Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans [Text Block]

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 certain employees upon retirement. There are 10 current and 16 former corporate officers participating in this plan. The Board determines those 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 on years of participation in the Arrow SERP. The Arrow SERP permits early retirement, with payments at a reduced rate, based on age and years of service subject to a minimum retirement age of 55. Participants whose accrued rights under the Arrow SERP, prior to the 2002 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 18 participants in this plan.

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

	2012			2011
Accumulated benefit obligation	$	69,690		$	62,891
Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	$	68,473		$	61,559
Service cost (Arrow SERP)	2,064			1,525
Interest cost	3,302			3,308
Actuarial loss	9,273			5,602
Benefits paid	(3,680		)	(3,521		)
Projected benefit obligation at end of year	$	79,432		$	68,473
Funded status	$	(79,432	)	$	(68,473	)
Components of net periodic pension cost:
Service cost (Arrow SERP)	$	2,064		$	1,525
Interest cost	3,302			3,308
Amortization of net loss	2,038			787
Amortization of prior service cost (Arrow SERP)	41			41
Net periodic pension cost	$	7,445		$	5,661
Weighted-average assumptions used to determine benefit obligation:
Discount rate	4.00		%	4.75		%
Rate of compensation increase (Arrow SERP)	5.00		%	5.00		%
Weighted-average assumptions used to determine net periodic pension cost:
Discount rate	4.75		%	5.50		%
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 actuarial assumptions used. The company reviews historical trends, future expectations, current market conditions, and external data to determine the assumptions. The discount rate represents the market rate for a high-quality corporate bond. The rate of compensation increase is determined by the company, based upon its long-term plans for such increases. The actuarial assumptions used to determine 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:

2013	$	3,992
2014	3,956
2015	3,915
2016	4,134
2017	4,079
2018-2022	28,124

Wyle Defined Benefit Plan

Wyle provided retirement benefits for certain employees under a defined benefit plan. Benefits under this plan were frozen as of December 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 as follows:

	2012			2011
Accumulated benefit obligation	$	128,772		$	118,191
Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	$	118,191		$	108,335
Interest cost	5,442			5,767
Actuarial loss	10,808			9,630
Benefits paid	(5,670		)	(5,541		)
Projected benefit obligation at end of year	$	128,771		$	118,191
Changes in plan assets:
Fair value of plan assets at beginning of year	$	81,719		$	80,362
Actual return on plan assets	11,477			(2,956		)
Company contributions	5,450			9,854
Benefits paid	(5,670		)	(5,541		)
Fair value of plan assets at end of year	$	92,976		$	81,719
Funded status	$	(35,795	)	$	(36,472	)
Components of net periodic pension cost:
Interest cost	$	5,442		$	5,767
Expected return on plan assets	(6,200		)	(6,524		)
Amortization of net loss	1,745			1,041
Net periodic pension cost	$	987		$	284
Weighted-average assumptions used to determine benefit obligation:
Discount rate	4.00		%	4.75		%
Expected return on plan assets	7.25		%	7.50		%
Weighted-average assumptions used to determine net periodic pension cost:
Discount rate	4.75		%	5.50		%
Expected return on plan assets	7.50		%	8.00		%

The amounts reported for net periodic pension cost and the respective benefit obligation amounts are dependent upon the actuarial assumptions used. The company reviews historical trends, future expectations, current market conditions, and external data to determine the assumptions. The discount rate represents the market rate for a high-quality corporate bond. The expected return on plan assets is based on current and expected asset allocations, historical trends, and projected returns on those assets. The actuarial assumptions used to determine the net periodic pension 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 $5,450 and $9,854 in 2012 and 2011, respectively, and expects to make estimated contributions of $265 in 2013.

Benefit payments are expected to be paid as follows:

2013	$	6,448
2014	6,546
2015	6,629
2016	6,823
2017	6,892
2018-2022	35,935

The fair values of the company's pension plan assets at December 31, 2012, utilizing the fair value hierarchy discussed in Note 7 are as follows:

	Level 1		Level 2		Level 3		Total
Cash Equivalents:
Common collective trusts	$	—	$	749	$	—	$	749
Equities:
U.S. common stocks	33,806		—		—		33,806
International mutual funds	12,714		—		—		12,714
Index mutual funds	12,674		—		—		12,674
Fixed Income:
Mutual funds	30,374		—		—		30,374
Insurance contracts	—		2,659		—		2,659
Total	$	89,568	$	3,408	$	—	$	92,976

The fair values of the company's pension plan assets at December 31, 2011, utilizing the fair value hierarchy discussed in Note 7 are as follows:

	Level 1		Level 2		Level 3		Total
Cash Equivalents:
Common collective trusts	$	—	$	1,058	$	—	$	1,058
Equities:
U.S. common stocks	28,102		—		—		28,102
International mutual funds	10,665		—		—		10,665
Index mutual funds	10,436		—		—		10,436
Fixed Income:
Mutual funds	24,181		—		—		24,181
Insurance contracts	—		7,277		—		7,277
Total	$	73,384	$	8,335	$	—	$	81,719

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

Comprehensive Income Items

In 2012, 2011, and 2010, actuarial (gains) losses of $9,120, $15,228, and $(368), respectively, were recognized in comprehensive income, net of related taxes, related to the company's defined benefit plans. In 2012, 2011, and 2010, the following amounts were recognized as a reclassification adjustment of comprehensive income, net of related taxes, as a result of being recognized in net periodic pension cost: transition obligation of $0, $0, and $18, respectively, prior service cost of $19, $19, and $43, respectively, and an actuarial loss of $2,311, $1,103, and $2,369, respectively.

Included in accumulated other comprehensive loss at December 31, 2012 and 2011 are the following amounts, net of related taxes, that have not yet been recognized in net periodic pension cost: unrecognized prior service costs of $25 and $44, respectively, and unrecognized actuarial losses of $47,053 and $40,243, respectively.

The 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, 2013 are $19 and $3,115, respectively.

Stock Ownership Plan

The company maintains a noncontributory employee stock ownership plan, which enables most United States employees to acquire shares 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 2012 and 2011 were $5,966 and $5,222, respectively. The company did not make any contributions to the plan in 2010. Effective December 31, 2012, the plan was frozen to new participants and no further contributions will be made by the company on behalf of participants in the plan. The account balances of participants in the plan as of December 31, 2012 became fully vested.

Defined Contribution Plan

The company has defined contribution plans for eligible employees, which qualify under Section 401(k) of the Internal Revenue Code. The company's contribution to the plans, which are based on a specified percentage of employee contributions, amounted to $14,014, $10,063, and $8,870 in 2012, 2011, and 2010, respectively. In lieu of contributions to the employee stock ownership plan, the company intends to make discretionary contributions to the company's defined benefit 401(k) plan. Certain international subsidiaries maintain separate defined contribution plans for their employees and made contributions thereunder, which amounted to $23,990, $23,450, and $20,811 in 2012, 2011, and 2010, respectively.