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 24, 2013

ARROW ELECTRONICS, INC.

(Exact Name of Registrant as Specified in Charter)

NEW YORK	1-4482	11-1806155
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer 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 24, 2013, the Registrant issued a press release announcing its second quarter 2013 earnings, which press release referred to the Second Quarter CFO Commentary as a supplement to the press release.  A copy of the press release is attached hereto as an Exhibit (99.1).

A copy of the Second Quarter 2013 CFO Commentary is attached hereto as an Exhibit (99.2).

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

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(c)	EXHIBITS
	99.1	Earnings press release dated July 24, 2013.
	99.2	Second Quarter 2013 CFO Commentary dated July 24, 2013.

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 24, 2013	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 24, 2013.
99.2	Second Quarter 2013 CFO Commentary issued by Arrow Electronics, Inc., dated July 24, 2013.

EX-99.1

Exhibit 99.1

ARROW ELECTRONICS NON-GAAP EARNINGS PER SHARE OF $1.12, AHEAD OF EXPECTATIONS

-- Cash Flow from Operations of $334 Million --

FOR IMMEDIATE RELEASE

ENGLEWOOD, Colo. –- July 24, 2013 -- Arrow Electronics, Inc. (NYSE:ARW) today reported second-quarter 2013 net income of $89.9 million, or $.86 per share on a diluted basis, compared with net income of $114.4 million, or $1.02 per share on a diluted basis in the second quarter of 2012.  Excluding certain items in both the second quarters of 2013 and 2012 as described in the non-GAAP earnings reconciliation table found herein, net income would have been $116.9 million, or $1.12 per share on a diluted basis, in the second quarter of 2013 compared with net income of $124.1 million, or $1.11 per share on a diluted basis, in the second quarter of 2012. The results for the second quarter of 2013 and 2012 include intangible amortization expense of approximately $9 million ($7 million net of tax, or $.07 per share on a diluted basis).  Second-quarter sales of $5.31 billion increased 3 percent from sales of $5.15 billion in the prior year.

“We executed very well in the second quarter, with revenue at the top end of our guidance and non-GAAP earnings per share well ahead of our expectations.  In our components segment, we saw each of our regions post sales above the high end of normal sequential seasonality.  Our enterprise computing solutions business performed especially well, with our 14th consecutive quarter of year-over-year organic growth and operating margins at the highest level in five years,” said Michael J. Long, chairman, president, and chief executive officer.  “Our differentiated value-added strategy continues to drive strong financial performance.”

Global components second-quarter sales of $3.40 billion decreased 2 percent year over year.  Sales, as adjusted in the non-GAAP sales reconciliation table below, increased 1 percent year over year.  In the Americas, sales declined 4 percent year over year due to ongoing market weakness amid economic uncertainty.  European sales were down 9 percent year over year primarily due to the prospective change in the accounting for revenue related to a fulfillment contract.  European sales, as adjusted in the non-GAAP earnings table below, increased 4 percent year over year.  Sales in the Asia-Pacific region increased 10 percent year over year, driven by strong growth in China and the ASEAN region.

Global ECS second-quarter sales of $1.91 billion increased 12 percent year over year.  Sales, as adjusted in the non-GAAP sales reconciliation table below, increased 7 percent year over year.  In the Americas, sales growth was 10 percent year over year.  In Europe, sales growth, including the Altimate acquisition, was 18 percent with broad-based strength across the region.

“Cash flow is again a great story as we generated $334 million in cash flow from operations in the second quarter of 2013 and $519 million on a trailing 12 month basis, meaningfully exceeding our targets,” said Paul J. Reilly, executive vice president, finance and operations, and chief financial officer.  “In the first half of 2013 we returned nearly $300 million to shareholders through our stock repurchase program, bringing the total amount returned to shareholders to $900 million since the beginning of 2010.”

SIX-MONTH RESULTS

Arrow’s net income for the first six months of 2013 was $167.8 million, or $1.58 per share on a diluted basis, compared with net income of $228.0 million, or $2.02 per share on a diluted basis in the first six months of 2012.  Excluding certain items in both the first six months of 2013 and 2012 as described in the non-GAAP earnings reconciliation table found herein, net income would have been $212.9 million, or $2.01 per share on a diluted basis, in the first six months of 2013 compared with net income of $243.9 million, or $2.16 per share on a diluted basis, in the first six months of 2012.  The results for the first six months of 2013 and 2012 include intangible amortization expense of approximately $18 million and $19 million, respectively ($14 million and $15 million net of tax, respectively, or $.13 per share on a diluted basis for both 2013 and 2012).  In the first six months of 2013, sales of $10.16 billion increased 1 percent from sales of $10.04 billion in the first six months of 2012.

GUIDANCE

Looking ahead to the third quarter of 2013, there remains economic uncertainty across the globe.  In light of these economic conditions, the company remains somewhat cautious in the outlook for business activity in the third quarter.  The company expects sales to be at the low to midpoint of normal sequential seasonal activity.

“As we look to the third quarter, we believe that total sales will be between $4.9 billion and $5.3 billion, with global components sales between $3.35 billion and $3.55 billion and global enterprise computing solutions sales between $1.55 billion and $1.75 billion.  We expect earnings per share, on a diluted basis, excluding amortization of intangible assets of approximately $.07 per share, and any charges to be in the range of $1.14 to $1.26.  Our guidance assumes an average tax rate in the range of 27 to 29 percent, average diluted shares outstanding are expected to be 101.7 million, and the average USD to Euro exchange rate for the third quarter is 1.31 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 100,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of more than 470 locations in 55 countries.

# # #

Certain Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also provides certain non-GAAP financial information relating to sales, operating income, net income attributable to shareholders and net income per basic and diluted share. The company provides sales on a non-GAAP basis adjusted for the impact of foreign currency and certain other items that impact the year-over-year comparison.  These other items include a prospective revision of sales related to a certain fulfillment contract to present these revenues on an agency basis as net fees, as compared to presenting gross sales (referred to as “change in presentation of sales” which had no impact on profitability or cash flow) and the impact of acquisitions by adjusting the company's prior periods to include the sales of businesses acquired as if the acquisitions had occurred at the beginning of the period presented (referred to as "impact of acquisitions"). Operating income, net income attributable to shareholders and net income per basic and diluted share are adjusted for certain charges, credits, gains, and losses that the company believes impact the comparability of its results of operations.  These charges, credits, gains, and losses arise out of the company’s efficiency enhancement initiatives, acquisitions, prepayment of debt, and adjustments related to certain tax matters. A reconciliation of the company’s non-GAAP financial information to GAAP is set forth in the tables below.

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

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

ARROW ELECTRONICS, INC.

SALES RECONCILIATION

(In thousands)

(Unaudited)

	Quarter Ended
	June 29, 2013		June 30, 2012			% Change
Consolidated sales, as reported	$	5,306,085	$	5,150,563			3.0	%
Impact of foreign currency		-		33,884
Impact of acquisitions		-		97,840
Change in presentation of sales		-		(149,138	)
Consolidated sales, as adjusted	$	5,306,085	$	5,133,149			3.4	%
Global components sales, as reported	$	3,398,690	$	3,453,687			(1.6	)%
Impact of foreign currency		-		21,575
Impact of acquisitions		-		25,792
Change in presentation of sales		-		(149,138	)
Global components sales, as adjusted	$	3,398,690	$	3,351,916			1.4	%
Europe components sales, as reported	$	901,748	$	991,586			(9.1	)%
Impact of foreign currency		-		23,841
Change in presentation of sales		-		(149,138	)
Europe components sales, as adjusted	$	901,748	$	866,289			4.1	%
Global ECS sales, as reported	$	1,907,395	$	1,696,876			12.4	%
Impact of foreign currency		-		12,309
Impact of acquisitions		-		72,048
Global ECS sales, as adjusted	$	1,907,395	$	1,781,233			7.1	%

	Six Months Ended
	June 29, 2013		June 30, 2012			% Change
Consolidated sales, as reported	$	10,155,714	$	10,040,092			1.2	%
Impact of foreign currency		-		43,027
Impact of acquisitions		3,219		225,293
Change in presentation of sales		-		(280,626	)
Consolidated sales, as adjusted	$	10,158,933	$	10,027,786			1.3	%
Global components sales, as reported	$	6,591,270	$	6,803,241			(3.1	)%
Impact of foreign currency		-		32,710
Impact of acquisitions		3,219		59,621
Change in presentation of sales		-		(280,626	)
Global components sales, as adjusted	$	6,594,489	$	6,614,946			(.3	)%
Europe components sales, as reported	$	1,788,384	$	2,048,217			(12.7	)%
Impact of foreign currency		-		37,297
Change in presentation of sales		-		(280,626	)
Europe components sales, as adjusted	$	1,788,384	$	1,804,888			(.9	)%
Global ECS sales, as reported	$	3,564,444	$	3,236,851			10.1	%
Impact of foreign currency		-		10,317
Impact of acquisitions		-		165,672
Global ECS sales, as adjusted	$	3,564,444	$	3,412,840			4.4	%

ARROW ELECTRONICS, INC.

EARNINGS RECONCILIATION

 (In thousands except per share data)

(Unaudited)

	Quarter Ended				Six Months Ended
	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Operating income, as reported	$	155,875	$	188,689	$	293,427	$	376,138
Restructuring, integration, and other charges		30,224		13,347		51,834		21,590
Operating income, as adjusted	$	186,099	$	202,036	$	345,261	$	397,728
Net income attributable to shareholders, as reported	$	89,935	$	114,383	$	167,810	$	228,011
Restructuring, integration, and other charges		20,688		9,702		36,183		15,843
Loss on prepayment of debt		-		-		2,627		-
Adjustments to tax reserves
Income tax		5,362		-		5,362		-
Interest (net of taxes)		939		-		939		-
Net income attributable to shareholders, as adjusted	$	116,924	$	124,085	$	212,921	$	243,854
Net income per basic share, as reported	$	.87	$	1.04	$	1.61	$	2.05
Restructuring, integration, and other charges		.20		.09		.35		.14
Loss on prepayment of debt		-		-		.03		-
Adjustments to tax reserves
Income tax		.05		-		.05		-
Interest (net of taxes)		.01		-		.01		-
Net income per basic share, as adjusted	$	1.13	$	1.12	$	2.04	$	2.19
Net income per diluted share, as reported	$	.86	$	1.02	$	1.58	$	2.02
Restructuring, integration, and other charges		.20		.09		.34		.14
Loss on prepayment of debt		-		-		.02		-
Adjustments to tax reserves
Income tax		.05		-		.05		-
Interest (net of taxes)		.01		-		.01		-
Net income per diluted share, as adjusted	$	1.12	$	1.11	$	2.01	$	2.16

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, risks related to the integration of acquired businesses, changes in legal and regulatory matters, and the company’s ability to generate additional cash flow.  Forward-looking statements are those statements, which are not statements of historical fact.  These forward-looking statements can be identified by forward-looking words such as "expects," "anticipates," "intends," "plans," "may," "will," "believes," "seeks," "estimates," and similar expressions. Shareholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made.  The company undertakes no obligation to update publicly or revise any of the forward-looking statements.

For a further discussion of factors to consider in connection with these forward-looking statements, investors should refer to Item 1A Risk Factors of the company’s Annual Report on Form 10-K for the year ended December 31, 2012.

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)

	Quarter Ended				Six Months Ended
	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Sales	$	5,306,085	$	5,150,563	$	10,155,714	$	10,040,092
Costs and expenses:
Cost of sales		4,616,513		4,463,419		8,824,070		8,672,369
Selling, general, and administrative expenses		470,874		457,073		922,279		912,910
Depreciation and amortization		32,599		28,035		64,104		57,085
Restructuring, integration, and other charges		30,224		13,347		51,834		21,590
		5,150,210		4,961,874		9,862,287		9,663,954
Operating income		155,875		188,689		293,427		376,138
Equity in earnings of affiliated companies		1,360		1,428		3,343		3,612
Loss on prepayment of debt		-		-		4,277		-
Interest and other financing expense, net		30,199		28,555		59,729		55,687
Income before income taxes		127,036		161,562		232,764		324,063
Provision for income taxes		37,000		47,081		64,770		95,859
Consolidated net income		90,036		114,481		167,994		228,204
Noncontrolling interests		101		98		184		193
Net income attributable to shareholders	$	89,935	$	114,383	$	167,810	$	228,011
Net income per share:
Basic	$	.87	$	1.04	$	1.61	$	2.05
Diluted	$	.86	$	1.02	$	1.58	$	2.02
Average number of shares outstanding:
Basic		103,225		110,433		104,542		111,218
Diluted		104,024		112,031		105,892		113,079

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

	June 29, 2013			December 31, 2012
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	345,891		$	409,684
Accounts receivable, net		4,723,601			4,923,898
Inventories		2,104,717			2,052,720
Other current assets		286,264			328,999
Total current assets		7,460,473			7,715,301
Property, plant, and equipment, at cost:
Land		23,906			23,944
Buildings and improvements		155,067			152,008
Machinery and equipment		1,072,661			1,030,983
		1,251,634			1,206,935
Less: Accumulated depreciation and amortization		(646,465	)		(607,294	)
Property, plant, and equipment, net		605,169			599,641
Investments in affiliated companies		65,505			65,603
Intangible assets, net		395,170			414,033
Cost in excess of net assets of companies acquired		1,704,298			1,711,703
Other assets		277,106			279,406
Total assets	$	10,507,721		$	10,785,687
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	3,633,720		$	3,769,268
Accrued expenses		615,304			776,586
Short-term borrowings, including current portion of long-term debt		24,922			364,357
Total current liabilities		4,273,946			4,910,211
Long-term debt		2,072,625			1,587,478
Other liabilities		336,921			300,636
Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized – 160,000 shares in both 2013 and 2012
Issued – 125,424 shares in both 2013 and 2012		125,424			125,424
Capital in excess of par value		1,051,243			1,086,239
Treasury stock (25,343 and 19,423 shares in 2013 and 2012, respectively), at cost		(899,185	)		(652,867	)
Retained earnings		3,447,099			3,279,289
Foreign currency translation adjustment		130,773			182,632
Other		(35,449	)		(37,495	)
Total shareholders' equity		3,819,905			3,983,222
Noncontrolling interests		4,324			4,140
Total equity		3,824,229			3,987,362
Total liabilities and equity	$	10,507,721		$	10,785,687

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Quarter Ended
	June 29, 2013			June 30, 2012
Cash flows from operating activities:
Consolidated net income	$	90,036		$	114,481
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		32,599			28,035
Amortization of stock-based compensation		6,799			6,891
Equity in earnings of affiliated companies		(1,360	)		(1,428	)
Deferred income taxes		(36	)		(2,629	)
Restructuring, integration, and other charges		20,688			9,702
Other		512			(1,474	)
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable		(227,817	)		(214,037	)
Inventories		(34,489	)		(81,464	)
Accounts payable		343,706			244,623
Accrued expenses		(415	)		(10,065	)
Other assets and liabilities		103,694			(32,016	)
Net cash provided by operating activities		333,917			60,619
Cash flows from investing activities:
Cash consideration paid for acquired businesses		-			(26,654	)
Acquisition of property, plant, and equipment		(26,810	)		(26,611	)
Purchase of cost method investment		-			(15,000	)
Net cash used for investing activities		(26,810	)		(68,265	)
Cash flows from financing activities:
Change in short-term and other borrowings		(13,397	)		(3,503	)
Repayment of long-term bank borrowings, net		(129,600	)		(291,900	)
Proceeds from exercise of stock options		1,695			628
Excess tax benefits from stock-based compensation arrangements		142			34
Repurchases of common stock		(198,806	)		(100,114	)
Net cash used for financing activities		(339,966	)		(394,855	)
Effect of exchange rate changes on cash		14,599			(11,375	)
Net decrease in cash and cash equivalents		(18,260	)		(413,876	)
Cash and cash equivalents at beginning of period		364,151			739,708
Cash and cash equivalents at end of period	$	345,891		$	325,832

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	June 29, 2013			June 30, 2012
Cash flows from operating activities:
Consolidated net income	$	167,994		$	228,204
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		64,104			57,085
Amortization of stock-based compensation		12,782			14,146
Equity in earnings of affiliated companies		(3,343	)		(3,612	)
Deferred income taxes		19,548			16,332
Restructuring, integration, and other charges		36,183			15,843
Excess tax benefits from stock-based compensation arrangements		(6,617	)		(4,981	)
Loss on prepayment of debt		2,627			-
Other		(377	)		(2,897	)
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable		161,163			119,977
Inventories		(59,866	)		(105,821	)
Accounts payable		(124,091	)		109,425
Accrued expenses		(173,852	)		(74,629	)
Other assets and liabilities		58,258			(58,118	)
Net cash provided by operating activities		154,513			310,954
Cash flows from investing activities:
Cash consideration paid for acquired businesses		(9,382	)		(187,197	)
Acquisition of property, plant, and equipment		(53,561	)		(48,864	)
Purchase of cost method investments		(3,000	)		(15,000	)
Net cash used for investing activities		(65,943	)		(251,061	)
Cash flows from financing activities:
Change in short-term and other borrowings		(27,739	)		(12,577	)
Proceeds from (repayment of) long-term bank borrowings, net		(85,300	)		37,800
Net proceeds from note offering		591,156			-
Redemption of senior notes		(338,184	)		-
Proceeds from exercise of stock options		12,295			10,766
Excess tax benefits from stock-based compensation arrangements		6,617			4,981
Repurchases of common stock		(312,310	)		(157,798	)
Net cash used for financing activities		(153,465	)		(116,828	)
Effect of exchange rate changes on cash		1,102			(14,120	)
Net decrease in cash and cash equivalents		(63,793	)		(71,055	)
Cash and cash equivalents at beginning of period		409,684			396,887
Cash and cash equivalents at end of period	$	345,891		$	325,832

ARROW ELECTRONICS, INC.

SEGMENT INFORMATION

(In thousands)

(Unaudited)

	Quarter Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Sales:
Global components	$	3,398,690		$	3,453,687		$	6,591,270		$	6,803,241
Global ECS		1,907,395			1,696,876			3,564,444			3,236,851
Consolidated	$	5,306,085			5,150,563		$	10,155,714		$	10,040,092
Operating income (loss):
Global components	$	140,158		$	170,524		$	268,438		$	341,232
Global ECS		80,722			65,961			142,313			121,448
Corporate (a)		(65,005	)		(47,796	)		(117,324	)		(86,542	)
Consolidated	$	155,875		$	188,689		$	293,427		$	376,138

(a) Includes restructuring, integration, and other charges of $30.2 million and $51.8 million for the second quarter and first six months of 2013 and $13.3 million and $21.6 million for the second quarter and first six months of 2012, respectively.

CONTACT:

Arrow Electronics, Inc.

Contacts:

Greg Hanson, 303-824-4537

Vice President and Treasurer

or

Paul J. Reilly, 631-847-1872

Executive Vice President, Finance and Operations & Chief Financial Officer

or

Media Contact:

John Hourigan, 303-824-4586

Vice President, Global Communications

EX-99.2

Exhibit 99.2

Second-Quarter 2013 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 as reported and adjusted information included in this CFO commentary is unaudited and should be read in conjunction with the Form 10-Q for the quarterly periods ended March 30, 2013 and June 29, 2013, as well as the company's consolidated financial statements and related notes appearing in the company's 2012 Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

Second-Quarter Summary

Arrow had a very strong second quarter, as revenues of $5.3 billion were at the high end of our guidance and diluted earnings per share of $1.12 was well in excess of our expectations.  Both businesses continue to push forward with our long term strategic initiatives while managing well the short term tactical aspects of the business.  Cash flow generation in the second quarter was also very strong at $334 million.  Solid execution in our components business led to all regions posting sales growth above normal seasonality.  Our enterprise computing solutions business continues to produce record results with strong organic growth year over year.

In global components, sales of $3.4 billion were ahead of expectations.   In the Americas, core sales advanced 4% versus the prior quarter, though still below the year-ago level reflecting the ongoing macroeconomic challenges.  In Europe, we saw a better than seasonal trend in sales growth, as core sales in constant currency increased 3% in this region in a quarter with normal seasonality down 8%.  Sales in Europe are still down versus the year-ago period, though the rate of year over year decline has lessened.  Asia Pacific also experienced strong sales momentum, with core growth of 13% year over year.   Broad based geographic strength drove a 17% gain in core sales quarter over quarter.  Book to bill remains above 1 globally for the third consecutive quarter.

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Our enterprise computing solutions business continues to outperform the markets we serve, with our 14th consecutive quarter of organic growth.  Sales of $1.9 billion were up 12% year over year with strong contributions from both regions.  In the Americas, sales grew 10% year over year and were slightly ahead of our expectations.  Sequential growth in the North American value-added business was in line with normal seasonality, following a very strong first quarter.  Our European sales were also at the high end of expectations and normal seasonality.  Year-over-year sales growth of 18% was driven by broad-based strength across the region, as the expansion of our matrix strategy, including the Altimate acquisition, continues to produce results.  With solid improvement in both regions, our second quarter operating margin of 4.2% reached a level not achieved since the second quarter of 2008.

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Consolidated Overview – Second Quarter

P&L Highlights*	Q2 2013	Y/Y Change	Y/Y Change Adjusted for Acquisitions	Q/Q Change
Sales	$5,306	+3%	+1%	+9%
Gross Profit Margin	13.0%	-30bps	-40bps	-20bps
Operating Expense/Sales	9.5%	+10bps	Flat	-50bps
Operating Income	$186.1	-8%	-8%	+17%
Operating Margin	3.5%	-40bps	-30bps	+20bps
Net Income	$116.9	-6%	-5%	+22%
Diluted EPS	$1.12	+1%	+2%	+26%

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

· Second quarter sales of $5.3 billion were at the high end of our guidance

o    Increased 3% year over year and 9% sequentially

o    Adjusted for the impact of acquisitions and foreign currency, sales were flat year over year

· Consolidated gross profit margin was 13.0%

o    Decreased 30 basis points year over year primarily due to a change in geographic  mix

§  Decreased 20 basis points sequentially, in line with normal seasonal trends due to the increased contribution from the ECS business

o    Adjusted for the impact of acquisitions and foreign currency, gross profit margins decreased by approximately 30 basis points year over year due to the increase in sales mix of our ECS and Asia components businesses

· Operating expenses as a percentage of sales were 9.5%

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

§  On an absolute dollar basis, operating expenses were up 4% year over year on a reported basis and increased 1% year over year when adjusted for the impact of acquisitions and foreign currency

· Operating income was $186.1 million

o    Decreased 8% year over year as reported and as adjusted for the impact of acquisitions

o    Increased 17% sequentially, or nearly 2x the growth in sales

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· Operating income as a percentage of sales was 3.5%

o    Decreased 40 basis points year over year as reported and 30 basis points adjusted for the impact of acquisitions

o    Increased 20 basis points sequentially

· Effective tax rate for the quarter was 26.3%

· Net income was $116.9 million

o    Decreased 6% year over year as reported and 5% as adjusted for the impact of acquisitions

o    Increased 22% sequentially

o    Net income for both 2012 and 2013 includes intangible amortization expense of approximately $7 million, net of tax

· Earnings per share were $1.13 and $1.12 on a basic and diluted basis, respectively

o    Diluted EPS for both 2012 and 2013 includes intangible amortization expense of approximately $.07

o    Increased 26% sequentially

o    Diluted EPS increased 1% year over year

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Global Components

Sales ($ in millions)

· Sales decreased 2% year over year and increased 6% sequentially

· Gross margin declined 30 basis points year over year due primarily to a change in geographic mix, as Asia Pacific growth continues to outpace the other regions

o    Sequentially, gross margin declined 30 basis points

o    Adjusted for the impact of acquisitions and foreign currency, gross margin declined 40 basis points year over year due to the aforementioned change in geographic mix

· Book-to-bill was above one on a global basis for the third consecutive quarter

o    Above parity in all regions

· Leading indicators, including lead times and cancellation rates, are in line with historical norms

· Operating profit declined 18% year over year

o    Operating margin of 4.1% decreased 80 basis points year over year as reported and as adjusted for the impact of acquisitions

· Return on working capital declined 500 basis points year over year

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Americas Components Region

Sales ($ in millions)

· Sales decreased 4% year over year and increased 4% sequentially

o    Sales above normal seasonality on a sequential basis

· Lighting growth continues to be very robust, increasing 21% year over year and 15% sequentially

· PEMCO initiatives continue to gain momentum, with sales increasing 1% year over year and 5% sequentially

· Operating income decreased 13% year over year

o    Operating margin declined 60 basis points year over year

· Looking ahead to the third quarter, we expect sales in our core Americas components business to be at the midpoint of normal seasonality

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Europe Components Region

Sales ($ in millions)

· Sales declined 9% year over year and increased 2% sequentially

o    Adjusted for the impact of foreign currency, sales declined 11% year over year and increased 3% sequentially

o    Sales in our core business were significantly ahead of normal seasonality

· Lighting and automotive vertical market growth continues to outperform the broader market, growing 16% and 5% year over year, respectively

· Operating income declined 22% year over year

o    Operating margin declined 50 basis points year over year

· Looking ahead to the third quarter, we expect sales in our core European components business to be at the midpoint of normal seasonality

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Asia Pacific Components Region

Sales ($ in millions)

· Sales increased 10% year over year and 15% sequentially

o    Sales in our core Asia business well above normal seasonality

§  Core Asia sales increased 13% year over year, driven by broad-based strength across the region

· PEMCO sales increased 6% year over year and 10% sequentially

· The mobile vertical market continues to show outstanding growth, increasing 168% year over year and 70% sequentially

o    Transportation grew a strong 37% year over year

· Operating profit decreased 6% year over year primarily due to a change in product mix

o    Operating margin decreased 40 basis points year over year

· Looking ahead to the third quarter, we expect sales in our core Asia Pacific components business to be at the low end of normal seasonality

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Global Enterprise Computing Solutions

Sales ($ in millions)

· Sales increased 12% year over year and 15% sequentially

o    Record level revenue for any second quarter

o    Adjusted for the impact of acquisitions and foreign currency, sales increased 7% year over year

§  14th consecutive quarter of year-over-year organic growth

o    Strong year-over-year growth in storage (+18%), industry-standard servers (+16%), services (+12%), and software (+9%)

o    Network, security, and infrastructure increased 22%, 13%, and 10% year over year, respectively

· Gross margin decreased 10 basis points year over year driven primarily by changes in product mix

o    Gross margin was flat on a sequential basis

· Operating income increased nearly 2x faster than sales, growing 22% year over year

o    Record level operating income for any second quarter

o    Operating margin was up 30 basis points year over year to 4.2%

§  Highest second-quarter operating margin since 2008

· Return on working capital continues to excel

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ECS America

Sales ($ in millions)

· Sales increased 10% year over year and 20% sequentially

o    Sales in our core value-added distribution business in line with normal seasonality

· Robust double-digit year-over-year growth in storage (+20%), industry-standard servers (+15%), software (+12%), and services (+11%)

o    Security and networking grew 25% and 22%, respectively

· Operating income increased 25% year over year

o    Operating income grew more than 2.5x faster than sales year over year

o    Operating margin increased 60 basis points year over year

o    Above the mid-point of our long-term target range

· Looking ahead to the third quarter, we expect sales in our core Americas value-added computing solutions business to be below normal seasonality.

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ECS Europe

Sales ($ in millions)

· Sales increased 18% year over year and 6% sequentially

o    Adjusted for the impact of acquisitions and foreign currency, sales increased 1% year over year

§  Organic sales growth at high end of normal seasonality on a sequential basis

o    Broad based strength across region

· Strong year-over-year growth driven by services (+20%), industry-standard servers (+19%), and storage (+10%)

o    Software increased 7% with networking up 22% and infrastructure up 14%

· Operating profit increased 21% year over year

o    Operating margin increased 10 basis points year over year

· Looking ahead to the third quarter, we expect sales in our core European value-added computing solutions business to be at the midpoint of normal seasonality

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Cash Flow and Balance Sheet Highlights

· Cash Flow from Operations

Cash generated from operating activities in the second quarter was $334 million and $519 million on a trailing twelve month basis.  We converted more than 116% of GAAP net income to cash over the last twelve months, far exceeding our targeted level.

· Working Capital

We continue to effectively manage all levers of our working capital throughout the second quarter with working capital to sales of $.15.  Return on working capital is 23.3%.

· Return on Invested Capital

Return on invested capital of 9.5% in the second quarter was well ahead of our weighted average cost of capital.

· Share Buyback

In the second quarter we repurchased 5.1 million shares for nearly $200 million.  As of the end of the second quarter, we have nearly completed our most recent share repurchase authorization, bringing the total amount returned to shareholders to $900 million since the beginning of 2010.

· Debt and Liquidity

Our balance sheet and capital structure remain very strong with conservative debt levels, and a net debt to EBITDA ratio of approximately 2.0x.  Our total liquidity is $2.3 billion when including our cash of $346 million.  Thus, we have the flexibility to continue to take advantage of opportunities in the marketplace.

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Third-Quarter 2013 Guidance
Consolidated Sales	$4.9 billion to $5.3 billion
Global Components	$3.35 billion to $3.55 billion
Global ECS	$1.55 billion to $1.75 billion
Diluted Earnings per Share*	$1.14 to $1.26

* Third quarter guidance assumes average diluted shares outstanding of 101.7 million and excludes amortization of intangible assets of $.07 per share.

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 2012 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, gains, and losses that the company believes impact the comparability of its results of operations. These charges, credits, gains, and losses arise out of the company's efficiency enhancement initiatives, acquisitions, prepayment of debt, and adjustments related to certain tax 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, gains 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 2013		Q1 2013		Q2 2012
Operating income, as Reported	$	155,875	$	137,552	$	188,689
Restructuring, integration, and other charges		30,224		21,610		13,347
Operating income, as Adjusted	$	186,099	$	159,162	$	202,036
Net income attributable to shareholders, as Reported	$	89,935	$	77,875	$	114,383
Restructuring, integration, and other charges		20,688		15,495		9,702
Loss on prepayment of debt		--		2,627		--
Adjustments to tax reserves
Income tax		5,362		--		--
Interest (net of taxes)		939		--		--
Net income attributable to shareholders, as Adjusted	$	116,924	$	95,997	$	124,085
Diluted EPS, as Reported	$	.86	$	.72	$	1.02
Restructuring, integration, and other charges		.20		.14		.09
Loss on prepayment of debt		--		.02		--
Adjustments to tax reserves
Income tax		.05		--		--
Interest (net of taxes)		.01		--		--
Diluted EPS, as Adjusted	$	1.12	$	.89	$	1.11

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:

Q2-13 Restructuring, Integration, and Other Charges:  During the second quarter of 2013, the company recorded restructuring, integration, and other charges of $30.2 million ($20.7 million net of related taxes or $.20 per share on both a basic and diluted basis).

Q2-13 Adjustments to Tax Reserves:  During the second quarter of 2013, the company recorded an increase in the provision for income taxes of $5.4 million ($.05 per share on both a basic and diluted basis) and an increase in interest expense of $1.5 million ($.9 million net of related taxes or $.01 per share on both a basic and diluted basis) relating to adjustments to tax reserves for ongoing international tax audits.

Q1-13 Restructuring, Integration, and Other Charges:  During the first quarter of 2013, the company recorded restructuring, integration, and other charges of $21.6

million ($15.5 million net of related taxes or $.15 and $.14 per share on a basic and diluted basis, respectively).

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Q1-13 Loss on Prepayment of Debt:  During the first quarter of 2013, the company recorded a loss on prepayment of debt of $4.3 million ($2.6 million net of related taxes or $.02 per share on both a basic and diluted basis).

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).

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