Arrow Electronics Announces Record Sales and Excellent Cash Flow.

Record Level Working Capital to Sales

MELVILLE, N.Y. -- Arrow Electronics, Inc. (NYSE:ARW) today reported second quarter 2007 net income of $99.2 million ($.80 and $.79 per share on a basic and diluted basis, respectively) on sales of $4.04 billion, compared with net income of $92.8 million ($.76 per share on both a basic and diluted basis) on sales of $3.44 billion in the second quarter of 2006. Sales increased 17 percent year over year. On a pro forma basis, sales increased five percent year over year as acquisitions also benefited sales growth. The company's results for the second quarters of 2007 and 2006 include a number of items outlined below that impact their comparability. A complete reconciliation of these items is provided under the heading "Certain Non-GAAP Financial Information." Excluding those items, on a non-GAAP basis, net income for the quarter ended June 30, 2007 would have been $101.5 million ($.82 and $.81 per share on a basic and diluted basis, respectively) and net income for the quarter ended June 30, 2006, would have been $94.7 million ($.78 and $.77 per share on a basic and diluted basis, respectively).

"We continue to execute well on our strategic initiatives as evidenced by our record results. We achieved record sales, generated an impressive level of cash flow, and managed our asset base to a record low level of working capital to sales," said William E. Mitchell, chairman, president and chief executive officer. "We have made strong strategic moves over the last 18 months that have resulted in a more diverse revenue stream, a broader geographic footprint, and increased opportunities in fast-growing product segments."

Global enterprise computing solutions ("ECS") sales of $1.27 billion increased 78 percent sequentially and 103 percent year over year on strong growth in industry standard servers, storage, software, and services. Growth was aided by the impact of the acquisitions of KeyLink Systems Group, Alternative Technology, Inc. and the storage and security distribution business of InTechnology plc. On a pro forma basis, sales increased 22 percent year over year. "Our strategic transformation in global ECS is producing impressive results as we grew sales at almost four times the rate at which the market is expected to grow. Global ECS now represents approximately one-third of our business, further diversifying and reducing the volatility of our revenue stream. By further executing on significant cross-selling opportunities, pursuing our strategic focus on the mid-market and leveraging our unique software capabilities, we expect to continue to outgrow the market. With increased scale, scope and flexibility, our strategy is proving out every day with our customers and vendors," said Mitchell.

Global components sales of $2.77 billion were essentially flat with the first quarter on fewer shipping days. Sales decreased two percent year over year as the well-publicized weakness within the large EMS customer base continued in North America and Asia Pacific. "We continue to execute well in the midst of cautious market conditions. In our Asia Pacific business, operating income increased by 74 percent sequentially, generating more operating income dollars than any other second quarter since 2000. In Europe and North America we achieved our highest and second highest level of operating income, respectively, for a second quarter in six years. Despite pockets of market weakness, we continue to improve our financial performance and deliver excellent results," Mitchell said.

The company's results for the second quarter of 2007 and 2006 include the items outlined below that impact their comparability:

* During the second quarter of 2007, the company recorded a net restructuring charge of $2.9 million ($2.0 million net of related taxes or $.02 per share on both a basic and diluted basis) primarily related to initiatives taken by the company in the period to improve operating efficiencies.

* During the second quarter of 2007, the company recorded an integration charge of $.5 million ($.3 million net of related taxes), primarily related to the acquisition of KeyLink.

* During the second quarter of 2006, the company recorded a $3.1 million ($1.9 million net of related taxes or $.02 per share on both a basic and diluted basis) restructuring charge.

"Based upon the information known to us today, we expect normal seasonality in both of our businesses in the third quarter. In global components, we expect to see an uptick in demand in Asia Pacific in preparation for the usual holiday build, normal seasonal softness in Europe due to its extended holiday period, and in North America, typical seasonality of flat to slightly down sales. In global enterprise computing solutions, we expect to see a moderate decrease in activity levels due to typical third quarter seasonality. We believe that total third quarter sales will be between $3.75 and $4.00 billion, with global component sales between $2.65 and $2.80 billion and global enterprise computing solutions sales between $1.10 and $1.20 billion. Earnings per share, on a diluted basis, excluding any charges and including estimated amortization of intangible assets of $.02, are expected to be in the range of $.76 to $.82, an increase of seven percent to 15 percent from last year's third quarter," said Paul J. Reilly, senior vice president and chief financial officer.

SIX MONTH RESULTS

Arrow's net income for the first six months of 2007 was $195.5 million ($1.58 and $1.57 per share on a basic and diluted basis, respectively) on sales of $7.54 billion, compared with net income of $174.3 million ($1.44 and $1.42 per share on a basic and diluted basis, respectively) on sales of $6.63 billion in the first six months of 2006.

Net income for the first six months of 2007 includes a net restructuring credit of $5.3 million ($3.8 million net of related taxes or $.03 per share on both a basic and diluted basis) primarily related to the sale of facilities offset, in part, by the aforementioned restructuring initiatives. Also included is an integration charge of $2.6 million ($1.6 million net of related taxes or $.01 per share or both a basic and diluted basis), primarily related to the acquisition of Keylink. Excluding these items, net income would have been $193.3 million ($1.57 and $1.55 per share on a basic and diluted basis, respectively) for the first six months of 2007.

Net income for the first six months of 2006 includes restructuring charges of $4.6 million ($2.8 million net of related taxes or $.02 per share on both a basic and diluted basis) and a loss on prepayment of debt of $2.6 million ($1.6 million net of related taxes or $.01 per share on both a basic and diluted basis) on the redemption of the total amount outstanding of $283.2 million principal amount ($156.4 million accreted value) of its zero coupon convertible debentures due in 2021 and on the repurchase of $4.1 million principal amount of its 7% Senior Notes due in January 2007. Excluding these items, net income would have been $178.7 million ($1.47 and $1.46 per share on a basic and diluted basis, respectively) for the first six months of 2006.

Arrow Electronics (www.arrow.com) is a global provider of products, services and solutions to industrial and commercial users of electronic components and computer products. Headquartered in Melville, New York, Arrow serves as a supply channel partner for more than 600 suppliers and 140,000 original equipment manufacturers, contract manufacturers and commercial customers through a global network of 260 locations in 55 countries and territories.

Certain Non-GAAP Financial Information

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

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

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

[TABLE OMITTED]

Information Relating to Forward-Looking Statements 

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

[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]
[TABLE OMITTED]

Effective April 1, 2007, the company's business segments were realigned as part of the company's continued efforts to strengthen its market leadership position, streamline the business, and further leverage cost synergies globally. The company's global components business was formed to bring a single, global organization to leverage the collective enterprise to speed services and solutions to customers and suppliers. The company's global ECS business was formed to bring a single organization with an expanded geographic reach, increased exposure in faster growing product segments, and a more robust customer and supplier base. As a result, the UK Microtronica, ATD (in Spain), and Arrow Computer Products (in France) businesses, previously included in the computer products business segment, were transitioned into the company's global components business segment. As a result of this realignment, global components and global ECS are the business segments upon which management primarily evaluates the operations of the company and upon which it bases its operating decisions. Prior period segment data was adjusted to conform to the current period presentation.

Effective January 1, 2007, stock option expense, which was previously included in corporate, has been allocated to global components, global ECS, and corporate. Prior period segment data was adjusted to conform with the current period presentation.

[TABLE OMITTED]