Debt

12 Months Ended

Dec. 31, 2023

Debt

Debt

6. Debt

Short-term borrowings, including the current portion of long-term debt, consist of the following at December 31:

(thousands)	2023		2022
4.50% notes, due March 2023	$	—	$	299,895
3.25% notes, due September 2024		499,224		—
Uncommitted lines of credit		—		78,000
Commercial paper		1,121,882		173,407
Other short-term borrowings		32,848		38,581
	$	1,653,954	$	589,883

The company has $500.0 million in uncommitted lines of credit. In May 2023, the company increased the borrowing capacity on its uncommitted lines from $200.0 million to $500.0 million.  There were no outstanding borrowings under the uncommitted lines of credit at December 31, 2023 and $78.0 million in outstanding borrowings under the uncommitted lines of credit at December 31, 2022. These borrowings were provided on a short-term basis and the maturity is agreed upon between the company and the lender. The uncommitted lines of credit had a weighted-average effective interest rate of 5.83% and 5.22% at December 31, 2023 and 2022, respectively.

The company has a commercial paper program and the maximum aggregate balance of commercial paper outstanding may not exceed the borrowing capacity of $1.2 billion. Amounts outstanding under the commercial paper program are backstopped by available commitments under the company’s revolving credit facility. There were $1.1 billion in outstanding borrowings under the commercial paper program at December 31, 2023 and $173.4 million in outstanding borrowings under this program as of December 31, 2022. The commercial paper program had an effective interest rate of 5.90% and 5.15% at December 31, 2023 and 2022, respectively.

Long-term debt consists of the following at December 31:

(thousands)	2023		2022
North American asset securitization program	$	198,000	$	1,235,000
3.25% notes, due 2024		—		498,122
4.00% notes, due 2025		349,061		348,344
6.125% notes, due 2026 (a)		497,661		—
7.50% senior debentures, due 2027		110,184		110,103
3.875% notes, due 2028		497,098		496,448
2.95% notes, due 2032		495,039		494,522
Other obligations with various interest rates and due dates		6,510		425
	$	2,153,553	$	3,182,964

(a)    Upon issuance of the 6.125% notes due March 2026, the company entered into an interest rate swap, which effectively converts the 6.125% notes to floating rate notes based on the secured overnight financing rate (“SOFR”) + 0.508%, or an effective interest rate of 5.87% at December 31, 2023.

The 7.50% senior debentures are not redeemable prior to their maturity.  All other notes may be called at the option of the company subject to “make whole” clauses.

The estimated fair market value of long-term debt at December 31, using quoted market prices, is as follows:

(thousands)	2023		2022
3.25% notes, due 2024	$	—	$	481,500
4.00% notes, due 2025		343,500		338,000
6.125% notes, due 2026		502,000		—
7.50% senior debentures, due 2027		117,000		116,500
3.875% notes, due 2028		475,000		456,000
2.95% notes, due 2032		425,000		395,500

The carrying amount of the company’s other short-term borrowings, 3.25% notes due in 2024, North American asset securitization program, commercial paper, uncommitted lines of credit, and other obligations approximate their fair value.

The company has a $2.0 billion revolving credit facility maturing in September 2026. The facility may be used by the company for general corporate purposes including working capital in the ordinary course of business, letters of credit, repayment, prepayment or purchase of long-term indebtedness, acquisitions, and as support for the company’s commercial paper program, as applicable. Interest on borrowings under the revolving credit facility is calculated using a base rate or SOFR, plus a spread (1.08% at December 31, 2023), which is based on the company’s credit ratings, plus a credit spread adjustment of 0.10% or a weighted-average effective interest rate of 6.42% at December 31, 2023. The facility fee, which is based on the company’s credit ratings, was 0.175% of the total borrowing capacity at December 31, 2023. The company had no outstanding borrowings under the revolving credit facility at December 31, 2023 and 2022.

The company has a North American asset securitization program collateralized by accounts receivable of certain of its subsidiaries. The company may borrow up to $1.5 billion under the program which matures in September 2025. The program is conducted through Arrow Electronics Funding Corporation (“AFC”), a wholly-owned, bankruptcy remote subsidiary. The North American asset securitization program does not qualify for sale treatment. Accordingly, the accounts receivable and related debt obligation remain on the company’s consolidated balance sheets. Interest on borrowings is calculated using a base rate plus a spread (0.40% at December 31, 2023), plus a credit spread adjustment of 0.10% or an effective interest rate of 5.85% at December 31, 2023. The facility fee is 0.40% of the total borrowing capacity.

The company had $198.0 million and $1.2 billion in outstanding borrowings under the North American asset securitization program at December 31, 2023 and 2022, respectively, which was included in “Long-term debt” in the company’s consolidated balance sheets. Total collateralized accounts receivable of approximately $2.7 billion and $3.1 billion were held by AFC and were included in “Accounts receivable, net” in the company’s consolidated balance sheets at December 31, 2023 and 2022, respectively. Any accounts receivable held by AFC would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings of the company before repayment of any outstanding borrowings under the North American asset securitization program.

Both the revolving credit facility and North American asset securitization program include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. As of December 31, 2023, the company was in compliance with all such financial covenants.

During the first quarter of 2023, the company completed the sale of $500.0 million principal amount of 6.125% notes due in March 2026. The notes have a call option which allows for redemption at par, without penalty, on or after March 1, 2024. The net proceeds of the offering of $496.3 million were used to repay the $300.0 million principal amount of its 4.50% notes due March 2023 and for general corporate purposes.

During February 2022, the company repaid $350.0 million principal amount of its 3.50% notes due April 2022.

Annual payments of borrowings during each of the years 2024 through 2028 are $1.7 billion, $550.7 million, $503.2 million, $110.9 million, and $500.2 million, respectively, and $500.0 million for all years thereafter.

Interest and other financing expense, net, includes interest and dividend income of $66.4 million, $33.7 million, and $14.7 million in 2023, 2022, and 2021, respectively. Interest paid, net of interest and dividend income, amounted to $274.1 million, $175.6 million, and $113.1 million in 2023, 2022, and 2021, respectively.