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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Arrow Electronics Inc | NYSE:ARW | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
2.18 | 1.78% | 124.89 | 125.135 | 121.27 | 123.32 | 542,271 | 01:00:00 |
☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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New York
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11-1806155
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification Number)
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9201 East Dry Creek Road
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80112
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Centennial
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CO
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(Zip Code)
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(Address of principal executive offices)
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(303)
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824-4000
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $1 par value
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ARW
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Name
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Age
|
Position
|
Michael J. Long
|
61
|
Chairman, President, and Chief Executive Officer
|
W. Victor Gao
|
40
|
Senior Vice President, Chief Marketing Officer
|
Lily Y. Hughes
|
56
|
Senior Vice President, Chief Legal Officer
|
Sean J. Kerins
|
57
|
President, Arrow Global Enterprise Computing Solutions
|
Andy King
|
56
|
President, Arrow Global Components
|
Chuck Kostalnick
|
54
|
Senior Vice President, Chief Supply Chain Officer
|
Vincent P. Melvin
|
56
|
Senior Vice President, Chief Information Officer
|
M. Catherine Morris
|
61
|
Senior Vice President, Chief Strategy Officer
|
Chris D. Stansbury
|
54
|
Senior Vice President, Chief Financial Officer
|
Gretchen K. Zech
|
50
|
Senior Vice President, Chief Human Resources Officer
|
•
|
grant liens on assets;
|
•
|
make investments;
|
•
|
merge, consolidate, or transfer all or substantially all of its assets;
|
•
|
incur additional debt; or
|
•
|
engage in certain transactions with affiliates.
|
•
|
import and export regulations that could erode profit margins or restrict exports;
|
•
|
the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations;
|
•
|
potential restrictions on transfers of funds;
|
•
|
import and export tariffs, duties and value-added taxes;
|
•
|
transportation delays and interruptions;
|
•
|
the burden and cost of compliance with complex multi-national tax laws and regulations;
|
•
|
uncertainties arising from local business practices and cultural considerations;
|
•
|
foreign laws that potentially discriminate against companies which are headquartered outside that jurisdiction;
|
•
|
stringent antitrust regulations in local jurisdictions;
|
•
|
volatility associated with sovereign debt of certain international economies;
|
•
|
the uncertainty surrounding the implementation and effects of Brexit;
|
•
|
potential military conflicts and political risks; and
|
•
|
currency fluctuations, which the company attempts to minimize through traditional hedging instruments.
|
•
|
effectively combining the acquired operations, technologies, or products;
|
•
|
unanticipated costs or assumed liabilities, including those associated with regulatory actions or investigations;
|
•
|
not realizing the anticipated financial benefit from the acquired companies;
|
•
|
diversion of management's attention;
|
•
|
negative effects on existing customer and supplier relationships; and
|
•
|
potential loss of key employees of the acquired companies.
|
•
|
result in substantial cost to the company;
|
•
|
divert management's attention and resources;
|
•
|
be time consuming to defend;
|
•
|
result in substantial damage awards; or
|
•
|
cause product shipment delays.
|
Item 5.
|
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|
Plan Category
|
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
Number of Securities Remaining Available for Future Issuance
|
||||
Equity compensation plans approved by security holders
|
|
2,850,763
|
|
|
$
|
71.26
|
|
|
7,622,287
|
|
Total
|
|
2,850,763
|
|
|
$
|
71.26
|
|
|
7,622,287
|
|
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
Arrow Electronics
|
100
|
94
|
123
|
139
|
119
|
146
|
Peer Group
|
100
|
96
|
114
|
126
|
91
|
146
|
S&P 400 Midcap Stock Index
|
100
|
98
|
118
|
137
|
122
|
154
|
Month of Board Approval
|
|
Dollar Value Approved for Repurchase
|
|
Dollar Value of Shares Repurchased
|
|
Approximate
Dollar Value of
Shares that May
Yet be
Purchased
Under the
Program
|
||||||
December 2016
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
$
|
—
|
|
December 2018
|
|
600,000
|
|
|
261,463
|
|
|
338,537
|
|
|||
Total
|
|
$
|
1,000,000
|
|
|
$
|
661,463
|
|
|
$
|
338,537
|
|
Month
|
|
Total
Number of
Shares
Purchased (a)
|
|
Average
Price Paid
per Share
|
|
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Program (b)
|
|
Approximate
Dollar Value of
Shares that May
Yet be
Purchased
Under the
Program
|
||||||
September 29 through October 26, 2019
|
|
268,316
|
|
|
$
|
74.54
|
|
|
268,316
|
|
|
$
|
418,538
|
|
October 27 through November 23, 2019
|
|
294,563
|
|
|
79.44
|
|
|
294,563
|
|
|
395,138
|
|
||
November 24 through December 31, 2019
|
|
685,778
|
|
|
82.55
|
|
|
685,661
|
|
|
338,537
|
|
||
Total
|
|
1,248,657
|
|
|
|
|
|
1,248,540
|
|
|
|
|
(a)
|
Includes share repurchases under the Share-Repurchase Programs and those associated with shares withheld from employees for stock-based awards, as permitted by the Omnibus Incentive Plan, in order to satisfy the required tax withholding obligations.
|
(b)
|
The difference between the “total number of shares purchased” and the “total number of shares purchased as part of publicly announced program” for the quarter ended December 31, 2019 is 117 shares, which relate to shares withheld from employees for stock-based awards, as permitted by the Omnibus Incentive Plan, in order to satisfy the required tax withholding obligations. The purchase of these shares were not made pursuant to any publicly announced repurchase plan.
|
For the years ended December 31:
|
|
2019 (a)
|
|
2018 (b)
|
|
2017 (c)
|
|
2016 (d)
|
|
2015 (e)
|
||||||||||
Sales
|
|
$
|
28,916,847
|
|
|
$
|
29,676,768
|
|
|
$
|
26,554,563
|
|
|
$
|
23,487,872
|
|
|
$
|
23,282,020
|
|
Gross profit
|
|
3,298,381
|
|
|
3,700,912
|
|
|
3,356,968
|
|
|
3,144,322
|
|
|
3,035,250
|
|
|||||
Operating income
|
|
107,696
|
|
|
1,147,512
|
|
|
945,736
|
|
|
876,826
|
|
|
824,482
|
|
|||||
Net income (loss) attributable to shareholders
|
|
(204,087
|
)
|
|
716,195
|
|
|
402,176
|
|
|
522,815
|
|
|
497,726
|
|
|||||
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(2.44
|
)
|
|
$
|
8.19
|
|
|
$
|
4.54
|
|
|
$
|
5.75
|
|
|
$
|
5.26
|
|
Diluted
|
|
$
|
(2.44
|
)
|
|
$
|
8.10
|
|
|
$
|
4.48
|
|
|
$
|
5.68
|
|
|
$
|
5.20
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At December 31:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable, net and inventories
|
|
$
|
11,959,807
|
|
|
$
|
12,824,141
|
|
|
$
|
11,428,106
|
|
|
$
|
9,566,080
|
|
|
$
|
8,627,908
|
|
Total assets
|
|
16,400,796
|
|
|
17,784,445
|
|
|
16,459,267
|
|
|
14,203,479
|
|
|
13,021,930
|
|
|||||
Long-term debt
|
|
2,640,129
|
|
|
3,239,115
|
|
|
2,933,045
|
|
|
2,696,334
|
|
|
2,380,575
|
|
|||||
Shareholders' equity
|
|
4,811,919
|
|
|
5,324,990
|
|
|
4,949,255
|
|
|
4,411,136
|
|
|
4,142,443
|
|
(a)
|
Operating income and net income attributable to shareholders include identifiable intangible asset amortization of $48.1 million, loss on disposition of businesses, net of $21.3 million, impairments of $698.2 million, and restructuring, integration, and other charges of $89.8 million. Net income attributable to shareholders also includes a net gain on investment of $11.8 million, pension settlement of $20.1 million, and tax expense of $21.7 million related to the repatriation of foreign earnings, the wind down of the personal computer and mobility asset disposition business, and the Tax Act.
|
(b)
|
Operating income and net income attributable to shareholders include identifiable intangible asset amortization of $49.4 million, loss on disposition of businesses, net of $3.6 million, and restructuring, integration, and other charges of $60.4 million. Net income attributable to shareholders also includes a net loss on investment of $14.2 million, impact of Tax Act of $28.3 million, and pension settlement of $1.7 million.
|
(c)
|
Operating income and net income attributable to shareholders include identifiable intangible asset amortization of $50.1 million, loss on disposition of businesses, net of $21.0 million, and restructuring, integration, and other charges of $74.6 million. Net income attributable to shareholders also includes a net loss on investment of $6.6 million, pension settlement of $16.7 million, loss on extinguishment of debt of $59.5 million, and the impact of the Tax Act of $124.7 million.
|
(d)
|
Operating income and net income attributable to shareholders include identifiable intangible asset amortization of $54.9 million and restructuring, integration, and other charges of $61.4 million. Net income attributable to shareholders also includes a net gain on investment of $2.9 million, and a pension settlement of $12.2 million.
|
(e)
|
Operating income and net income attributable to shareholders include identifiable intangible asset amortization of $51.0 million and restructuring, integration, and other charges of $68.8 million. Net income attributable to shareholders also includes a loss on extinguishment of debt of $2.9 million and a loss on investment, net of $1.0 million.
|
•
|
goodwill and other impairments of $623.8 million in 2019;
|
•
|
Digital inventory write-downs, net of $22.3 million in 2019;
|
•
|
AFS notes receivables reserves and inventory write-downs, net of $18.0 million in 2019;
|
•
|
losses from wind down of business of $162.4 million in 2019 and $19.7 million in 2018;
|
•
|
restructuring, integration, and other charges (excluding the impact of wind down) of $78.4 million in 2019 and $49.3 million in 2018;
|
•
|
identifiable intangible asset amortization (excluding the impact of wind down) of $42.4 million in 2019 and $38.2 million million in 2018;
|
•
|
net gain on investments of $11.8 million in 2019 and net loss on investments of $14.2 million in 2018;
|
•
|
loss on disposition of businesses, net, of $1.9 million in 2019 and $3.6 million in 2018;
|
•
|
pension settlement of $20.1 million in 2019 and $1.7 million in 2018;
|
•
|
income tax expense of $1.7 million in 2019 related to repatriation of foreign earnings and the Tax Act, and income tax benefit of $28.3 million in 2018 related to the Tax Act;
|
•
|
income tax expense of $20.0 million related to the wind down of business; and
|
•
|
interest expense of $0.7 million for 2019 related to an uncertain tax position related to the impact of the Tax Act.
|
•
|
Sales, gross profit, and operating expenses as adjusted for the impact of changes in foreign currencies (referred to as changes in foreign currencies) by re-translating prior period results at current period foreign exchange rates, the impact of dispositions by adjusting the company's operating results for businesses disposed, as if the dispositions had occurred at the beginning of the earliest period presented (referred to as dispositions), the impact of the company's personal computer and mobility asset disposition business (referred to as wind down), the impact of inventory write-downs related to the digital business (referred to as “digital inventory write-downs and recoveries”), and the impact of the notes receivable reserves and inventory write-downs related to the AFS business (referred to as “AFS notes receivable reserves and credits” and “AFS inventory write-downs and recoveries,” respectively).
|
•
|
Operating income as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, loss on disposition of businesses, net, AFS notes receivable reserves and credits and inventory write-downs and recoveries, digital inventory write-downs and recoveries, the impact of non-cash charges related to goodwill, trade names, and long-lived assets, and the impact of wind down.
|
•
|
Net income attributable to shareholders as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, and loss on disposition of businesses, net, AFS notes receivable reserves and credits and inventory write-downs and recoveries, digital inventory write-downs and recoveries, the impact of non-cash charges related to goodwill, trade names, and long-lived assets, the impact of wind down, pension settlements, net gains and losses on investments, and certain tax adjustments including related interest expense.
|
|
2019
|
|
2018
|
|
Change
|
|||||
Consolidated sales, as reported
|
$
|
28,917
|
|
|
$
|
29,677
|
|
|
(2.6
|
)%
|
Impact of changes in foreign currencies
|
—
|
|
|
(513
|
)
|
|
|
|||
Impact of dispositions and wind down*
|
(252
|
)
|
|
(496
|
)
|
|
|
|||
Consolidated sales, as adjusted*
|
$
|
28,665
|
|
|
$
|
28,667
|
|
|
flat
|
|
|
|
|
|
|
|
|||||
Global components sales, as reported
|
$
|
20,251
|
|
|
$
|
20,857
|
|
|
(2.9
|
)%
|
Impact of changes in foreign currencies
|
—
|
|
|
(338
|
)
|
|
|
|||
Impact of dispositions and wind down
|
(240
|
)
|
|
(416
|
)
|
|
|
|||
Global components sales, as adjusted*
|
$
|
20,010
|
|
|
$
|
20,103
|
|
|
(0.5
|
)%
|
|
|
|
|
|
|
|||||
Global ECS sales, as reported
|
$
|
8,666
|
|
|
$
|
8,820
|
|
|
(1.7
|
)%
|
Impact of changes in foreign currencies
|
—
|
|
|
(175
|
)
|
|
|
|||
Impact of dispositions
|
(11
|
)
|
|
(80
|
)
|
|
|
|||
Global ECS sales, as adjusted*
|
$
|
8,655
|
|
|
$
|
8,564
|
|
|
1.1
|
%
|
|
|
2019
|
|
2018
|
|
Change
|
||||||
Consolidated gross profit, as reported
|
|
$
|
3,298
|
|
|
$
|
3,701
|
|
|
(10.9
|
)%
|
|
Impact of changes in foreign currencies
|
|
—
|
|
|
(77
|
)
|
|
|
|
|||
Impact of disposition and wind down
|
|
(3
|
)
|
|
(85
|
)
|
|
|
|
|||
Digital and AFS inventory write-downs and credits
|
|
24
|
|
|
—
|
|
|
|
|
|||
Consolidated gross profit, as adjusted*
|
|
$
|
3,320
|
|
|
$
|
3,539
|
|
|
(6.2
|
)%
|
|
Consolidated gross profit as a percentage of sales, as reported
|
|
11.4
|
%
|
|
12.5
|
%
|
|
(110
|
)
|
bps
|
||
Consolidated gross profit as a percentage of sales, as adjusted
|
|
11.6
|
%
|
|
12.3
|
%
|
|
(70
|
)
|
bps
|
|
|
2019
|
|
2018
|
|
Change
|
||||||
Selling, general, and administrative expenses, as reported
|
|
$
|
2,192
|
|
|
$
|
2,303
|
|
|
(4.8
|
)%
|
|
Depreciation and amortization, as reported
|
|
190
|
|
|
186
|
|
|
1.8
|
%
|
|
||
Operating expenses, as reported*
|
|
$
|
2,381
|
|
|
$
|
2,489
|
|
|
(4.3
|
)%
|
|
Impact of changes in foreign currencies
|
|
—
|
|
|
(49
|
)
|
|
|
|
|||
Impact of dispositions and wind down
|
|
(60
|
)
|
|
(93
|
)
|
|
|
|
|||
AFS notes receivable (reserves) and credits
|
|
(16
|
)
|
|
—
|
|
|
|
|
|||
Operating expenses, as adjusted
|
|
$
|
2,305
|
|
|
$
|
2,347
|
|
|
(1.8
|
)%
|
|
Operating expenses as a percentage of sales, as reported
|
|
8.2
|
%
|
|
8.4
|
%
|
|
(20
|
)
|
bps
|
||
Operating expenses as a percentage of sales, as adjusted
|
|
8.0
|
%
|
|
8.2
|
%
|
|
(20
|
)
|
bps
|
|
|
2019
|
|
2018
|
|
Change
|
||||||
Consolidated operating income, as reported
|
|
$
|
108
|
|
|
$
|
1,148
|
|
|
(90.6
|
)%
|
|
Identifiable intangible asset amortization**
|
|
42
|
|
|
38
|
|
|
|
|
|
||
Restructuring, integration, and other charges**
|
|
78
|
|
|
49
|
|
|
|
|
|
||
Loss on disposition of businesses, net**
|
|
2
|
|
|
4
|
|
|
|
|
|||
AFS notes receivable reserve and inventory write-downs (credits)
|
|
18
|
|
|
—
|
|
|
|
|
|||
Digital inventory write-downs
|
|
22
|
|
|
—
|
|
|
|
|
|||
Goodwill and other impairments**
|
|
624
|
|
|
—
|
|
|
|
|
|||
Impact of wind down**
|
|
162
|
|
|
20
|
|
|
|
|
|||
Consolidated operating income, as adjusted*
|
|
$
|
1,057
|
|
|
$
|
1,259
|
|
|
(16.0
|
)%
|
|
Consolidated operating income as a percentage of sales, as reported
|
|
0.4
|
%
|
|
3.9
|
%
|
|
(350
|
)
|
bps
|
||
Consolidated operating income, as adjusted, as a percentage of sales, as reported
|
|
3.7
|
%
|
|
4.2
|
%
|
|
(50
|
)
|
bps
|
|
2019
|
|
2018
|
||||
Net income (loss) attributable to shareholders, as reported
|
$
|
(204
|
)
|
|
$
|
716
|
|
Identifiable intangible asset amortization**
|
42
|
|
|
37
|
|
||
Restructuring, integration, and other charges**
|
78
|
|
|
49
|
|
||
Loss on disposition of businesses, net**
|
2
|
|
|
4
|
|
||
(Gain) loss on investments, net
|
(12
|
)
|
|
14
|
|
||
AFS notes receivable reserves and inventory write-downs (credits)
|
18
|
|
|
—
|
|
||
Digital inventory write-downs and credits
|
22
|
|
|
—
|
|
||
Goodwill and other impairments**
|
624
|
|
|
—
|
|
||
Impact of wind down**
|
162
|
|
|
20
|
|
||
Interest expense related to tax adjustments
|
1
|
|
|
—
|
|
||
Pension settlements
|
20
|
|
|
2
|
|
||
Tax effect of adjustments above
|
(139
|
)
|
|
(36
|
)
|
||
Tax Act and other tax adjustments
|
22
|
|
|
(28
|
)
|
||
Net income attributable to shareholders, as adjusted*
|
$
|
636
|
|
|
$
|
778
|
|
|
Within 1 Year
|
|
1-3 Years
|
|
4-5 Years
|
|
After 5 Years
|
|
Total
|
||||||||||
Debt
|
$
|
331,431
|
|
|
$
|
885,996
|
|
|
$
|
803,260
|
|
|
$
|
950,873
|
|
|
$
|
2,971,560
|
|
Interest on long-term debt
|
102,305
|
|
|
169,645
|
|
|
117,869
|
|
|
79,180
|
|
|
468,999
|
|
|||||
Operating leases
|
75,841
|
|
|
109,584
|
|
|
66,142
|
|
|
129,834
|
|
|
381,401
|
|
|||||
Purchase obligations (a)
|
4,639,850
|
|
|
394,332
|
|
|
32,336
|
|
|
7,550
|
|
|
5,074,068
|
|
|||||
Other (b)
|
20,445
|
|
|
25,390
|
|
|
13,301
|
|
|
17,556
|
|
|
76,692
|
|
|||||
|
$
|
5,169,872
|
|
|
$
|
1,584,947
|
|
|
$
|
1,032,908
|
|
|
$
|
1,184,993
|
|
|
$
|
8,972,720
|
|
(a)
|
Amounts represent an estimate of non-cancelable inventory purchase orders and other contractual obligations related to information technology and facilities as of December 31, 2019. Most of the company's inventory purchases are pursuant to authorized distributor agreements, which are typically cancelable by either party at any time or on short notice, usually within a few months.
|
(b)
|
Includes amounts relating to the Tax Act transition tax payable, personnel and certain other costs resulting from restructuring and integration activities, and other miscellaneous contractual obligations.
|
Month of Board Approval
|
|
Dollar Value Approved for Repurchase
|
|
Dollar Value of Shares Repurchased
|
|
Approximate
Dollar Value of
Shares that May
Yet be
Purchased
Under the
Program
|
||||||
December 2016
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
$
|
—
|
|
December 2018
|
|
600,000
|
|
|
261,463
|
|
|
338,537
|
|
|||
Total
|
|
$
|
1,000,000
|
|
|
$
|
661,463
|
|
|
$
|
338,537
|
|
•
|
macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets;
|
•
|
industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development;
|
•
|
cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;
|
•
|
overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;
|
•
|
other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, contemplation of bankruptcy, or litigation;
|
•
|
events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and
|
•
|
a sustained decrease in share price (considered in both absolute terms and relative to peers).
|
|
Evaluation of net realizable value adjustments to inventories for excess or obsolescence
|
|
|
Description of the Matter
|
At December 31, 2019, the Company’s inventories were $3.477 billion. As discussed in Note 1 to the consolidated financial statements, inventories are stated at the lower of cost or net realizable value. Write-downs of inventories to net realizable value for excess or obsolete inventories are based upon forecasted sales, contractual supplier protection and stock rotation privileges, and the age of inventories.
|
|
Auditing management’s lower of cost or net realizable value determination for excess or obsolete inventories was especially challenging and highly judgmental because of the estimation uncertainty in determining demand for aging inventory and future market conditions, after considering supplier protection provisions. Inventories not supported by forecasted sales orders or stock rotation privileges are written down to lower of cost or net realizable value based on the age of the inventories and inventory turnover.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s determination of the lower of cost or net realizable value for excess and obsolete inventories. For example, we tested controls over management’s review of excess and obsolescence inventories which includes their review of the assumptions supporting current product demand, supplier protections, evaluation of aging of inventories and consideration of inventory turnover.
Our audit procedures to test the net realizable value adjustments to inventories for excess or obsolescence included, among others, testing the completeness and accuracy of the underlying data used in management’s assessment. We evaluated the reasonableness of management’s assumptions by performing a retrospective review of the prior year assumptions to actual activity, including write-off history. We evaluated the appropriateness and consistency of management’s methods and assumptions used in developing their estimates around forecasted sales and expected stock rotation privileges. We tested the aging of inventories. We held discussions with senior financial and operating management to determine whether any strategic or operational changes in the business would impact expected demand or related carrying value of inventory. We assessed the reasonableness of management’s general excess and obsolescence assumptions by comparing those assumptions to historical data and trends, as well as reviewing such assumptions for management bias. We considered macroeconomic trends within the industry, including trends that could impact the movement of the products provided by the Company. We also tested historical sales of inventory items on hand at year-end, and we reviewed historical gross margins to identify items being sold at a loss to evaluate the completeness of management’s write down of inventories.
|
|
|
|
Evaluation of Americas Components and Asia-Pacific Components Goodwill for Impairment
|
Description of the Matter
|
At December 31, 2019, the Company’s consolidated goodwill was $2,061 million. As discussed in Note 4 to the consolidated financial statements, goodwill is tested for impairment annually as of the first day of the fourth quarter, or more frequently if indicators of potential impairment exist. During the second quarter of 2019, as a result of the Company’s downward revision of forecasted future earnings, the Company determined it was more likely than not that an impairment existed within the Americas components and Asia-Pacific components reporting units and performed an interim goodwill impairment test. As a result, the Company recorded a $509 million impairment related to the America’s components reporting unit, with approximately $600 million of goodwill remaining within the reporting unit, and a full impairment charge of $61 million attributable to the Asia-Pacific components reporting unit. As of the first day of the fourth quarter, the Company’s annual impairment test did not result in any additional impairment of goodwill.
|
|
Auditing management’s interim impairment test related to the Americas components and Asia-Pacific component reporting units and auditing its annual goodwill impairment test related to the Americas Components reporting unit was especially challenging due to the complexity of forecasting the long-term cash flows of these businesses and the significant estimation uncertainty of the assumptions included within such forecasts. The significant estimation uncertainty was primarily due to the sensitivity of the reporting units’ fair value to changes in the underlying assumptions used in the income approach which include, among others, forecasted revenue, gross profit margins, operating income margins, forecasted working capital levels, and long-term growth and discount rates. These significant assumptions are inherently uncertain and require a high degree of estimation and judgment based on an evaluation of historical performance, current industry and global economic and geo-political conditions, and the timing and success of the Company’s ability to implement strategic initiatives.
|
|
|
How We Addressed the Matter in Our Audit
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s goodwill impairment review process, including controls over management’s review of the significant assumptions described above and controls over management’s review of its annual financial forecasts.
|
|
To test the estimated fair value of the Americas components and Asia-Pacific components reporting units, we performed audit procedures that included, among others, involving a specialist to assist in assessing the Company’s fair value methodologies and its development and calculation of the long-term growth and discount rates. We assessed the reasonableness of the Company’s assumptions around forecasted revenue, gross profit margins, operating income margins, forecasted working capital levels, long-term growth and discount rates, and tax rates by comparing those assumptions to recent historical performance, current economic and industry trends, and annual financial forecasts presented to the Board of Directors and communicated to external analysts. We also assessed the reasonableness of estimates included in the Company’s annual financial forecast by evaluating how such assumptions compared to economic, industry, and peer expectations. We evaluated management’s historical accuracy of forecasting revenues, gross profit margin, operating income margins, and capital expenditures by comparing past forecasts to subsequent actual activity. We performed various sensitivity analyses around these significant assumptions to understand the impact on the fair value calculation and focused our testing accordingly. We evaluated the Company’s determination of its reporting units and tested the allocation of net assets to each its reporting units. We also tested the Company’s reconciliation of the fair value of its reporting units to the Company’s market value as of the impairment test dates.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Sales
|
|
$
|
28,916,847
|
|
|
$
|
29,676,768
|
|
|
$
|
26,554,563
|
|
Cost of sales
|
|
25,618,466
|
|
|
25,975,856
|
|
|
23,197,595
|
|
|||
Gross profit
|
|
3,298,381
|
|
|
3,700,912
|
|
|
3,356,968
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Selling, general, and administrative expenses
|
|
2,191,612
|
|
|
2,303,051
|
|
|
2,162,045
|
|
|||
Depreciation and amortization
|
|
189,790
|
|
|
186,384
|
|
|
153,599
|
|
|||
Loss on disposition of businesses, net (Note 3)
|
|
21,252
|
|
|
3,604
|
|
|
21,000
|
|
|||
Impairments (Notes 3 and 4)
|
|
698,246
|
|
|
—
|
|
|
—
|
|
|||
Restructuring, integration, and other charges
|
|
89,785
|
|
|
60,361
|
|
|
74,588
|
|
|||
|
|
3,190,685
|
|
|
2,553,400
|
|
|
2,411,232
|
|
|||
Operating income
|
|
107,696
|
|
|
1,147,512
|
|
|
945,736
|
|
|||
Equity in earnings (losses) of affiliated companies
|
|
(2,765
|
)
|
|
(2,332
|
)
|
|
3,424
|
|
|||
Gain (loss) on investments, net
|
|
11,831
|
|
|
(14,166
|
)
|
|
(6,577
|
)
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(59,545
|
)
|
|||
Employee benefit plan expense, net
|
|
(24,849
|
)
|
|
(6,870
|
)
|
|
(23,869
|
)
|
|||
Interest and other financing expense, net
|
|
(203,743
|
)
|
|
(214,771
|
)
|
|
(165,252
|
)
|
|||
Income (loss) before income taxes
|
|
(111,830
|
)
|
|
909,373
|
|
|
693,917
|
|
|||
Provision for income taxes
|
|
88,338
|
|
|
187,799
|
|
|
286,541
|
|
|||
Consolidated net income (loss)
|
|
(200,168
|
)
|
|
721,574
|
|
|
407,376
|
|
|||
Noncontrolling interests
|
|
3,919
|
|
|
5,379
|
|
|
5,200
|
|
|||
Net income (loss) attributable to shareholders
|
|
$
|
(204,087
|
)
|
|
$
|
716,195
|
|
|
$
|
402,176
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
||||
Basic
|
|
$
|
(2.44
|
)
|
|
$
|
8.19
|
|
|
$
|
4.54
|
|
Diluted
|
|
$
|
(2.44
|
)
|
|
$
|
8.10
|
|
|
$
|
4.48
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
|||||
Basic
|
|
83,568
|
|
|
87,476
|
|
|
88,681
|
|
|||
Diluted
|
|
83,568
|
|
|
88,444
|
|
|
89,766
|
|
|
Years Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Consolidated net income (loss)
|
$
|
(200,168
|
)
|
|
$
|
721,574
|
|
|
$
|
407,376
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustment and other, net of taxes
|
19,948
|
|
|
(163,927
|
)
|
|
248,317
|
|
|||
Unrealized gain on investment securities, net of taxes
|
—
|
|
|
—
|
|
|
8,852
|
|
|||
Unrealized gain on foreign exchange contracts designated as net investment hedges, net of taxes
|
10,368
|
|
|
—
|
|
|
—
|
|
|||
Unrealized gain (loss) on interest rate swaps designated as cash flow hedges, net of taxes
|
(7,787
|
)
|
|
931
|
|
|
(2,359
|
)
|
|||
Employee benefit plan items, net of taxes
|
14,035
|
|
|
8,253
|
|
|
8,853
|
|
|||
Other comprehensive income (loss)
|
36,564
|
|
|
(154,743
|
)
|
|
263,663
|
|
|||
Comprehensive income (loss)
|
(163,604
|
)
|
|
566,831
|
|
|
671,039
|
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
3,245
|
|
|
2,848
|
|
|
10,207
|
|
|||
Comprehensive income (loss) attributable to shareholders
|
$
|
(166,849
|
)
|
|
$
|
563,983
|
|
|
$
|
660,832
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
300,103
|
|
|
$
|
509,327
|
|
Accounts receivable, net
|
|
8,482,687
|
|
|
8,945,463
|
|
||
Inventories
|
|
3,477,120
|
|
|
3,878,678
|
|
||
Other current assets
|
|
266,249
|
|
|
274,832
|
|
||
Total current assets
|
|
12,526,159
|
|
|
13,608,300
|
|
||
Property, plant, and equipment, at cost:
|
|
|
|
|
|
|
||
Land
|
|
7,793
|
|
|
7,882
|
|
||
Buildings and improvements
|
|
173,370
|
|
|
158,712
|
|
||
Machinery and equipment
|
|
1,481,525
|
|
|
1,425,933
|
|
||
|
|
1,662,688
|
|
|
1,592,527
|
|
||
Less: Accumulated depreciation and amortization
|
|
(859,578
|
)
|
|
(767,827
|
)
|
||
Property, plant, and equipment, net
|
|
803,110
|
|
|
824,700
|
|
||
Investments in affiliated companies
|
|
86,942
|
|
|
83,693
|
|
||
Intangible assets, net
|
|
271,903
|
|
|
372,644
|
|
||
Goodwill
|
|
2,061,322
|
|
|
2,624,690
|
|
||
Other assets
|
|
651,360
|
|
|
270,418
|
|
||
Total assets
|
|
$
|
16,400,796
|
|
|
$
|
17,784,445
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
7,046,221
|
|
|
$
|
7,631,879
|
|
Accrued expenses
|
|
880,507
|
|
|
912,292
|
|
||
Short-term borrowings, including current portion of long-term debt
|
|
331,431
|
|
|
246,257
|
|
||
Total current liabilities
|
|
8,258,159
|
|
|
8,790,428
|
|
||
Long-term debt
|
|
2,640,129
|
|
|
3,239,115
|
|
||
Other liabilities
|
|
636,115
|
|
|
378,536
|
|
||
Commitments and contingencies (Notes 15 and 16)
|
|
|
|
|
|
|
||
Equity:
|
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
|
|
|
||
Common stock, par value $1:
|
|
|
|
|
|
|
||
Authorized - 160,000 shares in both 2019 and 2018
|
|
|
|
|
|
|
||
Issued - 125,424 shares in both 2019 and 2018
|
|
125,424
|
|
|
125,424
|
|
||
Capital in excess of par value
|
|
1,150,006
|
|
|
1,135,934
|
|
||
Treasury stock (44,804 and 40,233 shares in 2019 and 2018, respectively), at cost
|
|
(2,332,548
|
)
|
|
(1,972,254
|
)
|
||
Retained earnings
|
|
6,131,248
|
|
|
6,335,335
|
|
||
Accumulated other comprehensive loss
|
|
(262,211
|
)
|
|
(299,449
|
)
|
||
Total shareholders' equity
|
|
4,811,919
|
|
|
5,324,990
|
|
||
Noncontrolling interests
|
|
54,474
|
|
|
51,376
|
|
||
Total equity
|
|
4,866,393
|
|
|
5,376,366
|
|
||
Total liabilities and equity
|
|
$
|
16,400,796
|
|
|
$
|
17,784,445
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
||||||
Consolidated net income (loss)
|
|
$
|
(200,168
|
)
|
|
$
|
721,574
|
|
|
$
|
407,376
|
|
Adjustments to reconcile consolidated net income (loss) to net cash provided by operations:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
189,790
|
|
|
186,384
|
|
|
153,599
|
|
|||
Amortization of stock-based compensation
|
|
41,070
|
|
|
46,238
|
|
|
39,122
|
|
|||
Equity in (earnings) losses of affiliated companies
|
|
2,765
|
|
|
2,332
|
|
|
(3,424
|
)
|
|||
Loss on extinguishment of debt
|
|
—
|
|
|
—
|
|
|
59,545
|
|
|||
Deferred income taxes
|
|
(50,288
|
)
|
|
1,236
|
|
|
38,412
|
|
|||
(Gain) loss on investments, net
|
|
(11,462
|
)
|
|
14,166
|
|
|
8,020
|
|
|||
Loss on disposition of businesses, net
|
|
21,252
|
|
|
3,604
|
|
|
21,000
|
|
|||
Pension settlement expense
|
|
20,111
|
|
|
1,665
|
|
|
16,706
|
|
|||
Impairments
|
|
698,246
|
|
|
—
|
|
|
—
|
|
|||
Other
|
|
10,659
|
|
|
9,198
|
|
|
10,466
|
|
|||
Change in assets and liabilities, net of effects of acquired and disposed businesses:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
338,849
|
|
|
(1,007,308
|
)
|
|
(1,079,094
|
)
|
|||
Inventories
|
|
383,058
|
|
|
(618,875
|
)
|
|
(379,835
|
)
|
|||
Accounts payable
|
|
(521,575
|
)
|
|
936,423
|
|
|
816,602
|
|
|||
Accrued expenses
|
|
(27,475
|
)
|
|
112,123
|
|
|
(5,013
|
)
|
|||
Other assets and liabilities
|
|
(36,837
|
)
|
|
(136,070
|
)
|
|
21,075
|
|
|||
Net cash provided by operating activities
|
|
857,995
|
|
|
272,690
|
|
|
124,557
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
||||||
Cash consideration paid for acquired businesses, net of cash acquired
|
|
—
|
|
|
(331,563
|
)
|
|
(3,628
|
)
|
|||
Proceeds from (cash paid on) disposition of businesses
|
|
(13,094
|
)
|
|
32,013
|
|
|
—
|
|
|||
Acquisition of property, plant, and equipment
|
|
(143,191
|
)
|
|
(135,336
|
)
|
|
(203,949
|
)
|
|||
Proceeds from sale of property, plant, and equipment
|
|
—
|
|
|
5,421
|
|
|
24,433
|
|
|||
Cash paid for customer relationship intangible asset
|
|
(7,616
|
)
|
|
(20,000
|
)
|
|
—
|
|
|||
Other
|
|
(9,682
|
)
|
|
(13,500
|
)
|
|
(5,614
|
)
|
|||
Net cash used for investing activities
|
|
(173,583
|
)
|
|
(462,965
|
)
|
|
(188,758
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
|
||||||
Change in short-term and other borrowings
|
|
(113,923
|
)
|
|
192,192
|
|
|
(41,316
|
)
|
|||
Proceeds from (repayments of) long-term bank borrowings, net
|
|
(405,007
|
)
|
|
306,635
|
|
|
47,760
|
|
|||
Proceeds from note offering, net
|
|
—
|
|
|
—
|
|
|
986,203
|
|
|||
Redemption of notes
|
|
—
|
|
|
(300,000
|
)
|
|
(558,887
|
)
|
|||
Proceeds from exercise of stock options
|
|
16,911
|
|
|
8,819
|
|
|
22,195
|
|
|||
Repurchases of common stock
|
|
(404,203
|
)
|
|
(243,305
|
)
|
|
(174,239
|
)
|
|||
Purchase of shares from noncontrolling interest
|
|
—
|
|
|
—
|
|
|
(23,350
|
)
|
|||
Other
|
|
(147
|
)
|
|
(1,174
|
)
|
|
(1,620
|
)
|
|||
Net cash provided by (used for) financing activities
|
|
(906,369
|
)
|
|
(36,833
|
)
|
|
256,746
|
|
|||
Effect of exchange rate changes on cash
|
|
12,733
|
|
|
6,352
|
|
|
3,218
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
(209,224
|
)
|
|
(220,756
|
)
|
|
195,763
|
|
|||
Cash and cash equivalents at beginning of year
|
|
509,327
|
|
|
730,083
|
|
|
534,320
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
300,103
|
|
|
$
|
509,327
|
|
|
$
|
730,083
|
|
|
Common Stock at Par Value
|
|
Capital in Excess of Par Value
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Noncontrolling Interests
|
|
Total
|
||||||||||||||
Balance at December 31, 2016
|
$
|
125,424
|
|
|
$
|
1,112,114
|
|
|
$
|
(1,637,476
|
)
|
|
$
|
5,194,610
|
|
|
$
|
(383,539
|
)
|
|
$
|
52,182
|
|
|
$
|
4,463,315
|
|
Consolidated net income
|
—
|
|
|
—
|
|
|
—
|
|
|
402,176
|
|
|
—
|
|
|
5,200
|
|
|
407,376
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
258,656
|
|
|
5,007
|
|
|
263,663
|
|
|||||||
Amortization of stock-based compensation
|
—
|
|
|
39,122
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
39,122
|
|
|||||||
Shares issued for stock-based compensation awards
|
—
|
|
|
(27,281
|
)
|
|
49,476
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,195
|
|
|||||||
Purchase of subsidiary shares from non-controlling interest
|
—
|
|
|
(9,788
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,562
|
)
|
|
(23,350
|
)
|
|||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(174,239
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(174,239
|
)
|
|||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(142
|
)
|
|
(142
|
)
|
|||||||
Balance at December 31, 2017
|
125,424
|
|
|
1,114,167
|
|
|
(1,762,239
|
)
|
|
5,596,786
|
|
|
(124,883
|
)
|
|
48,685
|
|
|
4,997,940
|
|
|||||||
Effect of new accounting principles
|
—
|
|
|
—
|
|
|
—
|
|
|
22,354
|
|
|
(22,354
|
)
|
|
—
|
|
|
—
|
|
|||||||
Consolidated net income
|
—
|
|
|
—
|
|
|
—
|
|
|
716,195
|
|
|
—
|
|
|
5,379
|
|
|
721,574
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(152,212
|
)
|
|
(2,531
|
)
|
|
(154,743
|
)
|
|||||||
Amortization of stock-based compensation
|
—
|
|
|
46,238
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46,238
|
|
|||||||
Shares issued for stock-based compensation awards
|
—
|
|
|
(24,471
|
)
|
|
33,290
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,819
|
|
|||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(243,305
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(243,305
|
)
|
|||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|
(157
|
)
|
|||||||
Balance at December 31, 2018
|
125,424
|
|
|
1,135,934
|
|
|
(1,972,254
|
)
|
|
6,335,335
|
|
|
(299,449
|
)
|
|
51,376
|
|
|
5,376,366
|
|
|||||||
Consolidated net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(204,087
|
)
|
|
—
|
|
|
3,919
|
|
|
(200,168
|
)
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37,238
|
|
|
(674
|
)
|
|
36,564
|
|
|||||||
Amortization of stock-based compensation
|
—
|
|
|
41,070
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,070
|
|
|||||||
Shares issued for stock-based compensation awards
|
—
|
|
|
(26,998
|
)
|
|
43,909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,911
|
|
|||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(404,203
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(404,203
|
)
|
|||||||
Distributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(147
|
)
|
|
(147
|
)
|
|||||||
Balance at December 31, 2019
|
$
|
125,424
|
|
|
$
|
1,150,006
|
|
|
$
|
(2,332,548
|
)
|
|
$
|
6,131,248
|
|
|
$
|
(262,211
|
)
|
|
$
|
54,474
|
|
|
$
|
4,866,393
|
|
•
|
macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets;
|
•
|
industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company's products or services, or a regulatory or political development;
|
•
|
cost factors such as increases in inventory, labor, or other costs that have a negative effect on earnings and cash flows;
|
•
|
overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;
|
•
|
other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, contemplation of bankruptcy, or litigation;
|
•
|
events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and
|
•
|
a sustained decrease in share price (considered in both absolute terms and relative to peers).
|
Accounts receivable, net
|
$
|
13,670
|
|
Inventories
|
1,512
|
|
|
Property, plant, and equipment
|
3,485
|
|
|
Other assets
|
46,488
|
|
|
Identifiable intangible assets
|
128,000
|
|
|
Goodwill
|
197,126
|
|
|
Accounts payable
|
(520
|
)
|
|
Accrued expenses
|
(33,836
|
)
|
|
Deferred tax liability
|
(41,474
|
)
|
|
Other liabilities
|
(1,592
|
)
|
|
Cash consideration paid, net of cash acquired
|
$
|
312,859
|
|
|
For the Year Ended December 31, 2017
|
||||||
|
As Reported
|
|
Pro Forma
|
||||
Sales
|
$
|
26,554,563
|
|
|
$
|
26,712,335
|
|
Net income attributable to shareholders
|
402,176
|
|
|
405,966
|
|
||
Net income per share:
|
|
|
|
||||
Basic
|
$
|
4.54
|
|
|
$
|
4.58
|
|
Diluted
|
$
|
4.48
|
|
|
$
|
4.52
|
|
|
|
Global
Components
|
|
Global ECS
|
|
Total
|
||||||
Balance as of December 31, 2017 (a)
|
|
$
|
1,264,869
|
|
|
$
|
1,205,178
|
|
|
$
|
2,470,047
|
|
Acquisitions
|
|
197,126
|
|
|
14,175
|
|
|
211,301
|
|
|||
Foreign currency translation adjustment
|
|
(24,494
|
)
|
|
(32,164
|
)
|
|
(56,658
|
)
|
|||
Balance as of December 31, 2018 (a)
|
|
$
|
1,437,501
|
|
|
$
|
1,187,189
|
|
|
$
|
2,624,690
|
|
Impairments and dispositions
|
|
(570,175
|
)
|
|
(1,386
|
)
|
|
(571,561
|
)
|
|||
Foreign currency translation adjustment
|
|
16,170
|
|
|
(7,977
|
)
|
|
8,193
|
|
|||
Balance as of December 31, 2019 (b)
|
|
$
|
883,496
|
|
|
$
|
1,177,826
|
|
|
$
|
2,061,322
|
|
(a)
|
The total carrying value of goodwill of companies acquired as of December 31, 2018 and December 31, 2017 in the table above is reflected net of $1,018,780 of accumulated impairment charges, of which $716,925 was recorded in the global components business segment and $301,855 was recorded in the global ECS business segment.
|
(b)
|
The total carrying value of goodwill of companies acquired as of December 31, 2019 in the table above is reflected net of $1,588,955 of accumulated impairment charges, of which $1,287,100 was recorded in the global components business segment and $301,855 was recorded in the global ECS business segment.
|
|
Weighted-Average Life
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||
Customer relationships
|
12 years
|
|
$
|
354,305
|
|
|
$
|
(148,632
|
)
|
|
$
|
205,673
|
|
Amortizable trade name
|
8 years
|
|
76,407
|
|
|
(10,177
|
)
|
|
66,230
|
|
|||
|
|
|
$
|
430,712
|
|
|
$
|
(158,809
|
)
|
|
$
|
271,903
|
|
|
Weighted-Average Life
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||
Non-amortizable trade names
|
indefinite
|
|
$
|
101,000
|
|
|
$
|
—
|
|
|
$
|
101,000
|
|
Customer relationships
|
11 years
|
|
475,050
|
|
|
(221,822
|
)
|
|
253,228
|
|
|||
Developed technology
|
5 years
|
|
6,340
|
|
|
(4,311
|
)
|
|
2,029
|
|
|||
Amortizable trade name
|
9 years
|
|
19,940
|
|
|
(3,553
|
)
|
|
16,387
|
|
|||
|
|
|
$
|
602,330
|
|
|
$
|
(229,686
|
)
|
|
$
|
372,644
|
|
|
|
2019
|
|
2018
|
||||
Marubun/Arrow
|
|
$
|
76,574
|
|
|
$
|
73,253
|
|
Other
|
|
10,368
|
|
|
10,440
|
|
||
|
|
$
|
86,942
|
|
|
$
|
83,693
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Marubun/Arrow
|
|
$
|
3,066
|
|
|
$
|
5,543
|
|
|
$
|
6,842
|
|
Other
|
|
(5,831
|
)
|
|
(7,875
|
)
|
|
(3,418
|
)
|
|||
|
|
$
|
(2,765
|
)
|
|
$
|
(2,332
|
)
|
|
$
|
3,424
|
|
|
|
2019
|
|
2018
|
||||
Accounts receivable
|
|
$
|
8,549,422
|
|
|
$
|
9,021,051
|
|
Allowances for doubtful accounts
|
|
(66,735
|
)
|
|
(75,588
|
)
|
||
Accounts receivable, net
|
|
$
|
8,482,687
|
|
|
$
|
8,945,463
|
|
|
|
2019
|
|
2018
|
||||
6.00% note, due 2020
|
|
$
|
209,322
|
|
|
$
|
—
|
|
Borrowings on lines of credit
|
|
60,000
|
|
|
180,000
|
|
||
Other short-term borrowings
|
|
62,109
|
|
|
66,257
|
|
||
|
|
$
|
331,431
|
|
|
$
|
246,257
|
|
|
|
2019
|
|
2018
|
||||
Revolving credit facility
|
|
$
|
10,000
|
|
|
$
|
—
|
|
North America asset securitization program
|
|
400,000
|
|
|
810,000
|
|
||
6.00% notes, due 2020
|
|
—
|
|
|
209,147
|
|
||
5.125% notes, due 2021
|
|
130,691
|
|
|
130,546
|
|
||
3.50% notes, due 2022
|
|
348,088
|
|
|
347,288
|
|
||
4.50% notes, due 2023
|
|
298,148
|
|
|
297,622
|
|
||
3.25% notes, due 2024
|
|
495,045
|
|
|
494,091
|
|
||
4.00% notes, due 2025
|
|
346,368
|
|
|
345,762
|
|
||
7.50% senior debentures, due 2027
|
|
109,857
|
|
|
109,776
|
|
||
3.875% notes, due 2028
|
|
494,648
|
|
|
494,095
|
|
||
Other obligations with various interest rates and due dates
|
|
7,284
|
|
|
788
|
|
||
|
|
$
|
2,640,129
|
|
|
$
|
3,239,115
|
|
|
|
2019
|
|
2018
|
||||
5.125% notes, due 2021
|
|
$
|
134,500
|
|
|
$
|
134,500
|
|
3.50% notes, due 2022
|
|
358,500
|
|
|
345,000
|
|
||
4.50% notes, due 2023
|
|
316,000
|
|
|
303,500
|
|
||
3.25% notes, due 2024
|
|
515,500
|
|
|
467,000
|
|
||
4.00% notes, due 2025
|
|
367,000
|
|
|
340,500
|
|
||
7.50% senior debentures, due 2027
|
|
135,000
|
|
|
128,000
|
|
||
3.875% notes, due 2028
|
|
516,500
|
|
|
458,500
|
|
Level 1
|
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
Level 2
|
Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
|
Level 3
|
Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.
|
|
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents (a)
|
|
Cash and cash equivalents / other assets
|
|
$
|
18,579
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,579
|
|
Equity investments (b)
|
|
Other assets
|
|
44,677
|
|
|
—
|
|
|
—
|
|
|
44,677
|
|
||||
Interest rate swaps
|
|
Other liabilities
|
|
—
|
|
|
(11,574
|
)
|
|
—
|
|
|
(11,574
|
)
|
||||
Foreign exchange contracts
|
|
Other current assets/other assets
|
|
—
|
|
|
24,092
|
|
|
—
|
|
|
24,092
|
|
||||
Foreign exchange contracts
|
|
Accrued expenses
|
|
—
|
|
|
(2,132
|
)
|
|
—
|
|
|
(2,132
|
)
|
||||
|
|
|
|
$
|
63,256
|
|
|
$
|
10,386
|
|
|
$
|
—
|
|
|
$
|
73,642
|
|
|
|
Balance Sheet Location
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents (a)
|
|
Cash and cash equivalents / other assets
|
|
$
|
22,883
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22,883
|
|
Equity investments (b)
|
|
Other assets
|
|
38,045
|
|
|
—
|
|
|
—
|
|
|
38,045
|
|
||||
Interest rate swaps
|
|
Other liabilities
|
|
—
|
|
|
(589
|
)
|
|
—
|
|
|
(589
|
)
|
||||
Foreign exchange contracts
|
|
Other current assets
|
|
—
|
|
|
4,163
|
|
|
—
|
|
|
4,163
|
|
||||
Foreign exchange contracts
|
|
Accrued expenses
|
|
—
|
|
|
(2,384
|
)
|
|
—
|
|
|
(2,384
|
)
|
||||
|
|
|
|
$
|
60,928
|
|
|
$
|
1,190
|
|
|
$
|
—
|
|
|
$
|
62,118
|
|
(a)
|
Cash equivalents include highly liquid investments with an original maturity of less than three months.
|
(b)
|
The company has an 8.4% equity ownership interest in Marubun Corporation and a portfolio of mutual funds with quoted market prices. During 2019, 2018, and 2017 the company recorded unrealized gains (losses) of $4,204, $(13,854), and $14,596, respectively, on equity securities held at the end of each year.
|
Maturity Date
|
|
Notional Amount
|
|
Interest Rate due from Counterparty
|
|
Interest Rate due to Counterparty
|
April 2020
|
|
50,000
|
|
6.000%
|
|
6 mo. USD LIBOR + 3.896%
|
Maturity Date
|
|
Notional Amount
|
March 2023
|
|
EUR 50,000
|
September 2024
|
|
EUR 50,000
|
April 2025
|
|
EUR 100,000
|
January 2028
|
|
EUR 100,000
|
Total
|
|
EUR 300,000
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Gain (loss) recognized in income
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
$
|
12,171
|
|
|
$
|
6,940
|
|
|
$
|
(20,877
|
)
|
Interest rate swaps
|
|
(1,298
|
)
|
|
(1,236
|
)
|
|
(831
|
)
|
|||
Total
|
|
$
|
10,873
|
|
|
$
|
5,704
|
|
|
$
|
(21,708
|
)
|
Gain (loss) recognized in other comprehensive income (loss) before reclassifications, net of tax
|
|
|
|
|
|
|
||||||
Foreign exchange contracts
|
|
$
|
16,985
|
|
|
$
|
(409
|
)
|
|
$
|
(2,022
|
)
|
Interest rate swaps
|
|
(8,767
|
)
|
|
—
|
|
|
(4,672
|
)
|
|||
Total
|
|
$
|
8,218
|
|
|
$
|
(409
|
)
|
|
$
|
(6,694
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
3,887
|
|
|
$
|
(12,345
|
)
|
|
$
|
119,298
|
|
State
|
(69
|
)
|
|
20,141
|
|
|
(6,156
|
)
|
|||
International
|
134,808
|
|
|
178,767
|
|
|
134,987
|
|
|||
|
$
|
138,626
|
|
|
$
|
186,563
|
|
|
$
|
248,129
|
|
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
(54,356
|
)
|
|
$
|
19,207
|
|
|
$
|
31,167
|
|
State
|
(2,710
|
)
|
|
312
|
|
|
13,535
|
|
|||
International
|
6,778
|
|
|
(18,283
|
)
|
|
(6,290
|
)
|
|||
|
(50,288
|
)
|
|
1,236
|
|
|
38,412
|
|
|||
|
$
|
88,338
|
|
|
$
|
187,799
|
|
|
$
|
286,541
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
(557,592
|
)
|
|
$
|
186,677
|
|
|
$
|
115,664
|
|
International
|
445,762
|
|
|
722,696
|
|
|
578,253
|
|
|||
Income (loss) before income taxes
|
$
|
(111,830
|
)
|
|
$
|
909,373
|
|
|
$
|
693,917
|
|
|
|
|
|
|
|
||||||
Provision (benefit) at statutory tax rate
|
$
|
(23,484
|
)
|
|
$
|
190,968
|
|
|
$
|
242,415
|
|
State taxes, net of federal benefit
|
(2,051
|
)
|
|
18,888
|
|
|
5,184
|
|
|||
International effective tax rate differential
|
17,474
|
|
|
7,480
|
|
|
(88,444
|
)
|
|||
U.S. tax (benefit) on foreign earnings
|
26,013
|
|
|
—
|
|
|
—
|
|
|||
Deductible loss on wind down of business (c)
|
(11,311
|
)
|
|
—
|
|
|
—
|
|
|||
Capital loss
|
—
|
|
|
60,757
|
|
|
—
|
|
|||
Change in valuation allowance
|
1,305
|
|
|
(66,557
|
)
|
|
1,408
|
|
|||
Other non-deductible expenses
|
1,585
|
|
|
14,128
|
|
|
12,700
|
|
|||
Changes in tax accruals
|
10,418
|
|
|
(3,968
|
)
|
|
(7,973
|
)
|
|||
Tax credits
|
(3,034
|
)
|
|
(7,884
|
)
|
|
(8,170
|
)
|
|||
Non-deductible portion of impairment of goodwill
|
75,900
|
|
|
—
|
|
|
—
|
|
|||
Tax Act's transition tax (a)
|
—
|
|
|
(28,323
|
)
|
|
196,010
|
|
|||
Tax Act's impact on deferred taxes (b)
|
—
|
|
|
—
|
|
|
(71,261
|
)
|
|||
Other
|
(4,477
|
)
|
|
2,310
|
|
|
4,672
|
|
|||
Provision for income taxes
|
$
|
88,338
|
|
|
$
|
187,799
|
|
|
$
|
286,541
|
|
(a)
|
For the year ended December 31, 2017, the company accrued a provisional estimate of $196,010 of tax expense for the Tax Act's one-time transition tax on the foreign subsidiaries' accumulated, unremitted earnings in accordance with U.S. Securities and Exchange Commission's Staff Accounting Bulletin (“SAB 118”). Additionally, during the fourth quarter of 2018 the company recorded a $28,323 benefit upon finalizing its analysis of the impact from the Tax Act.
|
(b)
|
For the year ended December 31, 2017, the company accrued $71,261 in provisional tax benefit related to the net change in deferred tax liabilities stemming from the Tax Act's reduction of the U.S. federal tax rate from 35% to 21%, and disallowance of certain incentive based compensation tax deductibility under Internal Revenue Code Section 162(m).
|
(c)
|
The wind of down of the company’s personal computer and mobility asset disposition business resulted in the net tax benefit of $11,311 for the year ended December 31, 2019.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at beginning of year
|
$
|
35,879
|
|
|
$
|
24,361
|
|
|
$
|
31,534
|
|
Additions based on tax positions taken during a prior period
|
13,018
|
|
|
583
|
|
|
2,342
|
|
|||
Reductions based on tax positions taken during a prior period
|
(86
|
)
|
|
(1,248
|
)
|
|
(1,242
|
)
|
|||
Additions related to positions taken upon finalization of Tax Act during the current period
|
—
|
|
|
16,506
|
|
|
—
|
|
|||
Additions based on tax positions taken during the current period
|
8,926
|
|
|
3,133
|
|
|
6,543
|
|
|||
Reductions based on tax positions taken during the current period
|
(259
|
)
|
|
(233
|
)
|
|
—
|
|
|||
Reductions related to settlement of tax matters
|
—
|
|
|
(136
|
)
|
|
(2,921
|
)
|
|||
Reductions related to a lapse of applicable statute of limitations
|
(4,492
|
)
|
|
(7,087
|
)
|
|
(11,895
|
)
|
|||
Balance at end of year
|
$
|
52,986
|
|
|
$
|
35,879
|
|
|
$
|
24,361
|
|
United States - Federal
|
|
2016 - present
|
United States - States
|
|
2013 - present
|
Germany (d)
|
|
2013 - present
|
Hong Kong
|
|
2013 - present
|
Italy (d)
|
|
2013 - present
|
Sweden
|
|
2014 - present
|
United Kingdom
|
|
2018 - present
|
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
96,605
|
|
|
$
|
129,641
|
|
Capital loss carryforwards
|
57,031
|
|
|
60,606
|
|
||
Inventory adjustments
|
54,500
|
|
|
52,094
|
|
||
Allowance for doubtful accounts
|
12,797
|
|
|
17,016
|
|
||
Accrued expenses
|
27,998
|
|
|
27,088
|
|
||
Interest carryforward
|
13,059
|
|
|
5,008
|
|
||
Stock-based compensation awards
|
11,006
|
|
|
12,824
|
|
||
Other comprehensive income items
|
984
|
|
|
—
|
|
||
Integration and restructuring
|
788
|
|
|
2,547
|
|
||
Lease liability
|
74,935
|
|
|
—
|
|
||
Intangible assets
|
4,266
|
|
|
—
|
|
||
Other
|
13,913
|
|
|
—
|
|
||
|
367,882
|
|
|
306,824
|
|
||
Valuation allowance
|
(81,037
|
)
|
|
(80,471
|
)
|
||
Total deferred tax assets
|
$
|
286,845
|
|
|
$
|
226,353
|
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Goodwill
|
$
|
(109,131
|
)
|
|
$
|
(121,346
|
)
|
Depreciation
|
(115,459
|
)
|
|
(131,848
|
)
|
||
Intangible assets
|
—
|
|
|
(18,754
|
)
|
||
Lease right-of-use assets
|
(69,491
|
)
|
|
—
|
|
||
Other comprehensive income items
|
—
|
|
|
(8,301
|
)
|
||
Other
|
—
|
|
|
(6,634
|
)
|
||
Total deferred tax liabilities
|
$
|
(294,081
|
)
|
|
$
|
(286,883
|
)
|
Total net deferred tax assets (liabilities)
|
$
|
(7,236
|
)
|
|
$
|
(60,530
|
)
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Restructuring and integration charges - current period actions
|
|
$
|
22,256
|
|
|
$
|
23,698
|
|
|
$
|
46,816
|
|
Restructuring and integration charges - actions taken in prior periods
|
|
636
|
|
|
7,517
|
|
|
6,191
|
|
|||
Other charges
|
|
66,893
|
|
|
29,146
|
|
|
21,581
|
|
|||
|
|
$
|
89,785
|
|
|
$
|
60,361
|
|
|
$
|
74,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
acquisition-related charges of $1,790 for professional and other fees directly related to recent acquisition activity as well as contingent consideration for acquisitions completed in prior years; and
|
•
|
relocation and other charges associated with centralization efforts to maximize operating efficiencies of $8,959; and
|
•
|
personnel charges of $45,951 related to the operating expense reduction program previously disclosed in July 2019. The accrual related to the operating expense reduction program was $24,252 at December 31, 2019, and all accrued amounts are expected to be paid within one year.
|
•
|
acquisition-related charges of $10,236 related to professional and other fees directly related to recent acquisition activity as well as contingent consideration for acquisitions completed in prior years; and
|
•
|
$11,188 in charges related to relocation and infrastructure upgrades of the company's data centers, and other centralization efforts to maximize operating efficiencies.
|
•
|
an additional expense of $2,071 to increase its accrual for the Wyle environmental obligation (see Note 16);
|
•
|
acquisition-related charges for 2017 of $7,658 related to contingent consideration for acquisitions completed in prior years, which were conditional upon the financial performance of the acquired companies and the continued employment of the selling shareholders, as well as professional and other fees directly related to recent acquisition activity; and
|
•
|
a net loss on real estate transaction of $3,144.
|
|
|
Foreign Currency Translation Adjustment and Other, Net
|
|
Unrealized
Gain (loss) on
Investment
Securities,
Net
|
|
Unrealized Gain (Loss) on Foreign Exchange Contracts Designated as Net Investment Hedges, Net
|
|
Unrealized Gain (Loss) on Interest Rate Swaps Designated as Cash Flow Hedges, Net
|
|
Employee Benefit Plan Items, Net
|
|
Total
|
||||||||||||
Balance as of December 31, 2017
|
|
$
|
(104,931
|
)
|
|
$
|
14,946
|
|
|
$
|
—
|
|
|
$
|
(5,306
|
)
|
|
$
|
(29,592
|
)
|
|
$
|
(124,883
|
)
|
Reclassification to retained earnings (b)
|
|
—
|
|
|
(14,946
|
)
|
|
—
|
|
|
(1,185
|
)
|
|
(6,223
|
)
|
|
(22,354
|
)
|
||||||
Other comprehensive income (loss) before reclassifications (a)
|
|
(161,359
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,939
|
|
|
(156,420
|
)
|
||||||
Amounts reclassified into income (loss)
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
931
|
|
|
3,314
|
|
|
4,208
|
|
||||||
Net change in accumulated other comprehensive income (loss) for the year ended December 31, 2018
|
|
(161,396
|
)
|
|
(14,946
|
)
|
|
—
|
|
|
(254
|
)
|
|
2,030
|
|
|
(174,566
|
)
|
||||||
Balance as of December 31, 2018
|
|
(266,327
|
)
|
|
—
|
|
|
—
|
|
|
(5,560
|
)
|
|
(27,562
|
)
|
|
(299,449
|
)
|
||||||
Other comprehensive income (loss) before reclassifications (a)
|
|
7,658
|
|
|
—
|
|
|
16,489
|
|
|
(8,767
|
)
|
|
(3,079
|
)
|
|
12,301
|
|
||||||
Amounts reclassified into income (loss) (c)
|
|
12,964
|
|
|
—
|
|
|
(6,121
|
)
|
|
980
|
|
|
17,114
|
|
|
24,937
|
|
||||||
Net change in accumulated other comprehensive income (loss) for the year ended December 31, 2019
|
|
20,622
|
|
|
—
|
|
|
10,368
|
|
|
(7,787
|
)
|
|
14,035
|
|
|
37,238
|
|
||||||
Balance as of December 31, 2019
|
|
$
|
(245,705
|
)
|
|
$
|
—
|
|
|
$
|
10,368
|
|
|
$
|
(13,347
|
)
|
|
$
|
(13,527
|
)
|
|
$
|
(262,211
|
)
|
(a)
|
Foreign currency translation adjustment includes intra-entity foreign currency transactions that are of a long-term investment nature of $(10,630) and $11,712 for 2019 and 2018, respectively.
|
(b)
|
Amount relates to unrealized gains and losses on investments and stranded tax effects reclassified from “Accumulated other comprehensive income” to “Retained earnings” in accordance with ASU No. 2018-02 and ASU No. 2016-01.
|
(c)
|
Foreign currency translation adjustment includes a reclassification of cumulative translation adjustments to earnings upon the sale of three foreign subsidiaries during 2019 of $19,602 (Note 3). Employee Benefit Plan items, net includes a pre-tax pension settlement expense of $20,111 ($15,257 net of tax) for 2019 (Note 14).
|
|
|
Common Stock Issued
|
|
Treasury Stock
|
|
Common Stock Outstanding
|
|||
Common stock outstanding at December 31, 2016
|
|
125,424
|
|
|
36,511
|
|
|
88,913
|
|
Shares issued for stock-based compensation awards
|
|
—
|
|
|
(1,097
|
)
|
|
1,097
|
|
Repurchases of common stock
|
|
—
|
|
|
2,319
|
|
|
(2,319
|
)
|
Common stock outstanding at December 31, 2017
|
|
125,424
|
|
|
37,733
|
|
|
87,691
|
|
Shares issued for stock-based compensation awards
|
|
—
|
|
|
(709
|
)
|
|
709
|
|
Repurchases of common stock
|
|
—
|
|
|
3,209
|
|
|
(3,209
|
)
|
Common stock outstanding at December 31, 2018
|
|
125,424
|
|
|
40,233
|
|
|
85,191
|
|
Shares issued for stock-based compensation awards
|
|
—
|
|
|
(886
|
)
|
|
886
|
|
Repurchases of common stock
|
|
—
|
|
|
5,457
|
|
|
(5,457
|
)
|
Common stock outstanding at December 31, 2019
|
|
125,424
|
|
|
44,804
|
|
|
80,620
|
|
Month of Board Approval
|
|
Dollar Value Approved for Repurchase
|
|
Dollar Value of Shares Repurchased
|
|
Approximate
Dollar Value of
Shares that May
Yet be
Purchased
Under the
Program
|
||||||
December 2016
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
$
|
—
|
|
December 2018
|
|
600,000
|
|
|
261,463
|
|
|
338,537
|
|
|||
Total
|
|
$
|
1,000,000
|
|
|
$
|
661,463
|
|
|
$
|
338,537
|
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income (loss) attributable to shareholders
|
|
$
|
(204,087
|
)
|
|
$
|
716,195
|
|
|
$
|
402,176
|
|
Weighted-average shares outstanding - basic
|
|
83,568
|
|
|
87,476
|
|
|
88,681
|
|
|||
Net effect of various dilutive stock-based compensation awards
|
|
—
|
|
|
968
|
|
|
1,085
|
|
|||
Weighted-average shares outstanding - diluted
|
|
83,568
|
|
|
88,444
|
|
|
89,766
|
|
|||
Net income (loss) per share:
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
(2.44
|
)
|
|
$
|
8.19
|
|
|
$
|
4.54
|
|
Diluted (a)
|
|
$
|
(2.44
|
)
|
|
$
|
8.10
|
|
|
$
|
4.48
|
|
(a)
|
As the company reported a net loss attributable to shareholders for 2019, basic and diluted net loss per share attributable to shareholders are the same and stock-based compensation awards for the issuance of 1,614 shares were excluded from the computation of net income per share on a diluted basis as their effect was anti-dilutive. Stock-based compensation awards for the issuance of 651 shares, and 380 shares for the years ended December 31, 2018, and 2017, respectively, were excluded from the computation of net income per share on a diluted basis as their effect was anti-dilutive.
|
|
Shares
|
|
Weighted- Average Exercise Price
|
|
Weighted- Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
||||||
Outstanding at December 31, 2018
|
1,631,977
|
|
|
$
|
63.69
|
|
|
|
|
|
|
|
|
Granted
|
365,273
|
|
|
|
81.05
|
|
|
|
|
|
|
|
|
Exercised
|
(330,750
|
)
|
|
|
51.13
|
|
|
|
|
|
|
|
|
Forfeited
|
(35,483
|
)
|
|
|
77.17
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2019
|
1,631,017
|
|
|
|
69.83
|
|
|
83
|
months
|
|
$
|
24,316
|
|
Exercisable at December 31, 2019
|
789,844
|
|
|
$
|
61.99
|
|
|
67
|
months
|
|
$
|
17,970
|
|
|
2019
|
|
2018
|
|
2017
|
Volatility (percent) (a)
|
24
|
|
24
|
|
26
|
Expected term (in years) (b)
|
5.6
|
|
5.5
|
|
5.1
|
Risk-free interest rate (percent) (c)
|
2.5
|
|
2.7
|
|
1.9
|
(a)
|
Volatility is measured using historical daily price changes of the company's common stock over the expected term of the option.
|
(b)
|
The expected term represents the weighted-average period the option is expected to be outstanding and is based primarily on the historical exercise behavior of employees.
|
(c)
|
The risk-free interest rate is based on the U.S. Treasury zero-coupon yield with a maturity that approximates the expected term of the option.
|
|
Shares
|
|
Weighted- Average Grant Date Fair Value
|
|||
Non-vested shares at December 31, 2018
|
1,092,865
|
|
|
$
|
69.87
|
|
Granted
|
534,898
|
|
|
|
72.92
|
|
Vested
|
(575,394
|
)
|
|
|
60.46
|
|
Forfeited
|
(41,877
|
)
|
|
|
77.11
|
|
Non-vested shares at December 31, 2019
|
1,010,492
|
|
|
$
|
76.55
|
|
|
Arrow SERP
|
|
Wyle Defined Benefit Plan
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Accumulated benefit obligation
|
$
|
93,385
|
|
|
$
|
82,951
|
|
|
$
|
—
|
|
|
$
|
59,399
|
|
Changes in projected benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation at beginning of year
|
90,578
|
|
|
97,607
|
|
|
59,399
|
|
|
60,374
|
|
||||
Service cost
|
2,874
|
|
|
3,103
|
|
|
—
|
|
|
—
|
|
||||
Interest cost
|
3,710
|
|
|
3,338
|
|
|
1,130
|
|
|
2,114
|
|
||||
Actuarial loss (gain)
|
9,210
|
|
|
(8,874
|
)
|
|
1,500
|
|
|
(322
|
)
|
||||
Benefits paid
|
(4,555
|
)
|
|
(4,596
|
)
|
|
(2,718
|
)
|
|
(2,767
|
)
|
||||
Settlement
|
—
|
|
|
—
|
|
|
(59,311
|
)
|
|
—
|
|
||||
Projected benefit obligation at end of year
|
101,817
|
|
|
90,578
|
|
|
—
|
|
|
59,399
|
|
||||
Changes in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
—
|
|
|
—
|
|
|
54,925
|
|
|
46,663
|
|
||||
Actual return on plan assets
|
—
|
|
|
—
|
|
|
7,606
|
|
|
29
|
|
||||
Company contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
11,000
|
|
||||
Benefits paid
|
—
|
|
|
—
|
|
|
(2,718
|
)
|
|
(2,767
|
)
|
||||
Settlement
|
—
|
|
|
—
|
|
|
(59,311
|
)
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
—
|
|
|
—
|
|
|
502
|
|
|
54,925
|
|
||||
Funded status
|
$
|
(101,817
|
)
|
|
$
|
(90,578
|
)
|
|
$
|
502
|
|
|
$
|
(4,474
|
)
|
Amounts recognized in the company's consolidated balance sheets:
|
|
|
|
|
|
|
|
||||||||
Current assets
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
502
|
|
|
$
|
—
|
|
Current liabilities
|
(4,535
|
)
|
|
(4,532
|
)
|
|
—
|
|
|
(4,474
|
)
|
||||
Noncurrent liabilities
|
(97,282
|
)
|
|
(86,046
|
)
|
|
—
|
|
|
—
|
|
||||
Net asset (liability) at end of year
|
(101,817
|
)
|
|
(90,578
|
)
|
|
502
|
|
|
(4,474
|
)
|
||||
Components of net periodic pension cost:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
2,874
|
|
|
3,103
|
|
|
—
|
|
|
—
|
|
||||
Interest cost
|
3,710
|
|
|
3,338
|
|
|
1,130
|
|
|
2,114
|
|
||||
Expected return on plan assets
|
—
|
|
|
—
|
|
|
(954
|
)
|
|
(2,648
|
)
|
||||
Amortization of net loss
|
100
|
|
|
1,531
|
|
|
820
|
|
|
702
|
|
||||
Settlement charge
|
—
|
|
|
—
|
|
|
20,111
|
|
|
—
|
|
||||
Net periodic pension cost
|
$
|
6,684
|
|
|
$
|
7,972
|
|
|
$
|
21,107
|
|
|
$
|
168
|
|
Weighted-average assumptions used to determine benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
3.10
|
%
|
|
4.20
|
%
|
|
N/A
|
|
|
2.60
|
%
|
||||
Rate of compensation increase
|
5.00
|
%
|
|
5.00
|
%
|
|
N/A
|
|
|
N/A
|
|
||||
Expected return on plan assets
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
2.25
|
%
|
||||
Weighted-average assumptions used to determine net periodic pension cost:
|
|
|
|
|
|
|
|
||||||||
Discount rate
|
4.20
|
%
|
|
3.50
|
%
|
|
2.60
|
%
|
|
3.60
|
%
|
||||
Rate of compensation increase
|
5.00
|
%
|
|
5.00
|
%
|
|
N/A
|
|
|
N/A
|
|
||||
Expected return on plan assets
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
5.25
|
%
|
|
Arrow SERP
|
||
2020
|
$
|
4,535
|
|
2021
|
5,882
|
|
|
2022
|
6,037
|
|
|
2023
|
6,426
|
|
|
2024
|
6,611
|
|
|
2025-2029
|
34,043
|
|
|
|
|
||
Operating Leases
|
|
|
||
Right-of-use asset
|
|
$
|
277,953
|
|
|
|
|
||
Lease liability - current
|
|
56,268
|
|
|
Lease liability - non-current
|
|
251,672
|
|
|
Total operating lease liabilities
|
|
$
|
307,940
|
|
|
|
|
||
2020
|
|
$
|
75,841
|
|
2021
|
|
61,681
|
|
|
2022
|
|
47,903
|
|
|
2023
|
|
36,743
|
|
|
2024
|
|
29,399
|
|
|
Thereafter
|
|
129,834
|
|
|
Total lease payments
|
|
381,401
|
|
|
Less: imputed interest
|
|
(73,461
|
)
|
|
Total
|
|
$
|
307,940
|
|
|
|
|
|
|
|
||
Supplemental Cash Flow Information
|
|
|
||
Cash paid for amounts included in the measurement of operating lease liabilities
|
|
$
|
98,171
|
|
Right-of-use assets obtained in exchange for operating lease obligations
|
|
40,860
|
|
|
|
|
|
||
Operating Lease Term and Discount Rate
|
|
|
||
Weighted-average remaining lease term in years
|
|
7
|
|
|
Weighted-average discount rate
|
|
5.0
|
%
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
Components:
|
|
|
|
|
|
|
||||||
Americas
|
|
$
|
7,167,295
|
|
|
$
|
7,816,533
|
|
|
$
|
7,010,385
|
|
EMEA (a)
|
|
5,412,379
|
|
|
5,733,222
|
|
|
4,868,862
|
|
|||
Asia-Pacific
|
|
7,671,061
|
|
|
7,307,096
|
|
|
6,451,209
|
|
|||
Global components
|
|
$
|
20,250,735
|
|
|
$
|
20,856,851
|
|
|
$
|
18,330,456
|
|
|
|
|
|
|
|
|
||||||
ECS:
|
|
|
|
|
|
|
||||||
Americas
|
|
$
|
5,632,025
|
|
|
$
|
5,742,526
|
|
|
$
|
5,388,888
|
|
EMEA (a)
|
|
3,034,087
|
|
|
3,077,391
|
|
|
2,835,219
|
|
|||
Global ECS
|
|
$
|
8,666,112
|
|
|
$
|
8,819,917
|
|
|
$
|
8,224,107
|
|
Consolidated (b)
|
|
$
|
28,916,847
|
|
|
$
|
29,676,768
|
|
|
$
|
26,554,563
|
|
(b)
|
Includes sales related to the United States of $11,511,611, $12,157,306, and $11,038,930 for 2019, 2018, and 2017, respectively.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Operating income (loss):
|
|
|
|
|
|
||||||
Global components (c)
|
$
|
(10,199
|
)
|
|
$
|
1,007,638
|
|
|
$
|
801,027
|
|
Global ECS
|
426,192
|
|
|
427,605
|
|
|
444,710
|
|
|||
Corporate (d)
|
(308,297
|
)
|
|
(287,731
|
)
|
|
(300,001
|
)
|
|||
Consolidated
|
$
|
107,696
|
|
|
$
|
1,147,512
|
|
|
$
|
945,736
|
|
(c)
|
Global components operating income for 2019 includes impairments of $698,246, charges of $22,332 related to a subset of inventory held by its digital business, and a charge $18,037 related to the receivables and inventory of its financing solutions business. The company has made the decision to narrow its digital inventory offerings and will no longer provide notes to its components customers. Also included are restructuring, integration, and other charges of $10,778 and a loss on disposition of businesses, net, of $19,384 for 2019.
|
(d)
|
Includes restructuring, integration, and other charges of $79,007, $60,361, and $74,588 in 2019, 2018, and 2017, respectively. Also included in 2019, 2018, and 2017 was a net loss on the disposition of businesses, net of $1,868, $3,604, and $21,000, respectively.
|
|
|
2019
|
|
2018
|
||||
Global components
|
|
$
|
10,253,006
|
|
|
$
|
11,425,579
|
|
Global ECS
|
|
5,479,919
|
|
|
5,632,102
|
|
||
Corporate
|
|
667,871
|
|
|
726,764
|
|
||
Consolidated
|
|
$
|
16,400,796
|
|
|
$
|
17,784,445
|
|
|
|
2019
|
|
2018
|
||||
Americas (e)
|
|
$
|
594,357
|
|
|
$
|
673,228
|
|
EMEA
|
|
157,550
|
|
|
110,996
|
|
||
Asia-Pacific
|
|
51,203
|
|
|
40,476
|
|
||
Consolidated
|
|
$
|
803,110
|
|
|
$
|
824,700
|
|
(e)
|
Includes net property, plant, and equipment related to the United States of $591,818 and $670,201 at December 31, 2019 and 2018, respectively.
|
|
|
First Quarter
|
|
Second Quarter (b)
|
|
Third Quarter (c)
|
|
Fourth Quarter (d)
|
||||||||
2019
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
|
$
|
7,155,991
|
|
|
$
|
7,344,548
|
|
|
$
|
7,078,118
|
|
|
$
|
7,338,190
|
|
Gross profit
|
|
861,688
|
|
|
814,909
|
|
|
798,841
|
|
|
822,943
|
|
||||
Operating income (loss)
|
|
245,560
|
|
|
(549,190
|
)
|
|
173,218
|
|
|
238,108
|
|
||||
Net income (loss) attributable to shareholders
|
|
140,735
|
|
|
(548,966
|
)
|
|
92,131
|
|
|
112,013
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per share (a):
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.65
|
|
|
$
|
(6.48
|
)
|
|
$
|
1.11
|
|
|
$
|
1.37
|
|
Diluted
|
|
$
|
1.63
|
|
|
$
|
(6.48
|
)
|
|
$
|
1.10
|
|
|
$
|
1.36
|
|
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Sales
|
|
$
|
6,875,613
|
|
|
$
|
7,392,528
|
|
|
$
|
7,490,445
|
|
|
$
|
7,918,182
|
|
Gross profit
|
|
868,944
|
|
|
932,820
|
|
|
923,778
|
|
|
975,370
|
|
||||
Operating income
|
|
235,995
|
|
|
286,827
|
|
|
290,310
|
|
|
334,380
|
|
||||
Net income attributable to shareholders
|
|
139,094
|
|
|
169,915
|
|
|
176,533
|
|
|
230,653
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income per share (a):
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
1.58
|
|
|
$
|
1.94
|
|
|
$
|
2.02
|
|
|
$
|
2.66
|
|
Diluted
|
|
$
|
1.56
|
|
|
$
|
1.92
|
|
|
$
|
1.99
|
|
|
$
|
2.63
|
|
(a)
|
Quarterly net income per share is calculated using the weighted-average shares outstanding during each quarterly period, while net income per share for the full year is calculated using the weighted-average shares outstanding during the year. Therefore, the sum of the net income per share for each of the four quarters may not equal the net income per share for the full year. As the company reported a net loss attributable to shareholders for the second quarter of 2019, basic and diluted net loss per share attributable to shareholders are the same.
|
(b)
|
Net income attributable to shareholders includes impairments of $697,993, a charge of $20,114 related to a subset of inventory held by its digital business, and a charge of $15,851 related to the receivables and inventory of its financing solutions business during the second quarter of 2019.
|
(c)
|
Net income attributable to shareholders includes a loss on disposition of businesses, net, of $14,573 and personnel charges of $30,906 related to the operating expense reduction program, previously disclosed in July 2019, during the third quarter of 2019.
|
(d)
|
Net income attributable to shareholders includes a U.S. Tax Act benefit of $28,323 during the fourth quarter of 2018. Net income attributable to shareholders includes a pension settlement of $20,111 and loss on disposition of businesses, net of $5,813, and tax expense of $18,193 during the fourth quarter of 2019 related to the repatriation of foreign earnings and the wind down of the personal computer and mobility asset disposition business.
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Exhibit
Number
|
|
Exhibit
|
|
|
|
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|
|
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|
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|
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|
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|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
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|
||
|
|
|
|
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|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
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|
|
|
|
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|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
10(l)
|
|
Form of Indemnification Agreement between the company and each director (incorporated by reference to Exhibit 10(g) to the company's Annual Report on Form 10-K for the year ended December 31, 1986, Commission File No. 1-4482).
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
|
|
|
||
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Documents.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Definition Linkbase Document.
|
|
Balance at beginning of year
|
|
Charged to income
|
|
Other (a)
|
|
Write-down
|
|
Balance at end of year
|
||||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Year ended December 31, 2019
|
$
|
75,588
|
|
|
$
|
26,220
|
|
|
$
|
(681
|
)
|
|
$
|
34,392
|
|
|
$
|
66,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Year ended December 31, 2018
|
$
|
56,291
|
|
|
$
|
34,936
|
|
|
$
|
(1,958
|
)
|
|
$
|
13,681
|
|
|
$
|
75,588
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Year ended December 31, 2017
|
$
|
52,256
|
|
|
$
|
12,887
|
|
|
$
|
2,831
|
|
|
$
|
11,683
|
|
|
$
|
56,291
|
|
(a)
|
“Other” primarily includes the effect of fluctuations in foreign currencies and the allowance for doubtful accounts of the businesses acquired and disposed of by the company.
|
|
|
|
ARROW ELECTRONICS, INC.
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Lily Y. Hughes
|
|
|
|
|
Lily Y. Hughes
|
|
|
|
|
Senior Vice President, Chief Legal Officer and Corporate Secretary
|
|
|
|
|
February 13, 2020
|
|
|
|
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 13, 2020:
|
||||
|
|
|
|
|
By:
|
/s/ Michael J. Long
|
|
|
|
|
Michael J. Long, Chairman, President, and Chief Executive Officer (principal executive officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Chris D. Stansbury
|
|
|
|
|
Chris D. Stansbury, Senior Vice President and Chief Financial Officer (principal financial officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Richard A. Seidlitz
|
|
|
|
|
Richard A. Seidlitz, Corporate Controller (principal accounting officer)
|
|
|
|
|
|
|
|
|
By:
|
/s/ Barry W. Perry
|
|
|
|
|
Barry W. Perry, Lead Independent Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Philip K. Asherman
|
|
|
|
|
Philip K. Asherman, Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Steven H. Gunby
|
|
|
|
|
Steven H. Gunby, Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Gail E. Hamilton
|
|
|
|
|
Gail E. Hamilton, Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Richard S. Hill
|
|
|
|
|
Richard S. Hill, Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Fran Keeth
|
|
|
|
|
Fran Keeth, Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Andrew C. Kerin
|
|
|
|
|
Andrew C. Kerin, Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Stephen C. Patrick
|
|
|
|
|
Stephen C. Patrick, Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Laurel J. Krzeminski
|
|
|
|
|
Laurel J. Krzeminski, Director
|
|
|
1 Year Arrow Electronics Chart |
1 Month Arrow Electronics Chart |
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