8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): July 30, 2012

ARROW ELECTRONICS, INC.

(Exact Name of Registrant as Specified in Charter)

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

7459 SOUTH LIMA STREET, ENGLEWOOD, COLORADO  80112

(Address of Principal Executive Offices)

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

Not Applicable

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

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 20.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On July 30, 2012, the Registrant issued a press release announcing its second quarter 2012 earnings.  A copy of the press release is attached hereto as an Exhibit 99.1.  In that press release registrant made reference to a CFO commentary that supplemented the company’s earnings release.  A copy of the CFO commentary is attached hereto as Exhibit 99.2.

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

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(c)           EXHIBITS

99.1           Earnings press release dated July 30, 2012.

99.2           Second Quarter 2012 CFO Commentary

SIGNATURES

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

		ARROW ELECTRONICS, INC.
Date:  July 30, 2012	By:	/s/ Peter S. Brown
		Name:	Peter S. Brown
		Title:	Senior Vice President

EXHIBIT INDEX

Exhibit	Description
99.1	Earnings press release issued by Arrow Electronics, Inc., dated July 30, 2012.
99.2	Second Quarter CFO Commentary issued by Arrow Electronics, Inc. on July 30, 2012.

EX-99.1

Exhibit 99.1

Arrow Electronics Reports Second-Quarter Results

-- Sales of $5.15 Billion and Non-GAAP Earnings Per Share of $1.11 --

-- Generated More Than $575 Million in Cash from Operations over Last 12 Months --

ENGLEWOOD, Colo.--(BUSINESS WIRE)--July 30, 2012--Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2012 net income of $114.4 million, or $1.02 per share on a diluted basis, compared with net income of $156.2 million, or $1.33 per share on a diluted basis in 2011. Excluding certain items in both 2012 and 2011 as described in the non-GAAP earnings reconciliation table, net income of $124.1 million, or $1.11 per share on a diluted basis, in the second quarter of 2012 compared with net income of $159.8 million, or $1.36 per share on a diluted basis, in the second quarter of 2011. Second-quarter sales of $5.15 billion declined 7 percent from sales of $5.54 billion in the prior year. Pro forma for acquisitions and excluding the impact of foreign currency, sales declined 5 percent year over year.

“In a challenging macroeconomic environment that weakened throughout the quarter, we executed well, with sales and earnings per share in line with our expectations. Although the macro environment continues to be challenging, we remain committed to selectively investing in line with our strategic priorities to drive organic growth and strengthen the business. At the same time, we are taking $20 million in additional cost and expense reduction actions as we continue to advance the efficiency of our organization,” said Michael J. Long, chairman, president, and chief executive officer.

“We remain focused on our key financial objectives and have generated more than $575 million in cash flow from operations over the last 12 months, well in excess of our target,” said Paul J. Reilly, executive vice president, finance and operations and chief financial officer. “We again delivered return on invested capital substantially ahead of our weighted average cost of capital.”

Global enterprise computing solutions (“ECS”) second-quarter sales of $1.70 billion increased 2 percent year over year. Sales were in line with our expectations driven by another quarter of strong performance in ECS Europe, with sales increasing 12 percent year over year in local currency, as our supplier matrix expansion strategy continues to pay dividends. In the Americas we performed very well, growing sales 3 percent year over year, even as market growth has slowed. On a global basis, we saw solid double-digit year-over-year growth in services, storage, and software, offset by declines in servers. During the quarter we completed the acquisition of The Altimate Group, a value-added distributor of enterprise and midrange computing products, services, and solutions. This transaction further strengthens our relationships with key hardware, software and storage suppliers in Europe, supporting the strategic initiative to extend the ECS product matrix across the region.

Global components second-quarter sales of $3.45 billion decreased 11 percent year over year. Sales in the Asia Pacific region were ahead of normal seasonality and our expectations on a sequential basis driven by strength in China and Taiwan, and declined 6 percent from the prior year. In the Americas sales were in line with normal seasonality on a sequential basis, and declined 4 percent year over year, as the business continues to perform well in a choppy market. Sales in our vertical lighting channel continue to outpace the market. European sales, while in line with normal seasonality, were down 14 percent year over year in local currency.

SIX-MONTH RESULTS

Arrow’s net income for the first six months of 2012 was $228.0 million, or $2.02 per share on a diluted basis, compared with net income of $292.5 million, or $2.49 per share on a diluted basis, in the first six months of 2011. Sales of $10.04 billion declined 7 percent year over year from sales of $10.76 billion in the year-ago period. Pro forma for acquisitions and excluding the impact of foreign currency, sales declined 6 percent year over year in the first six months of 2012.

Excluding certain items in both the first six months of 2012 and 2011 as described in the non-GAAP earnings reconciliation found below, net income would have been $243.9 million, or $2.16 per share on a diluted basis, for the first six months of 2012 compared with $305.8 million, or $2.60 per share on a diluted basis, for the first six months of 2011.

GUIDANCE

“Looking ahead, we believe that total third-quarter sales will be between $4.8 and $5.2 billion, with global components sales between $3.3 and $3.5 billion and global enterprise computing solutions sales between $1.5 and $1.7 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $1.00 to $1.12. Our guidance assumes that the average Euro to USD exchange rate for the third quarter is 1.21 to 1,” said Mr. Reilly.

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

Arrow Electronics (www.arrow.com) is a global provider of products, services and solutions to industrial and commercial users of electronic components and enterprise computing solutions. Arrow serves as a supply channel partner for more than 120,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 390 locations in 53 countries.

Certain Non-GAAP Financial Information

In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles (“GAAP”), the company provides certain non-GAAP financial information relating to operating income, net income attributable to shareholders and net income per basic and diluted share, each as adjusted for certain charges, credits and losses that the company believes impact the comparability of its results of operations. These charges, credits and losses arise out of the company’s efficiency enhancement initiatives, acquisitions, and settlement of certain legal matters. A reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the table below.

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

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

ARROW ELECTRONICS, INC. EARNINGS RECONCILIATION (In thousands except per share data) (unaudited)
	Quarter Ended					Six Months Ended
	June 30, 2012		July 2, 2011			June 30, 2012			July 2, 2011
Operating income, as reported	$	188,689		$	248,330		$	376,138		$	467,498
Restructuring, integration, and other charges		13,347			5,221			21,590			14,828
Settlement of legal matter		-			-			-			5,875
Operating income, as adjusted	$	202,036		$	253,551		$	397,728		$	488,201
Net income attributable to shareholders, as reported	$	114,383		$	156,197		$	228,011		$	292,506
Restructuring, integration, and other charges		9,702			3,584			15,843			10,783
Settlement of legal matter		-			-			-			3,609
Gain on bargain purchase		-			-			-			(1,078	)
Net income attributable to shareholders, as adjusted	$	124,085		$	159,781		$	243,854		$	305,820
Net income per basic share, as reported		1.04		$	1.35		$	2.05		$	2.54
Restructuring, integration, and other charges		.09			.03			.14			.09
Settlement of legal matter		-			-			-			.03
Gain on bargain purchase		-			-			-			(.01	)
Net income per basic share, as adjusted	$	1.12		$	1.38		$	2.19		$	2.65
Net income per diluted share, as reported	$	1.02		$	1.33		$	2.02		$	2.49
Restructuring, integration, and other charges		.09			.03			.14			.09
Settlement of legal matter		-			-			-			.03
Gain on bargain purchase		-			-			-			(.01	)
Net income per diluted share, as adjusted	$	1.11		$	1.36		$	2.16		$	2.60
The sum of the components for basic and diluted net income per share, as adjusted, may not agree to totals, as presented, due to rounding.

Information Relating to Forward-Looking Statements

This press release includes forward-looking statements that are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: industry conditions, the company's implementation of its new enterprise resource planning system, changes in product supply, pricing and customer demand, competition, other vagaries in the global components and global ECS markets, changes in relationships with key suppliers, increased profit margin pressure, the effects of additional actions taken to become more efficient or lower costs, and the company’s ability to generate additional cash flow. Forward-looking statements are those statements, which are not statements of historical fact. These forward-looking statements can be identified by forward-looking words such as "expects," "anticipates," "intends," "plans," "may," "will," "believes," "seeks," "estimates," and similar expressions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (unaudited)
	Quarter Ended				Six Months Ended
	June 30, 2012		July 2, 2011		June 30, 2012		July 2, 2011
Sales	$	5,150,563	$	5,539,931	$	10,040,092	$	10,762,934
Costs and expenses:
Cost of sales		4,463,419		4,769,784		8,672,369		9,270,279
Selling, general and administrative expenses		457,073		490,590		912,910		955,510
Depreciation and amortization		28,035		26,006		57,085		48,944
Restructuring, integration, and other charges		13,347		5,221		21,590		14,828
Settlement of legal matter		-		-		-		5,875
		4,961,874		5,291,601		9,663,954		10,295,436
Operating income		188,689		248,330		376,138		467,498
Equity in earnings of affiliated companies		1,428		1,408		3,612		2,621
Gain on bargain purchase		-		-		-		1,755
Interest and other financing expense, net		28,555		26,536		55,687		52,303
Income before income taxes		161,562		223,202		324,063		419,571
Provision for income taxes		47,081		66,891		95,859		126,763
Consolidated net income		114,481		156,311		228,204		292,808
Noncontrolling interests		98		114		193		302
Net income attributable to shareholders	$	114,383	$	156,197	$	228,011	$	292,506
Net income per share:
Basic	$	1.04	$	1.35	$	2.05	$	2.54
Diluted	$	1.02	$	1.33	$	2.02	$	2.49
Average number of shares outstanding:
Basic		110,433		115,434		111,218		115,323
Diluted		112,031		117,469		113,079		117,463

ARROW ELECTRONICS, INC. CONSOLIDATED BALANCE SHEETS (In thousands except par value)
	June 30,			December 31,
	2012			2011
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	325,832		$	396,887
Accounts receivable, net		4,401,677			4,482,117
Inventories		2,074,777			1,963,910
Other current assets		223,138			181,677
Total current assets		7,025,424			7,024,591
Property, plant and equipment, at cost:
Land		23,776			23,790
Buildings and improvements		145,934			147,215
Machinery and equipment		975,385			934,558
		1,145,095			1,105,563
Less: Accumulated depreciation and amortization		(573,124	)		(549,334	)
Property, plant and equipment, net		571,971			556,229
Investments in affiliated companies		62,182			60,579
Intangible assets, net		406,324			392,763
Cost in excess of net assets of companies acquired		1,638,862			1,473,333
Other assets		330,139			321,584
Total assets	$	10,034,902		$	9,829,079
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	3,440,928		$	3,264,088
Accrued expenses		611,878			660,996
Short-term borrowings, including current portion of long-term debt		27,412			33,843
Total current liabilities		4,080,218			3,958,927
Long-term debt		1,957,873			1,927,823
Other liabilities		273,085			267,069
Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized – 160,000 shares in 2012 and 2011
Issued – 125,424 and 125,382 shares in 2012 and 2011, respectively		125,424			125,382
Capital in excess of par value		1,068,529			1,076,275
Treasury stock (16,637 and 13,568 shares in 2012 and 2011, respectively), at cost		(555,110	)		(434,959	)
Retained earnings		3,000,968			2,772,957
Foreign currency translation adjustment		110,916			158,550
Other		(30,944	)		(29,393	)
Total shareholders' equity		3,719,783			3,668,812
Noncontrolling interests		3,943			6,448
Total equity		3,723,726			3,675,260
Total liabilities and equity	$	10,034,902		$	9,829,079

ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)
	Quarter Ended
	June 30, 2012			July 2, 2011
Cash flows from operating activities:
Consolidated net income	$	114,481		$	156,311
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		28,035			26,006
Amortization of stock-based compensation		6,891			10,821
Equity in earnings of affiliated companies		(1,428	)		(1,408	)
Deferred income taxes		(2,629	)		573
Restructuring, integration, and other charges		9,702			3,584
Excess tax benefits from stock-based compensation arrangements		(34	)		(1,152	)
Other		(1,440	)		734
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable		(214,037	)		(164,965	)
Inventories		(81,464	)		(151,785	)
Accounts payable		244,623			163,088
Accrued expenses		(10,065	)		(2,142	)
Other assets and liabilities		(32,016	)		(4,698	)
Net cash provided by operating activities		60,619			34,967
Cash flows from investing activities:
Cash consideration paid for acquired businesses		(26,654	)		(63,324	)
Acquisition of property, plant and equipment		(26,611	)		(42,163	)
Purchase of cost method investment		(15,000	)		-
Net cash used for investing activities		(68,265	)		(105,487	)
Cash flows from financing activities:
Change in short-term and other borrowings		(3,503	)		(2,464	)
Proceeds from long-term bank borrowings, net		(291,900	)		101,700
Proceeds from exercise of stock options		628			18,996
Excess tax benefits from stock-based compensation arrangements		34			1,152
Repurchases of common stock		(100,114	)		(50,414	)
Net cash provided by (used for) financing activities		(394,855	)		68,970
Effect of exchange rate changes on cash		(11,375	)		11,272
Net increase (decrease) in cash and cash equivalents		(413,876	)		9,722
Cash and cash equivalents at beginning of period		739,708			521,302
Cash and cash equivalents at end of period	$	325,832		$	531,024

ARROW ELECTRONICS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited)
	Six Months Ended
	June 30, 2012			July 2, 2011
Cash flows from operating activities:
Consolidated net income	$	228,204		$	292,808
Adjustments to reconcile consolidated net income to net cash provided by (used for) operations:
Depreciation and amortization		57,085			48,944
Amortization of stock-based compensation		14,146			21,178
Equity in earnings of affiliated companies		(3,612	)		(2,621	)
Deferred income taxes		16,332			(484	)
Restructuring, integration, and other charges		15,843			10,783
Settlement of legal matter		-			3,609
Excess tax benefits from stock-based compensation arrangements		(4,981	)		(6,880	)
Other		(2,897	)		373
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable		119,977			113,584
Inventories		(105,821	)		(113,804	)
Accounts payable		109,425			(410,915	)
Accrued expenses		(74,629	)		(45,251	)
Other assets and liabilities		(58,118	)		(56,026	)
Net cash provided by (used for) operating activities		310,954			(144,702	)
Cash flows from investing activities:
Cash consideration paid for acquired businesses		(187,197	)		(442,337	)
Acquisition of property, plant and equipment		(48,864	)		(60,340	)
Purchase of cost method investment		(15,000	)		-
Net cash used for investing activities		(251,061	)		(502,677	)
Cash flows from financing activities:
Change in short-term and other borrowings		(12,577	)		(6,364	)
Proceeds from long-term bank borrowings, net		37,800			292,500
Proceeds from exercise of stock options		10,766			46,146
Excess tax benefits from stock-based compensation arrangements		4,981			6,880
Repurchases of common stock		(157,798	)		(96,861	)
Net cash provided by (used for) financing activities		(116,828	)		242,301
Effect of exchange rate changes on cash		(14,120	)		9,781
Net decrease in cash and cash equivalents		(71,055	)		(395,297	)
Cash and cash equivalents at beginning of period		396,887			926,321
Cash and cash equivalents at end of period	$	325,832		$	531,024

ARROW ELECTRONICS, INC. SEGMENT INFORMATION (In thousands) (unaudited)
	Quarter Ended						Six Months Ended
	June 30, 2012			July 2, 2011			June 30, 2012			July 2, 2011
Sales:
Global components	$	3,453,687		$	3,875,331		$	6,803,241		$	7,761,931
Global ECS		1,696,876			1,664,600			3,236,851			3,001,003
Consolidated	$	5,150,563		$	5,539,931		$	10,040,092		$	10,762,934
Operating income (loss):
Global components	$	170,524		$	224,035		$	341,232		$	452,916
Global ECS		65,961			63,690			121,448			102,770
Corporate (a)		(47,796	)		(39,395	)		(86,542	)		(88,188	)
Consolidated	$	188,689		$	248,330		$	376,138		$	467,498

(a) Includes restructuring, integration, and other charges of $13.3 million and $21.6 million for the second quarter and first six months of 2012 and $5.2 million and $14.8 million for the second quarter and first six months of 2011, respectively. Also included in the first six months of 2011 is a charge of $5.9 million related to the settlement of a legal matter.

CONTACT:

Arrow Electronics, Inc.

Contacts:

Greer Aviv, 303-824-3765

Senior Manager, Investor Relations

or

Paul J. Reilly, 631-847-1872

Executive Vice President, Finance and Operations & Chief Financial Officer

or

Media Contact:

John Hourigan, 303-824-4586

Director, Corporate Communications

EX-99.2

Exhibit 99.2

Second-Quarter 2012 CFO Commentary

As reflected in our earnings release, there are a number of items that impact the comparability of our results with those in the trailing quarter and the second quarter of last year.  Any discussion of our results will exclude these items to give you a better sense of our operating results. As always, the operating information we provide to you should be used as a complement to GAAP numbers. For a complete reconciliation between our GAAP and Non-GAAP results, please refer to our earnings release or the earnings reconciliation found at the end of this document.

The following second quarter and pro forma information included in this CFO commentary is unaudited and should be read in conjunction with the Form 10-Q for the quarterly periods ended June 30, 2012 and March 31, 2012, as well as the company's consolidated financial statements and related notes appearing in the company's 2011 Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

Second-Quarter Summary

We executed well in the second quarter, with revenue and earnings per share in line with our expectations, even as the global macroeconomic climate weakened throughout the quarter.  We continue to build our business strategically and make progress toward our corporate targets.  We are investing cautiously as the macro environment continues to be challenging.  In the second quarter we generated $61 million in cash from operations.  Over the last twelve months we have generated more than $575 million in cash flow from operations and converted 108% of our GAAP net income to cash, well in excess of our target. Even in a challenging macro environment returns continue to be accretive to shareholders with return on invested capital well ahead of our weighted average cost of capital.

In our global enterprise computing solutions segment, sales increased 2% year over year and 10% from the first quarter and were in line with our expectations driven by another quarter of strong performance in ECS Europe as our matrix expansion strategy continues to pay dividends.  In the Americas we performed very well even as market growth has slowed.  On a global basis, we saw solid double-digit year-over-year growth in services, storage, and software, offset by declines in servers.  Consistent with our strategy to increase our scale in Europe, we completed the acquisition of The Altimate Group, a value-added distributor of enterprise and midrange computing products, services, and solutions.

In global components, sales decreased 11% year over year and increased 3% sequentially, in line with our expectations.  Sales in Asia Pacific came in well ahead of normal seasonality in our core business, driven by strength in China and Taiwan, while sales in the Americas and Europe were in line with normal seasonality.  Book to bill is at parity on a global basis, with the Americas and our core Asia business above one.  We remain focused on our strategic priorities of increasing our technical resources, creating new value through expansion of services, local execution with global capabilities, and leveraging our differentiated go-to-market model.

1

Consolidated Overview – Second Quarter

P&L Highlights*	Q2 2012	Y/Y Change	Y/Y Change Pro Forma	Q/Q Change
Sales	$5,151	-7%	-8%	+5%
Gross Profit Margin	13.3%	-60bps	-80bps	-60bps
Operating Expense/Sales	9.4%	+10bps	-10bps	-50bps
Operating Income	$202.0	-20%	-22%	+3%
Operating Margin	3.9%	-70bps	-60bps	-10bps
Net Income	$124.1	-22%	-24%	+4%
Diluted EPS	$1.11	-18%	-20%	+6%

* $ in millions, except per share data, may reflect rounding

●   Second quarter sales of $5.2 billion were in line with our expectations

o   Decreased 7% year over year and increased 5% on a sequential basis

§   Pro forma for acquisitions and excluding FX, sales were down 5% year over year and increased 6% sequentially

●   Consolidated gross profit margin was 13.3%

o   Decreased 60 basis year over year and sequentially primarily due to pricing pressure as well as a change in mix of products and customers

o   Pro forma for acquisitions and excluding FX, gross profit margin was down 80 basis pointsyear over year

●   Operating expenses as a percentage of sales were 9.4%

o   Increased 10 basis points year over year and declined 50 basis points sequentially

§   On an absolute dollar basis, operating expenses declined 6% year over year

§   Pro forma for acquisitions, operating expenses declined 9% year over year and were down 10 basis points as a percentage of sales.

●   Operating income was $202.0 million

o   Decreased 20% year over year and increased 3% sequentially

o   Pro forma for acquisitions, operating income was down 22% year over year

●   Operating income as a percentage of sales was 3.9%

o   Decreased 70 basis points year over year and 10 basis points sequentially

o   Pro forma for acquisitions, operating income as a percentage of sales decreased 60 basis points year over year

●   Effective tax rate for the quarter was 29.0%

●   Net income was $124.1 million

o   Decreased 22% compared with last year and was up 4% sequentially

o   Pro forma for acquisitions, net income was down 24% year over year

●   Earnings per share were $1.12 and $1.11 on a basic and diluted, respectively

o   Diluted EPS decreased 18% year over year and increased 6% sequentially

o   Pro forma for acquisitions, EPS decreased 20% year over year

2

Global Components

$2,272 $3,259 $3,875 $3,454 Q2-09 Q2-10 Q2-11 Q2-12

Sales ($ in millions)

●   Sales decreased 11% year over year and increased 3% sequentially

o   Pro forma and excluding the impact of foreign exchange, sales declined 9% year over year and increased 4% sequentially

●   Gross margin declined 50 basis points year over year primarily due to weakness in Europe resulting from macro-related market softness

o   Sequentially, gross margin decreased 50 basis points

●   Book to bill at parity

o   In line with normal seasonal trends

●   We continue to see solid design activity in all regions

o   Approved registrations increased 11% year over year

●   Leading indicators, including lead times and cancellation rates, are in line with historical levels

●   Operating profit declined 24% year over year

o   Operating margin decreased 80 basis points year over year to 4.9%

●   Return on working capital declined 430 basis points year over year

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Americas Components Region

$817 $1,259 $1,563 $1,503 Q2-09 Q2-10 Q2-11 Q2-12

Sales ($ in millions)

●   Sales decreased 4% year over year and increased 3% sequentially

o   Pro forma for acquisitions, sales decreased 5% year over year and increased 2% on a sequential basis

o   Sales in line with normal seasonality on a sequential basis

●   The lighting vertical continues to grow faster than the market, increasing 25% year over year and 9% sequentially

o   Alternative energy and aerospace and defense increased 10% and 5%, respectively, sequentially

●   PEMCO sales increased 1% year over year, driven by growth in connectors

●   Operating income decreased 13% year over year

o   Operating margin declined 70 basis points year over year

o   We continue to generate operating margins above the targeted level in what was a more difficult environment compared to a year ago.

●   Looking ahead to the third quarter, we expect sales in our legacy Americas components business to be in line with normal seasonality

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Europe Components Region

$638 $968 $1,293 $992 Q2-09 Q2-10 Q2-11 Q2-12

Sales ($ in millions)

●   Sales declined 23% year over year and 6% sequentially

o   Pro forma for acquisitions and excluding FX, sales decreased 15% year over year and 4% sequentially

o   Sales in our core business were in line with normal seasonality despite ongoing market softness in all regions

●   Vertical market growth continues to outperform the broader market

o   Automotive and medical increased 6% and 2% year over year, respectively

●   Operating income declined 48% year over year

o   Operating margin declined 190 basis points year over year

●   Looking ahead to the third quarter, we expect sales in our legacy European components business to be in line with normal seasonality

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Asia Pacific Components Region

$817 $1,032 $1,019 $959 Q2-09 Q2-10 Q2-11 Q2-12

Sales ($ in millions)

●   Sales declined 6% year over year and increased 16% sequentially

o   Pro forma for acquisitions, sales decreased 9% year over year

o   Sales in our core Asia business were significantly ahead of normal seasonality driven by a rebound in sales in China and Taiwan

o   Core Asia sales declined 2% year over year

●   Lighting growth continue to be strong, increasing 18% sequentially

●   Operating profit declined 21% year over year

o   Operating margin declined 50 basis points year over year

●   Looking ahead to the third quarter, we expect sales in our legacy Asia Pacific components business to be in line with normal seasonality

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Global Enterprise Computing Solutions

$1,120 $1,354 $1,665 $1,697 Q2-09 Q2-10 Q2-11 Q2-12

Sales ($ in millions)

●   Sales increased 2% year over year and 10% sequentially

o   Record second quarter revenue

o   Pro forma for acquisitions and excluding FX, sales increased 4% year over year and 9% sequentially

●   Strong double-digit year-over-year growth in services (+18%), storage (+16%), and software (+13%)

o   Within software networking, infrastructure, and virtualization continue to post very strong year over year growth

●   Gross margin decreased 40 basis points year over year driven primarily by product mix

o   Pro forma for acquisitions, gross profit decreased 60 basis points year over year

o   Gross margin was down 50 basis points on a sequential basis

●   Operating income increased 4% year over year

o   Operating income grew 2x faster than sales year over year

o   Operating margin increased 10 basis points year over year to 3.9%

●   Return on working capital continues to excel

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ECS America

$816 $994 $1,165 $1,200 Q2-09 Q2-10 Q2-11 Q2-12

Sales ($ in millions)

●   Sales increased 3% year over year and 13% sequentially

o   Pro forma for acquisitions, sales increased 1% year over year and 10% sequentially

o   Performed well in a weakening market

●   Robust double-digit year-over-year growth in services (+22%), storage (+19%), and software (+15%)

o   Within software, networking grew 85% and infrastructure grew 20% year over year

●   Gross profit decreased 40 basis points year over year and 80 basis points sequentially driven primarily by changes in product mix

●   Operating income grew 2% year over year

o   Operating margin was flat year over year and remains within our long-term target range

●   Looking ahead to the third quarter, we expect sales in our legacy Americas value-added computing solutions business to be in line with normal seasonality

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 ECS Europe

$304 $360 $500 $497 Q2-09 Q2-10 Q2-11 Q2-12

Sales ($ in millions)

●   Sales declined 1% year over year and increased 5% sequentially

o   Pro forma for acquisitions and excluding FX, sales increased 11% year over year and 8% sequentially

●   Sales growth was slightly above normal seasonality on a sequential basis, driven primarily by strength in proprietary servers and software

o   Double-digit year-over-year growth in all regions except Southern Europe

o   Strong year-over-year growth in software with virtualization and infrastructure up 18% and 17%, respectively

●   Gross profit declined 40 basis points year over year due primarily to product and country mix

o   Pro forma for acquisitions, gross profit declined 40 basis points year over year

o   Increased 10 basis points sequentially

●   Operating profit increased 6% year over year

o   Operating income grew substantially faster than sales year over year

o   Operating margin increased 10 basis points year over year

●   Looking ahead to the third quarter, we expect sales in our legacy European value-added computing solutions business to be in line with normal seasonality

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Cash Flow and Balance Sheet Highlights

●   Cash Flow from Operations

We generated $61 million in cash from operations in the second quarter, with contributions from both business segments.  Over the last twelve months we have generated more than $575 million in cash flow from operations and converted 108% of our GAAP net income to cash, well in excess of our target.

●   Working Capital

We continue to effectively manage all levers of our working capital with working capital to sales of $.15.  Return on working capital is 26.6%.

●   Return on Invested Capital

Our return on invested capital of 10.5% is well ahead of our weighted average cost of capital.

●   Share Buyback

Through the end of the second quarter, we completed the previous $150 million share repurchase authorization, bringing the total amount returned to shareholders to nearly $700 million over the past five years.  In June the board of directors authorized an additional $200 million share repurchase program.

●   Debt and Liquidity

Our balance sheet and capital structure remain strong with conservative debt levels, and a net debt to EBITDA ratio of approximately 1.8x.  Our total liquidity is $2.3 billion when including our cash of $325 million.  Thus, we have the flexibility to continue to take advantage of opportunities in the marketplace.

Third-Quarter 2012 Guidance
Consolidated Sales	$4.8 billion to $5.2 billion
Global Components	$3.3 billion to $3.5 billion
Global ECS	$1.5 billion to $1.7 billion
Diluted Earnings per Share	$1.00 to $1.12

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Arrow Electronics Revenue Seasonality*

Global Components	NAC	EMEA ex FX	AAP
Q1	-2% to +4%	+13% to +19%	-1% to +5%
Q2	-3% to +3%	-5% to -11%	+4% to +10%
Q3	-2% to +4%	-5% to +1%	+3% to +9%
Q4	-4% to +2%	-3% to -9%	-1% to +7%

Global ECS	NA	EMEA ex FX
Q1	-28% to -34%	-21% to -27%
Q2	+20% to +26%	+1% to +7%
Q3	-2% to -8%	-12% to -18%
Q4	+28% to +34%	+59% to +65%

* Revenue seasonality based on historical sequential sales growth for 2007-2011 for our traditional components and ECS businesses excluding acquisitions

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Risk Factors

The discussion of the company’s business and operations should be read together with the risk factors contained in Item 1A of its 2011 Annual Report on Form 10-K, filed with the Securities and Exchange Commission, which describe various risks and uncertainties to which the company is or may become subject.  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.

Certain Non-GAAP Financial Information

In addition to disclosing results that are determined in accordance with Generally Accepted Accounting Principles ("GAAP"), the company provides certain non-GAAP financial information relating to operating income, net income attributable to shareholders and net income per basic and diluted share, each as adjusted for certain charges, credits and losses that the company believes impact the comparability of its results of operations. These charges, credits and losses arise out of the company's efficiency enhancement initiatives and acquisitions.  A reconciliation of the company's non-GAAP financial information to GAAP is set forth in the table below.

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

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

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Earnings Reconciliation

($ in thousands, except per share data)

		Q2 2012		Q1 2012		Q2 2011
Operating income, as Reported	$	188,689	$	187,449	$	248,330
Restructuring, integration, and other charges		13,347		8,243		5,221
Operating income, as Adjusted	$	202,036	$	195,692	$	253,551
Net income attributable to shareholders, as Reported	$	114,383	$	113,628	$	156,197
Restructuring, integration, and other charges		9,702		6,141		3,584
Net income attributable to shareholders, as Adjusted	$	124,085	$	119,769	$	159,781
Diluted EPS, as Reported	$	1.02	$	1.00	$	1.33
Restructuring, integration, and other charges		0.09		0.05		0.03
Diluted EPS, as Adjusted	$	1.11	$	1.05	$	1.36
The sum of the components for diluted EPS, as Adjusted, may not agree to totals, as presented, due to rounding.

Earnings Reconciliation

References to restructuring and other charges refer to the following incremental charges taken in the periods indicated:

Q2-12 Restructuring, Integration, and Other Charges:During the second quarter of 2012, the company recorded restructuring, integration, and other charges of $13.3 million ($9.7 million net of related taxes or $.09 per share on both a basic and diluted basis).

Q1-12 Restructuring, Integration, and Other Charges:During the first quarter of 2012, the company recorded restructuring, integration, and other charges of $8.2 million ($6.1 million net of related taxes or $.05 per share on both a basic and diluted basis).

Q2-11 Restructuring, Integration, and Other Charges: During the second quarter of 2011, the company recorded restructuring, integration, and other charges of $5.2 million ($3.6 million net of related taxes or $.03 per share on both a basic and diluted basis).

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