arrow annual report 2009 form 10-k

Morningstar® Document Research℠

FORM 10-KARROW ELECTRONICS INC - arwFiled: February 03, 2010 (period: December 31, 2009)

Annual report which provides a comprehensive overview of the company for the past year

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2009

OR

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

For the transition period from to

Commission file number 1-4482

ARROW ELECTRONICS, INC.(Exact name of registrant as specified in its charter)

New York 11-1806155(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification Number)

50 Marcus Drive, Melville, New York 11747(Address of principal executive offices) (Zip Code)

(631) 847-2000(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Stock, $1 par value New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ⌧ No � Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes � No ⌧ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧ No � Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, everyInteractive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during thepreceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes � No � Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is notcontained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. � Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smallerreporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 ofthe Exchange Act (check one):Large accelerated filer ⌧ Accelerated filer �Non-accelerated filer � (do not check if a smaller reporting company) Smaller reporting company � Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes� No ⌧

Source: ARROW ELECTRONICS INC, 10-K, February 03, 2010 Powered by Morningstar® Document Research℠

The aggregate market value of voting stock held by non-affiliates of the registrant as of the last business day of the registrant's mostrecently completed second fiscal quarter was $2,474,561,676. There were 119,834,138 shares of Common Stock outstanding as of January 29, 2010.

DOCUMENTS INCORPORATED BY REFERENCE The definitive proxy statement related to the registrant's Annual Meeting of Shareholders, to be held May 4, 2010, is incorporated byreference in Part III to the extent described therein.


TABLE OF CONTENTS

PART I Item 1. Business. 3Item 1A. Risk Factors. 9Item 1B. Unresolved Staff Comments. 16Item 2. Properties. 16Item 3. Legal Proceedings. 16Item 4. Submission of Matters to a Vote of Security Holders. 18

PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 19Item 6. Selected Financial Data. 22Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 24Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 40Item 8. Financial Statements and Supplementary Data. 42Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 88Item 9A. Controls and Procedures. 88Item 9B. Other Information. 90

PART III Item 10. Directors, Executive Officers, and Corporate Governance. 91Item 11. Executive Compensation. 91Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 91Item 13. Certain Relationships and Related Transactions, and Director Independence. 91Item 14. Principal Accounting Fees and Services. 91

PART IV Item 15. Exhibits and Financial Statement Schedules. 92SIGNATURES 100


PART I

Item 1. Business.

Arrow Electronics, Inc. (the "company" or "Arrow") is a global provider of products, services, and solutions to industrial andcommercial users of electronic components and enterprise computing solutions. The company believes it is a leader in the electronicsdistribution industry in operating systems, employee productivity, value-added programs, and total quality assurance. Arrow, whichwas incorporated in New York in 1946, serves over 900 suppliers and over 125,000 original equipment manufacturers ("OEMs"),contract manufacturers ("CMs"), and commercial customers.

Serving its industrial and commercial customers as a supply chain partner, the company offers both a wide spectrum of products and abroad range of services and solutions, including materials planning, design services, programming and assembly services, inventorymanagement, and a variety of online supply chain tools.

Arrow's diverse worldwide customer base consists of OEMs, CMs, and other commercial customers. Customers includemanufacturers of consumer and industrial equipment (including machine tools, factory automation, and robotic equipment),telecommunications products, automotive and transportation, aerospace and defense, scientific and medical devices, and computer andoffice products. Customers also include value-added resellers ("VARs") of enterprise computing solutions.

The company maintains over 200 sales facilities and 22 distribution and value-added centers in 51 countries and territories, servingover 70 countries and territories. Through this network, Arrow provides one of the broadest product offerings in the electroniccomponents and enterprise computing solutions distribution industries and a wide range of value-added services to help customersreduce their time to market, lower their total cost of ownership, introduce innovative products through demand creation opportunities,and enhance their overall competitiveness.

The company has two business segments, the global components business segment and the global enterprise computing solutions("ECS") business segment. The company distributes electronic components to OEMs and CMs through its global componentsbusiness segment and provides enterprise computing solutions to VARs through its global ECS business segment. For 2009,approximately 66% of the company's sales were from the global components business segment, and approximately 34% of thecompany's sales were from the global ECS business segment. The financial information about the company's business segments andgeographic operations is found in Note 16 of the Notes to Consolidated Financial Statements.

Operating efficiency and working capital management remain a key focus of the company's business initiatives to grow sales fasterthan the market, grow profits faster than sales, and increase return on invested capital. To achieve its financial objectives, thecompany seeks to capture significant opportunities to grow across products, markets, and geographies. To supplement its organicgrowth strategy, the company continually evaluates strategic acquisitions to broaden its product offerings, increase its marketpenetration, and/or expand its geographic reach.

Global Components

The company's global components business segment, one of the largest distributors of electronic components and related services inthe world, covers the world's largest electronics markets – North America, EMEASA (Europe, Middle East, Africa, and SouthAmerica), and the Asia Pacific region.

North America includes sales and marketing organizations in the United States, Canada, and Mexico. Over the past two years, theglobal components business segment completed the following strategic acquisitions to increase the company's presence in the growingaerospace and defense markets:

3


• In February 2008, acquired all the assets and operations of ACI Electronics LLC ("ACI"), a distributor of electroniccomponents used in defense and aerospace applications. This acquisition further bolstered the company's leading position inthe North American defense and aerospace market and expanded the company's leading market share in many technologysegments including discrete semiconductors used in military applications.

• In December 2009, acquired A.E. Petsche Company, Inc. ("Petsche"), a leading provider of interconnect products, including

specialty wire, cable, and harness management solutions, to the aerospace and defense markets. This acquisition will expandthe company's product offering in specialty wire and cable and provide a variety of cross-selling opportunities with thecompany's existing business as well as other emerging markets.

In the EMEASA region, Arrow operates in Argentina, Austria, Belgium, Brazil, Czech Republic, Denmark, Estonia, Finland, France,Germany, Greece, Hungary, Ireland, Israel, Italy, Latvia, Lithuania, the Netherlands, Norway, Poland, Romania, the RussianFederation, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, and the United Kingdom.

In the Asia Pacific region, Arrow operates in Australia, China, Hong Kong, India, Japan, Korea, Malaysia, New Zealand, Philippines,Singapore, Taiwan, Thailand, and Vietnam. Over the past three years, the global components business segment completed thefollowing strategic acquisitions to broaden its product offerings and expand its geographic reach in the Asia Pacific region:

• In June 2007, acquired the component distribution business of Adilam Pty. Ltd. ("Adilam"), a leading electronic componentsdistributor in Australia and New Zealand.

• In November 2007, acquired Universe Electron Corporation ("UEC"), a distributor of semiconductor and multimediaproducts in Japan.

• In February 2008, acquired the components distribution business of Hynetic Electronics and Shreyanics Electronics("Hynetic") in India.

• In July 2008, acquired the components distribution business of Achieva Ltd. ("Achieva"), a value-added distributor ofsemiconductors and electromechanical devices based in Singapore. Achieva is in eight countries within the Asia Pacificregion and is focused on creating value for its partners through technical support and demand creation activities.

• In December 2008, acquired Excel Tech, Inc. ("Excel Tech"), the sole Broadcom distributor in Korea, and Eteq ComponentsPte Ltd ("Eteq Components"), a Broadcom-based components distribution business in the ASEAN region and China.

Within the global components business segment, approximately 70% of the company's sales consist of semiconductor products andrelated services, approximately 18% consist of passive, electro-mechanical, and interconnect products, consisting primarily ofcapacitors, resistors, potentiometers, power supplies, relays, switches, and connectors, and approximately 12% consist of computing,memory, and other products. Most of the company's customers require delivery of their orders on schedules or volumes that aregenerally not available on direct purchases from manufacturers.

Most manufacturers of electronic components rely on authorized distributors, such as the company, to augment their sales andmarketing operations. As a marketing, stocking, technical support, and financial intermediary, the distributor relieves manufacturersof a portion of the costs, financial risk, and personnel associated with these functions (including otherwise sizable investments infinished goods inventories, accounts receivable systems, and distribution networks), while providing geographically dispersed selling,order processing, and delivery capabilities. At the same time, the distributor offers to a broad range of customers the convenience ofaccessing, from a single source, multiple products from multiple suppliers and rapid or scheduled deliveries, as well as othervalue-added services, such as materials management,

4


memory programming capabilities, and financing solutions. The growth of the electronics distribution industry is fostered by the manymanufacturers who recognize their authorized distributors as essential extensions of their marketing organizations. Global ECS

The company's global ECS business segment is a leading distributor of enterprise and midrange computing products, services, andsolutions to VARs in North America, Europe, the Middle East and Africa. Over the past several years, the company has transformedits enterprise computing solutions business into a stronger organization with broader global reach, increased market share in thefast-growing product segments of software and storage, and a more robust customer and supplier base. Execution on the company'sstrategic objectives resulted in the global ECS business segment becoming a leading value-added distributor of enterprise products forvarious suppliers including IBM, Sun Microsystems, and Hewlett-Packard and a leading distributor of enterprise storage and securityand virtualization software. The global ECS geographic footprint has expanded from two countries (the United States and Canada) in2005, to 26 countries around the world, including Austria, Belgium, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland,France, Germany, Hungary, Israel, Latvia, Lithuania, Luxembourg, Morocco, the Netherlands, Norway, Poland, Serbia, Slovakia,Slovenia, Sweden, Switzerland, the United Kingdom, and the United States. Over the past three years, the global ECS businesssegment completed the following acquisitions:

• In March 2007, acquired substantially all of the assets and operations of the KeyLink Systems Group business ("KeyLink")from Agilysys, Inc. The acquisition of KeyLink, a leading value-added distributor of enterprise servers, storage and softwarein the United States and Canada, brought considerable scale, cross-selling opportunities and mid-market reseller focus to thecompany's global ECS business segment. The company's global ECS business segment also entered into a long-termprocurement agreement with Agilysys.

• In September 2007, acquired Centia Group Limited and AKS Group AB ("Centia/AKS"), specialty distributors of accessinfrastructure, security and virtualization software solutions in Europe.

• In June 2008, acquired LOGIX S.A. ("LOGIX"), a subsidiary of Groupe OPEN. LOGIX is a leading value-added distributorof midrange servers, storage, and software to over 6,500 partners in 11 countries. This acquisition established the global ECSbusiness segment’s presence in the Middle East and Africa, increased its scale throughout Europe, and strengthened existingrelationships with key suppliers.

Within the global ECS business segment, approximately 26% of the company's sales consist of proprietary servers, 9% consist ofindustry standard servers, 30% consist of software, 29% consist of storage, and 6% consist of services.

Information technology ("IT") demands for today’s businesses are evolving. As IT needs become more complex, corporateinformation officers are increasingly seeking products bundled into solutions that support business communication, operations,processes, and transactions in a competitive manner.

Global ECS provides VARs with many value-added services, including but not limited to, vertical market expertise, systems-leveltraining and certification, solutions testing at Arrow ECS Solutions Centers, financing support, marketing augmentation, complexorder configuration, and access to a one-stop-shop for mission-critical solutions. Midsize and large companies rely on VARs for theirIT needs, and global ECS works with these VARs to tailor complex, highly-technical mid-market and enterprise solutions in acost-competitive manner. VARs range in size from small and medium-sized businesses to large global organizations and are typicallystructured as sales organizations and service providers. They purchase enterprise and mid-market computing solutions fromdistributors and manufacturers and resell them to end-users. The increasing complexity of these solutions and increasing demand forbundled solutions is changing how VARs go to market and increasing the importance of global ECS' value-added services.

5


Global ECS' suppliers benefit from affordable mid-market access, demand creation, speed to market, and enhanced supply chainefficiency. For suppliers, global ECS is the aggregation point to over 18,000 VARs. In better serving the needs of both suppliers and VARs, the company’s focus is to evolve toward a "channel management" model thatmoves Arrow from being an extension of suppliers’ sales and marketing organizations to being the outsourced provider that fullymanages their channel. This model benefits suppliers and VARs alike. Market development activities maximize Arrow’s full linecard, demand and lead generation services and vertical enablement programs to help suppliers reach more resellers and thus moreend-users. Channel development services support the business needs of resellers with training and education, business development,financing and engineering to help them grow. Services such as financial programs, on-site and remote professional services, supplierservices and managed services help resellers capture more revenue beyond technology sales.

Customers and Suppliers

The company and its affiliates serve over 125,000 industrial and commercial customers. Industrial customers range from major OEMsand CMs to small engineering firms, while commercial customers primarily include VARs and OEMs. No single customer accountedfor more than 4% of the company's 2009 consolidated sales.

The products offered by the company are sold by both field sales representatives, who regularly call on customers in assigned marketareas, and by inside sales personnel, who call on customers by telephone or email from the company's selling locations. The companyalso employs sales teams that focus on small and emerging customers where sales representatives regularly call on customers bytelephone or email from centralized selling locations, and inbound sales agents serve customers that call into the company.

Each of the company's North American selling locations and primary distribution centers in the global components business segmentare electronically linked to the company's central computer system, which provides fully integrated, online, real-time data with respectto nationwide inventory levels and facilitates control of purchasing, shipping, and billing. The company's international operations inthe global components business segment utilize similar online, real-time computer systems, with access to the company's WorldwideStock Check System. This system provides global access to real-time inventory data.

The company sells the products of over 900 suppliers. Sales of products and services from IBM accounted for approximately 12% ofthe company's consolidated sales in 2009. No other single supplier accounted for more than 10% of the company's consolidated salesin 2009. The company believes that many of the products it sells are available from other sources at competitive prices. However,certain parts of the company’s business, such as the company's global ECS business segment, rely on a limited number of supplierswith the strategy of providing focused support, deep product knowledge, and customized service to suppliers and VARs. Most of thecompany's purchases are pursuant to authorized distributor agreements, which are typically cancelable by either party at any time oron short notice.

Distribution Agreements

It is the policy of most manufacturers to protect authorized distributors, such as the company, against the potential write-down ofinventories due to technological change or manufacturers' price reductions. Write-downs of inventories to market value are basedupon contractual provisions, which typically provide certain protections to the company for product obsolescence and price erosion inthe form of return privileges, scrap allowances, and price protection. Under the terms of the related distributor agreements andassuming the distributor complies with certain conditions, such suppliers are required to credit the distributor for reductions inmanufacturers' list prices. As of December 31, 2009, this type of arrangement covered approximately 68% of the company'sconsolidated inventories. In addition, under the terms of many such agreements, the distributor has the right to return to themanufacturer, for credit, a defined portion of those inventory items purchased within a designated period of time.

6


A manufacturer, which elects to terminate a distribution agreement, is generally required to purchase from the distributor the totalamount of its products carried in inventory. As of December 31, 2009, this type of repurchase arrangement covered approximately71% of the company's consolidated inventories.

While these industry practices do not wholly protect the company from inventory losses, the company believes that they currentlyprovide substantial protection from such losses.

Competition

The company's business is extremely competitive, particularly with respect to prices, franchises, and, in certain instances, productavailability. The company competes with several other large multinational and national distributors, as well as numerous regional andlocal distributors. As one of the world's largest electronics distributors, the company's financial resources and sales are greater thanmost of its competitors.

Employees

The company and its affiliates employed approximately 11,300 employees worldwide as of December 31, 2009.

Available Information

The company files its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxystatements, and other documents with the U.S. Securities and Exchange Commission ("SEC") under the Securities Exchange Act of1934. A copy of any document the company files with the SEC is available for review at the SEC's public reference room, 100 FStreet, N.E., Washington, D.C. 20549. The SEC is reachable at 1-800-SEC-0330 for further information on the public referenceroom. The company's SEC filings are also available to the public on the SEC's Web site at http://www.sec.gov and through the NewYork Stock Exchange ("NYSE"), 20 Broad Street, New York, New York 10005, on which the company's common stock is listed.

You may obtain a copy of any of the company's filings with the SEC, or any of the agreements or other documents that constituteexhibits to those filings, by request directed to the company at the following address and telephone number:

Arrow Electronics, Inc.50 Marcus Drive

Melville, New York 11747-4210(631) 847-2000

Attention: Corporate Secretary

The company also makes these filings available, free of charge, through its website (http://www.arrow.com ) as soon as reasonablypracticable after the company files such material with the SEC. The company does not intend this internet address to be an active linkor to otherwise incorporate the contents of the website into this Annual Report on Form 10-K.

7


Executive Officers

The following table sets forth the names, ages, and the positions held by each of the executive officers of the company as of February3, 2010:

Name Age Position Michael J. Long 51 Chairman, President, and Chief Executive OfficerPeter S. Brown 59 Senior Vice President, General Counsel, and SecretaryAndrew S. Bryant 54 President, Arrow Global Enterprise Computing SolutionsPeter T. Kong 59 President, Arrow Global ComponentsJohn P. McMahon 57 Senior Vice President, Human ResourcesPaul J. Reilly 53 Executive Vice President, Finance and Operations, and Chief Financial Officer

Set forth below is a brief account of the business experience during the past five years of each executive officer of the company.

Michael J. Long was appointed Chairman of the Board of Directors in December 2009 and Chief Executive Officer of the company inMay 2009. He was appointed a Director and President of the company in February 2008. Prior thereto he served as Chief OperatingOfficer of the company from February 2008 to May 2009 and Senior Vice President of the company from January 2006 to February2008. He also served as Vice President of the company for more than five years. He served as President, Arrow Global Componentsfrom September 2006 to February 2008; served as President, North America and Asia/Pacific Components from January 2006 untilSeptember 2006; President, North America from May 2005 to December 2005; and President and Chief Operating Officer of ArrowEnterprise Computing Solutions from July 1999 to April 2005.

Peter S. Brown has been Senior Vice President, General Counsel, and Secretary of the company for more than five years.

Andrew S. Bryant was appointed President of Arrow Global Enterprise Computing Solutions in April 2008. Prior to joining Arrow heserved as Chief Operating Officer for Jennings, Strouss & Salmon, P.L.C. from September 2007 to April 2008; under contract as aconsultant to Avnet, Inc. from June 2006 to September 2007, and President of Logistics at Avnet, Inc. from July 2004 to June 2006.

Peter T. Kong was appointed President of Arrow Global Components in May 2009. Prior thereto he served as President of ArrowAsia/Pacific from March 2006 to May 2009. Prior to joining Arrow in March 2006, he served as President of the Asia PacificOperations for Lear Corporation since 1998.

John P. McMahon was appointed Senior Vice President, Human Resources of the company in March 2007. Prior to joining Arrow, heserved as Senior Vice President and Chief Human Resource Officer of UMass Memorial Health Care System from August 2005 toMarch 2007 and Senior Vice President of Global Human Resources at Fisher Scientific from June 2004 to June 2005.

Paul J. Reilly was appointed Executive Vice President of Finance and Operations in May 2009. Prior thereto he served as Senior VicePresident of the company from May 2005 to May 2009 and Vice President of the company for more than five years. He has beenChief Financial Officer of the company for more than five years.

8


Item 1A. Risk Factors.

Described below and throughout this report are certain risks that the company’s management believes are applicable to the company’sbusiness and the industry in which it operates. If any of the described events occur, the company’s business, results of operations,financial condition, liquidity, or access to the capital markets could be materially adversely affected. When stated below that a riskmay have a material adverse effect on the company’s business, it means that such risk may have one or more of these effects. Theremay be additional risks that are not presently material or known. There are also risks within the economy, the industry and the capitalmarkets that could materially adversely affect the company, including those associated with an economic recession, inflation, andglobal economic slowdown. The recent financial crisis continues to affect the banking systems and financial markets and the currentuncertainty in global economic conditions have resulted in a tightening in the credit markets, a low level of liquidity in many financialmarkets, and unsettled credit and equity markets. These factors affect businesses generally, including the company’s customers andsuppliers and, as a result, are not discussed in detail below except to the extent such conditions could materially affect the companyand its customers and suppliers in particular ways.

If the company is unable to maintain its relationships with its suppliers or if the suppliers materially change the terms of theirexisting agreements with the company, the company’s business could be materially adversely affected.

A substantial portion of the company’s inventory is purchased from suppliers with which the company has entered into non-exclusivedistribution agreements. These agreements are typically cancelable on short notice (generally 30 to 90 days). Certain parts of thecompany’s business, such as the company's global ECS business, rely on a limited number of suppliers. For example, sales ofproducts and services from one of the company's suppliers, IBM, accounted for approximately 12% of the company's consolidatedsales in 2009. To the extent that the company’s significant suppliers reduce the amount of products they sell through distribution, orare unwilling to continue to do business with the company, or are unable to continue to meet or significantly alter their obligations, thecompany’s business could be materially adversely affected. In addition, to the extent that the company’s suppliers modify the terms oftheir contracts with the company, or extend lead times, limit supplies due to capacity constraints, or other factors, there could be amaterial adverse effect on the company’s business.

The competitive pressures the company faces could have a material adverse effect on the company's business.

The market for the company's products and services is very competitive and subject to rapid technological change. Not only does thecompany compete with other distributors, it also competes for customers with many of its own suppliers. Additional competition hasemerged from third-party logistics providers, catalogue distributors, and brokers. The company's failure to maintain and enhance itscompetitive position could adversely affect its business and prospects. Furthermore, the company's efforts to compete in themarketplace could cause deterioration of gross profit margins and, thus, overall profitability. The sizes of the company's competitorsvary across market sectors, as do the resources the company has allocated to the sectors in which it does business. Therefore, some ofthe competitors may have a more extensive customer and/or supplier base than the company in one or more of its market sectors. Products sold by the company may be found to be defective and, as a result, warranty and/or product liability claims may beasserted against the company, which may have a material adverse effect on the company. The company sells its components at prices that are significantly lower than the cost of the equipment or other goods in which they areincorporated. Since a defect or failure in a product could give rise to failures in the end products that incorporate them, the companymay face claims for damages (such as consequential damages) that are disproportionate to the revenues and profits it receives from theproducts involved in the claims. While the company typically has provisions in its supplier agreements

9


that hold the supplier accountable for defective products, and the company and its suppliers generally exclude consequential damagesin their standard terms and conditions, the company’s ability to avoid such liabilities may be limited as a result of differing factors,such as the inability to exclude such damages due to the laws of some of the countries where it does business. The company’sbusiness could be materially adversely affected as a result of a significant quality or performance issue in the products sold by thecompany, if it is required to pay for the associated damages. Although the company currently has product liability insurance, suchinsurance is limited in coverage and amount.

Declines in value and other factors pertaining to the company’s inventory could materially adversely affect its business.

The market for the company's products and services is subject to rapid technological change, evolving industry standards, changes inend-market demand, oversupply of product, and regulatory requirements, which can contribute to the decline in value or obsolescenceof inventory. Although most of the company’s suppliers provide the company with certain protections from the loss in value ofinventory (such as price protection and certain rights of return), the company cannot be sure that such protections will fullycompensate it for the loss in value, or that the suppliers will choose to, or be able to, honor such agreements. For example, many ofthe company’s suppliers will not allow products to be returned after they have been held in inventory beyond a certain amount of time,and, in most instances, the return rights are limited to a certain percentage of the amount of product the company purchased in aparticular time frame. All of these factors pertaining to inventory could have a material adverse effect on the company’s business.

The company is subject to environmental laws and regulations that could materially adversely affect its business.

The company is subject to a wide and ever-changing variety of international and U.S. federal, state, and local laws and regulations,compliance with which may require substantial expense. Of particular note are three European Union ("EU") directives known as the(i) Restriction of Certain Hazardous Substances Directive ("RoHS"), (ii) the Waste Electrical and Electronic Equipment Directive, and(iii) the Registration, Evaluation and Authorisation of Chemicals ("REACH"). The first two directives restrict the distribution ofproducts within the EU containing certain substances and require a manufacturer or importer to recycle products containing thosesubstances. REACH will require companies to inform all purchasers of certain products in the EU to what extent they contain certainsubstances covered by the legislation. In addition, China has passed the Management Methods on Control of Pollution fromElectronic Information Products, which prohibits the import of products for use in China that contain similar substances banned by theRoHS directive. Failure to comply with these directives or any other applicable environmental regulations could result in fines orsuspension of sales. Additionally, these directives and regulations may result in the company having non-compliant inventory thatmay be less readily salable or have to be written off.

Some environmental laws impose liability, sometimes without fault, for investigating or cleaning up contamination on or emanatingfrom the company’s currently or formerly owned, leased, or operated property, as well as for damages to property or natural resourcesand for personal injury arising out of such contamination. As the distribution business, in general, does not involve the manufacture ofproducts, it is typically not subject to significant liability in this area. However, there may be occasions, including throughacquisitions, where environmental liability arises. Such liability may be joint and several, meaning that the company could be heldresponsible for more than its share of the liability involved. The presence of environmental contamination could also interfere withongoing operations or adversely affect the company’s ability to sell or lease its properties. The discovery of contamination for whichthe company is responsible, or the enactment of new laws and regulations, or changes in how existing requirements are enforced,could require the company to incur costs for compliance or subject it to unexpected liabilities.

The foregoing matters could materially adversely affect the company’s business.

10


The company is currently involved in the investigation and remediation of environmental matters at two sites as a result of its WyleElectronics acquisition, and the company is in litigation related to those sites.

In 2000, the company acquired Wyle Electronics ("Wyle") and assumed its outstanding liabilities, including responsibility forenvironmental problems at sites Wyle had previously owned. The Wyle purchase agreement includes an indemnification from theseller, now known as E.ON AG, in favor of the company, covering virtually all costs arising out of or in connection with thoseenvironmental obligations. Two sites are known to have environmental issues, one at Norco, California and the other at Huntsville,Alabama. The company has thus far borne most of the cost of the investigation and remediation of the Norco and Huntsville sites,under the direction of the cognizant state agencies. The company has spent approximately $39 million to date in connection withthese sites. In addition, the company was named as a defendant in a private lawsuit filed in connection with alleged contamination at asmall industrial building formerly leased by Wyle Laboratories in El Segundo, California. The lawsuit was settled, but the possibilityremains that government entities or others may attempt to involve the company in further characterization or remediation ofgroundwater issues in the area.

E.ON AG acknowledged liability under the contractual indemnities with respect to the Norco and Huntsville sites and made a smallinitial payment, but has subsequently refused to make further payments. As a result, the company is suing E.ON AG in the RegionalCourt in Frankfurt, Germany. The litigation is currently suspended while the company engages in a court-facilitated mediation withE.ON AG. The mediation commenced in December 2009 and will continue well into 2010.

As successor-in-interest to Wyle, the company is the beneficiary of the various Wyle insurance policies that covered liabilities arisingout of operations at the two contaminated sites. Certain of the insurance carriers implicated in actions, which were brought inRiverside, California, County Court by landowners and residents alleging personal injury and property damage caused bycontaminated groundwater and related soil-vapor found in certain residential areas adjacent to the Norco site, have undertakensubstantial portions of the defense of the company, and the company has recovered approximately $13 million from them to date. Thecompany has sued certain of the umbrella liability policy carriers, however, they have yet to make payment on the tendered losses.

The company believes strongly in the merits of its positions regarding the E.ON AG indemnity and the liabilities of the insurancecarriers, but there can be no guarantee of the outcome of litigation. Should and to the extent some or all of the insurance policies atissue prove insufficient or unavailable, and E.ON AG prevails in the litigation pending in Germany, the company would beresponsible for the costs. The total costs of 1) the investigation and remediation of the two sites, 2) the defense of the company andthe defense and indemnity of Wyle Laboratories in the Riverside County cases, 3) the settlement amount in those cases, and 4) theamount of any shortfall in the availability of the E.ON AG indemnity and/or the insurance coverage are all as yet undetermined. Anyor all of those costs could have a material adverse effect on the company's business.

The company may not have adequate or cost-effective liquidity or capital resources.

The company requires cash or committed liquidity facilities for general corporate purposes, such as funding its ongoing workingcapital, acquisition, and capital expenditure needs, as well as to make interest payments on and to refinance indebtedness. AtDecember 31, 2009, the company had cash and cash equivalents of $1.14 billion. In addition, the company currently has access tocommitted credit lines of $1.4 billion. The company’s ability to satisfy its cash needs depends on its ability to generate cash fromoperations and to access the financial markets, both of which are subject to general economic, financial, competitive, legislative,regulatory, and other factors that are beyond its control. The company may, in the future, need to access the financial markets to satisfy its cash needs. The company’s ability to obtainexternal financing is affected by various factors including general financial market conditions and the company’s debt ratings. While,thus far, uncertainties in global credit markets have not significantly affected the company’s access to capital, future financing couldbe difficult or more

11


expensive. Further, any increase in the company’s level of debt, change in status of its debt from unsecured to secured debt, ordeterioration of its operating results may cause a reduction in its current debt ratings. Any downgrade in the company’s current debtrating or tightening of credit availability could impair the company’s ability to obtain additional financing or renew existing creditfacilities on acceptable terms. Under the terms of any external financing, the company may incur higher than expected financingexpenses and become subject to additional restrictions and covenants. For example, the company’s existing debt agreements containrestrictive covenants, including covenants requiring compliance with specified financial ratios, and a failure to comply with these orany other covenants may result in an event of default. The company’s lack of access to cost-effective capital resources, an increase inthe company’s financing costs, or a breach of debt instrument covenants could have a material adverse effect on the company'sbusiness.

The agreements governing some of the company’s financing arrangements contain various covenants and restrictions that limitsome of management's discretion in operating the business and could prevent the company from engaging in some activities thatmay be beneficial to its business.

The agreements governing the company’s financings contain various covenants and restrictions that, in certain circumstances, couldlimit its ability to:

• grant liens on assets; • make restricted payments (including paying dividends on capital stock or redeeming or repurchasing capital stock); • make investments; • merge, consolidate, or transfer all or substantially all of its assets; • incur additional debt; or • engage in certain transactions with affiliates.

As a result of these covenants and restrictions, the company may be limited in how it conducts its business and may be unable to raiseadditional debt, compete effectively, or make investments.

The company’s failure to have long-term sales contracts may have a material adverse effect on its business.

Most of the company’s sales are made on an order-by-order basis, rather than through long-term sales contracts. The companygenerally works with its customers to develop non-binding forecasts for future volume of orders. Based on such non-bindingforecasts, the company makes commitments regarding the level of business that it will seek and accept, the inventory that it purchases,and the levels of utilization of personnel and other resources. A variety of conditions, both specific to each customer and generallyaffecting each customer’s industry, such as the continued tightening of the credit markets, may cause customers to cancel, reduce, ordelay orders that were either previously made or anticipated, go bankrupt or fail, or default on their payments. Generally, customerscancel, reduce, or delay purchase orders and commitments without penalty. The company seeks to mitigate these risks, in some cases,by entering into noncancelable/nonreturnable sales agreements, but there is no guarantee that such agreements will adequately protectthe company. Significant or numerous cancellations, reductions, delays in orders by customers, losses of customers, and/or customerdefaults on payments could materially adversely affect the company’s business.

12


The company’s revenues originate primarily from the sales of semiconductor, PEMCO (passive, electro-mechanical andinterconnect), IT hardware and software products, the sales of which are traditionally cyclical.

The semiconductor industry historically has experienced fluctuations in product supply and demand, often associated with changes intechnology and manufacturing capacity and subject to significant economic market upturns and downturns. Sales of semiconductorproducts and related services represented approximately 46%, 46%, and 48% of the company’s consolidated sales in 2009, 2008, and2007, respectively. The sale of the company's PEMCO products closely tracks the semiconductor market. Accordingly, thecompany’s revenues and profitability, particularly in its global components business segment, tend to closely follow the strength orweakness of the semiconductor market. Further, economic weakness could cause a decline in spending in information technology,which could have a negative impact on our ECS business. A cyclical downturn in the technology industry could have a materialadverse effect on the company’s business and negatively impact its ability to maintain historical profitability levels.

The company’s non-U.S. sales represent a significant portion of its revenues, and consequently, the company is increasinglyexposed to risks associated with operating internationally.

In 2009, 2008, and 2007, approximately 57%, 54%, and 50%, respectively, of the company’s sales came from its operations outsidethe United States. As a result of the company’s international sales and locations, its operations are subject to a variety of risks that arespecific to international operations, including the following:

• import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, treaties, and technical standards and changes in those regulations; • potential restrictions on transfers of funds; • import and export duties and value-added taxes; • transportation delays and interruptions; • uncertainties arising from local business practices and cultural considerations; • potential military conflicts and political risks; and • currency fluctuations, which the company attempts to minimize through traditional hedging instruments.

Furthermore, products the company sells which are either manufactured in the United States or based on U.S. technology ("U.S.Products") are subject to the Export Administration Regulations ("EAR") when exported and re-exported to and from all internationaljurisdictions, in addition to the local jurisdiction’s export regulations applicable to individual shipments. Licenses or proper licenseexceptions may be required by local jurisdictions’ export regulations, including EAR, for the shipment of certain U.S. Products tocertain countries, including China, India, Russia, and other countries in which the company operates. Non-compliance with the EARor other applicable export regulations can result in a wide range of penalties including the denial of export privileges, fines, criminalpenalties, and the seizure of commodities. In the event that any export regulatory body determines that any shipments made by thecompany violate the applicable export regulations, the company could be fined significant sums and/or its export capabilities could berestricted, which could have a material adverse effect on the company’s business.

Also, the company's operating income margins are lower in certain geographic markets. Operating income in the componentsbusiness in Asia/Pacific and information technology business in Europe tends to be lower than operating income in North Americaand Europe. As sales in those markets increased as a percentage of overall sales, consolidated operating income margins havefallen. The financial impact of lower operating income on returns on working capital was offset, in part, by lower working capitalrequirements. While the company has and will continue to adopt measures to reduce the potential impact

13


of losses resulting from the risks of doing business abroad, it cannot ensure that such measures will be adequate and, therefore, couldhave a material adverse effect on its business. When the company makes acquisitions, it may not be able to successfully integrate them.

If the company is unsuccessful in integrating its acquisitions, or if integration is more difficult than anticipated, the company mayexperience disruptions that could have a material adverse effect on its business. The company's goodwill and identifiable intangible assets could become impaired, which could reduce the value of its assets andreduce its net income in the year in which the write-off occurs. Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. The company also ascribesvalue to certain identifiable intangible assets, which consist primarily of customer relationships, non-competition agreements, along-term procurement agreement, customer databases, and sales backlog, among others, as a result of acquisitions. The companymay incur impairment charges on goodwill or identifiable intangible assets if it determines that the fair values of the goodwill oridentifiable intangible assets are less than their current carrying values. The company evaluates, on a regular basis, whether events orcircumstances have occurred that indicate all, or a portion, of the carrying amount of goodwill may no longer be recoverable, in whichcase an impairment charge to earnings would become necessary.

See Notes 1 and 3 of the Notes to the Consolidated Financial Statements and 'Critical Accounting Policies' in Management'sDiscussion and Analysis of Financial Condition and Results of Operations for further discussion of the impairment testing of goodwilland identifiable intangible assets.

A continued decline in general economic conditions or global equity valuations, could impact the judgments and assumptions aboutthe fair value of the company's businesses and the company could be required to record impairment charges on its goodwill or otheridentifiable intangible assets in the future, which could impact the company’s consolidated balance sheet, as well as the company’sconsolidated statement of operations. If the company was required to recognize an impairment charge in the future, the charge wouldnot impact the company’s consolidated cash flows, current liquidity, capital resources, and covenants under its existing revolvingcredit facility, asset securitization program, and other outstanding borrowings.

If the company fails to maintain an effective system of internal controls or discovers material weaknesses in its internal controlsover financial reporting, it may not be able to report its financial results accurately or timely or detect fraud, which could have amaterial adverse effect on its business.

An effective internal control environment is necessary for the company to produce reliable financial reports and is an important part ofits effort to prevent financial fraud. The company is required to periodically evaluate the effectiveness of the design and operation ofits internal controls over financial reporting. Based on these evaluations, the company may conclude that enhancements,modifications or changes to internal controls are necessary or desirable. While management evaluates the effectiveness of thecompany’s internal controls on a regular basis, these controls may not always be effective. There are inherent limitations on theeffectiveness of internal controls, including collusion, management override, and failure in human judgment. In addition, controlprocedures are designed to reduce rather than eliminate business risks. If the company fails to maintain an effective system of internalcontrols, or if management or the company’s independent registered public accounting firm discovers material weaknesses in thecompany’s internal controls, it may be unable to produce reliable financial reports or prevent fraud, which could have a materialadverse effect on the company’s business. In addition, the company may be subject to sanctions or investigation by regulatoryauthorities, such as the SEC or the NYSE. Any such actions could result in an adverse reaction in the financial markets due to a lossof

14


confidence in the reliability of the company’s financial statements, which could cause the market price of its common stock to declineor limit the company’s access to capital. The company relies heavily on its internal information systems, which, if not properly functioning, could materially adverselyaffect the company’s business.

The company's current global operations reside on multiple technology platforms. These platforms are subject to electrical ortelecommunications outages, computer hacking, or other general system failure, which could have a material adverse effect on thecompany's business. Because most of the company's systems consist of a number of legacy, internally developed applications, it canbe harder to upgrade and may be more difficult to adapt to commercially available software. The company is in the process of converting its various business information systems worldwide to a single Enterprise ResourcePlanning system. The company has committed significant resources to this conversion, and is expected to be phased in over severalyears. This conversion is extremely complex, in part, because of the wide range of processes and the multiple legacy systems thatmust be integrated globally. The company will be using a controlled project plan that it believes will provide for the adequateallocation of resources. However, such a plan, or a divergence from it, may result in cost overruns, project delays, or businessinterruptions. During the conversion process, the company may be limited in its ability to integrate any business that it may want toacquire. Failure to properly or adequately address these issues could impact the company's ability to perform necessary businessoperations, which could materially adversely affect the company’s business.

The company may be subject to intellectual property rights claims, which are costly to defend, could require payment of damagesor licensing fees and could limit the company’s ability to use certain technologies in the future.

Certain of the company’s products include intellectual property owned by the company and/or its third party suppliers. Substantiallitigation and threats of litigation regarding intellectual property rights exist in the semiconductor/integrated circuit and softwareindustries. From time to time, third parties (including certain companies in the business of acquiring patents not for the purpose ofdeveloping technology but with the intention of aggressively seeking licensing revenue from purported infringers) may assert patent,copyright and/or other intellectual property rights to technologies that are important to the company’s business. In some cases,depending on the nature of the claim, the company may be able to seek indemnification from its suppliers for itself and its customersagainst such claims, but there is no assurance that it will be successful in obtaining such indemnification or that the company is fullyprotected against such claims. In addition, the company is exposed to potential liability for technology that it develops itself for whichit has no indemnification protections. In any dispute involving products that incorporate intellectual property developed or licensed bythe company, the company’s customers could also become the target of litigation. The company is obligated in many instances toindemnify and defend its customers if the products or services the company sells are alleged to infringe any third party’s intellectualproperty rights. Any infringement claim brought against the company, regardless of the duration, outcome or size of damage award,could:

• result in substantial cost to the company; • divert management’s attention and resources; • be time consuming to defend; • result in substantial damage awards; • cause product shipment delays; or • require the company to seek to enter into royalty or other licensing agreements.

Additionally, if an infringement claim is successful the company may be required to pay damages or seek royalty or licensearrangements, which may not be available on commercially reasonable terms. The payment of any such damages or royalties maysignificantly increase the company’s operating expenses and harm the company’s operating results and financial condition. Also,royalty or license arrangements

15


may not be available at all. The company may have to stop selling certain products or using technologies, which could affect thecompany’s ability to compete effectively. Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The company owns and leases sales offices, distribution centers, and administrative facilities worldwide. Its executive office islocated in Melville, New York and occupies a 163,000 square foot facility under a long-term lease expiring in 2013. The companyowns 14 locations throughout North America, EMEASA, and the Asia Pacific region and occupies approximately 300 additionallocations under leases due to expire on various dates through 2022. The company believes its facilities are well maintained andsuitable for company operations.

Item 3. Legal Proceedings.

Tekelec Matters

In 2000, the company purchased Tekelec Europe SA ("Tekelec") from Tekelec Airtronic SA ("Airtronic") and certain other sellingshareholders. Subsequent to the closing of the acquisition, Tekelec received a product liability claim in the amount of €11.3million. The product liability claim was the subject of a French legal proceeding started by the claimant in 2002, under which separatedeterminations were made as to whether the products that are subject to the claim were defective and the amount of damages sustainedby the purchaser. The manufacturer of the products also participated in this proceeding. The claimant has commenced legalproceedings against Tekelec and its insurers to recover damages in the amount of €3.7 million and expenses of €.3 million plusinterest.

Environmental and Related Matters

Wyle Claims

In connection with the 2000 purchase of Wyle from the VEBA Group ("VEBA"), the company assumed certain of the thenoutstanding obligations of Wyle, including Wyle’s 1994 indemnification of the purchasers of its Wyle Laboratories division forenvironmental clean-up costs associated with any then existing contamination or violation of environmental regulations. Under theterms of the company’s purchase of Wyle from VEBA, VEBA agreed to indemnify the company for costs associated with the Wyleenvironmental indemnities, among other things. The company is aware of two Wyle Laboratories facilities (in Huntsville, Alabamaand Norco, California) at which contaminated groundwater was identified. Each site will require remediation, the final form and costof which is undetermined. As further discussed in Note 15 of the Notes to Consolidated Financial Statements, the Alabama site isbeing investigated by the company under the direction of the Alabama Department of Environmental Management. The Norco site issubject to a consent decree, entered in October 2003, between the company, Wyle Laboratories, and the California Department ofToxic Substance Control.

Wyle Laboratories has demanded indemnification from the company with respect to the work at both sites (and in connection with thelitigation discussed below), and the company has, in turn, demanded indemnification from VEBA. VEBA merged with apublicly–traded, German conglomerate in June 2000. The combined entity, now known as E.ON AG, remains responsible forVEBA’s liabilities. E.ON AG acknowledged liability under the terms of the VEBA contract in connection with the Norco andHuntsville sites and made an initial, partial payment. Neither the company’s demands for subsequent payments nor its demand fordefense and indemnification in the related litigation and other costs associated with the Norco site were met.

16


Related Litigation

In October 2005, the company filed suit against E.ON AG in the Frankfurt am Main Regional Court in Germany. The suit seeksindemnification, contribution, and a declaration of the parties’ respective rights and obligations in connection with the RiversideCounty litigation (discussed below) and other costs associated with the Norco site. In its answer to the company’s claim filed inMarch 2009 in the German proceedings, E.ON AG filed a counterclaim against the company for approximately $16.0 million. Thecompany is in the process of preparing a response to the counterclaim. The company believes it has reasonable defenses to thecounterclaim and plans to defend its position vigorously. The company believes that the ultimate resolution of the counterclaim willnot materially adversely impact the company’s consolidated financial position, liquidity, or results of operations. The litigation iscurrently suspended while the company engages in a court-facilitated mediation with E.ON AG. The mediation commenced inDecember 2009 and will continue well into 2010.

The company was named as a defendant in several suits related to the Norco facility, all of which were consolidated for pre-trialpurposes. In January 2005, an action was filed in the California Superior Court in Riverside County, California (Gloria Austin, et al. v.Wyle Laboratories, Inc. et al.). Approximately 90 plaintiff landowners and residents sued a number of defendants under a variety oftheories for unquantified damages allegedly caused by environmental contamination at and around the Norco site. Also filed in theSuperior Court in Riverside County were Jimmy Gandara, et al. v. Wyle Laboratories, Inc. et al. in January 2006, and Lisa Briones, etal. v. Wyle Laboratories, Inc. et al. in May 2006; both of which contain allegations similar to those in the Austin case on behalf ofapproximately 20 additional plaintiffs. All of these matters have now been resolved to the satisfaction of the parties.

The company was also named as a defendant in a lawsuit filed in September 2006 in the United States District Court for the CentralDistrict of California (Apollo Associates, L.P., et anno. v. Arrow Electronics, Inc. et al.) in connection with alleged contamination at athird site, an industrial building formerly leased by Wyle Laboratories, in El Segundo, California. The lawsuit was settled, though thepossibility remains that government entities or others may attempt to involve the company in further characterization or remediation ofgroundwater issues in the area.

Impact on Financial Statements

The company believes that any cost which it may incur in connection with environmental conditions at the Norco, Huntsville, and ElSegundo sites and the related litigation is covered by the contractual indemnifications (except, under the terms of the environmentalindemnification, for the first $.5 million), discussed above. The company believes that recovery of costs incurred to date associatedwith the environmental clean-up of the Norco and Huntsville sites, is probable. Accordingly, the company increased the receivable foramounts due from E.ON AG by $7.3 million during 2009 to $40.9 million. The company’s net costs for such indemnified mattersmay vary from period to period as estimates of recoveries are not always recognized in the same period as the accrual of estimatedexpenses.

Also included in the proceedings against E.ON AG is a claim for the reimbursement of pre-acquisition tax liabilities of Wyle in theamount of $8.7 million for which E.ON AG is also contractually liable to indemnify the company. E.ON AG has specificallyacknowledged owing the company not less than $6.3 million of such amounts, but its promises to make payments of at least thatamount were not kept. The company also believes that the recovery of these amounts is probable.

In connection with the acquisition of Wyle, the company acquired a $4.5 million tax receivable due from E.ON AG (as successor toVEBA) in respect of certain tax payments made by Wyle prior to the effective date of the acquisition, the recovery of which thecompany also believes is probable.

As successor-in-interest to Wyle, the company is the beneficiary of various Wyle insurance policies that covered liabilities arising outof operations at Norco and Huntsville. Certain of the insurance carriers implicated in the Riverside County litigation have undertakensubstantial portions of the defense of the company, and the company has recovered approximately $13 million from them to date. Thecompany has sued certain of the umbrella liability policy carriers, however, because they have yet to make payment on the tenderedlosses.

The company believes strongly in the merits of its positions regarding the E.ON AG indemnity and the liabilities of the insurancecarriers.

17


Other

From time to time, in the normal course of business, the company may become liable with respect to other pending and threatenedlitigation, environmental, regulatory, labor, product, and tax matters. While such matters are subject to inherent uncertainties, it is notcurrently anticipated that any such matters will materially impact the company’s consolidated financial position, liquidity, or results ofoperations.

Item 4. Submission of Matters to a Vote of Security Holders.

None.

18


PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

The company's common stock is listed on the NYSE (trading symbol: "ARW"). The high and low sales prices during each quarter of2009 and 2008 follow:

Year High Low 2009: Fourth Quarter $ 30.10 $ 24.85 Third Quarter 30.01 19.57 Second Quarter 25.88 18.61 First Quarter 21.32 15.00 2008: Fourth Quarter $ 26.60 $ 11.74 Third Quarter 36.00 24.95 Second Quarter 34.97 26.50 First Quarter 39.44 29.00

Holders

On January 29, 2010, there were approximately 2,900 shareholders of record of the company's common stock.

Dividend History

The company did not pay cash dividends on its common stock during 2009 or 2008. While from time to time the Board of Directorsconsiders the payment of dividends on the common stock, the declaration of future dividends is dependent upon the company'searnings, financial condition, and other relevant factors, including debt covenants.

19


Equity Compensation Plan Information

The following table summarizes information, as of December 31, 2009, relating to the Omnibus Incentive Plan, which was approvedby the company’s shareholders and under which cash-based awards, non-qualified stock options, incentive stock options, stockappreciation rights, restricted stock or restricted stock units, performance shares or units, covered employee annual incentive awards,and other stock-based awards may be granted.

Plan Category

Number ofSecurities to

be IssuedUpon Exerciseof Outstanding

Options,Warrants and

Rights

WeightedAverageExercisePrice of

OutstandingOptions,

Warrantsand Rights

Number ofSecurities

RemainingAvailablefor FutureIssuance

Equity compensation plans approved by security holders 6,464,861 $ 27.30 3,715,621 Equity compensation plans not approved by security holders - - - Total 6,464,861 $ 27.30 3,715,621

Performance Graph

The following graphs compare the performance of the company's common stock for the periods indicated with the performance of theStandard & Poor's 500 Stock Index ("S&P 500 Stock Index") and the average performance of a group consisting of the company'speer companies on a line-of-business basis. The graphs assume $100 invested on December 31, 2004 in the company, the S&P 500Stock Index, and the Peer Group. Total return indices reflect reinvestment of dividends and are weighted on the basis of marketcapitalization at the time of each reported data point. During 2009, the company expanded its Peer Group to include Ingram Micro Inc.and Tech Data Corp. to reflect additional competitors in the enterprise computing solutions industry, which has become a moresignificant portion of the company's business over the past several years.

The companies included in the below graph for the new Peer Group are Avnet, Inc., Bell Microproducts, Inc., Ingram Micro Inc., JacoElectronics, Inc., Nu Horizons Electronics Corp. and Tech Data Corp.

20


2004 2005 2006 2007 2008 2009 Arrow Electronics 100 132 130 162 78 122 Peer Group 100 94 94 109 60 110 S&P 500 Stock Index 100 103 117 121 75 92

The companies included in the below graph for the old Peer Group are Avnet, Inc., Bell Microproducts, Inc., Jaco Electronics, Inc.,and Nu Horizons Electronics Corp.

2004 2005 2006 2007 2008 2009 Arrow Electronics 100 132 130 162 78 122 Peer Group 100 133 143 200 107 174 S&P 500 Stock Index 100 103 117 121 75 92

Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows the share-repurchase activity for the quarter ended December 31, 2009:

Month

TotalNumber of

SharesPurchased

AveragePrice Paidper Share

Total Number ofShares

Purchased asPart of Publicly

AnnouncedProgram

Approximate DollarValue of Shares that

May Yet bePurchased Under

the Program October 4 through 31, 2009 93 $ 25.65 - - November 1 through 30, 2009 4,008 26.85 - - December 1 through 31, 2009 1,558 27.40 - - Total 5,659 -

The purchases of Arrow common stock noted above reflect shares that were withheld from employees for restricted stock, aspermitted by the plan, in order to satisfy the required tax withholding obligations. None of these purchases were made pursuant to apublicly announced repurchase plan and the company currently does not employ a stock repurchase plan.

21


Item 6. Selected Financial Data.

The following table sets forth certain selected consolidated financial data and must be read in conjunction with the company'sconsolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K (dollars in thousandsexcept per share data):

For the years endedDecember 31: 2009 (a) 2008 (b) 2007 (c) 2006 (d)(g) 2005 (e)(f)(g) Sales $ 14,684,101 $ 16,761,009 $ 15,984,992 $ 13,577,112 $ 11,164,196 Operating income (loss) $ 272,787 $ (493,569) $ 686,905 $ 606,225 $ 480,258 Net income (loss)

attributable to shareholders $ 123,512 $ (613,739) $ 407,792 $ 388,331 $ 253,609 Net income (loss) per share: Basic $ 1.03 $ (5.08) $ 3.31 $ 3.19 $ 2.15 Diluted $ 1.03 $ (5.08) $ 3.28 $ 3.16 $ 2.09 At December 31: Accounts receivable and inventories $ 4,533,809 $ 4,713,849 $ 4,961,035 $ 4,401,857 $ 3,811,914 Total assets 7,762,366 7,118,285 8,059,860 6,669,572 6,044,917 Long-term debt 1,276,138 1,223,985 1,223,337 976,774 1,138,981 Shareholders' equity 2,916,960 2,676,698 3,551,860 2,996,559 2,372,886 (a) Operating income and net income attributable to shareholders include restructuring, integration, and other charges of $105.5

million ($75.7 million net of related taxes or $.63 per share on both a basic and diluted basis). Net income attributable toshareholders also includes a loss on prepayment of debt of $5.3 million ($3.2 million net of related taxes or $.03 per share onboth a basic and diluted basis).

(b) Operating loss and net loss attributable to shareholders include a non-cash impairment charge associated with goodwill of$1.02 billion ($905.1 million net of related taxes or $7.49 per share on both a basic and diluted basis) and restructuring,integration, and other charges of $81.0 million ($61.9 million net of related taxes or $.51 per share on both a basic and dilutedbasis). Net loss attributable to shareholders also includes a loss of $10.0 million ($.08 per share on both a basic and dilutedbasis) on the write-down of an investment, and a reduction of the provision for income taxes of $8.5 million ($.07 per shareon both a basic and diluted basis) and an increase in interest expense of $1.0 million ($1.0 million net of related taxes or $.01per share on both a basic and diluted basis) primarily related to the settlement of certain international income tax matters.

(c) Operating income and net income attributable to shareholders include restructuring, integration, and other charges of $11.7million ($7.0 million net of related taxes or $.06 per share on both a basic and diluted basis). Net income attributable toshareholders also includes an income tax benefit of $6.0 million, net, ($.05 per share on both a basic and diluted basis)principally due to a reduction in deferred income taxes as a result of the statutory tax rate change in Germany.

(d) Operating income and net income attributable to shareholders include restructuring, integration, and other charges of $16.1million ($11.7 million net of related taxes or $.10 per share on both a basic and diluted basis). Net income attributable toshareholders also includes a loss on prepayment of debt of $2.6 million ($1.6 million net of related taxes or $.01 per share onboth a basic and diluted basis) and the reduction of the provision for income taxes of $46.2 million ($.38 per share on both abasic and diluted basis) and the reduction of interest expense of $6.9 million ($4.2 million net of related taxes or $.03 pershare on both a basic and diluted basis) related to the settlement of certain income tax matters.

22


(e) Operating income and net income attributable to shareholders include restructuring, integration, and other charges of $11.0million ($6.0 million net of related taxes or $.05 per share on both a basic and diluted basis). Net income attributable toshareholders also includes a loss on prepayment of debt of $4.3 million ($2.6 million net of related taxes or $.02 and $.01 pershare on a basic and diluted basis, respectively) and a loss of $3.0 million ($.03 per share on both a basic and diluted basis)on the write-down of an investment.

(f) Effective January 1, 2006, the company began measuring share-based payment awards exchanged for employee services atfair value and recorded an expense related to such awards in the consolidated statements of operations over the requisiteemployee service period. Prior to January 1, 2006, the company accounted for share-based payment awards using theintrinsic value method and was not required to record any expense in the consolidated financial statements if the exerciseprice of the award was not less than the market price of the underlying stock on the date of grant. Had compensation expensebeen determined in accordance with the fair value method of accounting at the grant dates for awards under the company'svarious stock-based compensation plans, operating income and net income attributable to shareholders for 2005 would bereduced by $15.2 million and $9.1 million ($.08 and $.07 per share on a basic and diluted basis, respectively).

(g) Effective January 1, 2009, the company adopted the provisions of Financial Accounting Standards Board ("FASB")Accounting Standards Codification ("ASC") Topic 810-10-65, which requires, among other things, that the presentation anddisclosure requirements be applied retrospectively for all periods presented. The adoption of FASB ASC Topic 810-10-65did not have a material impact on the company’s consolidated financial position or results of operations and, accordingly,selected financial data was not restated to reflect the adoption of FASB ASC Topic 810-10-65 for financial statement periodsdated prior to those included in this Annual Report on Form 10-K (2006 and 2005). Reference to net income (loss)attributable to shareholders for 2006 and 2005 is equivalent to net income (loss) as presented in the company’s consolidatedstatements of operations for those periods.

23


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The company is a global provider of products, services, and solutions to industrial and commercial users of electronic components andenterprise computing solutions. The company provides one of the broadest product offerings in the electronic components andenterprise computing solutions distribution industries and a wide range of value-added services to help customers reduce time tomarket, lower their total cost of ownership, introduce innovative products through demand creation opportunities, and enhance theiroverall competitiveness. The company has two business segments, the global components business segment and the global ECSbusiness segment. The company distributes electronic components to OEMs and CMs through its global components businesssegment and provides enterprise computing solutions to VARs through its global ECS business segment. For 2009, approximately66% of the company's sales were from the global components business segment, and approximately 34% of the company's sales werefrom the global ECS business segment.

Operating efficiency and working capital management remain a key focus of the company's business initiatives to grow sales fasterthan the market, grow profits faster than sales, and increase return on invested capital. To achieve its financial objectives, thecompany seeks to capture significant opportunities to grow across products, markets, and geographies. To supplement its organicgrowth strategy, the company continually evaluates strategic acquisitions to broaden its product offerings, increase its marketpenetration, and/or expand its geographic reach. Cash flow needed to fund this growth is primarily expected to be generated throughcontinuous corporate-wide initiatives to improve profitability and increase effective asset utilization.

On June 2, 2008, the company acquired LOGIX, a subsidiary of Groupe OPEN for a purchase price of $252.6 million, which includesassumption of debt and acquisition costs. On March 31, 2007, the company acquired from Agilysys substantially all of the assets andoperations of KeyLink for a purchase price of $480.6 million in cash, which included acquisition costs and final adjustments basedupon a closing audit. The company also entered into a long-term procurement agreement with Agilysys. Results of operations ofLOGIX and KeyLink were included in the company's consolidated results from the date of acquisition within the company's globalECS business segment.

Consolidated sales for 2009 declined by 12.4%, compared with the year-earlier period, due to a 13.9% decrease in the globalcomponents business segment sales and a 9.3% decrease in the global ECS business segment sales.

Net income attributable to shareholders increased to $123.5 million in 2009, compared with a net loss attributable to shareholders of$613.7 million in the year-earlier period. The following items impacted the comparability of the company's results for the years endedDecember 31, 2009 and 2008:

• restructuring, integration, and other charges of $105.5 million ($75.7 million net of related taxes) in 2009 and $81.0 million($61.9 million net of related taxes) in 2008;

• a non-cash impairment charge associated with goodwill of $1.02 billion ($905.1 million net of related taxes) in 2008; • a loss on prepayment of debt of $5.3 million ($3.2 million net of related taxes) in 2009; • a loss of $10.0 million on the write-down of an investment in 2008; and • a reduction of the provision for income taxes of $8.5 million and an increase in interest expense of $1.0 million ($1.0 million

net of related taxes) primarily related to the settlement of certain international income tax matters in 2008.

Excluding the above-mentioned items, the decrease in net income attributable to shareholders for 2009 was primarily the result of thesales declines in the global ECS business segment and the more profitable global components businesses in North America andEurope, as well as competitive pricing pressure impacting gross profit margins. These decreases were offset, in part, by a reduction inselling, general and administrative expenses ("SG&A") due to the company’s continuing efforts to streamline and simplify

24


processes and to reduce expenses in response to the decline in sales due to the worldwide economic recession, as well as a reduction innet interest and other financing expense.

Substantially all of the company's sales are made on an order-by-order basis, rather than through long-term sales contracts. As such,the nature of the company's business does not provide for the visibility of material forward-looking information from its customersand suppliers beyond a few months.

Sales

Following is an analysis of net sales (in millions) by reportable segment for the years ended December 31:

2009 2008 % Change Global components $ 9,751 $ 11,319 (13.9)%Global ECS 4,933 5,442 (9.3)%

Consolidated $ 14,684 $ 16,761 (12.4)%

Consolidated sales for 2009 declined by $2.08 billion, or 12.4%, compared with the year-earlier period. The decrease was driven by adecrease in the global components business segment of $1.57 billion, or 13.9%, and a decrease in the global ECS business segment of$508.7 million, or 9.3%. On a pro forma basis, which includes LOGIX as though this acquisition occurred on January 1, 2008,consolidated sales for 2009 decreased 13.5%. The translation of the company's international financial statements into U.S. dollarsresulted in decreased sales of $350.7 million for 2009, compared with the year-earlier period, due to a stronger U.S. dollar. Excludingthe impact of foreign currency, the company's consolidated sales decreased by 10.5% in 2009.

In the global components business segment, sales for 2009 decreased primarily due to weakness in North America and Europe as aresult of lower demand for products due to the worldwide economic recession and the impact of a stronger U.S. dollar on thetranslation of the company's international financial statements. The decrease in sales for 2009 was offset, in part, by strength in theAsia Pacific region. Excluding the impact of foreign currency, the company's global components business segment sales decreased by11.4% for 2009.

In the global ECS business segment, the decrease in sales for 2009 was primarily due to lower demand for products due to theworldwide economic recession and the impact of a stronger U.S. dollar on the translation of the company's international financialstatements. The decrease in sales for 2009 was offset, in part, by the LOGIX acquisition. On a pro forma basis, which includesLOGIX as though this acquisition occurred on January 1, 2008, the global ECS business segment sales for 2009 declined by 12.7%.Excluding the impact of foreign currency, the company's global ECS business segment sales decreased 8.7% for 2009.

Following is an analysis of net sales (in millions) by reportable segment for the years ended December 31:

2008 2007 % Change Global components $ 11,319 $ 11,224 0.8%Global ECS 5,442 4,761 14.3%

Consolidated $ 16,761 $ 15,985 4.9%

Consolidated sales for 2008 increased by $776.0 million, or 4.9%, compared with the year-earlier period. The increase was driven byan increase in the global components business segment of $95.7 million, or

25


less than 1%, and an increase in the global ECS business segment of $680.3 million, or 14.3%. The translation of the company'sinternational financial statements into U.S. dollars resulted in increased sales of $293.4 million for 2008, compared with theyear-earlier period, due to a weaker U.S. dollar. Excluding the impact of foreign currency, the company's consolidated sales increasedby 3.0% in 2008.

In the global components business segment, sales for 2008 increased by less than 1% compared with the year-earlier period, primarilydue to strength in the Asia Pacific region and the impact of a weaker U.S. dollar on the translation of the company's internationalfinancial statements. This was offset, in part, by weakness in North America and Europe. Excluding the impact of foreign currency,the company's global components business segment sales decreased by 1.3% for 2008.

In the global ECS business segment, sales for 2008 increased by 14.3%, compared with the year-earlier period, primarily due to theKeyLink and LOGIX acquisitions. On a pro forma basis, which includes KeyLink and LOGIX as though these acquisitions occurredon January 1, 2007 and excluding KeyLink sales from the related long-term procurement agreement with Agilysys for the first quarterof 2008, the global ECS business segment sales for 2008 decreased by less than 1%, compared with the year-earlier period. Thisdecrease was primarily due to weakness of servers, offset, in part, by the impact of a weaker U.S. dollar on the translation of thecompany’s international financial statements and growth in storage, software, and services. Excluding the impact of foreign currency,the company's global ECS business segment sales increased by 13.3% for 2008.

Gross Profit

The company recorded gross profit of $1.75 billion and $2.28 billion for 2009 and 2008, respectively. The gross profit margin for2009 decreased by approximately 170 basis points when compared with the year-earlier period. Approximately two-thirds of thedecrease in gross profit percent was due to increased competitive pricing pressure in both the company's business segments, and theremaining one-third was due to a change in the mix in the company's business, with the global ECS business segment and AsiaPacific region being a greater percentage of total sales. The competitive pricing pressure experienced by the company during the firsthalf of 2009 lessened in the second half of 2009. The profit margins of products in the global ECS business segment are typicallylower than the profit margins of the products in the global components business segment, and the profit margins of the componentssold in the Asia Pacific region tend to be lower than the profit margins in North America and Europe. The financial impact of thelower gross profit was offset, in part, by the lower operating costs and lower working capital requirements in the global ECS businesssegment and the Asia Pacific region relative to the company’s other businesses.

The company recorded gross profit of $2.28 billion and $2.29 billion for 2008 and 2007, respectively. The gross profit margin for2008 decreased by approximately 70 basis points when compared with the year-earlier period. The decrease in gross profit was due,in part, to the KeyLink and LOGIX acquisitions, which are both lower gross profit margin businesses. On a pro forma basis, whichincludes KeyLink and LOGIX as though these acquisitions occurred on January 1, 2007, the gross profit margin for 2008 decreased byapproximately 60 basis points when compared with the year-earlier period. This was primarily due to a change in the mix in thecompany's business, with the global ECS business segment and Asia Pacific region being a greater percentage of total sales.

Restructuring, Integration, and Other Charges

2009 Charges

In 2009, the company recorded restructuring, integration, and other charges of $105.5 million ($75.7 million net of related taxes or$.63 per share on both a basic and diluted basis). Included in the restructuring, integration, and other charges for 2009 is arestructuring charge of $100.3 million related to initiatives by the company to improve operating efficiencies. Also included in therestructuring, integration, and other charges for 2009 are restructuring charges of $2.6 million and integration credits of $1.3 millionrelated to adjustments to restructuring and integration reserves established in prior periods and acquisition-related expenses of $3.9million.

26


The restructuring charge of $100.3 million in 2009 primarily includes personnel costs of $90.9 million and facilities costs of $8.0million. The personnel costs are related to the elimination of approximately 1,605 positions within the global components businesssegment and approximately 320 positions within the global ECS business segment. The facilities costs are related to exit activities for28 vacated facilities worldwide due to the company's continued efforts to streamline its operations and reduce real estate costs. Theseinitiatives are due to the company's continued efforts to lower cost and drive operational efficiency.

The above-mentioned charges were incurred in connection with the company's cost reduction initiatives announced in the fourthquarter of 2008 and second quarter of 2009, which are expected to result in $275 million of annual savings, of which $225 million isexpected to be permanent.

2008 Charges

In 2008, the company recorded restructuring, integration, and other charges of $81.0 million ($61.9 million net of related taxes or $.51per share on both a basic and diluted basis). Included in the restructuring, integration, and other charges for 2008 is a restructuringcharge of $69.8 million related to initiatives by the company to improve operating efficiencies. Also included in the restructuring,integration, and other charges for 2008 is a restructuring credit of $.3 million related to adjustments to reserves previously establishedthrough restructuring charges in prior periods, an integration charge of $.6 million, primarily related to the ACI and KeyLinkacquisitions, and a charge related to a preference claim from 2001 of $10.9 million.

The restructuring charge of $69.8 million in 2008 primarily includes personnel costs of $39.4 million, facility costs of $4.3 million,and a write-down of a building and related land of $25.4 million. These initiatives are the result of the company's continued efforts tolower cost and drive operational efficiency. The personnel costs are primarily associated with the elimination of approximately 750positions across multiple functions and multiple locations. The facilities costs are related to the exit activities of 9 vacated facilities inNorth America and Europe. During the fourth quarter of 2008, the company recorded an impairment charge of $25.4 million inconnection with an approved plan to actively market and sell a building and related land in North America within the company'sglobal components business segment. The decision to exit this location was made to enable the company to consolidate facilities andreduce future operating costs. The company wrote-down the carrying values of the building and related land to their estimated fairvalues less cost to sell and ceased recording depreciation.

In 2008, an opinion was rendered in a bankruptcy proceeding (Bridge Information Systems, et. anno v. Merisel Americas, Inc. &MOCA) in favor of Bridge Information Systems ("Bridge"), the estate of a former global ECS customer that declared bankruptcy in2001. The proceeding is related to sales made in 2000 and early 2001 by the MOCA division of ECS, a company Arrow purchasedfrom Merisel Americas in the fourth quarter of 2000. The court held that certain of the payments received by the company at the timewere preferential and must be returned to Bridge. Accordingly, during 2008, the company recorded a charge of $10.9 million inconnection with the preference claim from 2001, including legal fees.

2007 Charges

In 2007, the company recorded restructuring, integration, and other charges of $11.7 million ($7.0 million net of related taxes or $.06per share on both a basic and diluted basis). Included in the restructuring, integration, and other charges for 2007 is $9.7 millionrelated to initiatives by the company to improve operating efficiencies. Also included in the restructuring, integration, and othercharges for 2007 is a restructuring credit of $.9 million primarily related to the reversal of excess reserves, which were previouslyestablished through restructuring charges in prior periods, and an integration charge of $2.9 million primarily related to the acquisitionof KeyLink.

The restructuring charge of $9.7 million in 2007 primarily includes personnel costs of $11.3 million and a

27


facilities credit of $1.9 million. The personnel costs are related to the elimination of approximately 400 positions. These positionswere primarily within the company's global components business segment in North America and related to the company's continuedfocus on operational efficiency. The facilities credit is primarily related to a gain on the sale of the Harlow, England facility of $8.5million that was vacated in 2007. This was offset by facilities costs of $6.6 million, primarily related to exit activities for a vacatedfacility in Europe due to the company's continued efforts to reduce real estate costs.

Integration costs of $3.7 million in 2007 include $2.9 million recorded as an integration charge and $.8 million recorded as additionalcosts in excess of net assets of companies acquired. The integration costs include personnel costs of $1.7 million associated with theelimination of approximately 50 positions in North America related to the acquisition of KeyLink, a credit of $.5 million primarilyrelated to the reversal of excess facility-related accruals in connection with certain acquisitions made prior to 2005 and other costs of$2.6 million.

Impairment Charge

The company tests goodwill for impairment annually as of the first day of the fourth quarter, or more frequently if indicators ofpotential impairment exist. During the fourth quarter of 2008, as a result of significant declines in macroeconomic conditions, globalequity valuations depreciated. Both factors impacted the company’s market capitalization, and the company determined it wasnecessary to perform an interim impairment test of its goodwill and identifiable intangible assets. Based upon the results of suchtesting, the company concluded that a portion of its goodwill was impaired and, as such, recognized a non-cash impairment charge of$1.02 billion ($905.1 million net of related taxes or $7.49 per share on both a basic and diluted basis) as of December 31, 2008, ofwhich $716.9 million related to the company's global components business segment and $301.9 million related to the company'sglobal ECS business segment. The impairment charge did not impact the company’s consolidated cash flows, liquidity, capitalresources, and covenants under its existing revolving credit facility, asset securitization program, and other outstanding borrowings.

Operating Income (Loss)

The company recorded operating income of $272.8 million in 2009 as compared with an operating loss of $493.6 million in2008. Included in operating income for 2009 was the previously discussed restructuring, integration, and other charges of $105.5million. Included in the operating loss for 2008 was the previously discussed impairment charge associated with goodwill of $1.02billion and restructuring, integration, and other charges of $81.0 million.

SG&A decreased $301.7 million, or 18.8%, in 2009, as compared with 2008, on a sales decrease of 12.4%. The dollar decreasecompared with the year-earlier period, was due to the company's continuing efforts to streamline and simplify processes and to reduceexpenses in response to the decline in sales, as well as the impact of foreign exchange rates. This decrease was offset, in part, byexpenses incurred by LOGIX, which was acquired in June 2008. SG&A, as a percentage of sales, was 8.9% and 9.6% for 2009 and2008, respectively.

The company recorded an operating loss of $493.6 million in 2008 as compared with operating income of $686.9 million in2007. Included in the operating loss for 2008 was the previously discussed impairment charge associated with goodwill of $1.02billion and restructuring, integration, and other charges of $81.0 million. Included in operating income for 2007 was the previouslydiscussed restructuring, integration, and other charges of $11.7 million.

SG&A increased $87.4 million, or 5.7%, in 2008, as compared with 2007, on a sales increase of 4.9%. The dollar increase comparedwith the year-earlier period, was due to the impact of foreign exchange rates, expenses incurred by acquired companies, and increasedexpenditures related to the company's global ERP initiative. SG&A, as a percentage of sales, was 9.6% and 9.5% for 2008 and 2007,respectively.

28


Loss on Prepayment of Debt

During 2009, the company recorded a loss on prepayment of debt of $5.3 million ($3.2 million net of related taxes or $.03 per share onboth a basic and diluted basis), related to the repurchase of $130.5 million principal amount of its 9.15% senior notes due 2010. Theloss on prepayment of debt includes the premium paid and write-off of the deferred financing costs, offset by the gain for terminatingthe related interest rate swaps.

Loss on Write-Down of an Investment

During 2008, the company determined that an other-than-temporary decline in the fair value of its investment in Marubun Corporationoccurred and, accordingly, recognized a loss of $10.0 million ($.08 per share on both a basic and diluted basis) on the write-down ofthis investment.

Interest and Other Financing Expense, Net

Net interest and other financing expense decreased by 16.6% in 2009 to $83.3 million, compared with $99.9 million in 2008, primarilydue to lower interest rates on the company’s variable rate debt and lower average debt outstanding.

Net interest and other financing expense decreased by 1.7% in 2008 to $99.9 million, compared with $101.6 million in 2007, primarilydue to lower interest rates on the company’s variable rate debt offset, in part, by an increase in interest expense of $1.0 millionprimarily related to the settlement of certain international income tax matters (discussed in "Income Taxes" below).

Income Taxes

The company recorded a provision for income taxes of $65.4 million (an effective tax rate of 34.6%) for 2009. The company'sprovision and effective tax rate for 2009 were impacted by the previously discussed restructuring, integration, and other charges andloss on the prepayment of debt. Excluding the impact of the above-mentioned items, the company's effective tax rate was 32.5% for2009.

The company recorded a provision for income taxes of $16.7 million (an effective tax rate of (2.8%)) for 2008. During the fourthquarter of 2008, the company recorded a reduction of the provision of $8.5 million ($.07 per share on both a basic and diluted basis)primarily related to the settlement of certain international tax matters covering multiple tax years. The company's provision andeffective tax rate for 2008 were impacted by the previously discussed settlement of certain international income tax matters,impairment charge associated with goodwill, restructuring, integration, and other charges, and loss on the write-down of aninvestment. Excluding the impact of the above-mentioned items, the company's effective tax rate was 30.7% for 2008.

The company recorded a provision for income taxes of $180.7 million (an effective tax rate of 30.5%) for 2007. During 2007, thecompany recorded an income tax benefit of $6.0 million, net, ($.05 per share on both a basic and diluted basis) principally due to areduction in deferred income taxes as a result of the statutory tax rate change in Germany. These deferred income taxes primarilyrelated to the amortization of intangible assets for income tax purposes, which are not amortized for accounting purposes. Thecompany's provision and effective tax rate for 2007 were impacted by the aforementioned income tax benefit and the previouslydiscussed restructuring, integration, and other charges. Excluding the impact of the above-mentioned items, the company's effectivetax rate was 31.7% for 2007.

The company's provision for income taxes and effective tax rate are impacted by, among other factors, the statutory tax rates in thecountries in which it operates and the related level of income generated by these operations.

29


Net Income (Loss) Attributable to Shareholders

The company recorded net income attributable to shareholders of $123.5 million for 2009, compared with a net loss of $613.7 millionin the year-earlier period. Included in the net income for 2009 was the previously discussed restructuring, integration, and othercharges of $75.7 million and loss on the prepayment of debt of $3.2 million. Included in the net loss attributable to shareholders for2008 was the previously discussed impairment charge associated with goodwill of $905.1 million, restructuring, integration, and othercharges of $61.9 million, and loss on the write-down of an investment of $10.0 million, as well as, a reduction of the provision forincome taxes of $8.5 million and an increase in interest expense, net of related taxes, of $1.0 million related to the settlement ofcertain international income tax matters. Excluding the above-mentioned items, the decrease in net income attributable toshareholders was primarily the result of the sales declines in the global ECS business segment and the more profitable globalcomponents businesses in North America and Europe, as well as competitive pricing pressure impacting gross profit margins. Thesedecreases were offset, in part, by a reduction in SG&A due to the company’s continuing efforts to streamline and simplify processesand to reduce expenses in response to the decline in sales due to the worldwide economic recession, as well as a reduction in netinterest and other financing expense.

The company recorded a net loss of $613.7 million for 2008, compared with net income of $407.8 million in the year-earlier period.Included in the net loss for 2008 was the previously discussed impairment charge associated with goodwill of $905.1 million,restructuring, integration, and other charges of $61.9 million, and loss on the write-down of an investment of $10.0 million, as well as,a reduction of the provision for income taxes of $8.5 million and an increase in interest expense, net of related taxes, of $1.0 millionrelated to the settlement of certain international income tax matters. Included in net income for 2007 was the previously discussedrestructuring, integration, and other charges of $7.0 million and income tax benefit of $6.0 million, net, principally due to a reductionin deferred income tax as a result of the statutory tax rate change in Germany. Excluding the above-mentioned items, the decrease innet income in 2008 was primarily the result of the sales decline in the more profitable components businesses in North America andEurope and increased expenditures related to the company's global ERP initiative offset, in part, by increased sales in the global ECSbusiness segment and the global components businesses in the Asia Pacific region and by a lower effective tax rate.

Liquidity and Capital Resources

At December 31, 2009 and 2008, the company had cash and cash equivalents of $1.14 billion and $451.3 million, respectively.

During 2009, the net amount of cash provided by the company's operating activities was $849.9 million, the net amount of cash usedfor investing activities was $290.7 million, and the net amount of cash provided by financing activities was $113.7 million. The effectof exchange rate changes on cash was an increase of $12.9 million.

During 2008, the net amount of cash provided by the company's operating activities was $619.8 million, the net amount of cash usedfor investing activities was $492.7 million, and the net amount of cash used for financing activities was $111.1 million. The effect ofexchange rate changes on cash was a decrease of $12.5 million.

During 2007, the net amount of cash provided by the company's operating activities was $850.7 million, the net amount of cash usedfor investing activities was $665.5 million, and the net amount of cash used for financing activities was $82.2 million. The effect ofexchange rate changes on cash was an increase of $7.0 million.

30


Cash Flows from Operating Activities

The company maintains a significant investment in accounts receivable and inventories. As a percentage of total assets, accountsreceivable and inventories were approximately 58.4% and 66.2% at December 31, 2009 and 2008, respectively.

The net amount of cash provided by the company's operating activities during 2009 was $849.9 million and was primarily due toearnings from operations, adjusted for non-cash items, a reduction in inventory, and an increase in accounts payable. This was offset,in part, by a decrease in accrued expenses.

The net amount of cash provided by the company's operating activities during 2008 was $619.8 million and was primarily due toearnings from operations, adjusted for non-cash items, and a reduction in accounts receivable and inventory offset, in part, by adecrease in accounts payable.

The net amount of cash provided by the company's operating activities during 2007 was $850.7 million and was primarily due toearnings from operations, adjusted for non-cash items, a reduction in inventory, and an increase in accounts payable and accruedexpenses. This was offset, in part, by an increase in accounts receivable supporting increased sales.

Working capital, as a percentage of sales, was 12.1%, 13.4%, and 15.2% in 2009, 2008, and 2007, respectively.

Cash Flows from Investing Activities

The net amount of cash used for investing activities during 2009 was $290.7 million, primarily reflecting $170.1 million of cashconsideration paid for acquired businesses and $121.5 million for capital expenditures, offset, in part, by proceeds from the sale offacilities of $1.2 million. Included in the capital expenditures is $82.3 million related to the company's global ERP initiative.

During 2009, the company acquired Petsche, a leading provider of interconnect products, including specialty wire, cable, and harnessmanagement solutions, to the aerospace and defense markets for cash consideration of $170.1 million.

The net amount of cash used for investing activities during 2008 was $492.7 million, primarily reflecting $333.5 million of cashconsideration paid for acquired businesses and $158.7 million for capital expenditures. Included in capital expenditures is $113.4million related to the company's global ERP initiative.

During 2008, the company acquired Hynetic, a components distribution business in India, ACI, a distributor of electronic componentsused in defense and aerospace applications, LOGIX, a leading value-added distributor of midrange servers, storage, and software,Achieva, a value-added distributor of semiconductors and electro-mechanical devices, Excel Tech, the sole Broadcom distributor inKorea, and Eteq Components, a Broadcom-based components distribution business in the ASEAN region and China, for aggregatecash consideration of $319.9 million. In addition, the company paid $13.6 million to increase its ownership interest inmajority-owned subsidiaries.

The net amount of cash used for investing activities during 2007 was $665.5 million, primarily reflecting $539.6 million of cashconsideration paid for acquired businesses and $138.8 million for capital expenditures, offset, in part, by $13.0 million of cashproceeds, primarily related to the sale of the company's Lenexa, Kansas and Harlow, England facilities. Included in capitalexpenditure is $73.1 million related to the company's global ERP initiative.

During 2007, the company acquired KeyLink, a leading enterprise computing solutions distributor in North America, Adilam, aleading electronic components distributor in Australia and New Zealand, Centia/AKS, specialty distributors of access infrastructure,security, and virtualization software solutions in Europe, and UEC, a distributor of semiconductor and multimedia products in Japan,for aggregate cash consideration

31


of $506.9 million. In addition, the company paid $32.7 million to increase its ownership interest in Ultra Source from 70.7% to92.8%.

During the fourth quarter of 2006, the company initiated a global ERP effort to standardize processes worldwide and adoptbest-in-class capabilities. Implementation is expected to be phased-in over the next several years. For 2010, the estimated cash flowimpact of this initiative is expected to be in the $40 to $60 million range with the annual impact decreasing by approximately $10million in 2011. The company expects to finance these costs with cash flows from operations.

Cash Flows from Financing Activities

The net amount of cash provided by financing activities during 2009 was $113.7 million. The primary sources of cash from financingactivities were $297.4 million of net proceeds from a note offering and $4.2 million of proceeds from the exercise of stock options.The primary use of cash for financing activities for 2009 included $135.7 million of repurchases of senior notes, a $48.1 milliondecrease in short-term borrowings, $2.5 million of repurchases of common stock, and a $1.7 million shortfall in tax benefits fromstock-based compensation arrangements.

During 2009, the company repurchased $130.5 million principal amount of its 9.15% senior notes due 2010. The related loss on therepurchase, including the premium paid and write-off of the deferred financing costs, offset by the gain for terminating the relatedinterest rate swaps aggregated $5.3 million ($3.2 million net of related taxes or $.03 per share on both a basic and diluted basis) andwas recognized as a loss on prepayment of debt.

During 2009, the company completed the sale of $300.0 million principal amount of 6.00% notes due in 2020. The net proceeds ofthe offering of $297.4 million were used to repay a portion of the previously discussed 9.15% senior notes due 2010 and for generalcorporate purposes.

The net amount of cash used for financing activities during 2008 was $111.1 million, primarily reflecting $115.8 million ofrepurchases of common stock offset, in part, by $4.4 million of cash proceeds from the exercise of stock options.

The net amount of cash used for financing activities during 2007 was $82.2 million. Net repayments of short-term borrowings of$90.3 million, repayments of long-term borrowings of $169.1 million related to the company's 7% senior notes that were repaid inJanuary 2007 in accordance with their terms, and repurchases of common stock of $84.2 million were the primary uses of cash. Thiswas offset, in part, by net proceeds from long-term bank borrowings of $198.5 million, which include proceeds from a $200.0 millionterm loan due in 2012, proceeds from the exercise of stock options of $55.2 million, and $7.7 million related to excess tax benefitsfrom stock-based compensation arrangements.

On September 23, 2009, the company filed a shelf registration statement with the SEC registering debt securities, preferred stock,common stock and warrants of Arrow Electronics, Inc. that may be issued by the company from time to time. As set forth in the shelfregistration statement, the net proceeds from the sale of the offered securities may be used by the company for general corporatepurposes, including repayment of borrowings, working capital, capital expenditures, acquisitions and stock repurchases, or for suchother purposes as may be specified in the applicable prospectus supplement.

The company has an $800.0 million revolving credit facility with a group of banks that matures in January 2012. Interest onborrowings under the revolving credit facility is calculated using a base rate or a euro currency rate plus a spread based on thecompany's credit ratings (.425% at December 31, 2009). The facility fee related to the revolving credit facility is .125%.

The company has a $600.0 million asset securitization program collateralized by accounts receivable of certain of its North Americansubsidiaries which expires in March 2010. Interest on borrowings is calculated using a base rate or a commercial paper rate plus aspread, which is based on the company's credit ratings (.225% at December 31, 2009). The facility fee is .125%.

32


The company had no outstanding borrowings under the revolving credit facility or the asset securitization program at December 31,2009 and 2008. Both programs include terms and conditions that limit the incurrence of additional borrowings, limit the company'sability to pay cash dividends or repurchase stock, and require that certain financial ratios be maintained at designated levels. Thecompany was in compliance with all covenants as of December 31, 2009 and is currently not aware of any events that would causenon-compliance with any covenants in the future.

Management believes that company's current cash availability, its current borrowing capacity under its revolving credit facility andasset securitization program, its expected ability to generate future operating cash flows, and the company's access to capital marketsare sufficient to meet its projected cash flow needs for the foreseeable future.

Contractual Obligations

Payments due under contractual obligations at December 31, 2009 follow (in thousands):

Within1 Year

1-3Years

4-5Years

After5 Years Total

Debt $ 122,386 $ 213,157 $ 366,745 $ 695,760 $ 1,398,048 Interest on long-term debt 70,724 129,716 102,669 354,007 657,116 Capital leases 709 476 - - 1,185 Operating leases 53,036 74,631 42,297 14,180 184,144 Purchase obligations (a) 2,675,031 11,614 4,701 - 2,691,346 Other (b) 33,310 24,104 11,357 2,914 71,685 $ 2,955,196 $ 453,698 $ 527,769 $ 1,066,861 $ 5,003,524

(a) Amounts represent an estimate of non-cancelable inventory purchase orders and other contractual obligations related toinformation technology and facilities as of December 31, 2009. Most of the company's inventory purchases are pursuant toauthorized distributor agreements, which are typically cancelable by either party at any time or on short notice, usually withina few months.

(b) Includes estimates of contributions required to meet the requirements of several defined benefit plans. Amounts are subject tochange based upon the performance of plan assets, as well as the discount rate used to determine the obligation. Thecompany does not anticipate having to make required contributions to the plans beyond 2015. Also included are amountsrelating to personnel, facilities, customer termination, and certain other costs resulting from restructuring and integrationactivities.

Under the terms of various joint venture agreements, the company is required to pay its pro-rata share of the third party debt of thejoint ventures in the event that the joint ventures are unable to meet their obligations. At December 31, 2009, the company's pro-ratashare of this debt was approximately $6.1 million. The company believes there is sufficient equity in the joint ventures to meet theirobligations.

At December 31, 2009, the company had a liability for unrecognized tax benefits and a liability for the payment of related interesttotaling $82.2 million, of which approximately $3.3 million is expected to be paid within one year. For the remaining liability, due tothe uncertainties related to these tax matters, the company is unable to make a reasonably reliable estimate when cash settlement witha taxing authority will occur.

Off-Balance Sheet Arrangements

The company has no off-balance sheet financing or unconsolidated special-purpose entities.

33


Critical Accounting Policies and Estimates

The company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in theUnited States. The preparation of these financial statements requires the company to make significant estimates and judgments thataffect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingent assets and liabilities. Thecompany evaluates its estimates on an ongoing basis. The company bases its estimates on historical experience and on various otherassumptions that are believed reasonable under the circumstances; the results of which form the basis for making judgments about thecarrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimatesunder different assumptions or conditions.

The company believes the following critical accounting policies involve the more significant judgments and estimates used in thepreparation of its consolidated financial statements:

Revenue Recognition

The company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services are rendered,the sales price is determinable, and collectibility is reasonably assured. Revenue typically is recognized at time of shipment. Sales arerecorded net of discounts, rebates, and returns, which historically were not material.

A portion of the company's business involves shipments directly from its suppliers to its customers. In these transactions, the companyis responsible for negotiating price both with the supplier and customer, payment to the supplier, establishing payment terms with thecustomer, product returns, and has risk of loss if the customer does not make payment. As the principal with the customer, thecompany recognizes the sale and cost of sale of the product upon receiving notification from the supplier that the product was shipped.

The company has certain business with select customers and suppliers that is accounted for on an agency basis (that is, the companyrecognizes the fees associated with serving as an agent in sales with no associated cost of sales) in accordance with FASB ASC Topic605-45-45. Generally, these transactions relate to the sale of supplier service contracts to customers where the company has no futureobligation to perform under these contracts or the rendering of logistics services for the delivery of inventory for which the companydoes not assume the risks and rewards of ownership.

Accounts Receivable

The company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to makerequired payments. The allowances for doubtful accounts are determined using a combination of factors, including the length of timethe receivables are outstanding, the current business environment, and historical experience.

Inventories

Inventories are stated at the lower of cost or market. Write-downs of inventories to market value are based upon contractual provisionsgoverning price protection, stock rotation, and obsolescence, as well as assumptions about future demand and market conditions. Ifassumptions about future demand change and/or actual market conditions are less favorable than those projected by the company,additional write-downs of inventories may be required. Due to the large number of transactions and the complexity of managing theprocess around price protections and stock rotations, estimates are made regarding adjustments to the book cost of inventories. Actualamounts could be different from those estimated.

34


Investments

The company assesses its long-term investments accounted for as available-for-sale on a quarterly basis to determine whether declinesin market value below cost are other-than-temporary. When the decline is determined to be other-than-temporary, the cost basis for theindividual security is reduced and a loss is realized in the company's consolidated statement of operations in the period in which itoccurs. When the decline is determined to be temporary, the unrealized losses are included in the shareholders' equity section in thecompany's consolidated balance sheets in "Other." The company makes such determination based upon the quoted market price,financial condition, operating results of the investee, and the company's intent and ability to retain the investment over a period oftime, which is sufficient to allow for any recovery in market value. In addition, the company assesses the following factors:

� broad economic factors impacting the investee's industry; � publicly available forecasts for sales and earnings growth for the industry and investee; and � the cyclical nature of the investee's industry.

During 2008, the company determined that an other-than-temporary decline in the fair value of its investment in Marubun Corporationoccurred and, accordingly, recognized a loss of $10.0 million ($.08 per share on both a basic and diluted basis) on the write-down ofthis investment. The company could incur an additional impairment charge in future periods if, among other factors, the investee'sfuture earnings differ from currently available forecasts.

Income Taxes

The carrying value of the company's deferred tax assets is dependent upon the company's ability to generate sufficient future taxableincome in certain tax jurisdictions. Should the company determine that it is more likely than not that some portion or all of its deferredtax assets will not be realized, a valuation allowance to the deferred tax assets would be established in the period such determinationwas made.

It is the company's policy to provide for uncertain tax positions and the related interest and penalties based upon management'sassessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31,2009, the company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the company prevails inmatters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, thecompany's effective tax rate in a given financial statement period may be affected.

Financial Instruments

The company uses various financial instruments, including derivative financial instruments, for purposes other thantrading. Derivatives used as part of the company's risk management strategy are designated at inception as hedges and measured foreffectiveness both at inception and on an ongoing basis. The company enters into interest rate swap transactions that convert certainfixed-rate debt to variable-rate debt or variable-rate debt to fixed-rate debt in order to manage its targeted mix of fixed- andfloating-rate debt. The effective portion of the change in the fair value of interest rate swaps designated as fair value hedges isrecorded as a change to the carrying value of the related hedged debt, and the effective portion of the change in fair value of interestrate swaps designated as cash flow hedges is recorded in the shareholders' equity section in the company's consolidated balance sheetsin "Other." The ineffective portion of the interest rate swaps, if any, is recorded in "Interest and other financing expense, net" in thecompany's consolidated statements of operations.

The company enters into cross-currency swaps to hedge a portion of its net investment in euro-denominated net assets. Thecompany’s cross-currency swaps are derivatives designated as net investment hedges. The effective portion of the change in the fairvalue of derivatives designated as net investment hedges is recorded in "Foreign currency translation adjustment" included in thecompany's consolidated balance sheets and any ineffective portion is recorded in earnings. The company uses the hypotheticalderivative method to assess the effectiveness of its net investment hedge on a quarterly

35


basis. Contingencies and Litigation

The company is subject to proceedings, lawsuits, and other claims related to environmental, regulatory, labor, product, tax, and othermatters and assesses the likelihood of an adverse judgment or outcome for these matters, as well as the range of potential losses. Adetermination of the reserves required, if any, is made after careful analysis. The reserves may change in the future due to newdevelopments impacting the probability of a loss, the estimate of such loss, and the probability of recovery of such loss from thirdparties.

Restructuring and Integration

The company recorded charges in connection with restructuring its businesses, and the integration of acquired businesses. These itemsprimarily include employee separation costs and estimates related to the consolidation of facilities (net of sub-lease income),contractual obligations, and the valuation of certain assets. Actual amounts could be different from those estimated.

Stock-Based Compensation

The company records share-based payment awards exchanged for employee services at fair value on the date of grant and expensesthe awards in the consolidated statements of operations over the requisite employee service period. Stock-based compensationexpense includes an estimate for forfeitures and is generally recognized over the expected term of the award on a straight-linebasis. Stock-based compensation expense related to awards with a market or performance condition is recognized over the expectedterm of the award utilizing the graded vesting method. The fair value of stock options is determined using the Black-Scholesvaluation model and the assumptions shown in Note 12 of the Notes to Consolidated Financial Statements. The assumptions used incalculating the fair value of share-based payment awards represent management's best estimates. The company's estimates may beimpacted by certain variables including, but not limited to, stock price volatility, employee stock option exercise behaviors, additionalstock option grants, estimates of forfeitures, the company's performance, and related tax impacts.

Employee Benefit Plans

The costs and obligations of the company's defined benefit pension plans are dependent on actuarial assumptions. The two criticalassumptions used, which impact the net periodic pension cost (income) and the benefit obligation, are the discount rate and expectedreturn on plan assets. The discount rate represents the market rate for a high quality corporate bond, and the expected return on planassets is based on current and expected asset allocations, historical trends, and expected returns on plan assets. These key assumptionsare evaluated annually. Changes in these assumptions can result in different expense and liability amounts.

Costs in Excess of Net Assets of Companies Acquired

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. The company tests goodwillfor impairment annually as of the first day of the fourth quarter, and when an event occurs or circumstances change such that it ismore likely than not that an impairment may exist, such as (i) a significant adverse change in legal factors or in business climate, (ii)an adverse action or assessment by a regulator, (iii) unanticipated competition, (iv) a loss of key personnel, (v) a more-likely-than-notsale or disposal of all or a significant portion of a reporting unit, (vi) the testing for recoverability of a significant asset group within areporting unit, or (vii) the recognition of a goodwill impairment loss of a subsidiary that is a component of the reporting unit. Inaddition, goodwill is required to be tested for impairment after a portion of the goodwill is allocated to a business targeted for disposal.

36


Goodwill is reviewed for impairment utilizing a two-step process. The first step of the impairment test requires the identification ofthe reporting units and comparison of the fair value of each of these reporting units to the respective carrying value. The company'sreporting units are defined as each of the three regional businesses within the global components business segment, which are NorthAmerica, EMEASA, and Asia/Pacific and each of the two regional businesses within the global ECS business segment, which areNorth America and Europe. Prior to 2009, the North America and Europe reporting units within the global ECS business segmentwere evaluated as a single reporting unit. If the carrying value of the reporting unit is less than its fair value, no impairment exists andthe second step is not performed. If the carrying value of the reporting unit is higher than its fair value, the second step must beperformed to compute the amount of the goodwill impairment, if any. In the second step, the impairment is computed by comparingthe implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reportingunit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized for the excess.

The company generally estimates the fair value of a reporting unit using a three-year weighted average multiple of earnings beforeinterest and taxes from comparable companies, which utilizes a look-back approach. The assumptions utilized in the evaluation of theimpairment of goodwill under this approach include the identification of reporting units and the selection of comparable companies,which are critical accounting estimates subject to change. During 2009 and 2008, as a result of a significant decline inmacroeconomic conditions, the company determined that it was prudent to supplement its historical goodwill impairment testingmethodology with a forward-looking discounted cash flow methodology. The assumptions included in the discounted cash flowmethodology included forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetualgrowth rates, and long-term discount rates, among others, all of which require significant judgments by management. During 2009and 2008, the company also reconciled its discounted cash flow analysis to its current market capitalization allowing for a reasonablecontrol premium. As of the first day of the fourth quarters of 2007, 2008, and 2009, the company's annual impairment testing did notindicate impairment at any of the company's reporting units.

During the fourth quarter of 2008, as a result of significant declines in macroeconomic conditions, global equity valuationsdepreciated. Both factors impacted the company's market capitalization, and the company determined it was necessary to perform aninterim goodwill impairment test as of December 31, 2008. Based upon the results of the discounted cash flow approach as ofDecember 31, 2008, the carrying value of the global ECS reporting unit and the EMEASA and Asia/Pacific reporting units within theglobal components business segment were higher than their fair value and, accordingly, the company performed a step-twoimpairment analysis. The fair value of the North America reporting unit within the global components business segment was higherthan its carrying value and a step-two analysis was not required. The results of the step-two impairment analysis indicated thatgoodwill related to the EMEASA and Asia/Pacific reporting units within the global components business segment were fully impairedand the goodwill related to the global ECS business segment was partially impaired. The company recognized a total non-cashimpairment charge of $1.02 billion ($905.1 million net of related taxes or $7.49 per share on both a basic and diluted basis) as ofDecember 31, 2008, of which $716.9 million related to the company's global components business segment and $301.9 million relatedto the company's global ECS business segment. The impairment charge did not impact the company’s consolidated cash flows,liquidity, capital resources, and covenants under its existing revolving credit facility, asset securitization program, and otheroutstanding borrowings.

A continued decline in general economic conditions or global equity valuations, could impact the judgments and assumptions aboutthe fair value of the company's business. If general economic conditions or global equity valuations continue to decline, the companycould be required to record an additional impairment charge in the future, which could impact the company’s consolidated balancesheet, as well as the company’s consolidated statement of operations. If the company was required to recognize an additionalimpairment charge in the future, the charge would not impact the company’s consolidated cash flows, current liquidity, capitalresources, and covenants under its existing revolving credit facility, asset securitization program, and other outstanding borrowings.

37


As of December 31, 2009, the company has $926.3 million of goodwill, of which approximately $473.4 million was allocated to theNorth America reporting unit within the global components business segment and $255.3 million and $197.6 million was allocated tothe North America and Europe reporting units within the global ECS business segment, respectively. As of the date of the company'slatest impairment test, the fair value of the North America reporting unit within the global components business segment and the fairvalue of the North America and Europe reporting units within the global ECS business segment exceeded their carrying values byapproximately 45%, 337%, and 138%, respectively.

Impairment of Long-Lived Assets

The company reviews long-lived assets, including property, plant and equipment and identifiable intangible assets, for impairmentwhenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. The company also testsindefinite-lived intangible assets, consisting of acquired trade names, for impairment at least annually as of the first day of the fourthquarter. If the fair value is less than the carrying amount of the asset, a loss is recognized for the difference.

During 2008, the company recorded an impairment charge of $25.4 million in connection with an approved plan to market and sell abuilding and related land in North America within the company's global components business segment. The company wrote-down thecarrying values of the building and related land to their estimated fair values less cost to sell and ceased recordingdepreciation. During 2009, the company recorded an additional impairment charge of $2.1 million as a result of further declines inreal estate valuations. As of December 31, 2009 and 2008, the assets were designated as assets held-for-sale, and the carrying valuesof $7.4 million and $9.5 million, respectively, were included in "Prepaid expenses and other assets" on the company's consolidatedbalance sheets. The sale is expected to be completed in the first quarter of 2010.

Factors which may cause an impairment of long-lived assets include significant changes in the manner of use of these assets, negativeindustry or market trends, a significant underperformance relative to historical or projected future operating results, or a likely sale ordisposal of the asset before the end of its estimated useful life. If any of these factors exist, the company is required to test thelong-lived asset for recoverability and may be required to recognize an impairment charge for all or a portion of the asset's carryingvalue.

During the fourth quarter of 2008, as a result of significant declines in macroeconomic conditions, global equity valuationsdepreciated. Both factors impacted the company’s market capitalization, and the company determined it was necessary to review therecoverability of its long-lived assets to be held and used, including property, plant and equipment and identifiable intangible assets,by comparing the carrying value of the related asset groups to the undiscounted cash flows directly attributable to the asset groupsover the estimated useful life of those assets. Based upon the results of such tests as of December 31, 2008, the company’s long-livedassets to be held and used were not impaired.

Shipping and Handling Costs

Shipping and handling costs are reported as either a component of cost of products sold or SG&A. The company reports shipping andhandling costs, primarily related to outbound freight, in the consolidated statements of operations as a component of SG&A. If thecompany included such costs in cost of products sold, gross profit margin as a percentage of sales for 2009 would decrease from11.9% to 11.6% with no impact on reported earnings.

Impact of Recently Issued Accounting Standards

In October 2009, the FASB issued Accounting Standards Update No. 2009-13, "Multiple-Deliverable Revenue Arrangements" ("ASUNo. 2009-13"). ASU No. 2009-13 amends guidance included within ASC Topic 605-25 to require an entity to use an estimated sellingprice when vendor specific objective evidence or acceptable third party evidence does not exist for any products or services includedin a

38


multiple element arrangement. The arrangement consideration should be allocated among the products and services based upon theirrelative selling prices, thus eliminating the use of the residual method of allocation. ASU No. 2009-13 also requires expandedqualitative and quantitative disclosures regarding significant judgments made and changes in applying this guidance. ASU No.2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or afterJune 15, 2010. Early adoption and retrospective application are also permitted. The company is currently evaluating the impact ofadopting the provisions of ASU No. 2009-13.

In October 2009, the FASB issued Accounting Standards Update No. 2009-14, "Certain Revenue Arrangements That IncludeSoftware Elements" ("ASU No. 2009-14"). ASU No. 2009-14 amends guidance included within ASC Topic 985-65 to excludetangible products containing software components and non-software components that function together to deliver the product’sessential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to followthe guidance of ASU No. 2009-13. ASU No. 2009-14 is effective prospectively for revenue arrangements entered into or materiallymodified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. Thecompany is currently evaluating the impact of adopting the provisions of ASU No. 2009-14.

In June 2009, the FASB issued FASB Statement No. 166, "Accounting for Transfers of Financial Assets, an amendment of FASBStatement No. 140" ("Statement No. 166"), codified in ASC Topic 810-10. Statement No. 166, among other things, eliminates theconcept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additionaldisclosures about transfers of financial assets. Statement No. 166 is effective for annual reporting periods beginning after November15, 2009. The adoption of the provisions of Statement No. 166 is not anticipated to impact the company's consolidated financialposition or results of operations.

In June 2009, the FASB issued FASB Statement No. 167, "Amendments to FASB Interpretation No. ("FIN") 46(R)" ("Statement No.167"), codified in ASC Topic 810-10. Statement No. 167, among other things, requires a qualitative rather than a quantitative analysisto determine the primary beneficiary of a variable interest entity ("VIE"), amends FIN 46(R)’s consideration of related partyrelationships in the determination of the primary beneficiary of a VIE, amends certain guidance in FIN 46(R) for determining whetheran entity is a VIE, requires continuous assessments of whether an enterprise is the primary beneficiary of a VIE, and requiresenhanced disclosures about an enterprise’s involvement with a VIE. Statement No. 167 is effective for annual reporting periodsbeginning after November 15, 2009. The adoption of the provisions of Statement No. 167 is not anticipated to impact the company'sconsolidated financial position or results of operations.

Information Relating to Forward-Looking Statements

This report includes forward-looking statements that are subject to numerous assumptions, risks, and uncertainties, which could causeactual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: industryconditions, the company's implementation of its new enterprise resource planning system, changes in product supply, pricing andcustomer demand, competition, other vagaries in the global components and global ECS markets, changes in relationships with keysuppliers, increased profit margin pressure, the effects of additional actions taken to become more efficient or lower costs, and thecompany’s ability to generate additional cash flow. Forward-looking statements are those statements, which are not statements ofhistorical 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 arecautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they aremade. The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

39


Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The company is exposed to market risk from changes in foreign currency exchange rates and interest rates.

Foreign Currency Exchange Rate Risk

The company, as a large, global organization, faces exposure to adverse movements in foreign currency exchange rates. Theseexposures may change over time as business practices evolve and could materially impact the company's financial results in the future.The company's primary exposure relates to transactions in which the currency collected from customers is different from the currencyutilized to purchase the product sold in Europe, the Asia Pacific region, Canada, and Latin America. The company's policy is to hedgesubstantially all such currency exposures for which natural hedges do not exist. Natural hedges exist when purchases and sales withina specific country are both denominated in the same currency and, therefore, no exposure exists to hedge with foreign exchangeforward, option, or swap contracts (collectively, the "foreign exchange contracts"). In many regions in Asia, for example, sales andpurchases are primarily denominated in U.S. dollars, resulting in a "natural hedge." Natural hedges exist in most countries in whichthe company operates, although the percentage of natural offsets, as compared with offsets that need to be hedged by foreign exchangecontracts, will vary from country to country. The company does not enter into foreign exchange contracts for trading purposes. Therisk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the company minimizes bylimiting its counterparties to major financial institutions. The fair values of the foreign exchange contracts, which are nominal, areestimated using market quotes. The notional amount of the foreign exchange contracts at December 31, 2009 and 2008 was $294.9million and $315.0 million, respectively.

The translation of the financial statements of the non-United States operations is impacted by fluctuations in foreign currencyexchange rates. The change in consolidated sales and operating income was impacted by the translation of the company's internationalfinancial statements into U.S. dollars. This resulted in decreased sales of $350.7 million and decreased operating income of $18.5million for 2009, compared with the year-earlier period, based on 2008 sales and operating income at the average rate for 2009. Salesand operating income would decrease by approximately $424.4 million and $.9 million, respectively, if average foreign exchange rateshad declined by 10% against the U.S. dollar in 2009. These amounts were determined by considering the impact of a hypotheticalforeign exchange rate on the sales and operating income of the company's international operations.

In May 2006, the company entered into a cross-currency swap, with a maturity date of July 2011, for approximately $100.0 million or€78.3 million (the "2006 cross-currency swap") to hedge a portion of its net investment in euro-denominated net assets. The 2006cross-currency swap is designated as a net investment hedge and effectively converts the interest expense on $100.0 million oflong-term debt from U.S. dollars to euros. As the notional amount of the 2006 cross-currency swap is expected to equal a comparableamount of hedged net assets, no material ineffectiveness is expected. The 2006 cross-currency swap had a negative fair value of $12.5million and $10.0 million at December 31, 2009 and 2008, respectively.

In October 2005, the company entered into a cross-currency swap, with a maturity date of October 2010, for approximately $200.0million or €168.4 million (the "2005 cross-currency swap") to hedge a portion of its net investment in euro-denominated netassets. The 2005 cross-currency swap is designated as a net investment hedge and effectively converts the interest expense on $200.0million of long-term debt from U.S. dollars to euros. As the notional amount of the 2005 cross-currency swap is expected to equal acomparable amount of hedged net assets, no material ineffectiveness is expected. The 2005 cross-currency swap had a negative fairvalue of $41.9 million and $36.5 million at December 31, 2009 and 2008, respectively.

40


Interest Rate Risk

The company’s interest expense, in part, is sensitive to the general level of interest rates in North America, Europe, and the AsiaPacific region. The company historically has managed its exposure to interest rate risk through the proportion of fixed-rate andfloating-rate debt in its total debt portfolio. Additionally, the company utilizes interest rate swaps in order to manage its targeted mixof fixed- and floating-rate debt.

At December 31, 2009, approximately 56% of the company’s debt was subject to fixed rates, and 44% of its debt was subject tofloating rates. A one percentage point change in average interest rates would not materially impact net interest and other financingexpense in 2009. This was determined by considering the impact of a hypothetical interest rate on the company’s average floating rateon investments and outstanding debt. This analysis does not consider the effect of the level of overall economic activity that couldexist. In the event of a change in the level of economic activity, which may adversely impact interest rates, the company could likelytake actions to further mitigate any potential negative exposure to the change. However, due to the uncertainty of the specific actionsthat might be taken and their possible effects, the sensitivity analysis assumes no changes in the company’s financial structure.

In June 2004, the company entered into interest rate swaps, with an aggregate notional amount of $200.0 million. The swaps modifythe company's interest rate exposure by effectively converting the fixed 9.15% senior notes to a floating rate, based on the six-monthU.S. dollar LIBOR plus a spread (an effective rate of 4.94% and 8.19% at December 31, 2009 and 2008, respectively), through itsmaturity. In 2009, the company terminated $130.5 million aggregate notional amount of the interest rate swaps upon the repayment ofa portion of the 9.15% senior notes. The swaps are classified as fair value hedges and had a fair value of $2.0 million and $9.4 millionat December 31, 2009 and 2008, respectively.

In June 2004 and November 2009, the company entered into interest rate swaps, with an aggregate notional amount of $275.0million. The swaps modify the company's interest rate exposure by effectively converting a portion of the fixed 6.875% senior notesto a floating rate, based on the six-month U.S. dollar LIBOR plus a spread (an effective rate of 4.18% and 5.01% at December 31,2009 and 2008, respectively), through its maturity. The swaps are classified as fair value hedges and had a fair value of $9.6 millionand $12.0 million at December 31, 2009 and 2008, respectively.

41


Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and ShareholdersArrow Electronics, Inc. We have audited the accompanying consolidated balance sheets of Arrow Electronics, Inc. (the "company") as of December 31, 2009and 2008 and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period endedDecember 31, 2009. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financialstatements and the schedule are the responsibility of the company’s management. Our responsibility is to express an opinion on thesefinancial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position ofArrow Electronics, Inc. at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for each ofthe three years in the period ended December 31, 2009 in conformity with U.S. generally accepted accounting principles. Also, in ouropinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole,presents fairly in all material respects the information set forth therein.

As discussed in Note 2 to the consolidated financial statements, the company adopted the guidance issued in Financial AccountingStandards Board ("FASB") Statement No. 141(R), "Business Combinations" (codified in FASB Accounting Standards CodificationTopic 805, "Business Combinations") on January 1, 2009.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ArrowElectronics, Inc.’s internal control over financial reporting as of December 31, 2009, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our reportdated February 3, 2010 expressed an unqualified opinion thereon. /s/ ERNST & YOUNG LLP New York, New YorkFebruary 3, 2010

42


ARROW ELECTRONICS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data) Years Ended December 31, 2009 2008 2007 Sales $ 14,684,101 $ 16,761,009 $ 15,984,992 Costs and expenses:

Cost of products sold 12,933,207 14,478,296 13,699,715 Selling, general and administrative expenses 1,305,566 1,607,261 1,519,908 Depreciation and amortization 67,027 69,286 66,719 Restructuring, integration, and other charges 105,514 80,955 11,745 Impairment charge - 1,018,780 -

14,411,314 17,254,578 15,298,087 Operating income (loss) 272,787 (493,569) 686,905 Equity in earnings of affiliated companies 4,731 6,549 6,906 Loss on prepayment of debt 5,312 - - Loss on the write-down of an investment - 10,030 - Interest and other financing expense, net 83,285 99,863 101,628 Income (loss) before income taxes 188,921 (596,913) 592,183 Provision for income taxes 65,416 16,722 180,697 Consolidated net income (loss) 123,505 (613,635) 411,486 Noncontrolling interests (7) 104 3,694 Net income (loss) attributable to shareholders $ 123,512 $ (613,739) $ 407,792 Net income (loss) per share:

Basic $ 1.03 $ (5.08) $ 3.31 Diluted $ 1.03 $ (5.08) $ 3.28

Average number of shares outstanding: Basic 119,800 120,773 123,176 Diluted 120,489 120,773 124,429

See accompanying notes.

43


ARROW ELECTRONICS, INC.CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

December 31, 2009 2008 (A) ASSETS Current assets:

Cash and cash equivalents $ 1,137,007 $ 451,272 Accounts receivable, net 3,136,141 3,087,290 Inventories 1,397,668 1,626,559 Prepaid expenses and other assets 168,812 180,647 Total current assets 5,839,628 5,345,768

Property, plant and equipment, at cost: Land 23,584 25,127 Buildings and improvements 137,539 147,138 Machinery and equipment 779,105 698,156

940,228 870,421 Less: Accumulated depreciation and amortization (479,522) (459,881)

Property, plant and equipment, net 460,706 410,540 Investments in affiliated companies 53,010 46,788 Cost in excess of net assets of companies acquired 926,296 905,848 Other assets 482,726 409,341

Total assets $ 7,762,366 $ 7,118,285 LIABILITIES AND EQUITY Current liabilities:

Accounts payable $ 2,763,237 $ 2,459,922 Accrued expenses 445,914 455,547 Short-term borrowings, including current portion of long-term debt 123,095 52,893 Total current liabilities 3,332,246 2,968,362

Long-term debt 1,276,138 1,223,985 Other liabilities 236,685 248,888 Equity:

Shareholders' equity: Common stock, par value $1:

Authorized – 160,000 shares in 2009 and 2008 Issued – 125,287 and 125,048 shares in 2009 and 2008, respectively 125,287 125,048

Capital in excess of par value 1,056,704 1,035,302 Treasury stock (5,459 and 5,740 shares in 2009 and 2008, respectively), at cost (179,152) (190,273)Retained earnings 1,694,517 1,571,005 Foreign currency translation adjustment 229,019 172,528 Other (9,415) (36,912)

Total shareholders' equity 2,916,960 2,676,698 Noncontrolling interests 337 352

Total equity 2,917,297 2,677,050 Total liabilities and equity $ 7,762,366 $ 7,118,285

(A) Prior period amounts were reclassified to conform to the current year presentation as a result of the adoption of theAccounting Standards Codification Topic 810-10-65. See Note 1 of the Notes to the Consolidated Financial Statementsfor additional information.


44


ARROW ELECTRONICS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Years Ended December 31, 2009 2008 2007 Cash flows from operating activities: Consolidated net income (loss) $ 123,505 $ (613,635) $ 411,486

Adjustments to reconcile consolidated net income (loss) to net cashprovided by operations:

Depreciation and amortization 67,027 69,286 66,719 Amortization of stock-based compensation 33,017 18,092 21,389 Amortization of deferred financing costs and discount on notes 2,313 2,162 2,144 Equity in earnings of affiliated companies (4,731) (6,549) (6,906)Deferred income taxes 19,313 (88,212) 8,661 Restructuring, integration, and other charges 75,720 61,876 7,036 Impairment charge - 1,018,780 - Impact of settlement of tax matters - (7,488) - Excess tax benefits from stock-based compensation arrangements 1,731 (161) (7,687)Loss on prepayment of debt 3,228 - - Loss on the write-down of an investment - 10,030 -

Change in assets and liabilities, net of effects of acquired businesses: Accounts receivable 2,302 269,655 (279,636)Inventories 286,626 85,489 116,657 Prepaid expenses and other assets 12,139 11,504 (19,315)Accounts payable 304,295 (191,669) 475,155 Accrued expenses (92,587) 2,977 32,458 Other 15,957 (22,338) 22,582 Net cash provided by operating activities 849,855 619,799 850,743 Cash flows from investing activities: Acquisition of property, plant and equipment (121,516) (158,688) (138,834)Cash consideration paid for acquired businesses (170,064) (333,491) (539,618)Proceeds from sale of facilities 1,153 - 12,996 Other (272) (512) (23)Net cash used for investing activities (290,699) (492,691) (665,479) Cash flows from financing activities: Change in short-term borrowings (48,144) 2,604 (90,318)Repayment of long-term bank borrowings (29,400) (3,953,950) (2,312,251)Proceeds from long-term bank borrowings 29,400 3,951,461 2,510,800 Repurchase of senior notes (135,658) - (169,136) Net proceeds from note offering 297,430 - - Proceeds from exercise of stock options 4,234 4,392 55,228 Excess tax benefits from stock-based compensation arrangements (1,731) 161 7,687 Repurchases of common stock (2,478) (115,763) (84,236)Net cash provided by (used for) financing activities 113,653 (111,095) (82,226)Effect of exchange rate changes on cash 12,926 (12,472) 6,963 Net increase in cash and cash equivalents 685,735 3,541 110,001 Cash and cash equivalents at beginning of year 451,272 447,731 337,730 Cash and cash equivalents at end of year $ 1,137,007 $ 451,272 $ 447,731


45


ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF EQUITY(In thousands)

CommonStockat ParValue

Capitalin Excess

of ParValue

TreasuryStock

RetainedEarnings

ForeignCurrency

TranslationAdjustment

OtherComprehensiveIncome (Loss)

NoncontrollingInterests Total

Balance at December31, 2006 $ 122,626 $ 943,958 $ (5,530) $ 1,787,746 $ 155,166 $ (7,407) $ 13,794 $ 3,010,353

Consolidated net income - - - 407,792 - - 3,694 411,486 Translation adjustments - - - - 157,589 - (90) 157,499 Unrealized gain (loss)

on securities, net - - - - - 648 (111) 537 Unrealized loss on

interest rate swapsdesignated as cashflow hedges, net - - - - - (94) - (94)

Other employee benefitplan items, net - - - - - (1,867) - (1,867)Comprehensiveincome 567,561

Amortization ofstock-basedcompensation - 21,389 - - - - - 21,389

Shares issued forstock-basedcompensation awards 2,413 50,473 2,197 - - - - 55,083

Tax benefits related tostock-basedcompensation awards - 9,791 - - - - - 9,791

Repurchase of commonstock - - (84,236) - - - - (84,236)

Purchase of subsidiaryshares fromnoncontrollinginterest - - - - - - (12,143) (12,143)

Adjustment to initiallyapply change inaccounting forsabbatical liability - - - (10,794) - - - (10,794)

Balance at December31, 2007 125,039 1,025,611 (87,569) 2,184,744 312,755 (8,720) 5,144 3,557,004 Consolidated net income(loss) - - - (613,739) - - 104 (613,635)Translation adjustments - - - - (140,227) - (127) (140,354)Unrealized loss on

securities, net - - - - - (14,678) - (14,678)Unrealized loss on

interest rate swapsdesignated as cashflow hedges, net - - - - - (1,032) - (1,032)

Other employee benefitplan items, net - - - - - (12,482) - (12,482)Comprehensive loss (782,181)

Amortization ofstock-basedcompensation - 18,092 - - - - - 18,092

Shares issued forstock-basedcompensation awards 9 (8,719) 13,059 - - - - 4,349

Tax benefits related tostock-basedcompensation awards - 318 - - - - - 318

Repurchase of commonstock - - (115,763) - - - - (115,763)

Purchase of subsidiaryshares fromnoncontrollinginterest - - - - - - (4,769) (4,769)

Balance at December31, 2008 $ 125,048 $ 1,035,302 $ (190,273) $ 1,571,005 $ 172,528 $ (36,912) $ 352 $ 2,677,050

46


ARROW ELECTRONICS, INC.CONSOLIDATED STATEMENTS OF EQUITY (continued)

(In thousands)

CommonStockat ParValue

Capitalin Excess

of ParValue

TreasuryStock

RetainedEarnings

ForeignCurrency

TranslationAdjustment

OtherComprehensiveIncome (Loss)

NoncontrollingInterests Total

Balance at December 31, 2008 $ 125,048 $ 1,035,302 $ (190,273) $ 1,571,005 $ 172,528 $ (36,912) $ 352 $ 2,677,050 Consolidated net income (loss) - - - 123,512 - - (7) 123,505 Translation adjustments - - - - 56,491 - (8) 56,483 Unrealized gain on securities,

net - - - - - 22,844 - 22,844 Unrealized gain on interest rate

swaps designated as cashflow hedges, net - - - - - 1,132 - 1,132

Other employee benefit planitems, net - - - - - 3,521 - 3,521

Comprehensive income 207,485 Amortization of stock-based

compensation - 33,017 - - - - - 33,017 Shares issued for stock-based

compensation awards 239 (9,604) 13,599 - - - - 4,234 Tax benefits related to

stock-based compensationawards - (2,011) - - - - - (2,011)

Repurchase of common stock - - (2,478) - - - - (2,478)Balance at December 31, 2009 $ 125,287 $ 1,056,704 $ (179,152) $ 1,694,517 $ 229,019 $ (9,415) $ 337 $ 2,917,297


47


ARROW ELECTRONICS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

1. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. All significantintercompany transactions are eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires thecompany to make significant estimates and assumptions that affect the amounts reported in the consolidated financial statements andaccompanying notes. Actual results could differ from those estimates.

Subsequent Events

The company evaluated subsequent events through February 3, 2010, the issuance date of these consolidated financial statements.

Accounting Standards Codification

During 2009, the company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update No. 2009-01,"Amendments based on Statement of Financial Accounting Standards No. 168 – The FASB Accounting Standards Codification andthe Hierarchy of Generally Accepted Accounting Principles" (the "Codification"). The Codification became the single source ofauthoritative GAAP in the United States, other than rules and interpretive releases issued by the United States Securities and ExchangeCommission ("SEC"). The Codification reorganized GAAP into a topical format that eliminates the previous GAAP hierarchy andinstead established two levels of guidance – authoritative and nonauthoritative. All non-grandfathered, non-SEC accounting literaturethat was not included in the Codification became nonauthoritative. The adoption of the Codification did not change previous GAAP,but rather simplified user access to all authoritative literature related to a particular accounting topic in one place. Accordingly, theadoption had no impact on the company’s consolidated financial position or results of operations. All prior references to previousGAAP in the company’s consolidated financial statements were updated for the new references under the Codification.

Noncontrolling Interests

Effective January 1, 2009, the company adopted the FASB Accounting Standards Codification ("ASC") Topic 810-10-65. ASC Topic810-10-65 requires that noncontrolling interests be reported as a component of equity; net income attributable to the parent and thenoncontrolling interest be separately identified in the consolidated results of operations; changes in a parent's ownership interest betreated as equity transactions if control is maintained; and upon a loss of control, any gain or loss on the interest be recognized in theconsolidated results of operations. ASC Topic 810-10-65 also requires expanded disclosures to clearly identify and distinguishbetween the interests of the parent and the interests of the noncontrolling owners. The adoption of the provisions of ASC Topic810-10-65 did not materially impact the company's consolidated financial position or results of operations. Prior period amounts werereclassified to conform to the current period presentation.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments, which are readily convertible into cash, with original maturities of three monthsor less.

48




Inventories

Inventories are stated at the lower of cost or market. Cost approximates the first-in, first-out method.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful livesof the assets. The estimated useful lives for depreciation of buildings is generally 20 to 30 years, and the estimated useful lives ofmachinery and equipment is generally three to ten years. Leasehold improvements are amortized over the shorter of the term of therelated lease or the life of the improvement. Long-lived assets are reviewed for impairment whenever changes in circumstances orevents may indicate that the carrying amounts are not recoverable. If the fair value is less than the carrying amount of the asset, a lossis recognized for the difference.

Software Development Costs

The company capitalizes certain internal and external costs incurred to acquire or create internal-use software. Capitalized softwarecosts are amortized on a straight-line basis over the estimated useful life of the software, which is generally three to seven years.

Identifiable Intangible Assets

Identifiable intangible assets are generally the result of acquisitions and consist primarily of customer relationships, trade names,non-competition agreements, a long-term procurement agreement, customer databases, and sales backlog. Identifiable intangibleassets are included in "Other assets" in the company's consolidated balance sheets. Amortization of definite-lived intangible assets iscomputed on the straight-line method over the estimated useful lives of the assets, while indefinite-lived intangible assets are notamortized. The weighted average useful life of customer relationships is approximately 12 years. The useful life of other intangibleassets ranges from one to five years. Identifiable intangible assets are reviewed for impairment whenever changes in circumstances orevents may indicate that the carrying amounts are not recoverable. The company also tests indefinite-lived intangible assets,consisting of acquired trade names, for impairment at least annually as of the first day of the fourth quarter. If the fair value is lessthan the carrying amount of the asset, a loss is recognized for the difference.

Investments

Investments are accounted for using the equity method if the investment provides the company the ability to exercise significantinfluence, but not control, over an investee. Significant influence is generally deemed to exist if the company has an ownershipinterest in the voting stock of the investee between 20% and 50%, although other factors, such as representation on the investee'sBoard of Directors, are considered in determining whether the equity method is appropriate. The company records its investments inequity method investees meeting these characteristics as "Investments in affiliated companies" in the company's consolidated balancesheets.

All other equity investments, which consist of investments for which the company does not possess the ability to exercise significantinfluence, are accounted for under the cost method, if private, or as available-for-sale, if public, and are included in "Other assets" inthe company's consolidated balance sheets. Under the cost method of accounting, investments are carried at cost and are adjusted onlyfor other-than-temporary declines in realizable value and additional investments. The company assesses its long-term investmentsaccounted for as available-for-sale on a quarterly basis to determine whether declines in market value below cost areother-than-temporary. When the decline is

49




determined to be other-than-temporary, the cost basis for the individual security is reduced and a loss is realized in the company'sconsolidated statement of operations in the period in which it occurs. When the decline is determined to be temporary, the unrealizedlosses are included in the shareholders' equity section in the company's consolidated balance sheets in "Other." The company makessuch determination based upon the quoted market price, financial condition, operating results of the investee, and the company's intentand ability to retain the investment over a period of time, which is sufficient to allow for any recovery in market value. In addition, thecompany assesses the following factors:

• broad economic factors impacting the investee's industry; • publicly available forecasts for sales and earnings growth for the industry and investee; and • the cyclical nature of the investee's industry.

The company could incur an impairment charge in future periods if, among other factors, the investee's future earnings differ fromcurrently available forecasts.

Cost in Excess of Net Assets of Companies Acquired

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. The company tests goodwill forimpairment annually as of the first day of the fourth quarter, and when an event occurs or circumstances change such that it is morelikely than not that an impairment may exist, such as (i) a significant adverse change in legal factors or in business climate, (ii) anadverse action or assessment by a regulator, (iii) unanticipated competition, (iv) a loss of key personnel, (v) a more-likely-than-notsale or disposal of all or a significant portion of a reporting unit, (vi) the testing for recoverability of a significant asset group within areporting unit, or (vii) the recognition of a goodwill impairment loss of a subsidiary that is a component of the reporting unit. Inaddition, goodwill is required to be tested for impairment after a portion of the goodwill is allocated to a business targeted for disposal.

Goodwill is reviewed for impairment utilizing a two-step process. The first step of the impairment test requires the identification ofthe reporting units and comparison of the fair value of each of these reporting units to the respective carrying value. The company'sreporting units are defined as each of the three regional businesses within the global components business segment, which are NorthAmerica, EMEASA, and Asia/Pacific and each of the two regional businesses within the global Enterprise Computing Solutions("ECS") business segment, which are North America and Europe. Prior to 2009, the North America and Europe reporting units withinthe global ECS business segment were evaluated as a single reporting unit. If the carrying value of the reporting unit is less than itsfair value, no impairment exists and the second step is not performed. If the carrying value of the reporting unit is higher than its fairvalue, the second step must be performed to compute the amount of the goodwill impairment, if any. In the second step, theimpairment is computed by comparing the implied fair value of the reporting unit goodwill with the carrying amount of thatgoodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss isrecognized for the excess.

The company generally estimates the fair value of a reporting unit using a three-year weighted average multiple of earnings beforeinterest and taxes from comparable companies, which utilizes a look-back approach. The assumptions utilized in the evaluation of theimpairment of goodwill under this approach include the identification of reporting units and the selection of comparable companies,which are critical accounting estimates subject to change. During 2009 and 2008, as a result of significant declines in macroeconomicconditions, the company determined that it was prudent to supplement its historical goodwill impairment testing methodology with aforward-looking discounted cash flow methodology. The assumptions included in the discounted cash flow methodology includedforecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-termdiscount rates, among others, all of which require significant judgments by management.

50




Foreign Currency Translation

The assets and liabilities of international operations are translated at the exchange rates in effect at the balance sheet date, with therelated translation gains or losses reported as a separate component of shareholders' equity in the company's consolidated balancesheets. The results of international operations are translated at the monthly average exchange rates.

Income Taxes

Income taxes are accounted for under the liability method. Deferred taxes reflect the tax consequences on future years of differencesbetween the tax bases of assets and liabilities and their financial reporting amounts. The carrying value of the company's deferred taxassets is dependent upon the company's ability to generate sufficient future taxable income in certain tax jurisdictions. Should thecompany determine that it is more likely than not that some portion or all of its deferred assets will not be realized, a valuationallowance to the deferred tax assets would be established in the period such determination was made.

It is the company's policy to provide for uncertain tax positions and the related interest and penalties based upon management'sassessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31,2009, the company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the company prevails inmatters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, thecompany's effective tax rate in a given financial statement period may be affected.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) attributable to shareholders by the weighted averagenumber of common shares outstanding for the period. Diluted net income (loss) per share reflects the potential dilution that wouldoccur if securities or other contracts to issue common stock were exercised or converted into common stock.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of consolidated net income (loss), foreign currency translation adjustments, unrealized gains orlosses on securities, and interest rate swaps designated as cash flow hedges, in addition to other employee benefit planitems. Unrealized gains or losses on securities are net of any reclassification adjustments for realized gains or losses included inconsolidated net income (loss). Except for unrealized gains or losses resulting from the company's cross-currency swaps, foreigncurrency translation adjustments included in comprehensive income (loss) were not tax effected as investments in internationalaffiliates are deemed to be permanent.

Stock-Based Compensation

The company records share-based payment awards exchanged for employee services at fair value on the date of grant and expensesthe awards in the consolidated statements of operations over the requisite employee service period. Stock-based compensationexpense includes an estimate for forfeitures and is generally recognized over the expected term of the award on a straight-linebasis. Stock-based compensation expense related to awards with a market or performance condition is recognized over the expectedterm of the award utilizing the graded vesting method. The company recorded, as a component of selling, general and administrativeexpenses ("SG&A"), amortization of stock-based compensation of $33,017, $18,092, and $21,389 in 2009, 2008, and 2007,respectively.

51




Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluatedregularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company'soperations are classified into two reportable business segments: global components and global ECS.

Revenue Recognition

The company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services are rendered,the sales price is determinable, and collectibility is reasonably assured. Revenue typically is recognized at time of shipment. Sales arerecorded net of discounts, rebates, and returns, which historically were not material.

A portion of the company's business involves shipments directly from its suppliers to its customers. In these transactions, the companyis responsible for negotiating price both with the supplier and customer, payment to the supplier, establishing payment terms with thecustomer, product returns, and has risk of loss if the customer does not make payment. As the principal with the customer, thecompany recognizes the sale and cost of sale of the product upon receiving notification from the supplier that the product was shipped.

The company has certain business with select customers and suppliers that is accounted for on an agency basis (that is, the companyrecognizes the fees associated with serving as an agent in sales with no associated cost of sales) in accordance with FASB ASC Topic605-45-45. Generally, these transactions relate to the sale of supplier service contracts to customers where the company has no futureobligation to perform under these contracts or the rendering of logistics services for the delivery of inventory for which the companydoes not assume the risks and rewards of ownership.

Shipping and Handling Costs

Shipping and handling costs included in SG&A totaled $54,006, $73,617, and $67,911 in 2009, 2008, and 2007, respectively.

Sabbatical Liability

Effective January 1, 2007, the company adopted FASB ASC Topic 710-10-25. ASC Topic 710-10-25 requires that compensationexpense associated with a sabbatical leave, or other similar benefit arrangements, be accrued over the requisite service period duringwhich an employee earns the benefit. Upon adoption, the company recognized a liability of $18,048 and a cumulative-effectadjustment to retained earnings of $10,794, net of related taxes.

Impact of Recently Issued Accounting Standards

In October 2009, the FASB issued Accounting Standards Update No. 2009-13, "Multiple-Deliverable Revenue Arrangements" ("ASUNo. 2009-13"). ASU No. 2009-13 amends guidance included within ASC Topic 605-25 to require an entity to use an estimated sellingprice when vendor specific objective evidence or acceptable third party evidence does not exist for any products or services includedin a multiple element arrangement. The arrangement consideration should be allocated among the products and services based upontheir relative selling prices, thus eliminating the use of the residual method of allocation. ASU No. 2009-13 also requires expandedqualitative and quantitative disclosures regarding significant judgments made and changes in applying this guidance. ASU No.2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or afterJune 15, 2010. Early adoption and retrospective application are also permitted. The company is currently evaluating the impact ofadopting the provisions of ASU No. 2009-13.

52




In October 2009, the FASB issued Accounting Standards Update No. 2009-14, "Certain Revenue Arrangements That IncludeSoftware Elements" ("ASU No. 2009-14"). ASU No. 2009-14 amends guidance included within ASC Topic 985-605 to excludetangible products containing software components and non-software components that function together to deliver the product’sessential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to followthe guidance of ASU No. 2009-13. ASU No. 2009-14 is effective prospectively for revenue arrangements entered into or materiallymodified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. Thecompany is currently evaluating the impact of adopting the provisions of ASU No. 2009-14.

In June 2009, the FASB issued FASB Statement No. 166, "Accounting for Transfers of Financial Assets, an amendment of FASBStatement No. 140" ("Statement No. 166"), codified in ASC Topic 810-10. Statement No. 166, among other things, eliminates theconcept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additionaldisclosures about transfers of financial assets. Statement No. 166 is effective for annual reporting periods beginning after November15, 2009. The adoption of the provisions of Statement No. 166 is not anticipated to impact the company's consolidated financialposition or results of operations.

In June 2009, the FASB issued FASB Statement No. 167, "Amendments to FASB Interpretation No. ("FIN") 46(R)" ("Statement No.167"), codified in ASC Topic 810-10. Statement No. 167, among other things, requires a qualitative rather than a quantitative analysisto determine the primary beneficiary of a variable interest entity ("VIE"), amends FIN 46(R)’s consideration of related partyrelationships in the determination of the primary beneficiary of a VIE, amends certain guidance in FIN 46(R) for determining whetheran entity is a VIE, requires continuous assessments of whether an enterprise is the primary beneficiary of a VIE, and requiresenhanced disclosures about an enterprise’s involvement with a VIE. Statement No. 167 is effective for annual reporting periodsbeginning after November 15, 2009. The adoption of the provisions of Statement No. 167 is not anticipated to impact the company'sconsolidated financial position or results of operations.

Reclassification

Certain prior year amounts were reclassified to conform to the current year presentation.

2. Acquisitions

Effective January 1, 2009, the company began accounting for business combinations under ASC Topic 805 which requires, amongother things, the acquiring entity in a business combination to recognize the fair value of all the assets acquired and liabilitiesassumed; the recognition of acquisition-related costs in the consolidated results of operations; the recognition of restructuring costs inthe consolidated results of operations for which the acquirer becomes obligated after the acquisition date; and contingent purchaseconsideration to be recognized at their fair values on the acquisition date with subsequent adjustments recognized in the consolidatedresults of operations. The accounting prescribed by ASC Topic 805 is applicable for all business combinations entered into afterJanuary 1, 2009.

The results of operations of the below acquisitions were included in the company's consolidated results from their respective dates ofacquisition.

2009

On December 20, 2009, the company acquired A.E. Petsche Company, Inc. ("Petsche") for a purchase price of $174,100, whichincludes cash acquired of $4,036 and is subject to a final working capital adjustment. The purchase price does not reflect the presentvalue of the income tax benefits the company will receive relating to the deductibility of intangible assets for income tax purposes,which are

53




estimated to be approximately $25,000. Petsche headquartered in Arlington, Texas, is a leading provider of interconnect products,including specialty wire, cable, and harness management solutions, to the aerospace and defense markets. With approximately 250employees, Petsche provides value-added distribution services to over 3,500 customers in the United States, Canada, Mexico, theUnited Kingdom, France, and Belgium. Total Petsche sales for 2009 were approximately $190,000.

The following table summarizes the preliminary allocation of the net consideration paid to the fair value of the assets acquired andliabilities assumed for the Petsche acquisition:

Accounts receivable, net $ 32,208 Inventories 50,403 Prepaid expenses and other assets 661 Property, plant and equipment 2,831 Identifiable intangible assets 80,900 Cost in excess of net assets of companies acquired 19,048 Accounts payable (12,551)Accrued expenses (3,383)Other liabilities (53)Cash consideration paid, net of cash acquired $ 170,064

The company allocated $26,300 of the purchase price to intangible assets relating to customer relationships, with a useful life of 15years, $52,000 to trade names with an indefinite useful life, and $2,600 to other intangible assets (consisting of non-competitionagreements and sales backlog), with useful lives ranging from one to three years.

The cost in excess of net assets of companies acquired related to the Petsche acquisition was recorded in the company's globalcomponents business segment. Substantially all of the intangible assets related to the Petsche acquisition are expected to be deductiblefor income tax purposes.

The following table summarizes the company's unaudited consolidated results of operations for 2009 and 2008 as well as theunaudited pro forma consolidated results of operations of the company, as though the Petsche acquisition occurred on January 1:

For the Years Ended December 31, 2009 2008 As Reported Pro Forma As Reported Pro Forma Sales $ 14,684,101 $ 14,867,421 $ 16,761,009 $ 16,977,405 Net income (loss) attributable to

shareholders 123,512 133,568 (613,739) (603,554)Net income (loss) per share:

Basic $ 1.03 $ 1.11 $ (5.08) $ (5.00)Diluted $ 1.03 $ 1.11 $ (5.08) $ (5.00)

The unaudited pro forma consolidated results of operations does not purport to be indicative of the results obtained had the Petscheacquisition occurred as of the beginning of 2009 and 2008, or of those results that may be obtained in the future. Additionally, theabove table does not reflect any anticipated cost savings or cross-selling opportunities expected to result from this acquisition.

54




2008

On June 2, 2008, the company acquired LOGIX S.A. ("LOGIX"), a subsidiary of Groupe OPEN for a purchase price of $205,937,which included $15,508 of debt paid at closing, cash acquired of $3,647, and acquisition costs. In addition, $46,663 in debt wasassumed. LOGIX is a leading value-added distributor of midrange servers, storage, and software to over 6,500 partners in 11European countries. Total LOGIX sales for 2007 were approximately $600,000 (approximately €440,000). For 2008, LOGIX salesof $376,852 were included in the company's consolidated results of operations from the date of acquisition.

The following table summarizes the allocation of the net consideration paid to the fair value of the assets acquired and liabilitiesassumed for the LOGIX acquisition:

Accounts receivable, net $ 119,599 Inventories 26,776 Prepaid expenses and other assets 6,058 Property, plant and equipment 5,234 Identifiable intangible assets 23,262 Cost in excess of net assets of companies acquired 174,269 Accounts payable (90,660)Accrued expenses (6,878)Debt (including short-term borrowings of $43,096) (46,663)Other liabilities (8,707)Cash consideration paid, net of cash acquired $ 202,290

The company allocated $21,401 of the purchase price to intangible assets relating to customer relationships, with a useful life of 10years, and $1,861 to other intangible assets (consisting of non-competition agreements and sales backlog), with useful lives rangingfrom one to two years.

The cost in excess of net assets of companies acquired related to the LOGIX acquisition was recorded in the company's global ECSbusiness segment. The intangible assets related to the LOGIX acquisition are not expected to be deductible for income tax purposes.

During 2008, the company acquired Hynetic Electronics and Shreyanics Electronics, a components distribution business in India, ACIElectronics LLC, a distributor of electronic components used in defense and aerospace applications, Achieva Ltd., a value-addeddistributor of semiconductors and electro-mechanical devices, Excel Tech, Inc., the sole Broadcom distributor in Korea, and EteqComponents Pte Ltd, a Broadcom-based components distribution business in the ASEAN region and China. The impact of theseacquisitions was not material to the company's consolidated financial position or results of operations. Annual sales for theseacquisitions were approximately $320,000.

2007

On March 31, 2007, the company acquired from Agilysys, Inc. ("Agilysys") substantially all of the assets and operations of theirKeyLink Systems Group business ("KeyLink") for a purchase price of $480,640 in cash, which included acquisition costs and finaladjustments based upon a closing audit. The company also entered into a long-term procurement agreement with Agilysys. KeyLink,a leading enterprise computing solutions distributor, provides complex solutions from industry leading manufacturers to more than800 reseller partners. KeyLink has long-standing reseller relationships that provide the company with significant cross-sellingopportunities. KeyLink's highly experienced sales and marketing professionals strengthen the company's existing relationships withvalue-added resellers ("VARs") and position the company to attract new relationships.

55




The cost in excess of net assets of companies acquired related to the KeyLink acquisition was recorded in the company's global ECSbusiness segment. Substantially all of the intangible assets related to the KeyLink acquisition are expected to be deductible forincome tax purposes.

During 2007, the company acquired Adilam Pty. Ltd., a leading electronic components distributor in Australia and New Zealand,Centia Group Limited and AKS Group AB, specialty distributors of access infrastructure, security, and virtualization softwaresolutions in Europe, and Universe Electron Corporation, a distributor of semiconductor and multimedia products in Japan. The impactof these acquisitions was not material to the company's consolidated financial position or results of operations. Annual sales for theseacquisitions were approximately $163,000.

Other

Amortization expense related to identifiable intangible assets for the years ended December 31, 2009, 2008, and 2007 was $15,349,$15,324, and $14,546, respectively. Amortization expense for each of the years 2010 through 2014 are estimated to be approximately$17,838, $16,082, $14,282, $13,215, and $13,215, respectively.

In July 2007, the company paid $32,685 that was capitalized as cost in excess of net assets of companies acquired, partially offset bythe carrying value of the related noncontrolling interest, to increase its ownership interest in Ultra Source Technology Corp. ("UltraSource") from 70.7% to 92.8%. In January 2008, the company paid $8,699 to increase its ownership interest in Ultra Source to 100%.

Additionally, during 2008, the company paid $4,859, which was capitalized as cost in excess of net assets of companies acquired,partially offset by the carrying value of the related noncontrolling interest, to increase its ownership interest in other majority-ownedsubsidiaries.

3. Cost in Excess of Net Assets of Companies Acquired

Cost in excess of net assets of companies acquired allocated to the company's business segments follows:

Global

Components Global ECS Total December 31, 2007 $ 1,091,249 $ 687,986 $ 1,779,235 Acquisitions 105,734 84,479 190,213 Impairment charge (716,925) (301,855) (1,018,780)Other (primarily foreign currency translation) (26,580) (18,240) (44,820)December 31, 2008 453,478 452,370 905,848 Acquisitions 19,048 - 19,048 Acquisition-related adjustments 601 (8,171) (7,570)Other (primarily foreign currency translation) 294 8,676 8,970 December 31, 2009 $ 473,421 $ 452,875 $ 926,296

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. The company tests goodwillfor impairment annually as of the first day of the fourth quarter, or more frequently if indicators of potential impairment exist.

56




Goodwill is reviewed for impairment utilizing a two-step process. The first step of the impairment test requires the identification ofthe reporting units and comparison of the fair value of each of these reporting units to the respective carrying value. The company'sreporting units are defined as each of the three regional businesses within the global components business segment, which are NorthAmerica, EMEASA, and Asia/Pacific and each of the two regional businesses within the global ECS business segment, which areNorth America and Europe. Prior to 2009, the North America and Europe reporting units within the global ECS business segmentwere evaluated as a single reporting unit. If the carrying value of the reporting unit is less than its fair value, no impairment exists andthe second step is not performed. If the carrying value of the reporting unit is higher than its fair value, the second step must beperformed to compute the amount of the goodwill impairment, if any. In the second step, the impairment is computed by comparingthe implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reportingunit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized for the excess.

The company generally estimates the fair value of a reporting unit using a three-year weighted average multiple of earnings beforeinterest and taxes from comparable companies, which utilizes a look-back approach. The assumptions utilized in the evaluation of theimpairment of goodwill under this approach include the identification of reporting units and the selection of comparable companies,which are critical accounting estimates subject to change. During 2009 and 2008, as a result of a significant decline inmacroeconomic conditions, the company determined that it was prudent to supplement its historical goodwill impairment testingmethodology with a forward-looking discounted cash flow methodology. The assumptions included in the discounted cash flowmethodology included forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetualgrowth rates, and long-term discount rates, among others, all of which require significant judgments by management. During 2009and 2008, the company also reconciled its discounted cash flow analysis to its current market capitalization allowing for a reasonablecontrol premium. As of the first day of the fourth quarters of 2007, 2008, and 2009, the company's annual impairment testing did notindicate impairment at any of the company's reporting units.

During the fourth quarter of 2008, as a result of significant declines in macroeconomic conditions, global equity valuationsdepreciated. Both factors impacted the company's market capitalization, and the company determined it was necessary to perform aninterim goodwill impairment test as of December 31, 2008. Based upon the results of the discounted cash flow approach as ofDecember 31, 2008, the carrying value of the global ECS reporting unit and the EMEASA and Asia/Pacific reporting units within theglobal components business segment were higher than their fair value and, accordingly, the company performed a step-twoimpairment analysis. The fair value of the North America reporting unit within the global components business segment was higherthan its carrying value and a step-two analysis was not required. The results of the step-two impairment analysis indicated thatgoodwill related to the EMEASA and Asia/Pacific reporting units within the global components business segment were fully impairedand the goodwill related to the global ECS business segment was partially impaired. The company recognized a total non-cashimpairment charge of $1,018,780 ($905,069 net of related taxes or $7.49 per share on both a basic and diluted basis) as of December31, 2008, of which $716,925 related to the company's global components business segment and $301,855 related to the company'sglobal ECS business segment.

The impairment charge did not impact the company’s consolidated cash flows, liquidity, capital resources, and covenants under itsexisting revolving credit facility, asset securitization program, and other outstanding borrowings.

4. Investments in Affiliated Companies

The company owns a 50% interest in several joint ventures with Marubun Corporation (collectively "Marubun/Arrow") and a 50%interest in Altech Industries (Pty.) Ltd. ("Altech Industries"), a joint venture with Allied Technologies Limited. These investments areaccounted for using the equity method.

57



(Dollars in thousands except per share data) The following table presents the company's investment in Marubun/Arrow, the company's investment and long-term note receivable inAltech Industries, and the company's other equity investments at December 31: 2009 2008 Marubun/Arrow $ 37,649 $ 34,881 Altech Industries 15,361 11,888 Other - 19 $ 53,010 $ 46,788

The equity in earnings (loss) of affiliated companies for the years ended December 31 consists of the following:

2009 2008 2007 Marubun/Arrow $ 3,745 $ 5,486 $ 5,440 Altech Industries 1,004 1,233 1,550 Other (18) (170) (84) $ 4,731 $ 6,549 $ 6,906

Under the terms of various joint venture agreements, the company is required to pay its pro-rata share of the third party debt of thejoint ventures in the event that the joint ventures are unable to meet their obligations. At December 31, 2009, the company's pro-ratashare of this debt was approximately $6,100. The company believes that there is sufficient equity in the joint ventures to meet theirobligations.

5. Accounts Receivable

The company has a $600,000 asset securitization program collateralized by accounts receivables of certain of its North Americansubsidiaries which expires in March 2010. The asset securitization program is conducted through Arrow Electronics FundingCorporation, a wholly-owned, bankruptcy remote subsidiary. The asset securitization program does not qualify for saletreatment. Accordingly, the accounts receivable and related debt obligation remain on the company's consolidated balancesheets. Interest on borrowings is calculated using a base rate or a commercial paper rate plus a spread, which is based on thecompany's credit ratings (.225% at December 31, 2009). The facility fee is .125%.

The company had no outstanding borrowings under the asset securitization program at December 31, 2009 and 2008.

Accounts receivable, net, consists of the following at December 31:

2009 2008 Accounts receivable $ 3,175,815 $ 3,140,076 Allowance for doubtful accounts (39,674) (52,786)Accounts receivable, net $ 3,136,141 $ 3,087,290

The company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to makerequired payments. The allowances for doubtful accounts are determined using a combination of factors, including the length of timethe receivables are outstanding, the current business environment, and historical experience.

58




6. Debt

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

2009 2008 9.15% senior notes, due 2010 $ 69,544 $ - Cross-currency swap, due 2010 41,943 - Interest rate swaps designated as fair value hedges 2,036 - Short-term borrowings in various countries 9,572 52,893 $ 123,095 $ 52,893

Short-term borrowings in various countries are primarily utilized to support the working capital requirements of certain internationaloperations. The weighted average interest rates on these borrowings at December 31, 2009 and 2008 were 3.5% and 3.6%,respectively.

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

2009 2008 9.15% senior notes, due 2010 $ - $ 199,994 Bank term loan, due 2012 200,000 200,000 6.875% senior notes, due 2013 349,765 349,694 6.875% senior debentures, due 2018 198,241 198,032 6.00% notes, due 2020 299,909 - 7.5% senior debentures, due 2027 197,610 197,470 Cross-currency swap, due 2010 - 36,467 Cross-currency swap, due 2011 12,497 9,985 Interest rate swaps designated as fair value hedges 9,556 21,394 Other obligations with various interest rates and due dates 8,560 10,949 $ 1,276,138 $ 1,223,985

The 7.5% senior debentures are not redeemable prior to their maturity. The 9.15% senior notes, 6.875% senior notes, 6.875% seniordebentures, and 6.00% notes may be called at the option of the company subject to "make whole" clauses.

The estimated fair market value at December 31, using quoted market prices, follow:

2009 2008 9.15% senior notes, due 2010 $ 73,000 $ 206,000 6.875% senior notes, due 2013 378,000 329,000 6.875% senior debentures, due 2018 214,000 160,000 6.00% notes, due 2020 300,000 - 7.5% senior debentures, due 2027 208,000 152,000

59




The carrying amounts of the company's short-term borrowings, bank term loan, and other obligations approximate their fair value.

Annual payments of borrowings during each of the years 2010 through 2014 are $123,095, $13,228, $200,405, $359,423, and 7,322,respectively, and $695,760 for all years thereafter.

The company has an $800,000 revolving credit facility with a group of banks that matures in January 2012. Interest on borrowingsunder the revolving credit facility is calculated using a base rate or a euro currency rate plus a spread based on the company's creditratings (.425% at December 31, 2009). The facility fee related to the revolving credit facility is .125%. The company had nooutstanding borrowings under the revolving credit facility at December 31, 2009 and 2008. The company also entered into a $200,000term loan with the same group of banks, which is repayable in full in January 2012. Interest on the term loan is calculated using abase rate or a euro currency rate plus a spread based on the company's credit ratings (.60% at December 31, 2009).

The revolving credit facility and the asset securitization program include terms and conditions that limit the incurrence of additionalborrowings, limit the company's ability to pay cash dividends or repurchase stock, and require that certain financial ratios bemaintained at designated levels. The company was in compliance with all covenants as of December 31, 2009 and is currently notaware of any events that would cause non-compliance with any covenants in the future.

During 2009, the company repurchased $130,455 principal amount of its 9.15% senior notes due 2010. The related loss on therepurchase, including the premium paid and write-off of the deferred financing costs, offset by the gain for terminating a portion of theinterest rate swaps aggregated $5,312 ($3,228 net of related taxes or $.03 per share on both a basic and diluted basis) and wasrecognized as a loss on prepayment of debt.

During 2009, the company completed the sale of $300,000 principal amount of 6.00% notes due in 2020. The net proceeds of theoffering of $297,430 were used to repay a portion of the previously discussed 9.15% senior notes due 2010 and for general corporatepurposes.

Interest and other financing expense, net, includes interest income of $2,964, $5,337, and $5,726 in 2009, 2008, and 2007,respectively. Interest paid, net of interest income, amounted to $79,952, $96,993, and $98,881 in 2009, 2008, and 2007, respectively.

7. Financial Instruments Measured at Fair Value

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in theprincipal or most advantageous market for the asset or liability in an orderly transaction between market participants on themeasurement date. The company utilizes a fair value hierarchy, which maximizes the use of observable inputs and minimizes the useof unobservable inputs when measuring fair value. The fair value hierarchy has three levels of inputs that may be used to measure fairvalue:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets orliabilities.

Level 2 Quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly, forsubstantially the full term of the asset or liability.

Level 3 Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable.

60



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands except per share data)

The following table presents assets/(liabilities) measured at fair value on a recurring basis at December 31, 2009:

Level 1 Level 2 Level 3 Total Cash equivalents $ - $ 744,125 $ - $ 744,125 Available-for-sale securities 56,464 - - 56,464 Interest rate swaps - 11,592 - 11,592 Cross-currency swaps - (54,440) - (54,440) $ 56,464 $ 701,277 $ - $ 757,741

The following table presents assets/(liabilities) measured at fair value on a recurring basis at December 31, 2008:

Level 1 Level 2 Level 3 Total Cash equivalents $ - $ 198,800 $ - $ 198,800 Available-for-sale securities 21,187 - - 21,187 Interest rate swaps - 19,541 - 19,541 Cross-currency swaps - (46,452) - (46,452) $ 21,187 $ 171,889 $ - $ 193,076

Available-For-Sale Securities

The company has a 2.7% equity ownership interest in WPG Holdings Co., Ltd. ("WPG") and an 8.4% equity ownership interest inMarubun Corporation ("Marubun"), which are accounted for as available-for-sale securities.

The fair value of the company's available-for-sale securities is as follows at December 31:

2009 2008 Marubun WPG Marubun WPG Cost basis $ 10,016 $ 10,798 $ 10,016 $ 10,798 Unrealized holding gain 4,408 31,242 - 373 Fair value $ 14,424 $ 42,040 $ 10,016 $ 11,171

The fair value of these investments is included in "Other assets" in the company's consolidated balance sheets, and the related netunrealized holding gains and losses are included in "Other" in the shareholders' equity section in the company's consolidated balancesheets.

During 2008, the company determined that an other-than-temporary decline in the fair value of Marubun occurred based upon variousfactors including the financial condition and near-term prospects of Marubun, the magnitude of the loss compared to the investment'scost, the length of time the investment was in an unrealized loss position, and publicly available information about the industry andgeographic region in which Marubun operates and, accordingly, recorded a loss of $10,030 ($.08 per share on both a basic and dilutedbasis) on the write-down of this investment.

61




Derivative Instruments

The company uses various financial instruments, including derivative financial instruments, for purposes other thantrading. Derivatives used as part of the company's risk management strategy are designated at inception as hedges and measured foreffectiveness both at inception and on an ongoing basis.

The fair values of derivative instruments in the consolidated balance sheet as of December 31, 2009 follow:

Asset/(Liability) Derivatives

Balance Sheet

Location Fair Value Derivative instruments designated as hedges:

Interest rate swaps designated as fair value hedges Prepaid expenses $ 2,036 Interest rate swaps designated as fair value hedges Other assets 9,556 Cross-currency swaps designated as net investment hedges Short-term borrowings (41,943)Cross-currency swaps designated as net investment hedges Long-term debt (12,497)Foreign exchange contracts designated as cash flow hedges Prepaid expenses 406 Foreign exchange contracts designated as cash flow hedges Accrued expenses (272)

Total derivative instruments designated as hedging instruments (42,714) Derivative instruments not designated as hedges:

Foreign exchange contracts Prepaid expenses 2,362 Foreign exchange contracts Accrued expenses (1,952)

Total derivative instruments not designated as hedging instruments 410 Total $ (42,304)

The effect of derivative instruments on the consolidated statement of operations for the year ended December 31, 2009 follow:

Gain/(Loss)Recognizedin Income

Fair value hedges:

Interest rate swaps (a) $ 4,907 Total $ 4,907

Derivative instruments not designated as hedges:

Foreign exchange contracts (b) $ (8,574)Total $ (8,574)

62




Effective Portion Ineffective

Portion

Gain/(Loss)Recognized in

OtherComprehensive

Income

Gain/(Loss)Reclassifiedinto Income

Gain/(Loss)Recognized in

Income Cash Flow Hedges:

Interest rate swaps (c) $ 1,853 $ - $ - Foreign exchange contracts (d) (2,277) 94 -

Total $ (424) $ 94 $ - Net Investment Hedges:

Cross-currency swaps (c) $ (7,988) $ - $ 536 Total $ (7,988) $ - $ 536

(a) The amount of gain/(loss) recognized in income on derivatives is recorded in "Loss on prepayment of debt" in theaccompanying consolidated statements of operations.

(b) The amount of gain/(loss) recognized in income on derivatives is recorded in "Cost of products sold" in the accompanyingconsolidated statements of operations.

(c) Both the effective and ineffective portions of any gain/(loss) reclassified or recognized in income is recorded in "Interestand other financing expense, net" in the accompanying consolidated statements of operations.

(d) Both the effective and ineffective portions of any gain/(loss) reclassified or recognized in income is recorded in "Cost ofproducts sold" in the accompanying consolidated statements of operations.

Interest Rate Swaps

The company enters into interest rate swap transactions that convert certain fixed-rate debt to variable-rate debt or variable-rate debt tofixed-rate debt in order to manage its targeted mix of fixed- and floating-rate debt. The effective portion of the change in the fairvalue of interest rate swaps designated as fair value hedges is recorded as a change to the carrying value of the related hedged debt,and the effective portion of the change in fair value of interest rate swaps designated as cash flow hedges is recorded in theshareholders' equity section in the accompanying consolidated balance sheets in "Other." The ineffective portion of the interest rateswaps, if any, is recorded in "Interest and other financing expense, net" in the accompanying consolidated statements of operations.

In June 2004, the company entered into interest rate swaps, with an aggregate notional amount of $200,000. The swaps modify thecompany's interest rate exposure by effectively converting the fixed 9.15% senior notes to a floating rate, based on the six-month U.S.dollar LIBOR plus a spread (an effective rate of 4.94% and 8.19% at December 31, 2009 and 2008, respectively), through itsmaturity. In 2009, the company terminated $130,455 aggregate notional amount of the interest rate swaps upon the repayment of aportion of the 9.15% senior notes. The swaps are classified as fair value hedges and had a fair value of $2,036 and $9,385 atDecember 31, 2009 and 2008, respectively.

63




In June 2004 and November 2009, the company entered into interest rate swaps, with an aggregate notional amount of $275,000. Theswaps modify the company's interest rate exposure by effectively converting a portion of the fixed 6.875% senior notes to a floatingrate, based on the six-month U.S. dollar LIBOR plus a spread (an effective rate of 4.18% and 5.01% at December 31, 2009 and 2008,respectively), through its maturity. The swaps are classified as fair value hedges and had a fair value of $9,556 and $12,009 atDecember 31, 2009 and 2008, respectively.

Cross-Currency Swaps

The company enters into cross-currency swaps to hedge a portion of its net investment in euro-denominated net assets. Thecompany’s cross-currency swaps are derivatives designated as net investment hedges. The effective portion of the change in the fairvalue of derivatives designated as net investment hedges is recorded in "Foreign currency translation adjustment" included in theaccompanying consolidated balance sheets and any ineffective portion is recorded in "Interest and other financing expense, net" in theaccompanying consolidated statements of operations. As the notional amounts of the company’s cross-currency swaps are expected toequal a comparable amount of hedged net assets, no material ineffectiveness is expected. The company uses the hypotheticalderivative method to assess the effectiveness of its net investment hedges on a quarterly basis.

In May 2006, the company entered into a cross-currency swap, with a maturity date of July 2011, for approximately $100,000 or€78,281 (the "2006 cross-currency swap") to hedge a portion of its net investment in euro-denominated net assets. The 2006cross-currency swap effectively converts the interest expense on $100,000 of long-term debt from U.S. dollars to euros. The 2006cross-currency swap had a negative fair value of $12,497 and $9,985 at December 31, 2009 and 2008, respectively.

In October 2005, the company entered into a cross-currency swap, with a maturity date of October 2010, for approximately $200,000or €168,384 (the "2005 cross-currency swap") to hedge a portion of its net investment in euro-denominated net assets. The 2005cross-currency swap effectively converts the interest expense on $200,000 of long-term debt from U.S. dollars to euros. The 2005cross-currency swap had a negative fair value of $41,943 and $36,467 at December 31, 2009 and 2008, respectively.

Foreign Exchange Contracts

The company enters into foreign exchange forward, option, or swap contracts (collectively, the "foreign exchange contracts") tomitigate the impact of changes in foreign currency exchange rates. These contracts are executed to facilitate the hedging of foreigncurrency exposures resulting from inventory purchases and sales and generally have terms of no more than six months. Gains or losseson these contracts are deferred and recognized when the underlying future purchase or sale is recognized or when the correspondingasset or liability is revalued. The company does not enter into foreign exchange contracts for trading purposes. The risk of loss on aforeign exchange contract is the risk of nonperformance by the counterparties, which the company minimizes by limiting itscounterparties to major financial institutions. The fair values of foreign exchange contracts, which are nominal, are estimated usingmarket quotes. The notional amount of the foreign exchange contracts at December 31, 2009 and 2008 was $294,928 and $315,021,respectively.

Other

The carrying amounts of cash and cash equivalents, accounts receivable, net, and accounts payable approximate their fair value due tothe short maturities of these financial instruments.

64




Cash equivalents consist primarily of overnight time deposits and institutional money market funds with quality financialinstitutions. These financial institutions are located in many different geographical regions, and the company's policy is designed tolimit exposure with any one institution. As part of its cash and risk management processes, the company performs periodicevaluations of the relative credit standing of these financial institutions.

8. Income Taxes

The provision for income taxes for the years ended December 31 consists of the following:

2009 2008 2007 Current

Federal $ 23,078 $ 55,459 $ 101,077 State 636 5,510 13,410 International 22,389 43,965 57,549

46,103 104,934 172,036 Deferred

Federal 20,905 (33,232) (6)State 5,995 (1,892) 5,124 International (7,587) (53,088) 3,543

19,313 (88,212) 8,661 $ 65,416 $ 16,722 $ 180,697

The principal causes of the difference between the U.S. federal statutory tax rate of 35% and effective income tax rates for the yearsended December 31 are as follows:

2009 2008 2007 United States $ 108,106 $ 5,409 $ 262,068 International 80,815 (602,322) 330,115 Income before income taxes $ 188,921 $ (596,913) $ 592,183 Provision at statutory tax rate $ 66,122 $ (208,919) $ 207,264 State taxes, net of federal benefit 4,310 2,352 12,047 International effective tax rate differential (16,530) (28,801) (54,448)Non-deductible impairment charge - 237,602 - Other non-deductible expenses 2,634 10,424 3,270 Changes in tax accruals and reserves 8,258 4,188 15,838 Other 622 (124) (3,274)Provision for income taxes $ 65,416 $ 16,722 $ 180,697

During 2008, the company recorded a reduction of the provision for income taxes of $8,450 and an increase in interest expense of$1,009 ($962 net of related taxes) primarily related to the settlement of certain international income tax matters covering multipleyears.

65




During 2007, the company recorded an income tax benefit of $6,024, net, principally due to a reduction in deferred income taxes as aresult of the statutory tax rate change in Germany. These deferred income taxes primarily related to the amortization of intangibleassets for income tax purposes, which are not amortized for accounting purposes.

At December 31, 2009, the company had a liability for unrecognized tax benefits of $68,833 (of which $70,036, if recognized, wouldfavorably affect the company's effective tax rate). The company does not believe there will be any material changes in itsunrecognized tax positions over the next twelve months. A reconciliation of the beginning and ending amount of unrecognized taxbenefits for the years ended December 31 is as follows:

2009 2008 Balance at beginning of year $ 69,719 $ 77,702 Additions based on tax positions taken during a prior period 12,442 12,179 Reductions based on tax positions taken during a prior period (9,000) (19,446)Additions based on tax positions taken during the current period 742 4,125 Reductions based on tax positions taken during the current period - - Reductions related to settlement of tax matters (4,994) (3,866)Reductions related to a lapse of applicable statute of limitations (76) (975)Balance at end of year $ 68,833 $ 69,719

Interest costs related to unrecognized tax benefits are classified as a component of "Interest and other financing expense, net" in thecompany's consolidated statements of operations. Penalties, if any, are recognized as a component of "Selling, general andadministrative expenses." In 2009, 2008, and 2007, the company recognized $4,678, $1,476, and $4,149, respectively, of interestexpense related to unrecognized tax benefits. At December 31, 2009 and 2008, the company had a liability for the payment of interestof $13,328 and $11,634, respectively, related to unrecognized tax benefits.

In many cases the company's uncertain tax positions are related to tax years that remain subject to examination by tax authorities. Thefollowing describes the open tax years, by major tax jurisdiction, as of December 31, 2009:

United States – Federal 2005 – presentUnited States – State 2001 – presentGermany (a) 2007 – presentHong Kong 2001 – presentItaly (a) 2004 – presentSweden 2003 – presentUnited Kingdom 2007 – present

(a) Includes federal as well as local jurisdictions.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and itsreported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in futureyears.

66




The significant components of the company's deferred tax assets and liabilities, included primarily in "Prepaid expenses and otherassets," "Other assets," and "Other liabilities" in the company's consolidated balance sheets, consist of the following at December 31:

2009 2008 Deferred tax assets:

Net operating loss carryforwards $ 52,294 $ 36,991 Capital loss carryforwards 2,223 2,242 Inventory adjustments 30,680 32,037 Allowance for doubtful accounts 11,280 12,917 Accrued expenses 47,742 43,839 Other comprehensive income items 5,128 23,096 Derivative financial instruments 21,179 18,225 Restructuring and integration reserves 1,613 5,233 Interest carryforward 41,388 16,385 Goodwill 14,652 31,574 Other - 6,084

228,179 228,623 Valuation allowance (68,556) (43,453)

Total deferred tax assets $ 159,623 $ 185,170 Deferred tax liabilities:

Other $ (6,319) $ - Total deferred tax liabilities $ (6,319) $ - Total net deferred tax assets $ 153,304 $ 185,170

At December 31, 2009, certain international subsidiaries had tax loss carryforwards of approximately $166,821 expiring in variousyears after 2010. Deferred tax assets related to the tax loss carryforwards of the international subsidiaries in the amount of $48,285 asof December 31, 2009 were recorded with a corresponding valuation allowance of $16,941. The impact of the change in this valuationallowance on the effective rate reconciliation is included in the international effective tax rate differential.

Valuation allowances reflect the deferred tax benefits that management is uncertain of the ability to utilize in the future.

Cumulative undistributed earnings of international subsidiaries were $1,425,643 at December 31, 2009. No deferred U.S. federalincome taxes were provided for the undistributed earnings as they are permanently reinvested in the company's internationaloperations.

Income taxes paid, net of income taxes refunded, amounted to $90,340, $144,215, and $189,620 in 2009, 2008, and 2007,respectively.

67




9. Restructuring, Integration, and Other Charges

In 2009, 2008, and 2007, the company recorded restructuring, integration, and other charges of $105,514 ($75,720 net of related taxesor $.63 per share on both a basic and diluted basis), $80,955 ($61,867 net of related taxes of $.51 per share on both a basic and dilutedbasis), and $11,745 ($7,036 net of related taxes or $.06 per share on both a basic and diluted basis), respectively.

The following table presents the components of the restructuring, integration, and other charges for 2009, 2008, and 2007:

2009 2008 2007 Current year restructuring charge $ 100,274 $ 69,836 $ 9,708 Current year integration charge - 551 2,944 Adjustments to prior year restructuring accruals 2,643 (322) (907)Adjustments to prior year integration accruals (1,279) - - Acquisition-related expenses 3,876 - - Preference claim from 2001 - 10,890 - $ 105,514 $ 80,955 $ 11,745

2009 Restructuring Charge The following table presents the components of the 2009 restructuring charge of $100,274 and activity in the related restructuringaccrual for 2009:

Personnel

Costs Facilities Other Total Restructuring charge $ 90,896 $ 8,016 $ 1,362 $ 100,274 Payments (65,524) (1,747) (1,138) (68,409)Foreign currency translation 8 18 - 26 December 31, 2009 $ 25,380 $ 6,287 $ 224 $ 31,891

The restructuring charge of $100,274 in 2009 primarily includes personnel costs of $90,896 and facilities costs of $8,016. Thepersonnel costs are related to the elimination of approximately 1,605 positions within the global components business segment andapproximately 320 positions within the global ECS business segment. The facilities costs are related to exit activities for 28 vacatedfacilities worldwide due to the company's continued efforts to streamline its operations and reduce real estate costs. These initiativesare due to the company's continued efforts to lower cost and drive operational efficiency.

68




2008 Restructuring Charge

The following table presents the components of the 2008 restructuring charge of $69,836 and activity in the related restructuringaccrual for 2008 and 2009:

Personnel

Costs Facilities

AssetWrite-Downs Other Total

Restructuring charge $ 39,383 $ 4,305 $ 25,423 $ 725 $ 69,836 Payments (24,238) (474) - (225) (24,937)Non-cash usage - - (25,423) - (25,423)Reclassification of capital lease - 810 - - 810 Foreign currency translation (949) 78 - - (871)December 31, 2008 14,196 4,719 - 500 19,415 Restructuring charge (credit) 505 141 2,112 (49) 2,709 Payments (13,069) (2,308) - (55) (15,432)Non-cash usage - - (2,112) (197) (2,309)Foreign currency translation (75) 84 - 9 18 December 31, 2009 $ 1,557 $ 2,636 $ - $ 208 $ 4,401

The restructuring charge of $69,836 in 2008 primarily includes personnel costs of $39,383, facility costs of $4,305, and a write-downof a building and related land of $25,423. These initiatives are the result of the company's continued efforts to lower cost and driveoperational efficiency. The personnel costs are primarily associated with the elimination of approximately 750 positions acrossmultiple functions and multiple locations. The facilities costs are related to the exit activities of 9 vacated facilities in North Americaand Europe. During the fourth quarter of 2008, the company recorded an impairment charge of $25,423 in connection with anapproved plan to actively market and sell a building and related land in North America within the company's global componentsbusiness segment. The decision to exit this location was made to enable the company to consolidate facilities and reduce futureoperating costs. The company wrote-down the carrying values of the building and related land to their estimated fair values less costto sell and ceased recording depreciation. During 2009, the company recorded an impairment charge of $2,112 as a result of furtherdeclines in real estate valuations. As of December 31, 2009 and 2008, the assets were designated as held-for-sale, and the carryingvalues of $7,388 and $9,500, respectively, were included in "Prepaid expenses and other assets" on the company's consolidatedbalance sheets. The sale is expected to be completed in the first quarter of 2010.

69



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Dollars in thousands except per share data)

2007 Restructuring Charge

The following table presents the components of the 2007 restructuring charge of $9,708 and activity in the related restructuringaccrual for 2007, 2008, and 2009:

Personnel

Costs Facilities Other Total Restructuring charge (credit) $ 11,312 $ (1,947) $ 343 $ 9,708 Payments/proceeds (7,563) 7,896 (258) 75 Foreign currency translation 66 (133) (71) (138)December 31, 2007 3,815 5,816 14 9,645 Restructuring charge 586 540 - 1,126 Payments (3,807) (1,245) (14) (5,066)Foreign currency translation (129) (1,286) - (1,415)December 31, 2008 465 3,825 - 4,290 Restructuring charge - 144 - 144 Payments (461) (663) - (1,124)Foreign currency translation (4) 300 - 296 December 31, 2009 $ - $ 3,606 $ - $ 3,606

The restructuring charge of $9,708 in 2007 primarily includes personnel costs of $11,312 and a facilities credit of $1,947. Thepersonnel costs are related to the elimination of approximately 400 positions. These positions were primarily within the company'sglobal components business segment in North America and related to the company's continued focus on operational efficiency. Thefacilities credit is primarily related to a gain on the sale of the Harlow, England facility of $8,506 that was vacated in 2007. This wasoffset by facilities costs of $6,559, primarily related to exit activities for a vacated facility in Europe due to the company's continuedefforts to reduce real estate costs.

70




Restructuring Accrual Related to Actions Taken Prior to 2007

The following table presents the activity in the restructuring accrual during 2007, 2008, and 2009 related to actions taken prior to2007:

Personnel

Costs Facilities Other Total December 31, 2006 $ 2,601 $ 3,051 $ 2,806 $ 8,458 Restructuring charge (credit) (506) 961 (1,362) (907)Payments (1,782) (1,457) - (3,239)Foreign currency translation 32 169 183 384 December 31, 2007 345 2,724 1,627 4,696 Restructuring credit (73) (124) (1,251) (1,448)Payments (59) (1,006) - (1,065)Non-cash usage - - (201) (201)Foreign currency translation (6) (181) 105 (82)December 31, 2008 207 1,413 280 1,900 Restructuring charge (credit) - 60 (270) (210)Payments (42) (1,120) - (1,162)Foreign currency translation 3 81 (10) 74 December 31, 2009 $ 168 $ 434 $ - $ 602

Integration

Included in the restructuring, integration, and other charges referenced above is an integration credit of $1,279 for 2009, primarilyrelated to adjustments to integration reserves established in prior years, an integration charge of $551 for 2008, primarily related to theACI and KeyLink acquisitions, and an integration charge of $2,944 for 2007, primarily related to the acquisition of KeyLink.

The following table presents the integration charge and activity for 2007, 2008, and 2009:

Personnel

Costs Facilities Other Total December 31, 2006 $ - $ 2,735 $ 658 $ 3,393 Integration costs (a) 1,666 (535) 2,609 3,740 Payments (1,109) (684) (251) (2,044)Foreign currency translation - 58 - 58 December 31, 2007 557 1,574 3,016 5,147 Integration costs (b) 774 435 (323) 886 Payments (1,091) (1,186) - (2,277)Foreign currency translation - 11 - 11 December 31, 2008 240 834 2,693 3,767 Integration credit (207) (3) (1,069) (1,279)Payments (30) (831) (10) (871)December 31, 2009 $ 3 $ - $ 1,614 $ 1,617

71




(a) Integration costs of $3,740 in 2007 include $2,944 recorded as an integration charge and $796 recorded as additional costs inexcess of net assets of companies acquired. The integration costs include personnel costs of $1,666 associated with theelimination of approximately 50 positions in North America related to the acquisition of KeyLink, a credit of $535 primarilyrelated to the reversal of excess facility-related accruals in connection with certain acquisitions made prior to 2005 and othercosts of $2,609.

(b) Integration costs of $886 in 2008 include $551 recorded as an integration charge and $335 recorded as additional costs inexcess of net assets of companies acquired. Integration costs primarily include personnel costs of $774 related to theelimination of 11 positions in North America related to the ACI and KeyLink acquisitions and 1 position in Europe related tothe Centia/AKS acquisition. Integration costs also include costs related to a vacated facility in Asia associated with theAchieva acquisition.

Restructuring and Integration Accrual Summary

In summary, the restructuring and integration accruals aggregate $42,117 at December 31, 2009, of which $41,685 is expected to bespent in cash, and are expected to be utilized as follows:

• The accruals for personnel costs of $27,108 to cover the termination of personnel are primarily expected to be spent within oneyear.

• The accruals for facilities totaling $12,963 relate to vacated leased properties that have scheduled payments of $5,604 in 2010,$2,884 in 2011, $1,766 in 2012, $1,583 in 2013, $615 in 2014, and $511 thereafter.

• Other accruals of $2,046 are expected to be utilized over several years.

Acquisition-Related Expenses

In 2009, the company recorded acquisition-related expenses of $2,841 related to contingent consideration for an acquisition completedin a prior year which was conditional upon the financial performance of the acquired company and the continued employment of theselling shareholders. In addition, the company recorded other acquisition-related expenses of $1,035.

Preference Claim From 2001

In 2008, an opinion was rendered in a bankruptcy proceeding (Bridge Information Systems, et. anno v. Merisel Americas, Inc. &MOCA) in favor of Bridge Information Systems ("Bridge"), the estate of a former global ECS customer that declared bankruptcy in2001. The proceeding is related to sales made in 2000 and early 2001 by the MOCA division of ECS, a company Arrow purchasedfrom Merisel Americas in the fourth quarter of 2000. The court held that certain of the payments received by the company at the timewere preferential and must be returned to Bridge. Accordingly, during 2008, the company recorded a charge of $10,890, inconnection with the preference claim from 2001, including legal fees.

72




10. Shareholders' Equity

The following table sets forth the activity in the number of shares outstanding (in thousands):

CommonStockIssued

TreasuryStock

CommonStock

Outstanding Common stock outstanding at December 31, 2006 122,626 207 122,419 Shares issued for stock-based compensation awards 2,413 (70) 2,483 Repurchases of common stock - 2,075 (2,075)Common stock outstanding at December 31, 2007 125,039 2,212 122,827 Shares issued for stock-based compensation awards 9 (313) 322 Repurchases of common stock - 3,841 (3,841)Common stock outstanding at December 31, 2008 125,048 5,740 119,308 Shares issued for stock-based compensation awards 239 (418) 657 Repurchases of common stock - 137 (137)Common stock outstanding at December 31, 2009 125,287 5,459 119,828

The company has 2,000,000 authorized shares of serial preferred stock with a par value of one dollar. There were no shares of serialpreferred stock outstanding at December 31, 2009 and 2008.

11. Net Income (Loss) Per Share

The following table sets forth the computation of net income per share on a basic and diluted basis for the years ended December 31(shares in thousands):

2009 2008 2007 Net income (loss) attributable to shareholders, as reported $ 123,512 $ (613,739) $ 407,792 Net income (loss) per share: Basic $ 1.03 $ (5.08) $ 3.31 Diluted (a) $ 1.03 $ (5.08) $ 3.28 Weighted average shares outstanding-basic 119,800 120,773 123,176 Net effect of various dilutive stock-based compensation awards 689 - 1,253 Weighted average shares outstanding-diluted 120,489 120,773 124,429

(a) Stock-based compensation awards for the issuance of 3,851, 4,368, and 43 shares for the years ended December 31, 2009,2008, and 2007, respectively, were excluded from the computation of net income (loss) per share on a diluted basis as theireffect is anti-dilutive.

12. Employee Stock Plans

Omnibus Plan

The company maintains the Arrow Electronics, Inc. 2004 Omnibus Incentive Plan (the "Omnibus Plan"), which replaced the ArrowElectronics, Inc. Stock Option Plan, the Arrow Electronics, Inc. Restricted Stock Plan, the 2002 Non-Employee Directors StockOption Plan, the Non-Employee Directors Deferral Plan,

73




and the 1999 CEO Bonus Plan (collectively, the "Prior Plans"). The Omnibus Plan broadens the array of equity alternatives availableto the company when designing compensation incentives. The Omnibus Plan permits the grant of cash-based awards, non-qualifiedstock options, incentive stock options ("ISOs"), stock appreciation rights, restricted stock, restricted stock units, performance shares,performance units, covered employee annual incentive awards, and other stock-based awards. The Compensation Committee of thecompany's Board of Directors (the "Compensation Committee") determines the vesting requirements, termination provision, and theterms of the award for any awards under the Omnibus Plan when such awards are issued.

Under the terms of the Omnibus Plan, a maximum of 13,300,000 shares of common stock may be awarded, subject toadjustment. There were 3,715,621 and 6,957,960 shares available for grant under the Omnibus Plan as of December 31, 2009 and2008, respectively. Shares currently subject to awards granted under the Prior Plans, which cease to be subject to such awards for anyreason other than exercise for, or settlement in, shares will also be available under the Omnibus Plan. Generally, shares are countedagainst the authorization only to the extent that they are issued. Restricted stock, restricted stock units, and performance shares countagainst the authorization at a rate of 1.69 to 1.

After adoption of the Omnibus Plan, there were no additional awards made under any of the Prior Plans, though awards previouslygranted under the Prior Plans will survive according to their terms.

Stock Options

Under the Omnibus Plan, the company may grant both ISOs and non-qualified stock options. ISOs may only be granted to employees,subsidiaries, and affiliates. The exercise price for options cannot be less than the fair market value of Arrow's common stock on thedate of grant. Options granted under the Prior Plans become exercisable in equal installments over a four-year period, except for stockoptions authorized for grant to directors, which become exercisable in equal installments over a two-year period. Options currentlyoutstanding have terms of ten years.

The following information relates to the stock option activity for the year ended December 31, 2009:

Shares

WeightedAverageExercise

Price

WeightedAverage

RemainingContractual

Life

AggregateIntrinsic

Value Outstanding at December 31, 2008 4,367,941 $ 31.42 Granted 832,092 17.00 Exercised (247,056) 17.14 Forfeited (427,531) 31.89 Outstanding at December 31, 2009 4,525,446 29.50 77 months $ 16,246 Exercisable at December 31, 2009 2,656,057 30.86 63 months $ 5,883

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company'sclosing stock price on the last trading day of 2009 and the exercise price, multiplied by the number of in-the-money options) receivedby the option holders had all option holders exercised their options on December 31, 2009. This amount changes based on the marketvalue of the company's stock.

The total intrinsic value of options exercised during 2009, 2008, and 2007 was $2,106, $1,398, and $30,739, respectively.

74




Cash received from option exercises during 2009, 2008, and 2007 was $4,234, $4,392, and $55,228, respectively, and is includedwithin the financing activities section in the company's consolidated statements of cash flows. The actual tax benefit realized fromshare-based payment awards during 2009, 2008, and 2007 was $3,025, $3,551, and $11,249, respectively.

The fair value of stock options was estimated using the Black-Scholes valuation model with the following weighted-averageassumptions for the years ended December 31:

2009 2008 2007 Volatility (percent) * 35 33 29 Expected term (in years) ** 5.9 5.5 3.6 Risk-free interest rate (percent) *** 2.1 2.9 4.6

* Volatility is measured using historical daily price changes of the company's common stock over the expected term of theoption.

** The expected term represents the weighted average period the option is expected to be outstanding and is based primarily on thehistorical exercise behavior of employees.

*** The risk-free interest rate is based on the U.S. Treasury zero-coupon yield with a maturity that approximates the expected termof the option.

There is no expected dividend yield.

The weighted-average fair value per option granted was $6.07, $11.63, and $11.03 during 2009, 2008, and 2007, respectively.

Performance Shares

The Compensation Committee, subject to the terms and conditions of the Omnibus Plan, may grant performance unit and/orperformance share awards. The fair value of a performance unit award is the fair market value of the company's common stock on thedate of grant. Such awards will be earned only if performance goals over performance periods established by or under the direction ofthe Compensation Committee are met. The performance goals and periods may vary from participant-to-participant, group-to-group,and time-to-time. The performance shares will be delivered in common stock at the end of the service period based on the company'sactual performance compared to the target metric and may be from 0% to 200% of the initial award. Compensation expense isrecognized using the graded vesting method over the service period, which is generally two to four years and is adjusted each periodbased on the current estimate of performance compared to the target metric.

Restricted Stock

Subject to the terms and conditions of the Omnibus Plan, the Compensation Committee may grant shares of restricted stock and/orrestricted stock units. Restricted stock units are similar to restricted stock except that no shares are actually awarded to the participanton the date of grant. Shares of restricted stock and/or restricted stock units awarded under the Omnibus Plan may not be sold,transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable period of restriction establishedby the Compensation Committee and specified in the award agreement (and in the case of restricted stock units until the date ofdelivery or other payment). Compensation expense is recognized on a straight-line basis as shares become free of forfeiturerestrictions (i.e., vest) generally over a four-year period.

75




Non-Employee Director Awards

The company's Board of Directors (the "Board") shall set the amounts and types of equity awards that shall be granted to allnon-employee directors on a periodic, nondiscriminatory basis pursuant to the Omnibus Plan, as well as any additional amounts, ifany, to be awarded, also on a periodic, nondiscriminatory basis, based on each of the following: the number of committees of theBoard on which a non-employee director serves, service of a non-employee director as the chair of a Committee of the Board, serviceof a non-employee director as Chairman of the Board or Lead Director, or the first selection or appointment of an individual to theBoard as a non-employee director. Non-employee directors currently receive annual awards of fully-vested restricted stock unitsvalued at $90. All restricted stock units are settled in common stock one year following the director's separation from the Board.

Unless a non-employee director gives notice setting forth a different percentage, 50% of each director's annual retainer fee is deferredand converted into units based on the fair market value of the company's stock as of the date it was payable. Upon a non-employeedirector's retirement from the Board, each unit in their deferral account will be converted into a share of company stock anddistributed to the non-employee director as soon as practicable following such date.

Summary of Non-Vested Shares

The following information summarizes the changes in non-vested performance shares, restricted stock, restricted stock units, andnon-employee director awards for 2009:

Shares

Weighted Average

Grant Date Fair Value

Non-vested shares at December 31, 2008 1,427,247 $ 33.88 Granted 2,079,254 17.23 Vested (472,871) 32.35 Forfeited (400,095) 31.51 Non-vested shares at December 31, 2009 2,633,535 21.37

As of December 31, 2009, there was $29,868 of total unrecognized compensation cost related to non-vested shares which is expectedto be recognized over a weighted-average period of 2.8 years. The total fair value of shares vested during 2009, 2008, and 2007 was$8,809, $10,313, and $11,803, respectively.

Stock Ownership Plan

The company maintains a noncontributory employee stock ownership plan, which enables most North American employees to acquireshares of the company's common stock. Contributions, which are determined by the Board, are in the form of common stock or cash,which is used to purchase the company's common stock for the benefit of participating employees. Contributions to the plan in 2009which pertained to 2008 were $0, and contributions to the plan in 2008 which pertained to 2007 were $10,857.

76




13. Employee Benefit Plans

Supplemental Executive Retirement Plans ("SERP")

The company maintains an unfunded Arrow SERP under which the company will pay supplemental pension benefits to certainemployees upon retirement. There are 12 current and 13 former corporate officers participating in this plan. The Board determinesthose employees who are eligible to participate in the Arrow SERP.

The Arrow SERP, as amended, provides for the pension benefits to be based on a percentage of average final compensation, based onyears of participation in the Arrow SERP. The Arrow SERP permits early retirement, with payments at a reduced rate, based on ageand years of service subject to a minimum retirement age of 55. Participants whose accrued rights under the Arrow SERP, prior to the2002 amendment, which were adversely affected by the amendment, will continue to be entitled to such greater rights.

The company acquired Wyle Electronics ("Wyle") in 2000. Wyle also sponsored an unfunded SERP for certain of its executives.Benefit accruals for the Wyle SERP were frozen as of December 31, 2000. There are 19 participants in this plan.

The company uses a December 31 measurement date for the Arrow SERP and the Wyle SERP. Pension information for the yearsended December 31 is as follows:

2009 2008 Accumulated benefit obligation $ 49,058 $ 46,286 Changes in projected benefit obligation: Projected benefit obligation at beginning of year $ 53,885 $ 53,065 Service cost (Arrow SERP) 2,320 2,587 Interest cost 3,017 2,929 Actuarial (gain)/loss 848 (1,768)Benefits paid (3,018) (2,928)Projected benefit obligation at end of year $ 57,052 $ 53,885 Funded status $ (57,052) $ (53,885) Components of net periodic pension cost: Service cost (Arrow SERP) $ 2,320 $ 2,587 Interest cost 3,017 2,929 Amortization of net loss (174) 321 Amortization of prior service cost (Arrow SERP) 591 549 Amortization of transition obligation (Arrow SERP) 410 411 Net periodic pension cost $ 6,164 $ 6,797 Weighted average assumptions used to determine benefit obligation: Discount rate 5.50% 6.00%Rate of compensation increase (Arrow SERP) 5.00% 5.00%

77




2009 2008 Weighted average assumptions used to determine net periodic pension cost: Discount rate 6.00% 5.75%Rate of compensation increase (Arrow SERP) 5.00% 5.00%

The amounts reported for net periodic pension cost and the respective benefit obligation amounts are dependent upon the actuarialassumptions used. The company reviews historical trends, future expectations, current market conditions, and external data todetermine the assumptions. The discount rate represents the market rate for a high quality corporate bond. The rate of compensationincrease is determined by the company, based upon its long-term plans for such increases. The actuarial assumptions used todetermine the net periodic pension cost are based upon the prior year's assumptions used to determine the benefit obligation.

Benefit payments are expected to be paid as follows:

2010 $ 3,674 2011 3,656 2012 3,789 2013 3,820 2014 3,780 2015 - 2019 22,242

78




Wyle Defined Benefit Plan

Wyle provided retirement benefits for certain employees under a defined benefit plan. Benefits under this plan were frozen as ofDecember 31, 2000 and former participants were permitted to participate in the company's employee stock ownership and 401(k)plans. The company uses a December 31 measurement date for this plan. Pension information for the years ended December 31 is asfollows:

2009 2008 Accumulated benefit obligation $ 108,124 $ 101,077 Changes in projected benefit obligation: Projected benefit obligation at beginning of year $ 101,077 $ 101,494 Interest cost 5,844 5,769 Actuarial (gain)/loss 6,444 (1,033)Benefits paid (5,241) (5,153)Projected benefit obligation at end of year $ 108,124 $ 101,077 Changes in plan assets: Fair value of plan assets at beginning of year $ 62,328 $ 81,364 Actual return on plan assets 13,821 (19,691)Company contributions 4,500 5,808 Benefits paid (5,241) (5,153)Fair value of plan assets at end of year $ 75,408 $ 62,328 Funded status $ (32,716) $ (38,749) Components of net periodic pension cost: Interest cost $ 5,844 $ 5,769 Expected return on plan assets (5,048) (6,830)Amortization of net loss 3,526 1,552 Net periodic pension cost $ 4,322 $ 491 Weighted average assumptions used to determine benefit obligation: Discount rate 5.50% 6.00%Expected return on plan assets 8.25% 8.00% Weighted average assumptions used to determine net periodic pension cost: Discount rate 6.00% 5.75%Expected return on plan assets 8.00% 8.50%

The amounts reported for net periodic pension cost and the respective benefit obligation amounts are dependent upon the actuarialassumptions used. The company reviews historical trends, future expectations, current market conditions, and external data todetermine the assumptions. The discount rate

79




represents the market rate for a high quality corporate bond. The expected return on plan assets is based on current and expected assetallocations, historical trends, and expected returns on plan assets. The actuarial assumptions used to determine the net periodicpension cost are based upon the prior year's assumptions used to determine the benefit obligation.

The company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations,are met. The company made contributions of $4,500 in 2009 and expects to make estimated contributions in 2010 of $600.

Benefit payments are expected to be paid as follows:

2010 $ 6,035 2011 6,072 2012 6,176 2013 6,311 2014 6,430 2015 - 2019 34,141

The fair values of the company’s pension plan assets at December 31, 2009, utilizing the fair value hierarchy discussed in Note 7,follow:

Level 1 Level 2 Level 3 Total Cash Equivalents:

Common collective trusts $ - $ 879 $ - $ 879 Equities:

U.S. common stocks 25,063 - - 25,063 International mutual funds 11,281 - - 11,281 Index mutual funds 12,428 - - 12,428

Fixed Income:

Mutual funds 25,031 - - 25,031 Insurance contracts - 726 - 726

Total $ 73,803 $ 1,605 $ - $ 75,408

The investment portfolio contains a diversified blend of common stocks, bonds, cash equivalents, and other investments, which mayreflect varying rates of return. The investments are further diversified within each asset classification. The portfolio diversificationprovides protection against a single security or class of securities having a disproportionate impact on aggregate performance. Thelong-term target allocations for plan assets are 65% in equities and 35% in fixed income, although the actual plan asset allocationsmay be within a range around these targets. The actual asset allocations are reviewed and rebalanced on a periodic basis to maintainthe target allocations.

Comprehensive Income items

In 2009, 2008, and 2007, actuarial (gains)/losses of $(1,038), $14,045, and $3,749, respectively, were recognized in comprehensiveincome, net of related taxes, related to the company's defined benefit plans. In 2009, 2008, and 2007, the following amounts wererecognized as a reclassification adjustment of comprehensive income, net of related taxes, as a result of being recognized in netperiodic pension cost: transition obligation of $251, $299, and $293, respectively, prior service cost of $186, $323, and $315,

80




respectively, and an actuarial loss of $2,019, $939, and $1,274, respectively.

Included in accumulated other comprehensive loss at December 31, 2009 and 2008 are the following amounts, net of related taxes,that have not yet been recognized in net periodic pension cost: unrecognized transition obligation of $506 and $757, respectively,unrecognized prior service costs of $103 and $289, respectively, and unrecognized actuarial losses of $28,893 and $31,950,respectively.

The transition obligation, prior service cost, and actuarial loss included in accumulated other comprehensive loss, net of related taxes,which are expected to be recognized in net periodic pension cost for the year ended December 31, 2010 are $18, $159, and $2,759,respectively.

Defined Contribution Plan

The company has a defined contribution plan for eligible employees, which qualifies under Section 401(k) of the Internal RevenueCode. The company's contribution to the plan, which is based on a specified percentage of employee contributions, amounted to$7,821, $9,420, and $8,783 in 2009, 2008, and 2007, respectively. Certain international subsidiaries maintain separate definedcontribution plans for their employees and made contributions thereunder, which amounted to $15,588, $17,759, and $11,113 in 2009,2008, and 2007, respectively.

14. Lease Commitments

The company leases certain office, distribution, and other property under non-cancelable operating leases expiring at various datesthrough 2022. Rental expense under non-cancelable operating leases, net of sublease income, amounted to $57,612, $67,334, and$60,173 in 2009, 2008, and 2007, respectively.

Aggregate minimum rental commitments under all non-cancelable operating leases, exclusive of real estate taxes, insurance, andleases related to facilities closed as a result of the integration of acquired businesses and the restructuring of the company, are asfollows:

2010 $ 53,036 2011 42,755 2012 31,876 2013 25,932 2014 16,365 Thereafter 14,180

15. Contingencies

Tekelec Matters

In 2000, the company purchased Tekelec Europe SA ("Tekelec") from Tekelec Airtronic SA ("Airtronic") and certain other sellingshareholders. Subsequent to the closing of the acquisition, Tekelec received a product liability claim in the amount of €11,333. Theproduct liability claim was the subject of a French legal proceeding started by the claimant in 2002, under which separatedeterminations were made as to whether the products that are subject to the claim were defective and the amount of damages sustainedby the purchaser. The manufacturer of the products also participated in this proceeding. The claimant has commenced legalproceedings against Tekelec and its insurers to recover damages in the amount of €3,742 and expenses of €312 plus interest.

81




Environmental and Related Matters

Wyle Claims

In connection with the 2000 purchase of Wyle from the VEBA Group ("VEBA"), the company assumed certain of the thenoutstanding obligations of Wyle, including Wyle's 1994 indemnification of the purchasers of its Wyle Laboratories division forenvironmental clean-up costs associated with any then existing contamination or violation of environmental regulations. Under theterms of the company’s purchase of Wyle from VEBA, VEBA agreed to indemnify the company for costs associated with the Wyleenvironmental indemnities, among other things. The company is aware of two Wyle Laboratories facilities (in Huntsville, Alabamaand Norco, California) at which contaminated groundwater was identified. Each site will require remediation, the final form and costof which is undetermined.

Wyle Laboratories has demanded indemnification from the company with respect to the work at both sites (and in connection with thelitigation discussed below), and the company has, in turn, demanded indemnification from VEBA. VEBA merged with apublicly–traded, German conglomerate in June 2000. The combined entity, now known as E.ON AG, remains responsible forVEBA’s liabilities. E.ON AG acknowledged liability under the terms of the VEBA contract in connection with the Norco andHuntsville sites and made an initial, partial payment. Neither the company’s demands for subsequent payments nor its demand fordefense and indemnification in the related litigation and other costs associated with the Norco site were met.

Related Litigation

In October 2005, the company filed suit against E.ON AG in the Frankfurt am Main Regional Court in Germany. The suit seeksindemnification, contribution, and a declaration of the parties’ respective rights and obligations in connection with the RiversideCounty litigation (discussed below) and other costs associated with the Norco site. In its answer to the company’s claim filed inMarch 2009 in the German proceedings, E.ON AG filed a counterclaim against the company for approximately $16,000. Thecompany is in the process of preparing a response to the counterclaim. The company believes it has reasonable defenses to thecounterclaim and plans to defend its position vigorously. The company believes that the ultimate resolution of the counterclaim willnot materially adversely impact the company’s consolidated financial position, liquidity, or results of operations. The litigation iscurrently suspended while the company engages in a court-facilitated mediation with E.ON AG. The mediation commenced inDecember 2009 and will continue well into 2010.

The company was named as a defendant in several suits related to the Norco facility, all of which were consolidated for pre-trialpurposes. In January 2005, an action was filed in the California Superior Court in Riverside County, California (Gloria Austin, et al. v.Wyle Laboratories, Inc. et al.). Approximately 90 plaintiff landowners and residents sued a number of defendants under a variety oftheories for unquantified damages allegedly caused by environmental contamination at and around the Norco site. Also filed in theSuperior Court in Riverside County were Jimmy Gandara, et al. v. Wyle Laboratories, Inc. et al. in January 2006, and Lisa Briones, etal. v. Wyle Laboratories, Inc. et al. in May 2006; both of which contain allegations similar to those in the Austin case on behalf ofapproximately 20 additional plaintiffs. All of these matters have now been resolved to the satisfaction of the parties.

The company was also named as a defendant in a lawsuit filed in September 2006 in the United States District Court for the CentralDistrict of California (Apollo Associates, L.P., et anno. v. Arrow Electronics, Inc. et al.) in connection with alleged contamination at athird site, an industrial building formerly leased by Wyle Laboratories, in El Segundo, California. The lawsuit was settled, though thepossibility remains that government entities or others may attempt to involve the company in further characterization or remediation ofgroundwater issues in the area.

Environmental Matters – Huntsville

Characterization of the extent of contaminated soil and groundwater continues at the site in Huntsville, Alabama. Under the directionof the Alabama Department of Environmental Management, approximately $3,000 was spent to date. The pace of the ongoingremedial investigations, project management and regulatory oversight is likely to increase somewhat and though the complete scope ofthe activities is not

82




yet known, the company currently estimates additional investigative and related expenditures at the site of approximately $500 to$1,000. The nature and scope of both feasibility studies and subsequent remediation at the site has not yet been determined, butassuming the outcome includes source control and certain other measures, the cost is estimated to be between $2,500 and $4,000.

Environmental Matters – Norco

In October 2003, the company entered into a consent decree with Wyle Laboratories and the California Department of ToxicSubstance Control (the "DTSC") in connection with the Norco site. In April 2005, a Remedial Investigation Work Plan was approvedby DTSC that provided for site-wide characterization of known and potential environmental issues. Investigations performed inconnection with this work plan and a series of subsequent technical memoranda continued until the filing of a final RemedialInvestigation Report early in 2008. The development of a final Remedial Action Work Plan is ongoing. An estimated $28,000 wasexpended to date on project management, regulatory oversight, and investigative and feasibility study activities.

Work is under way pertaining to the remediation of contaminated groundwater at certain areas on the Norco site and of soil gas in alimited area immediately adjacent to the site. In the first quarter of 2008, a hydraulic containment system was installed to capture andtreat groundwater before it moves into the adjacent offsite area. Approximately $8,000 was expended on remediation to date, and it isanticipated that these activities, along with the initial phases of the treatment of contaminated groundwater in the offsite area andremaining Remedial Action Work Plan costs, will give rise to an additional estimated $9,650 to $20,250.

Costs categories related to environmental activities at Norco include those for project management and regulatory oversight, remedialinvestigations, feasibility studies, and interim remedial actions. Project management and regulatory oversight include costs incurredby Wyle Laboratories and project consultants for project management and costs billed by DTSC to provide regulatory oversight.

The company currently estimates that the additional cost of project management and regulatory oversight will range from $500 to$750. Ongoing remedial investigations (including costs related to soil and groundwater investigations), and the preparation of a finalremedial investigation report are projected to cost between $400 and $700.

Despite the amount of work undertaken and planned to date, the complete scope of work under the consent decree is not yet known,and, accordingly, the associated costs have not yet been determined.

Impact on Financial Statements

The company believes that any cost which it may incur in connection with environmental conditions at the Norco, Huntsville, and ElSegundo sites and the related litigation is covered by the contractual indemnifications (except, under the terms of the environmentalindemnification, for the first $450), discussed above. The company believes that the recovery of costs incurred to date associated withthe environmental clean-up of the Norco and Huntsville sites, is probable. Accordingly, the company increased the receivable foramounts due from E.ON AG by $7,293 during 2009 to $40,912. The company’s net costs for such indemnified matters may varyfrom period to period as estimates of recoveries are not always recognized in the same period as the accrual of estimated expenses.

Also included in the proceedings against E.ON AG is a claim for the reimbursement of pre-acquisition tax liabilities of Wyle in theamount of $8,729 for which E.ON AG is also contractually liable to indemnify the company. E.ON AG has specificallyacknowledged owing the company not less than $6,335 of such amounts, but its promises to make payments of at least that amountwere not kept. The company also believes that the recovery of these amounts is probable.

83




In connection with the acquisition of Wyle, the company acquired a $4,495 tax receivable due from E.ON AG (as successor to VEBA)in respect of certain tax payments made by Wyle prior to the effective date of the acquisition, the recovery of which the company alsobelieves is probable.

As successor-in-interest to Wyle, the company is the beneficiary of various Wyle insurance policies that covered liabilities arising outof operations at Norco and Huntsville. Certain of the insurance carriers implicated in the Riverside County litigation have undertakensubstantial portions of the defense of the company, and the company has recovered approximately $13,000 from them to date. Thecompany has sued certain of the umbrella liability policy carriers, however, because they have yet to make payment on the tenderedlosses.

The company believes strongly in the merits of its positions regarding the E.ON AG indemnity and the liabilities of the insurancecarriers.

Other

From time to time, in the normal course of business, the company may become liable with respect to other pending and threatenedlitigation, environmental, regulatory, labor, product, and tax matters. While such matters are subject to inherent uncertainties, it is notcurrently anticipated that any such matters will materially impact the company’s consolidated financial position, liquidity, or results ofoperations.

16. Segment and Geographic Information

The company is a global provider of products, services, and solutions to industrial and commercial users of electronic components andenterprise computing solutions. The company distributes electronic components to original equipment manufacturers and contractmanufacturers through its global components business segment and enterprise computing solutions to VARs through its global ECSbusiness segment. As a result of the company's philosophy of maximizing operating efficiencies through the centralization of certainfunctions, selected fixed assets and related depreciation, as well as borrowings, are not directly attributable to the individual operatingsegments and are included in the corporate business segment.

Sales and operating income (loss), by segment, for the years ended December 31 follows:

2009 2008 2007 Sales: Global components $ 9,751,305 $ 11,319,482 $ 11,223,751 Global ECS 4,932,796 5,441,527 4,761,241 Consolidated $ 14,684,101 $ 16,761,009 $ 15,984,992 Operating income (loss): Global components $ 318,866 $ 533,126 $ 604,217 Global ECS 167,748 196,269 202,223 Corporate (a) (213,827) (1,222,964) (119,535)Consolidated $ 272,787 $ (493,569) $ 686,905

(a) Includes restructuring, integration, and other charges of $105,514, $80,955, and $11,745 in 2009, 2008, and 2007,respectively. Also included in 2008 is a non-cash impairment charge of $1,018,780 associated with goodwill.

84




Total assets, by segment, at December 31 follow:

2009 2008 Global components $ 4,512,141 $ 4,093,118 Global ECS 2,258,803 2,325,095 Corporate 991,422 700,072 Consolidated $ 7,762,366 $ 7,118,285

Sales, by geographic area, for the years ended December 31 follow:

2009 2008 2007 North America (b) $ 7,017,389 $ 8,366,124 $ 8,565,247 EMEASA 4,287,405 5,392,805 4,970,585 Asia/Pacific 3,379,307 3,002,080 2,449,160 $ 14,684,101 $ 16,761,009 $ 15,984,992

(b) Includes sales related to the United States of $6,374,447, $7,705,048, and $7,962,526 in 2009, 2008, and 2007, respectively.

Net property, plant and equipment, by geographic area, at December 31 follow:

2009 2008 North America (c) $ 381,581 $ 324,385 EMEASA 62,206 68,215 Asia/Pacific 16,919 17,940 $ 460,706 $ 410,540

(c) Includes net property, plant and equipment related to the United States of $380,576 and $323,561 in 2009 and 2008,respectively.

85




17. Quarterly Financial Data (Unaudited)

During 2009, the company began operating on a revised interim quarterly reporting calendar that closes on the Saturday following theend of the calendar quarter. There were 65, 63, and 65 shipping days for the first, second, and third quarters of 2009 compared with64, 64, and 65 shipping days for each of the year-earlier periods, respectively.

A summary of the company's consolidated quarterly results of operations is as follows:

First

Quarter SecondQuarter

ThirdQuarter

FourthQuarter

2009 Sales $ 3,417,428 $ 3,391,823 $ 3,671,865 $ 4,202,985 Gross profit 430,996 402,194 421,061 496,643 Net income attributable to shareholders 26,741 (b) 21,097 (c) 12,581 (d) 63,093 (e) Net income per share (a): Basic $ .22 (b) $ .18 (c) $ .10 (d) $ .53 (e)Diluted .22 (b) .18 (c) .10 (d) .52 (e) 2008 Sales $ 4,028,491 $ 4,347,477 $ 4,295,314 $ 4,089,727 Gross profit 586,291 612,471 563,855 520,096 Net income (loss) attributable to shareholders 85,871 (f) 96,215 (g) 76,070 (h) (871,895) (i) Net income (loss) per share (a): Basic $ .70 (f) $ .79 (g) $ .64 (h) $ (7.30) (i)Diluted .69 (f) .79 (g) .63 (h) (7.30) (i)

(a) Quarterly net income per share is calculated using the weighted average number of shares outstanding during each quarterlyperiod, while net income per share for the full year is calculated using the weighted average number of shares outstandingduring the year. Therefore, the sum of the net income per share for each of the four quarters may not equal the net incomeper share for the full year.

(b) Includes restructuring, integration, and other charges ($16,069 net of related taxes or $.13 per share on both a basic anddiluted basis).

(c) Includes restructuring, integration, and other charges ($16,124 net of related taxes or $.13 per share on both a basic anddiluted basis).

(d) Includes restructuring, integration, and other charges ($29,075 net of related taxes or $.24 per share on both a basic anddiluted basis) and a loss on prepayment of debt ($3,228 net of related taxes or $.03 per share on both a basic and dilutedbasis).

(e) Includes restructuring, integration, and other charges ($14,452 net of related taxes or $.12 per share on both a basic anddiluted basis).

(f) Includes restructuring, integration, and other charges ($11,981 net of related taxes or $.10 per

86




share on both a basic and diluted basis).

(g) Includes restructuring, integration, and other charges ($5,929 net of related taxes or $.05 per share on both a basic and dilutedbasis).

(h) Includes restructuring, integration, and other charges ($7,635 net of related taxes or $.06 per share on both a basic and dilutedbasis).

(i) Includes a non-cash impairment charge associated with goodwill ($905,069 net of related taxes or $7.58 per share on both abasic and diluted basis), restructuring, integration, and other charges ($36,331 net of related taxes or $.30 per share on both abasic and diluted basis), and a loss on the write-down of an investment ($10,030 net of related taxes or $.08 per share on botha basic and diluted basis). Also includes a reduction of the provision for income taxes ($8,450 net of related taxes or $.07 pershare on both a basic and diluted basis) and an increase in interest expense ($962 net of related taxes or $.01 per share onboth a basic and diluted basis) primarily related to the settlement of certain international income tax matters.

87


Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None. Item 9A. Controls and Procedures.

Disclosure Controls and Procedures

The company's management, under the supervision and with the participation of the company's Chief Executive Officer and ChiefFinancial Officer, carried out an evaluation of the effectiveness of the design and operation of the company's disclosure controls andprocedures as of December 31, 2009 (the "Evaluation"). Based upon the Evaluation, the company's Chief Executive Officer and ChiefFinancial Officer concluded that the company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the SecuritiesExchange Act of 1934) are effective.

Management's Report on Internal Control Over Financial Reporting

The company's management is responsible for establishing and maintaining adequate "internal control over financial reporting" (asdefined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Management evaluates the effectiveness of the company's internal controlover financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission inInternal Control – Integrated Framework. Management, under the supervision and with the participation of the company's ChiefExecutive Officer and Chief Financial Officer, assessed the effectiveness of the company's internal control over financial reporting asof December 31, 2009, and concluded that it is effective.

The company acquired A.E. Petsche Company, Inc. ("Petsche") in December 2009. The company has excluded Petsche from itsannual assessment of and conclusion on the effectiveness of the company's internal control over financial reporting. Petscheaccounted for 2.4 percent of total assets as of December 31, 2009 and less than 1 percent of the company's consolidated sales and netincome attributable to shareholders for the year ended December 31, 2009.

The company's independent registered public accounting firm, Ernst & Young LLP, has audited the effectiveness of the company'sinternal control over financial reporting as of December 31, 2009, as stated in their report, which is included herein.

88


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and ShareholdersArrow Electronics, Inc.

We have audited Arrow Electronics, Inc.’s (the "company") internal control over financial reporting as of December 31, 2009, basedon criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (the COSO criteria). The company’s management is responsible for maintaining effective internal control overfinancial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in theaccompanying Management’s Report of Internal Control over Financial Reporting. Our responsibility is to express an opinion on thecompany’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control overfinancial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control overfinancial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness ofinternal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effecton the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment ofand conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of A.E. PetscheCompany, Inc. ("Petsche") acquired by the company on December 20, 2009, which is included in the company’s 2009 consolidatedfinancial statements and constituted 2.4 percent of total assets as of December 31, 2009 and less than 1 percent of the sales and netincome attributable to shareholders for the year then ended. Our audit of internal control over financial reporting of the company alsodid not include an evaluation of the internal control over financial reporting of Petsche.

In our opinion, Arrow Electronics, Inc. maintained, in all material respects, effective internal control over financial reporting as ofDecember 31, 2009, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), theconsolidated balance sheets of Arrow Electronics, Inc. as of December 31, 2009 and 2008, and the related consolidated statements ofoperations, equity, and cash flows for each of the three years in the period ended December 31, 2009 and our report dated February 3,2010 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

New York, New York February 3, 2010

89


Changes in Internal Control Over Financial Reporting

There was no change in the company's internal control over financial reporting that occurred during the company's most recent fiscalquarter that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

Item 9B. Other Information. None.

90


PART III

Item 10. Directors, Executive Officers, and Corporate Governance.

See "Executive Officers" in Part I of this Annual Report on Form 10-K. In addition, the information set forth under the headings"Election of Directors" and "Section 16(A) Beneficial Ownership Reporting Compliance" in the company's Proxy Statement, filed inconnection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, are incorporated herein by reference.

Information about the company's audit committee financial experts set forth under the heading "The Board and its Committees" in thecompany's Proxy Statement, filed in connection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, isincorporated herein by reference.

Information about the company's code of ethics governing the Chief Executive Officer, Chief Financial Officer, and CorporateController, known as the "Finance Code of Ethics," as well as a code of ethics governing all employees, known as the "WorldwideCode of Business Conduct and Ethics," is available free-of-charge on the company's website at http://www.arrow.com and is availablein print to any shareholder upon request.

Information about the company's "Corporate Governance Guidelines" and written committee charters for the company's AuditCommittee, Compensation Committee, and Corporate Governance Committee is available free-of-charge on the company's website athttp://www.arrow.com and is available in print to any shareholder upon request.

Item 11. Executive Compensation.

The information required by Item 11 is included in the company's Proxy Statement filed in connection with the Annual Meeting ofShareholders scheduled to be held on May 4, 2010, and is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.


Item 13. Certain Relationships and Related Transactions, and Director Independence.


Item 14. Principal Accounting Fees and Services.


91


PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) The following documents are filed as part of this report: Page 1. Financial Statements. Report of Independent Registered Public Accounting Firm 42

Consolidated Statements of Operations for the years ended December 31, 2009, 2008, and 2007 43

Consolidated Balance Sheets as of December 31, 2009 and 2008 44

Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007 45

Consolidated Statements of Equity for the years ended December 31, 2009, 2008, and 2007 46

Notes to Consolidated Financial Statements 48 2. Financial Statement Schedule. Schedule II – Valuation and Qualifying Accounts 99

All other schedules are omitted since the required information is not present, or is not present in amountssufficient to require submission of the schedule, or because the information required is included in theconsolidated financial statements, including the notes thereto.

3. Exhibits. See Index of Exhibits included on pages 93 - 98

92


INDEX OF EXHIBITS

ExhibitNumber

Exhibit

2(a) Share Purchase Agreement, dated as of August 7, 2000, among VEBA Electronics GmbH, EBV Verwaltungs

GmbH i.L., Viterra Grundstucke Verwaltungs GmbH, VEBA Electronics LLC, VEBA Electronics BeteiligungsGmbH, VEBA Electronics (UK) Plc, Raab Karcher Electronics Systems Plc and E.ON AG and ArrowElectronics, Inc., Avnet, Inc., and Cherrybright Limited regarding the sale and purchase of the VEBA electronicsdistribution group (incorporated by reference to Exhibit 2(i) to the company's Annual Report on Form 10-K forthe year ended December 31, 2000, Commission File No. 1-4482).

3(a)(i) Restated Certificate of Incorporation of the company, as amended (incorporated by reference to Exhibit 3(a) to the

company's Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 1-4482).

3(a)(ii) Certificate of Amendment of the Certificate of Incorporation of Arrow Electronics, Inc., dated as of August 30,1996 (incorporated by reference to Exhibit 3 to the company's Quarterly Report on Form 10-Q for the quarterended September 30, 1996, Commission File No. 1-4482).

3(a)(iii) Certificate of Amendment of the Restated Certificate of Incorporation of the company, dated as of October 12,

2000 (incorporated by reference to Exhibit 3(a)(iii) to the company's Annual Report on Form 10-K for the yearended December 31, 2000, Commission File No. 1-4482).

3(b) Amended Corporate By-Laws, dated July 29, 2004 (incorporated by reference to Exhibit 3(ii) to the company's

Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, Commission File No. 1-4482).

4(a)(i) Indenture, dated as of January 15, 1997, between the company and The Bank of New York Mellon (formerly, theBank of Montreal Trust Company), as Trustee (incorporated by reference to Exhibit 4(b)(i) to the company'sAnnual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 1-4482).

4(a)(ii) Officers' Certificate, as defined by the Indenture in 4(a)(i) above, dated as of January 22, 1997, with respect to the

company's $200,000,000 7% Senior Notes due 2007 and $200,000,000 7 1/2% Senior Debentures due 2027(incorporated by reference to Exhibit 4(b)(ii) to the company's Annual Report on Form 10-K for the year endedDecember 31, 1996, Commission File No. 1-4482).

4(a)(iii) Officers' Certificate, as defined by the Indenture in 4(a)(i) above, dated as of January 15, 1997, with respect to the

$200,000,000 6 7/8% Senior Debentures due 2018, dated as of May 29, 1998 (incorporated by reference toExhibit 4(b)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 1998,Commission File No. 1-4482).

4(a)(iv) Supplemental Indenture, dated as of February 21, 2001, between the company and The Bank of New York (as

successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4.2 to thecompany's Current Report on Form 8-K, dated March 12, 2001, Commission File No. 1-4482).

93


ExhibitNumber

Exhibit

4(a)(v) Supplemental Indenture, dated as of December 31, 2001, between the company and The Bank of New York (as

successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4(b)(vi) to thecompany's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

4(a)(vi) Supplemental Indenture, dated as of March 11, 2005, between the company and The Bank of New York (as

successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4(b)(vii) tothe company's Annual Report on Form 10-K for the year ended December 31, 2004, Commission File No.1-4482).

4(a)(vii) Supplemental Indenture, dated as of September 30, 2009, between the company and The Bank of New York (as

successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4.1 to thecompany's Current Report on Form 8-K dated September 29, 2009, Commission File No. 1-4482).

10(a) Arrow Electronics Savings Plan, as amended and restated on September 9, 2009 (incorporated by reference to

Exhibit 10(a) to the company's Quarterly Report on Form 10-Q for the quarter ended October 3, 2009,Commission File No. 1-4482).

10(b) Wyle Electronics Retirement Plan, as amended and restated on September 9, 2009 (incorporated by reference to

Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended October 3, 2009,Commission File No. 1-4482).

10(c) Arrow Electronics Stock Ownership Plan, as amended and restated on September 9, 2009 (incorporated by

reference to Exhibit 10(c) to the company's Quarterly Report on Form 10-Q for the quarter ended October 3, 2009,Commission File No. 1-4482).

10(d)(i) Arrow Electronics, Inc. 2004 Omnibus Incentive Plan as amended February 28, 2007 and February 27, 2008

(incorporated by reference to Exhibit 10.1 to the company's Current Report on Form 8-K, dated May 2, 2008,Commission File No. 1-4482).

10(d)(ii) Form of Stock Option Award Agreement under 10(d)(i) above (incorporated by reference to Exhibit 10-0 to the

company's Current Report on Form 8-K, dated March 23, 2006, Commission File No. 1-4482).

10(d)(iii) Form of Performance Share Award Agreement under 10(d)(i) above (incorporated by reference to Exhibit 10-0 tothe company's Current Report on Form 8-K, dated August 31, 2005, Commission File No. 1-4482).

10(d)(iv) Form of Restricted Stock Award Agreement under 10(d)(i) above (incorporated by reference to Exhibit 10-0 to

the company's Current Report on Form 8-K, dated September 14, 2005, Commission File No. 1-4482).

10(e)(i) Arrow Electronics, Inc. Stock Option Plan, as amended and restated effective February 27, 2002 (incorporated byreference to Exhibit 10(d)(i) to the company's Annual Report on Form 10-K for the year ended December 31,2002, Commission File No. 1-4482).

94


ExhibitNumber

Exhibit

10(e)(ii) Paying Agency Agreement, dated November 11, 2003, by and between Arrow Electronics, Inc. and Wachovia

Bank, N.A. (incorporated by reference to Exhibit 10(d)(iii) to the company's Annual Report on Form 10-K for theyear ended December 31, 2003, Commission File No. 1-4482).

10(f) Restricted Stock Plan of Arrow Electronics, Inc., as amended and restated effective February 27, 2002

(incorporated by reference to Exhibit 10(e)(i) to the company's Annual Report on Form 10-K for the year endedDecember 31, 2002, Commission File No. 1-4482).

10(g) 2002 Non-Employee Directors Stock Option Plan as of May 23, 2002 (incorporated by reference to Exhibit 10(f)

to the company's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No.1-4482).

10(h) Non-Employee Directors Deferral Plan as of May 15, 1997 (incorporated by reference to Exhibit 99(d) to the

company's Registration Statement on Form S-8, Registration No. 333-45631).

10(i) Arrow Electronics, Inc. Supplemental Executive Retirement Plan, as amended effective January 1, 2009.

10(j) Arrow Electronics, Inc. Executive Deferred Compensation Plan as of October 1, 2004 (incorporated by referenceto Exhibit 10(j) to the company's Annual Report on Form 10-K for the year ended December 31, 2005,Commission File No. 1-4482).

10(k)(i) Employment Agreement, dated as of December 30, 2008, by and between the company and Michael J. Long

(incorporated by reference to Exhibit 10(k)(i) to the company's Annual Report on Form 10-K for the year endedDecember 31, 2008, Commission File No. 1-4482).

10(k)(ii) Employment Agreement, dated as of December 30, 2008, by and between the company and Peter S. Brown

(incorporated by reference to Exhibit 10(k)(ii) to the company's Annual Report on Form 10-K for the year endedDecember 31, 2008, Commission File No. 1-4482).

10(k)(iii) Employment Agreement, dated as of December 30, 2008, by and between the company and Paul J. Reilly

(incorporated by reference to Exhibit 10(k)(iii) to the company's Annual Report on Form 10-K for the year endedDecember 31, 2008, Commission File No. 1-4482).

10(k)(iv) Employment Agreement, dated as of December 30, 2008, by and between the company and John P. McMahon

(incorporated by reference to Exhibit 10(k)(vi) to the company’s Annual Report on Form 10-K for the year endedDecember 31, 2008, Commission File No. 1-4482).

10(k)(v) Employment Agreement, dated as of December 30, 2008, by and between the company and Andrew S. Bryant.

10(k)(vi) Employment Agreement, dated as of December 30, 2008, by and between the company and Peter Kong.

95


ExhibitNumber

Exhibit

10(k)(vii) Form of agreement providing extended separation benefits under certain circumstances between the company and

certain employees party to employment agreements, including the employees listed in 10(k)(i)-(vi) above.

10(k)(viii) Grantor Trust Agreement, as amended and restated on November 11, 2003, by and between Arrow Electronics,Inc. and Wachovia Bank, N.A. (incorporated by reference to Exhibit 10(i)(xvii) to the company's Annual Reporton Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(k)(ix) First Amendment, dated September 17, 2004, to the amended and restated Grantor Trust Agreement in 10(k)(viii)

above by and between Arrow Electronics, Inc. and Wachovia Bank, N.A. (incorporated by reference to Exhibit10(a) to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, CommissionFile No. 1-4482).

10(l)(i) 9.15% Senior Exchange Notes due October 1, 2010, dated as of October 6, 2000, among Arrow Electronics, Inc.

and Goldman, Sachs & Co.; Chase Securities Inc.; Morgan Stanley & Co. Incorporated; Bank of AmericaSecurities LLC; Donaldson, Lufkin & Jenrette Securities Corporation; BNY Capital Markets, Inc.; Credit SuisseFirst Boston Corporation; Deutsche Bank Securities Inc.; Fleet Securities, Inc.; and HSBC Securities (USA) Inc.,as underwriters (incorporated by reference to Exhibit 4.4 to the company's Registration Statement on Form S-4,Registration No. 333-51100).

10(l)(ii) 6.875% Senior Exchange Notes due 2013, dated as of June 25, 2003, among Arrow Electronics, Inc. and

Goldman, Sachs & Co.; JPMorgan; and Bank of America Securities LLC, as joint book-running managers; CreditSuisse First Boston, as lead manager; and Fleet Securities, Inc.; HSBC, Scotia Capital; and Wachovia Securities,as co-managers (incorporated by reference to Exhibit 99.1 to the company's Current Report on Form 8-K datedJune 25, 2003, Commission File No. 1-4482).

10(m) Amended and Restated Five Year Credit Agreement, dated as of January 11, 2007, among Arrow Electronics, Inc.

and certain of its subsidiaries, as borrowers, the lenders from time to time party thereto, JPMorgan Chase Bank,N.A., as administrative agent, and Bank of America, N.A., The Bank of Nova Scotia, BNP Paribas and WachoviaBank National Association, as syndication agents (incorporated by reference to Exhibit 10(n) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2006, Commission File No. 1-4482).

10(n)(i) Transfer and Administration Agreement, dated as of March 21, 2001, by and among Arrow Electronics Funding

Corporation, Arrow Electronics, Inc., individually and as Master Servicer, the several Conduit Investors, AlternateInvestors and Funding Agents and Bank of America, National Association, as administrative agent (incorporatedby reference to Exhibit 10(m)(i) to the company's Annual Report on Form 10-K for the year ended December 31,2001, Commission File No. 1-4482).

10(n)(ii) Amendment No. 1 to the Transfer and Administration Agreement, dated as of November 30, 2001, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(m)(ii) to thecompany's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

96


ExhibitNumber

Exhibit

10(n)(iii) Amendment No. 2 to the Transfer and Administration Agreement, dated as of December 14, 2001, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(m)(iii) to thecompany's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

10(n)(iv) Amendment No. 3 to the Transfer and Administration Agreement, dated as of March 20, 2002, to the Transfer and

Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(m)(iv) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

10(n)(v) Amendment No. 4 to the Transfer and Administration Agreement, dated as of March 29, 2002, to the Transfer and

Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(v) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(n)(vi) Amendment No. 5 to the Transfer and Administration Agreement, dated as of May 22, 2002, to the Transfer and

Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(vi) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(n)(vii) Amendment No. 6 to the Transfer and Administration Agreement, dated as of September 27, 2002, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(vii) to thecompany's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(n)(viii) Amendment No. 7 to the Transfer and Administration Agreement, dated as of February 19, 2003, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 99.1 to the company'sCurrent Report on Form 8-K dated February 6, 2003, Commission File No. 1-4482).

10(n)(ix) Amendment No. 8 to the Transfer and Administration Agreement, dated as of April 14, 2003, to the Transfer and

Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(ix) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(n)(x) Amendment No. 9 to the Transfer and Administration Agreement, dated as of August 13, 2003, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(x) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(n)(xi) Amendment No. 10 to the Transfer and Administration Agreement, dated as of February 18, 2004, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(xi) to thecompany's Annual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(n)(xii) Amendment No. 11 to the Transfer and Administration Agreement, dated as of August 13, 2004, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(b) to the company'sQuarterly Report on Form 10-Q for the quarter ended September 30, 2004, Commission File No. 1-4482).

97


ExhibitNumber

Exhibit

10(n)(xiii) Amendment No. 12 to the Transfer and Administration Agreement, dated as of February 14, 2005, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(o)(xiii) to thecompany's Annual Report on Form 10-K for the year ended December 31, 2004, Commission File No. 1-4482).

10(n)(xiv) Amendment No. 13 to the Transfer and Administration Agreement, dated as of February 13, 2006, to the Transfer

and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(o)(xiv) to thecompany's Annual Report on Form 10-K for the year ended December 31, 2005, Commission File No. 1-4482).

10(n)(xv) Amendment No. 14 to the Transfer and Administration Agreement, dated as of October 31, 2006, to the Transfer

and Administration Agreement in 10(n)(i) above (incorporated by reference to Exhibit 10(o)(xv) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2006, Commission File No. 1-4482).

10(n)(xvi) Amendment No. 15 to the Transfer and Administration Agreement, dated as of February 12, 2007, to the Transfer

and Administration Agreement in 10(n)(i) above (incorporated by reference to Exhibit 10(o)(xvi) to the company'sAnnual Report on Form 10-K for the year ended December 31, 2006, Commission File No. 1-4482).

10(n)(xvii) Amendment No. 16 to the Transfer and Administration Agreement, dated as of March 27, 2007, to the Transfer

and Administration Agreement in 10(n)(i) above (incorporated by reference to Exhibit 10(b) to the company'sQuarterly Report on Form 10-Q for the quarter ended March 31, 2007, Commission File No. 1-4482).

10(o) Form of Indemnification Agreement between the company and each director (incorporated by reference to Exhibit

10(g) to the company’s Annual Report on Form 10-K for the year ended December 31, 1986, Commission FileNo. 1-4482).

21 Subsidiary Listing.

23 Consent of Independent Registered Public Accounting Firm.

31(i) Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(ii) Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(i) Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906

of the Sarbanes-Oxley Act of 2002.

32(ii) Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906of the Sarbanes-Oxley Act of 2002.

98


ARROW ELECTRONICS, INC.SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(In thousands)

For the three years endedDecember 31,

Balance atbeginning

of year

Chargedto

income Other (a) Write-down

Balanceat endof year

Allowance for doubtful accounts 2009 $ 52,786 $ 7,515 $ 1,001 $ 21,628 $ 39,674 2008 $ 71,232 $ 14,866 $ 7,787 $ 41,099 $ 52,786 2007 $ 75,404 $ 14,211 $ 1,372 $ 19,755 $ 71,232

(a) Represents the allowance for doubtful accounts of the businesses acquired by the company during 2009, 2008, and 2007.

99


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

ARROW ELECTRONICS, INC. By: /s/ Peter S. Brown Peter S. Brown Senior Vice President, General Counsel and Secretary February 3, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons onbehalf of the registrant and in the capacities indicated on February 3, 2010:

By: /s/ Michael J. Long Michael J. Long, Chairman, President, and Chief Executive Officer By: /s/ Paul J. Reilly Paul J. Reilly, Executive Vice President, Finance and Operations, and Chief Financial Officer By: /s/ Michael A. Sauro Michael A. Sauro, Vice President, Corporate Controller, and Chief Accounting Officer By: /s/ Daniel W. Duval Daniel W. Duval, Lead Independent Director By: /s/ Gail E. Hamilton Gail E. Hamilton, Director By: /s/ John N. Hanson John N. Hanson, Director By: /s/ Richard S. Hill Richard S. Hill, Director By: /s/ Fran Keeth Fran Keeth, Director By: /s/ Roger King Roger King, Director By: /s/ Stephen C. Patrick Stephen C. Patrick, Director By: /s/ Barry W. Perry Barry W. Perry, Director By: /s/ John C. Waddell John C. Waddell, Director

100


Exhibit 10(i)


SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as amended and restated effective January 1, 2009)


Table of Contents

Page ARTICLE I Normal and Early Retirement Benefits 2 ARTICLE II Payment of Benefits 5 ARTICLE III Amendment, Termination, or Curtailment of Benefits 11 ARTICLE IV Definitions 14 ARTICLE V Miscellaneous 18

ii



SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as amended and restated effective January 1, 2009)

INTRODUCTION

Purpose of Plan. The Arrow Electronics, Inc. Supplemental Executive Retirement Plan (“SERP”) is an unfundedretirement plan for a select group of employees designated as SERP participants by the Arrow Board of Directors (including theCompensation Committee of the Board) and who have been so notified in writing. References below to “you” and the like are to theparticipants who have been so notified. The SERP is administered by Arrow’s Management Pension and Investment OversightCommittee or its delegees, subject to the ultimate authority of the Board.

Section 409A Compliance. In order to ensure continued compliance with the Federal income tax laws applicable tononqualified deferred compensation, the Company, without formal amendment of the plan document for the SERP, made suchchanges in operation of the SERP as it deemed necessary or advisable for the period from January 1, 2005 to December 31, 2008 byreason of the enactment of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), taking into accountNotice 2005-1 and other guidance thereunder (“Regulations”). The Plan was amended, generally effective as of December 31, 2008,(i) to require all benefits under the SERP, other than “Grandfathered Benefits” described below,” be payable only at a time andmanner compliant with Section 409A and the Regulations and (ii) to require that all offsets be determined under an objective andnondiscretionary formula not under the control of the Participant and not subject to Company discretion within the meaning of Treas.Reg. § 1.409A-3(i). By this further restatement, the SERP is amended to set forth more definitively the benefit formula effective as ofJanuary 1, 2009. In no case will a Participant’s benefit be less than the benefit accrued under the “old Plan” as of December 31, 2008.


Table of Contents

Page

“Grandfathered Benefits.” If you met the requirements for retirement under the SERP (including disabilityretirement) on December 31, 2004, your accrued benefit at that date, calculated under the terms of the Plan in effect on October 3,2004 based solely on service and compensation up to December 31, 2004 and in accordance with provisions of the Regulationsdefining benefits earned and vested on December 31, 2004, is a “Grandfathered Benefit” and will be payable in accordance with theterms of the SERP in effect on October 3, 2004. The provisions of the Plan set forth below apply to all benefits hereunder in excess ofthe Grandfathered Benefits, hereinafter referred to as “Section 409A Benefits.”

Construction. The SERP is intended to comply and shall at all times be administered in accordance with theprovisions of Section 409A and the Regulations. Any ambiguities in the language of the SERP shall be resolved, and any terms nototherwise defined shall be construed, in a manner compliant with, Section 409A and the Regulations. To the maximum extentpermitted by law, no provision of the SERP inconsistent with Section 409A or the Regulations shall be valid or given any effectwhatever.

ARTICLE I

Normal and Early Retirement Benefits

1.1 Normal Retirement Date. Your normal retirement date is the date on which you reach age 60, except as theBoard may otherwise specify in written notice to you (which notice shall be part of the SERP).

1.2 Early Retirement Date. Your early retirement date is the date on which your combined years of age andservice equal at least 72 and you are at least age 55, or if applicable, such other date as the Board may specify in written notice to you(which notice shall be part of the SERP). Fractional years of age and service shall be combined in determining eligibility for earlyretirement (or any similar determination).

2


Table of Contents

Page

1.3 Retirement Income Target. In the letter continuing your participation in the SERP as amended and restatedeffective December 31, 2008, or admitting you to participation if you were not previously a participant (which “participation letter”shall be part of the SERP), the Board will specify the retirement income target that will be used to determine your retirement pensionunder the SERP, subject where applicable to the Other Benefits Formula Offset and Assumed Social Security Offset to be applied asset forth below. Your retirement income target may be expressed either as a fixed dollar amount or as an “income replacementpercentage” applied to your Final Average Compensation, and your retirement income based thereon shall be based on your Years ofSERP Participation.

1.4 Retirement Benefit Based on Income Replacement Percentage. If your retirement income target is basedon an income replacement percentage, your participation letter will specify the income replacement percentage assigned to you forpurposes of (i) your normal retirement pension payable on retirement at or after your normal retirement date, and (ii) the earlyretirement pension that would be payable to you on early retirement at first date of eligibility for retirement and at each later age atwhich you may be eligible for early retirement, with the percentage applicable at intervening ages being determined on similarprinciples. Your SERP normal or early retirement pension will then be calculated by multiplying your Final Average Compensationby your applicable income replacement percentage and then subtracting (i)) the actuarial equivalent of your Other Benefits FormulaOffset as of your actual date of retirement, calculated based on the Plan Actuarial Assumptions, and (ii) your Assumed Social SecurityOffset.

1.5 Other Benefits Formula Offset. The Other Benefits Formula Offset is the sum of

3


Table of Contents

Page

(a) an amount equal to the aggregate employer contributions to the Arrow Electronics StockOwnership Plan and its predecessors, and the Arrow Electronics Savings Plan including its predecessors (excluding participantelective contributions and voluntary rollovers) taken into account in determining the offset for defined contribution plan benefits underthe Plan in effect prior to January 1, 2009, increased by interest at an annual rate of 7% credited and compounded annually toDecember 31, 2008, as definitively determined and recorded in the records of the Committee as of December 31, 2008, plus

(b) 3% of the compensation limit applicable under section 401(a)(17) of the Code for each calendaryear beginning on or after January 1, 2009 and ending with the calendar year in which you retire (whether early, or at or after yournormal retirement date), provided that such limit shall be prorated for such last year based on the number of completed months thereinending prior to your date of retirement, increased by interest at an annual rate of 7% credited and compounded annually fromDecember 31, 2008 to your retirement date

1.6 Assumed Social Security Offset. Your Assumed Social Security Offset shall be a monthly amount equal tofifty percent (50%) of your Assumed Primary Insurance Amount at age 62 or later date of actual retirement

1.7 Retirement Benefit in a Fixed Dollar Amount. If your income replacement target is determined as a fixeddollar amount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at or after yournormal retirement and at each age on which you may be eligible for early retirement.

4


Table of Contents

Page

ARTICLE II

Payment of Benefits

Section 409A Benefits shall be payable only upon your (i) Separation from Service after reaching a retirement datehereunder, (ii) suffering a Change in Control Termination or (iii) upon your Disability as herein defined. If you separate from serviceunder any other circumstances, the SERP provides no benefit to you or your beneficiary.

2.1 Separation from Service. The terms “retirement” or “termination of employment” and similar phrases asused in the SERP shall, as applicable, refer to separation from service within the meaning of the Regulations, other than by reason ofdeath, determined by reference to the presumptive rule of Treasury Reg. § 1.409A-1(h)(l)(ii) (under which a reasonable expectation ofa permanent reduction in the level of service to no more than 20% of the average level during the prior 36-month or other applicableperiod is presumed to result in a separation from service), and determined by treating Arrow and all Subsidiaries as singleemployer. In addition:

(a) Subsidiary Change in Control Event. If you are employed by a Subsidiary and are affected by aSubsidiary Change which occurs after you have reached early or normal retirement date, distribution shall thereupon be made to youunder the rules herein provided in the event of a Separation from Service, except that no six-month delay shall be required by reasonof your being a specified employee.

(b) Leaves, etc. Your employment relationship shall be treated as continuing while you are onmilitary leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of suchleave does not exceed six months, or if longer, so long as your right to reemployment with the Company is provided either by statuteor by contract. If the period of leave exceeds six months your right to reemployment is not provided either by statute or by contract,the employment relationship is deemed to terminate immediately following such six-month period.

(c) Separation incident to sale of a division or other substantial assets. Notwithstanding theforegoing, a separation from service shall not occur for purposes of the SERP to the extent that the Committee determines otherwise inaccordance with Treas. Reg. § 1.409A-1(h)(4).

5


Table of Contents

Page

(d) Coordination with employment agreements. In the event that you have an employmentagreement with the Company that defines termination of employment or separation from service in a manner consistent with theRegulations, that definition shall govern for purpose of the SERP unless its application would for any reason (such as effectively animpermissible change in the time of payment of benefits) be inconsistent with the Regulations.

2.2 Normal Retirement Benefit. If you separate from service on or after your normal retirement date, you willreceive a normal retirement pension calculated as provided in Article I based on (a) your retirement income target, Final AverageCompensation (if such target is based on an income replacement percentage), Years of SERP Participation and/or other relevant suchfactors set forth in your participation letter as of your normal retirement date and (b) if your retirement income target is based on anincome replacement percentage, your Other Benefits Formula Offset and Assumed Social Security Offset at your actual retirementdate Your normal retirement pension will commence on the first day of the month following your separation from service, or if youare a specified employee as of the date of such separation from service, on the first day of the seventh month following yourseparation from service. No adjustment in your retirement income target shall be made by reason of the delay in commencement ofyour benefit between your normal retirement date and date of actual retirement.

6


Table of Contents

Page

2.3 Early Retirement Benefit.

(a) Based on Percentage of Final Average Compensation . If you retire early and your SERP pensionis based on a percentage of Final Average Compensation, your benefit will be calculated in the same manner as a normal retirementpension, but your income replacement percentage will be reduced based on the Early Payment Discount Assumption to reflect the factthat your pension is beginning before normal retirement. If your Years of SERP Participation at early retirement are fewer than themaximum number of Years of SERP Participation assumed in determining your normal retirement pension, your early retirementpension will be further reduced on a pro-rata basis based on the ratio of your actual Years of SERP Participant to such maximum Theletter admitting you to participation in the SERP will set forth the percentage of your Final Average Compensation that would bepayable to you on early retirement at each whole age from your first date of eligibility for retirement to you’re your normal retirementdate. Your actual SERP early retirement benefit will then be calculated by multiplying your Final Average Compensation at your earlyretirement date by the reduced income replacement percentage as so determined and subtracting the Other Benefits Formula Offsetand Assumed Social Security Offset.

(b) Based on Fixed Dollar Amount. If your retirement income target is determined as a fixed dollaramount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at each date on whichyou may be eligible for early retirement. Because the amount is “fixed” rather than based on a percentage of Final AverageCompensation, the Other Benefits Formula Offset and Assumed Social Security Offset will not apply

(c) Time of Commencement. If you separate from service on or after your early retirement date andprior to your normal retirement date, you will be entitled to an early retirement pension calculated as provided in Article I based onyour Final Average Compensation, Years of SERP Participation, and/or other relevant factors set forth in your participation letter, asof your date of separation from service. Payment of your early retirement pension will commence on the first day of the monthfollowing your separation from service or, if you are a specified employee on the date of such separation from service, on the first dayof the seventh month following your separation from service.

7


Table of Contents

Page

2.4 Six-month delay. If distribution becomes due under the SERP based on the separation from service of aParticipant who is a specified employee as of the date of such event, such distribution shall be not be made until the first day of theseventh month after the date of separation, in an amount actuarially increased to reflect such delay based on the Plan ActuarialAssumptions. Choice of Form of Benefit Normal Form of Pension – Single Life Annuity with 60-month Guarantee

Under the normal form of pension, SERP pension payments are payable for your life only. However, if you die afteryour pension payments begin but before you have received 60 monthly payments, then monthly payments will continue to yourBeneficiary in the same amount you received prior to your death, until a total of 60 payments have been made. No benefits arepayable under the SERP if you die before your pension payments begin. The Other Benefits Formula Offset and Assumed SocialSecurity Offset described above are calculated assuming the normal form of payment. Optional Joint and 50% or 66-2/3% Surviving Spouse Annuity

Under this optional form of pension, your monthly pension will still be payable for your lifetime, but in anactuarially reduced amount calculated based on the Plan Actuarial Assumptions and without the guarantee of 60 monthly paymentsThe surviving spouse’s pension will be equal to either 50% or 66-2/3% of the reduced monthly benefit you were receiving, whicheveryou elect.

8


Table of Contents

Page

Your election to take a surviving spouse pension must be made before your pension begins and cannot be changedafter the pension begins. If you elect this benefit form, no benefits will be payable after the death of both you and your spouse. If youstart to receive a reduced monthly pension under this form and your spouse then dies before you, you will continue to receive thereduced benefit for the remainder of your life. If you start to receive a reduced monthly pension under this form and you then diebefore your spouse, 50% or 66-2/3% of the reduced benefit (as you elected) will be paid to your surviving spouse for the remainder ofhis or her life.

Your "spouse" for purposes of the above means and is limited to the individual to whom you are legally married onyour retirement date. For example, that spouse may become entitled to the survivorship pension under this option even if the marriageshould later end by divorce; and a new spouse whom you marry after a divorce, or after your "spouse" as defined above may die, willnot be entitled to benefits under this optional form.

Your election of an optional benefit form can be revoked by you (without the consent of your spouse or any otherperson) at any time prior to the date as of which payment is to begin, but not thereafter. If you elect a Joint and Surviving SpouseAnnuity and your spouse dies (or you become divorced) before your retirement, your election will automatically be revoked and yourbenefit will then be payable in the normal form.

9


Table of Contents

Page

Early Payment Upon Certain Events Change in Control Termination

(1) If there is a Change in Control of Arrow, and within 24 months after such Change in Control you separatefrom service either (a) involuntarily other than for Cause or Disability or (b) voluntarily for Good Reason, your separation fromservice is considered to be a “Change in Control Termination.” For this purpose, “Change of Control of Arrow” shall mean a changein control event as defined in the Regulations that also qualifies as a “Change in Control” under the definition contained in Arrow’sstandard form of change in control agreement, and “Cause” shall have the meaning given in such agreement. If the definition inArrow's standard form of such agreement shall subsequently be revised or there shall cease to be a standard form of suchagreement, the definition in the prior sentence shall continue to govern for purposes of this Agreement unless the Committee shallotherwise direct and the change in such definition is permitted to be given effect under the Regulations.

(2) If you incur a “Change in Control Termination” after attaining age 50 and prior to either your earlyretirement date or normal retirement date, then except as otherwise provided in paragraph 3 below, you will receive your Section409A Benefit accrued to your date of termination in the form of a normal retirement pension beginning on the first day of the monthcoincident with or next following the date you attain age 60, calculated based on your Years of SERP Participation as of your date oftermination as if your date of termination were an early retirement hereunder but without any discount for early payment.

(3) If you were a participant in the SERP and had attained age 50 and completed 15 years of SERPparticipation prior to January 1, 2002, and thereafter incur a “Change in Control Termination,” paragraph 2 above will not apply andyou will receive beginning on the first day of the month following the termination (in addition to any Grandfathered Benefitpayable), the greater of (i) the normal retirement benefit you would have received under the terms of the SERP as in effect onDecember 31, 2001 based on your aggregate service to December 31, 2008, less the amount of any Grandfathered Benefit payable, or(ii) your Section 409A Benefit calculated based on your Years of SERP Participation as of your termination date as if your terminationwere an early retirement hereunder and reduced for payment prior to normal retirement date based on the Early Payment DiscountAssumption, in lieu of any other benefit under the Plan.

10


Table of Contents

Page

Disability.

If you incur Disability prior to either your early retirement date or normal retirement date or change of controltermination, your Section 409A Benefit accrued to your date of Disability, calculated based on your Years of SERP Participation as ifyour Disability were an early retirement hereunder and reduced for payment. Prior to normal retirement date based on the EarlyPayment Discount Assumption, will be become payable on the first day of the month following your normal retirement date; provided,that any SERP pension payments will be reduced by the full amount of any disability benefits you receive for the same period that areattributable to Company contributions. “Disability” for purposes hereof shall mean the Participant’s inability to perform each andevery duty of his or her occupation or position of employment as a result of a medically determinable physical or mental impairmentthat can be expected to result in death or to last for a continuous period of not less than 12 months, provided that the Participant byreason thereof either (a) is unable to engage in any substantial gainful activity or (b) receives income replacement benefits for a periodof not less than 3 months under an accident and health plan maintained by the Employer or a Subsidiary. Notwithstanding theforegoing, a determination of total disability by the Social Security Administration shall be conclusive proof of Disability.

ARTICLE III

Amendment, Termination, or Curtailment of Benefits

Period of participation. Your participation in the SERP begins on the date designated by the Board. The Board mayact at any time to end your participation or to suspend your accrual of additional benefits or modify on a prospective basis the formulafor determining your benefits hereunder.

11


Table of Contents

Page

Amendment or Termination. The Board reserves the right to amend or terminate the SERP at any time. However,no such action may adversely change any benefit you (or your spouse or beneficiary) are currently receiving, or in any other case,reduce the amount of your benefit accrued under the Plan as of the date of such action or adversely affect the right of the participant(and the participant’s beneficiary or surviving spouse, if applicable) to receive payment in respect of such amount upon completion bythe participant of the conditions precedent to entitlement to a retirement pension as they exist under the terms of the SERP in effectimmediately prior to such action, and at the time and on the terms then in effect, except with your consent. A termination of the Planshall not cause the acceleration of payments under the Plan unless the Committee determines, after consultation with counsel, that theterms and conditions of such termination are within exceptions provided by applicable regulations to the general Section 409Aprohibition against acceleration. Notwithstanding anything herein to the contrary, the Board shall have the right and power to adoptany and all such amendments to the SERP as it shall deem necessary or advisable to ensure compliance with Section 409A and theRegulations, including amendments with retroactive effect. Termination of SERP Benefits/Effect of Competition

When you become eligible for SERP payments, your annual SERP pension will be paid to you in monthlyinstallments. Payments will end with the payment for the month in which you die, except for any benefits payable to your beneficiaryon your death before receiving at least 60 monthly payments, if your pension was payable in the normal form described above (or forany surviving pension to your spouse, if your pension was paid as a surviving spouse pension as described above), or earlier if youcompete with Arrow, as defined below.

12


Table of Contents

Page

You compete with Arrow if, directly or indirectly, alone, as an employee, agent, independent contractor, lender,consultant, owner, partner or joint venturer, or as an officer, director, or stockholder of any corporation, or otherwise, are employedby, participate in, are engaged in, or are connected with any person or entity which is engaged in a business of the type and characterengaged in, and competitive with that conducted by Arrow. Ownership of 3% or less of the stock or other securities of a corporation,the stock of which is listed on a national securities exchange or is quoted on the NASDAQ National Market, will not constitute aviolation of this provision, so long as you do not in fact have the power to control, or direct the management of, or are not otherwiseassociated with, such corporation.

The provision terminating SERP benefits if you compete with Arrow as described above will not be applicable ifyour payments are made on account of a Change In Control Termination as defined in Part II hereof, or if your termination ofemployment would constitute a Change In Control Termination except for your failure to have the 15 years of SERP participationrequired for individuals who became participants in the SERP prior to January 1, 2002. Prior Plan Benefit Protected

If you were a participant in the SERP as in effect on December 31, 2001, your Section 409A Benefit, when added toyour Grandfathered Benefit, will not be less than the amount you would have received under the SERP as in effect on December 31,2001 as increased for service through December 31, 2008. Any additional benefit provided under this paragraph shall be determinedby treating references to retirement or termination of employment under such predecessor plan as meaning Separation from Service asdefined herein and shall be payable in the time and manner provided for under this amended SERP upon Separation from Service withvested rights.

13


Table of Contents

Page

ARTICLE IV

Definitions:

“Arrow” means Arrow Electronics, Inc., or any successor thereof by merger, consolidation, purchase of substantiallyall of its business and assets, or otherwise.

“Assumed Primary Insurance Amount” means the primary insurance amount calculated to be payable on a monthlybasis on your attainment of age 62 or year of retirement if later (excluding any benefit payable on behalf of a spouse or otherdependent) as provided under the Federal Social Security Act or any other similar applicable national benefit program as in effect onsuch date, determined on the following assumptions, notwithstanding facts to the contrary:

14


Table of Contents

Page

(1) Your salary history will begin with calendar year 1951 or the calendar year you attain age 22, whichever islater, and end with the calendar year preceding the later of the calendar year in which you attain age 62 or your calendar year ofretirement, including years in which you were not employed by the Company (the “Salary History Period”);

(2) If you retire prior to age 62, the Social Security wage base for each year until the year you attain age 62will be assumed to be the Social Security wage base in effect in your year of retirement;

(3) You will be deemed to have earned wages in excess of the Social Security Act wage base during each yearof your Salary History Period.

(4) You will be deemed to have been employed in the United States during each year of the Salary HistoryPeriod.

“Board” means the Board of Directors of Arrow or any duly constituted committee thereof, including theCompensation Committee.

“Beneficiary” means your beneficiary is the person (including a trust, estate, foundation, or other entity) youdesignate (at such time and in such manner as the Committee shall authorize) to receive the death benefit (if any) payable upon deathafter commencing to receive benefits, and before receiving at least 60 payments. If an individual is designated as beneficiary and diesprior to becoming entitled to benefits hereunder (or if no valid designation of beneficiary is in effect for any other reason), yourbeneficiary shall be your surviving spouse, if any, and otherwise shall be your estate unless otherwise provided in the beneficiarydesignation.

"Code" means the Internal Revenue Code of 1986, as it may be from time to time amended, or correspondingprovisions of subsequent law.

15


Table of Contents

Page

“Committee” means Arrow’s Management Pension and Investment Oversight Committee.

“Company” means Arrow and its Subsidiaries and their predecessors.

“Early Payment Discount Assumption” means interest credited and compounded annually at an annual rate of7%.for each year (or fraction thereof in completed months) between your retirement date and your normal retirement date.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Final Average Compensation” means your highest average annual Performance Based Compensation (base salaryplus targeted incentive compensation) for any three calendar years (which need not be consecutive) in the last five consecutivecalendar years ending prior to your retirement (or such other period as the Board may specify), determined before reduction by anyelection to (i) make 401(k) contributions under the Arrow Electronics Savings Plan, (ii) defer compensation under any other electivedeferred compensation plan, or (iii) pay the cost of health or other benefits with pre-tax contribution, and excluding all eventspayments made pursuant to stock appreciation rights, or otherwise pursuant to any plan for the grant of stock options, stock, or otherstock rights.

“Plan Actuarial Assumptions” means interest at an annual rate of 7% compounded annually and the applicablemortality table in effect under section 417(e)(3)(A) of the Code in November prior to the calendar year in which payment is to begin.

“Specified Employee” means “specified employee” as determined in accordance with the procedures adopted by theCompany in accordance with the Regulations for purposes of its nonqualified deferred compensation plans subject to Section 409A.

16


Table of Contents

Page

“Subsidiary” means a subsidiary or affiliate that is a member of the same controlled group as Arrow within themeaning of section 414(b) or (c) of the Code.

“Subsidiary Change of Control Event” means a change in control event with respect to a Subsidiary within themeaning of the Regulations, pursuant to which Arrow ceases to have direct or indirect ownership of at least fifty-one percent (51%) ofthe value of the total equity or total combined voting power in respect of the Subsidiary.

“Years of SERP Participation” means your years of participation to your retirement date in the SERP as amendedfrom time to time and in its predecessor plans, including the Unfunded Pension Plan for Selected Executives of Arrow Electronics,Inc. effective January 1, 1990. In addition, the determination of your income replacement percentage as set forth in the letter or noticeyour receive as described in Sections 1.3 and 1.4 may assume a minimum number of such years at your normal retirement date (whichneed not be the same as your projected years of service to normal retirement date). Years of SERP participation will be calculated inyears and fractions of a year in completed months. In cases where the Board concludes that special circumstances so warrant (such as,but not limited to, when an executive is hired from a prior employer and after taking into account benefits accrued and/or lost underthe prior employer’s plans), you may be granted additional years of SERP participation. Any such grant shall be evidenced by writtennotice to the affected participant.

17


Table of Contents

Page

ARTICLE V

Miscellaneous

5.1 Committee.

(a) The Plan shall be administered by the Committee. The Committee shall have the responsibility,power and discretion to make all determinations, including as to matters of fact and construction and interpretation of the SERP,authorized or required of it by the terms of the SERP or deemed useful in carrying out its responsibilities hereunder. Except as theCompensation Committee of the Board may otherwise determine, all such determinations shall be final and binding on allpersons. No member of the Committee shall be entitled to act on or decide any matter relating specifically to such member.

(b) The Committee shall have all powers and discretion necessary or helpful for purposes ofadministration of the SERP. Without limiting the generality of the foregoing, the Committee shall have the power and discretion todetermine the benefits to which any participant, beneficiary, or spouse is or may become entitled to under the SERP, and to adopt suchrules and procedures as it deems advisable to carry out its responsibilities hereunder.

(c) The Committee shall adopt procedures for applying for benefits and appealing a denial of benefitsin accordance with applicable regulations under ERISA, under which the final determination of such appeal shall be made by theCompensation Committee of the Board.

(d) The Committee may allocate any of its responsibilities, powers and discretion under the SERP toone or more members of the Committee and delegate any of such responsibilities, powers and discretion to persons not members ofthe Committee (alone or together with one or more members of the Committee). The actions taken by any member or members of theCommittee or any other such persons in the exercise of responsibilities, powers and discretion delegated hereunder shall have the samevalid and binding effect under the SERP as action by the full Committee.

5.2 Direction to pay benefits. All benefit payments under the SERP shall be upon and in accordance with thewritten directions of the Committee or its agent.

18


Table of Contents

Page

5.3 Liability limited; indemnification. The members of the Committee and each of them shall be free from allliability, joint and several, for their acts and conduct, and for the acts and conduct of any duly constituted agents. Arrow shallindemnify and save them harmless from the effects and consequences of their acts and conduct in such official capacity except to theextent that such effects and consequences flow from their own willful misconduct. Under no circumstances will members of theCommittee be personally liable for the payment of SERP benefits.

5.4 Payment to incompetent. If any participant, beneficiary, or spouse entitled to benefits under the SERPshall be legally incompetent (or shall be a minor), such benefits may be paid in one or more of the following ways, as the Committeein its sole discretion s hall determine:

(a) To the legal representatives of the participant, beneficiary, or spouse;

(b) Directly to such participant, beneficiary, or spouse;

(c) To the spouse or guardian of such participant, beneficiary, or spouse or to the person with whomsuch participant, beneficiary, or spouse resides. Payment to any person in accordance with these provisions will, to the extent of the payment, discharge Arrow, and none of theforegoing or the Committee will be required to see to the proper application of any such payment. Without in any manner limitingthese provisions, in the event that any amount is payable hereunder to any legally incompetent participant, beneficiary, or spouse, theCommittee may in its discretion utilize the procedures described in the following section.

19


Table of Contents

Page

5.5 Doubt as to right to payment. If any doubt exists as to the right of any person to any benefits hereunder orthe amount of time of payment of such benefits (including, without limitation, any case of doubt as to identity, or any case in whichnotice has been received from any person claiming any interest in amounts payable hereunder, or any case in which a claim from otherpersons may exist by reason of community property or similar laws), the Committee will be entitled, in its discretion, to direct thatpayment of such benefits be deferred until order of a court of competent jurisdiction, or to pay such sum into court in accordance withappropriate rules of law in such case then provided, or to make payment only upon receipt of a bond or similar indemnification (insuch amount and in such form as is satisfactory to the Committee).

5.6 Withholding. All payments under the SERP shall be subject to any applicable withholding requirementsimposed by any tax or other law.

5.7 Source of payment. All benefits under the SERP shall be paid by Arrow out of general assets, and anyrights of a participant, beneficiary, or spouse under the SERP shall be mere unsecured contractual rights. Arrow and the participantsintend that any arrangements made to assist Arrow to meet obligations under the SERP shall be unfunded for tax purposes and forpurposes of Title I of ERISA, and no trust, security, escrow, or similar account shall be established in connection with theSERP. Arrow has, however, established a “rabbi trust” to assist in meeting its obligation to pay benefits under the SERP, and amountspaid from any such rabbi trust shall discharge the obligations of Arrow hereunder to the extent of the payments. No participant,beneficiary, or spouse shall have a preferred claim on or beneficial ownership interest in the assets of such rabbi trust. If a participantshall be employed by a subsidiary of Arrow, the subsidiary shall be jointly and severally liable with Arrow for the payment of benefitshereunder to that participant, and references to “Arrow” in the preceding provisions of this Section 5.7 shall include such subsidiary.

20


Table of Contents

Page

5.8 Spendthrift clause. Except as otherwise provided by law, no benefit, distribution, or payment under theSERP may be anticipated, assigned (either at law or in equity), alienated, or subject to attachment, garnishment, levy, execution, orother legal or equitable process.

5.9 Reimbursement of legal expenses. In the event that any dispute shall arise between a participant andArrow relating to rights under the SERP, and it is determined by agreement between the parties, or by a final judgment of a court ofcompetent jurisdiction that is no longer subject to appeal, that the participant has been substantially successful in such dispute,reasonable legal fees and disbursements of the participant in connection with such dispute shall be paid by Arrow.

5.10 Usage. Whenever applicable, the singular, when used in the SERP, will include the plural.

5.11 Data. Any participant, beneficiary, or spouse entitled to benefits under the SERP must furnish to theCommittee such documents, evidence, or information as the Committee considers necessary or desirable for the purpose ofadministering the SERP.

5.12 Separability. If any provision of the SERP is held invalid or unenforceable, its invalidity orunenforceability will not affect other provisions of the SERP, and the SERP will be construed and enforced as if such provision hadnot been included therein.

5.13 Captions. The captions contained herein are inserted only as a matter of convenience and for reference andin no way define, limit, enlarge, or describe the scope or intent of the SERP; nor shall they, in any way, affect the SERP or theconstruction of any provision thereof.

21


Table of Contents

Page

5.14 Name. The SERP may be known as the Arrow Electronics, Inc. Supplemental Executive Retirement Plan

5.15 Governing law. The SERP is intended to constitute an unfunded plan of deferred compensation for a selectgroup of management or highly compensated employees, within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA,and no individual shall be eligible to participate in the SERP unless he is a member of such a group. If an individual formerly soeligible ceases to be a member of such a group, his participation and accrual of additional benefits shall be suspended, but benefitspreviously accrued shall not be reduced thereby. Except to the extent preempted by federal law, the SERP shall be construed andgoverned in all respects according to the laws of the State of New York, where it is adopted, without regard to principles of conflict oflaws.

5.16 Right of discharge reserved. The establishment of the SERP shall not be construed to confer upon anemployee or participant any legal right to be retained in the employ of Arrow or give any employee or any other person any right tobenefits, except to the extent expressly provided hereunder. All employees will remain subject to discharge to the same extent as ifthe SERP had never been adopted, and may be treated without regard to the effect such treatment might have upon them under theSERP.

5.17 Grantor trust agreement/change of control. The powers, rights and duties of the Trustee under any rabbitrust created for the purpose of assisting Arrow in meeting its obligations under the SERP shall, following a “Change of Control” asdefined in the trust agreement for such Trust, govern and prevail to the extent inconsistent with any of the provisions of the SERP,including without limitation SERP provisions making the Committee’s determinations final and binding (except as determined by theCompensation Committee of the Board), and provisions giving the Committee power and discretion to invoke the proceduresdescribed in Sections 5.4 and 5.5, to make the determinations and give directions with respect to the payment of benefits as providedin Section 5.2 above, including adopting a claims procedure as described in Section 5.1(c). Arrow shall make such contributions tosuch Trust as shall be required under the terms of such trust agreement, including, without limitation, such contributions as may berequired thereunder upon an individual participant’s retirement or disability, or as may be required with respect to all participants uponany Potential Change of Control or Change of Control as such terms are defined in such trust agreement.

22


Table of Contents

Page

5.18 Relationship to other agreements. In the event that an employment or other agreement with a participantsubstitutes a different or modified benefit formula or other provisions for the income replacement target or certain other provisions ofthe SERP, the benefits of such participants under the SERP shall be determined based on the provisions of such agreement to theextent consistent with Section 409A or the Regulations.

5.19 Acceleration Generally Prohibited. No acceleration of payments under the SERP shall be permitted exceptas authorized by the Regulations. Without limiting the generality of the foregoing:

(1) Ethics or conflict of interest requirements. Distribution may be accelerated as may be necessary to complywith ethics or conflict of interest requirements in accordance with Treasury Reg. § 1.409A-3(j)(4)(iii).

(2) Payment of employment taxes. Distribution may be accelerated in order to pay the Federal InsuranceContributions Act (FICA) tax imposed under section 3101, section 3121(a) and section 3121(v)(2) of the Code on deferrals under theSERP (the “FICA Amount”), Federal, state, local or foreign wage withholding taxes on the FICA Amount, and additional wagewithholding taxes attributable to the pyramiding of wages subject to withholding and taxes. Acceleration shall be permitted under thisparagraph (2) only to the extent that Committee determines that such tax obligations cannot be readily met from other sources, andthe total payment under this paragraph (2) shall not exceed the aggregate of the FICA Amount and related income tax withholding.

23


Table of Contents

Page

To evidence the adoption of this amended and restated Arrow Electronics, Inc. Supplemental Executive RetirementPlan, the undersigned has, pursuant to direction of the Management Pension and Investment Oversight Committee, under authoritygiven by the Compensation Committee the Board of Directors, has executed this Plan document this 10th day of December, 2009,effective as of January 1, 2009. /s/ Peter S. Brown

Senior Vice President and General Counsel

24


Exhibit 10(k)(v)

EMPLOYMENT AGREEMENT (the “Agreement”) made as of the 30th day of December, 2008 by and betweenARROW ELECTRONICS, INC., a New York corporation with its principal office at 50 Marcus Drive, Melville, New York 11747(the “Company”), and Andrew S. Bryant, residing 2441 E. Desert Flower Lane Phoenix, AZ 85048 (the “Executive”).

WHEREAS, the Executive has been employed by the Company as the Vice President of the Company andPresident, Arrow Enterprise Computing Solutions, with the responsibilities and duties of an officer of the Company, under anEmployment Agreement dated as of April 21, 2008 (the “Old Agreement”);

WHEREAS, the Old Agreement contains provisions that do not comply with section 409A of the Internal RevenueCode of 1986, as amended, and applicable regulations thereunder (“409A”) and other provisions that are obsolete; and

WHEREAS, the Company and Executive wish to novate the Old Agreement and to replace it with this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agreeas follows: 1. Employment and Duties.

(a) Employment. The Company hereby employs the Executive for the Employment Period defined inParagraph 3, to perform such duties for the Company and its subsidiaries and affiliates and to hold such offices as may be specifiedfrom time to time by the Company’s Board of Directors, subject to the following provisions of this Agreement. The Executive herebyaccepts such employment.

(b) Duties and Responsibilities. It is contemplated that the Executive will be Vice President of the Companyand President, Arrow Enterprise Computing Solutions, but the Board of Directors shall have the right to adjust the duties,responsibilities, and title of the Executive as the Board of Directors may from time to time deem to be in the interests of the Company.

(c) Time Devoted to Duties. The Executive shall devote all of his normal business time and efforts to thebusiness of the Company, its subsidiaries and its affiliates, the amount of such time to be sufficient, in the reasonable judgment of theBoard of Directors, to permit him diligently and faithfully to serve and endeavor to further their interests to the best of his ability. 2. Compensation.

(a) Monetary Remuneration and Benefits. During the Employment Period, the Company shall pay to theExecutive for all services rendered by him in any capacity:


(i) a minimum base salary of $400,000 per year (payable in accordance with the Company’s thenprevailing practices, but in no event less frequently than in equal monthly installments), subject to increase if the Board of Directors ofthe Company in its sole discretion so determines; provided that, should the Company institute a Company-wide pay cut/furloughprogram, such salary may be decreased by up to 15%, but only for as long as said Company-wide program is in effect;

(ii) such additional compensation by way of salary or bonus or fringe benefits as the Board ofDirectors of the Company in its sole discretion shall authorize or agree to pay, payable on such terms and conditions as it shalldetermine; and

(iii) such employee benefits that are made available by the Company to its other executives generally.

(b) Annual Incentive Payment. The Executive shall participate in the Company’s Management Incentive Plan(or such alternative, successor, or replacement plan or program in which the Company’s principal operating executives, other than theChief Executive Officer, generally participate) and shall have a targeted incentive thereunder of not less than $300,000 per year;provided, however, that the Executive’s actual incentive payment for any year shall be measured by the Company’s performanceagainst goals established for that year and that such performance may produce an incentive payment ranging from none to 200% of thetargeted amount. The Executive’s incentive payment for any year will be appropriately pro-rated to reflect a partial year ofemployment.

(c) Supplemental Executive Retirement Plan. The Executive shall participate in the Company’s UnfundedPension Plan for Selected Executives (the “SERP”). The timing of payment under the SERP shall be in accordance with its terms.

(d) Automobile. While the Executive is actively working for the Company, the Company will pay theExecutive a monthly automobile allowance of $850. Such allowance shall cease when the Executive’s employment with theCompany terminates for any reason.

(e) Expenses. During the Employment Period, the Company agrees to reimburse the Executive, upon thesubmission of appropriate vouchers, for out-of-pocket expenses (including, without limitation, expenses for travel, lodging andentertainment) incurred by the Executive in the course of his duties hereunder in accordance with its expense reimbursementpolicy. Any reimbursement that is taxable to Executive shall be paid no later than the end of the year following the year in which it isincurred.

(f) Office and Staff. The Company will provide the Executive with an office, secretary and such otherfacilities as may be reasonably required for the proper discharge of his duties hereunder.

(g) Indemnification. The Company agrees to indemnify, defend and hold harmless the Executive for any andall liabilities to which he may be subject as a result of his employment hereunder (and as a result of his service as an officer or directorof the Company, or as an officer or director of any of its subsidiaries or affiliates), as well as the costs of any legal action brought orthreatened against him as a result of such employment, to the fullest extent permitted by law.

2


(h) Participation in Plans. Notwithstanding any other provision of this Agreement, the Executive shall havethe right to participate in any and all of the plans or programs made available by the Company (or it subsidiaries, divisions oraffiliates) to, or for the benefit of, executives (including the annual stock option and restricted stock grant programs) or employees ingeneral, on a basis consistent with other senior executives.

(i) Equity Awards. At the first meeting of Arrow’s Board of Directors following the commencement of theExecutive’s employment, the Company’s Compensation Committee will award the Executive $300,000 value of restricted stock of theCompany and $300,000 value of non-qualified stock options, each pursuant to the terms of the Company’s 2004 Omnibus IncentivePlan, which shares and options will both vest separately at the rate of 25% on each anniversary of the date of the award (until fullyvested in the year 2012) while the Executive is employed by the Company. 3. The Employment Period.

The “Employment Period,” as used in the Agreement, shall mean the period beginning as of the date hereof andterminating on the last day of the calendar month in which the first of the following occurs:

(a) the death of the Executive;

(b) the disability of the Executive as determined in accordance with Paragraph 4 hereof and subject to theprovisions thereof;

(c) the termination of the Executive’s employment by the Company for cause in accordance with Paragraph 5hereof; or

(d) December 31, 2010; provided, however, that, unless sooner terminated as otherwise provided herein, theEmployment Period shall automatically be extended for one or more twelve (12) month periods beyond the then scheduled expirationdate thereof unless between the 18th and 12th month preceding such scheduled expiration date either the Company or the Executivegives the other written notice of its or his election not to have the Employment Period so extended.

3


4. Disability.

For purposes of this Agreement, the Executive will be deemed “disabled” if he is absent from work because he isincapacitated due to an accident or physical or mental impairment, and one of the following conditions is also satisfied: (i) Executiveis expected to return to his duties with the Company within 6 months after the beginning of his absence or (ii) Executive is unable toperform his duties or those of a substantially similar position of employment due to a medically-determinable physical or mentalimpairment which can be expected to result in death or last for a continuous period of not less than 6 months. If the Executive isabsent on account of being disabled (as defined in the preceding sentence), during such absence the Company shall continue to pay tothe Executive his base salary, any additional compensation authorized by the Company’s Board of Directors, and other remunerationand benefits provided in accordance with Paragraph 2 hereof, all without delay, diminution or proration of any kind whatsoever(except that his remuneration hereunder shall be reduced by the amount of any payments he may otherwise receive as a result of hisdisability pursuant to a disability program provided by or through the Company), and his medical benefits and life insurance shallremain in full force. Unless terminated earlier in accordance with Paragraph 3(a), (c) or (d), the Employment Period shall end on the180th consecutive day of his disability absence, and Executive’s compensation under Paragraph 2 shall immediately cease, except themedical benefits covering the Executive and his family shall remain in place (subject to the eligibility requirements and otherconditions contained in the underlying plan, as described in the Company’s employee benefits manual, and subject to the requirementthat the Executive continue to pay the “employee portion” of the cost thereof), and the Executive’s life insurance policy under theManagement Insurance Program shall be transferred to him, as provided in the related agreement, subject to the obligation of theExecutive to pay the premiums therefor. No benefits shall be payable to Executive under Paragraph 6 on account of an earlytermination of the Employment Period pursuant to this Paragraph 4.

In the event that the Executive is determined to be capable of performing his duties before being absent for 180 consecutivedays (and before expiration of the Employment Period), the Executive shall be entitled to resume employment with the Companyunder the terms of this Agreement for the then remaining balance of the Employment Period. 5. Termination for Cause or Good Reason.

(a) Cause. In the event of any malfeasance, willful misconduct, active fraud or gross negligence by theExecutive in connection with his employment hereunder, the Company shall have the right to terminate the Employment Period bygiving the Executive notice in writing of the reason for such proposed termination. If the Executive shall not have corrected suchconduct to the satisfaction of the Company within thirty days after such notice, the Employment Period shall terminate and theCompany shall have no further obligation to the Executive hereunder but the restriction on the Executive’s activities contained inParagraph 8 and the obligations of the Executive contained in Paragraphs 9(b) and 9(c) shall continue in effect as provided therein.

(b) Good Reason. If, during the Employment Period, without the consent of the Executive, the Board ofDirectors materially diminishes the Executive’s authority, duties and responsibilities as the Vice President of the Company andPresident, Arrow Enterprise Computing Solutions, the Executive shall have the right to terminate his employment with the Companyand be treated under Paragraph 6 the same as if he had been discharged without cause. If the Executive decides to exercise such rightto terminate his employment with the Company, he shall give written notice to the Company within forty-five days after such actionby the Board of Directors stating his objection and the action he thinks necessary to correct it, and he shall permit the Company tohave a forty-five day period in which to correct its action. If the Company makes a correction satisfactory to the Executive, theExecutive shall be obligated to continue in his employment with the Company. If the Company does not make such a correction, theExecutive’s rights and obligations under Paragraph 6 shall accrue at the expiration of such forty-five day period (which shall be hislast day of active work for purposes of Paragraph 6).

4


6. Payments Upon Termination by the Company Without Cause or by Executive for Good Reason.

In the event that the Company-discharges the Executive without cause or the Executive terminates his employmentfor good reason (in either case as defined in Paragraph 5 above) prior to the expiration of the Employment Period, the Executive’spost-discharge compensation and benefits will be as follows, subject to the Executive’s execution of a release as set forth in Paragraph7 below:

(a) The Executive will be placed on inactive or “RA” status beginning on the day following his last day ofactive work and ending on the earliest of (i) the date the Employment Period was scheduled to expire, (ii) the day the Executive beginsemployment for a person or entity other than the Company (including self-employment), or (iii) the day the Executive fails to observeany provision of this Agreement, including his obligations under Paragraphs 8 and 9 (referred to herein as the “RA Period”), duringwhich time he will be paid the salary provided in subparagraph 2(a) on the same schedule as if he still were an active employee (lessthe customary deductions), subject to any required delay described in subparagraph (c) below;

(b) The Executive will be paid two-thirds (2/3) of the incentive bonus to which he would have been entitledunder Paragraph 2(b) had his employment not terminated during the Employment Period, based on the Company’s performance goalsand actual performance for the relevant performance period (or, on a pro rata basis, portion of such performance period) with nochange in the target incentive amount from one performance period to the next during the RA Period, but only if the Executive is stillon RA status at the end of the relevant performance period (or, if earlier, the end of the RA Period if the Executive is still on RA statuson the date the Employment Period was scheduled to expire). Payment to Executive shall be made at the regular time for payment ofsuch bonuses under the Company’s Management Incentive Plan, but not later than the March 15 following the end of the relevantperformance period;

(c) Notwithstanding the provisions of subparagraphs (a) and (b) above, if the Executive is a “specifiedemployee” under section 409A of the Internal Revenue Code of 1986, as amended (“Code”), no payment of deferred compensationwithin the meaning Code section 409A that is not exempted from application of Section 409A as an exempt short term deferral orexempt separation pay in accordance with applicable Treasury regulations will be paid to the Executive on account of his terminationof employment for 6 months following the day he ceases active work, and any such payments due during such 6-month period will beheld and paid on the first business day following completion of such 6-month period, along with interest calculated at simple interestin effect at the beginning of the RA Period;

5


(d) Any unvested stock options, restricted stock or performance shares held by the Executive on his last day ofactive work that would have vested by the scheduled expiration of the Employment Period had the Executive’s employment notterminated will vest on his last day of active work, subject to the payment by the Executive of all applicable taxes. Any vested Arrowperformance shares will be paid out in accordance with their terms. Any vested stock option will remain exercisable after theExecutive ceases active work in accordance with the terms of the applicable award relating to post-termination exercise. Any stockoptions, performance shares or restricted stock not already vested on the Executive’s last day of active work or vested on such last dayin accordance with this subparagraph (d) will be forfeited on the Executive’s last day of active work. No stock options, restricted stockor performance shares will be awarded to the Executive after his last day of active work.

(e) The Executive’s active participation in the Company’s 401(k) Plan, ESOP and SERP will end on his lastday of active work, and he will earn no vesting service and no additional benefits under those plans after that date. For purposes ofreceiving a distribution of his vested account balance under the 401(k) plan or ESOP, the Executive will be considered to have severedfrom service with the Company on his last day of active work.

(f) The Executive will remain covered by the Company medical plan during the RA Period under the sameterms and conditions as an active employee. At the end of the RA Period the Executive will be entitled to continuation coverage forhimself and his eligible dependents under the plan’s COBRA provisions at his own expense. The Executive’s participation in all otherwelfare benefit and fringe benefit plans of the Company will end on the day he ceases active work, subject to any conversion rightsgenerally available to former employees under the terms of such plans_

The Executive shall have an affirmative duty to diligently seek other employment; provided, however, that theExecutive shall not be obligated to accept a new position which is not reasonably comparable to his employment with the Company.Executive will immediately notify the Company, in writing, upon securing other employment. 7. Release.

In consideration for the payments and benefits set forth in Paragraph 6, Executive agrees to execute and return to theCompany a release in the following form:

“Andy S. Bryant (the “Executive”) and Arrow Electronics, Inc. and its affiliates (“Arrow”) each hereby releases theother and its agents, directors and employees from and against any and all claims (statutory, contractual or otherwise) arising out ofthe Executive’s employment or the termination thereof or any discrimination in connection therewith and for any further additionalpayments of any kind or nature whatsoever except as expressly set forth in the employment agreement between the Executive andArrow dated December 30, 2008. Without limiting the foregoing, the Executive hereby releases Arrow from any claim under the AgeDiscrimination in Employment Act and any other similar law. Nothing contained herein will be construed as impacting theExecutive’s right to claim unemployment benefits on account of his termination of employment with Arrow, if any, or preventing theExecutive or Arrow from providing information to or making a claim with any governmental agency to the extent permitted orrequired by law. This release will, however, constitute an absolute bar to the recovery of any damages or additional compensation,consideration or relief of any kind or nature whatsoever arising out of or in connection with such claim.”

6


The executed release required by this Paragraph 7 as a condition for payment under Paragraph 6 shall be given to theCompany no later than 35 days following the Executive’s last day of active work. The Company will provide to the Executive anexecuted release in the same form promptly upon receipt of the release signed by the Executive. The Company, in its sole discretion,may delay payment of any amount otherwise due hereunder pending receipt of such release and expiration of any applicablerevocation period. If the Executive fails to provide the executed release by the expiration of such 35-day period, the Executive willforfeit any payments or benefits still due under Paragraph 6, including but not limited to any unexercised stock options the vesting ofwhich was accelerated pursuant to the terms of Paragraph 6. 8. Non-Disclosure; Non-Competition; Trade Secrets.

For a period of two years following Executive’s last day of active work the Executive will not, directly or indirectly:

(a) Disclosure of Information. Use, attempt to use, disclose or otherwise make known to any person or entity(other than to the Board of Directors of the Company or otherwise in the course of the business of the Company, its subsidiaries oraffiliates and except as may be required by applicable law):

(i) any knowledge or information, including, without limitation, lists of customers or suppliers, tradesecrets, know-how, inventions, discoveries, processes and formulae, as well as all data and records pertaining thereto, which he mayacquire in the course of his employment, in any manner which may be detrimental to or cause injury or loss to the Company, itssubsidiaries or affiliates; or

(ii) any knowledge or information of a confidential nature (including all unpublished matters) relatingto, without limitation, the business, properties, accounting, books and records, trade secrets or memoranda of the Company, itssubsidiaries or affiliates, which he now knows or may come to know in any manner which may be detrimental to or cause injury orloss to the Company, its subsidiaries or affiliates.

(b) Non-Competition. Engage or become interested in the United States, Canada, Mexico or Europe (whetheras an owner, shareholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) in the business ofdistributing electronic parts, components, supplies or systems, or any other business that is competitive with the principal business orbusinesses then (or, in the case of the post-termination covenant, as of the date of termination) conducted by the Company, itssubsidiaries or affiliates (provided, however, that nothing contained herein shall prevent the Executive from acquiring or owning lessthan 1% of the issued and outstanding capital stock or debentures of a corporation whose securities are listed on the New York StockExchange, American Stock Exchange, or the National Association of Securities Dealers Automated Quotation System, if suchinvestment is otherwise permitted by the Company’s Human Resource and Conflict of Interest policies).

(c) Solicitation. Solicit or participate in the solicitation of any business of any type conducted by theCompany, its subsidiaries or affiliates, during said term or thereafter, from any person, firm or other entity which is or was at anyduring the preceding 12 months (or, in the case of the post-termination covenant, during the 12 months preceding the date oftermination) a supplier or customer, or prospective supplier or customer that Executive acquired knowledge of during the course of hisemployment, of the Company, its subsidiaries or affiliates; or

7


(d) Employment. Employ or retain, or arrange to have any other person, firm or other entity employ or retain,or otherwise participate in the employment or retention of, any person who was an employee or consultant of the Company, itssubsidiaries or affiliates, at any time during the period of twelve consecutive months immediately preceding such employment orretention.

The Executive will promptly furnish in writing to the Company, its subsidiaries or affiliates, any informationreasonably requested by the Company (including any third party confirmations) with respect to any activity or interest the Executivemay have in any business.

Except as expressly herein provided, nothing contained herein is intended to prevent the Executive, at any time afterthe termination of the Employment Period, from either (I) being gainfully employed or (ii) exercising his skills and abilities outside ofsuch geographic areas, provided in either case the provisions of this Agreement are complied with. 9. Preservation of Business.

(a) General. During the Employment Period, the Executive will use his best efforts to advance the businessand organization of the Company, its subsidiaries and affiliates, to keep available to the Company, its subsidiaries and affiliates, theservices of present and future employees and to advance the business relations with its suppliers, distributors, customers and others.

(b) Patents and Copyrights, etc. The Executive agrees, without additional compensation, to make available tothe Company all knowledge possessed by him relating to any methods, developments, inventions, processes, discoveries and/orimprovements (whether patented, patentable or unpatentable) which concern in any way the business of the Company, its subsidiariesor affiliates, whether acquired by the Executive before or during his employment hereunder, provided that the Executive shall notdisclose to the Company any such knowledge acquired by the Executive prior to his employment by the Company and which is ownedby a third party.

Any methods, developments, inventions, processes, discoveries and/or improvements (whether patented, patentableor unpatentable) which the Executive may conceive of or make, related directly or indirectly to the business or affairs of the Company,its subsidiaries or affiliates, or any part thereof, during the Employment Period, shall be and remain the property of the Company. TheExecutive agrees promptly to communicate and disclose all such methods, developments, inventions, processes, discoveries and/orimprovements to the Company and to execute and deliver to it any instruments deemed necessary by the Company to effect thedisclosure and assignment thereof to it. The Executive also agrees, on request and at the expense of the Company, to execute patentapplications and any other instruments deemed necessary by the Company for the prosecution of such patent applications or theacquisition of Letters Patent in the United States or any other country and for the assignment to the Company of any patents whichmay be issued. The Company shall indemnify and hold the Executive harmless from any and all costs, expenses, liabilities or damagessustained by the Executive by reason of having made such patent applications or being granted such patents.

8


Any writings or other materials written or produced by the Executive or under his supervision (whether alone orwith others and whether or not during regular business hours), during the Employment Period which are related, directly or indirectly,to the business or affairs of the Company, its subsidiaries or affiliates, or are capable of being used therein, and the copyright thereof,common law or statutory, including all renewals and extensions, shall be and remain the property of the Company. The Executiveagrees promptly to communicate and disclose all such writings or materials to the Company and to execute and deliver to it anyinstruments deemed necessary by the Company to affect the disclosure and assignment thereof to it. The Executive further agrees, onrequest and at the expense of the Company, to take any and ail action deemed necessary by the Company to obtain copyrights or otherprotections for such writings or other materials or to protect the Company’s right, title and interest therein. The Company shallindemnify, defend and hold the Executive harmless from any and all costs, expenses, liabilities or damages sustained by the Executiveby reason of the Executive’s compliance with the Company’s request.

(c) Return of Documents. Upon the termination of the Employment Period, including any termination ofemployment described in Paragraph 6, the Executive will promptly return to the Company all copies of information protected byParagraph 9(a) hereof or pertaining to matters covered by subparagraph (b) of this Paragraph 9 which are in his possession, custody orcontrol, whether prepared by him or others. 10. Separability.

The Executive agrees that the provisions of Paragraphs 8 and 9 hereof constitute independent and separablecovenants which shall survive the termination of the Employment Period and which shall be enforceable by the Companynotwithstanding any rights or remedies the Executive may have under any other provisions hereof. The Company agrees that theprovisions of Paragraph 6 hereof constitute independent and separable covenants which shall survive the termination of theEmployment Period and which shall be enforceable by the Executive notwithstanding any rights or remedies the Company may haveunder any other provisions hereof. 11. Specific Performance.

The Executive acknowledges that (i) the services to be rendered under the provisions of this Agreement and theobligations of the Executive assumed herein are of a special, unique and extraordinary character; (ii) it would be difficult orimpossible to replace such services and obligations; (iii) the Company, its subsidiaries and affiliates will be irreparably damaged if theprovisions hereof are not specifically enforced; and (iv) the award of monetary damages will not adequately protect the Company, itssubsidiaries and affiliates in the event of a breach hereof by the Executive. The Company acknowledges that (i) the Executive will beirreparably damaged if the provisions of Paragraphs 1(b) and 6 hereof are not specifically enforced and (ii) the award of monetarydamages will not adequately protect the Executive in the event of a breach thereof by the Company. By virtue thereof, the Executiveagrees and consents that if he violates any of the provisions of this Agreement, and the Company agrees and consents that if it violatesany of the provisions of Paragraphs 6 hereof, the other party, in addition to any other rights and remedies available under thisAgreement or otherwise, shall (without any bond or other security being required and without the necessity of proving monetarydamages) be entitled to a temporary and/or permanent injunction to be issued by a court of competent jurisdiction restraining thebreaching party from committing or continuing any violation of this Agreement, or any other appropriate decree of specificperformance. Such remedies shall not be exclusive and shall be in addition to any other remedy which any of them may have.

9


12. Miscellaneous.

(a) Entire Agreement; Amendment . This Agreement constitutes the whole employment agreement betweenthe parties and may not be modified, amended or terminated except by a written instrument executed by the parties hereto. It isspecifically agreed and understood, however, that the provisions of that certain letter agreement dated as of December 30, 2008granting to the Executive extended separation benefits in the event of a change in control of the Company shall survive and shall notbe affected hereby: All other agreements between the parties pertaining to the employment or remuneration of the Executive notspecifically contemplated hereby or incorporated or merged herein are terminated and shall be of no further force or effect.

(b) Assignment. Except as stated below, this Agreement is not assignable by the Company without thewritten consent of the Executive, or by the Executive without the written consent of the Company, and any purported assignment byeither party of such party’s rights and/or obligations under this Agreement shall be null and void; provided, however, that,notwithstanding the foregoing, the Company may merge or consolidate with or into another corporation, or sell all or substantially allof its assets to another corporation or business entity or otherwise reorganize itself, provided the surviving corporation or entity, if notthe Company, shall assume this Agreement and become obligated to perform all of the terms and conditions hereof, in which event theExecutive’s obligations shall continue in favor of such other corporation or entity.

(c) Waivers, etc. No waiver of any breach or default hereunder shall be considered valid unless in writing,and no such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. The failure of anyparty to insist upon strict adherence to any term of this Agreement on any occasion shall not operate or be construed as a waiver of theright to insist upon strict adherence to that term or any other term of this Agreement on that or any other occasion.

(d) Provisions Overly Broad. In the event that any term or provision of this Agreement shall be deemed by acourt of competent jurisdiction to be overly broad in scope, duration or area of applicability, the court considering the same shall havethe power and hereby is authorized and directed to modify such term of provision to limit such scope, duration or area, or all of them,so that such term or provision is no longer overly broad and to enforce the same as so limited. Subject to the foregoing sentence, in theevent any provision of this Agreement shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceabilityshall attach only to such provision and shall not affect or render invalid or unenforceable any other provision of this Agreement.

10


(e) Notices. Any notice permitted or required hereunder shall be in writing and shall be deemed to have beengiven on the date of delivery or, if mailed by registered or certified mail, postage prepaid, on the date of mailing:

(i) if to the Executive to:Andrew S. Bryant2441 E. Desert Flower LanePhoenix, AZ 85048

(ii) if to the Company to:

Arrow Electronics, Inc.50 Marcus DriveMelville, New York 11747Attention: Peter S. Brown

Senior Vice President andGeneral Counsel

Either party may, by notice to the other, change his or its address for notice hereunder.

(f) New York Law. This Agreement shall be construed and governed in all respects by the internal laws of theState of New York, without giving effect to principles of conflicts of law.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. ARROW ELECTRONICS, INC. By: /s/ Peter S. Brown Peter S. Brown Senior Vice President & General Counsel THE EXECUTIVE /s/ Andrew S. Bryant

Andrew S. Bryant

11


Exhibit 10(k)(vi)

EMPLOYMENT AGREEMENT made as of the 30 th day of December 2008 by and between ARROW ELECTRONICS,INC., a New York corporation with its principal office at 50 Marcus Drive, Melville, New York 11747 (the “Company”), and PETERKONG, residing at 15 Ardmore Park, Unit 2501, Singapore 259959 (the “Executive”).

WHEREAS, the Company wishes to employ the Executive as Vice President and President of Arrow Asia Pacific, with theresponsibilities and duties of an officer of the Company under an Employment Agreement dated March 17, 2006 (the “OldAgreement”); and

WHEREAS, the Old Agreement contains provisions that do not comply with section 409A of the Internal Revenue Code of1986, as amended, and applicable regulations thereunder (“409A”) and other provisions that are obsolete; and

WHEREAS, the Company and Executive wish to novate the Old Agreement and to replace it with this Agreement. 1. Employment and Duties.

a) Employment. The Company hereby employs the Executive for the Employment Period defined inParagraph 3, to perform such duties for the Company, its subsidiaries and affiliates and to hold such offices as may be specified fromtime to time by the Company’s Board of Directors, subject to the following provisions of this Agreement. The Executive herebyaccepts such employment.

b) Duties and Responsibilities. The Executive shall continue as Vice President of the Company and Presidentof Arrow Asia Pacific, provided that the Board of Directors shall have the right to adjust the duties, responsibilities, and title of theExecutive as the Board of Directors may from time to time deem to be in the interests of the Company (provided, however, that duringthe Employment Period, without the consent of the Executive, he shall not be assigned any titles, duties or responsibilities which, inthe aggregate, represent a material diminution in, or are materially inconsistent with, his prior title, duties, and responsibilities as VicePresident and President of Arrow Asia Pacific).

If the Board of Directors does not either continue the Executive in the office of Vice President and President ofArrow Asia Pacific or elect him to some other executive office satisfactory to the Executive, the Executive shall have the right todecline to give further service to the Company and shall have the rights and obligations which would accrue to him under Paragraph 6if he were discharged without cause. If the Executive decides to exercise such right to decline to give further service, he shall withinforty-five days after such action or omission by the Board of Directors give written notice to the Company stating his objection andthe action he thinks necessary to correct it, and he shall permit the Company to have a forty-five day period in which to correct itsaction or omission. If the Company makes a correction satisfactory to the Executive, the Executive shall be obligated to continue toserve the Company. If the Company does not make such a correction, the Executive’s rights and obligations under Paragraph 6 shallaccrue at the expiration of such forty-five day period.


c) Time Devoted to Duties. The Executive shall devote all of his normal business time and efforts to thebusiness of the Company, its subsidiaries and its affiliates, the amount of such time to be sufficient, in the reasonable judgment of theBoard of Directors, to permit him diligently and faithfully to serve and endeavor to further their interests to the best of his ability. 2. Compensation.

a) Monetary Remuneration and Benefits. During the Employment Period, the Company shall pay to theExecutive for all services rendered by him in any capacity:

i. a minimum base salary of $400,000 per year (payable in accordance with the Company’s thenprevailing practices, but in no event less frequently than in equal monthly installments), subject to increase if theBoard of Directors of the Company in its sole discretion so determines; provided that, should the company institutea company-wide pay cut/furlough program, such salary may be decreased by up to 15%, but only for as long as saidcompany-wide program is in effect;

ii. such additional compensation by way of salary or bonus or fringe benefits as the Board of

Directors of the Company in its sole discretion shall authorize or agree to pay, payable on such terms and conditionsas it shall determine; and

iii. such employee benefits that are made available by the Company to its other executives generally.

b) Annual Incentive Payment. The Executive shall participate in the Company’s Management Incentive Plan

(or such alternative, successor, or replacement plan or program in which the Company’s principal operating executives, other than theChief Executive Officer, generally participate) and shall have a targeted incentive thereunder of not less than $240,000 per annum;provided, however, that the Executive’s actual incentive payment in any year shall be measured by the Company’s performanceagainst goals established for that year and that such performance may produce an incentive payment ranging from none to twice thetargeted amount. The Executive’s incentive payment for any year will be appropriately pro-rated to reflect a partial year ofemployment.

c) Supplemental Executive Retirement Plan. The Executive shall continue to participate in the Company’sUnfunded Pension Plan for Selected Executives (the “SERP”). The timing of payment under the SERP shall be in accordance with itsterms.

d) Expenses. During the Employment Period, the Company agrees to reimburse the Executive, upon thesubmission of appropriate documentation, for reasonable and necessary out-of-pocket expenses (including, without limitation,expenses for travel, lodging and entertainment) incurred by the Executive in the course of his duties hereunder in accordance with itsexpense reimbursement policy. Any reimbursement that is taxable to Executive shall be paid no later than the end of the yearfollowing the year in which it is incurred.

- 2 -


e) Office and Staff. The Company will provide the Executive with an office, secretary and such otherfacilities as may be reasonably required for the proper discharge of his duties hereunder.

f) Indemnification. The Company agrees to indemnify the Executive for any and all liabilities to which hemay be subject as a result of his employment hereunder (and as a result of his service as an officer or director of the Company, or asan officer or director of any of its subsidiaries or affiliates), as well as the costs of any legal action brought or threatened against himas a result of such employment, to the fullest extent permitted by law.

g) Participation in Plans. Notwithstanding any other provision of this Agreement, the Executive shall have theright to participate in any and all of the plans or programs made available by the Company (or it subsidiaries, divisions or affiliates) to,or for the benefit of, executives (including the annual stock option and performance share programs) or employees in general, on abasis consistent with other similarly situated executives.

h) Withholdings. All payments of compensation and benefits by the Company shall be subject to all legallyrequired and customary withholding. 3. The Employment Period.

The “Employment Period,” as used in the Agreement, shall mean the period beginning as of the date hereof andterminating on the last day of the calendar month in which the first of the following occurs:

a) the death of the Executive;

b) the disability of the Executive as determined in accordance with Paragraph 4 hereof and subject to theprovisions thereof;

c) the termination of the Executive’s employment by the Company for cause in accordance with Paragraph 5hereof; or

d) December 31, 2010; provided, however, that, unless sooner terminated as otherwise provided herein, theEmployment Period shall automatically be extended for one or more twelve (12) month periods beyond the then scheduled expirationdate thereof unless between the 18th and 12th month preceding such scheduled expiration date either the Company or the Executivegives the other written notice of its or his election not to have the Employment Period so extended.

- 3 -


4. Disability.

For purposes of this Agreement, the Executive will be deemed “disabled” if he is absent from work because he isincapacitated due to an accident or physical or mental impairment, and one of the following conditions is also satisfied: (i) Executiveis expected to return to his duties with the Company within 6 months after the beginning of his absence or (ii) Executive is unable toperform his duties or those of a substantially similar position of employment due to a medically-determinable physical or mentalimpairment which can be expected to result in death or last for a continuous period of not less than 6 months. If the Executive isabsent on account of being disabled (as defined in the preceding sentence), during such absence the Company shall continue to pay tothe Executive his base salary, any additional compensation authorized by the Company’s Board of Directors, and other remunerationand benefits provided in accordance with Paragraph 2 hereof, all without delay, diminution or proration of any kind whatsoever(except that his remuneration hereunder shall be reduced by the amount of any payments he may otherwise receive as a result of hisdisability pursuant to a disability program provided by or through the Company), and his medical benefits and life insurance shallremain in full force. Unless terminated earlier in accordance with Paragraph 3a), c) or d), the Employment Period shall end on the180th consecutive day of his disability absence, and Executive’s compensation under Paragraph 2 shall immediately cease, except themedical benefits covering the Executive and his family shall remain in place (subject to the eligibility requirements and otherconditions contained in the underlying plan, as described in the Company’s employee benefits manual, and subject to the requirementthat the Executive continue to pay the “employee portion” of the cost thereof), and the Executive’s life insurance policy under theManagement Insurance Program shall be transferred to him, as provided in the related agreement, subject to the obligation of theExecutive to pay the premiums therefor.

In the event that the Executive is determined to be capable of performing his duties before being absent for 180consecutive days (and before expiration of the Employment Period), the Executive shall be entitled to resume employment with theCompany under the terms of this Agreement for the then remaining balance of the Employment Period. 5. Termination for Cause.

In the event of (i) any malfeasance, willful misconduct, fraud or gross negligence by the Executive in connectionwith his employment hereunder or (ii) any other willful or reckless misconduct by the Executive that, in the good faith opinion of thecompany’s Board of Directors, demonstrably and adversely affects the company’s business or reputation, the Company shall have theright to terminate the Employment Period by giving the Executive notice in writing of the reason for such proposed termination. If theExecutive shall not have corrected such conduct to the satisfaction of the Company within thirty days after such notice, theEmployment Period shall terminate and the Company shall have no further obligation to the Executive hereunder but the restriction onthe Executive’s activities contained in Paragraph 8 and the obligations of the Executive contained in Paragraphs 9(b) and 9(c) shallcontinue in effect as provided therein. 6. Termination Without Cause.

In the event that the Company discharges the Executive without cause, the Executive shall be entitled to thefollowing compensation during the remainder of the Employment Period (the length of which shall be determined under Paragraph3(d)) unless sooner terminated by Executive’s disability or death): (i) the base salary provided in Paragraph 2a) payable in accordancewith the usual payroll schedule, (ii) two-thirds of the targeted incentive provided in Paragraph 2b) for each year during theEmployment Period (or, on a pro rata basis, portion of a year) payable on the normal payment date(s) for such incentive, (iii) thevesting of any restricted stock awards and performance shares and the immediate exercisability of any stock options, which wouldhave vested, been earned or become exercisable during the full Employment Period, and iv) continued participation in the Company’smedical plan under the same terms and conditions as an active employee, with eligibility for continuation coverage for Executive andhis eligible dependents under the plan’s COBRA provisions at the end of the Employment Period at Executive’s ownexpense. However, participation in the Company’s 401(k) plan, ESOP and all welfare and fringe benefit plans (other than the medicalplan) will cease on the Executive’s last day of active work, subject to any conversion rights generally available to formeremployees. Any amounts payable to the Executive under this Paragraph 6 shall be reduced by the amount of the Executive’s earningsfrom other employment (which the Executive shall have an affirmative duty to seek; provided, however, that the Executive shall notbe obligated to accept a new position which is not reasonably comparable to his employment with the Company).

- 4 -


Notwithstanding the foregoing, if the Executive is a “specified employee” for purposes of 409A, no deferredcompensation (including without limitation salary continuation payments in accordance with clause (i) above) payable at separationfrom service that is not exempt from application of 409A as a short term deferral or separation pay will be paid to Executive duringthe 6-month period immediately following the day he ceases active work for the Company, and any such payments otherwise dueduring such 6-month period shall be paid on the first business day following completion of such 6-month period along with simpleinterest at the six-month Treasury rate in effect at the beginning of such 6-month period.

The provisions of Paragraph 8 restricting the Executive’s activities and the Executive’s obligations under Paragraph9(b) and 9(c) shall continue in effect and the Company shall have no obligation to make the payments under this Paragraph 6 (or tocontinue such payments) if the Executive is in material breach of any of such provisions. 7. Voluntary Termination by the Executive.

If the Executive terminates his employment voluntarily (other than pursuant to Paragraph 1(b)), the EmploymentPeriod shall terminate and the Company shall have no further obligation to the Executive under this Agreement (other than as requiredby law) but the restriction on the Executive’s activities contained in Paragraph 8 and the obligations of the Executive contained inParagraphs 9(b) and 9(c) shall continue in effect. 8. Non-Competition; Trade Secrets.

a) Disclosure of Information. During the Employment Period and thereafter, the Executive will not, directlyor indirectly, use, attempt to use, disclose or otherwise make known to any person or entity (other than to the Board of Directors of theCompany or otherwise in the course of the business of the Company, its subsidiaries or affiliates and except as may be required byapplicable law):

i. any knowledge or information, including, without limitation, lists of customers or suppliers, tradesecrets, know-how, inventions, discoveries, processes and formulae, as well as all data and records pertainingthereto, which he may acquire in the course of his employment, in any manner which may be detrimental to or causeinjury or loss to the Company, its subsidiaries or affiliates; or

- 5 -


ii. any knowledge or information of a confidential nature (including all unpublished matters) relatingto, without limitation, the business, properties, accounting, books and records, trade secrets or memoranda of theCompany, its subsidiaries or affiliates, which he now knows or may come to know in any manner which may bedetrimental to or cause injury or loss to the Company, its subsidiaries or affiliates.

b) Non-Competition. During the Employment Period and for a period of one year after the termination of the

Employment Period, the Executive will not, directly or indirectly, engage or become interested in the United States, Canada or Mexico(whether as an owner, shareholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) in thebusiness of distributing electronic parts, components, supplies or systems, or any other business that is competitive with the principalbusiness or businesses then conducted by the Company, its subsidiaries or affiliates (provided, however, that nothing contained hereinshall prevent the Executive from acquiring or owning less than 1% of the issued and outstanding capital stock or debentures of acorporation whose securities are listed on the New York Stock Exchange, American Stock Exchange, or the National Association ofSecurities Dealers Automated Quotation System, if such investment is otherwise permitted by the Company’s Human Resource andConflict of Interest policies);

c) Solicitation. During the Employment Period and for a period of one year after the termination of theEmployment Period, the Executive will not, directly or indirectly, solicit or participate in the solicitation of any business of any typeconducted by the Company, its subsidiaries or affiliates, during said term or thereafter, from any person, firm or other entity whichwas or at the time is a supplier or customer, or prospective supplier or customer, of the Company, its subsidiaries or affiliates; or

d) Employment. During the Employment Period and for a period of one year after the termination of theEmployment Period, the Executive will not, directly or indirectly, employ or retain, or arrange to have any other person, firm or otherentity employ or retain, or otherwise participate in the employment or retention of, any person who was an employee or consultant ofthe Company, its subsidiaries or affiliates, at any time during the period of twelve consecutive months immediately preceding suchemployment or retention.

The Executive will promptly furnish in writing to the Company, its subsidiaries or affiliates, any informationreasonably requested by the Company (including any third party confirmations) with respect to any activity or interest the Executivemay have in any business.

Except as expressly herein provided, nothing contained herein is intended to prevent the Executive, at any time afterthe termination of the Employment Period, from either (1) being gainfully employed or (ii) exercising his skills and abilities outsideof such geographic areas, provided in either case the provisions of this Agreement are complied with.

- 6 -


9. Preservation of Business.

a) General. During the Employment Period, the Executive will use his best efforts to advance the businessand organization of the Company, its subsidiaries and affiliates, to keep available to the Company, its subsidiaries and affiliates, theservices of present and future employees and to advance the business relations with its suppliers, distributors, customers and others.

b) Patents and Copyrights, etc. The Executive agrees, without additional compensation, to make available tothe Company all knowledge possessed by him relating to any methods, developments, inventions, processes, discoveries and/orimprovements (whether patented, patentable or unpatentable) which concern in any way the business of the Company, its subsidiariesor affiliates, whether acquired by the Executive before or during his employment hereunder.

Any methods, developments, inventions, processes, discoveries and/or improvements (whether patented, patentableor unpatentable) which the Executive may conceive of or make, related directly or indirectly to the business or affairs of the Company,its subsidiaries or affiliates, or any part thereof, during the Employment Period, shall be and remain the property of the Company. TheExecutive agrees promptly to communicate and disclose all such methods, developments, inventions, processes, discoveries and/orimprovements to the Company and to execute and deliver to it any instruments deemed necessary by the Company to effect thedisclosure and assignment thereof to it. The Executive also agrees, on request and at the expense of the Company, to execute patentapplications and any other instruments deemed necessary by the Company for the prosecution of such patent applications or theacquisition of Letters Patent in the United States or any other country and for the assignment to the Company of any patents whichmay be issued. The Company shall indemnify and hold the Executive harmless from any and all costs, expenses, liabilities ordamages sustained by the Executive by reason of having made such patent applications or being granted such patents.

Any writings or other materials written or produced by the Executive or under his supervision (whether alone orwith others and whether or not during regular business hours), during the Employment Period which are related, directly or indirectly,to the business or affairs of the Company, its subsidiaries or affiliates, or are capable of being used therein, and the copyright thereof,common law or statutory, including all renewals and extensions, shall be and remain the property of the Company. The Executiveagrees promptly to communicate and disclose all such writings or materials to the Company and to execute and deliver to it anyinstruments deemed necessary by the Company to effect the disclosure and assignment thereof to it. The Executive further agrees, onrequest and at the expense of the Company, to take any and all action deemed necessary by the Company to obtain copyrights or otherprotections for such writings or other materials or to protect the Company’s right, title and interest therein. The Company shallindemnify and hold the Executive harmless from any and all costs, expenses, liabilities or damages sustained by the Executive byreason of the Executive’s compliance with the Company’s request.

- 7 -


c) Return of Documents. Upon the termination of the Employment Period, including any termination ofemployment described in Paragraph 6, the Executive will promptly return to the Company all property and records of the Company,its subsidiaries and its affiliates, including without limitation, all copies of information protected by Paragraph 8(a) hereof orpertaining to matters covered by subparagraph (b) of this Paragraph 9 which are in his possession, custody or control, whetherprepared by him or others. 10. Separability.

The Executive agrees that the provisions of Paragraphs 7 and 8 hereof constitute independent and separablecovenants which shall survive the termination of the Employment Period and which shall be enforceable by the Companynotwithstanding any rights or remedies the Executive may have under any other provisions hereof. The Company agrees that theprovisions of Paragraph 6 hereof constitute independent and separable covenants which shall survive the termination of theEmployment Period and which shall be enforceable by the Executive notwithstanding any rights or remedies the Company may haveunder any other provisions hereof. 11. Specific Performance.

The Executive acknowledges that (i) the services to be rendered under the provisions of this Agreement and theobligations of the Executive assumed herein are of a special, unique and extraordinary character; (ii) it would be difficult orimpossible to replace such services and obligations; (iii) the Company, its subsidiaries and affiliates will be irreparably damaged if theprovisions hereof are not specifically enforced; and (iv) the award of monetary damages will not adequately protect the Company, itssubsidiaries and affiliates in the event of a breach hereof by the Executive. The Company acknowledges that (i) the Executive will beirreparably damaged if the provisions of Paragraph 6 hereof are not specifically enforced and (ii) the award of monetary damages willnot adequately protect the Executive in the event of a breach thereof by the Company. By virtue thereof, the Executive agrees andconsents that if he violates any of the provisions of this Agreement, and the Company agrees and consents that if it violates any of theprovisions of Paragraph 6 hereof, the other party, in addition to any other rights and remedies available under this Agreement orotherwise, shall (without any bond or other security being required and without the necessity of proving monetary damages) beentitled to a temporary and/or permanent injunction to be issued by a court of competent jurisdiction restraining the breaching partyfrom committing or continuing any violation of this Agreement, or any other appropriate decree of specific performance. Suchremedies shall not be exclusive and shall be in addition to any other remedy which the Company or any of its subsidiaries or affiliatesmay have. 12. Release

As a condition for payment under Paragraph 6, Executive shall execute and deliver an irrevocable release of claimsagainst the Company and its subsidiaries and its directors, officers and employees in a form prescribed by the Company. Such releaseshall be given to the Company no later than 22 days following the Executive’s last day of active work. The Company, in its solediscretion, may delay payment of any amount otherwise due hereunder pending receipt of such release and expiration of anyapplicable revocation period. If the Executive fails to provide the executed release by the expiration of such 22-day period, theExecutive will forfeit any payments or benefits still due under Paragraph 6, including but not limited to any performance shares andunexercised stock options the vesting of which was accelerated pursuant to the terms of Paragraph 6.

- 8 -


13. Miscellaneous.

a) Entire Agreement; Amendment. This Agreement constitutes the whole employment agreement between theparties and may not be modified, amended or terminated except by a written instrument executed by the parties hereto. It isspecifically agreed and understood, however, that the provisions of that certain letter agreement dated as of December 30, 2008granting to the Executive extended separation benefits in the event of a change in control of the Company shall survive and shall notbe affected hereby. All other agreements between the parties pertaining to the employment or remuneration of the Executive notspecifically contemplated hereby or incorporated or merged herein are terminated and shall be of no further force or effect.

b) Assignment. Except as stated below, this Agreement is not assignable by the Company without the writtenconsent of the Executive, or by the Executive without the written consent of the Company, and any purported assignment by eitherparty of such party’s rights and/or obligations under this Agreement shall be null and void; provided, however, that, notwithstandingthe foregoing, the Company may merge or consolidate with or into another corporation, or sell all or substantially all of its assets toanother corporation or business entity or otherwise reorganize itself, provided the surviving corporation or entity, if not the Company,shall assume this Agreement and become obligated to perform all of the terms and conditions hereof, in which event the Executive’sobligations shall continue in favor of such other corporation or entity.

c) Waivers, etc. No waiver of any breach or default hereunder shall be considered valid unless in writing, andno such waiver shall be deemed a waiver of any subsequent breach or default of the same or similar nature. The failure of any party toinsist upon strict adherence to any term of this Agreement on any occasion shall not operate or be construed as a waiver of the right toinsist upon strict adherence to that term or any other term of this Agreement on that or any other occasion.

d) Provisions Overly Broad. In the event that any term or provision of this Agreement shall be deemed by acourt of competent jurisdiction to be overly broad in scope, duration or area of applicability, the court considering the same shall havethe power and hereby is authorized and directed to modify such term or provision to limit such scope, duration or area, or all of them,so that such term or provision is no longer overly broad and to enforce the same as so limited. Subject to the foregoing sentence, inthe event any provision of this Agreement shall be held to be invalid or unenforceable for any reason, such invalidity orunenforceability shall attach only to such provision and shall not affect or render invalid or unenforceable any other provision of thisAgreement.

e) Notices. Any notice permitted or required hereunder shall be in writing and shall be deemed to have beengiven on the date of delivery or, if mailed by registered or certified mail, postage prepaid, on the date of mailing:

- 9 -


i. if to the Executive to:

Peter Kong15 Ardmore ParkUnit 2501Singapore 259959

ii. if to the Company to:

Arrow Electronics, Inc.50 Marcus DriveMelville, New York 11747Attention: Peter S. Brown

Senior Vice President andGeneral Counsel

Either party may, by notice to the other, change his or its address for notice hereunder by providing written notice to the other inaccordance with this provision.

f) Choice of Law; Choice of Forum. This Agreement shall be construed and governed in all respects by theinternal laws of the State of New York, without giving effect to principles of conflicts of law or where the parties are located at thetime a dispute arises. The parties consent and submit themselves to the exclusive jurisdiction of the state and federal courts in NewYork over any dispute arising out of or relating to this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. ARROW ELECTRONICS, INC. By: /s/ Peter S. Brown Peter S. Brown Senior Vice President & General

Counsel THE EXECUTIVE /s/ Peter Kong

Peter Kong

- 10 -


Exhibit 10(k)(vii)

Date NameAddressCity, State

Dear ___________:

Arrow Electronics, Inc., a New York corporation (the "Company"), considers the establishment and maintenance ofa sound and vital management to be essential to protecting and enhancing the best interests of the Company and its shareholders. Inthis connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change incontrol may arise and that such possibility, and the uncertainty and questions which it may raise among management, may result in thedeparture or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board ofDirectors of the Company (the "Board") has determined that appropriate steps should be taken to reinforce and encourage thecontinued attention and dedication of members of the Company's management to their assigned duties without distraction incircumstances arising from the possibility of a change in control of the Company. In particular, the Board believes it important,should the Company or its shareholders receive a proposal for transfer of control of the Company, that you be able to assess andadvise the Board whether such proposal would be in the best interests of the Company and its shareholders and to take such otheraction regarding such proposal as the Board might determine to be appropriate, without being influenced by the uncertainties of yourown situation.

In order to induce you to remain in the employ of the Company, this letter agreement, which has been approved by the Board, setsforth the severance benefits which the Company agrees will be provided to you in the event your employment with the Companyterminates subsequent to a "change of control" of the Company under the circumstances described below.

1. Agreement to Provide Services; Right to Terminate.

(i) Except as otherwise provided in paragraph (ii) below, or as provided in that certain Employment Agreement made asof _______________ by and between the Company and you, the Company or you may terminate your employment at any time,subject to the Company's providing the benefits hereinafter specified in accordance with the terms hereof.


Exhibit 10(k)(vii)

(ii) In the event a tender offer or exchange offer is made by a Person (as hereinafter defined) for more than 30% of the combinedvoting power of the Company's outstanding securities ordinarily having the right to vote at elections of directors ("Voting Securities"),including shares of the Company's Common Stock, par value $1 per share (the "Company Shares"), or in the event of any solicitationof proxies or written consents not approved by the Board, you agree that you will not leave the employ of the Company (other than asa result of Disability or upon Retirement, as such terms are hereinafter defined) and will render the services contemplated in therecitals to this Agreement until such tender offer or exchange offer has been abandoned or terminated, such solicitation of proxies hasended, or a change in control of the Company, as defined in Section 3 hereof, has occurred, except as otherwise agreed in writing byyou and the Company. For purposes of this Agreement, the term "Person" shall mean and include any individual, corporation,partnership, group, association or other "person", as such term is used in Section 14(d) of the Securities Exchange Act of 1934 (the"Exchange Act"), other than the Company, a wholly owned subsidiary of the Company or any employee benefit plan(s) sponsored bythe Company.

2. Term of Agreement . This Agreement shall commence on the date hereof and shall continue in effect until _____________;provided, however, that commencing on June 1, ________ and each June 1 thereafter, the term of this Agreement shall automaticallybe extended for one additional year unless at least 90 days prior to such June 1 date, the Company or you shall have given notice thatthis Agreement shall not be extended; and provided, further, that this Agreement shall continue in effect for a period of twenty-four(24) months beyond the term provided herein if a change in control of the Company, as defined in Section 3 hereof, shall haveoccurred during such term. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or theCompany terminate your employment prior to a change in control of the Company, as defined in Section 3 hereof.

3. Change in Control. For purposes of this Agreement, a "change in control" of the Company shall mean either of the following: (a)any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date ofthe most recent acquisition by such person or persons) ownership of stock of the Company possessing 30 percent or more of the totalvoting power of the stock of the Company, or (b) a majority of the members of the Company’s Board of Directors is replaced during a12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s Board ofDirectors before the date of the appointment or election, in each case interpreted in accordance with section 409A of the InternalRevenue Code of 1986, as amended and applicable Treasury regulations (“409A”).

4. Termination Following Change in Control. If any of the events described in Section 3 hereof constituting a change in control of theCompany shall have occurred, you shall be entitled to the benefits provided in paragraphs (iii) and (iv) of Section 5 hereof upon thetermination of your employment within twenty-four (24) months after such event, unless such termination is (a) because of your deathor Disability, (b) by the Company for Cause or (c) by you other than for Good Reason (as all such capitalized terms are hereinafterdefined).

- 2 -


Exhibit 10(k)(vii)

(i) Disability. Termination by the Company of your employment based on "Disability" shall mean termination because of yourabsence from your duties with the Company on a full time basis for one hundred eighty (180) consecutive days as a result of yourincapacity due to physical or mental illness, unless you shall have returned to the full time performance of your duties before theexpiration of such 180-day period.

(ii) Cause. Termination by the Company of your employment for "Cause" shall mean termination upon (a) the willful andcontinued failure by you to perform substantially your duties with the Company (other than any such failure resulting from yourincapacity due to physical or mental illness) after a demand for substantial performance is delivered to you by the Chairman of theBoard or President of the Company which specifically identifies the manner in which such executive believes that you have notsubstantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrablyinjurious to the Company. For purposes of this paragraph (ii), no act, or failure to act, on your part shall be considered "willful" unlessdone, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to,the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by theBoard or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by youin good faith and in the best interests of the corporation. It is also expressly understood that your attention to matters not directlyrelated to the business of the Company shall not provide a basis for termination for Cause so long as the Board has approved yourengagement in such activities. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless anduntil there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three quartersof the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and anopportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board youwere guilty of the conduct set forth above in (a) or (b) of this paragraph (ii) and specifying the particulars thereof in detail.

(iii) Good Reason. Termination by you of your employment for "Good Reason" shall mean termination based on any action (oromission) that constitutes one or more of the following:

(A) a material diminution in your compensation, based on the average of the taxable compensation paid to you duringthe 5-year period preceding the year in which the change in control occurred, as reported by the Company on Form W-2;

(B) a material reduction by the Company in your base salary as in effect immediately prior to the change in control;

(C) a change or modification in the benefit plans in which you were entitled to participate immediately prior to thechange in control, whether by termination, changes in the rate of accrual, limitations on available benefits or other designchanges, which in the aggregate constitute a material diminution of the total annual value of your compensation andbenefits as measured immediately prior to the change in control,

- 3 -


Exhibit 10(k)(vii)

(D) a material diminution in your authority, duties or responsibilities;

(E) a material diminution in the authority, duties or responsibilities of the person to whom you report,

(F) a material diminution in the budget over which you retain authority; or

(G) a material change in the location of your Company office;

provided that, no later than 90 days after the action or omission described in paragraphs (A) through (H) above you notify theCompany of your objection to such action or omission and your intention to terminate your employment with the Company if theCompany does not remedy the situation within the next 30 days

(iv) Notice of Termination. Any purported termination by the Company or by you following a change in control shall becommunicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination"shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon.

(v) Date of Termination. "Date of Termination" following a change in control shall mean (a) if your employment is terminatedfor Disability, the end of the 180-day period described in paragraph 4(i) above, (b) if your employment is terminated by the Companyfor Cause or by you without Good Reason, the date specified in the Notice of Termination as your last day of active work for theCompany, (c) if your employment is terminated by you for Good Reason, the day immediately following the expiration of the 30-daycure period described in paragraph 4(iii) above, or (d) if your employment is terminated by the Company for any reason other thanCause, the date on which a Notice of Termination is given. In the case of termination by the Company of your employment for Cause,if you have not previously expressly agreed in writing to the termination, then within thirty (30) days after receipt by you of the Noticeof Termination with respect thereto, you may notify the Company that a dispute exists concerning the termination, in which event theDate of Termination shall be the date set either by mutual written agreement of the parties or by the arbitrators in a proceeding asprovided in Section 13 hereof. During the pendency of any such dispute, the Company will continue to pay you your fullcompensation in effect just prior to the time the Notice of Termination is given and until the dispute is resolved in accordance withSection 13.

- 4 -


Exhibit 10(k)(vii)

5. Compensation Upon Termination or During Disability; Other Agreements

(i) During any period following a change in control that you fail to perform your duties as a result of incapacity due to physicalor mental illness, you shall continue to receive your salary at the rate then in effect and any benefits or awards under any Plans shallcontinue to accrue during such period to the extent not inconsistent with such Plans, until your employment is terminated pursuant toand in accordance with paragraphs 4(i) and 4(v) hereof. Thereafter, your benefits shall be determined in accordance with theCompany plans then in effect.

(ii) If your employment is terminated for Cause following a change in control of the Company, the Company shall pay you yoursalary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits orawards (including both the cash and stock components) which pursuant to the terms of any Company plans have been earned orbecome payable, but which have not yet been paid to you. Thereupon the Company shall have no further obligations to you under thisAgreement.

(iii) Subject to Section 8 hereof, if, within twenty-four (24) months after a change in control of the Company shall have occurred,as defined in Section 3 above, your employment by the Company shall be terminated (a) by the Company other than for Cause orDisability, or (b) by you for Good Reason, then, except as otherwise provided herein, you shall be entitled, without regard to anycontrary provisions of any Company plan, to the benefits provided below:

(A) the Company shall pay your salary through the Date of Termination at the rate and in accordance with the schedulein effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash andstock components) which pursuant to the terms of any Company plans have been earned or become payable, but whichhave not yet been paid to you (including any amounts which previously had been deferred at your request); and

(B) as severance pay and in lieu of any further salary for periods subsequent to the Date of Termination, the Companyshall pay to you on the fifth day following the Date of Termination an amount in cash equal to 2 times your "annualizedincludible compensation for the base period" (as defined in Section 280G(d)(1) of the Internal Revenue Code of 1986(the "Code")); .

provided that, if you are a “specified employee” within the meaning of 409A, any amount (or portion thereof) payable to youhereunder on account of your termination of employment within the 6-month period immediately following such termination, that isnot exempt from 409A under applicable Treasury regulations (including but not limited to the regulations exempting severance andother separation payments up to certain limits), shall not be paid until expiration of such 6-month period.

(iv) Following a change in control of the Company, unless you are terminated by the Company for Cause or Disability or youterminate your employment other than for Good Reason, you and your eligible dependents shall remain covered under the Company’smedical plan on the same basis as an active employee until the earlier of (A) your becoming eligible for Medicare, or (B) thecommencement date of equivalent benefits from a new employer.

- 5 -


Exhibit 10(k)(vii)

(v) Except as specifically provided in paragraph (iv) above, the amount of any payment provided for in this Section 5 shall notbe reduced, offset or subject to recovery by the Company by reason of any compensation earned by you as the result of employmentby another employer after the Date of Termination, or otherwise.

6. Successors; Binding Agreement.

(i) Unless the obligations under this Agreement are assumed by a Successor (as hereinafter defined) as a matter of law, theCompany shall be required to have the Successor, by agreement in form and substance satisfactory to you, assent to the fulfillment bythe Company of its obligations under this Agreement or agree to assume such obligations itself. Failure of the Company to obtainsuch assent or agreement at least three business days prior to the time a Person becomes a Successor (or where the Company does nothave at least three business days advance notice that a Person may become a Successor, within one business day after having noticethat such Person may become or has become a Successor) shall constitute Good Reason for termination by you of your employmentpursuant to Paragraph 4(iii)(H) and, if a change in control of the Company occurred, shall entitle you to terminate your employmentwithin 24 months of such change in control and receive the benefits provided in paragraphs (iii) and (iv) of Section 5 hereof, subject tothe notice and cure provisions of Paragraph 4(iii)(H). For purposes of this Agreement, "Successor" shall mean any Person thatsucceeds to, or has the practical ability to control (either immediately or with the passage of time), the Company's business directly, bymerger or consolidation, or indirectly, by purchase of the Company's Voting Securities, all or substantially all of its assets orotherwise.

(ii) This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors,administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to youhereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the termsof this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

(iii) For purposes of this Agreement, the "Company" shall include any corporation or other entity which is the surviving orcontinuing entity in respect of any merger, consolidation or form of business combination in which the Company ceases to exist.

7. Fees and Expenses; Mitigation. (i) Promptly upon request, but no later than 90 days after the fees and expenses are incurred, theCompany shall pay all reasonable legal fees and related expenses incurred by you in connection with the Agreement following achange in control of the Company, including, without limitation, (a) all such fees and expenses, if any, incurred in contesting ordisputing any such termination or incurred by you in seeking advice with respect to the matters set forth in Section 8 hereof or (b) yourseeking to obtain or enforce any right or benefit provided by this Agreement.

- 6 -


Exhibit 10(k)(vii)

(ii) You shall not be required to mitigate the amount of any payment the Company becomes obligated to make to you inconnection with this Agreement, by seeking other employment or otherwise.

8. Taxes.

(i) All payments to be made to you under this Agreement will be subject to required withholding of federal, state and localincome and employment taxes.

(ii) Notwithstanding anything in the foregoing to the contrary, if any of the payments provided for in this Agreement, togetherwith any other payments which you have the right to receive from the Company or any corporation which is a member of an"affiliated group" (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which the Company isa member, would constitute a "parachute payment" (as defined in Section 280(G)(2) of the Code), the payments pursuant to thisAgreement shall be reduced (reducing first the payments under Section 5(iii)(B) to the largest amount as will result in no portion ofsuch payments being subject to the excise tax imposed by Section 4999 of the Code); provided, however, that the determination as towhether any reduction in the payments under this Agreement pursuant to this proviso is necessary shall be made by you in good faith,and such determination shall be conclusive and binding on the Company with respect to its treatment of the payment for tax reportingpurposes.

9. Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Sections 5, 6(ii), 7, 8, 13and 14 of this Agreement shall survive termination of this Agreement.

10. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be inwriting and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receiptrequested, postage prepaid and addressed, to you or to the Company at the respective address set forth on the first page of thisAgreement, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of theCompany, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other inwriting in accordance herewith, except that notice of change of address shall be effective only upon receipt.

- 7 -


Exhibit 10(k)(vii)

11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver ordischarge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No wavier by eitherparty hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of thisAgreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the sameor at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subjectmatter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation,construction and performance of this Agreement shall be governed by the laws of the State of New York.

12. Validity . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability ofany other provision of this Agreement, which shall remain in full force and effect.

13. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively byarbitration in New York, New York by three arbitrators in accordance with the rules of the American Arbitration Association then ineffect. Judgment may be entered on the arbitrators' award in any court having jurisdiction; provided, however, that you shall beentitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute orcontroversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connectionwith any arbitration proceeding pursuant to this Section 13.

14. Employee's Commitment. You agree that subsequent to your period of employment with the Company, you will not at any timecommunicate or disclose to any unauthorized person, without the written consent of the Company, any proprietary processes of theCompany or any subsidiary or other confidential information concerning their business, affairs, products, suppliers or customerswhich, if disclosed, would have a material adverse effect upon the business or operations of the Company and its subsidiaries, taken asa whole; it being understood, however, that the obligations of this Section 14 shall not apply to the extent that the aforesaid matters (a)are disclosed in circumstances where you are legally required to do so or (b) become generally known to and available for use by thepublic otherwise than by your wrongful act or omission.

- 8 -


15. Related Agreements. To the extent that any provision of any other agreement between the Company or any of its subsidiaries andyou shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the sameshall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed tohave been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary toaccomplish such purpose. For avoidance of doubt, subject to the provisions of Section 8 hereof, the lump sum severance paymentunder paragraph 5(iii)(A) of this Agreement is intended to replace any salary continuation otherwise payable to you on account ofyour termination of employment following a change in control (as defined herein) under the terms of any employment agreement youmay have with the Company, and the provision for extended medical coverage under Section 5(iv) of this Agreement is intended tosupersede any similar provision in any employment agreement you may have with the Company that otherwise would provide forcontinued medical coverage on an active basis for a shorter period of time on account of your termination of employment following achange in control (as defined herein), but that any other entitlements you may have under such employment agreement (or otheragreement, plan or policy) upon your termination of employment following a change in control (as defined herein) shall be unaffectedby this Agreement.

16. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all ofwhich together will constitute one and the same instrument.

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copyof this letter which will then constitute our agreement on this subject.

Sincerely, ARROW ELECTRONICS, INC. By: Name Title

Agreed to this ___ dayof _________, ____. _________________________Executive


Exhibit 21

ARROW ELECTRONICS, INC. & SUBSIDIARIESOrganizational (Legal Entity) Structure

As of December 31, 2009

1. Arrow Electronics, Inc. a New York corporation 2. Arrow Electronics Canada Ltd., a Canadian corporation 3. Schuylkill Metals of Plant City, Inc., a Delaware corporation 4. Arrow Electronics International, Inc., a Delaware corporation (old FSC) 5. Hi-Tech Ad, Inc., a New York corporation 6. Arrow Enterprise Computing Solutions, Inc., a Delaware corporation a. Arrow ECS Canada Ltd. 7. Arrow Electronics Funding Corporation, a Delaware corporation 8. Arrow Electronics Real Estate Inc., a New York corporation 9. Arrow Electronics (U.K.), Inc., a Delaware corporation a. Arrow Electronics (Sweden) KB, a Swedish partnership (98% owned) b. Arrow Electronics South Africa, LLP (1% owned), a South African limited partnership c. Arrow Holdings (Delaware) LLC, a Delaware company i. Arrow International Holdings L.P., a Cayman company (1% owned) d. Arrow International Holdings L.P., a Cayman company (99% owned) i. Arrow Electronics International Holdings, LLC, a Delaware company 1. Arrow Electronics Holdings Vagyonkezelo, Kft, a Hungarian company (50% owned) ii. Arrow Electronics Holdings Vagyonkezelo, Kft, a Hungarian company (50% owned) 1. Arrow Electronics Europe, LLC, a Delaware company 2. Arrow Electronics B.V., a Netherlands company 3. Arrow Electronics EMEASA S.r.l., an Italian company a. ARW Electronics, Ltd., an Israeli company i. Arrow/Rapac, Ltd., an Israeli company b. Arrow Electronics Services S.r.l., an Italian company i. B.V. Arrow Electronics, DLC, a Netherlands company (34.35% owned) c. B.V. Arrow Electronics DLC, a Netherlands company (65.65% owned) i. Arrow Electronics UK Holding Ltd., a UK company 1. Arrow Electronics (UK) Ltd., a UK company a. Arrow Electronics, Ltd., a UK company (dormant) 2. Arrow Northern Europe Ltd., a UK company (dormant) 3. Multichip Ltd., a UK company a. Microtronica Ltd., a UK company ii. Arrow Central Europe GmbH, a German company 1. Silverstar S.r.l., an Italian company (95% owned) a. Microtronica Italy S.r.l., Italian company b. I.R. Electronic D.O.O., a Slovenian company c. Arrow Elektronik Ticaret, A.S., a Turkish company d. Arrow Electronics Hellas S.A., a Greek company e. Arrow Electronice S.R.L., a Romanian company f. Arrow France, S.A., a French company i. Mircrotronica France Sarl, a French company g. Arrow Iberia Electronica, S.L.U., a Spanish company i. Microtronica Iberia S.L.U., a Spanish company

1


Exhibit 21



ii. Arrow Iberia Electronica Lda., a Portugal company 2. Arrow Electronics Danish Holdings ApS, a Danish company a. Arrow Electronics Norwegian Holdings AS, a Norwegian

company i. Arrow Electronics Estonia OU, an Estonian company ii. Jacob Hatteland Electronic II AS, a Norwegian

company iii. Arrow Finland OY, a Finnish company iv. Arrow Denmark, ApS, a Danish company v. Arrow Components Sweden AB, a Swedish company a) Arrow Nordic Components AB,

a Swedish company vi. Arrow Norway A/S, a Norwegian company 3. Arrow Electronics Russ OOO(Russia) (99% owned) 4. Industrade AG, a Swiss company 5. Arrow Electronics Hungary Kereskedelmi Bt, a Hungarian company

(99% owned) 6. Spoerle Hungary Kereskedelmi Kft, a Hungarian company a. Arrow Electronics Hungary Kereskedelmi Bt, a Hungarian

company (1% owned) 7. Arrow Electronics Czech Republic s.r.o., a Czech company 8. Arrow Electronics Poland Sp.z.o.o., a Polish company 9. Spoerle Eastern Europe GmbH, a German company a. Arrow Electronics Ukraine, LLC, a Ukrainian company b. Arrow Electronics Russ OOO (Russia) (1% owned) c. Arrow Electronics Slovakia s.r.o. (0.9%) 10. Arrow Electronics Slovakia s.r.o (99.1% owned) 11. Power and Signal Group GmbH, a German company 12. DNSint.com GmbH, a German company a. Digital Network Services Deutschland, a German company b. Arrow ECS Sverige AB, a Swedish company c. Arrow ECS Danmark A/S, a Danish company d. Arrow ECS Norway AS, a Norwegian company i. AKS Group A/S (Norway), a Norwegian company e. DNS Polska Sp.z.o.o., a Polish company i. ITL-Polska Sp.z.o.o., a Polish company (99.2%

owned) f. DNS Hungaria Kft., a Hungarian company g. Soft-Tronik a.s., a Czech company h. Soft-Tronik SK s.r.o., a Slovakian company i. Internet Security AG, an Austrian company j. DNS d.o.o., a Croatian company k. Digital Network Services (UK) Limited, a UK company i. Centia Group Ltd (UK), a UK company

2


Exhibit 21



1. Centia Ltd (UK), a UK company ii. DNS Arrow UK Ltd., a UK company iii. DNS Arrow Ltd., a UK company l. DNS d.o.o., a Slovenian company 13. Logix, SAS (France) a. Arrow ECS Network & Security SAS (France) b. High Tech Sources SARL (France) c. Finovia SAS (France) d. Openway SAS (France) e. Asplenium SA (France) f. Logix E-Solution, Ltd. (Israel) g. Renaissance Electronics Ltd. (Israel) h. Logix Maroc SARL (Morocco) i. Logix Nederland B.V. (Netherlands) j. Logix Benelux SA NV (Belgium) k. Logix Polska Sp. z.o.o. (Poland) l. Arrow ECS Nordic A/S (Denmark)

i. Arrow ECS Norge AS (Norway) ii. Arrow ECS Denmark A/S (Denmark)

1. IPVista A/S (Denmark) iii. Arrow ECS Suomi OY (Finland) iv. Arrow ECS Sweden AB (Sweden) v. Arrow ECS Finland OY, a Finnish company iii. Arrow Electronics (Sweden) KB, a Swedish partnership (2% owned) iv. Silverstar S.r.l., an Italian company (5% owned)10. Arrow Electronics South Africa LLP (99% owned), a South African limited partnership11. Arrow Altech Holdings (Pty) Ltd. (50.1% owned), a South African company12. Arrow Altech Distribution (Pty) Ltd., a South African company a. Erf 211 Hughes (Pty) Limited, a South African company13. Arrow Brasil S.A., a Brazilian company14. Elko C.E., S.A., an Argentinean company (82.63% owned) a. TEC-Tecnologia Ltda, a Brazilian company (99.9% owned)15. Eurocomponentes, S.A., an Argentinean company (82.63% owned) (dormant)16. Macom, S.A., an Argentinean company (82.63% owned) (dormant)17. Compania de Semiconductores y Componentes, S.A., an Argentinean company (82.63% owned) (dormant)18. Components Agent (Cayman) Limited, a Cayman Islands company a. Arrow/Components (Agent) Ltd., a Hong Kong company i. Arrow Electronics (China) Trading Co. Ltd., a Chinese company b. Arrow Electronics China Ltd., a Hong Kong company i. Arrow Electronics (Shanghai) Co. Ltd., a Chinese company ii. Arrow Electronics (Shenzhen) Co. Ltd., a Chinese company iii. Arrow Electronics Distribution (Shanghai) Co. Ltd., a Chinese company

3


Exhibit 21



c. Arrow Electronics Asia Limited, a Hong Kong company d. Arrow Electronics (S) Pte Ltd, a Singapore company e. Intex-semi Ltd., a Hong Kong company f. Arrow Electronics Asia (S) Pte Ltd., a Singapore company i. Arrow Electronics (Thailand) Limited, a Thailand company ii. Achieva Components PTE Ltd. (Singapore) 1. Achieva Components Sdn Bhd (Malaysia) 2. Achieva Components (India) Private Limited (Singapore) 3. Achieva Components China Ltd. (Hong Kong) a. Achieva Components Int’l Trading (Shanghai) Co. Ltd. (China) 4. Achieva Components (Taiwan) Ltd. (Taiwan) 5. Achieva Components Korea Ltd. (Korea) iii. Achieva Electronics PTE Ltd. (Singapore) 1. Achieva Electronics Sdn Bhd (Malaysia) 2. New Tech Electronics Pte. Ltd. (Singapore) iv. NUTEQ Components PTE Ltd., (Singapore) 1. ETEQ Components PTE Ltd., (Singapore) a. ETEQ Components International PTE Ltd. (Singapore) g. Arrow Electronics India Ltd., a Hong Kong company h. Arrow Asia Pac Ltd., a Hong Kong company i. Kingsview Ltd., a British Virgin Islands company j. Hotung Ltd., a British Virgin Islands company k. Components Agent Asia Holdings, Ltd., a Mauritus company i. Arrow Electronics India Private Limited, an Indian company l. Arrow Electronics ANZ Holdings Pty Ltd., an Australian company i. Arrow Electronics Holdings Pty Ltd., an Australian company 1. Arrow Electronics Australia Pty Ltd., an Australian company ii. Arrow Components (NZ), a New Zealand Company m. Arrow Electronics Labuan Pte Ltd., a Malaysian company i. Arrow Electronics Korea Limited, a South Korean company 1. Excel Tech, Inc., a Korean company n. Arrow Components (M) Sdn Bhd, a Malaysian company o. Arrow Electronics Taiwan Ltd., a Taiwanese company i. Strong Pte, Ltd., a Singapore company ii. Lite-On Korea, Ltd., a Korean company (48.58% owned) iii. TLW Electronics, Ltd., a Hong Kong company 1. Lite-On Korea, Ltd., a Korean company (51.42% owned) iv. Creative Model Limited, a Hong Kong company v. Ultra Source Technology Corp., a Taiwanese company 1. Channel Ware Corp., a Taiwanese company 2. Ultra Source Technology (B.V.I) Corp., a British Virgin Islands company 3. Nuchip Technology Corp., a Taiwanese company (39.65% owned) p. Ultra Source Hong Kong Limited, a Hong Kong company

4


Exhibit 21



19. Arrow Asia Distribution Limited, a Hong Kong company20. Arrow Electronics (CI) Ltd., a Cayman Islands company a. Arrow Electronics Japan GK, a Japanese company i. Universe Electron Corporation b. Marubun/Arrow Asia Ltd., a British Virgin Islands company (50% owned) i. Marubun/Arrow (HK) Limited, a Hong Kong company 1. Marubun/Arrow (Shanghai) Co., Ltd., a Chinese company ii. Marubun/Arrow (S) Pte Ltd., a Singapore company 1. Marubun/Arrow (Thailand) Co., Ltd., a Thailand company 2. Marubun/Arrow (Philippines) Inc., a Filipino company 3. Marubun/Arrow (M) Sdn. Bhd (Malaysia), a Malaysian company21. Marubun/Arrow USA, LLC, a Delaware limited liability company (50% owned)22. Arrow Electronics Mexico, S. de R.L. de C.V., a Mexican company23. Dicopel, Inc., a U.S. company a. Arrow Components Chile Limitada, a Chilean company24. Arrow Components Mexico S.A. de C.V., a Mexican company25. Wyle Electronics de Mexico S de R.L. de C.V., a Mexican company26. Wyle Electronics Caribbean Corp., a Puerto Rican company27. eChipsCanada, Inc., a Canadian company (dormant)28. Marubun Corporation, a Japanese company (8.38% owned) a. Marubun USA Corporation, a California corporation i. Marubun/Arrow USA, LLC, a Delaware limited liability company (50% owned)29. WPG Holding Co., Ltd., a Taiwanese company (2.7% owned)30. A.E. Petsche Company, Inc., a Texas corporation a. Petsche Mexico, LLC, a U.S. company i. A.E. Petsche Company S De RL, a Mexican partnership (1% owned) b. A.E. Petsche Company S De RL, a Mexican partnership (99% owned) c. A.E. Petsche SAS, a French company31. A.E. Petsche Belgium BVBA, a Belgian company32. A.E. Petsche Canada, Inc., a Canadian company

5


ARROW ELECTRONICS, INC. EXHIBIT 23 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements and related prospectuses of Arrow Electronics, Inc., listedbelow, of our reports dated February 3, 2010, with respect to the consolidated financial statements and schedule of Arrow Electronics,Inc., and the effectiveness of internal control over financial reporting of Arrow Electronics, Inc., included in this Annual Report (Form10-K) for the year ended December 31, 2009:

1. Registration Statement (Form S-3 No. 333-162070) 2. Registration Statement (Form S-4 No. 333-51100) 3. Registration Statement (Form S-8 No. 333-118563) 4. Registration Statement (Form S-8 No. 333-52872) 5. Registration Statement (Form S-8 No. 333-101534) 6. Registration Statement (Form S-8 No. 333-45631) 7. Registration Statement (Form S-8 No. 333-154719)

/s/ ERNST & YOUNG LLP

New York, New YorkFebruary 3, 2010


Exhibit 31(i)Arrow Electronics, Inc.

Certification of Chief Executive Officer Pursuant to Section 302 of theSarbanes-Oxley Act of 2002

I, Michael J. Long, certify that:

1. I have reviewed this annual report on Form 10-K of Arrow Electronics, Inc. (the “registrant”);

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present inall material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in ExchangeAct Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisannual report based on such evaluation; and

d) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.

Date: February 3, 2010 By: /s/ Michael J. Long Michael J. Long Chairman, President, and Chief Executive Officer


Exhibit 31(ii)Arrow Electronics, Inc.

Certification of Chief Financial Officer Pursuant to Section 302 of theSarbanes-Oxley Act of 2002

I, Paul J. Reilly, certify that:

1. I have reviewed this annual report on Form 10-K of Arrow Electronics, Inc. (the “registrant”);

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present inall material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in ExchangeAct Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designedunder our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by thisannual report based on such evaluation; and

d) disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during theregistrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materiallyaffected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.

Date: February 3, 2010 By: /s/ Paul J. Reilly Paul J. Reilly Executive Vice President, Finance and Operations, and Chief Financial Officer


Exhibit 32(i)

Arrow Electronics, Inc.Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”)

In connection with the Annual Report on Form 10-K of Arrow Electronics, Inc. (the "company") for the year ended December 31,2009 (the "Report"), I, Michael J. Long, Chairman, President, and Chief Executive Officer of the company, certify, pursuant to therequirements of Section 906, that, to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the company.

Date: February 3, 2010 By: /s/ Michael J. Long Michael J. Long Chairman, President, and Chief Executive

Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwiseadopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, hasbeen provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or itsstaff upon request.


Exhibit 32(ii)

Arrow Electronics, Inc.Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”)

In connection with the Annual Report on Form 10-K of Arrow Electronics, Inc. (the "company") for the year ended December 31,2009 (the "Report"), I, Paul J. Reilly, Executive Vice President, Finance and Operations, and Chief Financial Officer of the company,certify, pursuant to the requirements of Section 906, that, to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the company.

Date: February 3, 2010 By: /s/ Paul J. Reilly Paul J. Reilly Executive Vice President, Finance and Operations, and Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwiseadopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, hasbeen provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or itsstaff upon request.

_____________________________________Created by Morningstar® Document Research℠http://documentresearch.morningstar.com


http://documentresearch.morningstar.com