% 15% 22% US and Europe $2.4 $2.4 $0.8 $4.7 continue to be vital for $8.6 design, growth & $5.0 $4.1 $3.9 profitability 41% 37% 54% 82% 31% Asia/Pacific EMEASA North America
    14. CONTINUED OPERATIONAL IMPROVEMENT We have executed well and there is more to come Over the last 5 years* We grew earnings 5x faster than sales; 85% CAGR WC/sales decreased more than 40% Generated more than $2Bn in cash flow ROIC increased by more than 2.5x We are not done with our journey Consistent go-to-market strategies worldwide to enable growth at great than market rates Leverage global scale to achieve best in class cost structure ERP to enable large gains in productivity ALL OF ABOVE = PREMIUM RETURNS *2002 through 2007
    15. CONTINUED OPERATIONAL IMPROVEMENT $16.0 ROIC** Net Sales ($Bn) 10.9% $13.6 $11.2 17% $10.6 26% CAGR CAGR $8.5 3.4% $7.3 2002 2007 2002 2003 2004 2005 2006 2007 $3.29 Diluted EPS* Cumulative Operating Cash Flow ($MM) $2.92 $2,521 $2.18 $1.97 $1,671 85% $1,550 CAGR $1,148 $960 $668 $0.74 $0.15 2002 2003 2004 2005 2006 2007 2002 2003 2004 2005 2006 2007 *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability. Includes estimated amortization of intangible assets **ROIC = Tax effected op. inc. and equity earnings of affiliates excluding restructuring and other charges – annualized minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM).
    16. OUR PRIORITIES FOR THE FUTURE Our path to achieving our strategic and financial goals is clear Pursue significant organic growth opportunities – still a growth business Products: PEMCO, analog, storage, software, services Vertical Markets: lighting, medical, transportation, industrial, defense & aerospace Geographies: Asia Pacific, Europe Customers: focus on the “M” in SMB Strategically accelerate growth through acquisitions Build best-in-class global capabilities and leverage efficiencies of scale worldwide – Lean Six Sigma makes a huge difference Global systems implementation to enable strategic initiatives and change our value proposition
    17. IN SUMMARY… The best is yet to come We occupy a unique, value-added space in the supply chain with We occupy a unique, value-added space in the supply chain with growth opportunities across every customer segment, end market, growth opportunities across every customer segment, end market, geography, and technology geography, and technology Strategic initiatives are in place to capture profitable growth Strategic initiatives are in place to capture profitable growth We are leveraging global scale to drive agility, responsiveness, and We are leveraging global scale to drive agility, responsiveness, and efficiency efficiency We will continue to manage the company prudently, while taking We will continue to manage the company prudently, while taking advantage of market opportunities advantage of market opportunities
    18. ARROW’S TRANSFORMATION Mike Long President & COO
    19. ARROW’S TRANSFORMATION: OVERVIEW Global ECS: Portfolio and Geographic Expansion Global Components: Powerful Go-To-Market Strategy and Roadmap Acquisition Strategy and Integration Case Study Global ERP Update
    20. ARROW’S TRANSFORMATION: GLOBAL ECS Now a $5Bn Value-added Distributor With Significant Scale and Scope Achieve category leadership with KeyLink Geographic expansion into Europe & line extension in Software with ATI Formation of Software Group Achieve scale in Divestiture of Gates, line extensions in EMC Europe with LOGIX & NetApp, formation of Storage Group Transform global Sun line extension platform with ERP Line extension into value Leverage powerful space with IBM, HP software portfolio Drive midmarket initiative Gates acquisition (Billings) 2008-2010 1995 1998 2000 2002 2004 2006* 2007 Volume Europe Scale Software Value Platforms Storage *Excludes Microtronica, pro forma includes full year of Alternative Technology, InTechnology, and KeyLink billings
    21. ARROW’S TRANSFORMATION: GLOBAL ECS Our strategic acquisitions have strengthened our line card, expanded our geographic presence and increased opportunities in fast-growing segments February 2006 Canada - Storage November 2006 December 2005 North America - Software Europe - Midrange & Security KeyLink Systems Group March 2007 Specialist Distribution North America – Midrange, Storage, & Software December 2006 August 2007 UK – Storage & Security Europe - Software June 2008 Europe – Midrange, Storage, & Software
    22. ARROW’S TRANSFORMATION: GLOBAL COMPONENTS Global go-to-market strategy optimized by segment Large Multi-National Customers – Global Alliance • Provide single point of contact at global level Fortune 200 Large • Offer broad line card and supply chain solutions Global $1.2 Bn* Core – Medium Customer Focus • Regionally manage medium-to-large regional customers • Optimize market segmentation • Invest in under-penetrated geographies, technologies and end markets Medium Sized • Offer broad line card, design support, and supply chain $9.2 Bn* solutions SMB/Emerging – Arrow Advantage • Support with global infrastructure to scale many accounts • Help small and emerging customers grow • Robust transfer system to transition high potential accounts Small/Emerging, $800 MM* • Offer broad line card *2007 Arrow sales
    23. ARROW’S TRANSFORMATION: GLOBAL COMPONENTS Roadmap Stage 3 Value Sustain One-Arrow-at- Scale through ERP system Expand “value-added” capabilities Stage 2 Complete ERP implementations Drive vertical market initiatives on a global basis Scale operational performance pilots Stage 1 Implement consistent go-to-market model Pursue vertical market initiatives Product and geographic growth initiatives Launch operational performance improvement pilots Design ERP system requirements and begin implementations Time 2007 2011
    24. ARROW’S TRANSFORMATION: GLOBAL COMPONENTS Regional and product specific acquisitions in components have expanded our reach in the Asia Pacific marketplace and in fast growing end markets like defense/aerospace October 2007 December 2005 Japan June 2007 Taiwan Australia/NZ 2008 – Pending, January 2008 Components India February 2008 distribution business Defense/Aerospace of Achieva Ltd., ASEAN and China
    25. ARROW’S TRANSFORMATION: ACI INTEGRATION CASE STUDY Our integration competencies have been built up over many years integrating over 70 companies around the world Week of Complete Week of Transition Weeks of Week of Feb 18 March 3 Feb 11 March 1/2 Jan 23-Feb 4 Feb 25 Systems training Warehouse Open for Final systems Complete due Deal announced move: 15,000 business with check diligence Employee Employee part number no transition onboarding Complete meetings setups issues systems Key customer Key customer Systems conversion & meetings meetings transition: 5,000 W/H transition Begin systems customer records plan testing transferred Inventory audit Key supplier The integration model for ACI was a complete “fold-in” of the business consents Retained sales and supplier marketing functions Leveraged Arrow’s back-office infrastructure to reduce ACI SG&A by more than 50%
    26. DISCIPLINED APPROACH TO ACQUISITIONS We will continue to use acquisitions as a strategic accelerator OUR DECISION FRAMEWORK STRATEGIC Does it fit our strategy of expansion into new geographies, technologies or end markets, or bring us scale? Does it meet our financial requirements? FINANCIAL -Accretive to earnings in the first year -Non-dilutive to ROIC (target of 12.5% by year 3) -Cash flow positive Does it share our passion for operational excellence? OPERATIONAL Is there a cultural fit? CULTURAL We have ample dry powder to execute: solid balance sheet, strong cash flow, and $1.4Bn of committed liquidity facilities in place Competitive advantage
    27. GLOBAL ERP: OVERVIEW Global ERP is a critical component of our strategy realization “Today, an average of only 22% of customer interactions, 19% of supplier interactions and 33% of employee interactions are conducted online and processed automatically.” Bob Suh, Accenture’s chief technology strategist Arrow ERP is a catalyst for change Operate locally, leverage globally Common optimized processes and best practices drive flexibility Based on Oracle ERP software Progress update Global Financial System implementation completed in May 2007 Successful implementation of Sun business in North America on April 1st Implementation to date on plan and on budget + 2007: $70-80MM cash flow impact; $12MM in incr. op. expenses + 2008: $90-100MM cash flow impact; $25MM in incr. op. expenses + 2009: $65-75MM cash flow impact; $40-45MM in incr. op. expenses
    28. GLOBAL ERP: ROADMAP Phased deployment will minimize business disruption risk 2006 2007 2008 2009 2010 GLOBAL FINANCE (GFS) Successful implementation in NA Sun business on ECS April 1st Process Modeling & System Build Implementation North America - Europe COMPONENTS Process Modeling & System Build Implementation Europe - Asia - North America
    29. GLOBAL ERP: GAME-CHANGING BENEFITS TO BE REALIZED Significant impact on profitability and returns; strategy enabler Today With ERP Multiple finance, logistics, HR, purchasing Single European platform enabling shared service teams in Europe models Inconsistent nomenclature for part Standardized parts globally – leverage purchasing identification volume with visibility to lowest cost globally Quoting varies by region, often with manual Streamlined process, reduced non-value added entry activities, increased quote win ratio Challenges in design win through product Enhanced design win tracking ability lifecycle Multiple pools of inventory with limited Single platform to see global inventory, efficiently visibility manage asset base worldwide Multiple customer databases with unbalanced Single database enabling productivity gains and workload decreased time to market Vast, untapped market information Data analytics unseen in today’s marketplace Total anticipated annual savings* = Over $75MM Total anticipated annual cash flow benefit* = Over $100MM *Benefits to be phased in over time, run-rate savings estimated to be achieved by 2011
    30. GLOBAL ECS Rich Severa President, Arrow North America ECS
    31. SNAPSHOT OF ARROW ECS Global value-added distributor with scale and scope 2007 sales of $4.8 billion; 30% of Arrow’s total sales Presence in 28 countries across North America and Europe* Over 2,500 employees* Unmatched line card with unique software capabilities 18,000+ value-added reseller partners* serving enterprise and midmarket customers – the fastest growing segment Target Customer Segment In Enterprise & Midmarket F500 $120 Billion Opportunity Enterprise & Midmarket Global SMB IT spending increases will be roughly 2% higher than overall IT spending increases on a worldwide basis** Small Business *Pro forma to include LOGIX **Source: IDC
    32. THE IT DISTRIBUTION LANDSCAPE ECS leads with a differentiated approach to value distribution VENDORS Mission critical Commodity PCs, servers, storage, All Products low end servers, World-class technical software, services printers and engineering resources ARROW 2-Tier Complex solution- ARROW Broad-line 2-Tier 2-Tier “Volume” selling capabilities “Value” “Value” Solutions product portfolio Internet VARs, Direct Pass 1-Tier Direct Marketers Co-investment with Through Marketers Companies suppliers Micro-Small High Speed Access to capital Midmarket Large Customers, Fulfillment to and Enterprise Fulfillment Small, Med, Enterprise Customers for Large Large Customers Enterprise Customers
    33. THE OPPORTUNITY We support our VAR partners’ go-to-market strategies and help them navigate increasingly complex end-user demands Channel Joint Value Proposition Channel Enablement VAR enablement and Training & Education Solutions Infrastructure training Engineering Resources Product Roadmap Logistical Support Marketing and demand Supplier Quote & Configuration Integration Capability generation Financing Solutions Order Tracking ECS Dedicated resources Demand Generation Solutions Sales Life Cycle Mgmt Opportunity management Market penetration Opportunity Mgmt Technical consulting Market Reach Integration services Product Marketing Product Portfolio Brand Management Management Manufacturing Technology Leadership
    34. VALUE CREATION: ARROW’S DIFFERENTIATED MODEL Arrow and a premier North American-based solutions provider working together on a $20MM communications opportunity ARW facilitates introduction of partner to end-user through demand Collaborative generation campaign in 2004 Selling Partner secures foothold for storage solution supported by ARW technical configurations Partner expands discovery of server requirements supported by ARW 100’s of configurations and re-designs over 2 year period Partner/ARW jointly pitch and win datacenter redesign project Virtualization solution on HP Superdomes ARW works with supplier to accelerate procurement to 10 days Normal lead time is 5 weeks Post implementation, end-user seeks to expand relationship \"Partnership is about understanding and listening to your customer's needs. It's about bringing true value and executing on that value. [Partner] gets it, they get us.” – End-User
    35. MARKET DRIVERS Favorable market dynamics for continued growth IDC estimates 5%-7% SMB market growth Customers and through 2010 vendors demanding more IDC estimates global solutions only 5% of servers are Continued virtualized demand for VARs/end users storage and need assistance security products and solutions navigating complexities Increasing Compliance/ Virtualization Globalization Strong SMB supply chain security market complexity
    36. GEOGRAPHIC COVERAGE Expanding into attractive markets aligned with our strategy SMB Hard Target* SMB IT spend expected to grow faster than 39% 28% 48% 13% 14% worldwide corporate IT 34% 6% spending in medium term APAC North America 2% EMEA ECS is focused on Japan enterprise and midmarket components of SMB 11% Our current geographic 5% footprint covers high Latin America opportunity SMB geographies ECS geographic footprint SMB % Total Companies SMB % of IT Spend Source: IDC *SMB includes firms <1,000 employees
    37. MIDMARKET INITIATIVE Accelerating success in the midmarket Solutions 40 new end-to-end solutions Fortune 500 60 net new VARs recruited YTD 50,000 companies targeted Demand Generation Focus driven by IT dependencies Large End-Users Enterprise Vertical Targets Financial Services Healthcare Medium Manufacturing & Distribution Business Dedicated resources Infrastructure CRM Data warehousing Enablement Marketing, Technical Support, Back-office, Financing, Small Education, Vendor Linkage (Core value-add) Business 37
    38. VIRTUALIZATION Next chapter in server consolidation with implications for broader portfolio Enables multiple “virtual” ECS Product Coverage servers to run on a shared machine Software Hardware Typical selling Impact of Virtualization Server opportunities are linked to centralized data center Storage installations Virtualization drives Desktop incremental opportunities across the ECS portfolio Network (software, new storage, thin client) “… virtualization begins a process that will extend this technology phenomenon far beyond its current general role as a tool for server consolidation.” - IDC
    39. VIRTUALIZATION Opportunities across the portfolio Incremental Sales From Virtualization Software VMware, Citrix, Datacore, $400MM+ Vizioncore, Platespin “Drag-Along” Upsides Security/ Nokia, Scriptlogic, ChipPC, Network Thinstall, Blue Coat, Checkpoint, Riverbed Storage Netapp, HP, IBM, EMC, Sun, Hitachi, Brocade Servers HP, IBM, Sun 2005 2006 2007 Rapid growth in VMware and Citrix Additional “drag-along” sales in software, storage, and servers
    40. BALANCED PORTFOLIO: STORAGE Investments in storage are yielding benefits in rapid revenue growth High growth product segment with Software combined worldwide Y/Y growth of 23% in 2007* Solutions Stack Storage Services Servers *Pro forma for Alternative Technology, InTechnology, and KeyLink (excluding the related procurement agreement sales)
    41. BALANCED PORTFOLIO: SOFTWARE AND SERVICES Arrow’s software group is now a $1 billion business Follow the wire to your solution Solutions and Services 100% Dedicated To and Thru our Partners Technical Capabilities Solutions 73 Pre-sales Branch Wireless Authentication SOHO Office or Wired engineers Access/Infrastructure Mobile Internet WAN Internet WAN 38 Consulting & User Security technical engineers Infrastructure Thin Client 7 Solutions Centers Edge Disaster Recovery Virtualization Site Over 400 LAN Data Center certifications
    42. ECS SERVER TARGET MARKET ECS server focus remains in mid-range servers Server Price Bands* Percent of Server Spend** Windows Netware ECS target product market is Mid-Range with i5/OS Other Linux z/OS Unix some presence in High-End and High-Volume Category ASV Volume 0-$2,999 High-End $3,000-$5,999 Industry Standard Servers >$500,000 $6,000-$9,999 13% $10,000-$24,999 Mid-Range $25,000-$49,999 Volume 49% Mid-Range $50,000-$99,999 26% Mid Range <$9,999 $25,000-$499,999 $100,000-$249,999 $250,000-$499,999 12% High-End $500,000-$999,999 $1.00m-$2.99m Super Computing & Mainframe High-End Volume $3.00m+ $10,000-$24,999 ECS Server Focus Value channel will continue to be the best route to market for this product set Virtualization and open architecture create incremental opportunities in ECS installed base *Source: IDC **2007 worldwide IT server spend via indirect channel
    43. ECS SERVER TARGET MARKET Mid-range servers and UNIX provide a solid base for our solutions Mid-Range Server Spend Via Indirect Channel** IT Spend CAGR (5yr) (2012) $11.2Bn $11.2Bn $11.1Bn $11.1Bn $11.1Bn $10.4Bn $1.0Bn -4.7% High End* $3.4Bn 2.8% High Volume $1.6Bn 2.6% Mid-Range Other 1.7% $5.2Bn Mid Range Unix 2007 2008 2009 2010 2011 2012 Unix i5/OS Windows Linux z/OS NetWare Other High-End Volume High-End Servers continue to be a portfolio play for ECS and we expect to continue to outgrow the market *High-end servers include only products between $500,000 to $999,999 in ASV **Source: IDC
    44. PORTFOLIO TRANSFORMATION We have evolved the product portfolio to provide a total set of solutions Product Mix Comparison (Net Sales) $5.1Bn Evolving to a diversified 1.1 21% Software portfolio Investments in software 1.6 31% Storage are key to solutions $1.8Bn 0.6 Steady gains in storage 12% Industry Standard 0.2 0.5 Rapid growth in industry 1.7 0.1 33% Proprietary Servers 1.0 standard servers 2004 2007 * Proprietary Servers Industry Standard % of 2007 Net Sales Services Storage Softw are Other *Includes KeyLink and related procurement agreement revenues for a full year
    45. IN SUMMARY… Balanced portfolio with a strategic line card – outstanding growth opportunities in a highly differentiated model Servers are a foundational component of our model Servers are a foundational component of our model European expansion offers new growth opportunities, especially in European expansion offers new growth opportunities, especially in Eastern Europe Eastern Europe Storage and Software growth will accelerate Storage and Software growth will accelerate “Follow the wire” brings more value-adds in security, additional “Follow the wire” brings more value-adds in security, additional infrastructure, and virtualization infrastructure, and virtualization
    46. SUPPLIER INSIGHTS Moderator Sean Kerins VP Storage Group, ECS Guest Panelists Hewlett Packard Frank Rauch VP, Solution Partners Organization NetApp Paul Mayes WW Distr. Sales Director, Channel Sales VMware Steve Houck VP WW Channel Sales
    47. COFFEE BREAK
    48. GLOBAL COMPONENTS Kurt Colehower President, Arrow North American Components
    49. ARROW GLOBAL COMPONENTS Our Global Components business provides value-added services for OEMs and EMS companies Presence in 50 countries and territories across North 2007 Revenue America, Europe, and Asia-Pacific $11.2Bn Market share leader in North America and Europe, top 22% player in Asia $2.4 Over 120,000 customers across all end markets and $4.7 geographies; no one customer > 2% of sales Product split: 68% semi, 23% PEMCO, 9% $4.1 computing/memory 37% 41% 60-75% of our customer base uses one or more value- added services North America Ship over 36,000 line items per day and manage over EMEASA 1 million part numbers Asia/Pacific
    50. UNMATCHED LINE CARD TOUCHING ALL TECHNOLOGIES We have a broad technology portfolio with more than 600 suppliers Connectors 8% Electromechanical 5% Analog 24% Passives 10% ASIC/Application Computing/Memory* 9% Specific/Opto 11% Microcomponents* 13% Discrete/Logic 20% *Primarily MCU/MPU and non-DRAM memory
    51. GLOBAL COMPONENTS TOTAL AVAILABLE MARKET Growth has slowed, but is still positive Semi forecasts for 2008 vary widely from 3% to 12% $300 2004-07 CAGR = 7% $250 or 2x GDP $200 ($ in Billions) $150 $100 $50 $0 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 Source: Worldwide semiconductor sales from the Semiconductor Industry Association
    52. MARKET DRIVERS Favorable market dynamics for continued growth Customers/ suppliers need help in navigating the Customers/ current suppliers need business flexibility and environment supply chain Strong demand efficiencies to from increasing meet demands electronic Small and for reduced content and medium-sized time-to-market conversion from customers mechanical to expected to electronic outgrow market Increasing Decreasing Increasing Strong small supply chain time-to- electronic and medium complexity market content market
    53. GLOBAL STRATEGY Product growth opportunities: Analog $2Bn global business with strong focus on demand creation Opportunity Global analog market 2007-12 revenue CAGR of 6-11%* Strong, consistent demand from broad base of end markets Conversion from mechanical to electronic Increasing electronic content Penetrate new customers Analog products align well with vertical market initiatives *Source: Gartner and Databeans
    54. GLOBAL STRATEGY Product growth opportunities: Passives, electromechanical, and connector products (PEMCO) $2Bn global business with #1 market position Top 2 player in every major PEMCO technology 5-yr sales CAGR of 16% organically Opportunity 2007 PEMCO DTAM* Market share less than in Mil/Ind Connectors 10% Capacitors 16% semis Resistors 6% Rationalizing distribution Frequency partnerships is a positive Control 2% Magnetics 2% Penetrate new customers Comm Connectors 34% Circuit Expand franchises into Protection 5% Relays 6% Asia Power Products Thermal Mgmt 6% 5% Leverage under-penetrated Switches 7% technologies Passive Electromechanical Connector *Source: Independent sources, public supplier and competitive data
    55. GLOBAL STRATEGY Vertical market opportunities Markets that are growing in our two largest regions: NA and Europe Under penetrated today Classic low volume – high mix markets that require specialization Fit well with Arrow’s capabilities Industrial Lighting Transportation Defense/Aerospace Medical
    56. GLOBAL STRATEGY Vertical market opportunities: Industrial Arrow Industrial Arrow Electronics North American Components Why is this a good opportunity for Arrow? $4Bn market in North America and EMEASA* Applications: factory automation, conveyor, package machinery, food processing equipment, industrial control, etc. Customer needs weighted towards higher margin PEMCO products Supply chain is highly fragmented with limited offerings Arrow Industrial provides differentiated engineering support for small to mid-tier OEM’s and emerging industrial equipment manufacturers *Source: Gartner
    57. GLOBAL STRATEGY Vertical market opportunities: Aerospace and Defense Arrow Military/Aerospace Arrow Electronics North American Components Why is this a good opportunity for Arrow? Continued growth in defense and aerospace market Strong growth in homeland security programs Satellite, communications, anti-terrorist applications Sophisticated electronic solutions and complex design Stringent quality and performance requirements Obsolescence management
    58. GLOBAL STRATEGY Vertical market opportunities: Aerospace and Defense Arrow Military/Aerospace $850MM business with unique military expertise #1 position globally Leading market share in many technology segments including discretes Demand creation expertise: 1,200+ design wins in 2007 and growing ACI acquisition Revenue CAGR of 20% in last 5 years Brought scale, strong supplier and customer relationships, and top talent Arrow is the only broadline provider of components and value-added services focused exclusively on serving the needs of the A&D customer base
    59. GLOBAL STRATEGY Vertical market opportunities: Lighting Why is this a good opportunity for Arrow? LED market expected to nearly triple in a six year span, from $4.2 billion in 2006 to $12.3 billion by 2012* Fragmented global marketplace Under-penetrated by distribution No dominant supplier High electronic content and design complexity *Source: iSuppli
    60. GLOBAL STRATEGY Vertical market opportunities: Lighting Arrow Global Lighting Initiative Provide LED alternatives to incandescent, halogen and fluorescent lighting Help customers navigate complexities of new lighting technology with wide range of solutions Over 1,200 customers; 50% new to distribution Expanded line card to 12 suppliers 2005-07 sales CAGR >50% http://lighting.arrow.com Extensive line card, unsurpassed supply chain management and design services, and experienced technical team to assist customers as they evolve and expand
    61. GLOBAL STRATEGY Vertical market opportunities: Medical Worldwide Medical Electronics Revenue Why is this a good opportunity for Arrow? CAGR Through 2012 by Application Ultrasound Peripheral $6B Global Market in 2007 with a Other Implantable Devices Telemetry 12% CAGR through 2012* Ultrasound Portables Other Handheld Strong growth in digital imaging External Defibrillator and storage Other Imaging Ultrasound Carts Infusion Pump Increasing electronic content Lab Equipment Bone Density Scanner Local design and manufacturing CT Scanner Glucose Meter necessary Digital Thermometer MRI Scanner Investment activity by venture PET Scanner Blood Pressure Monitor capital driving emerging customer Other Medical base Hearing Aid Cholesterol Monitor Transport Pacemaker Electrocardiogram X-Ray 0% 5% 10% 15% 20% 25% 30% 35% *Source: Databeans Medical 2007 **Source: Technology Forecasters
    62. GLOBAL STRATEGY Vertical market opportunities: Medical Arrow Medical Initiative Consumer / Portable Implantable Act as subject matter experts to aid with stringent government regulations and certification Play a key role at the front end of the design cycle Balance quality and regulatory compliance with time to market Diagnostic & Therapy Imaging needs Identified over 8,000 medical device customers in NA alone Increasing demand for services and support from customers in this specialized market
    63. GLOBAL STRATEGY Vertical market opportunities: Transportation Why is this a good opportunity for Arrow? $28Bn global market* Under penetrated by distribution 25% of vehicle cost is from electronic content, approaching 40% by 2010** Requires engineering support and complex solutions Infotainment Body Electronics Navigation Powertrain Occupant Driver Lighting Comport Protection ABS Breaking *Source: Gartner **Source: SAE International
    64. GLOBAL STRATEGY Vertical market opportunities: Transportation Arrow Transportation Group Dedicated organization focusing on the needs and requirements of the global transportation market Heavy Truck Automotive Technology experts driving true demand creation Quality experts (NAFTA, PPAP) Marine Industry Bus & Coach Generating 250 design wins annually Targeting higher margin small and medium-sized customers Agriculture Construction
    65. GLOBAL STRATEGY Geographic opportunities: Asia Pacific Asia Pacific accounts for nearly 50% of total electronics spend in the world* Driven by transfer business and indigenous consumption Domestic consumption became the biggest driver of GDP for the MARKET SHARE: TOP 10 DISTRIBUTORS 1st time in 7 yrs Demand for value-added services is 34% 48% growing 2002 2007 Market still fragmented, but MARKET SHARE: TOP 3 DISTRIBUTORS continues to consolidate** 18% 25% Top distributors are benefitting 2007 2002 *Source: Technology Forecasters **Source: Independent sources, public supplier and competitive data, regional intelligence; excl CPU/DRAM
    66. GLOBAL STRATEGY Transformation in Asia Pacific Entry into Japan with UEC acquisition; Hynetic (India) and Achieva (ASEAN Region Sales grew more than and China) in 2008 3.7x in last 5 years OI% Sales ($MM) Organic 5 year $2,500 Target CAGR of 18% $2,449 UltraSource acquisition $2,382 Expanded footprint to expands presence in Taiwan $2,000 52 sales offices in 12 2007 Arrow Asia Pac surpasses countries/territories $1Bn in annual sales Profitability increased $1,500 $1,466 almost 9x in last 5 years $1,170 $1,000 Continue to move $820 forward with customer $658 $500 segmentation and profitability initiatives 2002 $0 2002 2003 2004 2005 2006 2007
    67. WHY ARROW? Our business partners choose Arrow for many reasons Market Access & Dependability Broad, diversified customer and supplier base Strong global footprint/information platforms for migrating supply chains Transfer business doubled in the last year Award winning levels of customer service Financial strength Unmatched Solutions Strength Engineering focus 500 global field application engineers Demand creation ability and design win performance Provide flexible solutions to complex supply chain challenges
    68. IN SUMMARY… Arrow Global Components We occupy a unique, value-added space in the supply chain with We occupy a unique, value-added space in the supply chain with capabilities across all geographies, technologies and end markets capabilities across all geographies, technologies and end markets Market share leader in North America and Europe and top player in Asia Market share leader in North America and Europe and top player in Asia See continued growth opportunities across product lines, end markets, See continued growth opportunities across product lines, end markets, and geographies in a market that grows 2-3x GDP growth and geographies in a market that grows 2-3x GDP growth Focused in the SMB sweet spot with diversified customer and end market Focused in the SMB sweet spot with diversified customer and end market exposure and robust engineering capabilities exposure and robust engineering capabilities Investing in the future growth of our business while continuing to operate Investing in the future growth of our business while continuing to operate more efficiently and achieve our long-term financial target more efficiently and achieve our long-term financial target
    69. SUPPLIER INSIGHTS Moderator Brian McNally President, Global Alliance and Supply Chain Guest Speakers Freescale Semiconductor Henri Richard SVP, Chief Sales & Marketing Officer National Semiconductor Mike Noonen SVP, Worldwide Marketing & Sales
    70. Mike Noonen Senior Vice President Worldwide Marketing & Sales National Semiconductor Arrow Investor Day
    71. National Helped Create The Analog Semiconductor Industry
    72. Today National is Reinventing Analog Optimal Performance at the Lowest Power
    73. PowerWise® Solutions Reduce Heat & Energy Consumption • Power-Saver equalizers • Synchronous switching regulators • High-voltage PWM controllers • High-precision temperature sensors
    74. PowerWise® Solutions Extend Battery Life • Adaptive Voltage Scaling technology • Adaptive RF Power • RGB LED backlighting • Mobile Pixel Link • Integrated Class D audio subsystems • Analog Noise Reduction Technology
    75. PowerWise® Solutions Increase Reliability • High-speed A/D converters • Operational amplifiers • Precision Timing devices • Synchronous switching regulators
    76. Distribution Is Crucial To National Distribution 54% Direct 46%
    77. Top Reasons Arrow Is A Great Partner For National 1. Worldwide Synergy and Efficiencies 2. Engagement With All Customers 3. Market Segment Expertise 4. Together We Offer Complete Solutions
    78. Arrow Has Worldwide Synergy and Efficiencies • Organized to be global without compromising regional influence • Disciplined approach to inventory and asset management • Collaborative and effective information management • Ability to track designs worldwide from concept to production
    79. Arrow Actively & Efficiently Engages With All Customers Arrow Worldwide Global Customers Alliance Arrow 1000s of Mid-size Customers Electronic Components 10,000s of Small Arrow and Emerging Advantage Customers
    80. Arrow Has Market Segment Expertise and Resources Arrow makes it easy for our mutual customers to get the right solution and assistance
    81. Arrow Offers Our Mutual Customers Complete Solutions
    82. Thank You
    83. 5 June 2008 Freescale Semiconductor Arrow Financial Analysts Meeting Henri Richard Senior Vice President, Chief Sales and Marketing Officer TM Freescale Semiconductor Confidential and Proprietary Information. Freescale™ and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2008.
    84. Freescale’s Unique Strengths 50+ years of innovation • Leadership in growing Markets • Broad Product & Technology Portfolio • Deep Customer Relationships • Flexible Manufacturing Strategy • Significant R&D Investment • Talented, Global Workforce • Strong Financial Position • TM Freescale Semiconductor Confidential and Proprietary Information. Freescale™ and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2008.
    85. Market Realities: The Call for Teamwork Increasingly complex application requirements • Increasingly complex customer models • Compressed time to market requirements • Application support, not device support, is • required More complete solutions are demanded • The competition continues to increase, • improve and disrupt Internet both provides and limits access to • design engineers \"Individuals play the game, but teams beat the odds.” – U.S. Navy SEALs TM Freescale Semiconductor Confidential and Proprietary Information. Freescale™ and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2008.
    86. Teamwork and Intelligence: Arrow and Freescale Together, we provide: Financial strength, inventory and customer credit • Wide customer base and reach • Demand creation capabilities • AP market presence to capture and leverage • design activity New technology solutions for target market • segments Deep customer and market knowledge • Critical technology and technical expertise • “Talent wins games, but teamwork and intelligence wins championships.” –Michael Jordan TM Freescale Semiconductor Confidential and Proprietary Information. Freescale™ and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2008.
    87. A Powerful Market Combination: Arrow and Freescale Networking Wireless Consumer Industrial Automotive • Portable devices • Cellular & • Connectivity • Cellular Safety • Portable Environmental • Medical/Health • Health evolution of • • Media • Energy • Lighting, broadband data Comfort/ • convergence Management Building • Increase in # of Entertainment • Home Automation Internet entertainment • Low Power households • Gaming • Ubiquitous connectivity TM Freescale Semiconductor Confidential and Proprietary Information. Freescale™ and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2008.
    88. Transforming the Market: Arrow and Freescale Together, we will: TM Heighten focus on fastest growing market segments • Seek opportunities to leverage portfolio across markets • Better leverage geographic presence to meet supply and demand • Continually improve supply chain efficiency, worldwide coordination • Maintain investment in skilled, talented teams • Provide unparalleled customer support • Exceed industry growth expectations • Freescale: 2X by 3 in key growth segments • TM Freescale Semiconductor Confidential and Proprietary Information. Freescale™ and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2008.
    89. TM Freescale Semiconductor Confidential and Proprietary Information. Freescale™ and the Freescale logo are trademarks of Freescale Semiconductor, Inc. All other product or service names are the property of their respective owners. © Freescale Semiconductor, Inc. 2008.
    90. FINANCIAL REVIEW Paul Reilly Senior Vice President and CFO
    91. STRONG REVENUE GROWTH Driven by both organic growth and acquisitions $16.0 $13.6 $11.2 $10.6 17% CAGR $8.5 $7.3 >12% CAGR Ex Acqs* 2002 2003 2004 2005 2006 2007 Total Sales ($Bn) *Excluding baseline KeyLink, Alternative Technology, InTechnology, DNS, Ultra Source, Disway, and Pioneer
    92. OPERATING AT GREATER LEVELS OF EFFICIENCY In the last five years we have reduced our cost structure by over 30% while sales have grown nearly 120% 14.9% 9.9% 2002 2007 Operating Exp*/Sales ($MM) *Represents GAAP measure adjusted to exclude items affecting comparability
    93. IMPROVED WORKING CAPITAL PERFORMANCE Improved operating efficiency and focused management of working capital has driven improvements in all metrics 10.9% 27.8% 24.5% 15.2% 9.8% 3.4% 2002 2007 2002 2007 2002 2007 WC/Sales* ROIC*** ROWC** *Inventory + AR - AP at end of period/ sales **ROWC = operating income excluding restructuring and other charges/(Avg Inv. + Avg AR +Avg AP) ***ROIC = Tax effected op. income and equity in earnings of affiliates excluding restructuring and other charges - minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM)
    94. WELL POSITIONED TO PERFORM THROUGHOUT THE CYCLE We have reduced our earnings volatility Arrow Today Structural Semi Industry Changes More disciplined approach to Increased opportunities in ECS More disciplined approach to Increased opportunities in ECS inventory inventory Now 1/3 of our revenue base Now 1/3 of our revenue base Inventory days at lows throughout Inventory days at lows throughout More flexible cost structure More flexible cost structure the supply chain the supply chain $210MM in cost savings since ’03 $210MM in cost savings since ’03 More rational capital spending and More rational capital spending and Increased compensation variability utilization rates Increased compensation variability utilization rates Earnings floor established Earnings floor established Increased use of foundries creates Increased use of foundries creates Diverse geographic footprint greater flexibility Diverse geographic footprint greater flexibility Broad customer base in non-traditional Semi industry growing at aamore Broad customer base in non-traditional Semi industry growing at more end markets stable rate end markets stable rate 140,000 customers, no one customer >> 140,000 customers, no one customer than 2% sales than 2% sales CF positive throughout the cycle CF positive throughout the cycle Book value of $30 per share Book value of $30 per share
    95. WELL POSITIONED TO PERFORM IN THE FACE OF A WEAKENED ECONOMY Downside Scenario 2008E* Assumptions In millions except per share data Sales $16,400 $14,760 Sales decline of 10% Operating Expense $ $1,675 $1,610 Variable expenses at 4% of sales % 10.2% 10.9% Operating Profit $ $660 $492 % 4.0% 3.3% Interest Expense $100 $95 Interest savings from lower WC Net Income $390 $277 EPS, Diluted $3.12 $2.21 Shares Outstanding 125 125 *Source: First Call estimates
    96. CASH FLOW POSITIVE INDEPENDENT OF MARKET CONDITIONS We have generated cash for six consecutive years totaling $4.2Bn Cumulative Operating Cash Flow ($MM) Capital Allocation Strategy Invest in the business $5,000 $4,500 Acquisitions to strategically $4,000 accelerate growth that meet our value criteria $3,500 $3,000 Evaluate options to return $2,500 value to shareholders $2,000 Maintain investment grade $1,500 rating over the long-term $1,000 2001 2002 2003 2004 2005 2006 2007
    97. STRONGEST BALANCE SHEET IN TEN YEARS The health of our balance sheet is a competitive advantage Decrease in net debt & net debt to cap to lowest level in ten years Access to $1.4Bn in committed liquidity facilities Conservative debt maturity profile with next maturity not until 2010 ROIC* above WACC for 17 consecutive quarters Rated BBB- with a stable outlook by all three rating agencies *ROIC = Annualized, tax effected op. income and equity in earnings of affiliates excluding restructuring and other charges - annualized minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM)
    98. RESULTING IN SIGNIFICANT EARNINGS EXPANSION (Diluted earnings per share, excl. special charges*) $0.79 $3.29 $0.74 $0.68 $2.92 $2.18 $0.49 51% $1.97 85% $0.44 CAGR CAGR $0.74 $0.10 $0.15 2002 2003 2004 2005 2006 2007 Q1-03 Q1-04 Q1-05 Q1-06 Q1-07 Q1-08 *Represents GAAP measure adjusted to exclude items affecting comparability
    99. GLOBAL COMPONENTS OPERATING PERFORMANCE We continue to execute well and produce industry-leading operating performance Net Sales ($Bn) Sales increased 14% in the last $11.2 five years 14% Taken out over $40MM in costs CAGR through targeted initiatives in the past three quarters $5.7 Operating expense/sales decreased almost 40% in the 2002 2007 last five years Operating Income ($MM)* Grown earnings almost 2x faster $606 than sales Operating margin* near low end of 27% target range CAGR Return on working capital in $184 excess of 25% 2002 2007 *Represents GAAP measure adjusted to exclude items affecting comparability
    100. GLOBAL ECS OPERATING PERFORMANCE We continue to outgrow the market and invest in future growth Net Sales ($Bn) Sales increased 25% in the last $4.8 five years, or >12% organically 25% Operating margin* of 4.2% in 2007 CAGR at industry-leading levels Legacy business already at targeted operating margin $1.5 2002 2007 Continue to invest in strategic growth initiatives including Operating Income ($MM)* software, midmarket, and geographic expansion $202 Return on working capital in 28% excess of 75% CAGR $58 2002 2007 *Represents GAAP measure adjusted to exclude items affecting comparability
    101. THE ECS STORY Our traditional business is performing very well and is within target range GP% in server lines has actually increased over the last decade Software expansion has diluted OI% by 20 bps, yet returns are favorable European expansion has impacted progress to achieving financial targets Diluted 2007 OI% by 30 bps ECS 2007 ($MMs) Traditional Acquisitions Total Sales $2,251 $2,510 $4,761 Operating Income* $112 $90 $202 Operating Margin* 5.0% 3.6% 4.2% *Excludes special charges
    102. ACQUISITION SCORECARD Ultra Source KeyLink Alt Tech InTech DNS Announced Accretion NA $.15-.17 $.02-.04 $.02-.04 $.06-.09 Actual Accretion Exceeded Exceeded Met Met Below ROIC* exceeds WACC? YES YES YES YES NO Acquisitions in ECS Europe and ERP are a current drag on ROIC* ERP implementation: 60-70 bps European acquisitions: 30-40 bps ROIC* excluding European acquisitions and ERP = 12.2% in 2007 *ROIC = Annualized, tax effected op. income and equity in earnings of affiliates excluding restructuring and other charges - annualized minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM)
    103. FINANCIAL STRATEGY UPDATE Investor Day 2007 Investor Day 2008 Targets Targets Operating Income* Global Components 5.7% - 7.0% 5.7% - 7.0% Global ECS 4.9% - 5.3% 4.6% - 5.3% Consolidated 4.6% - 5.8% 4.5% - 5.8% WC/Sales $ $.15 - $.17 $.14 - $.15 ROIC** 12.5% - 15.0% 12.5% - 15.0% *Excludes special charges **ROIC = Annualized, tax effected op. income and equity in earnings of affiliates excluding restructuring and other charges - annualized minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM)
    104. THE ROADMAP TO ACHIEVING OUR FINANCIAL TARGETS Global Components GLOBAL TARGET 2007 Operating SMB ASIA PAC LEVERAGE 5.7-7.0% Margin* 5.4% Global leverage Increasing profitability in Asia/Pacific Continued initiatives to change customer mix will drive increased margins + Achieving targeted profitability for the region adds 30-35bps to Global OI% and achieves low end of global target range Leverage global scale and create best-in-class shared service functions Global ERP to standardize processes and enable performance improvement Strategic focus on small and medium-sized businesses This customer base typically has a 300bp gross margin premium *Excludes special charges
    105. THE ROADMAP TO ACHIEVING OUR FINANCIAL TARGETS Global ECS TARGET GLOBAL 2007 Operating MIDMARKET EUROPE LEVERAGE 4.6-5.3% Margin* 4.2% Global leverage Getting Europe ECS to scale LOGIX to bring needed scale & talented management Top priority for Andy Bryant Cost structure being evaluated Global ERP to enable performance improvement and revenue enhancement Leverage global scale and provide ECS with a tailored system Provide rich data analytics unseen before in the marketplace to further enhance value-added capabilities Midmarket initiative Accretive to business model as we ramp up capabilities *Excludes special charges
    106. CONSISTENT GENERATOR OF EARNINGS We have generated industry leading EPS in the last five years $11.24 $8.44 $7.78 $6.63 $6.31 $5.12 $3.35 $0.03 ARW ($4.66) ($5.91) Earnings Per Share* *Cumulative EPS for the last five years beginning April 1, 2003; Source: company financial statements; Represents GAAP basis through 1Q08; Companies included: AVT, IM, SNX, TECD, BHE, CLS, FLEX, JBL, SANM
    107. IN SUMMARY… Our financial discipline and strategic vision will serve us well We are well positioned to perform throughout the cycle Diversified revenue stream Opportunities for organic growth More flexible cost structure Strong balance sheet with significant liquidity Consistent cash flow generator ROIC*>WACC We are continually looking for ways to operate our business more efficiently We are committed to achieving our financial targets and in turn to increasing shareholder value *ROIC = Annualized, tax effected op. income and equity in earnings of affiliates excluding restructuring and other charges - annualized minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM)
    108. FINAL Q&A
    109. CLOSING REMARKS Bill Mitchell Chairman & CEO
    110. ARROW: STRONG RETURNS We generate industry-leading ROIC Ex. ERP & 11.5 12.2 Acq. 11.4 Ex. 10.0 ERP 10.9 7.9 7.6 7.6 7.4 7.1 3.6 3.5 ARW 2007 Return on Invested Capital (%)* *Represents CY2007 ROIC for ARW and comparable companies (AVT, IM, SNX, TECD, BHE, CLS, FLEX, JBL, SANM); ROIC = Tax effected op. income and equity in earnings of affiliates excluding restructuring and other charges - minority interest/(Avg Debt + Avg Equity – Avg Cash over $150MM); Source: Company financial statements
    111. ARROW: AN ATTRACTIVE VALUATION Arrow’s valuation has significant upside 14.2 11.8 11.8 11.7 11.0 10.5 9.8 9.3 8.9 8.8 ARW P/E Ratio* *Prices as of 5/30/08; Comparable companies include AVT, IM, SNX, TECD, BHE, FLEX, JBL, SANM, CLS; 2008 EPS from First Call
    112. ARROW: AN IMPRESSIVE SCORECARD STRATEGIC VISION Reduced exposure to semi cyclicality via ECS expansion DIVERSIFIED BUSINESS MODEL Now operating in 50 countries and territories GLOBAL REACH Across products, markets, and geographies GROWTH OPPORTUNITIES Capitalized on market opportunities to strategically DISCIPLINED ACQUISITION STRATEGY accelerate growth; immediately accretive to EPS $210MM of costs taken out over last 5 yrs; ERP potential LEVERAGING GLOBAL SCALE Experienced team with > 25 years of industry experience SEASONED MANAGEMENT FINANCIAL DISCIPLINE 85% EPS CAGR in last 5 yrs; 5x faster than growth in sales STRONG EARNINGS GROWTH Net debt at lowest level in 10 yrs HEALTHY BALANCE SHEET WC/sales decreased to record low level of 15% IMPRESSIVE ASSET MANAGEMENT 5 consecutive yrs of CF generation during period of growth & CASH FLOW PERFORMANCE For 17 consecutive quarters – unprecedented ROIC > WACC
    113. INVESTOR DAY 2008 Delivering today while building for the future
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