First Quarter 2008
  Earnings Call


  April 23, 2008
WELCOME



Sabrina Weaver

Director, Investor
     Relations
SAFE HARBOR STATEMENT

   Some of the comments to be made on this morning’s call may include forward-looking statements,
 ...
BUSINESS
 OVERVIEW


  Bill Mitchell

Chairman & CEO
OVERVIEW
   Challenging quarter…

         Record level first-quarter sales and WC/sales, positive cash flow generation
  ...
IN SUMMARY…

         Global scale and financial strength allow us to take advantage of
         opportunities in the mark...
FINANCIAL
    OVERVIEW


     Paul Reilly

Senior Vice President
        & CFO
CONSOLIDATED SALES
     ($ in millions)




                                                                              ...
GLOBAL ENTERPRISE COMPUTING SOLUTIONS
     ($ in millions)




                                                           ...
GLOBAL COMPONENTS
    ($ in millions)




                                                       Sales $2.9Bn
            ...
ASIA PAC COMPONENTS
    ($ in millions)




                                                  Sales $653MM
               ...
NORTH AMERICAN COMPONENTS
    ($ in millions)




                                                       Sales $1.2Bn
    ...
EUROPE COMPONENTS
    ($ in millions)




                                                      Sales $1.1Bn
             ...
P&L HIGHLIGHTS
    ($ in millions, except per share data, may reflect rounding)



                                       ...
STRONG FINANCIAL POSITION

              Cash flow of $40MM in Q1
                6th consecutive quarter of positive cash...
BUSINESS UNIT
   REVIEW



   Mike Long

President & COO
ENTERPRISE COMPUTING SOLUTIONS
   Mixed results in the first quarter…
         Double-digit Y/Y increases in storage, soft...
GLOBAL COMPONENTS REGIONAL PERFORMANCE
   Sales at the high end of guidance range in a cautious market…
         Asia Paci...
GLOBAL COMPONENTS LEADING INDICATORS

         Book-to-bill above parity; at 1.03 worldwide for 3rd consecutive Q
        ...
CLOSING
 COMMENTS


  Bill Mitchell

Chairman & CEO
IN CLOSING…

         Mixed performance in cautious market
            Components sales at high end of guidance range
    ...
SECOND QUARTER 2008 GUIDANCE




           Consolidated Sales                                                            ...
QUESTIONS &
 ANSWERS
EARNINGS RECONCILIATION
     $ in thousands, except per share data

                                                      ...
EARNINGS RECONCILIATION
   References to restructuring and other charges refer to the following incremental charges
   tak...
First Quarter 2008
  Earnings Call


  April 23, 2008
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arrow electronics Presentation 2008 1st

  1. 1. First Quarter 2008 Earnings Call April 23, 2008
  2. 2. WELCOME Sabrina Weaver Director, Investor Relations
  3. 3. SAFE HARBOR STATEMENT Some of the comments to be made on this morning’s call may include forward-looking statements, including statements addressing future financial results. These statements 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 implementation of its new global financial system and the company’s planned 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 ECS 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. These forward-looking statements can be identified by forward-looking words such as quot;expects,quot; quot;anticipates,quot; quot;intends,quot; quot;plans,quot; quot;may,quot; quot;will,quot; quot;believes,quot; quot;seeks,quot; quot;estimates,quot; 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. First Quarter Earnings April 23, 2008
  4. 4. BUSINESS OVERVIEW Bill Mitchell Chairman & CEO
  5. 5. OVERVIEW Challenging quarter… Record level first-quarter sales and WC/sales, positive cash flow generation Increasingly challenging market conditions at quarter end Global Enterprise Computing Solutions Strong growth in storage, software and services offset by weakness in servers Took actions to adjust cost structure, yet we continue to focus on investing for the long-term + Launch of midmarket initiative, LOGIX acquisition (closing pending) + Successful implementation of ERP in North American Sun business Global Components Executed well in cautious marketplace North America stable, double-digit growth in Asia Pac, Europe soft Book-to-bill above 1 globally + North America and Asia Pac above 1.05 Strong Y/Y increase in design registrations in North America Achieva acquisition further strengthens Asia Pac (closing pending) First Quarter Earnings April 23, 2008
  6. 6. IN SUMMARY… Global scale and financial strength allow us to take advantage of opportunities in the market Continue to invest in the long-term future of Arrow Taken steps to be more efficient in all areas of our business Strategic priorities are clear Continue to pursue transformational opportunities in ECS Leverage global scale in components Install world class systems and processes Pursue growth opportunities across products, markets and geographies First Quarter Earnings April 23, 2008
  7. 7. FINANCIAL OVERVIEW Paul Reilly Senior Vice President & CFO
  8. 8. CONSOLIDATED SALES ($ in millions) Sales $4.0Bn $4,028 +15% Y/Y, -9% Q/Q $3,498 +5%Y/Y Pro forma for $3,192 KeyLink* $2,727 Q1-05 Q1-06 Q1-07 Q1-08 *Includes KeyLink Systems Group sales in Q1-07 and excludes procurement agreement sales in Q1-08. First Quarter Earnings April 23, 2008
  9. 9. GLOBAL ENTERPRISE COMPUTING SOLUTIONS ($ in millions) Sales $1.1Bn $1,106 +55% Y/Y, -31% Q/Q +6%Y/Y Pro forma for KeyLink* $712 17th consecutive quarter of $511 $460 Y/Y growth Lower than anticipated volume, margin, and rebates on servers and a lag in return on investments in growth initiatives pressured margins Q1-05 Q1-06 Q1-07 Q1-08 Increased ROWC 28% Y/Y *Includes KeyLink Systems Group sales in Q1-07 and excludes procurement agreement sales in Q1-08. First Quarter Earnings April 23, 2008
  10. 10. GLOBAL COMPONENTS ($ in millions) Sales $2.9Bn $2,922 $2,785 $2,681 +5% Y/Y, +4% Q/Q $2,267 Decreased operating expense/sales 20 bps Y/Y Operating margin close to financial target Decreased WC/sales 70 bps Y/Y Q1-05 Q1-06 Q1-07 Q1-08 First Quarter Earnings April 23, 2008
  11. 11. ASIA PAC COMPONENTS ($ in millions) Sales $653MM $653 +20% Y/Y, Flat Q/Q $545 $531 Stronger than normal seasonality Increased operating income $304 almost 47% Y/Y Improved ROWC 200 bps Y/Y Q1-05 Q1-06 Q1-07 Q1-08 First Quarter Earnings April 23, 2008
  12. 12. NORTH AMERICAN COMPONENTS ($ in millions) Sales $1.2Bn $1,191 Up slightly Q/Q, flat Y/Y $1,165 $1,162 Sales in core SMB +2% Q/Q, +2% Y/Y Grew core SMB operating $1,046 income 3-4x sales Q/Q and Y/Y Increased ROWC 18% Y/Y Q1-05 Q1-06 Q1-07 Q1-08 First Quarter Earnings April 23, 2008
  13. 13. EUROPE COMPONENTS ($ in millions) Sales $1.1Bn $1,107 $1,075 +11% Q/Q, +3% Y/Y $959 $916 +8% Q/Q, -9% Y/Y, excluding FX Increased operating margin 70 bps Q/Q Grew earnings 2x the rate of sales Q/Q Q1-05 Q1-06 Q1-07 Q1-08 First Quarter Earnings April 23, 2008
  14. 14. P&L HIGHLIGHTS ($ in millions, except per share data, may reflect rounding) 1Q08 Q/Q Y/Y Change Change Sales $4,028 -9% +15% Gross Profit Margin 14.6% +70bps -90bps Operating Exp*/Sales 10.5% +120bps -50bps Operating Income* $163.6 -20% +5% Operating Margin* 4.1% -50bps -40bps Net Income* $97.9 -19% +7% Diluted EPS* $0.79 -19% +7% * $47MM of total expense reductions announced in last 3 quarters * •Represents GAAP measure adjusted to exclude the impact of restructuring and integration and other items affecting comparability. Includes amortization of intangible assets of $.02. See “Earnings Reconciliation” for a reconciliation between GAAP and “Adjusted” results. First Quarter Earnings April 23, 2008
  15. 15. STRONG FINANCIAL POSITION Cash flow of $40MM in Q1 6th consecutive quarter of positive cash flow generation Ability to self-fund growth initiatives Competitive advantage Financial Stability Strong balance sheet Access to committed liquidity facilities Focused management of working capital Increased ROWC almost 160 bps Y/Y Decreased WC/sales 280 bps Y/Y ROIC* significantly exceeded cost of capital for the 17th consecutive quarter *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). First Quarter Earnings April 23, 2008
  16. 16. BUSINESS UNIT REVIEW Mike Long President & COO
  17. 17. ENTERPRISE COMPUTING SOLUTIONS Mixed results in the first quarter… Double-digit Y/Y increases in storage, software, and services End-of-quarter weakness in servers Lower than anticipated volume, margin, and rebates on servers and a lag on return on investments pressured operating margin ECS Europe moving forward LOGIX acquisition to bring scale and senior leadership (closing pending) Andy Bryant to spend significant time in Europe Launched midmarket initiative Implemented ERP in North American Sun business Successful transition with no delays in orders/shipment On budget and on time First Quarter Earnings April 23, 2008
  18. 18. GLOBAL COMPONENTS REGIONAL PERFORMANCE Sales at the high end of guidance range in a cautious market… Asia Pacific Strong Y/Y growth in Taiwan, India, Australia/NZ, and ASEAN region Continued to outgrow the market Strategic expansion in Asia Pac + Hynetic & Shreyanics in India + Achieva in the ASEAN region (closing pending) North America Strong sequential increase in book-to-bill Double-digit Y/Y growth in design registrations Strong performance in military segment + Acquired and integrated ACI Electronics Europe Market conditions weakened in Q1 Strong Euro impacting export market First Quarter Earnings April 23, 2008
  19. 19. GLOBAL COMPONENTS LEADING INDICATORS Book-to-bill above parity; at 1.03 worldwide for 3rd consecutive Q NA strengthened, Asia Pac stable, Europe weakened Lead times stable and within normal range of 8 to 12 weeks No increase in cancellation rates Quarterly customer survey in North America Inventory well positioned heading into Q2 Outlook for purchase requirements softened First Quarter Earnings April 23, 2008
  20. 20. CLOSING COMMENTS Bill Mitchell Chairman & CEO
  21. 21. IN CLOSING… Mixed performance in cautious market Components sales at high end of guidance range ECS performance did not meet expectations Continue to manage company conservatively and prudently Maintain flexibility to take advantage of opportunities Consistently generating cash & balance sheet is in great shape Committed to investment initiatives to position Arrow for future growth Focus on efficiency in all areas of business to ensure premium returns to investors First Quarter Earnings April 23, 2008
  22. 22. SECOND QUARTER 2008 GUIDANCE Consolidated Sales $3.85Bn to $4.15Bn Global Components $2.70Bn to $2.90Bn Global ECS $1.15Bn to $1.25Bn Diluted EPS* $0.74 to $0.80 *Excluding Charges, including $.02 to $.03 estimated amortization of intangible assets. First Quarter Earnings April 23, 2008
  23. 23. QUESTIONS & ANSWERS
  24. 24. EARNINGS RECONCILIATION $ in thousands, except per share data Q108 Q407 Q107 Operating income, as Reported $144,143 $193,583 $162,659 Restructuring and integration charges (credit) 6,478 9,955 (6,147) Preference claim from 2001 12,941 -- -- Operating income, as Adjusted $163,562 $203,538 $156,512 Net income, as Reported $85,871 $113,963 $96,294 Restructuring and integration charges (credit) 4,159 6,598 (4,522) Preference claim from 2001 7,822 -- -- Net income, as Adjusted $97,852 $120,561 $91,772 Diluted EPS, as Reported $.69 $.92 $.77 Restructuring and integration charges (credit) .03 .05 (.04) Preference claim from 2001 .06 -- -- Diluted EPS, as Adjusted $.79 $.97 $.74 The sum of the components for net income per share, as Adjusted, may not agree to totals, as presented, due to rounding. First Quarter Earnings April 23, 2008
  25. 25. EARNINGS RECONCILIATION References to restructuring and other charges refer to the following incremental charges taken in the quarters indicated: Q1-08 Restructuring and Integration Charges: During the first quarter of 2008, the company recorded a restructuring and integration charge of $6.5 million ($4.2 million net of related taxes or $.03 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies. Included in this restructuring and integration charge is a restructuring charge of $5.3 million related to efficiency initiatives taken by the company during the first quarter of 2008. These actions are expected to reduce costs by approximately $7.0 million per annum, with approximately $1.0 million realized in the first quarter of 2008. Q1-08 Legal Settlement: As previously disclosed, during the first quarter of 2008, the company recorded a charge, including legal fees, related to a preference claim from 2001 of $12.9 million ($7.8 million net of related taxes or $.06 per share on both a basis and diluted basis). Q4-07 Restructuring and Integration Charges: During the fourth quarter of 2007, the company recorded a restructuring and integration charge of $10.0 million ($6.6 million net of related taxes or $.05 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies. Q1-07 Restructuring and integration Charges: During the first quarter of 2007, the company recorded a restructuring and integration credit of $6.1 million ($4.5 million net of related taxes or $.04 per share on both a basic and diluted basis), primarily related to the sale of the company's Harlow, England facility and the acquisition of KeyLink. First Quarter Earnings April 23, 2008
  26. 26. First Quarter 2008 Earnings Call April 23, 2008

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