Information Relating to Forward-Looking Statements



This report includes "forward-looking statements," as the term is defined under
the federal securities laws. 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. These forward-looking statements 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: potential adverse effects of the ongoing global COVID-19
pandemic, including actions taken to contain or mitigate the impact of COVID-19,
industry conditions, changes in product supply, pricing and customer demand,
competition, other vagaries in the global components and the global enterprise
computing solutions ("ECS") markets, changes in relationships with key
suppliers, increased profit margin pressure, changes in legal and regulatory
matters, non-compliance with certain regulations, such as export, antitrust, and
anti-corruption laws, foreign tax and other loss contingencies, and the
company's ability to generate cash flow. For a further discussion of these and
other factors that could cause Arrow Electronics, Inc.'s (the "company") future
results to differ materially from any forward-looking statements, see the
section entitled "Risk Factors" in this Quarterly Report on Form 10-Q and the
company's most recent Annual Report on Form 10-K, as well as in other filings
the company makes with the Securities and Exchange Commission. 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.

Overview

The company is a global provider of products, services, and solutions to
industrial and commercial users of electronic components and enterprise
computing solutions. The company has one of the world's broadest portfolios of
product offerings available from leading electronic components and enterprise
computing solutions suppliers, coupled with a range of services, solutions, and
tools that help industrial and commercial customers introduce innovative
products, reduce their time to market, and enhance their overall
competitiveness. The company has two business segments, the global components
business segment and the global ECS business segment. The company distributes
electronic components to original equipment manufacturers and contract
manufacturers through its global components business segment and provides
enterprise computing solutions to value-added resellers, and managed service
providers through its global ECS business segment. For the second quarter of
2021, approximately 77% of the company's sales were from the global components
business segment, and approximately 23% of the company's sales were from the
global ECS business segment.

The company's financial objectives are to grow sales faster than the market,
increase the markets served, grow profits faster than sales, and increase return
on invested capital. To achieve its objectives, the company seeks to capture
significant opportunities to grow across products, markets, and geographies. To
supplement its organic growth strategy, the company continually evaluates
strategic acquisitions to broaden its product and value-added service offerings,
increase its market penetration, and expand its geographic reach.

Executive Summary



Consolidated sales for the second quarter and first six months of 2021 increased
by 29.6% and 30.5%, respectively, compared with the year-earlier periods. The
increase for the second quarter of 2021 was driven by a 40.0% increase in the
global components business segment sales and a 3.5% increase in the global ECS
business segment sales. The increase for the first six months of 2021 was driven
by a 40.8% increase in the global components business segment sales and a 4.8%
increase in the global ECS business segment sales. Adjusted for the change in
foreign currencies, non-GAAP consolidated sales increased 25.5% and 26.4% for
the second quarter and first six months of 2021, respectively, compared with the
year-earlier periods.

The company reported net income attributable to shareholders of $240.6 million and $447.0 million in the second quarter and first six months of 2021, respectively, compared with $132.8 million and $182.3 million in the year-earlier periods. The following items impacted the comparability of the company's results:

Second quarters of 2021 and 2020:



•restructuring, integration, and other charges of $4.5 million in 2021 and $0.7
million in 2020;
•identifiable intangible asset amortization of $9.3 million in 2021 and $9.7
million in 2020;
•impairments of long-lived assets of $4.5 million in 2021 and $4.9 million in
2020;
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•gains from wind down of business of $11.8 million in 2020;
•Arrow Financing Solutions ("AFS") notes receivable reserves of $0.2 million in
2020; and
•net gain on investments of $6.7 million in 2021 and net gain on investments of
$10.9 million in 2020.

First six months of 2021 and 2020:



•restructuring, integration, and other charges of $10.2 million in 2021 and $9.8
million in 2020;
•identifiable intangible asset amortization of $18.6 million in 2021 and $19.7
million in 2020;
•impairments of long-lived assets of $4.5 million in 2021 and $4.9 million in
2020;
•gains from wind down of business of $11.8 million in 2020;
•AFS notes receivable recoveries of $0.7 million in 2020;
•tax expense related to legislation changes of $3.6 million in 2020; and
•net gain on investments of $9.5 million in 2021 and net loss on investments of
$5.9 million in 2020.

Excluding the aforementioned items, non-GAAP net income attributable to
shareholders for the second quarter and first six months of 2021 increased to
$249.3 million and $464.9 million, respectively, compared with $126.1 million
and $205.0 million in the year-earlier periods. Net income in the second quarter
of 2020 also included charges of approximately $32.7 million, net of tax,
primarily related to foreign tax and other loss contingencies within the global
ECS business.

Impact of the COVID-19 Pandemic



The global COVID-19 pandemic continues to create significant macroeconomic
uncertainty, volatility and disruption, including supply constraints, extended
lead times, and unpredictability across many markets. Supply chain constraints
are being caused by shortages in electronics components markets and supply chain
logistical issues resulting in extended lead times and unpredictability, which
has impacted the business. Despite these challenges, to date the company has
efficiently managed the global supply chain requirements of customers and
suppliers, and as a result, during the second quarter of 2021 the company's
global components business benefited from rising demand and higher prices for
certain products leading to improved profit margins globally.

Management is actively monitoring the impact of the global situation on its
financial condition, liquidity, operations, suppliers, industry and workforce.
The extent to which COVID-19 will continue to impact the company's results will
depend primarily on future developments, including the severity and duration of
the crisis, and the impact of actions taken and that will be taken to contain
COVID-19 or treat its impact, among others. These future developments are highly
uncertain and cannot be predicted with confidence. The global economic impact
from COVID-19 may adversely affect the company's results of operations in the
future and may affect the credit condition of some customers, which could
increase delays in customer payments and credit losses.

Accordingly, current results and financial condition discussed herein may not be
indicative of future operating results and trends. See the risk factors
regarding the impacts of the COVID-19 pandemic included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2020.

Impact on Q3 2021



As a result of the supply chain constraints and timing of quarter end for the
second quarter of 2021, we expect global components sales in the third quarter
of 2021 to be slightly below second quarter 2021 sales.

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 discloses certain non-GAAP financial information, including:

•Non-GAAP sales, non-GAAP gross profit, and non-GAAP operating expenses exclude
the impact of changes in foreign currencies (referred to as "changes in foreign
currencies") by re-translating prior period results at current period foreign
exchange rates; the impact of the company's personal computer and mobility asset
disposition business (referred to as "wind down"); and the impact of notes
receivable recoveries related to the AFS business (referred to as "AFS notes
receivable recoveries").
•Non-GAAP operating income excludes identifiable intangible asset amortization,
restructuring, integration, and other charges, AFS notes receivable recoveries,
impairments of long-lived assets, and the impact of wind down.
•Non-GAAP effective tax rate and non-GAAP net income attributable to
shareholders exclude identifiable intangible asset amortization, restructuring,
integration, and other charges, AFS notes receivable recoveries, net gains and
losses on investments, certain tax adjustments, impairments of long-lived
assets, and the impact of wind down.
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Management believes that providing this additional information is useful to the
reader to better assess and understand the company's operating performance,
especially when comparing results with previous periods, primarily because
management typically monitors the business adjusted for these items in addition
to GAAP results. However, analysis of results on a non-GAAP basis should be used
as a complement to, and in conjunction with, data presented in accordance with
GAAP.

Sales

Substantially all of the company's sales are made on an order-by-order basis,
rather than through long-term sales contracts. As such, the nature of the
company's business does not provide for the visibility of material
forward-looking information from its customers and suppliers beyond a few
months. Following is an analysis of net sales by reportable segment (in
millions):
                                          Quarter Ended                                       Six Months Ended
                                    July 3,           June 27,             %              July 3,          June 27,              %
                                     2021               2020             Change            2021              2020              Change
Consolidated sales, as reported   $  8,563          $   6,606            29.6%          $ 16,949          $ 12,988               30.5  %
Impact of changes in foreign
currencies                               -                219                                  -               421

Non-GAAP consolidated sales       $  8,563          $   6,825            25.5%          $ 16,949          $ 13,409               26.4  %

Global components sales, as
reported                          $  6,611          $   4,721            40.0%          $ 13,054          $  9,272               40.8  %
Impact of changes in foreign
currencies                               -                133                                  -               263

Non-GAAP global components sales  $  6,611          $   4,854            36.2%          $ 13,054          $  9,535               36.9  %

Global ECS sales, as reported     $  1,952          $   1,885             3.5%          $  3,895          $  3,716                4.8  %
Impact of changes in foreign
currencies                               -                 85                                  -               158

Non-GAAP global ECS sales         $  1,952          $   1,971            (1.0)%         $  3,895          $  3,874                0.5  %



Consolidated sales for the second quarter and first six months of 2021 increased
by $2.0 billion, or 29.6%, and $4.0 billion, or 30.5%, respectively, compared
with the year-earlier periods. The increase for the second quarter of 2021 was
driven by an increase in global components segment sales of $1.9 billion, or
40.0% and an increase in global ECS business segment sales of $66.6 million, or
3.5%. The increase for the first six months of 2021 was driven by an increase in
global components segment sales of $3.8 billion, or 40.8%, and an increase in
global ECS business segment sales of $178.5 million, or 4.8%. Non-GAAP
consolidated sales, adjusted for the impact of changes in foreign currencies,
increased 25.5% and 26.4% for the second quarter and first six months of 2021,
respectively, compared with the year-earlier periods.

The global components business capitalized on strong demand in all regions from
higher sales volumes and favorable pricing in all regions. This was especially
true in the Asia/Pacific region where sales for the second quarter and first six
months of 2021 increased 49% and 66%, respectively. The Americas and EMEA
regions each grew more than 20% during the second quarter of 2021 on both a GAAP
and non-GAAP basis. Increases during the second quarter and first six months of
2021 related to many product lines, however the company noted particularly
strong demand in the industrial, automotive, communications, consumer
electronics, data networking, and the aerospace and defense verticals. Changes
in foreign exchange rates contributed favorably to results in the EMEA and
Americas regions during 2021.

Increases in sales for the global ECS business were primarily due to higher
sales volumes driven by stronger demand for information technology hardware and
storage. Results in Q2 2021 were negatively impacted by minor supply chain
constraints with certain products that the company anticipates resolving during
the third quarter.

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Gross Profit

Following is an analysis of gross profit (in millions):


                                          Quarter Ended                                         Six Months Ended
                                    July 3,          June 27,                               July 3,          June 27,
                                     2021              2020             % Change             2021              2020             % Change
Consolidated gross profit, as
reported                          $  1,000          $    750              33.3%           $  1,930          $  1,479              30.5%
Impact of changes in foreign
currencies                               -                29                                     -                57

Impact of wind down                      -               (11)                                    -               (11)

Non-GAAP consolidated gross
profit*                           $  1,000          $    769              30.1%           $  1,930          $  1,525              26.5%
Consolidated gross profit as a
percentage of sales, as reported      11.7  %           11.4  %          30 bps               11.4  %           11.4  %           flat
Non-GAAP consolidated gross
profit as a percentage of
non-GAAP sales                        11.7  %           11.3  %          40 bps               11.4  %           11.4  %           flat

* The sum of the components for non-GAAP gross profit may not agree to totals, as presented, due to rounding.



The company recorded gross profit of $1.0 billion and $1.9 billion in the second
quarter and first six months of 2021, respectively, compared with $750.5 million
and $1.5 billion in the year-earlier periods. During the second quarter and
first six months of 2021, gross profit increased 33.3% and 30.5%, respectively
on a GAAP basis, and 30.1% and 26.5%, respectively, on a non-GAAP basis,
compared with the year-earlier periods. Gross profit margins in the second
quarter increased by approximately 30 bps and 40 bps on a GAAP and non-GAAP
basis respectively, and were flat for the first six months of 2021, compared
with the year-earlier periods. The increases in gross profit margins during the
second quarter are significant given the shift in regional mix to more
Asia/Pacific components sales, which generally have a lower gross profit margin
than components sales in the EMEA and Americas regions, contributing 48% of
global components sales for the second quarter and first six months of 2021,
compared with 45% and 41% of global components sales for the year-earlier
periods. This result is largely due to significant improvements in pricing and
margins during the second quarter in both the Asia/Pacific and Americas regions,
due in part to the current market conditions and the global supply chain issues
discussed above. Growing demand in services offerings globally continued to have
a positive impact on gross margins during the second quarter and first six
months of 2021 compared with the year-earlier periods.

Selling, General, and Administrative Expenses and Depreciation and Amortization

Following is an analysis of operating expenses (in millions):


                                          Quarter Ended                                        Six Months Ended
                                   July 3,            June 27,             %               July 3,          June 27,              %
                                     2021               2020             Change             2021              2020              Change
Selling, general, and
administrative expenses, as
reported                         $     602          $     501             20.1%          $  1,177          $  1,035             13.7%
Depreciation and amortization,
as reported                             49                 47             3.7%                 99                94              5.3%
Operating expenses, as reported  $     651          $     548             18.7%          $  1,276          $  1,129             13.0%
Impact of changes in foreign
currencies                               -                 20                                   -                35

Impact of wind down                      -                  1                                   -                 1
AFS notes receivable recoveries          -                  -                                   -                 1
Non-GAAP operating expenses*     $     651          $     570             14.2%          $  1,276          $  1,166              9.4%
Operating expenses as a
percentage of sales, as reported       7.6  %             8.3  %        (70) bps              7.5  %            8.7  %        (120) bps
Non-GAAP operating expenses as a
percentage of non-GAAP sales           7.6  %             8.3  %        (70) bps              7.5  %            8.7  %        (120) bps


*The sum of the components for selling, general, and administrative expenses and
depreciation and amortization, as reported, and non-GAAP operating expenses may
not agree to totals, as presented, due to rounding.
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Selling, general, and administrative expenses increased by $100.6 million, or
20.1%, and $141.3 million, or 13.7%, in the second quarter and first six months
of 2021, respectively, on a sales increase of 29.6% and 30.5% compared with the
year-earlier periods. In the second quarter and first six months of 2021, the
company received $8.2 million and $12.5 million, respectively, in settlement
funds in connection with certain class action claims (Refer to Note J), which
were recorded within selling, general, and administrative expenses. Depreciation
and amortization expense as a percentage of operating expenses was 7.5% and 7.8%
for the second quarter and first six months of 2021, respectively, compared with
8.5% and 8.3% in the year-earlier periods. Included in depreciation and
amortization expense is identifiable intangible asset amortization of $9.3
million and $18.6 million for the second quarter and first six months of 2021,
respectively, compared to $9.7 million and $19.7 million in the year-earlier
periods.

The decreases in operating expense as a percentage of sales relate primarily to
operating leverage the company generates when sales are growing and the
settlement funds discussed above. These were partially offset by investments to
grow the company's sales force, higher variable costs, and some increased costs
related to the global supply chain environment.

Non-GAAP operating expenses increased 14.2% and 9.4% for the second quarter and
first six months of 2021, respectively, compared with the year-earlier periods.
Non-GAAP operating expense, as a percentage of non-GAAP sales, decreased 70 bps
and 120 bps for the second quarter and first six months of 2021, respectively,
compared with the year-earlier periods.

Restructuring, Integration, and Other Charges



Restructuring initiatives and integration costs are due to the company's
continued efforts to lower costs, drive operational efficiency, integrate any
acquired businesses, and the consolidation of certain operations, as necessary.
The company recorded restructuring, integration, and other charges of
$4.5 million and $10.2 million, and $0.7 million and $9.8 million for the second
quarter and first six months of 2021 and 2020, respectively.

As of July 3, 2021, the company does not anticipate there will be any material
adjustments relating to the aforementioned restructuring and integration plans.
Refer to Note G, "Restructuring, Integration, and Other Charges," of the Notes
to the Consolidated Financial Statements for further discussion of the company's
restructuring and integration activities.

Operating Income

Following is an analysis of operating income (in millions):


                                       Quarter Ended                                          Six Months Ended
                                July 3,            June 27,             %                July 3,            June 27,              %
                                  2021               2020             Change              2021                2020              Change
Consolidated operating
income, as reported           $     341          $     197             73.2%          $     640           $     335                91.1  %
Identifiable intangible asset
amortization                          9                 10                                   19                  20
Restructuring, integration,
and other charges                     4                  1                                   10                  10

AFS notes receivable
recoveries                            -                  -                                    -                  (1)

Impairments                           4                  5                                    4                   5
Impact of wind down                   -                (12)                                   -                 (12)
Non-GAAP consolidated
operating income*             $     359          $     200             79.1%          $     673           $     357              88.7%
Consolidated operating income
as a percentage of sales, as
reported                            4.0  %             3.0  %         100 bps               3.8   %             2.6  %          120 bps
Non-GAAP consolidated
operating income, as a
percentage of sales,
excluding wind down                 4.2  %             3.0  %         120 bps               4.0   %             2.7  %          130 bps

* The sum of the components of non-GAAP consolidated operating income may not agree to totals, as presented, due to rounding.


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The company recorded operating income of $340.5 million, or 4.0% of sales, and
operating income of $640.0 million, or 3.8% of sales, in the second quarter and
first six months of 2021, respectively, compared with operating income of $196.6
million, or 3.0% of sales, and operating income of $334.9 million, or 2.6% of
sales, in the year-earlier periods. Non-GAAP operating income was $358.8
million, or 4.2% of sales, and $673.3 million, or 4.0% of sales, in the second
quarter and first six months of 2021 compared with non-GAAP operating income of
$200.3 million, or 3.0% of sales, and $356.8 million, or 2.7% of sales, in the
year-earlier periods.

Non-GAAP operating income, as a percentage of sales, increased 120 bps and 130
bps for the second quarter and first six months of 2021, respectively, primarily
due to increases in sales volumes and prices from the global components
business, the greater operating expense leverage from higher sales volumes in
all regions, partially offset by the impact to gross profit resulting from a
shift in regional mix. The increase in operating margins is also impacted by
reserves and other adjustments related to foreign tax and other loss
contingencies recorded within the global ECS business during the first quarter
of 2020 (Refer to Note J). These reserves are principally associated with
transactional taxes on activity from several prior years, not significant to any
one year. During the second quarter and first six months of 2021, respectively,
changes in foreign currencies had positive impacts on operating income of
approximately $8.4 million and $21.0 million when compared to the year-earlier
periods.

Gain (Loss) on Investments, Net



During the second quarter and first six months of 2021 and 2020, respectively,
the company recorded a gain of $6.7 million and $9.5 million and a gain of $10.9
million and loss of $5.9 million, respectively, which are primarily related to
changes in fair value of assets related to the Arrow SERP pension plan, which
consist primarily of life insurance policies and mutual fund assets.

Interest and Other Financing Expense, Net



The company recorded net interest and other financing expense of $30.7 million
and $64.3 million for the second quarter and first six months of 2021,
respectively, compared with $31.9 million and $75.1 million in the year-earlier
periods. The decrease for the second quarter and first six months of 2021
primarily relates to lower borrowings and interest rates on short term credit
facilities, partially offset by a decrease in interest income. The decrease in
interest income is primarily attributable to lower average cash balances and
lower interest rates within the company's cash pooling arrangements.

Income Tax



Income taxes for the interim periods presented have been included in the
accompanying consolidated financial statements on the basis of an estimated
annual effective tax rate. The determination of the consolidated provision for
income taxes requires management to make certain judgments and estimates.
Changes in the estimated level of annual pre-tax earnings, tax laws, and changes
resulting from tax audits can affect the overall effective income tax rate,
which impacts the level of income tax expense and net income. Judgments and
estimates related to the company's projections and assumptions are inherently
uncertain; therefore, actual results could differ from projections.

For the second quarter and first six months of 2021, the company recorded a
provision for income taxes of $74.1 million and $135.1 million, respectively, an
effective tax rate of 23.5% and 23.2%, compared to a provision of $40.9 million
and $68.7 million, an effective tax rate of 23.5% and 27.3% during the second
quarter and first six months of 2020, respectively. The company's non-GAAP
effective tax rate for the second quarter and first six months of 2021 was 23.5%
and 23.2%, respectively, compared to a non-GAAP effective tax rate of 24.1% and
26.3% for the second quarter and first six months of 2020, respectively.

The company's effective tax rate deviates from the statutory U.S. federal income
tax rate mainly due to the mix of foreign taxing jurisdictions in which the
company operates and where its foreign subsidiaries generate taxable income,
among other things. The change in the effective tax rate from 23.5% and 27.3%
for the second quarter and first six months of 2020, respectively, to 23.5% and
23.2% for the second quarter and first six months of 2021, respectively, is
primarily driven by discrete items, such as the out-of-period tax contingencies,
and changes in the mix of tax jurisdictions where taxable income is generated.
The non-GAAP effective tax rate for the first six months of 2020 includes
approximately $7.4 million in discrete tax items related to the foreign tax and
other loss contingencies.

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Net Income Attributable to Shareholders

Following is an analysis of net income attributable to shareholders (in millions):


                                                       Quarter Ended                            Six Months Ended
                                                July 3,            June 27,               July 3,               June 27,
                                                 2021                2020                   2021                  2020
Net income attributable to shareholders, as
reported                                     $      241          $      133          $      447               $      182
Identifiable intangible asset amortization*           9                  10                  18                       19
Restructuring, integration, and other
charges                                               4                   1                  10                       10

 (Gain) loss on investments, net                     (7)                (11)                (10)                       6
AFS notes receivable recoveries                       -                   -                   -                       (1)

Impairments                                           4                   5                   4                        5
Impact of wind down                                   -                 (12)                  -                      (12)

Tax effect of adjustments above                      (3)                  1                  (6)                      (8)
Impact of tax legislation changes                     -                   -                   -                        4
Non-GAAP net income attributable to
shareholders**                               $      249          $      126          $      465               $      205


* Identifiable intangible asset amortization also excludes amortization related
to the noncontrolling interest.
** The sum of the components for non-GAAP net income attributable to
shareholders may not agree to totals, as presented, due to rounding.

The company recorded net income attributable to shareholders of $240.6 million
and $447.0 million in the second quarter and first six months of 2021,
respectively, compared with $132.8 million and $182.3 million in the
year-earlier periods. Non-GAAP net income attributable to shareholders was
$249.3 million and $464.9 million for the second quarter and first six months of
2021, respectively, compared with $126.1 million and $205.0 million in the
year-earlier periods. During the second quarter and first six months of 2021,
changes in foreign currencies had positive impacts on net income of
approximately $6.0 million and $15.5 million when compared to the year-earlier
periods.

Liquidity and Capital Resources



At July 3, 2021 and December 31, 2020, the company had cash and cash equivalents
of $244.1 million and $373.6 million, respectively, of which $234.6 million and
$140.1 million, respectively, were held outside the United States. Liquidity is
affected by many factors, some of which are based on normal ongoing operations
of the company's business and some of which arise from fluctuations related to
global economics and markets. Cash balances are generated and held in many
locations throughout the world.

To achieve greater cash management agility and to further advance business
objectives, during the fourth quarter of 2019, the company reversed its
assertion to indefinitely reinvest a certain portion of its foreign earnings, of
which approximately $2.3 billion are available for distribution in future
periods as of July 3, 2021. The company continues to indefinitely reinvest the
residual $2.0 billion of undistributed earnings of its foreign subsidiaries. If
the indefinitely reinvested earnings were to be distributed to the United
States, the company would be required to pay withholding and other taxes.
Additionally, local government regulations may restrict the company's ability to
move cash balances to meet cash needs under certain circumstances. However, the
company currently does not expect such regulations and restrictions to impact
its ability to make acquisitions or to conduct operations throughout the global
organization.

During the first six months of 2021, the net amount of cash provided by the
company's operating activities was $276.8 million, the net amount of cash used
for investing activities was $18.9 million, and the net amount of cash used for
financing activities was $381.6 million. The effect of exchange rate changes on
cash was a decrease of $5.8 million.

During the first six months of 2020, the net amount of cash provided by the
company's operating activities was $885.1 million, the net amount of cash used
for investing activities was $65.0 million, and the net amount of cash used for
financing activities was $904.8 million. The effect of exchange rate changes on
cash was a decrease of $9.6 million.

Cash Flows from Operating Activities

The company maintains a significant investment in accounts receivable and inventories. As a percentage of total assets, accounts receivable and inventories were approximately 74.1% at July 3, 2021 and 73.3% at December 31, 2020.


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The net amount of cash provided by the company's operating activities during the
first six months of 2021 and 2020 was $276.8 million and $885.1 million,
respectively. The change relates primarily to income from operations offset by
the timing of payments.

The change in cash provided by operating activities during 2021, compared to the
year earlier period, relates primarily to the timing of payments, increasing
growth in customer demand in certain regions, and a corresponding increase in
working capital, including inventory, which is consistent with the company's
historical counter-cyclical cash flow in which the company generates less cash
flow in periods of increased demand.

Working capital as a percentage of sales, which the company defines as accounts
receivable, net, plus inventory, net, less accounts payable, divided by
annualized sales, was 14.2% in the second quarter of 2021 compared with 16.7% in
the second quarter of 2020.

Cash Flows from Investing Activities



The net amount of cash used for investing activities during the first six months
of 2021 was $18.9 million. The primary source of cash from investing activities
was $22.2 million of proceeds from the sale of a distribution warehouse in the
EMEA region. The primary use of cash for investing activities included $41.1
million for capital expenditures. Capital expenditures for the first six months
of 2021 primarily include expenditures related to investments in internally
developed software and website functionality and the build out of the company's
distribution centers.

The net amount of cash used for investing activities during the first six months
of 2020 was $65.0 million. The primary use of cash from investing activities
included $59.5 million for capital expenditures. Capital expenditures for the
first six months of 2020 include expenditures related to the build out of the
company's distribution centers and investments in internally developed software.

Cash Flows from Financing Activities



The net amount of cash used for financing activities during the first six months
of 2021 was $381.6 million. The uses of cash from financing activities included
$411.3 million of repurchases of common stock, $130.9 million of repayments of
the principal amount of the company's 5.125% notes due March 2021, and $14.8
million of net payments for short-term borrowings. The primary sources of cash
from financing activities during the second quarter of 2021 were $134.2 million
of net proceeds from long-term borrowings and $41.3 million of proceeds from the
exercise of stock options.

The net amount of cash used for financing activities during the first six months
of 2020 was $904.8 million. The uses of cash from financing activities included
$7.2 million of net payments from short-term borrowings, $411.7 million of net
payments for long-term bank borrowings, $48.4 million of payments upon the
settlement of forward starting interest rate swaps, $209.4 million of repayments
of the principal amount of the company's 6.00% notes due April 2020, and $231.7
million of repurchases of common stock. The primary source of cash from
financing activities during the second quarter of 2020 was $3.7 million of
proceeds from the exercise of stock options.

The company has a $2.0 billion revolving credit facility maturing in December
2023. This 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 a Eurocurrency rate plus a spread (1.18% at July 3, 2021), which is
based on the company's credit ratings, or an effective interest rate of 1.24% at
July 3, 2021. The facility fee, which is based on the company's credit ratings,
was .20% of the total borrowing capacity at July 3, 2021. The company had no
outstanding borrowings under the revolving credit facility at July 3, 2021 and
December 31, 2020, respectively. During the first six months of 2021 and 2020,
the average daily balance outstanding under the revolving credit facility was
$12.5 million and $24.0 million, 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. The company had no outstanding borrowings under this program at July 3,
2021 and December 31, 2020, respectively. During the first six months of 2021
and 2020, the average daily balance outstanding under the commercial paper
program was $171.4 million and $94.4 million, respectively. The program had a
weighted-average effective interest rate of .28% at July 3, 2021.

The company has a North American asset securitization program collateralized by
accounts receivable of certain of its subsidiaries. In March 2021, the company
amended its asset securitization program and, among other things, increased its
borrowing capacity from $1.2 billion to $1.25 billion and extended its term to
mature to March 2024. The program is conducted
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through Arrow Electronics Funding Corporation ("AFC"), a wholly-owned,
bankruptcy remote subsidiary. The 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, or a commercial paper rate, plus a spread (.45% at July 3,
2021), or an effective interest rate of .56% at July 3, 2021. The facility fee
is .40% of the total borrowing capacity. At July 3, 2021, the company had $135.0
million of outstanding borrowings under the North American asset securitization
program. At December 31, 2020, the company had no outstanding borrowings under
the North American asset securitization program. During the first six months of
2021 and 2020, the average daily balance outstanding under the North American
asset securitization program was $280.6 million and $509.9 million,
respectively.

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 July 3, 2021, the company was in compliance with all such
financial covenants.

The company has $200.0 million in uncommitted lines of credit. There were no
outstanding borrowings under the uncommitted lines of credit at July 3, 2021 and
December 31, 2020, respectively. These borrowings are provided on a short-term
basis and the maturity is agreed upon between the company and the lender. The
lines had a weighted-average effective interest rate of 1.50% at July 3, 2021.
During the first six months of 2021 and 2020, the average daily balance
outstanding under the uncommitted lines of credit was $0.2 million and $10.0
million, respectively.

In May 2019, the company entered into a series of ten-year forward-starting
interest rate swaps (the "2019 swaps"), which locked in an average treasury rate
of 2.33% on a total aggregate notional amount of $300.0 million. The 2019 swaps
were designated as cash flow hedges managing the risk of variability in interest
rates of future expected debt issuance by June 2020. In February 2020, the
company determined that certain of the forecasted cash flows were no longer
probable and de-designated the hedging relationship. In February 2020, the
company re-designated the 2019 swaps in a new cash flow hedge managing the risk
of variability in interest rates of future expected debt issuance by June 2023.

In April 2020, the company entered into a series of ten-year forward-starting
interest rate swaps (the "April 2020 swaps"), which locked in an average swap
rate of 0.97% on a total aggregate notional amount of $300.0 million and expire
in December 2024. The April 2020 swaps were designated as cash flow hedges
managing the risk of variability in interest rates of future expected debt
issuance by December 2025.

In May 2020, the company entered into a series of ten-year forward-starting
interest rate swaps (the "May 2020 swaps"), which locked in an average swap rate
of 0.90% on a total aggregate notional amount of $300.0 million and expire in
June 2022. The May 2020 swaps were designated as cash flow hedges managing the
risk of variability in interest rates of future expected debt issuance by June
2023.

During March 2021, the company repaid $130.9 million principal amount of its 5.125% notes due March 2021.

During April 2020, the company repaid $209.4 million principal amount of its 6.00% notes due April 2020.



In the normal course of business, certain of the company's subsidiaries have
agreements to sell, without recourse, selected trade receivables to financial
institutions. The company does not retain financial or legal interests in these
receivables, and, accordingly, they are accounted for as sales of the related
receivables and the receivables are removed from the company's consolidated
balance sheets.

Management believes that the company's current cash availability, its current
borrowing capacity under its revolving credit facility and asset securitization
programs, and its expected ability to generate future operating cash flows are
sufficient to meet its projected cash flow needs for the foreseeable future. The
company's current committed and undrawn liquidity stands at over $3.4 billion in
addition to $244.1 million of cash on hand at July 3, 2021. The company also may
issue debt or equity securities in the future and management believes the
company will have adequate access to the capital markets, if needed. The company
continually evaluates its liquidity requirements and would seek to amend its
existing borrowing capacity or access the financial markets as deemed necessary.
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Contractual Obligations



The company has contractual obligations for short-term and long-term debt,
interest on short-term and long-term debt, operating leases, purchase
obligations, and certain other long-term liabilities that were summarized in a
table of Contractual Obligations in the company's Annual Report on Form 10-K for
the year ended December 31, 2020. Since December 31, 2020, there were no
material changes to the contractual obligations of the company outside the
ordinary course of the company's business, except as follows:

•During the first quarter of 2021, the company repaid $130.9 million principal amount of its 5.125% notes due March 2021.



•During the first quarter of 2021, the company amended its asset securitization
program and, among other things, increased its borrowing capacity from $1.2
billion to $1.25 billion and extended its term to mature in March 2024. The
company had $135.0 million in outstanding borrowings under the North American
asset securitization program at July 3, 2021 and no outstanding borrowings under
the North American asset securitization program at December 31, 2020.

Share-Repurchase Programs

The following table shows the company's Board approved share-repurchase programs as of July 3, 2021 (in thousands):


                                                                                                                 Approximate
                                                                                                               Dollar Value of
                                                                                                               Shares that May
                                                                                                                   Yet be
                                                               Dollar Value           Dollar Value of             Purchased
                                                               Approved for               Shares                  Under the
               Month of Board Approval                          Repurchase              Repurchased                Program


December 2018                                                $      600,000          $      600,000          $              -
July 2020                                                           600,000                 536,533                    63,467
Total                                                        $    1,200,000          $    1,136,533          $         63,467



On July 21, 2021, the company's Board approved an additional $600,000 share-repurchase program.

Off-Balance Sheet Arrangements



During the first quarter of 2020, the company entered into an EMEA asset
securitization program under which it will continuously sell its interest in
designated pools of trade accounts receivables 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 on a monthly basis.
Refer to Note D "Accounts Receivables" of the Notes to the Consolidated
Financial Statements for further discussion of the EMEA asset securitization
program.

Critical Accounting Policies and Estimates



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

There were no significant changes during the second quarter of 2021 to the items
disclosed as Critical Accounting Policies and Estimates in Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
company's Annual Report on Form 10-K for the year ended December 31, 2020.
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