Good day, ladies and gentlemen, and welcome to the Arrow Electronics, Inc. Second Quarter Earnings Conference Call. My name is Shaquana, and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Ms. Greer Aviv. Please proceed, ma'am.

Thank you, Shaquana. Good afternoon, everyone, and welcome to the Arrow Electronics Second Quarter Conference Call. I'm Greer Aviv, Senior Manager of Arrow's Investor Relations program, and I will be serving as a moderator on today's call. If you would like to access today's call via webcast, please visit our Investor Relations website at www.arrow.com/investor and click on the webcast icon. With us on the call today are Mike Long, Chairman, President and Chief Executive Officer; Paul Reilly, Executive Vice President, Finance and Operations, and Chief Financial Officer; Andy Bryant, President, Global ECS; and Peter Kong, President, 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, along with the second quarter CFO commentary that should be used as a complement to the earnings press release. You can access a copy of our earnings reconciliation for the second quarter in our press release or 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 today'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 a few 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, Mike Long.

Thank you, Greer, and thanks to all of you for taking the time to join us today. We executed well in the second quarter, with revenue and earnings per share in line with our expectations even as the global macroeconomic climate weakened throughout the quarter. We continue to build the business strategically and make progress towards our corporate targets. We are investing cautiously as the macro environment continues to be challenging. We generated $61 million in cash from operations in the second quarter, and we had contributions from both business segments. Over the last 12 months, we have generated more than $575 million in cash flow from operations and converted 108% of our GAAP net income into cash, and that's well in excess of our target. Even in a challenging macro environment returns continue to be accretive, and shareholders will return on invested capital well ahead of our weighted average cost of capital. In our global enterprise computing solutions segment, sales increased 2% year-over-year and 10% from the first quarter. We were in line with our expectations driven by another quarter of strong performance in our ECS Europe, as our matrix expansion strategy continued to pay dividends. In the Americas, we performed well even as the market growth slowed. On a global basis, we saw double digit year-over-year growth in services, storage and software, offset by declines in servers. Consistent with our strategy to increase our scale in Europe, we completed the acquisition of the Altimate Group, a value-added distributor of enterprise and midrange computing products, services and solutions. Altimate operates in 8 countries across Western Europe and supports approximately 2,500 IT solution providers. The addition of Altimate strengthens our relationships with key hardware, software and storage suppliers in the region, supporting the strategic initiative to extend the ECS product…

Thanks, Mike. Second quarter sales of $5.2 billion were in line with our expectations but represent the decrease of 7% year-over-year. Pro forma for acquisitions and excluding foreign exchange, sales were down 5% year-over-year. Sales in Global ECS increased 2% year-over-year, primarily driven by strong performance in Europe. In global components, sales declined 11% year-over-year as macro concerns continue to impact performance, the sovereign European debt issue still looming and growth in China slow compared to historical rates. Our consolidated gross profit margin was 13.3%, a decrease of 60 basis points year-over-year. Pro forma for acquisitions and excluding foreign exchange, gross profit margin was down 80 basis points year-over-year, in part driven by exchange and mix. Operating expenses are down 6% year-over-year on an absolute dollar basis and increased 10 basis points as a percentage of sales. Pro forma for acquisitions, operating expenses declined 9% year-over-year and were down 10 basis points as a percentage of sales. To assist you with your analysis, acquisitions added $10 million to operating expenses this quarter. As Mike mentioned, we are prepared to take the necessary actions to maintain our financial strength and competitive advantage. We have proven how we can successfully navigate tough economic times in the not-so-distant past and come out even stronger. At this time, we feel it is prudent to proceed somewhat cautiously given the mixed economic signals we are seeing. While we do not believe the likelihood of another severe downturn is high, we do believe we are looking at a period of slow growth as the world continues in an ongoing economic malaise. We're currently watching any discretionary spending very carefully, and we'll be taking an additional $20 million in cost and expense reduction actions. Operating income was $202 million. Operating income, as a percentage of sales, was…

Thank you, Paul. Shaquana, please open up the call to questions at this time.

[Operator Instructions] Your first question comes from the line of Jim Suva representing Citi.

When we think about the company and its OpEx outlook and given your cost cutting that you're doing and undergoing, somewhat offset by some of the folding in of the acquisitions. Can you help us kind of dial into kind of an SG&A or an OpEx run rate? As I know again, you got OpEx being some -- restructuring being done, but yet, you got some acquisitions folding in. Help us out with that OpEx and how we should think about that, not only for September, but kind of going forward, as a percent of sales or dollar basis or the best way to look at that.

Okay. Jim, what we think is that for the third quarter, round numbers -- now realize also that we do have an acquisition coming in. Altimate was not in at all in the second quarter in the P&L. It was in the balance sheet when we closed at the end of the quarter. So that's adding some incremental expense. We expect to get some integration efficiencies from that. And what kind of also works, in our favor, is from a translation point of view with a lower euro, that will lower the U.S. dollar expenses. So when you add that all together, mix it all up, it will be about flat, maybe up a little bit in operating expense dollars in Q3. That means that there'll be a nominal trend-up in operating expenses as a percentage of sales, so that's kind of how we see Q3. Q4, we would expect to see expense dollars go up, variable costs associated with higher sales. Remember that, that's our most active quarter for our Global ECS business. But as a percentage of sales, it would trend down, below, right on that 9% level. So you'll see nothing unusual in Q3, and in Q4, you'll see the normal trend also in expenses.

Great. And then my quick follow-up. When we think about your inventory, which came up to this quarter and in the quarter, your sales outlook is for sequentially to be down for the September quarter. Is that just because demand kind of softened up here, or is it because interest rates in your price protection on inventory looks at a low way to kind of take advantage in low risk, to take advantage if things do turn around. How should we think about that inventory management and why there's the disconnect of inventory up, yet the sales outlook coming down?

Well, Jim, there's a couple of things that really drove that. The first one was about half of that increase was a large customer engagement where we're providing supply chain services. So we had to organize the inventory to match that demand. And the other half was in Asia. And there, we did see an increase of sales. But if you take a look at the historical turns, I think you'll see the inventory turn levels that we have also went up. So all in all, the inventory is probably balanced, close to an area that it needs to be.

Your next question comes from the line of Shawn Harrison representing Longbow Research.

I was hoping within Global Components, maybe you could speak to the linearity of sales trends throughout the quarter and into July. I guess the volatility. And then layer in that, just kind of the good strength that you saw in Asia, what was the driver this quarter of that growth?

Peter, do you want to take a shot at that, and then we'll follow up?

Sure. In terms of sales trend and booking trend, I think that pretty much follows seasonality. And as far as July is concerned, that's pretty much the same. It follows what we normally see in the market. As far as strength in Asia, we're pretty proud of the team. I think there's very good momentum with our Asia business at this moment. Both the core and the Ultra Source both grew ahead of normal seasonality. This is mostly as a result of being successful in moving our strategy forward and expanding our customer engagement in the region. So, I believe that the momentum is going to continue.

Yes. I think if you just add to that a little bit and you get down at the booking level, we saw the Americas at about 1.04, book-to-bill; Asia was about 1.01; and EMEA was at 0.95. The interesting thing about the EMEA market was that it was the second strongest Q2 over the last 5 years as far as bookings go. So there was a bright spot in the middle of everything going on there that could have easily been overlooked. And if you take the entire group and roll it up, those bookings were really in line with normal seasonality at these levels.

I guess just a follow-up to that then, Mike. If you take the guidance of Global Components, it looks as if it's maybe toward the low end of seasonality. So just wondering maybe how much conservatism you've baked in there given what looks to be a good book-to-bill ratio coming out of the quarter.

Yes. What we didn't do was take an improved economy into our guidance going forward. We really took our backlog and what is split into what we could see coming this quarter, plus our normal booking rate. And frankly, we're seeing some mixed signals out of Europe in terms of what is going there, and that one is getting very difficult for us to call. So there probably is a little conservatism in that piece of it, but the others, we think, are fairly solid.

Your next question comes from the line of Brian Alexander representing Raymond James. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: Paul, the gross margins you called out, down 80 basis points pro forma for acquisitions, I think down 60 basis points on a reported basis. Could you talk about the gross margin performance outside of mix, specifically pricing, and where you saw incremental pressure? It seems like this was the first time in a while that you called it out.

Brian, I'll give you some numerics behind it, and Mike can come in and give you more color behind it. When you looked at it around the globe, we see that there are engagements that have a value added component to them, whether it's in supply chain services or whether it's in demand creation with field application engineers. And that remains pretty good and pretty robust and right around what our expectations are. But conversely -- and that's true around the world. Conversely, when you see some things around or some business around fulfillment and/or commodities, you're seeing a little pressure on the gross profit margin, not substantial. I mean it's just out there at this point in time, but it's kind of universal as we see it. And that's probably not too far of expectations in light of normal lead times, a soft economic backdrop, et cetera. But not real, real surprising at this point in time. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: So you would call that out as being mostly cyclical and nothing structural from a supplier, customer relationship standpoint?

Absolutely believe it's more a reflection of the economic backdrop than any type of change and engagements or rewards for us in a period of normalcy. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: Okay. And then just on the margin outlook, it looks like you're assuming operating margins hold relatively flat overall in Q3. Do you expect Components operating margins to also stay flat, so that all of the margin decline's really coming from computing due to seasonality? Or are you expecting more operating margin decline in the Components business?

Right. Remember that just from a mix point of view, our European components business has a healthy margin. And what will happen on a sequential basis from Q2 to Q3, they will become less of the mix. So that has a bit of a negative impact for us when we looked at the segment, right? Because less European revenues, which have a -- because it's seasonally slow period of time. So what we would expect to see for the segment is that broadly, the operating income margin would be in the same area code, if you will, actually a little bit trend up, we think. And then we would expect to see -- as we've seen every Q3 since we've really expanded in the ECS business, we'd expect to see some of that to drop off also, a combination of less volume in North America, as well as their own summer holiday-type impact in the European business. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: Got it. Sounds like we should be back above 5% in Components, which is what I was getting at.

Your next question comes from the line of Steven Fox representing Cross Research.

Just a question on the Computing Solutions business. You seem to be outperforming the end markets in pretty much every geographic region, it looks like, was the commentary. So I was wondering if you could talk, sort of put that into more context in terms of where you see these end market relative to some of the numbers you posted either by product or region. And then secondly, just based on what you're seeing from customers and in terms of that segment, what are you thinking about seasonality going into the fourth quarter given that you seem to be talking about more economic pressures, not less? So could we still count on a big lift in the fourth quarter for that business?

We'll let Andy start off with that, and then we'll add some color to it at the end.

Thanks, Mike. So Steve, just to be clear, I want to make sure I understand your question. When you say end markets, are you referring to vertical markets?

I was looking by product segment, Andy, versus some of that commentary in the report versus how those products are really doing. Because it seems like you're controlling your own destiny a little bit better than the end markets are hanging in there.

Right. So yes, I think our performance has been very good, and we're outperforming the market. And you can see that even with the margin pressure, we continue to increase our operating margins despite lower gross margins. And some of that's because we are managing the mix very well. The server business has been slow, but you can see that services year-on-year was up 18%, software up 13%. We're enjoying a very nice growth figure in networking, albeit we're coming from some smaller numbers, but it was up 57%. And storage is still growing. It grew 16% year-over-year. So I think going forward, we're looking for a server rebound. I think it's a little early for me to say that, that's going to happen in the summer quarter. But typically in fourth quarter, we see the server business pick up. So that's how I kind of characterize it. And I would highlight Europe, again, as our success in the matrix expansion that we talked about at Investor Day.

And just, Andy, thinking out to the calendar fourth quarter, how are things looking versus typical trends you'd see?

Well, Steve, that's tough to call at this stage. I will say that we've seen business being pushed out, so we haven't seen business going away. So one could take that as pipeline continues to be out there. So the question for the fourth quarter is what's the mood going to be and what's the economic backdrop going to be that Mike referred to. So, we're optimistic, but I think it's a little too early to talk about Q4.

I think, in general, if we go back to what we've told you guys at Investor Day, the European team has done a real good job with their matrix management strategy. And that is where they have done some acquisitions, but they have been able to expand some of the lines we have acquired with those acquisitions across all of Europe. So what's really happened to our European business is they've expanded the marketplace that we could go after and made that pie bigger for us. And right now, during this tough time, we're the beneficiary of that strategy. So really, the hats off to Laurent and his team in Europe for continuing to drive that strategy forward. And it's been a pretty good win for the business.

And if I can just sneak a quick one in there. What were the components, inventory turns during the quarter? And how did they trend versus prior quarter?

They were 6.02 for the quarter, up from 5.8 in Q1.

Your next question comes from the line of Matt Sheerin representing Stifel, Nicolaus. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: A couple of questions on the computing segment. One is you talked about demand trends, suddenly weakness in servers. But it looks like you came in below the midpoint of guidance. And at your Analyst Day, you seemed fairly confident about the sequential growth you were looking for. We've heard from a number of suppliers and other distributors talk about some pushouts in the quarter. Did you see any of that in the quarter being pushed out either into the September quarter or further out?

Well, Matt, this is Andy again. So starting with -- at Investor Day, we were through the May time line, and we did see the market change a little bit the last couple weeks of the quarter in June. So we still brought in 10% sequential growth, we still came in at the low end of seasonality. And yes, we did see some projects get pushed out. So right now, it's a challenging environment, but the business was not lost. Some of these projects get pushed. And certainly, the large corporations are pushing some of their projects out. As I commented at Investor Day, small to medium business is holding up pretty good.

I think, Matt, if you look at it, the industry-standard server business was down around 5% year-over-year, and proprietary servers were down 27%. I would say at Investor Day, if you remember, the Gartner outlook at the time was about 6% growth. So we were thinking we would be right in there with the growth rates being faster than what they thought the IT spend would be. So really, if you look at how the computer group has maneuvered, despite proprietary servers and industry-standard servers, which used to be the highest profit level products we had being down, I would have to say this: they did a good job of controlling their mix, and therefore, their destiny over the quarter. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Yes, a good point, Mike. And on your guidance for computing, what's the assumption for the Altimate acquisition, in terms of incremental revenue that you expect?

Andy, why don't you go ahead?

Well, we're guiding Europe in line with normal seasonality without Altimate. Matt, I'll get you an exact figure on what we expect out of Altimate. I mean right now, we're guiding down 14% without them. The exact revenue forecast from that business I don't have at my fingertips, so we'll get back to you on that. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: And just last question for me, Paul, regarding the cost-cutting efforts, that incremental $20 million you're looking to take out, when should we expect to see some of that roll off of SG&A? And is that mostly on the component side, or is that across the whole business?

Matt, the majority of that, you'll see the impact in Q4, and it is across both businesses.

Your next question comes from the line of Scott Craig representing Bank of America Merrill Lynch.

On the Components business, Paul, can you talk about the gross margin and the operating margin on a year-over-year basis? And sort of -- I think they're down 15, down 80, respectively, if I remember. How much of that's from, say, mix and volume? And was there any pricing in there? And then my second question is just around sort of the general demand environment because you read the press release and you talk about challenging macroeconomic environment that weakened throughout the quarter, and yet, we're pointing to the legacy businesses and every geography in both ECS and components as being normal seasonality next quarter. I'm just curious why you think it'll be normal seasonality if we saw weakening trends, and it doesn't look like it's getting any better right now.

So if I go back and look at the both at the GP level year-over-year, we're down about 60 basis points in the segment, and we're down in the operating expenses. I'm sorry, we're up about 40 to 50 basis points in expense. That's really, more so, a matter of, on the expense side, just the volume drop-off changing the percentage. In fact, when we look at it, we've probably been able to be more efficient in the Components business in reducing expenses. I'm not talking about variable, I'm not talking about foreign exchange or acquisitions, but being more efficient and squeezing about $50 million of costs out on an annual basis already. So when I look at it, most of it is from a change in mix. We talked about Europe sliding. We talked about, when you look at it, Asia having less of an impact. So it looks like the vast majority is from a pricing point of view. My view on a sequential basis and normal seasonality is because we're coming off of a different base right now, right? So we would expect to see more normal seasonal trends as we go forward. We've seen some signs come in July that some of the world's economy is maybe now firming up a little bit, right? You've seen a lot more aggressive action coming out of China, as an example. You see -- it's tough to keep track of what day it is, but you also see more positive signs around the stability and the viability of the euro over the long term, et cetera. So that's kind of where we feel we are right now. I would say with that all behind us also, it's about executing well to ensure that we maintain our position in the marketplace. And that's Peter Kong and his team feel they can do that.

Your next question comes from the line of Craig Hettenbach with Goldman Sachs.

Andy, just following up on the server business. You said rebound seasonally in Q4, anything to note from Romley or product transitions that could hurt or help you going forward?

Craig, yes, the Romley chip, of course, has been out now for over 90 days. And it's well integrated into the industry-standard server products. I think it's really more a cycle right now, and we're still waiting for the normal refresh. Some of the larger midrange server guys in the UNIX space will be coming out with their new server versions by the end of the summer, so that typically stirs a little interest in buying going into Q4. But that would be the only thing I could point to right now.

Okay, if I could follow up with Paul. Just on the OpEx, the company's been pretty lean through the most recent upturn. So just curious, kind of, what things you can do to kind of take out a little more cost. And then also on gross margin, the comments on mix, just kind of what your expectation would be in the September quarter from a mix basis.

Sure. So you're right, thank you. We have been able to maintain what has been a relatively lean structure. We didn't really overinvest, although we have invested since coming out of last recession, and we'll continue to invest. We're not going to sacrifice the long term. There are some areas that we can get more efficient in naturally, whether it's around IT, whether it's around finance, whether it's around logistic centers. Those are the areas that we want to be most active in. We really don't want to be aggressive and being more efficient in the sales and marketing roles, simply because that impacts customer service, which over the long term, could be a negative for us from a sales and market share point of view. So we'll continue to focus on the support areas where we can become more efficient and go from there. and we feel good about it. And we're tracking global commitments we've made around those types of activities. Around gross profit, as you move into the next quarter, I would say, generally, we think gross profit will be, in the Component segment, which I think what you're asking about, flattish, Q3 to Q2, as we go forward and not a substantial change. Maybe a little bit of a change as the EAD space becomes a bigger piece of the mix, but flattish as we go forward right now.

And your next question comes from the line of Amitabh Passi representing UBS.

It's Amitabh. Just a couple of questions on my end. First, Andy, for you, server's down this quarter. Was this the first quarter were you saw year-over-year declines? And was it just simply a function of the demand environment softening, or do you think we're starting to see some of the impact of sort of trends, such as virtualization, driving down hardware demand? And then as a follow-up, Paul, for you, I had a couple of questions just around the balance sheet and cash flow. Accounts receivable days have been trending up. I think we're almost into the high 70s now. They used to be low to mid 60s, just trying to understand what might be happening there. And then just cash flow expectations for next quarter.

So on the question around servers, the first quarter. It's actually been a couple quarters where the server business has been soft and not growing. But I would remind you that in the industry-standard market, we came off of, 6 quarters ago, growth that was in the 30% range and proprietary was actually growing, if you go back 6 quarters ago. So I think the way I see it, we're in a little bit of a lull in the cycle. I don't think it's a reflection of virtualization slowing down market demand. I believe that virtualization actually enhances market demand. So again, looking for a refresh, and we'll know more as we exit the third quarter.

Cash flow expectations for Q3 would be positive. Again, we feel that we're making good progress. Remember, we talked about the change in how we're managing cash. So it's not just to get cash flow positive towards the end of the quarter, but to improve our average cash flow throughout the quarter. So we talked about the great success we had in Q1, we had it again in Q2, so I'm happy about that. The DSO, specifically, we try to break it down when I looked at it year-over-year and some of it has to do with performance, some of it has to do with timing of acquisitions and some of it has to do with the basis by which we are managing the balance sheet and revenue. So, first off, Altimate was included in our quarter-end balance sheet. No revenue, but full receivables, that was a negative of about 1 day, as a starting point. I would say that we probably saw something like 1/2 a day to a day, a slide compared to last year. The fact of the matter is most of that's in Asia-Pac and at the change in mix with more out of the core growing 20%, nearly 20%. I think it was 18% versus the Ultra Source business, which grew at about 12%. The third thing is that we see a growing amount of our revenues or a growing percentage of our revenue being accounted for on a net basis. So all we recognize as revenue are the GP dollars we're getting off of that sale, yet, we get to record the entire receivable at the full sale value. That's just the way it works, the accounting. That cost us something like 2.5 days. And finally, we've moved away from using factoring, which means that we add 1.5 days to our DSO, but since we can borrow under our revolver, our securitization in that 1% to 1.5% range and the factoring companies are charging 8%, we think that's a good economic trade for us to be willing to take those receivables -- if we really need to borrow, we can borrow under our revolver versus throwing money at the factoring companies. That's about 1.5 days also.

Your next question comes from the line of Ananda Baruah representing Brean Murray. Ananda Baruah - Brean Murray, Carret & Co., LLC, Research Division: I just wanted to know if you guys are seeing suppliers give you new rebates or incentivize you in any way, given the macro is softer.

Yes, I think that -- the truth is everyone wants to grow, and you could probably negotiate anything you wanted right now on the growth aspect. But the fact, is there is just not the market to support it, especially if you think of that -- just take lead times as an example. They've declined to 12 weeks, so they're relatively normal to what we've seen in the marketplace. We've seen, as we can tell you now for a few quarters, seen the book to bill relatively flat; the backlog, relatively flat. And everybody's looking for a way to get out of it. What we're trying to do ourselves is just to expand the market that Arrow can go after, providing a bigger marketplace. And that, right now, is the work that we are doing and some of the work we are doing in the EAD space, to grow the markets. Now, if we can capture more of that, we'll increase a bigger part of the share. But in general, any time the market is down, our computer business partners will try to grow their sales that way. And in fact, we've seen some of that lead over to the semiconductor suppliers. But going back, the design win activity for the year is up about 11% year-over-year, relatively flat sequentially or minus 3%, which is relatively flattish, take the number of registrations. The indicators just aren't there. And remember the last downturn, what we saw during the cycle, which gave us the feeling that things were going to get better with it, that design cycle was at about 27% increase year-over-year. So we're not seeing that spike at all right now, which just tells us the next couple of quarters are still going to be tough.

Your next question comes from the line of Brendan Furlong representing Miller Tabak. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: A question on the gross margin. I may have misunderstood your commentary on the OpEx. It seems flat to up slightly in Q3. Was that in terms of dollars or as a percent of sales? Because it looks like your gross margins have to get a bounce in the September quarter given total revenue's going to be down. That seems kind of -- might be tough to achieve.

Right. My comment was they'll be flat in dollars; they will trend up a bit as a percentage. The GP will trend up a bit also, GP percent, remembering that we're going to see the biggest revenue drop-off in the Global ECS business, which has a lower EP profile. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: Yes. But your Components business is also going to be down on a sequential basis, looking at the midpoint of guidance, which would also, you imagine given your comments on mix and pricing pressure, would also have a gross margin problem.

We think the margins will be flattish in the Components business in Q3. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: Okay, great. I guess the other question I have for you as well is most of your component suppliers are talking about end-of-quarter weakness in June and continuing to be weak in July. And yet, you guys are calling for normal seasonality into the September quarter. I'm just trying to get my head around that one.

I think if you take a look at supplier trends and our trends, you see there is a lag of what we see versus what they see, usually that's 3 months or so. And then as they start to come out of the downturn, prior to us, there's about another 3 months. So, I wouldn't try to correlate what a supplier sees to what we see. A supplier will typically have less than 25 direct customers that they deal with. We're dealing with 120,000 customers, so the booking trends are typically a little different, given that there aren't more of what I would call the leading edge of technology with their direct accounts. Having said that, we have seen, as we said, a relatively smooth quarter when it comes to bookings. And there hasn't been anything out of the ordinary that has taken us up to the above parity or really caused us to sink. This thing we're seeing is really across the board, and there's very few indicators of high growth right now. Brendan Oliver Furlong - Miller Tabak + Co., LLC, Research Division: And I guess my last question would be for Paul. In terms of the commentary earlier on that you're in a no-growth to slow-growth environment. And last quarter, you talked about, potentially, if things continued to be this way, given a little bit more -- I don't really want to say aggressive -- a little bit more cost control as we exit the calendar year. Should we still think of that's the way to go as we exit the calendar year?

Yes, for sure. We want to see -- we announced $30 million, we're tracking to that at the beginning of the year. There's another $20 million on top of that, so that'll be $50 million. We'll exit -- right now, based upon our estimates, we'll exit the year pretty much on track for that. So, we feel good about where we are. We're constantly evaluating where we stand with the economic backdrop. It's kind of interesting if you look at it. You look at North America, both in the Components business and the ECS business, the VAD business. They're doing pretty well from a profit point of view and cash flow point of view. And we can't afford to really choke down on those businesses. They're doing well. If there's not a major slide in the economy in the U.S., they'll continue to do well. And we want to make sure that we can invest in new markets, new opportunities there. Conversely, we're being a little bit more cautious in Europe as we continue, much like everybody else in the world, to understand what's going on around the European economies and actions that will be taken by the governments to defend the stability of the euro. So we're trying to get that right balance at this point in time, where we want to make sure that we can capture as much profitable market share, invest in the business over the long term, but maintain our financial strength and stability at this point in time.

Your next question comes from the line of Sherri Scribner representing Deutsche Bank.

I know a number of people have asked this question, but I'm going to try it in a little bit of a different way. In terms of the guidance for the legacy businesses to be generally in line, I just want to make sure I understand the word, legacy. Is that suggesting all the business that does not include the recent acquisitions, or is there some segment that you would consider non-legacy that you expect to see something different? And are there any segments that you would expect to see weaker than seasonal growth?

Okay, Sherri, I'm going to try to give that a shot, okay? When we talk about or refer to or try to point to our legacy businesses, those are the traditional distribution services that we have been involved with for 10 to 20 years. So the Components business in North America, the VAD business in North America, the Components business in Europe, the light business in Asia, because remember, we do have specialty businesses there. Those are the businesses that we have the most familiarity with from a seasonal trends point of view. Admittedly, it has changed over time. We're still trying to get our arms around what might be seasonal trends, if there are any, in the EAD space or the specialty businesses or some of specialty businesses we're entering into on a computer products side. We don't expect anything to be out of the norm downward in Q3, nor for that matter, do we expect anything to be out of the norm on the upside as we go through Q3.

And I would now like to turn the call back over to Ms. Greer Aviv for closing remarks.

Thank you, Shaquana. If you have any questions about the information presented here today, please feel free to contact Paul Reilly or myself. Thank you, and have a nice day.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a great day.