x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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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, Centennial, Colorado
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80112
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer x
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o
|
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Emerging growth company o
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Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Sales
|
|
$
|
7,155,991
|
|
|
$
|
6,875,613
|
|
Cost of sales
|
|
6,294,303
|
|
|
6,006,669
|
|
||
Gross profit
|
|
861,688
|
|
|
868,944
|
|
||
Operating expenses:
|
|
|
|
|
||||
Selling, general, and administrative expenses
|
|
556,076
|
|
|
562,969
|
|
||
Depreciation and amortization
|
|
47,526
|
|
|
47,247
|
|
||
Loss on disposition of businesses, net
|
|
866
|
|
|
1,562
|
|
||
Restructuring, integration, and other charges
|
|
11,660
|
|
|
21,171
|
|
||
|
|
616,128
|
|
|
632,949
|
|
||
Operating income
|
|
245,560
|
|
|
235,995
|
|
||
Equity in losses of affiliated companies
|
|
(1,467
|
)
|
|
(673
|
)
|
||
Gain (loss) on investments, net
|
|
5,348
|
|
|
(2,452
|
)
|
||
Employee benefit plan expense
|
|
1,139
|
|
|
1,231
|
|
||
Interest and other financing expense, net
|
|
51,981
|
|
|
45,179
|
|
||
Income before income taxes
|
|
196,321
|
|
|
186,460
|
|
||
Provision for income taxes
|
|
53,907
|
|
|
46,590
|
|
||
Consolidated net income
|
|
142,414
|
|
|
139,870
|
|
||
Noncontrolling interests
|
|
1,679
|
|
|
776
|
|
||
Net income attributable to shareholders
|
|
$
|
140,735
|
|
|
$
|
139,094
|
|
Net income per share:
|
|
|
|
|
|
|
||
Basic
|
|
$
|
1.65
|
|
|
$
|
1.58
|
|
Diluted
|
|
$
|
1.63
|
|
|
$
|
1.56
|
|
Weighted-average shares outstanding:
|
|
|
|
|
|
|
||
Basic
|
|
85,400
|
|
|
87,955
|
|
||
Diluted
|
|
86,319
|
|
|
89,035
|
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Consolidated net income
|
|
$
|
142,414
|
|
|
$
|
139,870
|
|
Other comprehensive income:
|
|
|
|
|
||||
Foreign currency translation adjustment and other
|
|
4,442
|
|
|
44,969
|
|
||
Unrealized gain on foreign exchange contracts designated as net investment hedges, net of taxes
|
|
5,533
|
|
|
—
|
|
||
Unrealized gain on interest rate swaps designated as cash flow hedges, net of taxes
|
|
240
|
|
|
228
|
|
||
Employee benefit plan items, net of taxes
|
|
319
|
|
|
282
|
|
||
Other comprehensive income
|
|
10,534
|
|
|
45,479
|
|
||
Comprehensive income
|
|
152,948
|
|
|
185,349
|
|
||
Less: Comprehensive income attributable to noncontrolling interests
|
|
1,031
|
|
|
523
|
|
||
Comprehensive income attributable to shareholders
|
|
$
|
151,917
|
|
|
$
|
184,826
|
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
351,899
|
|
|
$
|
509,327
|
|
Accounts receivable, net
|
|
7,902,516
|
|
|
8,945,463
|
|
||
Inventories
|
|
3,734,905
|
|
|
3,878,678
|
|
||
Other current assets
|
|
264,564
|
|
|
274,832
|
|
||
Total current assets
|
|
12,253,884
|
|
|
13,608,300
|
|
||
Property, plant, and equipment, at cost:
|
|
|
|
|
|
|
||
Land
|
|
7,845
|
|
|
7,882
|
|
||
Buildings and improvements
|
|
157,326
|
|
|
158,712
|
|
||
Machinery and equipment
|
|
1,428,758
|
|
|
1,425,933
|
|
||
|
|
1,593,929
|
|
|
1,592,527
|
|
||
Less: Accumulated depreciation and amortization
|
|
(774,325
|
)
|
|
(767,827
|
)
|
||
Property, plant, and equipment, net
|
|
819,604
|
|
|
824,700
|
|
||
Investments in affiliated companies
|
|
85,296
|
|
|
83,693
|
|
||
Intangible assets, net
|
|
369,291
|
|
|
372,644
|
|
||
Goodwill
|
|
2,632,451
|
|
|
2,624,690
|
|
||
Other assets
|
|
670,226
|
|
|
270,418
|
|
||
Total assets
|
|
$
|
16,830,752
|
|
|
$
|
17,784,445
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
6,034,457
|
|
|
$
|
7,631,879
|
|
Accrued expenses
|
|
860,982
|
|
|
912,292
|
|
||
Short-term borrowings, including current portion of long-term debt
|
|
138,686
|
|
|
246,257
|
|
||
Total current liabilities
|
|
7,034,125
|
|
|
8,790,428
|
|
||
Long-term debt
|
|
3,575,891
|
|
|
3,239,115
|
|
||
Other liabilities
|
|
719,326
|
|
|
378,536
|
|
||
Commitments and contingencies (Note N)
|
|
|
|
|
|
|
||
Equity:
|
|
|
|
|
|
|
||
Shareholders' equity:
|
|
|
|
|
|
|
||
Common stock, par value $1:
|
|
|
|
|
|
|
||
Authorized - 160,000 shares in both 2019 and 2018, respectively
|
|
|
|
|
|
|
||
Issued - 125,424 shares in both 2019 and 2018, respectively
|
|
125,424
|
|
|
125,424
|
|
||
Capital in excess of par value
|
|
1,128,757
|
|
|
1,135,934
|
|
||
Treasury stock (40,251 and 40,233 shares in 2019 and 2018, respectively), at cost
|
|
(1,992,981
|
)
|
|
(1,972,254
|
)
|
||
Retained earnings
|
|
6,476,070
|
|
|
6,335,335
|
|
||
Accumulated other comprehensive loss
|
|
(288,267
|
)
|
|
(299,449
|
)
|
||
Total shareholders' equity
|
|
5,449,003
|
|
|
5,324,990
|
|
||
Noncontrolling interests
|
|
52,407
|
|
|
51,376
|
|
||
Total equity
|
|
5,501,410
|
|
|
5,376,366
|
|
||
Total liabilities and equity
|
|
$
|
16,830,752
|
|
|
$
|
17,784,445
|
|
|
|
Three Months Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Consolidated net income
|
|
$
|
142,414
|
|
|
$
|
139,870
|
|
Adjustments to reconcile consolidated net income to net cash used for operations:
|
|
|
|
|
||||
Depreciation and amortization
|
|
47,526
|
|
|
47,247
|
|
||
Amortization of stock-based compensation
|
|
19,090
|
|
|
13,043
|
|
||
Equity in losses of affiliated companies
|
|
1,467
|
|
|
673
|
|
||
Deferred income taxes
|
|
6,968
|
|
|
(2,818
|
)
|
||
(Gain) loss on investments, net
|
|
(5,348
|
)
|
|
2,452
|
|
||
Other
|
|
5,575
|
|
|
3,465
|
|
||
Change in assets and liabilities, net of effects of acquired and disposed businesses:
|
|
|
|
|
||||
Accounts receivable
|
|
949,989
|
|
|
789,843
|
|
||
Inventories
|
|
134,402
|
|
|
(260,620
|
)
|
||
Accounts payable
|
|
(1,540,008
|
)
|
|
(691,818
|
)
|
||
Accrued expenses
|
|
(50,292
|
)
|
|
(22,087
|
)
|
||
Other assets and liabilities
|
|
(40,782
|
)
|
|
(94,327
|
)
|
||
Net cash used for operating activities
|
|
(328,999
|
)
|
|
(75,077
|
)
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Cash consideration paid for acquired businesses, net of cash acquired
|
|
—
|
|
|
(331,467
|
)
|
||
Proceeds from disposition of businesses
|
|
—
|
|
|
34,291
|
|
||
Acquisition of property, plant, and equipment
|
|
(33,815
|
)
|
|
(34,735
|
)
|
||
Other
|
|
2,940
|
|
|
(4,500
|
)
|
||
Net cash used for investing activities
|
|
(30,875
|
)
|
|
(336,411
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Change in short-term and other borrowings
|
|
(107,244
|
)
|
|
(18,387
|
)
|
||
Proceeds from long-term bank borrowings, net
|
|
335,023
|
|
|
601,386
|
|
||
Redemption of notes
|
|
—
|
|
|
(300,000
|
)
|
||
Proceeds from exercise of stock options
|
|
6,931
|
|
|
4,997
|
|
||
Repurchases of common stock
|
|
(53,925
|
)
|
|
(52,513
|
)
|
||
Net cash provided by financing activities
|
|
180,785
|
|
|
235,483
|
|
||
Effect of exchange rate changes on cash
|
|
21,661
|
|
|
(5,434
|
)
|
||
Net decrease in cash and cash equivalents
|
|
(157,428
|
)
|
|
(181,439
|
)
|
||
Cash and cash equivalents at beginning of period
|
|
509,327
|
|
|
730,083
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
351,899
|
|
|
$
|
548,644
|
|
|
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, 2018
|
$
|
125,424
|
|
|
$
|
1,135,934
|
|
|
$
|
(1,972,254
|
)
|
|
$
|
6,335,335
|
|
|
$
|
(299,449
|
)
|
|
$
|
51,376
|
|
|
$
|
5,376,366
|
|
Consolidated net income
|
—
|
|
|
—
|
|
|
—
|
|
|
140,735
|
|
|
—
|
|
|
1,679
|
|
|
142,414
|
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,182
|
|
|
(648
|
)
|
|
10,534
|
|
|||||||
Amortization of stock-based compensation
|
—
|
|
|
19,090
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19,090
|
|
|||||||
Shares issued for stock-based compensation awards
|
—
|
|
|
(26,267
|
)
|
|
33,198
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,931
|
|
|||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(53,925
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53,925
|
)
|
|||||||
Balance at March 30, 2019
|
$
|
125,424
|
|
|
$
|
1,128,757
|
|
|
$
|
(1,992,981
|
)
|
|
$
|
6,476,070
|
|
|
$
|
(288,267
|
)
|
|
$
|
52,407
|
|
|
$
|
5,501,410
|
|
|
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, 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
|
—
|
|
|
—
|
|
|
—
|
|
|
139,094
|
|
|
—
|
|
|
776
|
|
|
139,870
|
|
|||||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,732
|
|
|
(255
|
)
|
|
45,477
|
|
|||||||
Amortization of stock-based compensation
|
—
|
|
|
13,043
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,043
|
|
|||||||
Shares issued for stock-based compensation awards
|
—
|
|
|
(22,102
|
)
|
|
27,099
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,997
|
|
|||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
(52,513
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52,513
|
)
|
|||||||
Balance at March 31, 2018
|
$
|
125,424
|
|
|
$
|
1,105,108
|
|
|
$
|
(1,787,653
|
)
|
|
$
|
5,758,234
|
|
|
$
|
(101,505
|
)
|
|
$
|
49,206
|
|
|
$
|
5,148,814
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
Global
Components
|
|
Global ECS
|
|
Total
|
||||||
Balance as of December 31, 2018 (a)
|
|
$
|
1,437,501
|
|
|
$
|
1,187,189
|
|
|
$
|
2,624,690
|
|
Dispositions and related adjustments
|
|
—
|
|
|
(1,386
|
)
|
|
(1,386
|
)
|
|||
Foreign currency translation adjustment
|
|
15,869
|
|
|
(6,722
|
)
|
|
9,147
|
|
|||
Balance as of March 30, 2019 (a)
|
|
$
|
1,453,370
|
|
|
$
|
1,179,081
|
|
|
$
|
2,632,451
|
|
(a)
|
The total carrying value of goodwill as of March 30, 2019 and December 31, 2018 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 enterprise computing solutions ("ECS") business segment.
|
|
|
Weighted-Average Life
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||
Non-amortizable trade names
|
|
indefinite
|
|
$
|
101,000
|
|
|
$
|
—
|
|
|
$
|
101,000
|
|
Customer relationships
|
|
11 years
|
|
482,084
|
|
|
(232,649
|
)
|
|
249,435
|
|
|||
Developed technology
|
|
5 years
|
|
6,340
|
|
|
(4,596
|
)
|
|
1,744
|
|
|||
Amortizable trade name
|
|
9 years
|
|
21,407
|
|
|
(4,295
|
)
|
|
17,112
|
|
|||
|
|
|
|
$
|
610,831
|
|
|
$
|
(241,540
|
)
|
|
$
|
369,291
|
|
|
|
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
|
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Marubun/Arrow
|
|
$
|
75,107
|
|
|
$
|
73,253
|
|
Other
|
|
10,189
|
|
|
10,440
|
|
||
|
|
$
|
85,296
|
|
|
$
|
83,693
|
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Marubun/Arrow
|
|
$
|
1,226
|
|
|
$
|
1,091
|
|
Other
|
|
(2,693
|
)
|
|
(1,764
|
)
|
||
|
|
$
|
(1,467
|
)
|
|
$
|
(673
|
)
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Accounts receivable
|
|
$
|
7,962,977
|
|
|
$
|
9,021,051
|
|
Allowances for doubtful accounts
|
|
(60,461
|
)
|
|
(75,588
|
)
|
||
|
|
$
|
7,902,516
|
|
|
$
|
8,945,463
|
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Borrowings on lines of credit
|
|
$
|
—
|
|
|
$
|
180,000
|
|
Commercial paper
|
|
74,836
|
|
|
—
|
|
||
Other short-term borrowings
|
|
63,850
|
|
|
66,257
|
|
||
|
|
$
|
138,686
|
|
|
$
|
246,257
|
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Revolving credit facility
|
|
$
|
55,000
|
|
|
$
|
—
|
|
Asset securitization program
|
|
1,090,000
|
|
|
810,000
|
|
||
6.00% notes, due 2020
|
|
209,191
|
|
|
209,147
|
|
||
5.125% notes, due 2021
|
|
130,582
|
|
|
130,546
|
|
||
3.50% notes, due 2022
|
|
347,485
|
|
|
347,288
|
|
||
4.50% notes, due 2023
|
|
297,751
|
|
|
297,622
|
|
||
3.25% notes, due 2024
|
|
494,327
|
|
|
494,091
|
|
||
4.00% notes, due 2025
|
|
345,911
|
|
|
345,762
|
|
||
7.50% senior debentures, due 2027
|
|
109,796
|
|
|
109,776
|
|
||
3.875% notes, due 2028
|
|
494,231
|
|
|
494,095
|
|
||
Other obligations with various interest rates and due dates
|
|
1,617
|
|
|
788
|
|
||
|
|
$
|
3,575,891
|
|
|
$
|
3,239,115
|
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||
6.00% notes, due 2020
|
|
214,500
|
|
|
214,500
|
|
5.125% notes, due 2021
|
|
135,500
|
|
|
134,500
|
|
3.50% notes, due 2022
|
|
353,000
|
|
|
345,000
|
|
4.50% notes, due 2023
|
|
311,500
|
|
|
303,500
|
|
3.25% notes, due 2024
|
|
484,500
|
|
|
467,000
|
|
4.00% notes, due 2025
|
|
351,000
|
|
|
340,500
|
|
7.50% senior debentures, due 2027
|
|
130,000
|
|
|
128,000
|
|
3.875% notes, due 2028
|
|
484,000
|
|
|
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
|
|
$
|
21,738
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21,738
|
|
Equity investments (b)
|
|
Other assets
|
|
42,753
|
|
|
—
|
|
|
—
|
|
|
42,753
|
|
||||
Interest rate swaps
|
|
Other liabilities
|
|
—
|
|
|
(557
|
)
|
|
—
|
|
|
(557
|
)
|
||||
Foreign exchange contracts
|
|
Other current assets
|
|
—
|
|
|
12,925
|
|
|
—
|
|
|
12,925
|
|
||||
Foreign exchange contracts
|
|
Accrued expenses
|
|
—
|
|
|
(998
|
)
|
|
—
|
|
|
(998
|
)
|
||||
|
|
|
|
$
|
64,491
|
|
|
$
|
11,370
|
|
|
$
|
—
|
|
|
$
|
75,861
|
|
|
|
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. The company recorded an unrealized gain of $1,824 and an unrealized loss of $2,579 for the first quarter of 2019 and 2018, respectively, on equity securities held at the end of each quarter.
|
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
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Gain (Loss) Recognized in Income
|
|
|
|
|
||||
Foreign exchange contracts
|
|
$
|
3,489
|
|
|
$
|
(5,742
|
)
|
Interest rate swaps
|
|
(319
|
)
|
|
(303
|
)
|
||
Total
|
|
$
|
3,170
|
|
|
$
|
(6,045
|
)
|
Gain (Loss) Recognized in Other Comprehensive Income before reclassifications, net of tax
|
|
|
|
|
||||
Foreign exchange contracts
|
|
$
|
5,953
|
|
|
$
|
(1,078
|
)
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Restructuring and integration charges - current period actions
|
|
$
|
3,007
|
|
|
$
|
11,432
|
|
Restructuring and integration charges - actions taken in prior periods
|
|
(61
|
)
|
|
1,349
|
|
||
Other charges
|
|
8,714
|
|
|
8,390
|
|
||
|
|
$
|
11,660
|
|
|
$
|
21,171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
•
|
acquisition-related charges for the first quarter of $1,022 related to professional and other fees directly related to recent acquisition activity as well as contingent consideration for acquisitions completed in prior years.
|
•
|
$5,559 in charges related to relocation and other centralization efforts to maximize operating efficiencies.
|
•
|
acquisition related charges for the first quarter of $6,154 related to professional and other fees directly related to recent acquisition activity as well as contingent consideration for acquisitions completed in prior years.
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Net income attributable to shareholders
|
|
$
|
140,735
|
|
|
$
|
139,094
|
|
Weighted-average shares outstanding - basic
|
|
85,400
|
|
|
87,955
|
|
||
Net effect of various dilutive stock-based compensation awards
|
|
919
|
|
|
1,080
|
|
||
Weighted-average shares outstanding - diluted
|
|
86,319
|
|
|
89,035
|
|
||
Net income per share:
|
|
|
|
|
|
|
||
Basic
|
|
$
|
1.65
|
|
|
$
|
1.58
|
|
Diluted (a)
|
|
$
|
1.63
|
|
|
$
|
1.56
|
|
(a)
|
Stock-based compensation awards for the issuance of 903 and 415 shares for the first quarter of 2019 and 2018, respectively, were excluded from the computation of net income per share on a diluted basis as their effect was anti-dilutive.
|
|
|
|
|
|
March 30, 2019
|
||
Operating Leases
|
|
|
||
Right-of-use asset
|
|
$
|
349,077
|
|
|
|
|
||
Lease liability - current
|
|
68,603
|
|
|
Lease liability - non-current
|
|
302,283
|
|
|
Total operating lease liabilities
|
|
$
|
370,886
|
|
|
|
March 30, 2019
|
||
2019
|
|
$
|
75,827
|
|
2020
|
|
76,035
|
|
|
2021
|
|
59,166
|
|
|
2022
|
|
46,851
|
|
|
2023
|
|
37,177
|
|
|
Thereafter
|
|
160,022
|
|
|
Total lease payments
|
|
455,078
|
|
|
Less imputed interest
|
|
(84,192
|
)
|
|
Total
|
|
$
|
370,886
|
|
|
|
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Foreign Currency Translation Adjustment and Other:
|
|
|
|
|
||||
Other comprehensive income before reclassifications (a)
|
|
$
|
5,276
|
|
|
$
|
46,400
|
|
Amounts reclassified into income
|
|
(186
|
)
|
|
(1,178
|
)
|
||
Unrealized Gain (Loss) on Foreign Exchange Contracts Designated as Net Investment Hedges, Net:
|
|
|
|
|
||||
Other comprehensive income before reclassifications
|
|
6,592
|
|
|
—
|
|
||
Amounts reclassified into income
|
|
(1,059
|
)
|
|
—
|
|
||
Unrealized Gain (Loss) on Interest Rate Swaps Designated as Cash Flow Hedges, Net:
|
|
|
|
|
||||
Amounts reclassified into income
|
|
240
|
|
|
228
|
|
||
Employee Benefit Plan Items, Net:
|
|
|
|
|
||||
Amounts reclassified into income
|
|
319
|
|
|
282
|
|
||
Other:
|
|
|
|
|
||||
Retained earnings adjustment (b)
|
|
—
|
|
|
(22,354
|
)
|
||
Net change in Accumulated other comprehensive income (loss)
|
|
$
|
11,182
|
|
|
$
|
23,378
|
|
(a)
|
Includes intra-entity foreign currency transactions that are of a long-term investment nature of $9,859 and $(11,924) for the first quarter of 2019 and 2018, respectively.
|
(b)
|
Amounts relate 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.
|
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
|
|
|
$
|
311,395
|
|
|
$
|
88,605
|
|
December 2018
|
|
600,000
|
|
|
—
|
|
|
600,000
|
|
|||
Total
|
|
$
|
1,000,000
|
|
|
$
|
311,395
|
|
|
$
|
688,605
|
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Components:
|
|
|
|
|
||||
Americas
|
|
$
|
1,907,029
|
|
|
$
|
1,796,698
|
|
EMEA (a)
|
|
1,503,366
|
|
|
1,478,386
|
|
||
Asia/Pacific
|
|
1,781,532
|
|
|
1,654,848
|
|
||
Global components
|
|
$
|
5,191,927
|
|
|
$
|
4,929,932
|
|
|
|
|
|
|
||||
ECS:
|
|
|
|
|
||||
Americas
|
|
$
|
1,200,907
|
|
|
$
|
1,195,411
|
|
EMEA (a)
|
|
763,157
|
|
|
750,270
|
|
||
Global ECS
|
|
$
|
1,964,064
|
|
|
$
|
1,945,681
|
|
Consolidated (b)
|
|
$
|
7,155,991
|
|
|
$
|
6,875,613
|
|
(a)
|
Defined as Europe, the Middle East, and Africa.
|
(b)
|
Includes sales related to the United States of $2,782,035 and $2,649,668 for the first quarter of 2019 and 2018, respectively.
|
|
|
Quarter Ended
|
||||||
|
|
March 30,
2019 |
|
March 31,
2018 |
||||
Operating income (loss):
|
|
|
|
|
|
|
||
Global components
|
|
$
|
234,532
|
|
|
$
|
229,546
|
|
Global ECS
|
|
86,718
|
|
|
83,806
|
|
||
Corporate (c)
|
|
(75,690
|
)
|
|
(77,357
|
)
|
||
Consolidated
|
|
$
|
245,560
|
|
|
$
|
235,995
|
|
(c)
|
Includes restructuring, integration, and other charges of $11,660 and $21,171 for the first quarter of 2019 and 2018, respectively. Also included in the first quarter of 2019 and 2018 was a net loss on the disposition of businesses of $866 and $1,562, respectively.
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Global components
|
|
$
|
11,479,107
|
|
|
$
|
11,425,579
|
|
Global ECS
|
|
4,567,305
|
|
|
5,632,102
|
|
||
Corporate
|
|
784,340
|
|
|
726,764
|
|
||
Consolidated
|
|
$
|
16,830,752
|
|
|
$
|
17,784,445
|
|
|
|
March 30,
2019 |
|
December 31,
2018 |
||||
Americas (d)
|
|
$
|
659,608
|
|
|
$
|
673,228
|
|
EMEA
|
|
119,105
|
|
|
110,996
|
|
||
Asia/Pacific
|
|
40,891
|
|
|
40,476
|
|
||
Consolidated
|
|
$
|
819,604
|
|
|
$
|
824,700
|
|
(d)
|
Includes net property, plant, and equipment related to the United States of $656,736 and $670,201 at March 30, 2019 and December 31, 2018, respectively.
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
restructuring, integration, and other charges of $11.7 million in 2019 and $21.2 million in 2018;
|
•
|
identifiable intangible asset amortization of $11.9 million in 2019 and $13.5 million in 2018;
|
•
|
net gain on investments of $5.3 million in 2019 and net loss on investments of $2.5 million in 2018;
|
•
|
loss on disposition of businesses, net, of $0.9 million in 2019 and $1.6 million in 2018; and
|
•
|
Impact of U.S. tax reform of $3.5 million in 2019.
|
•
|
Sales, income, or expense items as adjusted for the impact of changes in foreign currencies (referred to as "impact of changes in foreign currencies") by re-translating prior period results at current period foreign exchange rates and 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 "impact of dispositions");
|
•
|
Operating income as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, and loss on disposition of businesses, net; and
|
•
|
Net income attributable to shareholders as adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, loss on disposition of businesses, net, gain (loss) on investments, net, and the impact of U.S. tax reform.
|
|
Quarter Ended
|
|
|
|||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
%
Change
|
|||||
|
|
|
|
|
|
|||||
Consolidated sales, as reported
|
$
|
7,156
|
|
|
$
|
6,876
|
|
|
4.1
|
%
|
Impact of changes in foreign currencies
|
—
|
|
|
(197
|
)
|
|
|
|||
Impact of dispositions
|
(11
|
)
|
|
(41
|
)
|
|
|
|||
Consolidated sales, as adjusted
|
$
|
7,145
|
|
|
$
|
6,638
|
|
|
7.6
|
%
|
|
|
|
|
|
|
|||||
Global components sales, as reported
|
$
|
5,192
|
|
|
$
|
4,930
|
|
|
5.3
|
%
|
Impact of changes in foreign currencies
|
—
|
|
|
(130
|
)
|
|
|
|||
Global components sales, as adjusted
|
$
|
5,192
|
|
|
$
|
4,800
|
|
|
8.2
|
%
|
|
|
|
|
|
|
|||||
Global ECS sales, as reported
|
$
|
1,964
|
|
|
$
|
1,946
|
|
|
0.9
|
%
|
Impact of changes in foreign currencies
|
—
|
|
|
(67
|
)
|
|
|
|||
Impact of dispositions
|
(11
|
)
|
|
(41
|
)
|
|
|
|||
Global ECS sales, as adjusted
|
$
|
1,953
|
|
|
$
|
1,838
|
|
|
6.3
|
%
|
|
Quarter Ended
|
|
|
|||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
% Change
|
|||||
|
|
|
|
|
|
|||||
Consolidated gross profit, as reported
|
$
|
862
|
|
|
$
|
869
|
|
|
(0.8
|
)%
|
Impact of changes in foreign currencies
|
—
|
|
|
(29
|
)
|
|
|
|||
Impact of dispositions
|
(1
|
)
|
|
(7
|
)
|
|
|
|||
Consolidated gross profit, as adjusted*
|
$
|
861
|
|
|
$
|
832
|
|
|
3.4
|
%
|
Consolidated gross profit as a percentage of sales, as reported
|
12.0
|
%
|
|
12.6
|
%
|
|
(60) bps
|
|
||
Consolidated gross profit as a percentage of sales, as adjusted
|
12.0
|
%
|
|
12.5
|
%
|
|
(50) bps
|
|
|
Quarter Ended
|
|
|
|||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
%
Change
|
|||||
|
|
|
|
|
|
|||||
Selling, general, and administrative expenses, as reported
|
$
|
556
|
|
|
$
|
563
|
|
|
(1.2
|
)%
|
Depreciation and amortization, as reported
|
48
|
|
|
47
|
|
|
0.6
|
%
|
||
Operating expenses, as reported
|
$
|
604
|
|
|
$
|
610
|
|
|
(1.1
|
)%
|
Impact of changes in foreign currencies
|
—
|
|
|
(19
|
)
|
|
|
|||
Impact of dispositions
|
(1
|
)
|
|
(8
|
)
|
|
|
|||
Operating expenses, as adjusted
|
$
|
603
|
|
|
$
|
583
|
|
|
3.4
|
%
|
Operating expenses as a percentage of sales, as reported
|
8.4
|
%
|
|
8.9
|
%
|
|
(50) bps
|
|
||
Operating expenses as a percentage of sales, as adjusted
|
8.4
|
%
|
|
8.8
|
%
|
|
(40) bps
|
|
|
Quarter Ended
|
|
|
|||||||
|
March 30,
2019 |
|
March 31,
2018 |
|
%
Change
|
|||||
|
|
|
|
|
|
|||||
Consolidated operating income, as reported
|
$
|
246
|
|
|
$
|
236
|
|
|
4.1
|
%
|
Identifiable intangible asset amortization
|
12
|
|
|
14
|
|
|
|
|||
Restructuring, integration, and other charges
|
12
|
|
|
21
|
|
|
|
|||
Loss on disposition of businesses, net
|
1
|
|
|
2
|
|
|
|
|||
Consolidated operating income, as adjusted*
|
$
|
270
|
|
|
$
|
272
|
|
|
(0.8
|
)%
|
Consolidated operating income as a percentage of sales, as reported
|
3.4
|
%
|
|
3.4
|
%
|
|
flat
|
|
||
Consolidated operating income, as adjusted, as a percentage of sales, as reported
|
3.8
|
%
|
|
4.0
|
%
|
|
(20) bps
|
|
|
Quarter Ended
|
||||||
|
March 30,
2019 |
|
March 31,
2018 |
||||
|
|
|
|
||||
Net income attributable to shareholders, as reported
|
$
|
141
|
|
|
$
|
139
|
|
Identifiable intangible asset amortization*
|
12
|
|
|
13
|
|
||
Restructuring, integration, and other charges
|
12
|
|
|
21
|
|
||
Loss on disposition of businesses, net
|
1
|
|
|
2
|
|
||
(Gain) loss on investments, net
|
(5
|
)
|
|
2
|
|
||
Tax effect of adjustments above
|
(5
|
)
|
|
(10
|
)
|
||
Impact of U.S. tax reform
|
4
|
|
|
—
|
|
||
Net income attributable to shareholders, as adjusted **
|
$
|
158
|
|
|
$
|
168
|
|
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
|
|
|
$
|
311,395
|
|
|
$
|
88,605
|
|
December 2018
|
|
600,000
|
|
|
—
|
|
|
600,000
|
|
|||
Total
|
|
$
|
1,000,000
|
|
|
$
|
311,395
|
|
|
$
|
688,605
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
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
Programs
|
||||||
January 1 through January 26, 2019
|
|
235,276
|
|
|
$
|
72.25
|
|
|
235,276
|
|
|
$
|
711,613
|
|
January 27 through February 23, 2019
|
|
339,126
|
|
|
80.84
|
|
|
170,749
|
|
|
697,966
|
|
||
February 24 through March 30, 2019
|
|
118,308
|
|
|
80.39
|
|
|
116,373
|
|
|
688,605
|
|
||
Total
|
|
692,710
|
|
|
|
|
|
522,398
|
|
|
|
|
(a)
|
Includes share repurchases under the Share-Repurchase Program 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 March 30, 2019 is 170,312 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.
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Exhibit
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
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.
|
|
|
|
ARROW ELECTRONICS, INC.
|
|
|
|
|
|
|
Date:
|
May 2, 2019
|
|
By:
|
/s/ Chris D. Stansbury
|
|
|
|
|
Chris D. Stansbury
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
Arrow 3-year Earnings per Share (EPS) % growth ranked against 3-year EPS % growth of 7 peer companies (60% weight). The comparison of 2021 EPS vs. 2018 EPS will determine a payout percentage according to the following grid:
|
Rank
|
Payout %
|
1
|
175%
|
2
|
140%
|
3
|
120%
|
4
|
110%
|
5
|
95%
|
6
|
65%
|
7
|
25%
|
8
|
0%
|
2.
|
Arrow’s three-year average Return on Invested Capital (ROIC) versus Arrow’s Weighted Average Cost of Capital (WACC) (40% Weight). This element will be calculated based on the threshold, target and maximums approved by the Committee and as listed below, with linear pro-ration for performance between these levels:
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arrow Electronics, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 2, 2019
|
|
By:
|
/s/ Michael J. Long
|
|
|
|
|
Michael J. Long
|
|
|
|
|
Chairman, President, and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Arrow Electronics, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 2, 2019
|
|
By:
|
/s/ Chris D. Stansbury
|
|
|
|
|
Chris D. Stansbury
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
|
Date:
|
May 2, 2019
|
|
By:
|
/s/ Michael J. Long
|
|
|
|
|
Michael J. Long
|
|
|
|
|
Chairman, President, and Chief Executive
|
|
|
|
|
Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the company.
|
Date:
|
May 2, 2019
|
|
By:
|
/s/ Chris D. Stansbury
|
|
|
|
|
Chris D. Stansbury
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|