Good day, everyone and welcome to the Arrow Electronics Conference Call to discuss their fourth quarter earnings. As a reminder, this call is being recorded. At this time, I’d like to turn the call over to Sabrina Weaver for opening remarks and introductions.

Thank you, Enola. Good morning, everyone and welcome to the Arrow Electronics fourth quarter and year-end conference call. I am Sabrina Weaver, Arrow’s Director of Investor Relations, and I will be serving as the moderator on this morning’s call. Today’s call is also available via webcast. To access this webcast or future webcasts, please visit our Investor Relations website and click on the webcast icon. With us on the call today are Bill Mitchell, Chairman, President and Chief Executive Officer; Paul Reilly, Senior Vice President and Chief Financial Officer; Kevin Gilroy and Cathy Morris, Presidents of Arrow Global Enterprise Computing Solutions; and Mike Long, President of Arrow Global Components. By now, you all should have received a copy of our earnings release. If not, you can access our release on the Investor Relations section of our website. Before we get started, I would like to review Arrow’s Safe Harbor statement. Some of the comments to be made on this morning’s call may include forward-looking statements, including statements addressing future financial results. These statements are subject to a number of risks and uncertainties that could cause actual results or facts to differ materially from such statements for a variety of reasons. Detailed information about these risks is included in Arrow’s SEC filings. We will begin with several minutes of prepared remarks, which will then be followed by a question-and-answer period. As a reminder to members of the press, you are in a listen-only mode on this call, but please feel free to contact us after today’s call with any questions you may have. At this time, I would like to introduce our Chairman, President, and CEO, Bill Mitchell.

Thanks, Sabrina, and thanks to all of you for taking the time to join us this morning. We finished the year with a really strong fourth quarter. We achieved record sales, record working capital as a percentage of sales, and record return on working capital. These results demonstrate the operating leverage we’ve built into our business over the last few years. Operating margin was again at industry-leading levels, and our balance sheet and capital structure remain strong. I would again emphasize that we’re managing our business for consistent performance and continuous improvement no matter what the operating environment is. And we’re doing this while investing in the long-term future of Arrow to increase our opportunities in higher growth markets, better leverage our global scale, and to further diversify our revenue stream. In our Enterprise Computing Solutions business, we performed exceptionally well despite some well-publicized concerns about IT spending in the fourth quarter. We again outgrew the market on an organic basis, and sales pro forma for acquisitions more than tripled the rate at which the overall market grew. Our acquisitions are performing well and are ahead of our projections and were contributors to our strong performance in the fourth quarter. Our strategic initiatives have gained significant traction in the market place. You’ll be hearing about the progress we’ve made from Kevin Gilroy. Operating margins were again at industry-leading levels, and with increased scale, scope, and capabilities, our strategy is working and is resonating strongly with our customers and suppliers. In Components, we executed well in a cautious marketplace. After three quarters of declining year-over-year growth, our North American business saw a slight up tick in the fourth quarter and book-to-bill was above 1 in each of the regions in which we operate. Mike Long will walk you through the details of market conditions and the strategic moves we made in the fourth quarter in just a moment. Overall, I’m really proud that we’ve taken Arrow to a new level in 2007, one that has much broader geographic reach, increased opportunities in our Enterprise Computing business, and a more flexible cost structure. More importantly, this has resulted in a much less volatile earnings stream, no matter what the market conditions are. Our performance this quarter is evidence of that. Our strategic priorities for the future are clear: To continue to leverage the tremendous opportunities in Enterprise Computing Solutions; Build a best-in-class Global Components organization to leverage our scale around the world; To install world-class systems and processes throughout the corporation; Pursue significant growth opportunities across products, markets, and geographies. And we look forward to continuing to take advantage of all of those opportunities that lie ahead in 2008 and beyond. Paul Reilly will now give you a more detailed review of the fourth quarter, and then Kevin and Mike will discuss their businesses’ performance in greater detail.

Thanks, Bill. As reflected in our earnings release, there are a number of items that impact the comparability of our results with those in both the trailing quarter and the fourth quarter of last year. I will review our performance excluding these items to give you a better sense of our operating results. As always, the operating information we provide to you should be used as a complement to our GAAP numbers. For a complete reconciliation between our GAAP and non-GAAP results, please refer to our earnings release or the earnings reconciliation slide at the end of the webcast presentation. Sales for the fourth quarter reached a new record level at $4.4 billion, an increase of 26% year-over-year and 10% sequentially. This was at the high end of expectations and demonstrated our continued success in the markets we serve. Pro forma for the impact of the KeyLink, Alternative Technology, and InTechnology acquisitions we grew sales by 9% over last year. Global Enterprise Computing Solutions increased sales by 111% year-over-year and increased 37% sequentially to $1.61 billion. Pro forma for the acquisitions of KeyLink, Alternative Technology, and InTechnology we continued to outgrow the market with sales increasing 22% over last year. This represents the 16th consecutive quarter of year-over-year sales growth for ECS. Operating income as a percentage of sales increased 190 basis points sequentially to an industry-leading 5.2%. And further improvements in managing our asset base in the fourth quarter allowed us to achieve record return on working capital for the ECS Group. Global Components sales of $2.8 billion decreased 2% sequentially and increased 3% year-over-year. Intense focus on cost containment and ongoing initiatives to drive down our operating expenses enabled us to increase our operating margin by 40 basis points year-over-year, and we only saw a 10 basis point…

Thank you, Paul. We finished the year with a very strong close generating sales at almost four times market growth. Performance was driven by strong double-digit year-over-year growth in proprietary servers, storage, software, and services. We have made several acquisitions in the high growth segments of software and storage. Alternative Technology grew sales in excess of 50% year-over-year for the fourth straight quarter, and InTechnology achieved a 20% gain in sales over last year’s Q4. And we expect software to be a continued source of growth for us given the strong underlying demand for virtualization and security solution. The virtualization software, in particular, only 5% of current servers are virtualized as published by IBC, which translates into a big opportunity for us. We achieved very strong gains in operating margins and posted record return on working capital in the fourth quarter as we leveraged our scale and continue to improve balanced performance in all aspects of working capital. The scale provided by our North American acquisitions was a key contributor to our record working capital performance in Q4, and our acquisitions overall are performing well. We also continue to make investments in the future growth of our business, such as in our mid-market initiative. We recently launched 40 new end-to-end solutions focused on the mid-market as well as launched our first full online education model to assist our VAR partners in effectively going to market. The reaction from both sides of the equation have been favorable with many vendors wanting to be the part of the solutions stack and we have recruited a significant number of net new VARs that are focused on the mid-market. 2007 was a very exciting and transformational year for us with the addition of KeyLink, Alternative Technology, InTechnology, and Centia/AKS. Our Enterprise Computing Solution business is now a much stronger organization with broader geographic reach into 22 countries, increased market share in the fast-growing product segments of software and storage, and a more robust customer and supplier base. Execution on our strategic objectives has resulted in ECS becoming the world’s largest distributor of enterprise storage and security and virtualization software. We have increased our strategic focus on selling total solutions, and now over 60% of our revenues are generated from the storage, software, and services segments. Our cross-selling initiatives continue to take hold with the number of referrals between our software and hardware organizations growing steadily. Year-to-date we have achieved almost $90 million of additional sales through our targeted pilot programs. Our strategy is resonating with our business partners at the highest levels. We are laying the groundwork and investing in the long-term to create some very, very exciting opportunities for our vendors, our reseller partners, and our shareholders. Bill, back to you.

Thanks, Kevin. That’s a great quarter, congratulations to you and the whole team. Mike Long will now comment on our Global Components business.

Thanks, Bill. In the fourth quarter, we executed extremely well in a cautious market place with sales at the high end of our expected range at $2.8 billion and better than seasonal operating margin performance. As we look out across the globe, our book-to-bill was greater than 1 in each of our regions as we exited the December quarter and was 1.03 on a worldwide basis. The trends have remained positive in Q1 with our book-to-bill above 1 in each of the regions through the end of January. Lead times remained stable and are still within normal ranges between the 8 to 12 weeks, and we saw no notable increases in cancellation rates. In addition, the results of our quarterly customer survey in North America did not change from the end of last quarter. The majority of our surveyed customer base continues to feel their inventory levels are well positioned leading into the first quarter. While the stock market may be pricing in a severe downturn, we see generally stable conditions right now. In Asia-Pac, our business outgrew the market again in the fourth quarter with particularly strong year-over-year growth in Taiwan, India, Australia, and New Zealand. Earlier this month, we announced the acquisition of the components distribution business of Hynetic and Shreyanics, a leading components distributor in India, which will provide us additional scale to increase our profitability in the India marketplace. We also entered Japan, a very strategic marketplace, in October with the formation of a Japanese subsidiary and the acquisition of Universe Electron Corporation. In 2007, we transitioned our primary focus from building infrastructure and systems in Asia-Pac to initiatives that would achieve profitable growth. Our focus on the small and medium-sized customer segment, along with productivity initiatives produced strong increases in operating income and return on…

Thanks, Mike, and then congratulations to you and your team, also, or as you say, a really nice year in challenging environments. Overall, we performed exceptionally well in the fourth quarter and for the full year of 2007. We continue to manage the company for consistent growth and continuous improvement. And we once again executed well on our strategic objectives. For several years, we have been on a journey to build platforms for sustainable, profitable growth for the future, and I’m really proud of what the team has accomplished and what we’ve created. And I’d like to go through it with you; a look back over five years. We’ve more than doubled in size since 2002, mainly through organic growth, but also via acquisitions that have strategically accelerated our sales growth. We’ve aligned our cost structure; we have increased its variability to react to market changes, and we’ve grown earnings at five times the rate of sales during that same period. In 2007, our continued and focused efforts drove operating expenses to sales down 50 basis points over the prior year and below 10% as a total percentage of sales. We’ve created a very strong balance sheet with net debt at the lowest level in 10 years, and we’re very well poised to make investments for the future. We decreased the amount of working capital needed to generate a dollar from $0.192 to around $0.15 in 2007, and we still see more room for improvement. Our business is one of managing tens of thousands of small transactions a day, and we’re working on ways to improve each and every one of those transactions. And that’s why we know there is more opportunity to achieve even higher levels of efficiency going forward. We generated an impressive $850 million of operating cash…

Enola, we’d like to open up the call to questions at this time.

We will take our first question from Matt Sheerin - Thomas Weisel Partners.

I’d just like to ask a few questions regarding the Components business. Could you tell us what the growth rate in Europe was on a constant currency basis? And then on Europe, are you seeing seasonal patterns in the March quarter? I know that your book-to-bill is above 1, but normally you grow sequentially in the double digits. Your big competitor, Avnet, had said that they’ve seen a little bit more sluggish trends, and a couple of other distributors had said the same thing about Europe, so could you comment specifically about Europe first?

Year-over-year on a constant dollar basis, Europe was down about 6% in the fourth quarter. So if you think about it, it continues a bit of the same trend we saw with the strong 2006 and then European marketplace softening a bit for 2007 for us. And then we’re seeing pretty much what we’d expect to see for the first quarter in normal seasonality. And we feel like that’s where the market is. All indications are that it’s not going to be a boomer up. It’s just going to be normal business going forward.

So normally you see Europe up in the 10% to 15% range; U.S. is up low-to-mid single digits, and then Asia is down. Is that basically what you are seeing in those regions right now?

Our expectation is that we see normal seasonality in Asia-Pac, which would be down because of the Chinese New year. We expect to see normal seasonality in North America, which I think our numbers have been more in that 3% to 5% range for the last several years. And Europe, we’d expect to see some normal seasonality there also approaching the numbers you’re talking about.

Then maybe, Mike, you could comment a little bit why you’re seeing a snapback in North America? Are you starting to see refresh of the inventories from some of your big EMS and OEM customers where things have been a little bit weaker, or is it more broadly better than that?

Matt, we have not seen a real big pickup in our large EMS customer base. But despite that, we have seen improvements in our small-to-medium customer base. The Military and Industrial segments have been doing very nicely for us in the year. So we have seen really the broad base of customers pick up, but we clearly have not seen a large pickup in the EMS segment yet.

And just a question for you Paul. In terms of the cost related to the ERP rollout, could you tell us how much of that is non-capitalized and is going to hit your SG&A line, or did so far?

We really haven’t talked about that as far as what is going to P&L and what goes to the balance sheet. I think if you were to look though at the rate of our spend in 2007 on a statement of cash flow, compare it to prior years for capital expenditures you could work your way into what amount would be about capitalized, then you could figure out what the amount would be expensed for 2007. We did talk a bit about an increase in spending this year as we sought to turn the system on in certain parts of our business, which we’re quite excited about. That means there’s a little bit more spending and a bit more in expense for the year, but that also means that beginning in 2009, we’ll begin to reap some of those benefits of having a system that is much more efficient, much more effective, let’s us really focus on how we can purchase better, let’s us focus on how we can really sell better, and you know that this is a business that’s all predicated upon top line growth. We look at our performance where we’ve been able to outgrow the marketplace each of last several years. So we are excited that we’ll accelerate our growth. So I hope it helps you out a bit, and you can work through that.

We will take our next question from Brian Alexander - Raymond James.

Paul, in terms of your EPS guidance, it implies operating margins are going to contract somewhere in the range of 20 basis points sequentially, and year-over-year they may be flat to down a little bit so a little bit of change in trend there. Can you just walk us through on a sequential basis, what’s really driving that decline? Historically, you’ve had a little bit of an increase. And I know the mix of your business has changed, and the KeyLink acquisition probably changes the margin profile of your computer business, but maybe just help us understand what the key drivers of that sequential decline are, and with KeyLink in the fold now, how should we be thinking about seasonality in the computer business, both in terms of revenue and margins as we move through 2008?

Let me try and do a couple of different points there. First off, I would start with the change in what I would call seasonality as a result of the KeyLink acquisition. As Bill mentioned, all of our acquisitions are at least at or in most cases ahead of what we thought they would deliver. So in the fourth quarter KeyLink really changed the impact of IBM. So that when we looked at it, almost 50% of fourth-quarter ECS sales are driven by a very large supplier, whose year-end is that time period. We know that they will always have a very spiky Q4. So that means that we’ll have more upside in Q4 because the change in mix, but also more downside, quite honestly from an operating income percentage going into the first quarter. And in fact if you’re on the webcast, we actually have laid out what we expect seasonality to be for all to see, because we do recognize it is changing. Second thing is we talked about the fact that we are investing ahead of sales. We invested ahead of sales at the end of the second quarter into the third quarter, admittedly had a short-term negative impact on the third quarter, but it certainly paid off for us in the fourth quarter. And we are going to pursue that some more. We really think that we can invest in this business for the long term. Sometimes changes the way folks evaluate the business for sure, but we think over the long-term it’s the right thing to do. As I mentioned, at least for what we did in ECS for late Q2, Q3 paid off in the fourth quarter. The third thing, as I mentioned, is there’s a bit of change in pace of spending around ERP, and that will have a bit of negative drag, also. So those are the factors that when you look at it sequentially, all changing what might be “normal seasonality” making it a little bit different going forward.

So as we look to the full-year of ‘08 and we try to gauge whether you’re still confident that you could deliver the operating margin objectives in the timeless business model by segment, Components being 5.7 to 7 and Computers being 4.9 to 5.3, and current run rate would suggest you’re below the low ends of both of those targets. How should we just be thinking about your ability to hit those if things do slow? How committed are you to hitting those targets? What actions would you take to get there?

Brian, that’s a great question. I’ll take it in two different ways. First of all, our cost structure is very different today than it was in past economic downturns. If you look at the last five years, we’ve taken out over $200 million of fixed costs. So we are more nimble today, more variable to begin with. We talked about our variable cost running round numbers about 4%, and we think that’s an improvement for us. And when I say variable there, I’m talking about salaries and commissions and that type of thing. We have done some modeling that if we saw a 15% decline in sales, our earnings per share would be between $2 and $2.50, and that would be without any type of actions to resize the business, so basically just a variable cost. So we think that’s a positive sign for us because that puts the floor on our stock price; it’s based upon historical multiples. And by the way, that also would put that on a multiple basis right around our put value, which is $27 a share. So that puts the floor on the stock price. I think the other thing though is that we’d have to evaluate the slope of the decline. If it’s going to be extended in a protracted downturn, we’d take a different course of action, than maybe if it was going to be a short one. As Bill mentioned, our balance sheet is strong as it’s been in ten years. Our cost structure is the strongest it’s been in five years. We’re prepared to take advantage of the marketplace, and there’s a very good argument to say we go on the offensive if there is some type of downturn to accelerate our organic growth, which has paid off for us quite a bit in the last five years as well as an M&A activity.

I’d just reiterate the point Paul is making. You asked about the timeless business model. We are still committed to those targets. We still think we are going to get to those targets. We are moving forward to do that. Should there be the downturn, as Paul said, we will take vigorous and strong action. We know what to do, and we’ll do it to make sure that we maintain the levels of profitability, and I would really emphasize what Paul said is that if there is a downturn, there will be very good opportunities for us to gain share and to look at some M&A opportunities, and we are well positioned to do that. So we see that there is opportunity even if there is a downturn, but no backing off of the commitments to meet our timeless business model targets.

Just one clarification, if I could, for Kevin. You mentioned proprietary server strength, but not industry standard. I’m just wondering why that’s the case? And then could you tell us what the growth in KeyLink was, like you did for the some of the other acquisitions?

So we saw a strong growth in proprietary in Q4. I think that’s a function of normal end of the year budget flushes, particularly in that one vendor that Paul was talking about that’s so strong, but moving forward, we see strength in industry standard servers. Certainly, virtualization software is a leading indicator of strength in that segment. And we also think that we are positioned well because interoperability will become more and more important towards the high end of mid-market and certainly in the Enterprise space. So proprietary is here to stay, and that’s good news for Arrow. And I think industry standard servers is here to stay and will continue to grow, and that’s good news for Arrow, too. The two together is a very powerful combination for Arrow.

And KeyLink growth?

KeyLink pretty much is fully integrated into the business, so there is no longer a standalone KeyLink number, but to the published numbers we grew 22% organically, excluding the acquisition impact. But if you extrapolate it, you would say it would be in the mid to high teen range.

We will take our next question from Jim Suva - Citigroup.

And I understand and appreciate your visibility into the trends for Q1. But can you talk a little bit about maybe a little more granularity as what we are seeing and hearing is last night Cisco said that January was below plan; Asia seems to be having some excess inventory there. Is there some type of regional strength that you’re seeing that’s offsetting some other things, or maybe walk us through, particularly how January, now that it’s closed, has progressed?

Let me take a shot at that, and I’ll ask Mike to chime in. One of the real strengths that we have is that we’re not dependent on any one marketplace, on any one vendor, on any one particular geography. And so as we look across that, we see by and large normal seasonalities. Again, I can’t comment on the Cisco outlook. We certainly don’t have a huge exposure to the networking industry, but we do service some of the same end markets that they would go after. What we can see, and again, that’s about a 90-day visibility, we see the patterns within normal seasonality and normal cyclicality. We have been in a bit of a downturn in North America, and as Mike mentioned, that appears to have stabilized and ticked up a bit. Europe typically follows North America 5, 6 to 9 quarters, and that’s playing out. Asia has been fine. This is a seasonally weak quarter for them as they have passed the big build seasons for the North American, European holiday season and the Lunar New Year. So we’re seeing that normal seasonality. We are seeing, as we commented, a bit of an increase of seasonality in our ECS business as a result of some of the acquisitions that we’ve made and the supplier profiles that that’s brought to us. That’s long term good news for us, but it has created a little bit of increased seasonality in this first quarter. So again, the strength of Arrow is that we look across many markets, many geographies, and many product sets, and as we look across that, all of the signs are very much in the normal range. We have not seen extensive push outs, we’ve not seen extensive cancellations; the pipelines and the backlogs appear at relatively normal levels, and so we’re calling it as we see it. The opposite side of that is that we are clearly cognizant of what’s going on in the marketplace around us. You can’t go online, you can’t read a newspaper, you can’t listen to the radio or TV without hearing about it. We’re certainly not immune to whatever happens in the macroeconomic conditions and we are well prepared for that eventuality. Mike, any further color you’d like to give to that in terms of what you’re seeing in the Components business?

Yes, I’d add a couple of things here. First off, I think we should remember that the entire supply chain itself is running leaner than it did in past years, and there is really a lot of increased discipline in inventory, which allows for forecasting that let’s us see the short-term. We came out of the end of the year with a 1.03 book-to-bill, and largely where we’re seeing our growth in the first quarter is around that industrial customer base, the mill customer base, lighting products, and also the medical customer base. And we’re seeing right now shorter cycle times to get the inventory in, but if you were to look at the positive spots in the marketplace, it’s more broad. And again, we have not seen a big pickup in the EMS customer base, but we have seen a stability in that customer base. So hopefully that add will help you.

And as a quick follow-up, is there any impact to the timing of Chinese New Year around your visibility or your bookings? This year it’s a little bit earlier than normal.

The Chinese New Year every year changes, and I think that gives us all a little bit complexity in terms of what will happen either before in bookings or after. We generally look at the Chinese New Year happening earlier as a positive versus it happening later.

We will take our next question from Will Stein - Credit Suisse.

Just a few clarifications. First, you mentioned just a moment ago that you have 90 days of visibility, or thereabout, and I’m just trying to clarify that. Is that what you’d consider non-cancelable and non-re-schedulable backlog that you feel very confident that you can deliver against without any returns or any cancellations of the orders, or is it more that this is the visibility that you have with customer forecasts that you feel good about because it’s so close in?

It’s more closely aligned with the latter. We do get into periods where we have non-cancelable orders. It’s typically somewhat less than that; it depends on customer, it depends on region, et cetera. But in terms of where we do have visibility, we find that the forecast tended to solidify in the 90-day periods and move around a lot for anything beyond that. And again, what we see in terms of the ratio of book to ship; that is the business that you get in and ship the next day, that’s pretty stable. We haven’t seen any undue level of push outs or cancellations, any of the things that in the ECS world we follow the pipeline of activity that’s going on. That appears within normal levels. Business activity is again within normal levels. And our history has shown us that we have pretty good visibility, not perfect visibility, into for about the next 90 days and not good visibility at all beyond that, and that’s why we only give guidance 90 days in advance, because that’s what we think we can see.

So it sounds like there’s a sense that there’s good visibility and all the trends are stable, but when push comes to shove, if customers wanted to cancel stuff that’s still scheduled for delivery only two or three weeks out, they don’t have for the most part any hard obligation to take those orders. Is that fair to say?

Again, it depends on customer, it depends on region, it depends on the business that we’re in, but by and large, from 30 days on our customers have pretty good capabilities if they do want to push it. And again, we’re just saying we haven’t seen it yet. It could show up, and again, we would be foolish to ignore all of the macro turbulence that’s going on around us. It could impact our business, and we will react vigorously if it does.

Thanks for the clarification. Just a couple of other quick ones. You posted a very nice inventory reduction. Inventory days in the quarter and working capital in general is improving. And I believe that’s driven in part by the new investments in the ERP system. How should we think about that going into the new year here? What additional benefit do you think we could see in terms of inventory and cash cycle days?

We actually haven’t gotten any real improvement from new ERP platform yet, because we haven’t hit the switch to turn it on, and that will be put in over a period of time. So we have been investing in the past in better tools, which we continue to use. We continue to focus in general on making sure that we manage all of working capital, not just the inventory lever. If you look at inventory, for the quarter we actually had good performance. We’re up a little bit at the end of the year in Components. You’d expect that; we expect more component sales in the first quarter, but turns were at good levels. And we still think we can make improvements over the long term in all of working capital, but it’s interesting. We’re making improvement each and every quarter, and yet we haven’t even used the big tool that we think will really help us out. So we continue to expect to be able to deliver improvement in working capital as we move forward into 2008 and beyond.

So what’s driving improvement now? I just don’t understand that. Did you say something about ad hoc tools that you’re deploying to help manage that better in the near term before the big European implementation, or did I miss that?

Yes, there’s a couple of things. First of all, you have to keep in mind that the mix is tilted a certain way in the fourth quarter with a large piece of our business being computer products, which is a drop ship model basically for that supplier is very strong in the fourth quarter, so that distorts the number when you look at it in the quarter-by-quarter. But when you look at it over the longer term, we’ve made great progress, both from trying to get the basics done. In receivables, we’re trying to get customers that pay us on time. I know it’s an odd concept, but we want to make a 100% payment on time from our customers. From the inventory side, we’ve talked about we really want to get the slower moving inventory and make it turn faster. That lifts the turns automatically without sacrificing customer service levels. And in payables, we want to be able to have a discussion with suppliers that say, we’ll make an investment, if you would like in inventory, but we need to have the right economics, which could also mean extended payment terms. So we’re working all those levers, they’re the basics, they’re the things that you should be doing each and every day in a good business. We’re making good progress there, and that’s why I think when we get the tool in there, we’ll see acceleration and improvement in this area.

And then one other quick one on the Q1 guidance. You seem to include an amortization charge that in some earlier quarters was backed out. So should we think of the clean number as $0.81 to $0.87 that’s called out in the press release, or when you report are you going to back out the $0.03 or $0.04 amortization and the reconciliation?

That’s a great question, Will, because actually what we have done for all of 2007 is we have made an estimate in each quarter of the goodwill amortization associated with the acquisition, even if we haven’t completed the valuation of the intangibles. So actually each of the four quarters of 2007 and our guidance for 2008 include amortization expense. You’re right, something that happened in 2006 where we had a different approach and we trued it up in the fourth quarter. But we’ve been very consistent; our guidance and our actual results always include amortization and intangibles in 2007 and in 2008.

We will take our next question from Mark Moskowitz – JP Morgan. Mark Moskowitz – JP Morgan: Bill, earlier you said that you see actually opportunity with a macro downturn, if such a case plays out, in terms of share gaining opportunities. Can you just talk about some of those opportunities, where they are; what regions; what verticals; what type of form factors?

It’s one of those areas where you look at organic opportunities to grow. We’re in strong financial position, we’re in strong market position, and in a downturn the weaker people don’t have the ability to invest in inventory to go after new opportunities. They don’t have the capabilities to continue to press forward in some of our market addition initiatives in Lighting, in Military, Aerospace, and areas like that, so we will use our financial and our market position to go out and aggressively compete for the business that’s out there, and we think we have good opportunities to gain share at the expense of some of our weaker competitors, who will not have the wherewithal to stay with us. Similarly on the M&A front, couple of things that have happened. Clearly, the drying up of the private equity market has brought prices back to levels that are attainable for strategic investors, which we are. We have made good progress in our M&A work over the last couple of years. We see good opportunities developing, and again, we are well prepared to access the acquisition market for those things that make strategic financial and operational sense for us to do that. And we think prices are coming down to more attractive and more affordable levels for us in a variety of geographic and market and product capabilities for us. So that’s another area where we can use our very strong balance sheet, our very strong cash flow generation, the fact that we don’t have to access capital markets to go after our acquisition activities. We think we’re in a nice position, and if there is a downturn, and we’re not calling one, but if there is a downturn, often times that’s when the stronger players can in fact really accelerate their position, accelerate their growth, and we are absolutely prepared to go do that. Mark Moskowitz – JP Morgan: And then continuing on that theme in terms of Arrow’s strong financial position, this question will be there for you Bill or Paul. I want to get a sense in terms of the SMB market. Clearly, that’s an area you’re focused in terms of SMB customers, but maybe if there was a macro downturn, they could have a little more difficulty, just given the credit markets and the tightening of lender’s requirements and standards. Would that allow you to maybe modify some of your credit agreements with your customers to actually maybe leverage your balance sheet a little more and help facilitate the flow of SMB customers?

Mark, you’ve hit it right on the head as it comes to utilizing our balance sheet build, absolutely right on saying inventory, but it’s also on how we approach the customer base, and as you mentioned, the small and medium-sized customer base, which has had some challenges in the credit markets recently. We could utilize our balance sheet strength to in fact expand the credit line and be able then to support more sales growth at our customer base, whether it’s current customers or new customers. That’s pretty interesting, because we have spent quite a bit of time over the last five years really upgrading the talent that we have in that function. We’ve also spent quite a bit of time in training them, developing our credit rating tool, that type of thing. So we think we’re in a good spot right now where we can capitalize on investments we’ve made in people and their qualifications and training and the tools they use to go after the customer base and be more aggressive in granting credit. Mark Moskowitz – JP Morgan: And then one last question here. Kevin, as you look out to the March quarter in terms of the guidance, how should we think about any ongoing or pending product refreshes in the server or storage environment and how that could impact your business favorably or be a drag?

We’re seeing a lot of product refreshes and new product introductions that are focused on the mid market, and we’re focused on the mid market. It’s a major initiative for us and the initial returns have been excellent. So we’re seeing that from major suppliers, tailored products sets for that specialized segment of the market. So that’s what I’m seeing there, and I think that plays favorably for Arrow.

We will take our next question from Steven Fox - Merrill Lynch.

First of all, what was your sales growth year-over-year in a constant currency basis, excluding acquisitions?

It was 6%.

And then secondly, in terms of days in this quarter, is it similar to the Q4, or are there less or more days of working days in Q1?

There will be more working days in Q1.

Do you have that number handy, by any chance?

We can actually give it to you later on. The United States is probably pretty easy to crack. It gets a little bit harder in Asia-Pac and Europe because of both official and unofficial holidays, both year-end holidays in Europe and the Chinese New Year holiday in the first quarter, but we’ll come back to you on that.

And then lastly, just a more strategic question. The downside analysis you discussed is really helpful. I’m just curious if you started to think about the lag effect in a recession to when your small and medium size customers would start to feel some of the slowing demand or pressure your sales? Any idea of how many quarters it would be on the Components business and the Computer business before they felt it?

One of the things we like about the SMB segment in both parts of the business, both in the Computer products as well as in the Components business is that the customer base, in fact, is quite sensitive to the real economic conditions, and sort of everything we see is statistically relevant. And they are quite sensitive to this because they’re small businesses. They’re out there dealing with the day-to-day business that goes on. So we follow it very carefully and think it’s a pretty good indicator. And I don’t think it lags a lot. I’m not sure we’ve ever really done a scientific study to say, ‘does it lag a day? A quarter?’ It certainly doesn’t lag a lot. And we think it’s one of our very best indicators of what the health of the business is in. Having said that, because they are small businesses, they will tend to be very responsive, and if things do turn down, they will turn down. And that gets back to the question that was asked earlier about our 90-day visibility. The smaller customers will in fact turn if they see it. We go out and talk to them all the time; we formally access them and survey them on a quarterly basis. We’re informally talking to them every day to try and understand what they’re seeing. And again, as of where we are today, as we’ve said, our book-to-bills are positive, the pipelines are about where we would expect them to be, the supply chain seems to be in pretty good balance, things that we see are normal seasonality, and that’s how we’re calling it. And like everybody else, we read everything that’s going on, and as we said, want to be very well prepared, in fact, if it does turn down in the short and medium term.

We will take our next question from Carter Shoop - Deutsche Bank.

Can we go over maybe the past five years what the sequential growth rate was in the Components division? I know there has been some reclassifications, et cetera. I was just hoping to come up with an average in the last five years what the sequential growth was in the March quarter?

Carter, you’re welcome to call us back later on, and we’ll give you that information. I just don’t have five years of data in front of me on growth rates.

With my model, I’m looking at a number in the high single-digits sequentially in the March quarter. It just seems a bit higher than what we’re guiding for at a midpoint of about 2.3% here. And historically, quarter-in, quarter-out, there’s usually a little bit of difference between what Arrow and Avnet’s sequential growth rates are for the Components division, but it seems like this quarter is a pretty big disconnect. There’s disconnects between what you are both considering to be normal seasonality. Is something happened over the past year in the Components division that would lead to a disconnect here on a go-forward basis, or could you help out understanding that?

Maybe I can make some comments on that, and Bill or Mike want to join in. The one thing that is absolutely out there is acquisitions that have distorted what has happened in and out and that type of thing. I’m sure you’re doing it, but you just got to make sure that you evaluate the impact of acquisition. The other thing, I think if we look at our sequential growth Q1 from Q4 over the last several years, it has been varied up and down a bit driven a little bit by quite honestly whether the cycles are strong or not, whether the green initiative has come into being, and that type of stuff. So what we’ve seen is it has changed year-over-year in each of the last three years.

On the restructuring side, it sounds like the restructuring charge is going to be for operational efficiency improvements. Can you help us understand when we decide to call out investments in that nature, and − I assume we’re also making continued investments in operational efficiency all the time − why we called out this one, and what investors should expect on a go-forward basis?

Carter, that’s a good question. Actually if you looked at the last two plus years of all the items we pulled out, and by the way we are doing that to help you all have a better understanding of our performance, in fact, it’s a net positive for us. So yes, we have restructuring integration charges that are negative. We’ve also pulled out all the tax positives that we’ve had, which as you may recall was some $50 million last year. We’ve also called out the sale of properties that we’ve had, which have been in gain. So we look at it overall, we’re trying to help everybody with the analysis. One of the big items we had this quarter was we did get out of a facility. The two previous facilities we got out of we sold at gains. This facility was leased that we got out of, and it actually had a pretty big tail on it. So we think we’ll be able to sublease it, but we’re still trying to work through that. We’re always going to continue to be efficient. The accounting rules say that it is a restructuring charge if you don’t replace the people, and we were very keen on that. So if we’re moving people from a wide number of locations to a single location, that’s not a restructuring charge for us. That’s more efficient, more effective, but that doesn’t go in there. That goes into our normal results, and we don’t call that out. If we close a location and never replace those people or their function, then that goes into restructuring. We’re just trying to follow the accounting rules.

That’s very helpful. Will the benefit from that come in the March quarter, or is that going to be maybe further on down in ‘08 where we’ll see a benefit from that plant closure?

It was actually a big location and you’ll see some of it in the first quarter. Really the challenge that we have it was a long tenured lease in the U.K. So the U.K. real estate marketplace today is not that robust today. So it will have less impact in the short term. We think over the longer term it will have more of an impact though.

And the last question, can you talk a little bit about the opportunity for LEDs. I know you highlighted it at the most recent Analyst Day. Can you quantify the growth there and the size of the market or how much it’s growing on a year-over-year basis?

Mike, why won’t you take that one? You’re right in the middle of the lighting initiative.

Basically what we’ve seen in that for us this year was something on the order of about a 40% growth rate. The Lighting market, while it is growing and you’re seeing terms in the billions of dollars, I’m sure, a portion of that is changing the incandescent lights to LED lights within businesses, and what we’re seeing really in North America for the electronics content of that growing, but so far a smaller part of that market. My expectations for us would be to double that business yet again this year, and then the following year have it be a substantial piece of our overall product portfolio.

So just to clarify, the 40% growth, was that in the fourth quarter, or is that for the full year?

That was for the full year.

And then you’re expecting it to double in ’08 and then grow from there?

Yes.

Carter, but that’s the kind of initiative that when we talk about it that says we will continue to press forward on those initiatives. And we have the financial strength and the market reach to do that. And that is a very smart long-term thing for us to do longer-term, and there are many of those. We’ve talked about Lighting, Military, Aerospace, Industrial. We talked about our mid-market initiatives, our SMB initiatives, a number of these things. Those are ones that we’ll continue to press forward on. We think that if there is a downturn, we will be able to gain significant capabilities and significant share in those areas because we can hang in there and then continue to press forward against weaker people that simply don’t have the market reach and financial wherewithal and the sets of capabilities that we have. That’s why we think that if there is a downturn, and again I emphasize I’m not calling one, and our signals don’t tell us that there is one coming. But if there were to be one, we would see opportunities like this one, and we’d go hard and fast to pull that in and make that grow faster.

We will take our next question from Josh Golden - JP Morgan.

First and foremost, congratulations on your 2007 results. You spoke a little bit about the balance sheet; you talked about committed credit facilities. Just a quick question, do you see the need to come to the capital markets to term out any debt in the near future?

We don’t see any real pressure to come to the capital markets at all in the near-term. When you look at it, the next maturity we have coming due is in January of 2010, so we’re in pretty good shape right now. With that said, it’s been pretty interesting. When you look at the activity in the credit market, and you know this better than any of us, so I don’t mean to be preaching to the choir here, but you’ve seen the high-quality credits in the last 30 days have been able to come to market and actually get pretty reasonable terms and covenants. So that’s another thing that lines up with us. You look at our balance sheet and it’s as strong as it’s been in over 10 years. We probably have a pretty nice profile, such that if we had to come to the market, if we wanted to come to be opportunistic and take advantage of changes in interest rates, we probably could do it pretty successfully. So I look at it as a win-win for us quite honestly.

Yes, on that note, I don’t disagree with you. I’m taking a look at the balance sheet and circling back against the rating agencies, when is the last time that you sat down with them looking at your balance sheet and still being low BBB rated entity? What is the outlook for moving the ratings up?

Josh, we have a regular discussion with the folks at the rating agencies probably on a quarterly basis. I would call it not a formal review, but we do speak to them quarterly giving them updates on any major changes in our business, what our results look like, what our balance sheet looks like, what our strategy is like. So we actually have a pretty regular dialogue with them, and they have been very supportive of us over the last couple of years, and we really appreciate that. We’ve actually had presentations back in the summer time with the rating agencies, and we probably have a one a year formal visit with them, and we’ll be getting that on our schedule going forward so that we can give them an update both on strategy, tactical execution, where we’ve been, and where we’re going.

Have they given you any metrics that you need to hit in order to receive an upgrade?

I would say that we focus on metrics for sure. The rating agencies are naturally cautious right now because of the capital markets and the threat of a potential recession, whether it’s short term or the slope of that. So we have those conversations, and it’s very interesting because you know if there is a downturn driven by broad economy, we actually generate more cash, which we have done in the past, and we’ll do it again. So we actually have protection on the down stroke, also. So we’ll have to see what happens going forward with our discussions with them.

You mentioned a little bit about M&A opportunities that may present themselves. Your thoughts surrounding the M&A opportunities, would they be bigger than what you have done in the recent past or remain around a similar size?

Again, what we do is that we want to look at first of all, the strategic fit; does it accelerate our strategic gains and our strategic goals. Secondly, is it a financial fit? Can we make the numbers work, can we make it accretive, is it affordable, all of those questions. And finally, and probably most importantly, is it an operational fit? Do we have the right cultural fit, do we have the right people, are we extending our talent pool, are the two cultures going to mesh together, can we mesh the systems and processes together, et cetera. So we look across the wide variety of opportunities. A couple of the ones that we’ve done in the past couple of months that Mike mentioned, the one in India and the one in Japan, are both quite small and quite strategic. They position us really well for future growth in two very important marketplaces. We did one last year at this time, which was quite big, which was KeyLink, and we’re prepared to do all of those things in between big and small. Again, if a market weakens that the weaker players become more open to opportunities for us, and we are very well prepared to step in to it in any range from small strategic acquisitions like we made in India and Japan or a very large transformational acquisition that we made in KeyLink, and we can do all of those, and we’ve paid for all of those out of the cash flow of the company, which is a really positive position to be in for us.

It appears we have no further questions at this time. Ms. Weaver, I would like to turn the conference back over to you for any additional or closing remarks.

Thank you, Enola. Before ending today’s call, for those of you participating in today’s webcast, we will quickly scroll through the slides reference in our webcast that contain a reconciliation between GAAP and adjusted results. This reconciliation is also included in our earnings release, and both the release and the presentation will be available on our website. In addition, we have included a slide on the anticipated seasonality of our EPS business to demonstrate the impact of recent acquisitions. I would like to thank all of you for taking the time to participate in our call this morning. If you have any questions about the information presented today please feel free to contact Paul or myself. Thank you, and have a great day.

Thank you, ladies and gentlemen once again. That does conclude today’s conference. We thank you for your participation.