EX-99.1 2 q42017pressreleaseexhibit9.htm EXHIBIT 99.1

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

Exhibit 99.1
Arrow Electronics Reports Fourth-Quarter and Year-End 2017 Results
-- Record Fourth-Quarter and Full-Year Sales and Operating Income --
-- Full-Year 2017 Sales Advanced $3 Billion Over Full-Year 2016 --
CENTENNIAL, Colo.--(BUSINESS WIRE)-Feb. 6, 2018--Arrow Electronics, Inc. (NYSE:ARW) today reported fourth-quarter 2017 sales of $7.63 billion, an increase of 18 percent from sales of $6.44 billion in the fourth quarter of 2016. Fourth-quarter net income of $54 million, or $0.60 per share on a diluted basis, compared with net income of $165 million, or $1.81 per share on a diluted basis, in the fourth quarter of 2016. Excluding certain items 1, net income would have been $224 million, or $2.51 per share on a diluted basis, in the fourth quarter of 2017, compared with net income of $182 million, or $2.00 per share on a diluted basis, in the fourth quarter of 2016. In the fourth quarter of 2017, changes in foreign currencies had positive impacts on growth of approximately $190 million or 3 percent on sales and $0.09 or 5 percent on earnings per share on a diluted basis compared to the fourth quarter of 2016. In the fourth quarter of 2017 net income was negatively impacted by $125 million, or $1.40 per diluted share, related to U.S. tax legislation. In the fourth-quarter of 2017, net income, excluding certain items 1, was positively impacted by $9 million, or $.10 per diluted share, due to tax reserve releases resulting in an effective tax rate that was below the low-end of our prior expected range.
“We are selling complete solutions enabling new entrant, mid-market, and large-scale customers to move quickly from idea to production. This is driving tremendous growth for our suppliers, and for Arrow, as evidenced by our record fourth quarter and full-year sales and operating income,” said Michael J. Long, chairman, president, and chief executive officer. “By making it easy for our customers and suppliers to capture growth, we have built unparalleled trust in the marketplace.”
Global components fourth-quarter sales of $4.94 billion grew 24 percent year over year. Fourth-quarter sales, as adjusted, grew 21 percent year over year. Americas components sales grew 25 percent year over year. Europe components sales grew 35 percent year over year. Sales in the region, as adjusted, grew 24 percent year over year. Asia-Pacific components sales grew 16 percent year over year. Sales in the region, as adjusted, grew 14 percent year over year. “Demand conditions remain strong around the world due to growing electronic content in the industrial and transportation end markets, and strong execution by our team,” said Mr. Long.
Global enterprise computing solutions fourth-quarter sales of $2.69 billion grew 10 percent year over year. Fourth-quarter sales, as adjusted, grew 6 percent year over year. Americas sales grew 5 percent year over year. Europe sales grew 19 percent year over year. Sales in the region, as adjusted, grew 8 percent year over year. “Fourth-quarter sales exceeded our expectation driven by new and expanded customer engagements, continued growth in our infrastructure software portfolio, and a return to growth for storage,” added Mr. Long.
FULL-YEAR RESULTS
Full-year 2017 sales of $26.81 billion increased 13 percent from sales of $23.83 billion in 2016. Net income for 2017 was $402 million, or $4.48 per share on a diluted basis, compared with net income of $523 million, or $5.68 per share on a diluted basis, in 2016. Excluding certain items 1, net income would have been $679 million, or $7.56 per share on a diluted basis, in 2017 compared with net income of $610 million, or $6.63 per share on a diluted basis, in 2016. In 2017, changes in foreign currencies had positive impacts on growth of approximately $142 million, or 1 percent on sales, and $.07, or 1 percent, on earnings per share on a diluted basis compared to 2016.
“The investments we made to scale our business paid dividends in the fourth quarter. Operating income, excluding certain items 1, grew 21 percent compared to 18 percent sales growth, and cash flow from operations was $123 million despite continued investment in working capital,” said Chris Stansbury, senior vice president and chief financial officer. “In the fourth quarter we reduced net leverage for the second quarter in a row, and we returned approximately $25 million to shareholders through our stock repurchase program. In 2017 we returned approximately $161 million to shareholders through our stock repurchase program. We had approximately $359 million of remaining authorization under our share repurchase programs at the end of the year.”
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 first quarter, we believe that total sales will be between $6.4 billion and $6.8 billion, with global components sales between $4.7 billion and $4.9 billion, and global enterprise computing solutions sales between $1.7 billion and $1.9 billion. As a result of this outlook, we expect earnings per share on a diluted basis, to be in the range of $1.50 to $1.62, 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 in the range of 23.5 to 25.5 percent, down from our prior range of 27 to 29 percent due to U.S. tax legislation, and average diluted shares outstanding are expected to be 89 million. Our guidance assumes an increase in non-cash depreciation expense of $6 million related to the go-live on our Americas ERP system. We are expecting the average USD-to-Euro exchange rate for the first quarter to be approximately $1.22 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 150,000 original equipment manufacturers, value-added resellers, contract manufacturers, and commercial customers through a global network. The company maintains over 300 sales facilities and 45 distribution and value-added centers, serving over 80 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, 2017.
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 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 for 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), loss on extinguishment of debt, impairment of assets held for sale, (gain)/loss on investments, and impact of tax reform. 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)
| Quarter Ended |  | Year Ended
| December 31, 2017 |  | December 31, 2016 |  | December 31, 2017 |  | December 31, 2016
| (Unaudited) |  | (Unaudited) |  |  |  |
Sales | $ | 7,633,870 |  |  | $ | 6,442,891 |  |  | $ | 26,812,508 |  |  | $ | 23,825,261 |
Cost of sales | 6,703,742 |  |  | 5,619,543 |  |  | 23,455,169 |  |  | 20,681,062 |
Gross profit | 930,128 |  |  | 823,348 |  |  | 3,357,339 |  |  | 3,144,199 |
Operating expenses: |  |  |  |  |  |  |
Selling, general, and administrative expenses | 562,234 |  |  | 518,329 |  |  | 2,162,996 |  |  | 2,052,863 |
Depreciation and amortization | 40,503 |  |  | 37,679 |  |  | 153,599 |  |  | 159,195 |
Impairment of assets held for sale | 21,000 |  |  | — |  |  | 21,000 |  |  | — |
Restructuring, integration, and other charges | 35,477 |  |  | 12,441 |  |  | 91,294 |  |  | 73,602 |
| 659,214 |  |  | 568,449 |  |  | 2,428,889 |  |  | 2,285,660 |
Operating income | 270,914 |  |  | 254,899 |  |  | 928,450 |  |  | 858,539 |
Equity in earnings of affiliated companies | 559 |  |  | 2,179 |  |  | 3,424 |  |  | 7,573 |
(Gain) loss on investment, net | (19 | ) |  | — |  |  | 14,231 |  |  | — |
Loss on extinguishment of debt | — |  |  | — |  |  | 59,545 |  |  | — |
Interest and other financing expense, net | 43,631 |  |  | 38,887 |  |  | 163,810 |  |  | 150,715 |
Income before income taxes | 227,861 |  |  | 218,191 |  |  | 694,288 |  |  | 715,397 |
Provision for income taxes | 172,128 |  |  | 53,233 |  |  | 287,126 |  |  | 190,674 |
Consolidated net income | 55,733 |  |  | 164,958 |  |  | 407,162 |  |  | 524,723 |
Noncontrolling interests | 1,848 |  |  | 440 |  |  | 5,200 |  |  | 1,973 |
Net income attributable to shareholders | $ | 53,885 |  |  | $ | 164,518 |  |  | $ | 401,962 |  |  | $ | 522,750 |
Net income per share: |  |  |  |  |  |  |
Basic | 0.61 |  |  | 1.84 |  |  | 4.53 |  |  | 5.75 |
Diluted | 0.60 |  |  | 1.81 |  |  | 4.48 |  |  | 5.68 |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 88,120 |  |  | 89,596 |  |  | 88,681 |  |  | 90,960 |
Diluted | 89,278 |  |  | 90,692 |  |  | 89,766 |  |  | 92,033 |

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except par value)
| December 31, 2017 |  | December 31, 2016
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents | $ | 730,083 |  |  | $ | 534,320 |
Accounts receivable, net | 8,171,092 |  |  | 6,746,687 |
Inventories, net | 3,302,518 |  |  | 2,855,645 |
Other current assets | 214,066 |  |  | 180,069 |
Total current assets | 12,417,759 |  |  | 10,316,721 |
Property, plant, and equipment, at cost: |  |  |
Land | 12,866 |  |  | 23,456 |
Buildings and improvements | 160,664 |  |  | 175,141 |
Machinery and equipment | 1,330,730 |  |  | 1,297,657 |
| 1,504,260 |  |  | 1,496,254 |
Less: Accumulated depreciation and amortization | (665,785 | ) |  | (739,955 | )
Property, plant, and equipment, net | 838,475 |  |  | 756,299 |
Investments in affiliated companies | 88,347 |  |  | 88,401 |
Intangible assets, net | 286,215 |  |  | 336,882 |
Goodwill | 2,470,047 |  |  | 2,392,220 |
Other assets | 361,966 |  |  | 315,843 |
Total assets | $ | 16,462,809 |  |  | $ | 14,206,366 |
LIABILITIES AND EQUITY |  |  |
Current liabilities: |  |  |
Accounts payable | $ | 6,756,830 |  |  | $ | 5,774,151 |
Accrued expenses | 842,933 |  |  | 821,244 |
Short-term borrowings, including current portion of long-term debt | 356,806 |  |  | 93,827 |
Total current liabilities | 7,956,569 |  |  | 6,689,222 |
Long-term debt | 2,933,045 |  |  | 2,696,334 |
Other liabilities | 572,971 |  |  | 355,190 |
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 | 1,114,167 |  |  | 1,112,114 |
Treasury stock (37,733 and 36,511 shares in 2017 and 2016, respectively), at cost | (1,762,239 | ) |  | (1,637,476 | )
Retained earnings | 5,599,192 |  |  | 5,197,230 |
Accumulated other comprehensive loss | (125,005 | ) |  | (383,854 | )
Total shareholders' equity | 4,951,539 |  |  | 4,413,438 |
Noncontrolling interests | 48,685 |  |  | 52,182 |
Total equity | 5,000,224 |  |  | 4,465,620 |
Total liabilities and equity | $ | 16,462,809 |  |  | $ | 14,206,366 |

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Quarter Ended
| December 31, 2017 |  | December 31, 2016
Cash flows from operating activities: |  |  |
Consolidated net income | $ | 55,733 |  |  | $ | 164,958 |
Adjustments to reconcile consolidated net income to net cash provided by operations: |  |  |
Depreciation and amortization | 40,503 |  |  | 37,679 |
Amortization of stock-based compensation | 8,821 |  |  | 10,042 |
Equity in earnings of affiliated companies | (559 | ) |  | (2,179 | )
Deferred income taxes | 25,150 |  |  | (2,061 | )
Gain on investment | (19 | ) |  | — |
Impairment of assets held for sale | 21,000 |  |  | — |
Impairment of property, plant and equipment | 4,761 |  |  | — |
Other | (1,711 | ) |  | 1,508 |
Change in assets and liabilities, net of effects of acquired businesses: |  |  |
Accounts receivable | (1,063,514 | ) |  | (972,399 | )
Inventories | (124,015 | ) |  | (286,306 | )
Accounts payable | 930,406 |  |  | 1,095,530 |
Accrued expenses | 37,972 |  |  | 149,935 |
Other assets and liabilities | 188,250 |  |  | 22,260 |
Net cash provided by operating activities | 122,778 |  |  | 218,967 |
Cash flows from investing activities: |  |  |
Cash consideration paid for acquired businesses | — |  |  | 4,195 |
Acquisition of property, plant, and equipment | (54,352 | ) |  | (38,354 | )
Other | (3,147 | ) |  | — |
Net cash used for investing activities | (57,499 | ) |  | (34,159 | )
Cash flows from financing activities: |  |  |
Change in short-term and other borrowings | (26,893 | ) |  | 16,743 |
Proceeds from (repayment of) long-term bank borrowings, net | 130,526 |  |  | (7,000 | )
Payments on note offering | (941 | ) |  | — |
Redemption of notes | (3,001 | ) |  | — |
Proceeds from exercise of stock options | 772 |  |  | 2,281 |
Repurchases of common stock | (25,114 | ) |  | (49,268 | )
Other | — |  |  | 993 |
Net cash provided by (used for) financing activities | 75,349 |  |  | (36,251 | )
Effect of exchange rate changes on cash | 5,116 |  |  | 1,348 |
Net increase in cash and cash equivalents | 145,744 |  |  | 149,905 |
Cash and cash equivalents at beginning of period | 584,339 |  |  | 384,415 |
Cash and cash equivalents at end of period | $ | 730,083 |  |  | $ | 534,320 |

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended
| December 31, 2017 |  | December 31, 2016
Cash flows from operating activities: |  |  |
Consolidated net income | $ | 407,162 |  |  | $ | 524,723 |
Adjustments to reconcile consolidated net income to net cash provided by operations: |  |  |
Depreciation and amortization | 153,599 |  |  | 159,195 |
Amortization of stock-based compensation | 39,122 |  |  | 39,825 |
Equity in earnings of affiliated companies | (3,424 | ) |  | (7,573 | )
Loss on extinguishment of debt | 59,545 |  |  | — |
Deferred income taxes | 38,412 |  |  | 28,130 |
Loss on investment, net | 14,231 |  |  | — |
Impairment of assets held for sale | 21,000 |  |  | — |
Impairment of property, plant and equipment | 4,761 |  |  | — |
Other | 5,704 |  |  | 5,972 |
Change in assets and liabilities, net of effects of acquired businesses: |  |  |
Accounts receivable | (1,122,598 | ) |  | (636,944 | )
Inventories | (379,835 | ) |  | (403,980 | )
Accounts payable | 816,602 |  |  | 582,165 |
Accrued expenses | (3,838 | ) |  | 47,020 |
Other assets and liabilities | 74,114 |  |  | 21,139 |
Net cash provided by operating activities | 124,557 |  |  | 359,672 |
Cash flows from investing activities: |  |  |
Cash consideration paid for acquired businesses | (3,628 | ) |  | (64,751 | )
Acquisition of property, plant, and equipment | (203,949 | ) |  | (164,695 | )
Proceeds from sale of property, plant and equipment | 24,433 |  |  | — |
Other | (5,614 | ) |  | (12,000 | )
Net cash used for investing activities | (188,758 | ) |  | (241,446 | )
Cash flows from financing activities: |  |  |
Change in short-term and other borrowings | (41,316 | ) |  | 48,684 |
Proceeds from long-term bank borrowings, net | 47,760 |  |  | 313,000 |
Proceeds from note offering, net | 986,203 |  |  | — |
Redemption of notes | (558,887 | ) |  | — |
Proceeds from exercise of stock options | 22,195 |  |  | 18,967 |
Repurchases of common stock | (174,239 | ) |  | (216,446 | )
Purchase of shares from noncontrolling interest | (23,350 | ) |  | — |
Other | (1,620 | ) |  | (2,007 | )
Net cash provided by financing activities | 256,746 |  |  | 162,198 |
Effect of exchange rate changes on cash | 3,218 |  |  | (19,194 | )
Net increase in cash and cash equivalents | 195,763 |  |  | 261,230 |
Cash and cash equivalents at beginning of period | 534,320 |  |  | 273,090 |
Cash and cash equivalents at end of period | $ | 730,083 |  |  | $ | 534,320 |

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
| Quarter Ended |  |
| December 31, 2017 |  | December 31, 2016 |  | % Change
Consolidated sales, as reported | $ | 7,633,870 |  |  | $ | 6,442,891 |  |  | 18.5 | %
Impact of changes in foreign currencies | — |  |  | 189,723 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Consolidated sales, as adjusted | $ | 7,633,870 |  |  | $ | 6,632,614 |  |  | 15.1 | %
Global components sales, as reported | $ | 4,944,942 |  |  | $ | 3,995,491 |  |  | 23.8 | %
Impact of changes in foreign currencies | — |  |  | 100,057 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Global components sales, as adjusted | $ | 4,944,942 |  |  | $ | 4,095,548 |  |  | 20.7 | %
Europe components sales, as reported | $ | 1,296,143 |  |  | $ | 963,349 |  |  | 34.5 | %
Impact of changes in foreign currencies | — |  |  | 84,946 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe components sales, as adjusted | $ | 1,296,143 |  |  | $ | 1,048,295 |  |  | 23.6 | %
Asia components sales, as reported | $ | 1,718,973 |  |  | $ | 1,487,816 |  |  | 15.5 | %
Impact of changes in foreign currencies | — |  |  | 14,655 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Asia components sales, as adjusted | $ | 1,718,973 |  |  | $ | 1,502,471 |  |  | 14.4 | %
Global ECS sales, as reported | $ | 2,688,928 |  |  | $ | 2,447,400 |  |  | 9.9 | %
Impact of changes in foreign currencies | — |  |  | 89,666 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Global ECS sales, as adjusted | $ | 2,688,928 |  |  | $ | 2,537,066 |  |  | 6.0 | %
Europe ECS sales, as reported | $ | 970,875 |  |  | $ | 818,363 |  |  | 18.6 | %
Impact of changes in foreign currencies | — |  |  | 81,665 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe ECS sales, as adjusted | $ | 970,875 |  |  | $ | 900,028 |  |  | 7.9 | %
Americas ECS sales, as reported | $ | 1,718,053 |  |  | $ | 1,629,037 |  |  | 5.5 | %
Impact of changes in foreign currencies | — |  |  | 8,001 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Americas ECS sales, as adjusted | $ | 1,718,053 |  |  | $ | 1,637,038 |  |  | 4.9 | %

ARROW ELECTRONICS, INC.
NON-GAAP SALES RECONCILIATION
(In thousands)
(Unaudited)
| Year Ended |  |
| December 31, 2017 |  | December 31, 2016 |  | % Change
Consolidated sales, as reported | $ | 26,812,508 |  |  | $ | 23,825,261 |  |  | 12.5 | %
Impact of changes in foreign currencies | — |  |  | 142,485 |  |  |
Impact of acquisitions | — |  |  | 48,148 |  |  |
Consolidated sales, as adjusted | $ | 26,812,508 |  |  | $ | 24,015,894 |  |  | 11.6 | %
Global components sales, as reported | $ | 18,330,456 |  |  | $ | 15,408,839 |  |  | 19.0 | %
Impact of changes in foreign currencies | — |  |  | 86,902 |  |  |
Impact of acquisitions | — |  |  | 9,711 |  |  |
Global components sales, as adjusted | $ | 18,330,456 |  |  | $ | 15,505,452 |  |  | 18.2 | %
Europe components sales, as reported | $ | 4,868,862 |  |  | $ | 4,086,607 |  |  | 19.1 | %
Impact of changes in foreign currencies | — |  |  | 55,710 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe components sales, as adjusted | $ | 4,868,862 |  |  | $ | 4,142,317 |  |  | 17.5 | %
Asia components sales, as reported | $ | 6,451,209 |  |  | $ | 5,400,429 |  |  | 19.5 | %
Impact of changes in foreign currencies | — |  |  | 28,755 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Asia components sales, as adjusted | $ | 6,451,209 |  |  | $ | 5,429,184 |  |  | 18.8 | %
Global ECS sales, as reported | $ | 8,482,052 |  |  | $ | 8,416,422 |  |  | 0.8 | %
Impact of changes in foreign currencies | — |  |  | 55,583 |  |  |
Impact of acquisitions | — |  |  | 38,437 |  |  |
Global ECS sales, as adjusted | $ | 8,482,052 |  |  | $ | 8,510,442 |  |  | (0.3 | )%
Europe ECS sales, as reported | $ | 2,804,486 |  |  | $ | 2,686,078 |  |  | 4.4 | %
Impact of changes in foreign currencies | — |  |  | 37,373 |  |  |
Impact of acquisitions | — |  |  | — |  |  |
Europe ECS sales, as adjusted | $ | 2,804,486 |  |  | $ | 2,723,451 |  |  | 3.0 | %
Americas ECS sales, as reported | $ | 5,677,566 |  |  | $ | 5,730,344 |  |  | (0.9 | )%
Impact of changes in foreign currencies | — |  |  | 18,210 |  |  |
Impact of acquisitions | — |  |  | 38,437 |  |  |
Americas ECS sales, as adjusted | $ | 5,677,566 |  |  | $ | 5,786,991 |  |  | (1.9 | )%

ARROW ELECTRONICS, INC.
NON-GAAP EARNINGS RECONCILIATION
(In thousands except per share data)
(Unaudited)
Three months ended December 31, 2017
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Impact of the Tax Act |  | Other* |  | Non-GAAP measure
Operating income | $ | 270,914 |  |  | 12,162 |  |  | $ | 35,477 |  |  | $ | — |  |  | 21,000 |  |  | $ | 339,553 |
Income before income taxes | 227,861 |  |  | 12,162 |  |  | 35,477 |  |  | — |  |  | 20,981 |  |  | 296,481 |
Provision for income taxes | 172,128 |  |  | 4,321 |  |  | 10,954 |  |  | (124,748 | ) |  | 8,112 |  |  | 70,767 |
Consolidated net income | 55,733 |  |  | 7,841 |  |  | 24,523 |  |  | 124,748 |  |  | 12,869 |  |  | 225,714 |
Noncontrolling interests | 1,848 |  |  | 147 |  |  | — |  |  | — |  |  | — |  |  | 1,995 |
Net income attributable to shareholders | $ | 53,885 |  |  | $ | 7,694 |  |  | $ | 24,523 |  |  | $ | 124,748 |  |  | $ | 12,869 |  |  | $ | 223,719 |
Net income per diluted share** | $ | 0.60 |  |  | $ | 0.09 |  |  | $ | 0.27 |  |  | $ | 1.40 |  |  | $ | 0.14 |  |  | $ | 2.51 |
Effective tax rate | 75.5 | % |  |  |  |  |  |  |  |  |  | 23.9 | %
Three months ended December 31, 2016
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Impact of the Tax Act |  | Other |  | Non-GAAP measure
Operating income | $ | 254,899 |  |  | 13,634 |  |  | $ | 12,441 |  |  | $ | — |  |  | — |  |  | $ | 280,974 |
Income before income taxes | 218,191 |  |  | 13,634 |  |  | 12,441 |  |  | — |  |  | — |  |  | 244,266 |
Provision for income taxes | 53,233 |  |  | 4,870 |  |  | 3,733 |  |  | — |  |  | — |  |  | 61,836 |
Consolidated net income | 164,958 |  |  | 8,764 |  |  | 8,708 |  |  | — |  |  | — |  |  | 182,430 |
Noncontrolling interests | 440 |  |  | 336 |  |  | — |  |  | — |  |  | — |  |  | 776 |
Net income attributable to shareholders | $ | 164,518 |  |  | $ | 8,428 |  |  | $ | 8,708 |  |  | $ | — |  |  | $ | — |  |  | $ | 181,654 |
Net income per diluted share | $ | 1.81 |  |  | $ | 0.09 |  |  | $ | 0.10 |  |  | $ | — |  |  | $ | — |  |  | $ | 2.00 |
Effective tax rate | 24.4 | % |  |  |  |  |  |  |  |  |  | 25.3 | %
Year Ended December 31, 2017
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Impact of the Tax Act |  | Other* |  | Non-GAAP measure
Operating income | $ | 928,450 |  |  | $ | 50,071 |  |  | $ | 91,294 |  |  | $ | — |  |  | $ | 21,000 |  |  | $ | 1,090,815 |
Income before income taxes | 694,288 |  |  | 50,071 |  |  | 91,294 |  |  | — |  |  | 94,776 |  |  | 930,429 |
Provision for income taxes | 287,126 |  |  | 17,744 |  |  | 28,846 |  |  | (124,748 | ) |  | 36,578 |  |  | 245,546 |
Consolidated net income | 407,162 |  |  | 32,327 |  |  | 62,448 |  |  | 124,748 |  |  | 58,198 |  |  | 684,883 |
Noncontrolling interests | 5,200 |  |  | 701 |  |  | — |  |  | — |  |  | — |  |  | 5,901 |
Net income attributable to shareholders | $ | 401,962 |  |  | $ | 31,626 |  |  | $ | 62,448 |  |  | $ | 124,748 |  |  | $ | 58,198 |  |  | $ | 678,982 |
Net income per diluted share** | $ | 4.48 |  |  | $ | 0.35 |  |  | $ | 0.70 |  |  | $ | 1.39 |  |  | $ | 0.65 |  |  | $ | 7.56 |
Effective tax rate | 41.4 | % |  |  |  |  |  |  |  |  |  | 26.4 | %
Year Ended December 31, 2016
| Reported GAAP measure |  | Intangible amortization expense |  | Restructuring & Integration charges |  | Impact of the Tax Act |  | Other |  | Non-GAAP measure
Operating income | $ | 858,539 |  |  | 54,886 |  |  | $ | 73,602 |  |  | $ | — |  |  | — |  |  | $ | 987,027 |
Income before income taxes | 715,397 |  |  | 54,886 |  |  | 73,602 |  |  | — |  |  | — |  |  | 843,885 |
Provision for income taxes | 190,674 |  |  | 17,226 |  |  | 22,977 |  |  | — |  |  | — |  |  | 230,877 |
Consolidated net income | 524,723 |  |  | 37,660 |  |  | 50,625 |  |  | — |  |  | — |  |  | 613,008 |
Noncontrolling interests | 1,973 |  |  | 1,275 |  |  | — |  |  | — |  |  | — |  |  | 3,248 |
Net income attributable to shareholders | $ | 522,750 |  |  | $ | 36,385 |  |  | $ | 50,625 |  |  | $ | — |  |  | $ | — |  |  | $ | 609,760 |
Net income per diluted share | $ | 5.68 |  |  | $ | 0.40 |  |  | $ | 0.55 |  |  | $ | — |  |  | $ | — |  |  | $ | 6.63 |
Effective tax rate | 26.7 | % |  |  |  |  |  |  |  |  |  | 27.4 | %
*Other includes gain/loss on investments, impairment of assets held for sale, and loss on extinguishment of debt. ** 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 |  | Year Ended
| December 31, 2017 |  | December 31, 2016 |  | December 31, 2017 |  | December 31, 2016
Sales: |  |  |  |  |  |  |
Global components | $ | 4,944,942 |  |  | $ | 3,995,491 |  |  | $ | 18,330,456 |  |  | $ | 15,408,839 |
Global ECS | 2,688,928 |  |  | 2,447,400 |  |  | 8,482,052 |  |  | 8,416,422 |
Consolidated | $ | 7,633,870 |  |  | $ | 6,442,891 |  |  | $ | 26,812,508 |  |  | $ | 23,825,261 |
Operating income (loss): |  |  |  |  |  |  |
Global components | $ | 217,337 |  |  | $ | 161,804 |  |  | $ | 801,027 |  |  | $ | 686,466 |
Global ECS | 162,702 |  |  | 158,011 |  |  | 445,081 |  |  | 441,803 |
Corporate (a) | (109,125 | ) |  | (64,916 | ) |  | (317,658 | ) |  | (269,730 | )
Consolidated | $ | 270,914 |  |  | $ | 254,899 |  |  | $ | 928,450 |  |  | $ | 858,539 |

(a) | Includes restructuring, integration, and other charges of $36.1 million and $91.3 million for the fourth quarter and year ended December 31, 2017 and $12.4 million and $73.6 million for the fourth quarter and year ended December 31, 2016, respectively.

NON-GAAP SEGMENT RECONCILIATION
| Quarter Ended |  | Year Ended
| December 31, 2017 |  | December 31, 2016 |  | December 31, 2017 |  | December 31, 2016
Global components operating income, as reported | $ | 217,337 |  |  | $ | 161,804 |  |  | $ | 801,027 |  |  | $ | 686,466 |
Intangible assets amortization expense | 6,515 |  |  | 7,497 |  |  | 27,725 |  |  | 31,621 |
Global components operating income, as adjusted | $ | 223,852 |  |  | $ | 169,301 |  |  | $ | 828,752 |  |  | $ | 718,087 |
Global ECS operating income, as reported | $ | 162,702 |  |  | $ | 158,011 |  |  | $ | 445,081 |  |  | $ | 441,803 |
Intangible assets amortization expense | 5,647 |  |  | 6,137 |  |  | 22,346 |  |  | 23,265 |
Global ECS operating income, as adjusted | $ | 168,349 |  |  | $ | 164,148 |  |  | $ | 467,427 |  |  | $ | 465,068 |

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