Good day, ladies and gentlemen, and welcome to your Arrow Electronics, Inc., Second Quarter Earnings Conference Call hosted by Greg Hanson. My name is Delou, and I will be your event manager today. [Operator Instructions] As a reminder, ladies and gentlemen, this call is being recorded for replay purposes only. I would now like to turn the conference over to your host, Mr. Hanson. Please proceed, sir.

Thank you. Good afternoon, and welcome to the Arrow Electronics Second Quarter Conference Call. I'm Greg Hanson, Vice President and Treasurer of Arrow. I will be serving as the moderator for today's call. If you'd like to access today's call via webcast, please visit our 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 of Global ECS; and Peter Kong, President of Global Components. By now, you should have all received a copy of our earnings release. If not, you can access the release on the investor relations section of our website, along with the CFO commentary and the earnings reconciliation for the second quarter. Before we get started, I'd like to review Arrow's Safe Harbor statement: Some of the comments 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'd like to introduce our Chairman, President and CEO, Mike Long.

Thanks, Greg. And thanks, everybody, for taking the time to join us today. Arrow had a very strong second quarter, with both sales and diluted earnings per share up year-over-year. Our revenue of $5.3 billion was at the top end of our guidance, and diluted earnings per share of $1.12 were well in excess of our expectations. Both business segments contributed to this successful quarter. We continue to push forward with our long-term strategic initiatives while managing well the short-term tactical aspects of the business. Cash flow generation in the second quarter was also impressive at more than $330 million. Solid execution in our components business led to all regions posting sales growth above normal seasonality. Our enterprise computing solutions business continues to produce record results, with strong organic growth year-over-year and a record level of operating income for the second quarter. In global components, sales of $3.4 billion were ahead of expectations. In the Americas, our core sales advanced 4% versus the prior quarter. They remained below our year-ago level, reflecting the ongoing macroeconomic challenges. In Europe, we saw a better-than-seasonal trend in sales growth. Core sales in constant currency increased 3% in the quarter, with normal seasonality down approximately 8%. Sales in Europe are still down versus the year-ago period, although the rate of year-over-year decline has lessened. Asia-Pac also experienced strong momentum with a core growth of 13% year-over-year, and we saw broad strength geographically. China and the ASEAN region were up significantly, driving a sequential gain in core sales of 17%. Book-to-bill was above 1 globally for the third consecutive quarter. Our enterprise computing solutions business continues to outperform the markets we serve, with our 14th consecutive quarter of organic growth. Sales of $1.9 billion were up 12% year-over-year, with strong contributions from both regions. In the Americas, sales grew 10% year-over-year and were slightly ahead of our expectations. Sequential growth in the North America value-added business was in line with normal seasonality following a very strong first quarter. In Europe, our sales grew 18% year-over-year as we saw broad-based strength across the region. This was driven by the expansion of our matrix strategy, which includes the Altimate acquisition. With solid improvements in both regions, our operating margin of 4.2% reached a level not achieved since the second quarter of 2008. Over the past 12 months, we've returned nearly $400 million to investors through our stock buyback program. We have been aggressive about repurchasing our shares, as we believe in the long-term value of our strategy. In summary, we executed very well in the second quarter. Our markets remained stable, although the growth -- global macro environment is still seeing some challenges. We'll continue to pursue our strategy which has served us well in the short term and positions us to accelerate our performance in the future. Paul will now provide an update of our financial results for the second quarter.

Thanks, Mike. Second quarter sales of $5.3 billion were at the high end of our guidance. Adjusted for the impact of acquisitions and changes in foreign currency, sales were flat year-over-year. In global components, sales declined 2% year-over-year as double-digit growth in Asia was offset by revenue declines in the Americas and Europe, reflecting the broad macroeconomic trends in those regions. Adjusted for the impact of acquisitions and changes in foreign currency, sales in global components were down 3% year-over-year. Sales in global ECS increased 12% year-over-year, with strong double-digit growth in both Europe and the Americas. Adjusted for the impact of acquisitions and changes in foreign currency, sales increased 7% year-over-year in global ECS. All of our businesses performed in line with or above normal seasonality this quarter. Our consolidated gross profit margin was 13%, a decrease of 30 basis points year-over-year due primarily to changes in geographic mix. Operating expenses increased 4% year-over-year on an absolute dollar basis. Adjusted for the impact of acquisitions and changes in foreign currency, operating expense dollars increased only 1% year-over-year and were flat as a percentage of sales. And to assist you with your analysis: Acquisitions added approximately $13 million to operating expenses this quarter. We also took important steps in the second quarter towards our annualized $75 million productivity-enhancement initiatives, and we remain on track to realize the targeted savings by the end of 2013. Operating income was $186.1 million. Operating income as a percentage of sales was down 40 basis points year-over-year as reported and down 30 basis points as adjusted for the impact of acquisitions. In global components, adjusted for the impact of acquisitions, the operating margin declined 80 basis points year-over-year, due in part to geographic mix as Asia-Pacific growth continued to outpace the other regions and accounted…

Thank you, Paul. Delou, if you would open up the call for questions at this time? Operator, if you could open the call for questions at this time, please. Delou, are you on the line? [Technical Difficulty]

[Operator Instructions] Okay, we do have a question from the line of -- [Operator Instructions] We do have a question. It's from the line of Mr. Jim Suva of Citi.

Guys, this is Nicholas Jones, on behalf of Jim Suva. I was hoping you could give an update on some of the pricing pressures you're seeing and then also just kind of the operating margin targets you have and what sales level you expect to kind of get in, especially for the components business?

Sure. I think that, on a year-over-year basis, gross margins are negatively impacted by a few factors. One is the ongoing pricing pressure of competitions, as well as some of the changes in product and geographic mix. And the other one is Asia-Pac components grew significantly faster than the Americas or EMEA and accounted for a greater proportion of our sales versus a year ago. What we have seen is a strengthening in the backlog coming off of 3 quarters of positive book-to-bill. So it's our belief that the margin's decline will abate and we'll start seeing margin growth from this point out. Paul, do you want to talk about the cost reduction?

Yes, sure. So we're really tracking very nicely to our cost-reduction efforts at this point in time, and you can see some of that in the operating income percent in global components. Interestingly, if you look on a historical basis, operating income percent normally trends down sequentially in Q2 in global components. And in fact, this quarter, we trended up in operating income by 20-plus basis points. So when we looked at it, we're starting to see traction there. And remember also, we're still investing in our business, as we do believe we want to be best prepared to capture our fair share of future growth in the marketplace.

The next question is from the line of Mark Delaney of Golden (sic) [Goldman] Sachs.

I was hoping you can help me understand a little bit more on the third quarter guidance since, I understand, you're assuming growth that's at the low end to midpoint of typical seasonality even though, in the second quarter, you had results that were above your previous guidance. So is that just general conservatism in that you're picking up at your customers? Or is there anything that you're actually seeing in terms of order patterns that would make you give guidance a little bit below seasonal?

I -- we actually have a couple of factors that we're really wrestling with. We have an increased backlog over the last 3 quarters because of the positive book-to-bill level that we've had, so that would suggest the growth. We also are a little unclear in our computer business around sequestration and what that's going to do in the third quarter. And then we're also augmented by something not as big, but this quarter, there's 2 days less than normal for us in the entire quarter. And as you know, those last couple of days can be a couple hundred million dollars of sales. What's interesting is, I think, if we're talking about maybe $60 million of sales in the guidance, that would sort of make the question go completely away, but we're not sure right now whether those sales have actually pulled ahead into the third quarter or whether they stay in the fourth quarter. And that's really the conservatism around our guidance to give you, obviously, the best number that we can at this point in time with what we see.

For my follow-up, I was hoping to dig a little bit deeper into the margins. Based on your third quarter guidance, it seems that you're expecting some additional margin improvement. And I understand there are some cost savings that are starting to flow to the model. I'm wondering if there are other factors that are starting to benefit you as well in terms of product mix or maybe better pricing.

Well, we are, as we've said, seeing an increased book-to-bill, which is always possible. Typically, when you get down towards the bottom, the margin will follow the sales back up because you'd still have that period of time where there's more of a competitive nature versus when the business gets healthier. We are expecting an uplift in our components business in the third quarter and an uplift in margin in the computer products business for the third quarter, too. And that's a result of what we see as more normal day-to-day bookings and really a more consistent view of bookings going forward. So we do expect the margin to improve for us. We also took -- on the expense side, we really did take some important steps towards that annualized $75 million productivity-enhancement program. We do remain on track with that by the end of 2013. We did have kind of a number of items related, really, to the warehouse transition in Europe as we closed the warehouse and consolidated some operations that we could do after the computer system being turned on. And so there may be some fluctuations in sort of the quarterly breakdown as we're restructuring right behind that computer conversion to bring us additional savings. And as I said, I believe we're going to be on track with $75 million, but that's probably the noise that you're seeing.

The next question is from the line of Shawn Harrison of Longbow Research.

I guess, just a couple of follow-ups on the earlier questions. When thinking about the global components EBIT margin target of 5.3%, is there anything other than kind of the Asia dynamics in -- that mix had, one that would not allow you to get back to that 5.3% margin if we were to see something like a $200 million to $250 million increase in the quarterly sales run rate in North America and Europe?

Paul, do you want to take them?

Sure. So first off, we don't see that there's anything that's changed both in the short-term last couple quarters over the last couple of years that would cause us to move away from our targeted levels of profitability in any of our businesses. And as we've talked about, some are further along the path than others. So we don't think there would be any real dynamics changes, that type of thing, that would change the targets. $200 million of sales would, I'm just trying to do the math in my head, really push us much closer to the target over the long term. So don't have any real concerns around that at this point in time.

Okay. And then 2 brief follow-ups. Just on the restructuring savings, how much it has hit the P&L so far. And then the amortization that's being backed out, how was that split between electronic components and computer products?

Okay, I'll take them in reverse order and admit that you have me stumped, I don’t have the information in front of me. I looked at it yesterday, but sadly, I -- there's a lot of acquisitions. I don't remember. We'll come back to you with that one. There's a lot of action going on around expense. So if I look at it, the way we're tracking it, we've actually got $17 million of expenses out through Q2, so Q2 versus Q4. But because that puts us ahead of the pace that we thought we were going to be at, we've chosen to also make some investments in the business so that we think, then -- you know how investments work, right? They're front-end loaded and they trail off. So it's maybe hard to see it in the -- going from Q4 to Q2, but the way we keep track, we've selectively chosen to invest in the business because we're ahead of our productivity enhancement targets.

I guess, to that, Paul, then, what would be kind of in -- you have the restructuring savings now at the investments, what should be the final number that we see on an annualized basis exiting the year?

Yes, well, we're already at $68 million annualized expense action savings, so to get to our $75 million number, it's not that far away. And we have a clear line of sight about what's happening in Q3 and Q4. The other issue, though, is that some of this front-end loaded spending that we're going through today in some investments would absolutely tail off also. So you really see the whole impact of really starting in -- the whole impact of the $75 million in probably the fourth quarter.

The next question is from the line of Sherri Scribner of Deutsche Bank.

I just wanted to ask a little bit, Paul, on the model, and thinking about the SG&A and the cost savings. Would you expect the SG&A to be relatively flat in September? And is there any chance that it goes down in December, or is it going to tick up, like it normally does, in December?

We think that, as we look to the third quarter, we'll see expenses trend downward through second quarter levels, when you look at it. And then if you looked at it year-over-year, you're kind of looking at actually flattish, and that's really where you see some of the investments not falling out of the mix yet. But we'll definitely be down in the expenses on a sequential basis, probably, I'm going to put a round number on it, somewhere between $10 million and $15 million.

Okay. And then thinking about the depreciation. It sounds like you're going to start stripping out amortization from your numbers starting in the September quarter. At least, that's the way the press release sounded. So should we assume that the depreciation number in September is roughly $7 million lower than the $33 million that it was in the June quarter?

Yes, just to be -- thanks for asking that question, Sherri. It's, really, what we're looking at is only the amortization of intangibles. So we've put a lot of the big investment into our UNITY ERP rollout, and that will still hit the P&L. We won't carve that out. We've done a lot of research around this and saw that many high-tech companies, tech-related companies, were in fact pulling out amortization of intangibles. We don’t see much of a change, so it's about $9 million pretax, $7 million after tax. And yes, you're right, that will be pulled out pretty consistently going forward.

And that'll be in the D&A line?

Yes.

Okay. And then just thinking about the semiconductor business. It sounded like you had a good quarter and you're expecting, going forward, in-line or slightly lower. Have you seen an inventory refresh in the semi business? It sounds like things are still cautious out there, but just wanted to get your thoughts.

Sure, Sherri. I think that the supply chain today is pretty lean. There's a lot of hand-to-mouth. And lead times are in that 11-week range where historical average, as you know, has been somewhere around 12. So everything right now is still flowing at a very lean rate, so an uptick will make quite a difference for everybody. And it shouldn't -- it should be more than marginal as that uptick does take place.

Okay, great. So we haven't seen it yet. Okay.

Yes.

The next question is from Matt Sheerin of Stifel. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: So a question on your commentary about the fewer selling days in the quarter. Will that also have a positive impact, then, on your expenses? Or is it just the timing of when the days fall, where it's -- it impacts sales more than it does actual operations or expenses?

Yes, Matt, as you know, we're not losing the days at the front of the quarter, we're losing the days in the back of the quarter. And those usually have the most volume. So that's why it has more of an impact on sales and GP dollars than it might have on the expense structure. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. So when you talk about that sequential decrease in OpEx, that's sort of a clean number.

You -- we'd like to think so. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And then, Mike, just another question on the components cycle because it looks like we've sort of been stuck at a 1.0:1.0 for a kind of book-to-bill for 3 quarters now. And as these cycles tend to shift fairly quickly, and we've been sort of stuck in this malaise, if you will, which is not a bad thing because it's not going down, but if you sort of had a guess at where the cycles headed here given some signs of the rebound in markets like telecom and networking, offset by some weakness in mobility. So lots of puts and takes, but is your sense that we're sort of stuck in this mode for a while? Or are you more optimistic that the semi cycle will continue to recover and then, beyond that, you'll see lead time stretch and better pricing in, for more orders?

Yes, for where we are right now, as you can tell by our guidance, we see it hanging here for another quarter. The book-to-bill, the good news about it is we've had 3 quarters of positive book-to-bill in that business. We do see, in some of the new business, the margins increasing. And the real trick here is to have the manufacturers start to tick up their sales. And as they do, we'll not only get that sales increase but then inventory safety will be important to them and the supply channels will kind of flow. We have not seen the signs of that yet. And really, until we do, our view is that the third quarter will fall about as we see it. And we're hopeful, hopeful, for an uptick towards the fourth quarter, but we don't have enough in here to call it yet. Matthew Sheerin - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And are you seeing -- last quarter, you talked about a pickup in design activity. Could you give us any numbers around that? That tends to be a good leading indicator.

Yes, sure can. What we've seen is that our approved design registrations increased about 11% year-over-year in the second quarter. And we did see stronger trends in Europe, which was good news. The other news that is decent news is that, sequentially, those registrations also increased 6%. So if we take the last 12 months, there's really been a 12% increase in those design registrations. That's the part -- as you know, the higher that number, sort of the greater the rebound will be. And that's one of the reasons that's giving us a little bit of that hold-back at this point because they're not in that 15%, 20% range yet where we really see things starting to take off.

The next question is from Louis Miscioscia from CLSA.

Maybe you could just go into a little bit more detail into the strength in ECS in both, I guess, America and Europe, just mostly organic demand. I know you broke out, in Europe, the acquisition difference, that was helpful. And then in the Americas, you said -- again, you commented it will be below normal seasonality quarter-over-quarter. Just curious why. Does that go back to the -- just being a few days shorter on the quarter?

Europe. Yes, go ahead, Andy.

So a little -- thanks, Mike. First part of your question, I think our strategy is really the reason that we continue to produce organic sales growth. We've had this matrix strategy in Europe in place for quite some time, but we've also had it in North America. So new product lines, our ability to gain share and out-execute our competition is producing the results. And of course storage, as you probably have read in the CFO report, was strong again. Software was strong. And even though the server market is kind of unremarkable right now, we're producing record results even without the server market participating. So good results in North America and Europe. And as you mentioned, we're coming off of 2 great quarters, so when you look at seasonality, the bar has been set pretty high for us. And I think Mike mentioned we're watching the sequester. We have a very good presence in the federal space, so if there is an upside to be had there, we'll participate. The fact is that September 30 falls on a Monday, so that will be the end of the government's year. That will be outside our quarter. So that's a little bit of color as to why we're seeing it the way we're it on a go-forward.

Yes. Well, let me add a little bit to this. So then if you take a look on how that ECS business has transformed, today, well over half of our sales come from software services, storage and security, something that really didn't exist here 5 years ago. So there's been a very good path towards diversifying this business into higher-value spaces that require more than just shifting the product. And by doing that, we've actually helped ourselves. If you really think of the industry standard servers, a long time ago, we were primarily proprietary servers. And the truth is, even with the competition that's out there, our worldwide growth in industry standard is around 16%, and 15% in Europe and 19% in North America. So given that extra value-added content, that's really allowed us to move this business into a new place.

Okay, great. And then maybe, Andy, if could just, your comment was helpful, maybe pull out Europe's strength in comparison to maybe just what you're seeing organically, a lot more tepid, I guess, in comparison.

In Europe?

Europe and the U.S.

Well, the organic growth, actually, is well above market growth, right? So if you strip out foreign exchange and the acquisition, then I think we still grew 7% or 8%. So we're pretty much pacing 3x the market growth. And again, I think, looking ahead, we feel pretty comfortable that our strategy that Mike just talked about is going to pay off, so...

Okay, great. Last 2 housekeeping questions. When does your quarter actually end, what's the last date?

September 28.

And then you had mentioned the amortization. Is that about $0.07? And it -- is that actually already in your EPS guidance of $1.14 to $1.26?

The exclusion of the $0.07 is in that -- those numbers you just quoted.

And the next question is from Brian Alexander for Raymond James. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: Paul, what was the book-to-bill on a global basis as you exited the quarter? And how does that compare to the end of last quarter? Was there much variability by region? And then just help me understand why backlog is increasing with lead times still pretty short. Then I have a follow-up.

Okay. So each of the major regions in global components had book-to-bills between 1.01 and 1.05, and I'd say the one that was at 1.01 is Europe. And that was well ahead of normal seasonality. So we see it as very positive. When we looked at it rolled up, remember, those are all core businesses, it was above 1.03. So we feel good about that as we exited the quarter and as we move forward. So I think that's a very positive sign for us. I guess the other question was on backlog? Brian G. Alexander - Raymond James & Associates, Inc., Research Division: Yes, just maybe clarify why that's rising as lead times still remain pretty short.

Well, your backlog, Brian, is not necessarily what you have in inventory. Your backlog is what customers have placed on you that will ship in the future. So as the book-to-bill increases the sales, your backlog starts to build. And as that backlog starts to build, you start to get better visibility into your numbers going forward. And that's really what is going on right now. So the customer demands on us for the future are higher than they were last quarter and higher than they were the quarter before that. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: And are you seeing that further out in bookings in terms of the window moving out from 30 to 60, to 60 to 90?

Right. We have not seen anything abnormal in our bookings. Our cancellation rates are remaining the same. The backlog tends to be building on a more steady basis, which we like to see. And as I said, the hardest part right now is, as that backlog starts to build, which pieces will ship in the third quarter versus which pieces will ship in the fourth quarter. That's what's giving us a little bit of a headache right now. Brian G. Alexander - Raymond James & Associates, Inc., Research Division: And then, Paul, just on cash flow. You mentioned that you had $300 million-plus in operating cash flow, a very good performance, and that you're overachieving in terms of your net income conversion to cash flow. How are you thinking about that over the next few quarters? Is that going to normalize? How should we be thinking about working capital? And then on the buyback, very active here in the first half, how should we think about the buyback going forward?

Sure. Thanks, Brian. So on the working capital management, we make good progress year-over-year when we look at it, really, in the inventory area, but we did slip a little bit in managing our payables. But net-net, when you look at it year-over-year, we improved in working capital where billings went down. And when we look at it on a sequential basis, we really make good progress in DSOs, which were 2 days better, and inventory turns, which improved also, with the payables management flat. So we think we can continue to push hard on managing well by doing the basics around working capital. So we expect to be cash flow positive in Q3, not at the same level as Q2 but still at a good level, probably more in line with our target of about 70% conversion at this point in time. And we think we'll be fine also in Q4. So our target is a long-term target. And as we all know, sometimes we have quarters where we have really strong performance and other times where we're kind of -- it looks like we slipped. But when I look at the long term, I still think we'll be able to do better than the 70% over the long term. Oh, and on the buyback. Yes, we got a board meeting coming up. And as always, we review our capital structure with our board. And yes, look, we were aggressive in Q2. We thought -- we do believe at that point in time that we were executing to what we told you all we would be doing, which we'd be buying aggressively around book value. So that's what we did. We've used up our authorization, and we'll continue to have the dialogue with our board.

[Operator Instructions] And the next question is from the line of Amitabh Passi of UBS.

It's Amitabh here. Mike, I'm just trying to reconcile the trends in your Americas components business, I think we've had almost 6 quarters of negative year-over-year growth, with sort of the macro commentary about things getting marginally better. Just trying to understand, what exactly do you think is going on in that segment? And why have trends been so weak for so long?

Well, I think there's been some fundamental market changes. We did have the 4% increase versus the prior quarter. Things are showing a sign of life. The lighting industry continues to be robust, and we've seen that increase about 21% year-over-year and 15% sequentially. The PEMCO, the passive, electromechanical and connector initiatives continue to gain momentum. And what we've seen is aerospace and defense having around a year-over-year growth of 3%, lighting is up in the 15% to 21% range quarter-on-quarter to year-over-year. We've actually seen, you've got some offsetting factors that are having an impact. The medical industry, medical devices quarter-on-quarter was down about 2%, but on the year, it's flat. So we've -- that's typically been an industry where there's been some wind at our back, and we haven't had that for quite some time, as that medical devices have not been that strong. The other thing you have to remember is that there's been a pretty good hit in the alternative energy sector. Solar, wind, those types of things are not growing at the pace that they used to. In fact, we've seen a decline in both of those, and that's -- that pulled us the other way. So I think there's some industry rationalization that's going on. Of course, automotive is ticking up, and that's good. But until that stuff sort of sorts itself out, that's what's really causing the problems.

Got it, very helpful. And then Paul, just one for you. Operating margins in your computing solutions segment, up 30 bps year-over-year. They were up 10 basis points in your first calendar quarter. Should we expect, on a year-over-year basis, ongoing improvement over the next couple quarters, maybe 10, 20 basis points?

Andy is sitting right here, so yes. I would -- I -- Amitabh, I would expect that we'll continue to see improvement there. As Andy has mentioned, look, we're probably running at a top line 3x the growth in the overall market that you're serving in around the data center. And we think that's still a rich opportunity, so we want to make sure we get the right balance between, obviously, maximizing our profitability, but also we want to invest in the business. So it may not be as linear every quarter because there is a bit of a lag between investment in pay-off, but we would expect over the long term that we continue to see the trend strengthen in our operating income percent.

Got it. Andy, can I just ask one for you quickly? I'm just curious, why -- how is it that, in most of your key categories in computing solutions, servers, networking, security, storage, you continue to outgrow your suppliers by quite a great extent? I'm just wondering, what explains that dynamic?

Most of the organic growth is coming from the matrix expansion strategy, which means we take a new line and we're enjoying revenue from $0 up. And so that's why you see the growth where we're expanding into a new country where we had no revenue in that vendor line previously. And so that strategy is driving faster the market growth.

And how far are we into that? Are we -- is there still quite a bit of headwind?

I think we're in -- just the middle inning. There is more to come. More to come.

The next question is from the line of Steven Fox of Cross Research.

Just one question and one comment. Just from a comment standpoint: I truly understand why you're making the change on the amortization line, but it would be helpful if we just got an 8-K filing sort of breaking out the change from a margin standpoint by your business segments. I think you can only get to a couple of the quarters from your 10-Q filings, so it just makes it hard on an apples-to-apples basis. And then from a question standpoint: Just looking at the enterprise spending line -- enterprise spending demand, rather, for the rest of the year. I know that you've mentioned some calendar issues, some government issues as well, but if you look at just your core set of small- and medium-sized customers, can you sort of describe what's been going on there from a big picture standpoint, whether the product trends you described so far apply fully to those markets, and also how you feel? I know it's early summer, but how do you feel about year-end spending around those -- that group of customers?

Okay. So I'll take the part about the medium business versus maybe large enterprise. So let's take the quarter closeout and when the fiscal year ends for the federal government, and I would say that business and our pipelines continue to show steady growth. And there's no change in -- really, in our outlook. We're actually seeing some of our bigger customers driving back into the IT spending arena. So when you look at the markets we serve, financial, healthcare, government and so on, some of the spending is large accounts getting back in the game and spending on IT. And the mid market has been consistent and pretty good for us. So to wrap it up: I think, heading into year end, I don't want to go out on a limb and talk about growth ahead of what the industry is calling for, but I do think the data center spend is a little bit stronger than the general IT spend. And so I think we're in a good position as we head into year end.

We have no further question in the queue. I will now turn the call back to Mr. Greg Hanson for any closing remarks.

Okay, thank you. As a reminder, if you have any questions about the information presented today, please feel free to contact me. Thank you. Have a nice day.

Thank you, ladies and gentlemen, for your participation in today's conference call. You may now disconnect. Have a great day. Thank you.