UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 30, 2024


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

For the transition period from to

Commission file number 1-4482

ARROW ELECTRONICS, INC.

(Exact name of registrant as specified in its charter)


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


9151 East Panorama Circle		80112
Centennial CO		(Zip Code)
(Address of principal executive offices)

(303) 824-4000

(Registrant’s telephone number, including area code)

No Changes

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of the exchange on which registered
Common Stock, $1 par value	ARW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 53,229,856 shares of Common Stock outstanding as of April 25, 2024.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands except per share data)

(Unaudited)


	Quarter Ended
	March 30,		April 1,
	2024		2023
Sales	$	6,924,260	$	8,736,428
Cost of sales		6,066,434		7,622,606
Gross profit		857,826		1,113,822
Operating expenses:
Selling, general, and administrative		583,326		642,431
Depreciation and amortization		41,727		46,679
Restructuring, integration, and other		46,856		2,560
		671,909		691,670
Operating income		185,917		422,152
Equity in losses of affiliated companies		(344)		(80)
Gain on investments, net		98		10,311
Employee benefit plan expense, net		(933)		(853)
Interest and other financing expense, net		(79,604)		(79,658)
Income before income taxes		105,134		351,872
Provision for income taxes		22,036		76,547
Consolidated net income		83,098		275,325
Noncontrolling interests		(503)		1,575
Net income attributable to shareholders	$	83,601	$	273,750

Net income per share:
Basic	$	1.54	$	4.66
Diluted	$	1.53	$	4.60
Weighted-average shares outstanding:
Basic		54,251		58,731
Diluted		54,815		59,479

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)


	Quarter Ended
	March 30,		April 1,
	2024		2023
Consolidated net income	$	83,098	$	275,325
Other comprehensive income (loss):
Foreign currency translation adjustment and other, net of taxes		(99,275)		11,285
Gain (loss) on foreign exchange contracts designated as net investment hedges, net of taxes		3,598		(433)
Gain (loss) on interest rate swaps designated as cash flow hedges, net of taxes		529		(3,709)
Employee benefit plan items, net of taxes		(91)		(272)
Other comprehensive (loss) income		(95,239)		6,871
Comprehensive (loss) income		(12,141)		282,196
Less: Comprehensive (loss) income attributable to noncontrolling interests		(1,651)		4,652
Comprehensive (loss) income attributable to shareholders	$	(10,490)	$	277,544

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands except par value)

(Unaudited)


	March 30,			December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	242,810	$	218,053
Accounts receivable, net		11,062,608		12,238,073
Inventories		4,797,053		5,187,225
Other current assets		798,591		684,126
Total current assets		16,901,062		18,327,477
Property, plant, and equipment, at cost:
Land		5,691		5,691
Buildings and improvements		196,291		195,579
Machinery and equipment		1,624,409		1,632,606
		1,826,391		1,833,876
Less: Accumulated depreciation and amortization		(1,309,303)		(1,303,136)
Property, plant, and equipment, net		517,088		530,740
Investments in affiliated companies		58,868		62,741
Intangible assets, net		119,274		127,440
Goodwill		2,054,536		2,050,426
Other assets		612,048		627,344
Total assets	$	20,262,876	$	21,726,168
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	8,940,313	$	10,070,015
Accrued expenses		1,474,605		1,463,915
Short-term borrowings, including current portion of long-term debt		945,698		1,653,954
Total current liabilities		11,360,616		13,187,884
Long-term debt		2,632,250		2,153,553
Other liabilities		500,672		507,424
Contingencies (Note L)
Equity:
Shareholders’ equity:
Common stock, par value $1:
Authorized - 160,000 shares in both 2024 and 2023
Issued - 57,955 and 57,691 shares in 2024 and 2023		57,955		57,691
Capital in excess of par value		565,166		553,340
Treasury stock (4,725 and 3,880 shares in 2024 and 2023, respectively), at cost		(405,663)		(297,745)
Retained earnings		5,873,818		5,790,217
Accumulated other comprehensive loss		(392,130)		(298,039)
Total shareholders’ equity		5,699,146		5,805,464
Noncontrolling interests		70,192		71,843
Total equity		5,769,338		5,877,307
Total liabilities and equity	$	20,262,876	$	21,726,168

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Quarter Ended
	March 30,		April 1,
	2024		2023
Cash flows from operating activities:
Consolidated net income	$	83,098	$	275,325
Adjustments to reconcile consolidated net income to net cash provided by operations:
Depreciation and amortization		41,727		46,679
Amortization of stock-based compensation		13,447		19,497
Equity in losses of affiliated companies		344		80
Deferred income taxes		(2,801)		(7,530)
Loss (gain) on investments, net		13		(10,311)
Other		1,189		1,321
Change in assets and liabilities, net of effects of acquired businesses:
Accounts receivable, net		1,057,676		1,701,889
Inventories		362,813		(199,521)
Accounts payable		(1,077,786)		(1,504,701)
Accrued expenses		21,053		(132,316)
Other assets and liabilities		(97,563)		33,392
Net cash provided by operating activities		403,210		223,804
Cash flows from investing activities:
Acquisition of property, plant, and equipment		(29,535)		(20,114)
Other		5,139		10,867
Net cash used for investing activities		(24,396)		(9,247)
Cash flows from financing activities:
Change in short-term and other borrowings		(709,675)		(146,050)
Proceeds from long-term bank borrowings, net		477,032		34,360
Net proceeds from note offering		—		498,600
Redemption of notes		—		(300,000)
Proceeds from exercise of stock options		2,929		5,934
Repurchases of common stock		(87,948)		(303,801)
Net cash used for financing activities		(317,662)		(210,957)
Effect of exchange rate changes on cash		(36,395)		25,039
Net increase in cash and cash equivalents		24,757		28,639
Cash and cash equivalents at beginning of period		218,053		176,915
Cash and cash equivalents at end of period	$	242,810	$	205,554

See accompanying notes.

Table of Contents

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

(Unaudited)


									Accumulated
	Common		Capital in						Other
	Stock at Par		Excess of Par		Treasury		Retained		Comprehensive		Noncontrolling
	Value		Value		Stock		Earnings		Loss		Interests		Total
Balance at December 31, 2023	$	57,691	$	553,340	$	(297,745)	$	5,790,217	$	(298,039)	$	71,843	$	5,877,307
Consolidated net income (loss)		—		—		—		83,601		—		(503)		83,098
Other comprehensive loss		—		—		—		—		(94,091)		(1,148)		(95,239)
Amortization of stock-based compensation		—		13,447		—		—		—		—		13,447
Shares issued for stock-based compensation awards		264		(1,621)		4,286		—		—		—		2,929
Repurchases of common stock		—		—		(112,204)		—		—		—		(112,204)
Balance at March 30, 2024	$	57,955	$	565,166	$	(405,663)	$	5,873,818	$	(392,130)	$	70,192	$	5,769,338


									Accumulated
	Common		Capital in						Other
	Stock at Par		Excess of Par		Treasury		Retained		Comprehensive		Noncontrolling
	Value		Value		Stock		Earnings		Loss		Interests		Total
Balance at December 31, 2022	$	125,424	$	1,208,708	$	(4,637,345)	$	9,214,832	$	(365,262)	$	64,996	$	5,611,353
Consolidated net income		—		—		—		273,750		—		1,575		275,325
Other comprehensive income		—		—		—		—		3,794		3,077		6,871
Amortization of stock-based compensation		—		19,497		—		—		—		—		19,497
Shares issued for stock-based compensation awards		—		(25,071)		31,005		—		—		—		5,934
Repurchases of common stock		—		—		(318,800)		—		—		—		(318,800)
Balance at April 1, 2023	$	125,424	$	1,203,134	$	(4,925,140)	$	9,488,582	$	(361,468)	$	69,648	$	5,600,180

See accompanying notes.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note C – Goodwill and Intangible Assets

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. The company tests goodwill and other indefinite-lived intangible assets for impairment annually as of the first day of the fourth quarter, or more frequently if indicators of potential impairment exist.

Goodwill of companies acquired, allocated to the company’s reportable segments, is as follows:


	Global
(thousands)	Components		Global ECS		Total
Balance as of December 31, 2023 (a)	$	875,194	$	1,175,232	$	2,050,426
Acquisitions		17,275		—		17,275
Foreign currency translation adjustment		(3,959)		(9,206)		(13,165)
Balance as of March 30, 2024 (a)	$	888,510	$	1,166,026	$	2,054,536

(a)

The total carrying value of goodwill as of March 30, 2024, and December 31, 2023 in the table above is reflected net of $1.6 billion of accumulated impairment charges, of which $1.3 billion was recorded in the global components reportable segment and $301.9 million was recorded in the global enterprise computing solutions (“ECS”) reportable segment.

Intangible assets, net, are comprised of the following as of March 30, 2024:


	Gross
	Carrying		Accumulated
(thousands)	Amount		Amortization		Net
Customer relationships	$	257,263	$	(160,240)	$	97,023
Amortizable trade name		73,359		(51,108)		22,251
	$	330,622	$	(211,348)	$	119,274

Intangible assets, net, are comprised of the following as of December 31, 2023:


	Gross
	Carrying		Accumulated
(thousands)	Amount		Amortization		Net
Customer relationships	$	258,337	$	(156,141)	$	102,196
Amortizable trade name		73,811		(48,567)		25,244
	$	332,148	$	(204,708)	$	127,440

During the first quarter of 2024 and 2023, the company recorded amortization expense related to identifiable intangible assets of $7.5 million and $8.0 million, respectively.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note D – Investments in Affiliated Companies

The company owns a 50% interest in two joint ventures with Marubun Corporation (collectively “Marubun/Arrow”) and a 50% interest in one other joint venture. These investments are accounted for using the equity method.

The following table presents the company’s investment in affiliated companies:


	March 30,		December 31,
(thousands)	2024		2023
Marubun/Arrow	$	46,810	$	50,779
Other		12,058		11,962
	$	58,868	$	62,741

The equity in losses of affiliated companies consists of the following:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
Marubun/Arrow	$	(534)	$	(397)
Other		190		317
	$	(344)	$	(80)

Under the terms of various joint venture agreements, the company is required to pay its pro-rata share of the third-party debt of the joint ventures in the event that the joint ventures are unable to meet their obligations. There were no outstanding borrowings under the third-party debt agreements of the joint ventures as of March 30, 2024, and December 31, 2023.

Note E – Accounts Receivable

Accounts receivable, net, consists of the following:


	March 30,		December 31,
(thousands)	2024		2023
Accounts receivable	$	11,207,057	$	12,384,553
Allowance for credit losses		(144,449)		(146,480)
Accounts receivable, net	$	11,062,608	$	12,238,073

The following table is a rollforward for the company’s allowance for credit losses:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
Balance at beginning of period	$	146,480	$	93,397
Charged to income		2,879		14,991
Translation adjustments		(861)		388
Write-offs		(4,049)		(5,083)
Balance at end of period	$	144,449	$	103,693

The company monitors the current credit condition of its customers in estimating the expected credit losses and has not experienced significant changes in customers’ payment trends or significant deterioration in customers’ credit risk as of March 30, 2024.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

EMEA Asset Securitization

The company has an EMEA asset securitization program under which it continuously sells its interest in designated pools of trade accounts receivable of certain of its subsidiaries in the EMEA region at a discount to a special purpose entity, which in turn sells certain of the receivables to unaffiliated financial institutions and conduits administered by such unaffiliated financial institutions (“unaffiliated financial institutions”) on a monthly basis. The company may sell up to €600.0 million under the EMEA asset securitization program, which matures in December 2025, subject to extension in accordance with its terms. In February 2024, the company amended provisions in the EMEA asset securitization program to update certain financial ratios. The program is conducted through Arrow EMEA Funding Corp B.V., an entity structured to be bankruptcy remote. The company is deemed the primary beneficiary of Arrow EMEA Funding Corp B.V. as the company has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive the benefits that could potentially be significant to the entity from the transfer of the trade accounts receivable into the special purpose entity. Accordingly, Arrow EMEA Funding Corp B.V. is included in the company’s consolidated financial statements.

Sales of accounts receivable to unaffiliated financial institutions under the EMEA asset securitization program:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
EMEA asset securitization, sales of accounts receivable	$	539,880	$	817,833

Receivables sold to unaffiliated financial institutions under the program are excluded from “Accounts receivable, net” on the company’s consolidated balance sheets, and cash receipts are reflected in the “Cash provided by operating activities” section of the consolidated statements of cash flows. The purchase price is paid in cash when the receivables are sold. Certain unsold receivables held by Arrow EMEA Funding Corp B.V. are pledged as collateral to unaffiliated financial institutions. These unsold receivables are included in “Accounts receivable, net” on the company’s consolidated balance sheets.

The company continues servicing the receivables which were sold and in exchange receives a servicing fee under the program. The company does not record a servicing asset or liability on the company’s consolidated balance sheets as the company estimates that the fee it receives to service these receivables approximates the fair market compensation to provide the servicing activities.

Other amounts related to the EMEA asset securitization program:


	March 30,		December 31,
(thousands)	2024		2023
Receivables sold to unaffiliated financial institutions that were uncollected	$	425,240	$	529,266
Collateralized accounts receivable held by Arrow EMEA funding Corp B.V.		911,615		805,788

Any accounts receivable held by Arrow EMEA Funding Corp B.V. would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings if there are outstanding balances under the EMEA asset securitization program. The assets of the special purpose entity cannot be used by the company for general corporate purposes. Additionally, the financial obligations of Arrow EMEA Funding Corp B.V. to the unaffiliated financial institutions under the program are limited to the assets it owns and there is no recourse to Arrow Electronics, Inc. for receivables that are uncollectible as a result of an account debtor’s insolvency or inability to pay.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The EMEA asset securitization program includes terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. As of March 30, 2024, the company was in compliance with all such financial covenants.

Factoring

In the normal course of business, certain of the company’s subsidiaries have factoring agreements to sell, with limited or no recourse, selected trade accounts receivable to financial institutions and accounts for these transactions as sales of the related receivables. The receivables are excluded from “Accounts receivable, net” on the company’s consolidated balance sheets and cash receipts are reflected as “Cash provided by operating activities” on the consolidated statements of cash flows. The company typically does not retain financial or legal interests in these receivables. Factoring fees for the sales of accounts receivables are included in “Interest and other financing expense, net” in the consolidated statements of operations. The company continues servicing the receivables which were sold.

Sales of trade accounts receivable under the company’s factoring programs:


	Quarter Ended
	March 30,		April 1,
(thousands)	2024		2023
Sales of accounts receivable under the factoring programs	$	208,560	$	382,278

Other amounts under the company’s factoring programs:


	March 30,		December 31,
(thousands)	2024		2023
Receivables sold under the factoring programs that were uncollected	$	259,236	$	375,940

Note F – Supplier Finance Programs

At the request of certain of the company’s suppliers, the company has entered into agreements (“supplier finance programs”) with third-party finance providers, which facilitate the participating suppliers’ ability to sell their receivables from the company to the third-party financial institutions, at the sole discretion of the suppliers. For agreeing to participate in these programs, the company seeks to secure improved standard payment terms with its suppliers. The company is not involved in negotiating terms of the arrangements between its suppliers and the financial institutions and has no economic interest in a supplier’s decision to enter into these agreements, or sell receivables from the company. The company’s rights and obligations to its suppliers, including amounts due, are not impacted by suppliers’ decisions to sell amounts under the arrangements. However, the company agrees to make all payments to the third-party financial institutions, and the company’s right to offset balances due from suppliers against payment obligations is restricted by the agreements for those payment obligations that have been sold by suppliers. As of March 30, 2024, and December 31, 2023, the company had $899.4 million and $1.1 billion, respectively, in obligations outstanding under these programs included in “Accounts payable” on the company’s consolidated balance sheets and all activity related to the obligations is presented within operating activities on the consolidated statements of cash flows.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note G – Debt

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


	March 30,		December 31,
(thousands)	2024		2023
3.25% notes, due September 2024	$	499,505	$	499,224
Commercial paper		427,763		1,121,882
Other short-term borrowings		18,430		32,848
	$	945,698	$	1,653,954

The company has $500.0 million in uncommitted lines of credit. There were no outstanding borrowings under the uncommitted lines of credit at March 30, 2024 and December 31, 2023. These borrowings were provided on a short-term basis and their maturity was agreed upon between the company and the lender. The uncommitted lines of credit had a weighted-average effective interest rate of 5.82% and 5.83% at March 30, 2024 and December 31, 2023, respectively.

The company has a commercial paper program, and the maximum aggregate balance of commercial paper outstanding may not exceed the borrowing capacity of $1.2 billion. Amounts outstanding under the commercial paper program are backstopped by available commitments under the company’s revolving credit facility. There were $427.8 million in outstanding borrowings under this program at March 30, 2024 and $1.1 billion in outstanding borrowings at December 31, 2023. The commercial paper program had an effective interest rate of 5.80% and 5.90% at March 30, 2024 and December 31, 2023, respectively.

Long-term debt consists of the following:


	March 30,		December 31,
(thousands)	2024		2023
Revolving Credit Facility	$	50,000	$	—
North American asset securitization program		625,000		198,000
4.00% notes, due 2025		349,245		349,061
6.125% notes, due 2026 (a) (b)		498,343		497,661
7.50% senior debentures, due 2027		110,205		110,184
3.875% notes, due 2028		497,264		497,098
2.95% notes, due 2032		495,172		495,039
Other obligations with various interest rates and due dates		7,021		6,510
	$	2,632,250	$	2,153,553

(a)

Upon issuance of the 6.125% notes due March 2026, the company entered into an interest rate swap, which effectively converted the 6.125% notes to floating rate notes based on the secured overnight financing rate (“SOFR”) + 0.508%, or an effective interest rate of 5.83% as of March 30, 2024. In March 2024, the company received a notice from the swap counterparty to terminate the swap without penalty. The effective date of cancellation was April 1, 2024. Refer to Note H.

(b)	In April 2024, the company completed the sale of $500.0 million principal amount of 5.875% notes due April 2034. The net proceeds of the offering of $498.6 million were used for general corporate purposes and to repay the $500.0 million principal amount of its 6.125% notes due March 2026.

The 7.50% senior debentures are not redeemable prior to their maturity. All other notes may be called at the option of the company subject to “make whole” clauses with the exception of the 6.125% notes which were called at par in April 2024.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The estimated fair market value of long-term debt, using quoted market prices, is as follows:


	March 30,		December 31,
(thousands)	2024		2023
4.00% notes, due 2025	$	344,500	$	343,500
6.125% notes, due 2026		499,500		502,000
7.50% senior debentures, due 2027		116,000		117,000
3.875% notes, due 2028		475,000		475,000
2.95% notes, due 2032		420,000		425,000

The carrying amount of the company’s other short-term borrowings, uncommitted lines of credit, revolving credit facility, 3.25% notes due in 2024, North American asset securitization program, commercial paper, and other obligations approximate their fair value.

The company has a $2.0 billion revolving credit facility maturing in September 2026. The facility may be used by the company for general corporate purposes including working capital in the ordinary course of business, letters of credit, repayment, prepayment or purchase of long-term indebtedness, acquisitions, and as support for the company’s commercial paper program, as applicable. Interest on borrowings under the revolving credit facility is calculated using a base rate or SOFR, plus a spread (1.08% at March 30, 2024), which is based on the company’s credit ratings, plus a credit spread adjustment of 0.10% or an effective interest rate of 6.44% at March 30, 2024. The facility fee, which is based on the company’s credit ratings, was 0.175% of the total borrowing capacity at March 30, 2024. The company had $50.0 million in outstanding borrowings under the revolving credit facility at March 30, 2024 and no outstanding borrowings under the revolving credit facility at December 31, 2023.

The company has a North American asset securitization program collateralized by accounts receivable of certain of its subsidiaries. The company may borrow up to $1.5 billion under the program which matures in September 2025. The program is conducted through Arrow Electronics Funding Corporation (“AFC”), a wholly-owned, bankruptcy remote subsidiary. The North American asset securitization program does not qualify for sale treatment. Accordingly, the accounts receivable and related debt obligation remain on the company’s consolidated balance sheets. Interest on borrowings is calculated using a base rate plus a spread (0.40% at March 30, 2024) plus a credit spread adjustment of 0.10% or an effective interest rate of 6.44% at March 30, 2024. The facility fee is 0.40% of the total borrowing capacity.

The company had $625.0 million and $198.0 million in outstanding borrowings under the North American asset securitization program at March 30, 2024 and December 31, 2023, respectively, which was included in “Long-term debt” on the company’s consolidated balance sheets. Total collateralized accounts receivable of approximately $2.3 billion and $2.7 billion were held by AFC and were included in “Accounts receivable, net” on the company’s consolidated balance sheets at March 30, 2024 and December 31, 2023, respectively. Any accounts receivable held by AFC would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings of the company before repayment of any outstanding borrowings under the North American asset securitization program.

Both the revolving credit facility and North American asset securitization program include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. As of March 30, 2024, the company was in compliance with all such financial covenants.

Interest and dividend income of $19.5 million and $14.3 million for the first quarter of 2024 and 2023, respectively, were recorded in “Interest and other financing expense, net” within the company’s consolidated statements of operations.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note H – Financial Instruments Measured at Fair Value

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

Level 1

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2

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

Level 3

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

The following table presents assets (liabilities) measured at fair value on a recurring basis at March 30, 2024:


(thousands)	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Cash equivalents (a)	Cash and cash equivalents	$	10,689	$	—	$	—	$	10,689
Equity investments (b)	Other assets		53,211		—		—		53,211
Foreign exchange contracts designated as net investment hedges	Other assets / other current assets		—		53,778		—		53,778
		$	63,900	$	53,778	$	—	$	117,678

The following table presents assets (liabilities) measured at fair value on a recurring basis at December 31, 2023:


(thousands)	Balance Sheet Location	Level 1		Level 2		Level 3		Total
Cash equivalents (a)	Cash and cash equivalents	$	8,729	$	—	$	—	$	8,729
Equity investments (b)	Other assets		57,625		—		—		57,625
Interest rate swap designated as fair value hedge	Other liabilities		—		(454)		—		(454)
Foreign exchange contracts designated as net investment hedges	Other assets / other current assets		—		47,245		—		47,245
		$	66,354	$	46,791	$	—	$	113,145

(a)	Cash equivalents include highly liquid investments with an original maturity of less than three months.

(b)

The company has an 8.4% equity ownership interest in Marubun Corporation and a portfolio of mutual funds with quoted market prices. The company recorded unrealized (losses) gains of ($3.6) million and $8.5 million for the first quarter of 2024 and 2023, respectively, on equity securities held at the end of the quarter.

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to goodwill and identifiable intangible assets (refer to Note C). The company tests these assets for impairment if indicators of potential impairment exist or at least annually if indefinite-lived.

Derivative Instruments

The company uses various financial instruments, including derivative instruments, for purposes other than trading. Certain derivative instruments are designated at inception as hedges and measured for effectiveness both at inception and on an ongoing basis. Derivative instruments not designated as hedges are carried at fair value on the consolidated balance sheets with changes in fair value recognized in earnings.

Table of Contents

Index to Notes

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Interest Rate Swaps

The company manages the risk of variability in interest rates of future expected debt issuances by entering into various forward-starting interest rate swaps, designated as cash flow hedges. Changes in fair value of interest rate swaps designated as cash flow hedges are recorded in the shareholders’ equity section in the company’s consolidated balance sheets in “Accumulated other comprehensive loss” and will be reclassified into income over the life of the anticipated debt issuance or in the period the hedged forecasted cash flows are deemed no longer probable to occur. Reclassified gains and losses are recorded within the line item “Interest and other financing expense, net” in the consolidated statements of operations. The fair value of interest rate swaps are estimated using a discounted cash flow analysis on the expected cash flows of each derivative using observable inputs, including interest rate curves and credit spreads.

In June 2023, the company terminated its outstanding forward-starting interest rate swaps and received a cash payment of $56.7 million, which was reported in the “Cash flows from financing activities” section of the consolidated statements of cash flows. The forecasted transactions related to the swaps continued to be probable to occur by December 31, 2025, and the $56.7 million gain on the termination of the interest rate swaps remained in “Accumulated other comprehensive loss” on the company’s consolidated balance sheets at March 30, 2024. In April 2024, the forecasted bond issuance occurred, and the $56.7 million gain will be amortized to "Interest and other financing expense, net" in the company's consolidated statement of operations over the 10-year life of the bond.

The company occasionally enters into interest rate swap transactions, designated as fair value hedges, that convert certain fixed-rate debt to variable-rate debt in order to manage its targeted mix of fixed- and floating-rate debt. For qualifying interest rate fair value hedges, gains or losses on derivatives are included in “Interest and other financing expense, net” in the consolidated statements of operations. The change in fair value of the hedged item attributable to the risk being hedged is reported as an adjustment to its carrying value and is also included in “Interest and other financing expense, net”.

As of December 31, 2023, the company had one outstanding interest rate swap designated as a fair value hedge of its 6.125% notes due in March 2026, the terms of which were as follows:


		Notional Amount		Interest Rate due	Interest Rate due to
Trade Date	Maturity Date	(thousands)		from Counterparty	Counterparty
February 2023	March 2026	$	500,000	6.125%	SOFR+0.508%

The counterparty to the interest rate swap had the option to cancel the swaps after one year, without penalty. In March 2024, the counterparty cancelled the swap and the company de-designated the fair value hedging relationship.

Foreign Exchange Contracts

The company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product. The company’s primary exposures to such transactions are denominated primarily in the following currencies: Euro, Indian Rupee, and Chinese Renminbi. The company enters into foreign exchange forward, option, or swap contracts (collectively, the “foreign exchange contracts”) to facilitate the hedging of foreign currency exposures resulting from inventory purchases and sales and mitigate the impact of changes in foreign currency exchange rates related to these transactions. Foreign exchange contracts generally have terms of no more than six months. The company does not enter into foreign exchange contracts for trading purposes. The risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the company minimizes by limiting its counterparties to major financial institutions. The fair value of the foreign exchange contracts is estimated using foreign currency spot rates and forward rates quotes by third-party financial institutions. The notional amount of the foreign exchange contracts inclusive of foreign exchange contracts designated as a net investment hedge at March 30, 2024 and December 31, 2023 was $1.1 billion and $1.0 billion, respectively.


Part I.	Financial Information

	Item 1.	Financial Statements
		Consolidated Statements of Operations	3
		Consolidated Statements of Comprehensive Income	4
		Consolidated Balance Sheets	5
		Consolidated Statements of Cash Flows	6
		Consolidated Statements of Equity	7
		Notes to Consolidated Financial Statements	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

	Item 4.	Controls and Procedures	34

Part II.	Other Information

	Item 1.	Legal Proceedings	35

	Item 1A.	Risk Factors	35

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

	Item 5.	Other Information	35

	Item 6.	Exhibits	36

Signature			37


		Page

Note A. Basis of Presentation		9
Note B. Impact of Recently Issued Accounting Standards		9
Note C. Goodwill and Intangible Assets		10
Note D. Investments in Affiliated Companies		11
Note E. Accounts Receivable		11
Note F. Supplier Finance Programs		13
Note G. Debt		14
Note H. Financial Instruments Measured at Fair Value		16
Note I. Restructuring, Integration, and Other		19
Note J. Net Income per Share		19
Note K. Shareholders’ Equity		20
Note L. Contingencies		21
Note M. Segment and Geographic Information		22