EX-99.1 2 q22017pressreleaseexhibit9.htm EXHIBIT 99.1

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

Exhibit 99.1
Arrow Electronics Reports Second-Quarter Results
-- Record Second-Quarter Sales and Gross Profit --
-- Second-Quarter Earnings Per Share of $1.11; Non-GAAP Earnings Per Share of $1.78 --
CENTENNIAL, Colo.--(BUSINESS WIRE)-Aug. 3, 2017--Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2017 sales of $6.47 billion, an increase of 8 percent from sales of $5.97 billion in the second quarter of 2016. Second-quarter net income of $100 million, or $1.11 per share on a diluted basis, compared with net income of $134 million, or $1.45 per share on a diluted basis, in the second quarter of 2016. Excluding certain items 1, net income would have been $160 million, or $1.78 per share on a diluted basis, in the second quarter of 2017, compared with net income of $153 million, or $1.65 per share on a diluted basis, in the second quarter of 2016. In the second quarter of 2017, changes in foreign currencies had negative impacts on growth of approximately $57 million or 1 percent on sales and $.01 or 1 percent on earnings per share on a diluted basis compared to the second quarter of 2016.
“Our investments in our digital platform, IoT and cloud capabilities, and sustainable technology solutions have allowed Arrow to stay ahead of changes to the distribution industry and the broader technology environment,” said Michael J. Long, chairman, president, and chief executive officer. “These investments drove record second-quarter gross profit and record second-quarter sales that were above the high end of our expectation.”
Global components second-quarter sales of $4.46 billion grew 16 percent year over year. Second-quarter sales, as adjusted, grew 17 percent year over year. Americas components sales grew 15 percent year over year. Asia-Pacific components sales grew 21 percent year over year. Europe components sales grew 13 percent year over year. Sales in the region, as adjusted, grew 16 percent year over year. Global components second-quarter operating income grew 11 percent year over year and grew 9 percent year over year excluding amortization of intangibles expense. “Global components sales exceeded the high end of our expectation for the third quarter in a row driven by robust customer growth and deeper engagements with existing customers,” said Mr. Long.
Global enterprise computing solutions second-quarter sales of $2 billion declined 6 percent year over year. Second-quarter sales, as adjusted, declined 5 percent year over year. Global enterprise computing solutions second-quarter operating income declined 2 percent year over year and declined 3 percent year over year excluding amortization of intangibles expense. “Our industry-leading infrastructure software and cloud portfolio produced strong growth again this quarter, but were offset by declines in legacy hardware,” added Mr. Long.
“Second-quarter cash flow from operations was negative $112 million. We are making substantial working capital investments to support our rapid growth, and believe these organic investments in our business have high return potential longer term,” said Chris Stansbury, senior vice president and chief financial officer. “We remain committed to returning excess cash to shareholders. During the second quarter we returned approximately $55 million to shareholders through our stock repurchase program. We had approximately $409 million of remaining authorization under our share repurchase programs at the end of the second quarter.”
SIX-MONTH RESULTS
In the first six months of 2017, Arrow’s sales of $12.22 billion increased 7 percent from sales of $11.45 billion in the first six months of 2016. Net income for the first six months of 2017 was $213 million, or $2.37 per share on a diluted basis, compared with net income of $241 million, or $2.59 per share on a diluted basis in the first six months of 2016. Excluding certain items 1, net income would have been $292 million, or $3.24 per share on a diluted basis, in the first six months of 2017 compared with net income of $285 million, or $3.07 per share on a diluted basis, in the first six months of 2016. In the first six months of 2017, changes in foreign currencies had negative impacts on growth of approximately $130 million or 1 percent on sales and $.05 or 2 percent on earnings per share on a diluted basis compared to the first six months of 2016.
1 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.

GUIDANCE
“As we look to the third quarter, we believe that total sales will be between $6.325 billion and $6.725 billion, with global components sales between $4.4 billion and $4.6 billion, and global enterprise computing solutions sales between $1.925 billion and $2.125 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.49 to $1.61, and earnings per share on a diluted basis, excluding any charges, to be in the range of $1.74 to $1.86 per share. Our guidance assumes an average tax rate of 27 to 29 percent and average diluted shares outstanding are expected to be 89 million. We are expecting the average USD-to-Euro exchange rate for the third quarter to be approximately $1.15 to €1,” said Mr. Stansbury.
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 (www.arrow.com) is a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Arrow serves as a supply channel partner for more than 125,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 465 locations serving over 90 countries.
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: industry conditions, the company's implementation of its new enterprise resource planning system, changes in product supply, pricing and customer demand, competition, other vagaries in the global components and global enterprise computing solutions markets, changes in relationships with key suppliers, increased profit margin pressure, the effects of additional actions taken to become more efficient or lower costs, risks related to the integration of acquired businesses, changes in legal and regulatory matters, and the company’s ability to generate additional cash flow. 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.
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 Dec. 31, 2016.
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, income, or expense on a non-GAAP basis adjusted for the impact of changes in foreign currencies and the impact of acquisitions by adjusting the company's operating results for businesses acquired, including the amortization expense related to acquired intangible assets, as if the acquisitions had occurred at the beginning of the earliest period presented (referred to as "impact of acquisitions"). Operating income, net income attributable to shareholders, and net income per basic and diluted share are adjusted to exclude identifiable intangible amortization, restructuring, integration, and other charges, and certain charges, credits, gains, and losses that the company believes impact the comparability of its results of operations. These charges, credits, gains, and losses arise out of the company’s efficiency enhancement initiatives, acquisitions (including intangible assets amortization expense), and financing activities. 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.

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
| Quarter Ended |  | Six Months Ended
| July 1, 2017 |  | July 2, 2016 |  | July 1, 2017 |  | July 2, 2016
Sales | $ | 6,465,346 |  |  | $ | 5,972,101 |  |  | $ | 12,224,898 |  |  | $ | 11,446,278 |
Costs and expenses: |  |  |  |  |  |  |  |  |  |  |
Cost of sales | 5,641,380 |  |  | 5,173,310 |  |  | 10,641,045 |  |  | 9,898,589 |
Selling, general, and administrative expenses | 532,347 |  |  | 518,704 |  |  | 1,047,866 |  |  | 1,024,517 |
Depreciation and amortization | 37,381 |  |  | 40,389 |  |  | 74,522 |  |  | 81,322 |
Restructuring, integration, and other charges | 24,416 |  |  | 16,106 |  |  | 39,921 |  |  | 36,894 |
| 6,235,524 |  |  | 5,748,509 |  |  | 11,803,354 |  |  | 11,041,322 |
Operating income | 229,822 |  |  | 223,592 |  |  | 421,544 |  |  | 404,956 |
Equity in earnings of affiliated companies | 724 |  |  | 2,227 |  |  | 1,649 |  |  | 4,083 |
Gain on sale of investment | 750 |  |  | — |  |  | 750 |  |  | — |
Loss on extinguishment of debt | 58,759 |  |  | — |  |  | 58,759 |  |  | — |
Interest and other financing expense, net | 42,358 |  |  | 39,024 |  |  | 80,431 |  |  | 74,599 |
Income before income taxes | 130,179 |  |  | 186,795 |  |  | 284,753 |  |  | 334,440 |
Provision for income taxes | 29,575 |  |  | 51,457 |  |  | 68,799 |  |  | 92,510 |
Consolidated net income | 100,604 |  |  | 135,338 |  |  | 215,954 |  |  | 241,930 |
Noncontrolling interests | 925 |  |  | 1,068 |  |  | 2,507 |  |  | 1,425 |
Net income attributable to shareholders | $ | 99,679 |  |  | $ | 134,270 |  |  | $ | 213,447 |  |  | $ | 240,505 |
Net income per share: |  |  |  |  |  |  |
Basic | $ | 1.12 |  |  | $ | 1.46 |  |  | $ | 2.40 |  |  | $ | 2.62 |
Diluted | $ | 1.11 |  |  | $ | 1.45 |  |  | $ | 2.37 |  |  | $ | 2.59 |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 88,876 |  |  | 91,782 |  |  | 89,079 |  |  | 91,647 |
Diluted | 89,837 |  |  | 92,693 |  |  | 90,146 |  |  | 92,771 |

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
| July 1, 2017 |  | December 31, 2016
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 419,918 |  |  | $ | 534,320 |
Accounts receivable, net | 6,531,452 |  |  | 6,746,687 |
Inventories | 3,045,377 |  |  | 2,855,645 |
Other current assets | 226,415 |  |  | 180,069 |
Total current assets | 10,223,162 |  |  | 10,316,721 |
Property, plant, and equipment, at cost: |  |  |  |  |
Land | 13,261 |  |  | 23,456 |
Buildings and improvements | 157,927 |  |  | 175,141 |
Machinery and equipment | 1,264,003 |  |  | 1,297,657 |
| 1,435,191 |  |  | 1,496,254 |
Less: Accumulated depreciation and amortization | (645,257 | ) |  | (739,955 | )
Property, plant, and equipment, net | 789,934 |  |  | 756,299 |
Investments in affiliated companies | 86,371 |  |  | 88,401 |
Intangible assets, net | 317,435 |  |  | 336,882 |
Goodwill | 2,446,864 |  |  | 2,392,220 |
Other assets | 336,259 |  |  | 315,843 |
Total assets | $ | 14,200,025 |  |  | $ | 14,206,366 |
LIABILITIES AND EQUITY |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 5,270,311 |  |  | $ | 5,774,151 |
Accrued expenses | 742,086 |  |  | 821,244 |
Short-term borrowings, including current portion of long-term debt | 427,033 |  |  | 93,827 |
Total current liabilities | 6,439,430 |  |  | 6,689,222 |
Long-term debt | 2,642,043 |  |  | 2,696,334 |
Other liabilities | 367,696 |  |  | 355,190 |
Commitments and contingencies (Note L) |  |  |  |  |
Equity: |  |  |  |  |
Shareholders' equity: |  |  |  |  |
Common stock, par value $1: |  |  |  |  |
Authorized - 160,000 shares in both 2017 and 2016 |  |  |  |  |
Issued - 125,424 shares in both 2017 and 2016 | 125,424 |  |  | 125,424 |
Capital in excess of par value | 1,098,979 |  |  | 1,112,114 |
Treasury stock (37,165 and 36,511 shares in 2017 and 2016, respectively), at cost | (1,715,587 | ) |  | (1,637,476 | )
Retained earnings | 5,410,677 |  |  | 5,197,230 |
Accumulated other comprehensive loss | (212,818 | ) |  | (383,854 | )
Total shareholders' equity | 4,706,675 |  |  | 4,413,438 |
Noncontrolling interests | 44,181 |  |  | 52,182 |
Total equity | 4,750,856 |  |  | 4,465,620 |
Total liabilities and equity | $ | 14,200,025 |  |  | $ | 14,206,366 |

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Quarter Ended
| July 1, 2017 |  | July 2, 2016
Cash flows from operating activities: |  |  |
Consolidated net income | $ | 100,604 |  |  | $ | 135,338 |
Adjustments to reconcile consolidated net income to net cash provided by (used for) operations: |  |  |
Depreciation and amortization | 37,381 |  |  | 40,389 |
Amortization of stock-based compensation | 9,816 |  |  | 10,398 |
Equity in earnings of affiliated companies | (724 | ) |  | (2,227 | )
Loss on extinguishment of debt | 58,759 |  |  | — |
Deferred income taxes | (2,113 | ) |  | 5,114 |
Other | 1,957 |  |  | 1,492 |
Change in assets and liabilities, net of effects of acquired businesses: |  |  |
Accounts receivable | (528,948 | ) |  | (467,492 | )
Inventories | (111,760 | ) |  | (67,101 | )
Accounts payable | 380,647 |  |  | 429,416 |
Accrued expenses | 3,518 |  |  | 45,952 |
Other assets and liabilities | (61,357 | ) |  | 17,448 |
Net cash provided by (used for) operating activities | (112,220 | ) |  | 148,727 |
Cash flows from investing activities: |  |  |
Cash consideration paid for acquired businesses | (2,534 | ) |  | 1,017 |
Acquisition of property, plant, and equipment | (39,788 | ) |  | (39,075 | )
Proceeds from sale of property, plant, and equipment | 16,547 |  |  | — |
Other | (3,000 | ) |  | (12,000 | )
Net cash used for investing activities | (28,775 | ) |  | (50,058 | )
Cash flows from financing activities: |  |  |
Change in short-term and other borrowings | (36,128 | ) |  | 67,141 |
Proceeds from long-term bank borrowings, net | 179,318 |  |  | (32,000 | )
Net proceeds from note offering | 494,625 |  |  | — |
Redemption of notes | (558,100 | ) |  | — |
Proceeds from exercise of stock options | 3,438 |  |  | 9,139 |
Repurchases of common stock | (54,816 | ) |  | (28,149 | )
Other | (945 | ) |  | — |
Net cash provided by financing activities | 27,392 |  |  | 16,131 |
Effect of exchange rate changes on cash | 11,959 |  |  | (13,684 | )
Net increase (decrease) in cash and cash equivalents | (101,644 | ) |  | 101,116 |
Cash and cash equivalents at beginning of period | 521,562 |  |  | 394,655 |
Cash and cash equivalents at end of period | $ | 419,918 |  |  | $ | 495,771 |

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Six Months Ended
| July 1, 2017 |  | July 2, 2016
Cash flows from operating activities: |  |  |
Consolidated net income | $ | 215,954 |  |  | $ | 241,930 |
Adjustments to reconcile consolidated net income to net cash provided by (used for) operations: |  |  |
Depreciation and amortization | 74,522 |  |  | 81,322 |
Amortization of stock-based compensation | 21,391 |  |  | 19,275 |
Equity in earnings of affiliated companies | (1,649 | ) |  | (4,083 | )
Loss on extinguishment of debt | 58,759 |  |  | — |
Deferred income taxes | 11,825 |  |  | 27,669 |
Other | 5,208 |  |  | 2,954 |
Change in assets and liabilities, net of effects of acquired businesses: |  |  |
Accounts receivable | 397,953 |  |  | 529,246 |
Inventories | (149,945 | ) |  | (22,490 | )
Accounts payable | (601,708 | ) |  | (606,678 | )
Accrued expenses | (90,101 | ) |  | (114,741 | )
Other assets and liabilities | (75,319 | ) |  | (39,320 | )
Net cash provided by (used for) operating activities | (133,110 | ) |  | 115,084 |
Cash flows from investing activities: |  |  |
Cash consideration paid for acquired businesses | (2,534 | ) |  | (45,473 | )
Acquisition of property, plant, and equipment | (101,906 | ) |  | (88,336 | )
Proceeds from sale of property, plant, and equipment | 24,433 |  |  | — |
Other | (3,000 | ) |  | (12,000 | )
Net cash used for investing activities | (83,007 | ) |  | (145,809 | )
Cash flows from financing activities: |  |  |
Change in short-term and other borrowings | 40,274 |  |  | 67,611 |
Proceeds from long-term bank borrowings, net | 241,818 |  |  | 233,000 |
Net proceeds from note offering | 494,625 |  |  | — |
Redemption of notes | (558,100 | ) |  | — |
Proceeds from exercise of stock options | 20,697 |  |  | 14,844 |
Repurchases of common stock | (123,663 | ) |  | (46,833 | )
Purchase of shares from noncontrolling interest | (23,350 | ) |  | — |
Other | (945 | ) |  | (1,817 | )
Net cash provided by financing activities | 91,356 |  |  | 266,805 |
Effect of exchange rate changes on cash | 10,359 |  |  | (13,399 | )
Net increase (decrease) in cash and cash equivalents | (114,402 | ) |  | 222,681 |
Cash and cash equivalents at beginning of period | 534,320 |  |  | 273,090 |
Cash and cash equivalents at end of period | $ | 419,918 |  |  | $ | 495,771 |

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
| Quarter Ended |  |
| July 1, 2017 |  | July 2, 2016 |  | % Change
Consolidated sales, as reported | $ | 6,465,346 |  |  | $ | 5,972,101 |  |  | 8.3 | %
Impact of changes in foreign currencies | — |  |  | (56,946 | ) |  |
Impact of acquisitions | — |  |  | 4,162 |  |  |
Consolidated sales, as adjusted | $ | 6,465,346 |  |  | $ | 5,919,317 |  |  | 9.2 | %
Global components sales, as reported | $ | 4,462,350 |  |  | $ | 3,832,972 |  |  | 16.4 | %
Impact of changes in foreign currencies | — |  |  | (28,321 | ) |  |
Impact of acquisitions | — |  |  | 4,162 |  |  |
Global components sales, as adjusted | $ | 4,462,350 |  |  | $ | 3,808,813 |  |  | 17.2 | %
Europe components sales, as reported | $ | 1,192,393 |  |  | $ | 1,056,691 |  |  | 12.8 | %
Impact of changes in foreign currencies | — |  |  | (32,448 | ) |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe components sales, as adjusted | $ | 1,192,393 |  |  | $ | 1,024,243 |  |  | 16.4 | %
Asia components sales, as reported | $ | 1,569,716 |  |  | $ | 1,298,429 |  |  | 20.9 | %
Impact of changes in foreign currencies | — |  |  | 3,735 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Asia components sales, as adjusted | $ | 1,569,716 |  |  | $ | 1,302,164 |  |  | 20.5 | %
Global ECS sales, as reported | $ | 2,002,996 |  |  | $ | 2,139,129 |  |  | (6.4 | )%
Impact of changes in foreign currencies | — |  |  | (28,626 | ) |  |
Impact of acquisitions | — |  |  | — |  |  |
Global ECS sales, as adjusted | $ | 2,002,996 |  |  | $ | 2,110,503 |  |  | (5.1 | )%
Europe ECS sales, as reported | $ | 641,656 |  |  | $ | 720,335 |  |  | (10.9 | )%
Impact of changes in foreign currencies | — |  |  | (27,816 | ) |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe ECS sales, as adjusted | $ | 641,656 |  |  | $ | 692,519 |  |  | (7.3 | )%
Americas ECS sales, as reported | $ | 1,361,340 |  |  | $ | 1,418,794 |  |  | (4.0 | )%
Impact of changes in foreign currencies | — |  |  | (810 | ) |  |
Impact of acquisitions | — |  |  | — |  |  |
Americas ECS sales, as adjusted | $ | 1,361,340 |  |  | $ | 1,417,984 |  |  | (4.0 | )%

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
| Six Months Ended |  |
| July 1, 2017 |  | July 2, 2016 |  | % Change
Consolidated sales, as reported | $ | 12,224,898 |  |  | $ | 11,446,278 |  |  | 6.8 | %
Impact of changes in foreign currencies | — |  |  | (129,988 | ) |  |
Impact of acquisitions | — |  |  | 46,761 |  |  |
Consolidated sales, as adjusted | $ | 12,224,898 |  |  | $ | 11,363,051 |  |  | 7.6 | %
Global components sales, as reported | $ | 8,521,153 |  |  | $ | 7,508,901 |  |  | 13.5 | %
Impact of changes in foreign currencies | — |  |  | (68,671 | ) |  |
Impact of acquisitions | — |  |  | 8,324 |  |  |
Global components sales, as adjusted | $ | 8,521,153 |  |  | $ | 7,448,554 |  |  | 14.4 | %
Europe components sales, as reported | $ | 2,310,672 |  |  | $ | 2,115,123 |  |  | 9.2 | %
Impact of changes in foreign currencies | — |  |  | (77,769 | ) |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe components sales, as adjusted | $ | 2,310,672 |  |  | $ | 2,037,354 |  |  | 13.4 | %
Asia components sales, as reported | $ | 2,946,695 |  |  | $ | 2,476,297 |  |  | 19.0 | %
Impact of changes in foreign currencies | — |  |  | 7,603 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Asia components sales, as adjusted | $ | 2,946,695 |  |  | $ | 2,483,900 |  |  | 18.6 | %
Global ECS sales, as reported | $ | 3,703,745 |  |  | $ | 3,937,377 |  |  | (5.9 | )%
Impact of changes in foreign currencies | — |  |  | (61,317 | ) |  |
Impact of acquisitions | — |  |  | 38,437 |  |  |
Global ECS sales, as adjusted | $ | 3,703,745 |  |  | $ | 3,914,497 |  |  | (5.4 | )%
Europe ECS sales, as reported | $ | 1,209,218 |  |  | $ | 1,327,783 |  |  | (8.9 | )%
Impact of changes in foreign currencies | — |  |  | (65,880 | ) |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe ECS sales, as adjusted | $ | 1,209,218 |  |  | $ | 1,261,903 |  |  | (4.2 | )%
Americas ECS sales, as reported | $ | 2,494,527 |  |  | $ | 2,609,594 |  |  | (4.4 | )%
Impact of changes in foreign currencies | — |  |  | 4,563 |  |  |
Impact of acquisitions | — |  |  | 38,437 |  |  |
Americas ECS sales, as adjusted | $ | 2,494,527 |  |  | $ | 2,652,594 |  |  | (6.0 | )%

ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Three months ended July 1, 2017
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Other* |  | Non-GAAP measure
Operating income | $ | 229,822 |  |  | $ | 12,364 |  |  | $ | 24,416 |  |  | $ | — |  |  | $ | 266,602 |
Income before income taxes | 130,179 |  |  | 12,364 |  |  | 24,416 |  |  | 58,009 |  |  | 224,968 |
Provision for income taxes | 29,575 |  |  | 4,388 |  |  | 7,576 |  |  | 22,377 |  |  | 63,916 |
Consolidated net income | 100,604 |  |  | 7,976 |  |  | 16,840 |  |  | 35,632 |  |  | 161,052 |
Noncontrolling interests | 925 |  |  | 157 |  |  | — |  |  | — |  |  | 1,082 |
Net income attributable to shareholders | $ | 99,679 |  |  | $ | 7,819 |  |  | $ | 16,840 |  |  | $ | 35,632 |  |  | $ | 159,970 |
Net income per diluted share** | 1.11 |  |  | 0.09 |  |  | 0.19 |  |  | 0.40 |  |  | 1.78 |
Effective tax rate | 22.7 | % |  |  |  |  |  |  |  | 28.4 | %
Three months ended July 2, 2016
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Other |  | Non-GAAP measure
Operating income | $ | 223,592 |  |  | 14,446 |  |  | 16,106 |  |  | — |  |  | 254,144 |
Income before income taxes | 186,795 |  |  | 14,446 |  |  | 16,106 |  |  | — |  |  | 217,347 |
Provision for income taxes | 51,457 |  |  | 5,119 |  |  | 6,370 |  |  | — |  |  | 62,946 |
Consolidated net income | 135,338 |  |  | 9,327 |  |  | 9,736 |  |  | — |  |  | 154,401 |
Noncontrolling interests | 1,068 |  |  | 592 |  |  | — |  |  | — |  |  | 1,660 |
Net income attributable to shareholders | $ | 134,270 |  |  | 8,735 |  |  | 9,736 |  |  | — |  |  | 152,741 |
Net income per diluted share | 1.45 |  |  | 0.09 |  |  | 0.11 |  |  | — |  |  | 1.65 |
Effective tax rate | 27.5 | % |  |  |  |  |  |  |  | 29.0 | %
Six months ended July 1, 2017
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Other* |  | Non-GAAP measure
Operating income | $ | 421,544 |  |  | 25,264 |  |  | 39,921 |  |  | — |  |  | 486,729 |
Income before income taxes | 284,753 |  |  | 25,264 |  |  | 39,921 |  |  | 58,009 |  |  | 407,947 |
Provision for income taxes | 68,799 |  |  | 8,949 |  |  | 12,573 |  |  | 22,377 |  |  | 112,698 |
Consolidated net income | 215,954 |  |  | 16,315 |  |  | 27,348 |  |  | 35,632 |  |  | 295,249 |
Noncontrolling interests | 2,507 |  |  | 408 |  |  | — |  |  | — |  |  | 2,915 |
Net income attributable to shareholders | $ | 213,447 |  |  | 15,907 |  |  | 27,348 |  |  | 35,632 |  |  | 292,334 |
Net income per diluted share** | 2.37 |  |  | 0.18 |  |  | 0.30 |  |  | 0.40 |  |  | 3.24 |
Effective tax rate | 24.2 | % |  |  |  |  |  |  |  | 27.6 | %
Six months ended July 2, 2016
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Other |  | Non-GAAP measure
Operating income | $ | 404,956 |  |  | 27,359 |  |  | 36,894 |  |  | — |  |  | 469,209 |
Income before income taxes | 334,440 |  |  | 27,359 |  |  | 36,894 |  |  | — |  |  | 398,693 |
Provision for income taxes | 92,510 |  |  | 7,398 |  |  | 11,804 |  |  | — |  |  | 111,712 |
Consolidated net income | 241,930 |  |  | 19,961 |  |  | 25,090 |  |  | — |  |  | 286,981 |
Noncontrolling interests | 1,425 |  |  | 592 |  |  | — |  |  | — |  |  | 2,017 |
Net income attributable to shareholders | $ | 240,505 |  |  | 19,369 |  |  | 25,090 |  |  | — |  |  | 284,964 |
Net income per diluted share | 2.59 |  |  | 0.21 |  |  | 0.27 |  |  | — |  |  | 3.07 |
Effective tax rate | 27.7 | % |  |  |  |  |  |  |  | 28.0 | %
* Other includes loss on extinguishment of debt and gain on sale of investment.
**The sum of the components for diluted EPS, as adjusted may not agree to totals, as presented, due to rounding.

ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)
(Unaudited)
| Quarter Ended |  | Six Months Ended
| July 1, 2017 |  | July 2, 2016 |  | July 1, 2017 |  | July 2, 2016
Sales: |  |  |  |  |  |  |
Global components | $ | 4,462,350 |  |  | $ | 3,832,972 |  |  | $ | 8,521,153 |  |  | $ | 7,508,901 |
Global ECS | 2,002,996 |  |  | 2,139,129 |  |  | 3,703,745 |  |  | 3,937,377 |
Consolidated | $ | 6,465,346 |  |  | $ | 5,972,101 |  |  | $ | 12,224,898 |  |  | $ | 11,446,278 |
Operating income (loss): |  |  |  |  |  |  |
Global components | $ | 197,164 |  |  | $ | 178,385 |  |  | $ | 370,697 |  |  | $ | 349,155 |
Global ECS | 106,703 |  |  | 109,399 |  |  | 187,582 |  |  | 187,611 |
Corporate (a) | (74,045 | ) |  | (64,192 | ) |  | (136,735 | ) |  | (131,810 | )
Consolidated | $ | 229,822 |  |  | $ | 223,592 |  |  | $ | 421,544 |  |  | $ | 404,956 |

(a) | Includes restructuring, integration, and other charges of $24.4 million and $16.1 million for the second quarters of 2017 and 2016, respectively.

NON-GAAP SEGMENT RECONCILIATION
| Quarter Ended |  | Six Months Ended
| July 1, 2017 |  | July 2, 2016 |  | July 1, 2017 |  | July 2, 2016
Global components operating income, as reported | $ | 197,164 |  |  | $ | 178,385 |  |  | $ | 370,697 |  |  | $ | 349,155 |
Intangible assets amortization expense | 6,827 |  |  | 8,545 |  |  | 14,226 |  |  | 16,445 |
Global components operating income, as adjusted | $ | 203,991 |  |  | $ | 186,930 |  |  | $ | 384,923 |  |  | $ | 365,600 |
Global ECS operating income, as reported | $ | 106,703 |  |  | $ | 109,399 |  |  | $ | 187,582 |  |  | $ | 187,611 |
Intangible assets amortization expense | 5,537 |  |  | 5,901 |  |  | 11,038 |  |  | 10,914 |
Global ECS operating income, as adjusted | $ | 112,240 |  |  | $ | 115,300 |  |  | $ | 198,620 |  |  | $ | 198,525 |

Contact: Steven O’Brien,
Vice President, Investor Relations
303-824-4544
Media Contact: John Hourigan,
Vice President, Global Communications
303-824-4586