8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): April 30, 2020

ARROW ELECTRONICS INC

(Exact Name of Registrant as Specified in Charter)

New York	1-4482	11-1806155
(State or Other Jurisdiction	(Commission	(IRS Employer
of Incorporation)	File Number)	Identification No.)

9201 East Dry Creek Road,	Centennial,	CO	80112
(Address of principal executive offices)			(Zip Code)

Registrant's telephone number, including area code: (303) 824-4000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of the exchange on which registered
Common Stock, $1 par value	ARW	New York Stock Exchange

 Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

  ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On April 30, 2020, the Registrant issued a press release announcing its first quarter 2020 earnings.  A copy of the press release is attached hereto as an Exhibit (99.1).

On April 30, 2020, the Registrant also issued a press release containing a first quarter 2020 CFO commentary related to its first quarter 2020 earnings.  A copy of that press release is attached hereto as an Exhibit (99.2).

The information in this Current Report on Form 8-K and the Exhibit attached hereto is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d)           EXHIBITS

99.1 Earnings press release dated April 30, 2020.

99.2 CFO commentary press release dated April 30, 2020.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		ARROW ELECTRONICS, INC.
Date:	April 30, 2020	By:	/s/ Lily Hughes
		Name:	Lily Hughes
		Title:	Senior Vice President, Chief Legal Officer and Corporate Secretary

EXHIBIT INDEX

Exhibit	Description
99.1	Earnings press release issued by Arrow Electronics, Inc., dated April 30, 2020.
99.2	CFO commentary press release issued by Arrow Electronics, Inc., dated April 30, 2020.

EX-99.1

ARROW ELECTRONICS, INC. 9201 E. DRY CREEK ROAD CENTENNIAL, CO 80112 303-824-4000 NEWS

Exhibit 99.1

Arrow Electronics Reports First-Quarter 2020 Results

-- Enabling Secure Work-from-Home Environments --

-- Dedicating Resources to Medical Equipment Production --

CENTENNIAL, Colo.--(BUSINESS WIRE)-Apr. 30, 2020--Arrow Electronics, Inc. (NYSE:ARW) today reported first-quarter 2020 sales of $6.38 billion, a decrease of 11 percent from sales of $7.16 billion in the first quarter of 2019. First-quarter sales, as adjusted, decreased 9 percent year over year. First-quarter net income of $50 million, or $.61 per share on a diluted basis, compared with net income of $141 million, or $1.63 per share on a diluted basis, in the first quarter of 2019. Excluding certain items¹, net income would have been $79 million, or $0.97 per share on a diluted basis, in the first quarter of 2020, compared with net income of $164 million, or $1.90 per share on a diluted basis, in the first quarter of 2019. Net income and diluted earnings per share in the first quarter of 2020 included charges related to foreign tax and other loss contingencies totaling approximately $33 million and $.41, respectively. In the first quarter of 2020, changes in foreign currencies negatively impacted growth by approximately $42 million or 1 percent on sales and $.02 or 1 percent on earnings per share on a diluted basis compared to the first quarter of 2019.

“Arrow maintains a firm commitment to our design, engineering, marketing and supply chain services, which play an essential role for our stakeholders as they navigate the unprecedented challenges associated with the COVID-19 pandemic,” said Michael J. Long, chairman, president, and chief executive officer. “I am grateful to our dedicated teams in all regions who have been working with urgency to ensure our customers and suppliers are well equipped to continue their business operations in the current environment. In addition to enabling secure work-from-home environments, Arrow is supporting the medical community’s life-saving efforts by providing critical electronic components and data management hardware and software.”

Global components first-quarter sales of $4.55 billion decreased 12 percent year over year. Sales, as adjusted, decreased 10 percent year over year. Asia-Pacific components sales decreased 5 percent year over year. Europe components sales decreased 13 percent year over year. Sales in the region, as adjusted, decreased 10 percent year over year. Americas components sales decreased 19 percent year over year. Sales in the region, as adjusted, decreased 16 percent year over year. Global components first-quarter operating income was $165 million. First-quarter operating income, excluding amortization of intangibles expense, as adjusted, was $171 million.

“Despite production stoppages, border closures and stay-at-home orders, our global components team demonstrated unwavering focus on our customers’ needs in the production of vital electronic equipment, delivering first-quarter financial performance consistent with pre-pandemic expectations,” continued Mr. Long. “We view global components financial results as a testament to the efforts of our team and our long-held belief that doing good is also good for business.”

Global enterprise computing solutions first-quarter sales of $1.83 billion decreased 7 percent year over year. Sales, as adjusted, decreased 6 percent year over year. Europe enterprise computing solutions sales decreased 8 percent year over year. Sales in the region, as adjusted, decreased 5 percent year over year. Americas enterprise computing solutions sales decreased 6 percent year over year. Global enterprise computing solutions first-quarter operating income was $42 million. First-quarter operating income, excluding amortization of intangibles expense, as adjusted, was $45 million. Operating income in the first quarter of 2020 included charges related to foreign tax and other loss contingencies of approximately $30 million.

“In connection with our shift from provisioning complex hybrid cloud solutions to rapidly enabling the massive migration to an at-home workforce, Arrow reported global enterprise computing solutions sales near the high-end of our prior expectations,” said Mr. Long.

“Looking ahead to the second half of the year, we anticipate a cautious, measured return to normal business activity, and Arrow is well positioned to continue benefiting from the robust cash flow our business generates. First-quarter cash provided by operating activities was $467 million thanks to our disciplined working capital management, including our new EMEA asset securitization program, and efficiencies from our previously announced cost optimization program,” said Chris Stansbury, senior vice president and chief financial officer. “Our liquidity position is the best in our company’s history, with more than $3.1 billion of undrawn committed borrowing capacity in addition to cash on hand.”

¹ A reconciliation of non-GAAP adjusted financial measures, including sales, gross profit, operating income, net income attributable to shareholders, and net income per share, as adjusted, to GAAP financial measures is presented in the reconciliation tables included herein.

1

SECOND-QUARTER 2020 OUTLOOK

• Consolidated sales of $6.075 billion to $6.675 billion, with global components sales of $4.4 billion to $4.7 billion, and global enterprise computing solutions sales of $1.675 billion to $1.975 billion

• Earnings per share on a diluted basis of $.98 to $1.14, and earnings per share on a diluted basis, excluding certain items¹ of $1.38 to $1.54 per share

• Average tax rate of approximately 24 percent compared to the long-term range of 23 to 25 percent

• Average diluted shares outstanding of 81 million

• Interest expense of approximately $40 million

• Expect average USD-to-Euro exchange rate of $1.10 to €1

Please refer to the CFO commentary, which can be found at investor.arrow.com, as a supplement to the company’s earnings release.

Arrow Electronics guides innovation forward for over 175,000 leading technology manufacturers and service providers. With 2019 sales of $29 billion, Arrow develops technology solutions that improve business and daily life. Learn more at fiveyearsout.com.

Information Relating to Forward-Looking Statements

This press release includes forward-looking statements that are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: potential adverse effects of the ongoing global coronavirus pandemic, including actions taken to contain or treat the coronavirus, industry conditions, changes in product supply, pricing and customer demand, competition, other vagaries in the global components and global ECS markets, changes in relationships with key suppliers, increased profit margin pressure, changes in legal and regulatory matters, non-compliance with certain regulations, such as export, anti-trust, and anti-corruption laws, foreign tax and other loss contingencies, and the company's ability to generate cash flow. For a further discussion of these and other factors that could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled “Risk Factors” in the company's Annual Report on Form 10-K for the year ended December 31, 2019. Forward-looking statements are those statements which are not statements of historical fact. These forward-looking statements can be identified by forward-looking words such as “expects,” “anticipates,” “intends,” “plans,” “may,” “will,” “believes,” “seeks,” “estimates,” and similar expressions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

Certain Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, operating income, net income attributable to shareholders, and net income per basic and diluted share.

The company provides sales, gross profit, and operating expense on a non-GAAP basis adjusted for the impact of changes in foreign currencies (referred to as changes in foreign currencies) by re-translating prior period results at current period foreign exchange rates, the impact of dispositions by adjusting the company’s operating results for businesses disposed, as if the dispositions had occurred at the beginning of the earliest period presented (referred to as dispositions), the impact of the company’s personal computer and mobility asset disposition business (referred to as wind down), the impact of inventory write-downs related to the digital business (referred to as "digital inventory write-downs and recoveries"), and the impact of the notes receivable reserves and inventory write-downs related to the AFS business (referred to as “AFS notes receivable reserves and recoveries” and “AFS inventory write-downs and recoveries” respectively). Operating income is adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, and loss on disposition of businesses, net, AFS notes receivable reserves and credits and inventory write-downs and recoveries, digital inventory write-downs and recoveries, and the impact of wind down. Net income attributable to shareholders, and net income per basic and diluted share are adjusted to exclude identifiable intangible asset amortization, restructuring, integration, and other charges, and loss on disposition of businesses, net, AFS notes receivable reserves and credits and inventory write-downs and recoveries, digital inventory write-downs and recoveries, net gains and losses on investments, the impact of wind down, and certain tax adjustments. A reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the tables below.

The company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the company’s operating performance and underlying trends in the company’s business because management considers these items referred to above to be outside the company’s core operating results. This non-GAAP financial information is among the primary indicators management uses as a basis for evaluating the company’s financial and operating performance. In addition, the company’s Board of Directors may use this non-GAAP financial information in evaluating management performance and setting management compensation.

The presentation of this additional non-GAAP financial information is not meant to be considered in isolation or as a substitute for, or alternative to, sales, operating income, net income and net income per basic and diluted share determined in accordance with GAAP. Analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP.

2

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
	Quarter Ended
	March 28, 2020			March 30, 2019
Sales	$	6,381,417		$	7,155,991
Cost of sales	5,653,026			6,294,303
Gross profit	728,391			861,688
Operating expenses:
Selling, general, and administrative expenses	533,839			556,076
Depreciation and amortization	47,110			47,526
Loss on disposition of businesses, net	—			866
Restructuring, integration, and other charges	9,138			11,660
	590,087			616,128
Operating income	138,304			245,560
Equity in earnings (losses) of affiliated companies	530			(1,467		)
Gain (loss) on investments, net	(16,810		)	5,348
Employee benefit plan expense	(1,109		)	(1,139		)
Interest and other financing expense, net	(43,268		)	(51,981		)
Income before income taxes	77,647			196,321
Provision for income taxes	27,892			53,907
Consolidated net income	49,755			142,414
Noncontrolling interests	252			1,679
Net income attributable to shareholders	$	49,503		$	140,735
Net income per share:
Basic	$	0.62		$	1.65
Diluted	$	0.61		$	1.63
Weighted-average shares outstanding:
Basic	80,407			85,400
Diluted	81,108			86,319

3

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
(Unaudited)
	March 28, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	200,998		$	300,103
Accounts receivable, net	7,817,019			8,482,687
Inventories	3,334,298			3,477,120
Other current assets	235,743			266,249
Total current assets	11,588,058			12,526,159
Property, plant, and equipment, at cost:
Land	7,728			7,793
Buildings and improvements	185,542			173,370
Machinery and equipment	1,492,802			1,481,525
	1,686,072			1,662,688
Less: Accumulated depreciation and amortization	(882,650		)	(859,578		)
Property, plant, and equipment, net	803,422			803,110
Investments in affiliated companies	80,337			86,942
Intangible assets, net	260,955			271,903
Goodwill	2,044,898			2,061,322
Other assets	613,790			651,360
Total assets	$	15,391,460		$	16,400,796
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	6,662,333		$	7,046,221
Accrued expenses	873,668			880,507
Short-term borrowings, including current portion of long-term debt	377,177			331,431
Total current liabilities	7,913,178			8,258,159
Long-term debt	2,222,789			2,640,129
Other liabilities	605,884			636,115
Commitments and contingencies
Equity:
Shareholders’ equity:
Common stock, par value $1:
Authorized - 160,000 shares in both 2020 and 2019, respectively
Issued - 125,424 shares in both 2020 and 2019, respectively	125,424			125,424
Capital in excess of par value	1,145,744			1,150,006
Treasury stock (46,756 and 44,804 shares in 2020 and 2019, respectively), at cost	(2,471,375		)	(2,332,548		)
Retained earnings	6,144,816			6,131,248
Accumulated other comprehensive loss	(349,484		)	(262,211		)
Total shareholders’ equity	4,595,125			4,811,919
Noncontrolling interests	54,484			54,474
Total equity	4,649,609			4,866,393
Total liabilities and equity	$	15,391,460		$	16,400,796

4

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
	Quarter Ended
	March 28, 2020			March 30, 2019
Cash flows from operating activities:
Consolidated net income	$	49,755		$	142,414
Adjustments to reconcile consolidated net income to net cash provided by (used for) operations:
Depreciation and amortization	47,110			47,526
Amortization of stock-based compensation	13,920			19,090
Equity in (earnings) losses of affiliated companies	(530		)	1,467
Deferred income taxes	32,613			6,968
(Gain) loss on investments, net	16,810			(5,348		)
Other	(205		)	5,575
Change in assets and liabilities, net of effects of acquired and disposed businesses:
Accounts receivable	558,605			949,989
Inventories	133,392			134,402
Accounts payable	(343,051		)	(1,540,008		)
Accrued expenses	(31,326		)	(50,292		)
Other assets and liabilities	(10,228		)	(40,782		)
Net cash provided by (used for) operating activities	466,865			(328,999		)
Cash flows from investing activities:
Acquisition of property, plant, and equipment	(27,971		)	(33,815		)
Other	(5,466		)	2,940
Net cash used for investing activities	(33,437		)	(30,875		)
Cash flows from financing activities:
Change in short-term and other borrowings	(84,354		)	(107,244		)
Proceeds from (repayments of) long-term bank borrowings, net	(288,577		)	335,023
Proceeds from exercise of stock options	1,980			6,931
Repurchases of common stock	(158,989		)	(53,925		)
Net cash provided by (used for) financing activities	(529,940		)	180,785
Effect of exchange rate changes on cash	(2,593		)	21,661
Net decrease in cash and cash equivalents	(99,105		)	(157,428		)
Cash and cash equivalents at beginning of period	300,103			509,327
Cash and cash equivalents at end of period	$	200,998		$	351,899

5

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
	Quarter Ended
	March 28, 2020		March 30, 2019			% Change
Consolidated sales, as reported	$	6,381,417	$	7,155,991		(10.8	)%
Impact of changes in foreign currencies	—		(41,571		)
Impact of dispositions and wind down	—		(94,195		)
Consolidated sales, as adjusted	$	6,381,417	$	7,020,225		(9.1	)%
Global components sales, as reported	$	4,550,601	$	5,191,927		(12.4	)%
Impact of changes in foreign currencies	—		(29,718		)
Impact of wind down	—		(83,054		)
Global components sales, as adjusted	$	4,550,601	$	5,079,155		(10.4	)%
Americas Components sales, as reported	$	1,552,798	$	1,907,029		(18.6	)%
Impact of changes in foreign currencies	—		(840		)
Impact of wind down	—		(62,866		)
Americas Components sales, as adjusted	$	1,552,798	$	1,843,323		(15.8	)%
Europe components sales, as reported	$	1,309,990	$	1,503,366		(12.9	)%
Impact of changes in foreign currencies	—		(23,951		)
Impact of wind down	—		(20,188		)
Europe components sales, as adjusted	$	1,309,990	$	1,459,227		(10.2	)%
Asia components sales, as reported	$	1,687,813	$	1,781,532		(5.3	)%
Impact of changes in foreign currencies	—		(4,927		)
Asia components sales, as adjusted	$	1,687,813	$	1,776,605		(5.0	)%
Global ECS sales, as reported	$	1,830,816	$	1,964,064		(6.8	)%
Impact of changes in foreign currencies	—		(11,853		)
Impact of dispositions	—		(11,141		)
Global ECS sales, as adjusted	$	1,830,816	$	1,941,070		(5.7	)%
Europe ECS sales, as reported	$	702,128	$	763,157		(8.0	)%
Impact of changes in foreign currencies	—		(11,919		)
Impact of dispositions	—		(11,141		)
Europe ECS sales, as adjusted	$	702,128	$	740,097		(5.1	)%
Americas ECS sales, as reported	$	1,128,688	$	1,200,907		(6.0	)%
Impact of changes in foreign currencies	—		66
Americas ECS sales, as adjusted	$	1,128,688	$	1,200,973		(6.0	)%

6

ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Three months ended March 28, 2020
	Reported GAAP measure			Intangible amortization expense		Restructuring & Integration charges		AFS Write Downs			Non-recurring tax items			Impact of Wind Down			Other(1)			Non-GAAP measure
Sales	$	6,381,417		$	—	$	—	$	—		$	—		$	—		$	—		$	6,381,417
Gross Profit	728,391			—		—		—			—			—			—			728,391
Operating income	138,304			9,955		9,138		(920		)	—			—			—			156,477
Income before income taxes	77,647			9,955		9,138		(920		)	—			—			16,810			112,630
Provision for income taxes	27,892			2,564		2,571		(222		)	(3,615		)	—			4,057			33,247
Consolidated net income	49,755			7,391		6,567		(698		)	3,615			—			12,753			79,383
Noncontrolling interests	252			137		—		—			—			—			—			389
Net income attributable to shareholders	$	49,503		$	7,254	$	6,567	$	(698	)	$	3,615		$	—		$	12,753		$	78,994
Net income per diluted share	$	0.61		$	0.09	$	0.08	$	(0.01	)	$	0.04		$	—		$	0.16		$	0.97
Effective tax rate	35.9		%																	29.5		%
Three months ended March 30, 2019
	Reported GAAP measure			Intangible amortization expense(2)		Restructuring & Integration charges		AFS Write Downs			Non-recurring tax items			Impact of Wind Down(2)			Other(3)			Non-GAAP measure
Sales	$	7,155,991		$	—	$	—	$	—		$	—		$	(83,054	)	$	—		$	7,072,937
Gross Profit	861,688			—		—		—			—			(8,127		)	—			853,561
Operating income	245,560			9,142		11,086		—			—			10,196			866			276,850
Income before income taxes	196,321			9,142		11,086		—			—			10,343			(4,482		)	222,410
Provision for income taxes	53,907			2,540		2,711		—			(3,502		)	2,528			(1,319		)	56,865
Consolidated net income	142,414			6,602		8,375		—			3,502			7,815			(3,163		)	165,545
Noncontrolling interests	1,679			142		—		—			—			—			—			1,821
Net income attributable to shareholders	$	140,735		$	6,460	$	8,375	$	—		$	3,502		$	7,815		$	(3,163	)	$	163,724
Net income per diluted share(4)	$	1.63		$	0.07	$	0.10	$	—		$	0.04		$	0.09		$	(0.04	)	$	1.90
Effective tax rate	27.5		%																	25.6		%
(1) Other includes loss on investments, net
(2) Identifiable intangible asset amortization related to the personal computer and mobility asset disposition business are included in “impact of wind down” above.
(3) Other includes loss on disposition of businesses, net and loss on investments, net.
(4) The sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.

7

ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
	Quarter Ended
	March 28, 2020			March 30, 2019
Sales:
Global components	$	4,550,601		$	5,191,927
Global ECS	1,830,816			1,964,064
Consolidated	$	6,381,417		$	7,155,991
Operating income (loss):
Global components	$	164,767		$	234,532
Global ECS	42,433			86,718
Corporate (a)	(68,896		)	(75,690		)
Consolidated	$	138,304		$	245,560

(a) Includes restructuring, integration, and other charges of $9,138 and $11,660 for the first quarter of 2020 and 2019, respectively. Also includes a loss on disposition of business of $866 for the first quarter of 2019.

NON-GAAP SEGMENT RECONCILIATION
	Quarter Ended
	March 28, 2020			March 30, 2019
Global components operating income, as reported	$	164,767		$	234,532
Intangible assets amortization expense (b)	7,380			6,253
Impact of wind-down (b)	—			9,622
AFS notes receivable reserve	(920		)	—
Global components operating income, as adjusted	$	171,227		$	250,407
Global ECS operating income, as reported	$	42,433		$	86,718
Intangible assets amortization expense	2,575			2,889
Global ECS operating income, as adjusted	$	45,008		$	89,607

(b) Identifiable intangible asset amortization related to the personal computer and mobility asset disposition business is included in “impact of wind down” above.

Contact:            Steven O’Brien,

Vice President, Investor Relations

303-824-4544

Media Contact:        John Hourigan,

Vice President, Global Communications

303-824-4586

8

EX-99.2

First Quarter 2020 CFO Commentary As reflected in our earnings release, there are a number of items that impact the comparability of First-quarter 2020 our results with those in the trailing quarter and prior quarter of last year. The discussion of our results may exclude these items to give you a better sense cash provided by of our operating results. As always, the operating information we provide to you should be used as a operating activities of complement to GAAP numbers. For a complete reconciliation between our GAAP and non-GAAP $467 million. results, please refer to our earnings release and the earnings reconciliation found at the end of this document. The following reported and adjusted information included in this CFO commentary is unaudited and should be read in conjunction with the company’s Form 10-Q for the quarterly period ended March 28, 2020, and the Annual Report on Form 10-K as filed with the Securities and Exchange Commission. investor.arrow.com 1

First-Quarter 2020 CFO Commentary First-Quarter Summary Sales were within the ranges of our prior expectations for the first quarter despite those expectations assuming no impacts from manufacturing shutdowns, First-quarter sales international border closures, and lower demand related to the COVID-19 global pandemic. Our commitment to design, engineering and supply-chain services decreased 11% year will help maximize performance during the uncertain near term while advancing the long-term strategy to be the leading enabler of next-generation technology solutions. First-quarter net income and diluted earnings per share included over year and charges related to foreign tax and other loss contingencies of approximately $33 million and $.41, respectively. decreased 9% year Demand conditions for the global components business remained depressed over year adjusted during the first quarter, due to the lingering effects of ongoing geopolitical tensions and disruptions from the COVID-19 pandemic. Despite disruptions, including an extended Chinese New Year business closures in Asia, sales reached the lower for the wind down, a end of prior guidance. disposition, and FX For the enterprise computing solutions business, net sales were near the higher end of prior guidance. However, the mix of business was different than our prior expectations. Demand for legacy technology solutions was less than we changes. anticipated. Demand for departmental software and security to enable remote workers was very strong. First-quarter operating income included charges related to foreign tax and other loss contingencies of approximately $30 million. Cash flow from operations was strong for a first quarter when cash flow is normally negative. Cash flow from operations totaled $467 million and benefited from proactive efforts to manage working capital including the new EMEA asset securitization program established in January. investor.arrow.com 2

First-Quarter 2020 CFO Commentary Consolidated Overview First Quarter 2020 Y/Y Change Adjusted for Dispositions, Wind Down P&L Highlights* Q1 2020 Y/Y Change & Currency Q/Q Change Sales $6,381 (11)% (9)% (13)% Gross Profit Margin 11.4% (60) bps (70) bps 20 bps Operating Income $138 (44)% (46)% (42)% Operating Margin 2.2% (120) bps (140) bps (100) bps Non-GAAP Operating Income $156 (44)% (43)% (45)% Non-GAAP Operating Margin 2.5% (140) bps (140) bps (140) bps Net Income $50 (65)% (67)% (56)% Diluted EPS $0.61 (63)% (64)% (55)% Non-GAAP Net Income $79 (52)% (51)% (56)% Non-GAAP Diluted EPS $0.97 (49)% (48)% (56)% $ in millions, except per share data; may reflect rounding. • Consolidated sales were $6.38 billion – Included charges related to foreign tax and other loss – Changes in foreign currencies negatively impacted sales contingencies of approximately $30 million growth by approximately $42 million or 1 percentage point year over year – Operating expenses as a percentage of sales were 9.1%, up 70 basis points year over year • Consolidated gross profit margin was 11.4% – Non-GAAP operating expenses as a percentage of – Down 60 basis points year over year, due to higher sales sales were 9.0%, up 80 basis points year over year mix of lower value products in all regions for global components, a higher mix of Asia components sales, and • Interest and other expense, net was $43 million a higher mix of departmental software in enterprise computing – Below our prior expectation of $52 million due to lower borrowings and lower interest rates on floating • Operating income margin was 2.2% and non-GAAP rate debt operating income margin was 2.5% investor.arrow.com 3

First-Quarter 2020 CFO Commentary • Effective tax rate for the quarter was 35.9%, and non- GAAP effective tax rate was 29.5% – Above our prior expectation of 24.5% due to foreign tax contingencies and the timing of discrete items • Diluted shares outstanding were 81 million – Slightly below our prior expectation of 82 million • Diluted earnings per share were $0.61 – Below our prior expectation of $.99 - $1.09 – Includes $17 million of non-cash investment losses due to the mark down of financial assets • Non-GAAP diluted earnings per share were $0.97 – Below our prior expectation of $1.29 - $1.39 – Includes $33 million or $.41 per share of charges related to foreign tax and other loss contingencies – Changes in foreign currencies negatively impacted earnings per share by approximately $.02 compared to the first quarter of 2019 A reconciliation of non-GAAP adjusted financial measures, including sales, as adjusted, operating income, as adjusted, net income attributable to shareholders, as adjusted, and net income per share, as adjusted, to GAAP financial measures is presented in the reconciliation tables included herein. investor.arrow.com 4

First-Quarter 2020 CFO Commentary Components Global $250 $250 $230 $217 $203 $210 $190 $172 $171 $170 $150 $130 $110 Q1-'19 Q2-'19 Q3-'19 Q4-'19 Q1-'20 Non-GAAP Operating Income ($ in millions) (as adjusted) • Sales decreased 10% year over year adjusted for the wind down of the PC and mobility asset disposition business and for changes in foreign currencies - Sales decreased 12% year over year as reported Global components • Lead times were stable year over year first-quarter sales • Backlog decreased slightly year over year decreased 10% year • Book-to-bill was 1.12, up from 1.00 in the first quarter of 2019 over year as adjusted. • Cancellation rates were within normal ranges • Operating margin of 3.6% decreased 90 points year over year • Non-GAAP operating margin of 3.8% decreased 110 basis points year over year – Margin decreased in all regions • Return on working capital decreased year over year investor.arrow.com 5

First-Quarter 2020 CFO Commentary Components Americas $2,000 $1,844 $1,816 $1,800 $1,692 $1,626 $1,553 $1,600 $1,400 $1,200 $1,000 $800 Q1-'19 Q2-'19 Q3-'19 Q4-'19 Q1-'20 Sales ($ in millions) (as adjusted) – Sales decreased 16% year over year adjusted for the wind down of the PC and mobility asset disposition business and for changes in foreign currencies Americas components – Sales decreased 19% year over year as reported sales decreased 16% – All key verticals decreased year over year year over year as adjusted. investor.arrow.com 6

First-Quarter 2020 CFO Commentary Components Europe $1,483 $1,500 $1,399 $1,400 $1,291 $1,310 $1,300 $1,189 $1,200 $1,100 $1,000 Q1-'19 Q2-'19 Q3-'19 Q4-'19 Q1-'20 Sales ($ in millions) (as adjusted) • Sales decreased 10% year over year adjusted for the wind down of the PC and mobility asset disposition business and for changes in foreign currencies – Sales decreased 13% year over year as reported Europe components – All key verticals decreased year over year sales decreased 10% year over year as adjusted. investor.arrow.com 7

First-Quarter 2020 CFO Commentary Components Asia $2,006 $1,978 $2,000 $1,905 $1,900 $1,782 $1,800 $1,688 $1,700 $1,600 $1,500 $1,400 Q1-'19 Q2-'19 Q3-'19 Q4-'19 Q1-'20 Sales ($ in millions) • Sales decreased 5% year over year – All key verticals decreased year over year Asia components sales decreased 5% year over year. investor.arrow.com 8

First-Quarter 2020 CFO Commentary Enterprise Computing Solutions Global $156 $160 $140 $120 $101 $95 $100 $90 $80 $60 $45 $40 $20 Q1-'19 Q2-'19 Q3-'19 Q4-'19 Q1-'20 Non-GAAP Operating Income ($ in millions) • Sales decreased 6% year over year adjusted for a disposition and changes in foreign currencies – Sales decreased 7% year over year as reported Enterprise computing • Billings were approximately flat year over year adjusted for changes in foreign currencies solutions sales • Operating income decreased 51% and non-GAAP operating income decreased 50% year over year decreased 6% year – Included charges related to foreign tax and other loss contingencies of approximately $30 million over year adjusted for a – Non-GAAP operating income decreased 50% year over year adjusted for a disposition and changes in foreign currencies disposition and changes • Operating margin of 2.3% decreased 210 basis points year over year in foreign currencies. • Non-GAAP operating margin of 2.5% decreased 210 basis points year over year • Return on working capital remains favorable investor.arrow.com 9

First-Quarter 2020 CFO Commentary Enterprise Computing Solutions Americas $1,700 $1,640 $1,500 $1,372 $1,419 $1,300 $1,201 $1,129 $1,100 $900 $700 $500 Q1-'19 Q2-'19 Q3-'19 Q4-'19 Q1-'20 Sales ($ in millions) • Sales decreased 6% year over year – Growth in infrastructure software led by virtualization, security, and storage year over year ECS Americas sales – Industry-standard and proprietary servers decreased year over year decreased 6% year over year. investor.arrow.com 10

First-Quarter 2020 CFO Commentary Enterprise Computing Solutions Europe $1,000 $959 $900 $800 $763 $701 $702 $700 $610 $600 $500 $400 Q1-'19 Q2-'19 Q3-'19 Q4-'19 Q1-'20 Sales ($ in millions) • Sales decreased 5% year over year adjusted for a disposition and changes in foreign currencies. – Sales decreased 8% year over year as reported ECS Europe sales – Growth in infrastructure software year over year adjusted for changes in foreign currencies decreased 5% year – Proprietary and industry-standard servers, storage and networking decreased year over year over year adjusted for a disposition and changes in foreign currencies. investor.arrow.com 11

First-Quarter 2020 CFO Commentary Cash Flow from Operations Cash flow from operating activities was $467 million in the quarter and was $1.65 billion over the last 12 months. Working Capital Working capital to sales was 17.6% in the quarter, down 200 basis points year over year. Return on working capital was 16.1% in the quarter, down 370 basis points year over year. Included charges related to foreign tax and other loss contingencies of approximately $30 million. Return on Invested Capital Cash flow from operating Return on invested capital was 7.5% in the quarter, down 190 basis points year over year and was 9.1% over the last activities of $1.65 billion 12 months. Included charges related to foreign tax and other loss contingencies of approximately $30 million. over the last 12 months. Share Buyback We repurchased approximately 2.2 million shares of stock for $150 million. Total cash returned to shareholders over the last 12 months was approximately $500 million. Debt and Liquidity Net-debt-to-last-12-months EBITDA ratio is approximately 2.2x. Total liquidity of $3.3 billion when including cash of $201 million. investor.arrow.com 12

First-Quarter 2020 CFO Commentary Arrow Electronics Outlook Guidance We are expecting the average USD-to-Euro exchange rate for the second quarter of 2020 to be $1.10 to €1 compared with $1.12 to €1 in the second quarter of 2019. Due to uncertainty from the COVID-19 pandemic, second-quarter sales and earnings per share ranges are wider than normal. Second-Quarter 2020 Guidance Consolidated Sales $6.075 billion to $6.675 billion Global Components $4.4 billion to $4.7 billion . Global ECS $1.675 billion to $1.975 billion Diluted Earnings Per Share1 $.98 to $1.14 Non-GAAP Diluted Earnings Per Share1 $1.38 to $1.54 Interest and other expense, net $40 million Diluted shares outstanding 81 million 1 Assumes an average tax rate at the midpoint of the 23% to 25% target range. Quarter Closing Dates Beginning and ending dates may impact comparisons to prior periods 2019 and 2020 Quarter Closing Dates First Second Third Fourth 2019 Mar. 30 Jun. 29 Sep. 28 Dec. 31 2020 Mar. 28 Jun. 27 Sep. 26 Dec. 31 investor.arrow.com 13

First-Quarter 2020 CFO Commentary Risk Factors Information Relating to Forward-Looking The discussion of the company’s Statements business and operations should be read together with the risk factors This press release includes forward-looking statements that are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ contained in Item 1A of its 2019 Annual materially from such statements for a variety of reasons, including, but not limited to: potential adverse effects of the Report on Form 10-K, filed with the ongoing global COVID-19 coronavirus pandemic, including actions taken to contain or treat COVID-19, industry Securities and Exchange Commission, conditions, changes in product supply, pricing and customer demand, competition, other vagaries in the global which describe various risks and components and global ECS markets, changes in relationships with key suppliers, increased profit margin pressure, changes in legal and regulatory matters, non- uncertainties to which the company is compliance with certain regulations, such as export, anti-trust, and anti-corruption laws, foreign tax and other loss or may become subject. If any of the contingencies, and the company's ability to generate cash flow. For a further discussion of these and other factors that described events occur, the company’s could cause the company’s future results to differ materially from any forward-looking statements, see the section entitled business, results of operations, “Risk Factors” in the company's Annual Report on Form 10- K for the year ended December 31, 2019. Forward-looking statements are those statements which are not statements of financial condition, liquidity, or access historical fact. These forward-looking statements can be identified by forward-looking words such as “expects,” to the capital markets could be “anticipates,” “intends,” “plans,” “may,” “will,” “believes,” “seeks,” “estimates,” and similar expressions. Shareholders materially adversely affected. and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward- looking statements. For a further discussion of factors to consider in connection with these forward-looking statements, investors should refer to Item 1A Risk Factors of the company’s Annual Report on Form 10-K for the year ended December 31, 2019 and Form 10-Q for the quarter ended March 28, 2020. investor.arrow.com 14

First-Quarter 2020 CFO Commentary Certain Non-GAAP Financial Information In addition to disclosing financial results that are management considers these items referred to above to determined in accordance with accounting principles be outside the company’s core operating results. This non- generally accepted in the United States (“GAAP”), the GAAP financial information is among the primary company also provides certain non-GAAP financial indicators management uses as a basis for evaluating the information relating to sales, operating income, net income company’s financial and operating performance. In attributable to shareholders, and net income per basic and addition, the company’s Board of Directors may use this diluted share. non-GAAP financial information in evaluating management performance and setting management The company provides sales, gross profit, and operating compensation. expenses as adjusted for the impact of changes in foreign currencies (referred to as changes in foreign currencies) The presentation of this additional non-GAAP financial by re-translating prior period results at current period information is not meant to be considered in isolation or foreign exchange rates, the impact of dispositions by as a substitute for, or alternative to, operating income, net adjusting the company’s operating results for businesses income attributable to shareholders and net income per disposed, as if the dispositions had occurred at the basic and diluted share determined in accordance with beginning of the earliest period presented (referred to as GAAP. Analysis of results and outlook on a non-GAAP dispositions), the impact of the company’s personal basis should be used as a complement to, and in computer and mobility asset disposition business conjunction with, data presented in accordance with (referred to as wind down), the impact of inventory write- GAAP. downs related to the digital business (referred to as “digital inventory write-downs and recoveries”), and the impact of the notes receivable reserves and inventory write-downs related to the AFS business (referred to as “AFS notes receivable reserves and recoveries” and “AFS inventory write-downs and recoveries,” respectively). Operating The company believes that income, net income attributable to shareholders, and net income per basic and diluted share are adjusted to exclude such non-GAAP financial identifiable intangible asset amortization, restructuring, integration, and other charges, and loss on disposition of information is useful to businesses, net, AFS notes receivable reserves and credits and inventory write-downs and recoveries, digital investors to assist in inventory write-downs and recoveries, and the impact of assessing and understanding wind down. Net income attributable to shareholders, and net income per basic and diluted share are also adjusted the company’s operating to exclude net gains and losses on investments, pension settlement expense, and certain tax adjustments. A performance. reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the tables below. The company believes that such non-GAAP financial information is useful to investors to assist in assessing and understanding the company’s operating performance and underlying trends in the company’s business because investor.arrow.com 15

First-Quarter 2020 CFO Commentary Earnings Reconciliation ($ in thousands, except per share data) Three months ended March 28, 2020 Reported Intangible Restructuring AFS Digital Tax Impact of Non-GAAP GAAP amortization & Integration Write Write (1) measure expense charges Downs Downs adjustments Wind Down Other measure Sales $ 6,381,417 $ — $ — $ — $ — $ — $ — $ — $ 6,381,417 Gross Profit 728,391 — — — — — — — 728,391 Operating income 138,304 9,955 9,138 (920) — — — — 156,477 Income before income taxes 77,647 9,955 9,138 (920) — — — 16,810 112,630 Provision for income taxes 27,892 2,564 2,571 (222) — (3,615) — 4,057 33,247 Consolidated net income 49,755 7,391 6,567 (698) — 3,615 — 12,753 79,383 Noncontrolling interests 252 137 — — — — — — 389 Net income attributable to shareholders $ 49,503 $ 7,254 $ 6,567 $ (698) $ — $ 3,615 $ — $ 12,753 $ 78,994 Net income per diluted share $ 0.61 $ 0.09 $ 0.08 $ (0.01) $ — $ 0.04 $ — $ 0.16 $ 0.97 Effective tax rate 35.9% 29.5% Three months ended March 30, 2019 Reported Intangible Restructuring AFS Digital Tax Impact of Non-GAAP GAAP amortization & Integration Write Write (4) (2) measure expense(4) charges Downs Downs adjustments Wind Down Other measure Sales $ 7,155,991 $ — $ — $ — $ — $ — $ (83,054) $ — $ 7,072,937 Gross Profit 861,688 — — — — — (8,127) — 853,561 Operating income 245,560 9,142 11,086 — — — 10,196 866 276,850 Income before income taxes 196,321 9,142 11,086 — — — 10,343 (4,482) 222,410 Provision for income taxes 53,907 2,540 2,711 — — (3,502) 2,528 (1,319) 56,865 Consolidated net income 142,414 6,602 8,375 — — 3,502 7,815 (3,163) 165,545 Noncontrolling interests 1,679 142 — — — — — — 1,821 Net income attributable to shareholders $ 140,735 $ 6,460 $ 8,375 $ — $ — $ 3,502 $ 7,815 $ (3,163) $ 163,724 Net income per diluted share(5) $ 1.63 $ 0.07 $ 0.10 $ — $ — $ 0.04 $ 0.09 $ (0.04) $ 1.90 Effective tax rate 27.5% 25.6% Three months ended December 31, 2019 Reported Intangible Restructuring AFS Digital Tax Impact of Non-GAAP GAAP amortization & Integration Write Write (6) (3) measure expense charges Downs Downs adjustments Wind Down Other measure Sales $ 7,338,190 $ — $ — $ — $ — $ — $ (19,375) $ — $ 7,318,815 Gross Profit 822,943 — — — 1,117 — 5,388 — 829,448 Operating income 238,108 14,311 16,350 2,850 1,117 — 10,912 1,002 284,650 Income before income taxes 169,648 14,311 16,350 2,850 1,117 — 10,942 17,919 233,137 Provision for income taxes 57,460 4,050 3,042 607 156 1,806 (18,380) 2,700 51,441 Consolidated net income 112,188 10,261 13,308 2,243 961 (1,806) 29,322 15,219 181,696 Noncontrolling interests 175 138 — — — — — — 313 Net income attributable to shareholders $ 112,013 $ 10,123 $ 13,308 $ 2,243 $ 961 $ (1,806) $ 29,322 $ 15,219 $ 181,383 Net income per diluted share $ 1.36 $ 0.12 $ 0.16 $ 0.03 $ 0.01 $ (0.02) $ 0.36 $ 0.18 $ 2.20 Effective tax rate 33.9% 22.1% (1) Other includes loss on investments, net (2) Other includes loss on disposition of businesses, net and loss on investments, net. (3) Other includes loss on disposition of businesses, net, gain (loss) on investments, net, interest related to uncertain tax position related to the Tax Act, and pension settlement. (4) Identifiable intangible asset amortization related to the personal computer and mobility asset disposition business are included in “impact of wind down” above. (5) The sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding. (6) Amounts for restructuring, integration, and other charges, identifiable intangible asset amortization, loss on disposition of businesses, and impairments related to the personal computer and mobility asset disposition business are included in “impact of wind down” above. investor.arrow.com 16

XML

Cover Document	Apr. 30, 2020
Cover [Abstract]
Document Type	8-K
Document Period End Date	Apr. 30, 2020
Entity Registrant Name	ARROW ELECTRONICS INC
Entity Incorporation, State or Country Code	NY
Entity File Number	1-4482
Entity Tax Identification Number	11-1806155
Entity Address, Address Line One	9201 East Dry Creek Road,
Entity Address, City or Town	Centennial,
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80112
City Area Code	(303)
Local Phone Number	824-4000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $1 par value
Trading Symbol	ARW
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0000007536
Amendment Flag	false