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Investor Day 2011Strength.Growth.Momentum.
WelcomeMike TauntonVice President & Treasurer
Safe Harbor Statement  This presentation may include forward-looking statements, including statements addressing  future f...
Agenda   SESSION I  9:00 to 10:15AM           Welcome                                Mike Taunton                         ...
Arrow’s StrategicTransformationMike LongChairman, President, & CEO
be the premier                                 electronics                            company in the worldInvestor Day 201...
A Growth CompanyStrength                            GrowthMomentumInvestor Day 2011               7Strength.Growth.Momentum.
Investor Day 2011Strength.Growth.Momentum.
Success across all Businesses• Exceptional organic                        • Significant margin     sales growth           ...
Record Revenue: Driven by Organic Growth                            12%                            organic                ...
Record Revenue: Supported by AcquisitionsInvestor Day 2011                     11Strength.Growth.Momentum.
Investor Day 2011                            AND BEYONDStrength.Growth.Momentum.
be the premier                                 electronics                            company in the worldInvestor Day 201...
Global Strategy            Drive growth in the core, services & high-growth product sets                        Core      ...
Premier Electronics Company in the World                               Computing Solutions          Production            ...
Expect to Be a $26+ Billion Company       Core Growth           Incremental Growth              Value-Added Services      ...
History of strength and growth                       Growing core and new services business                       Exceptio...
Global EnterpriseComputing SolutionsAndy BryantPresident, Global ECS
Investor Day 2011           19Strength.Growth.Momentum.
Leading Specialized Channel Management            Services Company   • 2010 sales of $5.6 billion grew 13% Y/Y   • Industr...
Outperformed the Market in 2010                                                                                           ...
Investor Day 2011                            AND BEYONDStrength.Growth.Momentum.
Market Outlook: Increased IT Spend                                                                                        ...
Our Strategy: Differentiating Arrow ECS      Grow in new               Move                                               ...
Our Strategy: Differentiating Arrow ECS      Grow in new               Move                                               ...
Create New Growth Opportunities  • Selectively expand into high    growth emerging markets                    Expanding ou...
Our Strategy: Differentiating Arrow ECS      Grow in new                              Move value            Expand service...
Evolve Technology Mix to Meet Changing               Needs                     Shift portfolio to high growth with innovat...
Drive Value and Growth with Channel            Management     Channel Management Model            • Expand VAD model to ne...
Our Strategy: Differentiating Arrow ECS      Grow in new                              Move value             Expand servic...
Grow Managed Services                  Unified communications, enterprise voice, video/data                  and software ...
Increase Private/Hybrid Cloud Adoption                                                                        • In 2011, g...
Strength, Growth and Momentum                              2010 Successes:                             • Outpaced the mark...
Strength, Growth and Momentum Will Drive               Future Success                                              2010 Su...
Poised for Exceptional Growth          $ in billions                                                      Services   $8.3B...
Session I Q&A
Coffee Break
Welcome BackGreer AvivSenior Manager, Investor Relations
Global ComponentsPeter KongPresident, Global Components
Investor Day 2011           40Strength.Growth.Momentum.
Leading Value-Added Service Provider            to OEMs and EMS Companies   • In 48 countries across North America,       ...
Broad Technology Portfolio with 1,200+            Suppliers                                              Semi = 69%       ...
Investor Day 2011                            AND BEYONDStrength.Growth.Momentum.
Diverse Opportunities: Convergence of  Electronics in Everything We DoInvestor Day 2011Strength.Growth.Momentum.
Demand Expected to Continue to Rebound                             $350                                                   ...
Build on Core Expertise with Differentiated            Value           Niche Distribution                Reverse Logistics...
Expand TAM to Drive Future Growth                                 2010 TAM   Approximate    2011 Growth                   ...
We are the Technology Product Lifecycle            LeaderTransimNew Product                                               ...
Accelerated Profitable Growth                                                 New                                         ...
Poised for Exceptional Growth          $ in billions                                                               Cross  ...
Arrow’s ServicesTransformationErnie KeithVice President, Global Operations & Value-Added Services
Significant Scope and Scale in Global Logistics              and Value-Added Services Capabilities                        ...
Arrow Runs One of the Most Complex Supply            Chains in the World Original Equipment                        Contrac...
Our Unique Competencies Position us Well    Extensive service offering                 Expertise you can leverage    Prove...
Investor Day 2011Strength.Growth.Momentum.
2010 Highlights• Exceptional organic         • Significant margin     sales growth                   expansion        • Be...
Investor Day 2011                            AND BEYONDStrength.Growth.Momentum.
Leadership in Lifecycle Services    Grow to $1 Bn in revenue by 2013    • Expand value proposition and global scale    • E...
Lifecycle Services Is a Very Large,            Fast-Growing, Fragmented Market          Production                        ...
Our Portfolio Now Spans the Entire Lifecycle         Design               Production      Reverse Logistics   IT Asset Dis...
Poised for Exceptional Growth            Roadmap to $1 billion                                                            ...
Arrow’s Financial HealthPaul ReillyExecutive Vice President, Finance and Operations & CFO
Operating Performance is a Foundation of               Strength                           Revenue ($Bn)                   ...
Transformed Balance Sheet to Further               Strengthen Arrow                       Available Liquidity             ...
Emerged Even Stronger from the Recession                Industry-leading performance in 2010   ($ in millions)            ...
Emerged Even Stronger from the Recession                Industry-leading performance in 2010   ($ in millions)            ...
Emerged Even Stronger from the Recession                Industry-leading performance in 2010   ($ in millions)            ...
Emerged Even Stronger from the Recession                Industry-leading performance in 2010   ($ in millions)            ...
Emerged Even Stronger from the Recession                Industry-leading performance in 2010   ($ in millions)            ...
Emerged Even Stronger from the Recession                Industry-leading performance in 2010   ($ in millions)            ...
Emerged Even Stronger from the Recession                Industry-leading performance in 2010   ($ in millions)            ...
Continue to Create Shareholder Value     • ROIC > WACC     • Generate positive cash flow throughout the cycle          – C...
Continue to Generate Superior Returns               Return on Invested Capital                                       Retur...
Generated Positive Cash Flow            Throughout the Cycle     Capital Allocation Strategy                      Cumulati...
Generated Industry Leading EPS               in the Last Five Years            $14.58                              $13.38 ...
Earnings Per Share Growth Has Been                       Exceptional                                          51% EPS CAGR...
Grown and Diversified by Capitalizing on            New Opportunities                       2002                          ...
$26+ Bn Premier Electronics Company                                    Adjacent                                    markets...
Three-Year Targets Reflect Continued EPS              Growth and Cash Flow Generation                                     ...
In Summary…    • We are well positioned for:        – Strong organic growth        – Growing earnings in the double digit ...
Session II Q&A
Closing CommentsMike LongChairman, President, & CEO
be the premier                                 electronics                            company in the worldInvestor Day 201...
Investor Day 2011Strength.Growth.Momentum.
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Investor Day 2011

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2011 Investor Day Presentation - "Strength.Growth.Momentum"

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Investor Day 2011

  1. 1. Investor Day 2011Strength.Growth.Momentum.
  2. 2. WelcomeMike TauntonVice President & Treasurer
  3. 3. Safe Harbor Statement This presentation may include forward-looking statements, including statements addressing future financial results. These statements 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 companys 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, 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.Investor Day 2011 3Strength.Growth.Momentum.
  4. 4. Agenda SESSION I 9:00 to 10:15AM Welcome Mike Taunton Arrow’s Strategic Transformation Mike Long Global ECS Update Andy Bryant Session I Q&A All Coffee Break SESSION II 10:15 to 11:45AM Welcome Back Greer Aviv Global Components Update Peter Kong Arrow’s Services Transformation Ernie Keith Arrow’s Financial Health Paul Reilly Closing Comments Mike Long Session II Q&A AllInvestor Day 2011 4Strength.Growth.Momentum.
  5. 5. Arrow’s StrategicTransformationMike LongChairman, President, & CEO
  6. 6. be the premier electronics company in the worldInvestor Day 2011Strength.Growth.Momentum.
  7. 7. A Growth CompanyStrength GrowthMomentumInvestor Day 2011 7Strength.Growth.Momentum.
  8. 8. Investor Day 2011Strength.Growth.Momentum.
  9. 9. Success across all Businesses• Exceptional organic • Significant margin sales growth expansion • Best-in-class • Strategic expansion of execution the portfolio Maximized Shareholder ValueInvestor Day 2011 9Strength.Growth.Momentum.
  10. 10. Record Revenue: Driven by Organic Growth 12% organic CAGRInvestor Day 2011 10Strength.Growth.Momentum.
  11. 11. Record Revenue: Supported by AcquisitionsInvestor Day 2011 11Strength.Growth.Momentum.
  12. 12. Investor Day 2011 AND BEYONDStrength.Growth.Momentum.
  13. 13. be the premier electronics company in the worldInvestor Day 2011 13Strength.Growth.Momentum.
  14. 14. Global Strategy Drive growth in the core, services & high-growth product sets Core Businesses ECS Global Components ServicesInvestor Day 2011 14Strength.Growth.Momentum.
  15. 15. Premier Electronics Company in the World Computing Solutions Production Reverse Logistics Our comprehensive portfolio spans the full product lifecycle and globe Design IT Asset DispositionInvestor Day 2011 15Strength.Growth.Momentum.
  16. 16. Expect to Be a $26+ Billion Company Core Growth Incremental Growth Value-Added Services Driven by core Expand product offerings Expand Arrow’s competencies and geographic reach value proposition $26+ Bn $19 Bn Organic growth Expanded markets Higher-margin product sets Strategic acquisitions 2010 2013Investor Day 2011 16Strength.Growth.Momentum.
  17. 17. History of strength and growth Growing core and new services business Exceptional team Premier electronics company in the worldInvestor Day 2011 17Strength.Growth.Momentum.
  18. 18. Global EnterpriseComputing SolutionsAndy BryantPresident, Global ECS
  19. 19. Investor Day 2011 19Strength.Growth.Momentum.
  20. 20. Leading Specialized Channel Management Services Company • 2010 sales of $5.6 billion grew 13% Y/Y • Industry leading returns on working capital 2010 Revenue $5.6 Bn • Expanded global footprint to 28 geographies across North America and Europe • Approximately 13,000 value-added reseller partners • World-class data center products and solutions capabilities – unified communications North America EMEA managed servicesInvestor Day 2011 20Strength.Growth.Momentum.
  21. 21. Outperformed the Market in 2010 22%• Extended value Storage 14% distribution model to 20% new suppliers Software 4%• Higher EMEA supplier Services 18% penetration and 0% geographic reach Proprietary -9% -7%• Realigned go-to-market 33% model in North America ISS 23% -20 -10 0 10 20 30 40 Arrow Market Source: IDCInvestor Day 2011 21Strength.Growth.Momentum.
  22. 22. Investor Day 2011 AND BEYONDStrength.Growth.Momentum.
  23. 23. Market Outlook: Increased IT Spend • Macro environment is $2,200 more stable than in $2,000 recent years $1,800 • Top IT spending $1,600 priorities among CIOs:IT Spend ($Bn) $1,400 – Information $1,200 management $1,000 – Network $800 – Virtualization $600 • Expect to outgrow the $400 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E 2012E 2013E 2014E market in our key segments Source: IDC Investor Day 2011 23 Strength.Growth.Momentum.
  24. 24. Our Strategy: Differentiating Arrow ECS Grow in new Move Expand services market value offering segments upstream Increase cloud, Create new Evolve value managed services, opportunities with proposition and consulting and suppliers and integrate more education services customers closely with partnersInvestor Day 2011 24Strength.Growth.Momentum.
  25. 25. Our Strategy: Differentiating Arrow ECS Grow in new Move Expand services market value offering segments upstream Increase cloud, Create new Evolve value managed services, opportunities with proposition and consulting and suppliers and integrate more education services customers closely with partnersInvestor Day 2011 25Strength.Growth.Momentum.
  26. 26. Create New Growth Opportunities • Selectively expand into high growth emerging markets Expanding our TAM to Capitalize on • Established footprint in the Information Age (2010 TAM, $in billions) $17 $313 managed services and unified $12 communications $20 • Mobility and edge $21 infrastructure of datacenter are driving information boom $243 • Cloud expected to grow at 22% Core Emerging UC Mobility Cloud Future CAGR through 2015 TAM Markets TAM Source: IDC, International Monetary FundInvestor Day 2011 26Strength.Growth.Momentum.
  27. 27. Our Strategy: Differentiating Arrow ECS Grow in new Move value Expand services market upstream offering segments Evolve value Increase cloud, Create new proposition and managed services, opportunities with integrate more consulting and suppliers and closely with partners education services customersInvestor Day 2011 27Strength.Growth.Momentum.
  28. 28. Evolve Technology Mix to Meet Changing Needs Shift portfolio to high growth with innovative solutions that deliver greater market penetration Today - $243 Bn TAM 2013 - $313 Bn TAM United Comm, Virtualization, 5% Servers, 17% Servers, 24% 11% Software, 32% Security, 13% Services -Managed, 1% Software, 10% Storage, 21% Storage, 24% Services - Services - Networking, Maint, 17% Managed, 5% 4% Networking, Services - 3% Maint, 15% Investor Day 2011 28 Strength.Growth.Momentum.
  29. 29. Drive Value and Growth with Channel Management Channel Management Model • Expand VAD model to new Delivers customer value and growth suppliers and customers • Extends reach with current suppliers and customers Product portfolio and solutions • Adds services that enable partners to capitalize on new Services trends and outperform market • Incorporates business Information Assets intelligence that increases market penetrationInvestor Day 2011 29Strength.Growth.Momentum.
  30. 30. Our Strategy: Differentiating Arrow ECS Grow in new Move value Expand services market upstream offering segments Evolve value Increase cloud, Create new proposition and managed services, opportunities with integrate more consulting and suppliers and closely with partners education services customersInvestor Day 2011 30Strength.Growth.Momentum.
  31. 31. Grow Managed Services Unified communications, enterprise voice, video/data and software % of IT Spend by Segment • Arrow ECS’s Shared 2010 Technologies unified communications (UC) service IP telephony 56% strong, established offering WAN app delivery 3% • Enterprise proliferation of smart mobile devices driving UC growth • Video on enterprise network is Video conferencing expanding – telepresence, 23% WLAN 18% training, conferencing, etc. Source: IDCInvestor Day 2011 31Strength.Growth.Momentum.
  32. 32. Increase Private/Hybrid Cloud Adoption • In 2011, global customers will spend: Private vs. Public Cloud – $29 billion on cloud services (up 30% Y/Y) – $13 billion on private clouds Target Large • By 2011, adoption will increase to 33% of midsized U.S. firms Private / Medium Hybrid Cloud • Large and medium companies will prefer private / hybrid clouds • Among CIOs, cloud computing is Public Cloud the #1 one security concern for new Small technologies Source: IDC, IDC Enterprise Security Survey, 2010Investor Day 2011 32Strength.Growth.Momentum.
  33. 33. Strength, Growth and Momentum 2010 Successes: • Outpaced the market with revenue and operating income growth of 13%+ • Record returns on working capital • Industry-leading revenue growth of almost 20% in EMEA* – Led by organic matrix expansion strategy *Local currencyInvestor Day 2011 33Strength.Growth.Momentum.
  34. 34. Strength, Growth and Momentum Will Drive Future Success 2010 Successes: • Outpaced the market with revenue and operating income growth of 13%+ • Record returns on working capital • Industry-leading revenue growth of almost 20% in EMEA* – Led by organic matrix expansion strategy • Poised to capitalize on fast growing unified communications segment • Well positioned for the private/hybrid cloud build-out • Services strategy is accelerating *Local currencyInvestor Day 2011 34Strength.Growth.Momentum.
  35. 35. Poised for Exceptional Growth $ in billions Services $8.3Bn Move Value Upstream $.4 New Market $.4 Segments $.5 $.5 Core $.6 Growth $.7 $1.2 $5.6Bn $1.2 2010 2013 New Suppliers Shift to Higher Growth Unified Comm., Cloud Segments Mobility Expand in new and existing markets to drive higher growthInvestor Day 2011 35Strength.Growth.Momentum.
  36. 36. Session I Q&A
  37. 37. Coffee Break
  38. 38. Welcome BackGreer AvivSenior Manager, Investor Relations
  39. 39. Global ComponentsPeter KongPresident, Global Components
  40. 40. Investor Day 2011 40Strength.Growth.Momentum.
  41. 41. Leading Value-Added Service Provider to OEMs and EMS Companies • In 48 countries across North America, 2010 Revenue Europe, Asia-Pacific $13.2 Bn • North America market share leader 30% • Leading player in Europe and Asia-Pacific 39% • Over 100,000 customers across all end 31% markets and geographies • A large portion of customer base uses one or more value-added service • Ship over 36,000 line items per day and North America EMEA manage over 1 million part numbers Asia/PacificInvestor Day 2011 41Strength.Growth.Momentum.
  42. 42. Broad Technology Portfolio with 1,200+ Suppliers Semi = 69% PEMCO = 20% Computing/ memory = 11%Investor Day 2011 42Strength.Growth.Momentum.
  43. 43. Investor Day 2011 AND BEYONDStrength.Growth.Momentum.
  44. 44. Diverse Opportunities: Convergence of Electronics in Everything We DoInvestor Day 2011Strength.Growth.Momentum.
  45. 45. Demand Expected to Continue to Rebound $350 • Industry estimates call for mid-single $300 digit market growthCore Components TAM ($ Bn) • We expect to $250 continue to outgrow the $200 $307 $292 market $242 $223 – 2-3x GDP organic $150 growth $100 2008 2009 2010 2011E Source: SIA; core component TAM excluding memory and microprocessors, excluding JapanInvestor Day 2011 45Strength.Growth.Momentum.
  46. 46. Build on Core Expertise with Differentiated Value Niche Distribution Reverse Logistics Global Components Core Business Web EnablementInvestor Day 2011 46Strength.Growth.Momentum.
  47. 47. Expand TAM to Drive Future Growth 2010 TAM Approximate 2011 Growth Annual Sales Outlook Global Components Core $300 Bn $13.2 Bn 5% - 10% Converge & Verical $46 Bn $280 MM 16% Intechra $22 Bn $75MM 16% Richardson RFPD $11 Bn $360 MM 10% Nu Horizons $5 Bn $670 MM 5% - 10% Acquisitions represent an almost 30% increase in addressable marketInvestor Day 2011 47Strength.Growth.Momentum.
  48. 48. We are the Technology Product Lifecycle LeaderTransimNew Product Supply Chain Reverse Logistics /Introduction Product Lifecycle IT Asset Disposition Note: Not to scale; size gives general sense of TAMInvestor Day 2011 48Strength.Growth.Momentum.
  49. 49. Accelerated Profitable Growth New Global Components • Expanded market base TAM • Elevated margins Services Core Niche • Operational excellence Web Enablement MarginInvestor Day 2011 49Strength.Growth.Momentum.
  50. 50. Poised for Exceptional Growth $ in billions Cross Services $18.0 Selling $.5 Vertical Markets $.8 Core Growth $1.5 $2.0 $13.2 2010 2013 Vertical Market Shift to Higher Growth Strengthen Supplier Emerging Expansion Segments Partnerships Markets Expand in new and existing markets to drive higher growthInvestor Day 2011 50Strength.Growth.Momentum.
  51. 51. Arrow’s ServicesTransformationErnie KeithVice President, Global Operations & Value-Added Services
  52. 52. Significant Scope and Scale in Global Logistics and Value-Added Services Capabilities Venlo Lunda Boston Reno Milan Beijing Phoenix Cleveland Suzhou Seoul Columbus Shenzhen Shanghai Nogales Dallas Taipei Guadalajara Bangalore Hong Kong Manila Mexico City Penang Manaus Sorocaba Singapore Sao Paulo Buenos Aires Johannesburg Melbourne Wellington Arrow Global Components Warehouse Arrow Sales TerritoryInvestor Day 2011 52Strength.Growth.Momentum.
  53. 53. Arrow Runs One of the Most Complex Supply Chains in the World Original Equipment Contract Manufacturer (OEM) Manufacturer Customer SupplierInvestor Day 2011 53Strength.Growth.Momentum.
  54. 54. Our Unique Competencies Position us Well Extensive service offering Expertise you can leverage Proven track record Fueled by industry-leading relationships Global supply chain footprintInvestor Day 2011Strength.Growth.Momentum.
  55. 55. Investor Day 2011Strength.Growth.Momentum.
  56. 56. 2010 Highlights• Exceptional organic • Significant margin sales growth expansion • Best-in-class • Strategic expansion of execution the portfolioInvestor Day 2011 56Strength.Growth.Momentum.
  57. 57. Investor Day 2011 AND BEYONDStrength.Growth.Momentum.
  58. 58. Leadership in Lifecycle Services Grow to $1 Bn in revenue by 2013 • Expand value proposition and global scale • Establish leadership in targeted segments • Deliver exceptional execution and best-in-class customer service Drive profitable growthInvestor Day 2011 58Strength.Growth.Momentum.
  59. 59. Lifecycle Services Is a Very Large, Fast-Growing, Fragmented Market Production Reverse Logistics $100 Bn total addressable market Design IT Asset DispositionInvestor Day 2011 59Strength.Growth.Momentum.
  60. 60. Our Portfolio Now Spans the Entire Lifecycle Design Production Reverse Logistics IT Asset Disposition • Application • Supply chain, • Product returns • Secure data Engineering logistics • Spare parts erasure • Custom logic • Turnkey • Excess • Reuse solutions • Programming, Inventory • Recycle • System and module tape and reel mgmt. design • Integration • Remarketing • 3rd-party design • Assembly Go-to-market requirements After-market requirementsInvestor Day 2011 60Strength.Growth.Momentum.
  61. 61. Poised for Exceptional Growth Roadmap to $1 billion $1 Bn+ $100MM Sales $210MM $225MM $480MM $220MM 2009 2010 2013 Reverse Logistics IT Asset Other Value- Disposition Add ServicesInvestor Day 2011 61Strength.Growth.Momentum.
  62. 62. Arrow’s Financial HealthPaul ReillyExecutive Vice President, Finance and Operations & CFO
  63. 63. Operating Performance is a Foundation of Strength Revenue ($Bn) Operating Expense*/Sales $18.7 15.0% 12% (630) CAGR bps $7.3 8.7% 2002 2010 2002 2010 EBITDA* ($MM) Diluted EPS* $862 $4.13 17% 51% CAGR CAGR $253 $0.15 2002 2010 2002 2010 *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparabilityInvestor Day 2011 63Strength.Growth.Momentum.
  64. 64. Transformed Balance Sheet to Further Strengthen Arrow Available Liquidity Net Debt ($MM) ($MM, inc. cash) $2,326 $1,399 $1,444 $896 2002 2010 2002 2010 Net Debt to Capital Net Debt to EBITDA* 53% 5.5x 22% 1.0x 2002 2010 2002 2010 *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparabilityInvestor Day 2011 64Strength.Growth.Momentum.
  65. 65. Emerged Even Stronger from the Recession Industry-leading performance in 2010 ($ in millions) 2008 2010 Change Sales $16,761 $18,745 +12%  Outgrew the market *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **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 $150MM)Investor Day 2011 65Strength.Growth.Momentum.
  66. 66. Emerged Even Stronger from the Recession Industry-leading performance in 2010 ($ in millions) 2008 2010 Change Sales $16,761 $18,745 +12%  Outgrew the market  Operating income grew more than Operating Income* $606 $784 +29% 2x faster than sales *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **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 $150MM)Investor Day 2011 66Strength.Growth.Momentum.
  67. 67. Emerged Even Stronger from the Recession Industry-leading performance in 2010 ($ in millions) 2008 2010 Change Sales $16,761 $18,745 +12%  Outgrew the market  Operating income grew more than Operating Income* $606 $784 +29% 2x faster than sales OI %* 3.6% 4.2% +60bps  Strong rebound in operating margin *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **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 $150MM)Investor Day 2011 67Strength.Growth.Momentum.
  68. 68. Emerged Even Stronger from the Recession Industry-leading performance in 2010 ($ in millions) 2008 2010 Change Sales $16,761 $18,745 +12%  Outgrew the market  Operating income grew more than Operating Income* $606 $784 +29% 2x faster than sales OI %* 3.6% 4.2% +60bps  Strong rebound in operating margin Net Income* $356 $494 +39%  Net income grew 3x growth in sales *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **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 $150MM)Investor Day 2011 68Strength.Growth.Momentum.
  69. 69. Emerged Even Stronger from the Recession Industry-leading performance in 2010 ($ in millions) 2008 2010 Change Sales $16,761 $18,745 +12%  Outgrew the market  Operating income grew more than Operating Income* $606 $784 +29% 2x faster than sales OI %* 3.6% 4.2% +60bps  Strong rebound in operating margin Net Income* $356 $494 +39%  Net income grew 3x growth in sales EPS* $2.93 $4.13 +41%  Record level EPS *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **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 $150MM)Investor Day 2011 69Strength.Growth.Momentum.
  70. 70. Emerged Even Stronger from the Recession Industry-leading performance in 2010 ($ in millions) 2008 2010 Change Sales $16,761 $18,745 +12%  Outgrew the market  Operating income grew more than Operating Income* $606 $784 +29% 2x faster than sales OI %* 3.6% 4.2% +60bps  Strong rebound in operating margin Net Income* $356 $494 +39%  Net income grew 3x growth in sales EPS* $2.93 $4.13 +41%  Record level EPS ROIC** 9.3% 14.0% +470bps  Significant increase in ROIC *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **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 $150MM)Investor Day 2011 70Strength.Growth.Momentum.
  71. 71. Emerged Even Stronger from the Recession Industry-leading performance in 2010 ($ in millions) 2008 2010 Change Sales $16,761 $18,745 +12%  Outgrew the market  Operating income grew more than Operating Income* $606 $784 +29% 2x faster than sales OI %* 3.6% 4.2% +60bps  Strong rebound in operating margin Net Income* $356 $494 +39%  Net income grew 3x growth in sales EPS* $2.93 $4.13 +41%  Record level EPS ROIC** 9.3% 14.0% +470bps  Significant increase in ROIC Cash Flow $620 $221 -$399  Cash flow positive throughout the cycle *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **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)Investor Day 2011 71Strength.Growth.Momentum.
  72. 72. Continue to Create Shareholder Value • ROIC > WACC • Generate positive cash flow throughout the cycle – Cumulative operating cash flow of almost $6 billion since 2001 – Manage working capital at “best-in-class” levels • Absolute EPS • EPS growth Differentiated operating income marginInvestor Day 2011 72Strength.Growth.Momentum.
  73. 73. Continue to Generate Superior Returns Return on Invested Capital Return on Working Capital as a % of WACC 200% 40% 180% 35% 160% 30% 140% 25% 120% 100% 20% 80% 15% 60% 10% 40% 20% 5% 0% 0% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010 WACCInvestor Day 2011 73Strength.Growth.Momentum.
  74. 74. Generated Positive Cash Flow Throughout the Cycle Capital Allocation Strategy Cumulative Operating Cash Flow ($MM) • Invest in the business $6,000 $5,500 • Acquisitions that meet our $5,000 value criteria to strategically $4,500 accelerate growth $4,000 $3,500 • Evaluate options to return $3,000 value to shareholders $2,500 $2,000 • Maintain investment grade $1,500 rating over the long-term $1,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Investor Day 2011 74Strength.Growth.Momentum.
  75. 75. Generated Industry Leading EPS in the Last Five Years $14.58 $13.38 $12.46 $10.42 $7.96 $6.24 $1.56 $1.24 $0.81 ARW Earnings Per Share* *Cumulative EPS for the last five years beginning April 1, 2006; Source: company financial statements; Represents GAAP basis (excluding goodwill impairments) through 1Q11; Companies included: AVT, IM, SNX, TECD, BHE, CLS, FLEX, JBLInvestor Day 2011 75Strength.Growth.Momentum.
  76. 76. Earnings Per Share Growth Has Been Exceptional 51% EPS CAGR 2002 - 2010 $7.00 $6.00 Absolute EPS* $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E** 2012E** *Represents GAAP measure adjusted to exclude the impact of restructuring and other items affecting comparability; **First Call estimate as of 5/24/11Investor Day 2011 76Strength.Growth.Momentum.
  77. 77. Grown and Diversified by Capitalizing on New Opportunities 2002 2010 $7Bn $19Bn ECS Europe 8% Americas ECS ECS Americas 27% America America 28% 30% 21% Asia 9% Europe Asia Europe 33% 21% 22% Global Components Global ECSInvestor Day 2011 77Strength.Growth.Momentum.
  78. 78. $26+ Bn Premier Electronics Company Adjacent markets + Synergistic transactions Geographic and services expansion Arrow Core $19Bn Diversified Technology Lifecycle Products and ServicesInvestor Day 2011 78Strength.Growth.Momentum.
  79. 79. Three-Year Targets Reflect Continued EPS Growth and Cash Flow Generation Three-Year Targets Sales $26+ Billion Earnings Per Share* $6.00 - $7.00 Cash Flow from Operations 70% of Net Income Return on Working Capital 30%+ Return on Invested Capital** 12.5% - 15.0% Operating Margin* Targets Global Components 5.3% - 6.6% Global ECS 4.3% - 5.0% *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)Investor Day 2011 79Strength.Growth.Momentum.
  80. 80. In Summary… • We are well positioned for: – Strong organic growth – Growing earnings in the double digit range – Exceptional cash flow – ROIC well ahead of WACC • We are continually looking for ways to operate our business more efficiently • We are committed to continuing to increase shareholder valueInvestor Day 2011 80Strength.Growth.Momentum.
  81. 81. Session II Q&A
  82. 82. Closing CommentsMike LongChairman, President, & CEO
  83. 83. be the premier electronics company in the worldInvestor Day 2011Strength.Growth.Momentum.
  84. 84. Investor Day 2011Strength.Growth.Momentum.

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