ARROW ELECTRONICS INC (Form: 10-K, Received: 02/03/2010 08:12:41)

ARROW ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF EQUITY (continued)

(In thousands)

	Common Stock at Par Value		Capital in Excess of Par Value			Treasury Stock			Retained Earnings		Foreign Currency Translation Adjustment		Other Comprehensive Income (Loss)			Noncontrolling Interests			Total
Balance at December 31, 2008	$	125,048	$	1,035,302		$	(190,273	)	$	1,571,005	$	172,528	$	(36,912	)	$	352		$	2,677,050
Consolidated net income (loss)		-		-			-			123,512		-		-			(7	)		123,505
Translation adjustments		-		-			-			-		56,491		-			(8	)		56,483
Unrealized gain on securities, net		-		-			-			-		-		22,844			-			22,844
Unrealized gain on interest rate swaps designated as cash flow hedges, net		-		-			-			-		-		1,132			-			1,132
Other employee benefit plan items, net		-		-			-			-		-		3,521			-			3,521
Comprehensive income																				207,485
Amortization of stock-based compensation		-		33,017			-			-		-		-			-			33,017
Shares issued for stock-based compensation awards		239		(9,604	)		13,599			-		-		-			-			4,234
Tax benefits related to stock-based compensation awards		-		(2,011	)		-			-		-		-			-			(2,011	)
Repurchase of common stock		-		-			(2,478	)		-		-		-			-			(2,478	)
Balance at December 31, 2009	$	125,287	$	1,056,704		$	(179,152	)	$	1,694,517	$	229,019	$	(9,415	)	$	337		$	2,917,297

See accompanying notes.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

1. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the company and its majority-owned subsidiaries. All significant intercompany transactions are eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the company to make significant estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Subsequent Events

The company evaluated subsequent events through February 3, 2010, the issuance date of these consolidated financial statements.

Accounting Standards Codification

During 2009, the company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update No. 2009-01, "Amendments based on Statement of Financial Accounting Standards No. 168 – The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles" (the "Codification"). The Codification became the single source of authoritative GAAP in the United States, other than rules and interpretive releases issued by the United States Securities and Exchange Commission ("SEC"). The Codification reorganized GAAP into a topical format that eliminates the previous GAAP hierarchy and instead established two levels of guidance – authoritative and nonauthoritative. All non-grandfathered, non-SEC accounting literature that was not included in the Codification became nonauthoritative. The adoption of the Codification did not change previous GAAP, but rather simplified user access to all authoritative literature related to a particular accounting topic in one place. Accordingly, the adoption had no impact on the company’s consolidated financial position or results of operations. All prior references to previous GAAP in the company’s consolidated financial statements were updated for the new references under the Codification.

Noncontrolling Interests

Effective January 1, 2009, the company adopted the FASB Accounting Standards Codification ("ASC") Topic 810-10-65. ASC Topic 810-10-65 requires that noncontrolling interests be reported as a component of equity; net income attributable to the parent and the noncontrolling interest be separately identified in the consolidated results of operations; changes in a parent's ownership interest be treated as equity transactions if control is maintained; and upon a loss of control, any gain or loss on the interest be recognized in the consolidated results of operations. ASC Topic 810-10-65 also requires expanded disclosures to clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. The adoption of the provisions of ASC Topic 810-10-65 did not materially impact the company's consolidated financial position or results of operations. Prior period amounts were reclassified to conform to the current period presentation.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments, which are readily convertible into cash, with original maturities of three months or less.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Inventories

Inventories are stated at the lower of cost or market. Cost approximates the first-in, first-out method.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is computed on the straight-line method over the estimated useful lives of the assets. The estimated useful lives for depreciation of buildings is generally 20 to 30 years, and the estimated useful lives of machinery and equipment is generally three to ten years. Leasehold improvements are amortized over the shorter of the term of the related lease or the life of the improvement. Long-lived assets are reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. If the fair value is less than the carrying amount of the asset, a loss is recognized for the difference.

Software Development Costs

The company capitalizes certain internal and external costs incurred to acquire or create internal-use software. Capitalized software costs are amortized on a straight-line basis over the estimated useful life of the software, which is generally three to seven years.

Identifiable Intangible Assets

Identifiable intangible assets are generally the result of acquisitions and consist primarily of customer relationships, trade names, non-competition agreements, a long-term procurement agreement, customer databases, and sales backlog. Identifiable intangible assets are included in "Other assets" in the company's consolidated balance sheets. Amortization of definite-lived intangible assets is computed on the straight-line method over the estimated useful lives of the assets, while indefinite-lived intangible assets are not amortized. The weighted average useful life of customer relationships is approximately 12 years. The useful life of other intangible assets ranges from one to five years. Identifiable intangible assets are reviewed for impairment whenever changes in circumstances or events may indicate that the carrying amounts are not recoverable. The company also tests indefinite-lived intangible assets, consisting of acquired trade names, for impairment at least annually as of the first day of the fourth quarter. If the fair value is less than the carrying amount of the asset, a loss is recognized for the difference.

Investments

Investments are accounted for using the equity method if the investment provides the company the ability to exercise significant influence, but not control, over an investee. Significant influence is generally deemed to exist if the company has an ownership interest in the voting stock of the investee between 20% and 50%, although other factors, such as representation on the investee's Board of Directors, are considered in determining whether the equity method is appropriate. The company records its investments in equity method investees meeting these characteristics as "Investments in affiliated companies" in the company's consolidated balance sheets.

All other equity investments, which consist of investments for which the company does not possess the ability to exercise significant influence, are accounted for under the cost method, if private, or as available-for-sale, if public, and are included in "Other assets" in the company's consolidated balance sheets. Under the cost method of accounting, investments are carried at cost and are adjusted only for other-than-temporary declines in realizable value and additional investments. The company assesses its long-term investments accounted for as available-for-sale on a quarterly basis to determine whether declines in market value below cost are other-than-temporary. When the decline is

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

determined to be other-than-temporary, the cost basis for the individual security is reduced and a loss is realized in the company's consolidated statement of operations in the period in which it occurs. When the decline is determined to be temporary, the unrealized losses are included in the shareholders' equity section in the company's consolidated balance sheets in "Other." The company makes such determination based upon the quoted market price, financial condition, operating results of the investee, and the company's intent and ability to retain the investment over a period of time, which is sufficient to allow for any recovery in market value. In addition, the company assesses the following factors:

broad economic factors impacting the investee's industry;

publicly available forecasts for sales and earnings growth for the industry and investee; and

the cyclical nature of the investee's industry.

The company could incur an impairment charge in future periods if, among other factors, the investee's future earnings differ from currently available forecasts.

Cost in Excess of Net Assets of Companies Acquired

Goodwill represents the excess of the cost of an acquisition over the fair value of the assets acquired. The company tests goodwill for impairment annually as of the first day of the fourth quarter, and when an event occurs or circumstances change such that it is more likely than not that an impairment may exist, such as (i) a significant adverse change in legal factors or in business climate, (ii) an adverse action or assessment by a regulator, (iii) unanticipated competition, (iv) a loss of key personnel, (v) a more-likely-than-not sale or disposal of all or a significant portion of a reporting unit, (vi) the testing for recoverability of a significant asset group within a reporting unit, or (vii) the recognition of a goodwill impairment loss of a subsidiary that is a component of the reporting unit. In addition, goodwill is required to be tested for impairment after a portion of the goodwill is allocated to a business targeted for disposal.

Goodwill is reviewed for impairment utilizing a two-step process. The first step of the impairment test requires the identification of the reporting units and comparison of the fair value of each of these reporting units to the respective carrying value. The company's reporting units are defined as each of the three regional businesses within the global components business segment, which are North America, EMEASA, and Asia/Pacific and each of the two regional businesses within the global Enterprise Computing Solutions ("ECS") business segment, which are North America and Europe. Prior to 2009, the North America and Europe reporting units within the global ECS business segment were evaluated as a single reporting unit. If the carrying value of the reporting unit is less than its fair value, no impairment exists and the second step is not performed. If the carrying value of the reporting unit is higher than its fair value, the second step must be performed to compute the amount of the goodwill impairment, if any. In the second step, the impairment is computed by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized for the excess.

The company generally estimates the fair value of a reporting unit using a three-year weighted average multiple of earnings before interest and taxes from comparable companies, which utilizes a look-back approach. The assumptions utilized in the evaluation of the impairment of goodwill under this approach include the identification of reporting units and the selection of comparable companies, which are critical accounting estimates subject to change. During 2009 and 2008, as a result of significant declines in macroeconomic conditions, the company determined that it was prudent to supplement its historical goodwill impairment testing methodology with a forward-looking discounted cash flow methodology. The assumptions included in the discounted cash flow methodology included forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others, all of which require significant judgments by management.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Foreign Currency Translation

The assets and liabilities of international operations are translated at the exchange rates in effect at the balance sheet date, with the related translation gains or losses reported as a separate component of shareholders' equity in the company's consolidated balance sheets. The results of international operations are translated at the monthly average exchange rates.

Income Taxes

Income taxes are accounted for under the liability method. Deferred taxes reflect the tax consequences on future years of differences between the tax bases of assets and liabilities and their financial reporting amounts. The carrying value of the company's deferred tax assets is dependent upon the company's ability to generate sufficient future taxable income in certain tax jurisdictions. Should the company determine that it is more likely than not that some portion or all of its deferred assets will not be realized, a valuation allowance to the deferred tax assets would be established in the period such determination was made.

It is the company's policy to provide for uncertain tax positions and the related interest and penalties based upon management's assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At December 31, 2009, the company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the company prevails in matters for which a liability for an unrecognized tax benefit is established or is required to pay amounts in excess of the liability, the company's effective tax rate in a given financial statement period may be affected.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) attributable to shareholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of consolidated net income (loss), foreign currency translation adjustments, unrealized gains or losses on securities, and interest rate swaps designated as cash flow hedges, in addition to other employee benefit plan items. Unrealized gains or losses on securities are net of any reclassification adjustments for realized gains or losses included in consolidated net income (loss). Except for unrealized gains or losses resulting from the company's cross-currency swaps, foreign currency translation adjustments included in comprehensive income (loss) were not tax effected as investments in international affiliates are deemed to be permanent.

Stock-Based Compensation

The company records share-based payment awards exchanged for employee services at fair value on the date of grant and expenses the awards in the consolidated statements of operations over the requisite employee service period. Stock-based compensation expense includes an estimate for forfeitures and is generally recognized over the expected term of the award on a straight-line basis. Stock-based compensation expense related to awards with a market or performance condition is recognized over the expected term of the award utilizing the graded vesting method. The company recorded, as a component of selling, general and administrative expenses ("SG&A"), amortization of stock-based compensation of $33,017, $18,092, and $21,389 in 2009, 2008, and 2007, respectively.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Segment Reporting

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The company's operations are classified into two reportable business segments: global components and global ECS.

Revenue Recognition

The company recognizes revenue when there is persuasive evidence of an arrangement, delivery has occurred or services are rendered, the sales price is determinable, and collectibility is reasonably assured. Revenue typically is recognized at time of shipment. Sales are recorded net of discounts, rebates, and returns, which historically were not material.

A portion of the company's business involves shipments directly from its suppliers to its customers. In these transactions, the company is responsible for negotiating price both with the supplier and customer, payment to the supplier, establishing payment terms with the customer, product returns, and has risk of loss if the customer does not make payment. As the principal with the customer, the company recognizes the sale and cost of sale of the product upon receiving notification from the supplier that the product was shipped.

The company has certain business with select customers and suppliers that is accounted for on an agency basis (that is, the company recognizes the fees associated with serving as an agent in sales with no associated cost of sales) in accordance with FASB ASC Topic 605-45-45. Generally, these transactions relate to the sale of supplier service contracts to customers where the company has no future obligation to perform under these contracts or the rendering of logistics services for the delivery of inventory for which the company does not assume the risks and rewards of ownership.

Shipping and Handling Costs

Shipping and handling costs included in SG&A totaled $54,006, $73,617, and $67,911 in 2009, 2008, and 2007, respectively.

Sabbatical Liability

Effective January 1, 2007, the company adopted FASB ASC Topic 710-10-25. ASC Topic 710-10-25 requires that compensation expense associated with a sabbatical leave, or other similar benefit arrangements, be accrued over the requisite service period during which an employee earns the benefit. Upon adoption, the company recognized a liability of $18,048 and a cumulative-effect adjustment to retained earnings of $10,794, net of related taxes.

Impact of Recently Issued Accounting Standards

In October 2009, the FASB issued Accounting Standards Update No. 2009-13, " Multiple-Deliverable Revenue Arrangements " ( " ASU No. 2009-13 " ). ASU No. 2009-13 amends guidance included within ASC Topic 605-25 to require an entity to use an estimated selling price when vendor specific objective evidence or acceptable third party evidence does not exist for any products or services included in a multiple element arrangement. The arrangement consideration should be allocated among the products and services based upon their relative selling prices, thus eliminating the use of the residual method of allocation. ASU No. 2009-13 also requires expanded qualitative and quantitative disclosures regarding significant judgments made and changes in applying this guidance. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. The company is currently evaluating the impact of adopting the provisions of ASU No. 2009-13.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

In October 2009, the FASB issued Accounting Standards Update No. 2009-14 , " Certain Revenue Arrangements That Include Software Elements " ( " ASU No. 2009-14 " ). ASU No. 2009-14 amends guidance included within ASC Topic 985-605 to exclude tangible products containing software components and non-software components that function together to deliver the product’s essential functionality. Entities that sell joint hardware and software products that meet this scope exception will be required to follow the guidance of ASU No. 2009-13. ASU No. 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption and retrospective application are also permitted. The company is currently evaluating the impact of adopting the provisions of ASU No. 2009-14.

In June 2009, the FASB issued FASB Statement No. 166, "Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140" ("Statement No. 166"), codified in ASC Topic 810-10. Statement No. 166, among other things, eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures about transfers of financial assets. Statement No. 166 is effective for annual reporting periods beginning after November 15, 2009. The adoption of the provisions of Statement No. 166 is not anticipated to impact the company's consolidated financial position or results of operations.

In June 2009, the FASB issued FASB Statement No. 167, "Amendments to FASB Interpretation No. ("FIN") 46(R)" ("Statement No. 167"), codified in ASC Topic 810-10. Statement No. 167, among other things, requires a qualitative rather than a quantitative analysis to determine the primary beneficiary of a variable interest entity ("VIE"), amends FIN 46(R)’s consideration of related party relationships in the determination of the primary beneficiary of a VIE, amends certain guidance in FIN 46(R) for determining whether an entity is a VIE, requires continuous assessments of whether an enterprise is the primary beneficiary of a VIE, and requires enhanced disclosures about an enterprise’s involvement with a VIE. Statement No. 167 is effective for annual reporting periods beginning after November 15, 2009. The adoption of the provisions of Statement No. 167 is not anticipated to impact the company's consolidated financial position or results of operations.

Reclassification

Certain prior year amounts were reclassified to conform to the current year presentation.

2. Acquisitions

Effective January 1, 2009, the company began accounting for business combinations under ASC Topic 805 which requires, among other things, the acquiring entity in a business combination to recognize the fair value of all the assets acquired and liabilities assumed; the recognition of acquisition-related costs in the consolidated results of operations; the recognition of restructuring costs in the consolidated results of operations for which the acquirer becomes obligated after the acquisition date; and contingent purchase consideration to be recognized at their fair values on the acquisition date with subsequent adjustments recognized in the consolidated results of operations. The accounting prescribed by ASC Topic 805 is applicable for all business combinations entered into after January 1, 2009.

The results of operations of the below acquisitions were included in the company's consolidated results from their respective dates of acquisition.

2009

On December 20, 2009, the company acquired A.E. Petsche Company, Inc. ("Petsche") for a purchase price of $174,100, which includes cash acquired of $4,036 and is subject to a final working capital adjustment. The purchase price does not reflect the present value of the income tax benefits the company will receive relating to the deductibility of intangible assets for income tax purposes, which are

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

estimated to be approximately $25,000. Petsche headquartered in Arlington, Texas, is a leading provider of interconnect products, including specialty wire, cable, and harness management solutions, to the aerospace and defense markets. With approximately 250 employees, Petsche provides value-added distribution services to over 3,500 customers in the United States, Canada, Mexico, the United Kingdom, France, and Belgium. Total Petsche sales for 2009 were approximately $190,000.

The following table summarizes the preliminary allocation of the net consideration paid to the fair value of the assets acquired and liabilities assumed for the Petsche acquisition:

Accounts receivable, net	$	32,208
Inventories		50,403
Prepaid expenses and other assets		661
Property, plant and equipment		2,831
Identifiable intangible assets		80,900
Cost in excess of net assets of companies acquired		19,048
Accounts payable		(12,551	)
Accrued expenses		(3,383	)
Other liabilities		(53	)
Cash consideration paid, net of cash acquired	$	170,064

The company allocated $26,300 of the purchase price to intangible assets relating to customer relationships, with a useful life of 15 years, $52,000 to trade names with an indefinite useful life, and $2,600 to other intangible assets (consisting of non-competition agreements and sales backlog), with useful lives ranging from one to three years.

The cost in excess of net assets of companies acquired related to the Petsche acquisition was recorded in the company's global components business segment. Substantially all of the intangible assets related to the Petsche acquisition are expected to be deductible for income tax purposes.

The following table summarizes the company's unaudited consolidated results of operations for 2009 and 2008 as well as the unaudited pro forma consolidated results of operations of the company, as though the Petsche acquisition occurred on January 1:

	For the Years Ended December 31,
	2009				2008
	As Reported		Pro Forma		As Reported			Pro Forma

Sales	$	14,684,101	$	14,867,421	$	16,761,009		$	16,977,405
Net income (loss) attributable to shareholders		123,512		133,568		(613,739	)		(603,554	)
Net income (loss) per share:
Basic	$	1.03	$	1.11	$	(5.08	)	$	(5.00	)
Diluted	$	1.03	$	1.11	$	(5.08	)	$	(5.00	)

The unaudited pro forma consolidated results of operations does not purport to be indicative of the results obtained had the Petsche acquisition occurred as of the beginning of 2009 and 2008, or of those results that may be obtained in the future. Additionally, the above table does not reflect any anticipated cost savings or cross-selling opportunities expected to result from this acquisition.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

2008

On June 2, 2008, the company acquired LOGIX S.A. ("LOGIX"), a subsidiary of Groupe OPEN for a purchase price of $205,937, which included $15,508 of debt paid at closing, cash acquired of $3,647, and acquisition costs. In addition, $46,663 in debt was assumed. LOGIX is a leading value-added distributor of midrange servers, storage, and software to over 6,500 partners in 11 European countries. Total LOGIX sales for 2007 were approximately $600,000 (approximately €440,000). For 2008, LOGIX sales of $376,852 were included in the company's consolidated results of operations from the date of acquisition.

The following table summarizes the allocation of the net consideration paid to the fair value of the assets acquired and liabilities assumed for the LOGIX acquisition:

Accounts receivable, net	$	119,599
Inventories		26,776
Prepaid expenses and other assets		6,058
Property, plant and equipment		5,234
Identifiable intangible assets		23,262
Cost in excess of net assets of companies acquired		174,269
Accounts payable		(90,660	)
Accrued expenses		(6,878	)
Debt (including short-term borrowings of $43,096)		(46,663	)
Other liabilities		(8,707	)
Cash consideration paid, net of cash acquired	$	202,290

The company allocated $21,401 of the purchase price to intangible assets relating to customer relationships, with a useful life of 10 years, and $1,861 to other intangible assets (consisting of non-competition agreements and sales backlog), with useful lives ranging from one to two years.

The cost in excess of net assets of companies acquired related to the LOGIX acquisition was recorded in the company's global ECS business segment. The intangible assets related to the LOGIX acquisition are not expected to be deductible for income tax purposes.

During 2008, the company acquired Hynetic Electronics and Shreyanics Electronics, a components distribution business in India, ACI Electronics LLC, a distributor of electronic components used in defense and aerospace applications, Achieva Ltd., a value-added distributor of semiconductors and electro-mechanical devices, Excel Tech, Inc., the sole Broadcom distributor in Korea, and Eteq Components Pte Ltd, a Broadcom-based components distribution business in the ASEAN region and China. The impact of these acquisitions was not material to the company's consolidated financial position or results of operations. Annual sales for these acquisitions were approximately $320,000.

2007

On March 31, 2007, the company acquired from Agilysys, Inc. ("Agilysys") substantially all of the assets and operations of their KeyLink Systems Group business ("KeyLink") for a purchase price of $480,640 in cash, which included acquisition costs and final adjustments based upon a closing audit. The company also entered into a long-term procurement agreement with Agilysys. KeyLink, a leading enterprise computing solutions distributor, provides complex solutions from industry leading manufacturers to more than 800 reseller partners. KeyLink has long-standing reseller relationships that provide the company with significant cross-selling opportunities. KeyLink's highly experienced sales and marketing professionals strengthen the company's existing relationships with value-added resellers ("VARs") and position the company to attract new relationships.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

The cost in excess of net assets of companies acquired related to the KeyLink acquisition was recorded in the company's global ECS business segment. Substantially all of the intangible assets related to the KeyLink acquisition are expected to be deductible for income tax purposes.

During 2007, the company acquired Adilam Pty. Ltd., a leading electronic components distributor in Australia and New Zealand, Centia Group Limited and AKS Group AB, specialty distributors of access infrastructure, security, and virtualization software solutions in Europe, and Universe Electron Corporation, a distributor of semiconductor and multimedia products in Japan. The impact of these acquisitions was not material to the company's consolidated financial position or results of operations. Annual sales for these acquisitions were approximately $163,000.

Other

Amortization expense related to identifiable intangible assets for the years ended December 31, 2009, 2008, and 2007 was $15,349, $15,324, and $14,546, respectively. Amortization expense for each of the years 2010 through 2014 are estimated to be approximately $17,838, $16,082, $14,282, $13,215, and $13,215, respectively.

In July 2007, the company paid $32,685 that was capitalized as cost in excess of net assets of companies acquired, partially offset by the carrying value of the related noncontrolling interest, to increase its ownership interest in Ultra Source Technology Corp. ("Ultra Source") from 70.7% to 92.8%. In January 2008, the company paid $8,699 to increase its ownership interest in Ultra Source to 100%.

Additionally, during 2008, the company paid $4,859, which was capitalized as cost in excess of net assets of companies acquired, partially offset by the carrying value of the related noncontrolling interest, to increase its ownership interest in other majority-owned subsidiaries.

3. Cost in Excess of Net Assets of Companies Acquired

Cost in excess of net assets of companies acquired allocated to the company's business segments follows:

	Global Components			Global ECS			Total

December 31, 2007	$	1,091,249		$	687,986		$	1,779,235
Acquisitions		105,734			84,479			190,213
Impairment charge		(716,925	)		(301,855	)		(1,018,780	)
Other (primarily foreign currency translation)		(26,580	)		(18,240	)		(44,820	)
December 31, 2008		453,478			452,370			905,848
Acquisitions		19,048			-			19,048
Acquisition-related adjustments		601			(8,171	)		(7,570	)
Other (primarily foreign currency translation)		294			8,676			8,970
December 31, 2009	$	473,421		$	452,875		$	926,296

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Goodwill is reviewed for impairment utilizing a two-step process. The first step of the impairment test requires the identification of the reporting units and comparison of the fair value of each of these reporting units to the respective carrying value. The company's reporting units are defined as each of the three regional businesses within the global components business segment, which are North America, EMEASA, and Asia/Pacific and each of the two regional businesses within the global ECS business segment, which are North America and Europe. Prior to 2009, the North America and Europe reporting units within the global ECS business segment were evaluated as a single reporting unit. If the carrying value of the reporting unit is less than its fair value, no impairment exists and the second step is not performed. If the carrying value of the reporting unit is higher than its fair value, the second step must be performed to compute the amount of the goodwill impairment, if any. In the second step, the impairment is computed by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized for the excess.

The company generally estimates the fair value of a reporting unit using a three-year weighted average multiple of earnings before interest and taxes from comparable companies, which utilizes a look-back approach. The assumptions utilized in the evaluation of the impairment of goodwill under this approach include the identification of reporting units and the selection of comparable companies, which are critical accounting estimates subject to change. During 2009 and 2008, as a result of a significant decline in macroeconomic conditions, the company determined that it was prudent to supplement its historical goodwill impairment testing methodology with a forward-looking discounted cash flow methodology. The assumptions included in the discounted cash flow methodology included forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others, all of which require significant judgments by management. During 2009 and 2008, the company also reconciled its discounted cash flow analysis to its current market capitalization allowing for a reasonable control premium. As of the first day of the fourth quarters of 2007, 2008, and 2009, the company's annual impairment testing did not indicate impairment at any of the company's reporting units.

During the fourth quarter of 2008, as a result of significant declines in macroeconomic conditions, global equity valuations depreciated. Both factors impacted the company's market capitalization, and the company determined it was necessary to perform an interim goodwill impairment test as of December 31, 2008. Based upon the results of the discounted cash flow approach as of December 31, 2008, the carrying value of the global ECS reporting unit and the EMEASA and Asia/Pacific reporting units within the global components business segment were higher than their fair value and, accordingly, the company performed a step-two impairment analysis. The fair value of the North America reporting unit within the global components business segment was higher than its carrying value and a step-two analysis was not required. The results of the step-two impairment analysis indicated that goodwill related to the EMEASA and Asia/Pacific reporting units within the global components business segment were fully impaired and the goodwill related to the global ECS business segment was partially impaired. The company recognized a total non-cash impairment charge of $1,018,780 ($905,069 net of related taxes or $7.49 per share on both a basic and diluted basis) as of December 31, 2008, of which $716,925 related to the company's global components business segment and $301,855 related to the company's global ECS business segment.

The impairment charge did not impact the company’s consolidated cash flows, liquidity, capital resources, and covenants under its existing revolving credit facility, asset securitization program, and other outstanding borrowings.

4. Investments in Affiliated Companies

The company owns a 50% interest in several joint ventures with Marubun Corporation (collectively "Marubun/Arrow") and a 50% interest in Altech Industries (Pty.) Ltd. ("Altech Industries"), a joint venture with Allied Technologies Limited. These investments are accounted for using the equity method.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

The following table presents the company's investment in Marubun/Arrow, the company's investment and long-term note receivable in Altech Industries, and the company's other equity investments at December 31:

	2009		2008

Marubun/Arrow	$	37,649	$	34,881
Altech Industries		15,361		11,888
Other		-		19
	$	53,010	$	46,788

The equity in earnings (loss) of affiliated companies for the years ended December 31 consists of the following:

	2009			2008			2007

Marubun/Arrow	$	3,745		$	5,486		$	5,440
Altech Industries		1,004			1,233			1,550
Other		(18	)		(170	)		(84	)
	$	4,731		$	6,549		$	6,906

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. At December 31, 2009, the company's pro-rata share of this debt was approximately $6,100. The company believes that there is sufficient equity in the joint ventures to meet their obligations.

5. Accounts Receivable

The company has a $600,000 asset securitization program collateralized by accounts receivables of certain of its North American subsidiaries which expires in March 2010. The asset securitization program is conducted through Arrow Electronics Funding Corporation, a wholly-owned, bankruptcy remote subsidiary. The 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 or a commercial paper rate plus a spread, which is based on the company's credit ratings (.225% at December 31, 2009). The facility fee is .125%.

The company had no outstanding borrowings under the asset securitization program at December 31, 2009 and 2008.

Accounts receivable, net, consists of the following at December 31:

	2009			2008

Accounts receivable	$	3,175,815		$	3,140,076
Allowance for doubtful accounts		(39,674	)		(52,786	)
Accounts receivable, net	$	3,136,141		$	3,087,290

The company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The allowances for doubtful accounts are determined using a combination of factors, including the length of time the receivables are outstanding, the current business environment, and historical experience.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

6. Debt

Short-term borrowings, including current portion of long-term debt, consist of the following at December 31:

	2009		2008

9.15% senior notes, due 2010	$	69,544	$	-
Cross-currency swap, due 2010		41,943		-
Interest rate swaps designated as fair value hedges		2,036		-
Short-term borrowings in various countries		9,572		52,893
	$	123,095	$	52,893

Short-term borrowings in various countries are primarily utilized to support the working capital requirements of certain international operations. The weighted average interest rates on these borrowings at December 31, 2009 and 2008 were 3.5% and 3.6%, respectively.

Long-term debt consists of the following at December 31:

	2009		2008

9.15% senior notes, due 2010	$	-	$	199,994
Bank term loan, due 2012		200,000		200,000
6.875% senior notes, due 2013		349,765		349,694
6.875% senior debentures, due 2018		198,241		198,032
6.00% notes, due 2020		299,909		-
7.5% senior debentures, due 2027		197,610		197,470
Cross-currency swap, due 2010		-		36,467
Cross-currency swap, due 2011		12,497		9,985
Interest rate swaps designated as fair value hedges		9,556		21,394
Other obligations with various interest rates and due dates		8,560		10,949
	$	1,276,138	$	1,223,985

The 7.5% senior debentures are not redeemable prior to their maturity. The 9.15% senior notes, 6.875% senior notes, 6.875% senior debentures, and 6.00% notes may be called at the option of the company subject to "make whole" clauses.

The estimated fair market value at December 31, using quoted market prices, follow:

	2009		2008

9.15% senior notes, due 2010	$	73,000	$	206,000
6.875% senior notes, due 2013		378,000		329,000
6.875% senior debentures, due 2018		214,000		160,000
6.00% notes, due 2020		300,000		-
7.5% senior debentures, due 2027		208,000		152,000

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

The carrying amounts of the company's short-term borrowings, bank term loan, and other obligations approximate their fair value.

Annual payments of borrowings during each of the years 2010 through 2014 are $123,095, $13,228, $200,405, $359,423, and 7,322, respectively, and $695,760 for all years thereafter.

The company has an $800,000 revolving credit facility with a group of banks that matures in January 2012. Interest on borrowings under the revolving credit facility is calculated using a base rate or a euro currency rate plus a spread based on the company's credit ratings (.425% at December 31, 2009). The facility fee related to the revolving credit facility is .125%. The company had no outstanding borrowings under the revolving credit facility at December 31, 2009 and 2008. The company also entered into a $200,000 term loan with the same group of banks, which is repayable in full in January 2012. Interest on the term loan is calculated using a base rate or a euro currency rate plus a spread based on the company's credit ratings (.60% at December 31, 2009).

The revolving credit facility and the asset securitization program include terms and conditions that limit the incurrence of additional borrowings, limit the company's ability to pay cash dividends or repurchase stock, and require that certain financial ratios be maintained at designated levels. The company was in compliance with all covenants as of December 31, 2009 and is currently not aware of any events that would cause non-compliance with any covenants in the future.

During 2009, the company repurchased $130,455 principal amount of its 9.15% senior notes due 2010. The related loss on the repurchase, including the premium paid and write-off of the deferred financing costs, offset by the gain for terminating a portion of the interest rate swaps aggregated $5,312 ($3,228 net of related taxes or $.03 per share on both a basic and diluted basis) and was recognized as a loss on prepayment of debt.

During 2009, the company completed the sale of $300,000 principal amount of 6.00% notes due in 2020. The net proceeds of the offering of $297,430 were used to repay a portion of the previously discussed 9.15% senior notes due 2010 and for general corporate purposes.

Interest and other financing expense, net, includes interest income of $2,964, $5,337, and $5,726 in 2009, 2008, and 2007, respectively. Interest paid, net of interest income, amounted to $79,952, $96,993, and $98,881 in 2009, 2008, and 2007, respectively.

7. 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.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

The following table presents assets/(liabilities) measured at fair value on a recurring basis at December 31, 2009:

	Level 1		Level 2			Level 3		Total

Cash equivalents	$	-	$	744,125		$	-	$	744,125
Available-for-sale securities		56,464		-			-		56,464
Interest rate swaps		-		11,592			-		11,592
Cross-currency swaps		-		(54,440	)		-		(54,440	)
	$	56,464	$	701,277		$	-	$	757,741

The following table presents assets/(liabilities) measured at fair value on a recurring basis at December 31, 2008:

	Level 1		Level 2			Level 3		Total

Cash equivalents	$	-	$	198,800		$	-	$	198,800
Available-for-sale securities		21,187		-			-		21,187
Interest rate swaps		-		19,541			-		19,541
Cross-currency swaps		-		(46,452	)		-		(46,452	)
	$	21,187	$	171,889		$	-	$	193,076

Available-For-Sale Securities

The company has a 2.7% equity ownership interest in WPG Holdings Co., Ltd. ("WPG") and an 8.4% equity ownership interest in Marubun Corporation ("Marubun"), which are accounted for as available-for-sale securities.

The fair value of the company's available-for-sale securities is as follows at December 31:

	2009				2008
	Marubun		WPG		Marubun		WPG

Cost basis	$	10,016	$	10,798	$	10,016	$	10,798
Unrealized holding gain		4,408		31,242		-		373
Fair value	$	14,424	$	42,040	$	10,016	$	11,171

The fair value of these investments is included in "Other assets" in the company's consolidated balance sheets, and the related net unrealized holding gains and losses are included in "Other" in the shareholders ' equity section in the company's consolidated balance sheets.

During 2008, the company determined that an other-than-temporary decline in the fair value of Marubun occurred based upon various factors including the financial condition and near-term prospects of Marubun, the magnitude of the loss compared to the investment's cost, the length of time the investment was in an unrealized loss position, and publicly available information about the industry and geographic region in which Marubun operates and, accordingly, recorded a loss of $10,030 ($.08 per share on both a basic and diluted basis) on the write-down of this investment.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Derivative Instruments

The company uses various financial instruments, including derivative financial instruments, for purposes other than trading. Derivatives used as part of the company's risk management strategy are designated at inception as hedges and measured for effectiveness both at inception and on an ongoing basis.

The fair values of derivative instruments in the consolidated balance sheet as of December 31, 2009 follow:

	Asset/(Liability) Derivatives
	Balance Sheet Location	Fair Value

Derivative instruments designated as hedges:
Interest rate swaps designated as fair value hedges	Prepaid expenses	$	2,036
Interest rate swaps designated as fair value hedges	Other assets		9,556
Cross-currency swaps designated as net investment hedges	Short-term borrowings		(41,943	)
Cross-currency swaps designated as net investment hedges	Long-term debt		(12,497	)
Foreign exchange contracts designated as cash flow hedges	Prepaid expenses		406
Foreign exchange contracts designated as cash flow hedges	Accrued expenses		(272	)
Total derivative instruments designated as hedging instruments			(42,714	)

Derivative instruments not designated as hedges:
Foreign exchange contracts	Prepaid expenses		2,362
Foreign exchange contracts	Accrued expenses		(1,952	)
Total derivative instruments not designated as hedging instruments			410
Total		$	(42,304	)

The effect of derivative instruments on the consolidated statement of operations for the year ended December 31, 2009 follow:

	Gain/(Loss) Recognized in Income

Fair value hedges:
Interest rate swaps (a)	$	4,907
Total	$	4,907

Derivative instruments not designated as hedges:
Foreign exchange contracts (b)	$	(8,574	)
Total	$	(8,574	)

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

	Effective Portion					Ineffective Portion
	Gain/(Loss) Recognized in Other Comprehensive Income			Gain/(Loss) Reclassified into Income		Gain/(Loss) Recognized in Income

Cash Flow Hedges:

Interest rate swaps (c)	$	1,853		$	-	$	-
Foreign exchange contracts (d)		(2,277	)		94		-
Total	$	(424	)	$	94	$	-

Net Investment Hedges:

Cross-currency swaps (c)	$	(7,988	)	$	-	$	536
Total	$	(7,988	)	$	-	$	536

(a)

The amount of gain/(loss) recognized in income on derivatives is recorded in "Loss on prepayment of debt" in the accompanying consolidated statements of operations.

(b)

The amount of gain/(loss) recognized in income on derivatives is recorded in "Cost of products sold" in the accompanying consolidated statements of operations.

(c)

Both the effective and ineffective portions of any gain/(loss) reclassified or recognized in income is recorded in "Interest and other financing expense, net" in the accompanying consolidated statements of operations.

(d)

Both the effective and ineffective portions of any gain/(loss) reclassified or recognized in income is recorded in "Cost of products sold" in the accompanying consolidated statements of operations.

Interest Rate Swaps

The company enters into interest rate swap transactions that convert certain fixed-rate debt to variable-rate debt or variable-rate debt to fixed-rate debt in order to manage its targeted mix of fixed- and floating-rate debt. The effective portion of the change in the fair value of interest rate swaps designated as fair value hedges is recorded as a change to the carrying value of the related hedged debt, and the effective portion of the change in fair value of interest rate swaps designated as cash flow hedges is recorded in the shareholders' equity section in the accompanying consolidated balance sheets in "Other." The ineffective portion of the interest rate swaps, if any, is recorded in "Interest and other financing expense, net" in the accompanying consolidated statements of operations.

In June 2004, the company entered into interest rate swaps, with an aggregate notional amount of $200,000. The swaps modify the company's interest rate exposure by effectively converting the fixed 9.15% senior notes to a floating rate, based on the six-month U.S. dollar LIBOR plus a spread (an effective rate of 4.94% and 8.19% at December 31, 2009 and 2008, respectively), through its maturity. In 2009, the company terminated $130,455 aggregate notional amount of the interest rate swaps upon the repayment of a portion of the 9.15% senior notes. The swaps are classified as fair value hedges and had a fair value of $2,036 and $9,385 at December 31, 2009 and 2008, respectively.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

In June 2004 and November 2009, the company entered into interest rate swaps, with an aggregate notional amount of $275,000. The swaps modify the company's interest rate exposure by effectively converting a portion of the fixed 6.875% senior notes to a floating rate, based on the six-month U.S. dollar LIBOR plus a spread (an effective rate of 4.18% and 5.01% at December 31, 2009 and 2008, respectively), through its maturity. The swaps are classified as fair value hedges and had a fair value of $9,556 and $12,009 at December 31, 2009 and 2008, respectively.

Cross-Currency Swaps

The company enters into cross-currency swaps to hedge a portion of its net investment in euro-denominated net assets. The company’s cross-currency swaps are derivatives designated as net investment hedges. The effective portion of the change in the fair value of derivatives designated as net investment hedges is recorded in "Foreign currency translation adjustment" included in the accompanying consolidated balance sheets and any ineffective portion is recorded in "Interest and other financing expense, net" in the accompanying consolidated statements of operations. As the notional amounts of the company’s cross-currency swaps are expected to equal a comparable amount of hedged net assets, no material ineffectiveness is expected. The company uses the hypothetical derivative method to assess the effectiveness of its net investment hedges on a quarterly basis.

In May 2006, the company entered into a cross-currency swap, with a maturity date of July 2011, for approximately $100,000 or €78,281 (the "2006 cross-currency swap") to hedge a portion of its net investment in euro-denominated net assets. The 2006 cross-currency swap effectively converts the interest expense on $100,000 of long-term debt from U.S. dollars to euros. The 2006 cross-currency swap had a negative fair value of $12,497 and $9,985 at December 31, 2009 and 2008, respectively.

In October 2005, the company entered into a cross-currency swap, with a maturity date of October 2010, for approximately $200,000 or €168,384 (the "2005 cross-currency swap") to hedge a portion of its net investment in euro-denominated net assets. The 2005 cross-currency swap effectively converts the interest expense on $200,000 of long-term debt from U.S. dollars to euros. The 2005 cross-currency swap had a negative fair value of $41,943 and $36,467 at December 31, 2009 and 2008, respectively.

Foreign Exchange Contracts

The company enters into foreign exchange forward, option, or swap contracts (collectively, the "foreign exchange contracts") to mitigate the impact of changes in foreign currency exchange rates. These contracts are executed to facilitate the hedging of foreign currency exposures resulting from inventory purchases and sales and generally have terms of no more than six months. Gains or losses on these contracts are deferred and recognized when the underlying future purchase or sale is recognized or when the corresponding asset or liability is revalued. 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 values of foreign exchange contracts, which are nominal, are estimated using market quotes. The notional amount of the foreign exchange contracts at December 31, 2009 and 2008 was $294,928 and $315,021, respectively.

Other

The carrying amounts of cash and cash equivalents, accounts receivable, net, and accounts payable approximate their fair value due to the short maturities of these financial instruments.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Cash equivalents consist primarily of overnight time deposits and institutional money market funds with quality financial institutions. These financial institutions are located in many different geographical regions, and the company's policy is designed to limit exposure with any one institution. As part of its cash and risk management processes, the company performs periodic evaluations of the relative credit standing of these financial institutions.

8. Income Taxes

The provision for income taxes for the years ended December 31 consists of the following:

	2009			2008			2007

Current
Federal	$	23,078		$	55,459		$	101,077
State		636			5,510			13,410
International		22,389			43,965			57,549
		46,103			104,934			172,036

Deferred
Federal		20,905			(33,232	)		(6	)
State		5,995			(1,892	)		5,124
International		(7,587	)		(53,088	)		3,543
		19,313			(88,212	)		8,661
	$	65,416		$	16,722		$	180,697

The principal causes of the difference between the U.S. federal statutory tax rate of 35% and effective income tax rates for the years ended December 31 are as follows:

	2009			2008			2007

United States	$	108,106		$	5,409		$	262,068
International		80,815			(602,322	)		330,115
Income before income taxes	$	188,921		$	(596,913	)	$	592,183

Provision at statutory tax rate	$	66,122		$	(208,919	)	$	207,264
State taxes, net of federal benefit		4,310			2,352			12,047
International effective tax rate differential		(16,530	)		(28,801	)		(54,448	)
Non-deductible impairment charge		-			237,602			-
Other non-deductible expenses		2,634			10,424			3,270
Changes in tax accruals and reserves		8,258			4,188			15,838
Other		622			(124	)		(3,274	)
Provision for income taxes	$	65,416		$	16,722		$	180,697

During 2008, the company recorded a reduction of the provision for income taxes of $8,450 and an increase in interest expense of $1,009 ($962 net of related taxes) primarily related to the settlement of certain international income tax matters covering multiple years.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

During 2007, the company recorded an income tax benefit of $6,024, net, principally due to a reduction in deferred income taxes as a result of the statutory tax rate change in Germany. These deferred income taxes primarily related to the amortization of intangible assets for income tax purposes, which are not amortized for accounting purposes.

At December 31, 2009, the company had a liability for unrecognized tax benefits of $68,833 (of which $70,036, if recognized, would favorably affect the company's effective tax rate). The company does not believe there will be any material changes in its unrecognized tax positions over the next twelve months. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31 is as follows:

	2009			2008

Balance at beginning of year	$	69,719		$	77,702
Additions based on tax positions taken during a prior period		12,442			12,179
Reductions based on tax positions taken during a prior period		(9,000	)		(19,446	)
Additions based on tax positions taken during the current period		742			4,125
Reductions based on tax positions taken during the current period		-			-
Reductions related to settlement of tax matters		(4,994	)		(3,866	)
Reductions related to a lapse of applicable statute of limitations		(76	)		(975	)
Balance at end of year	$	68,833		$	69,719

Interest costs related to unrecognized tax benefits are classified as a component of "Interest and other financing expense, net" in the company's consolidated statements of operations. Penalties, if any, are recognized as a component of "Selling, general and administrative expenses." In 2009, 2008, and 2007, the company recognized $4,678, $1,476, and $4,149, respectively, of interest expense related to unrecognized tax benefits. At December 31, 2009 and 2008, the company had a liability for the payment of interest of $13,328 and $11,634, respectively, related to unrecognized tax benefits.

In many cases the company's uncertain tax positions are related to tax years that remain subject to examination by tax authorities. The following describes the open tax years, by major tax jurisdiction, as of December 31, 2009:

United States – Federal		2005 – present
United States – State		2001 – present
Germany (a)		2007 – present
Hong Kong		2001 – present
Italy (a)		2004 – present
Sweden		2003 – present
United Kingdom		2007 – present

(a) Includes federal as well as local jurisdictions.

Deferred income taxes are provided for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

The significant components of the company's deferred tax assets and liabilities, included primarily in "Prepaid expenses and other assets," "Other assets," and "Other liabilities" in the company's consolidated balance sheets, consist of the following at December 31:

	2009			2008

Deferred tax assets:
Net operating loss carryforwards	$	52,294		$	36,991
Capital loss carryforwards		2,223			2,242
Inventory adjustments		30,680			32,037
Allowance for doubtful accounts		11,280			12,917
Accrued expenses		47,742			43,839
Other comprehensive income items		5,128			23,096
Derivative financial instruments		21,179			18,225
Restructuring and integration reserves		1,613			5,233
Interest carryforward		41,388			16,385
Goodwill		14,652			31,574
Other		-			6,084
		228,179			228,623
Valuation allowance		(68,556	)		(43,453	)
Total deferred tax assets	$	159,623		$	185,170

Deferred tax liabilities:
Other	$	(6,319	)	$	-
Total deferred tax liabilities	$	(6,319	)	$	-
Total net deferred tax assets	$	153,304		$	185,170

At December 31, 2009, certain international subsidiaries had tax loss carryforwards of approximately $166,821 expiring in various years after 2010. Deferred tax assets related to the tax loss carryforwards of the international subsidiaries in the amount of $48,285 as of December 31, 2009 were recorded with a corresponding valuation allowance of $16,941. The impact of the change in this valuation allowance on the effective rate reconciliation is included in the international effective tax rate differential.

Valuation allowances reflect the deferred tax benefits that management is uncertain of the ability to utilize in the future.

Cumulative undistributed earnings of international subsidiaries were $1,425,643 at December 31, 2009. No deferred U.S. federal income taxes were provided for the undistributed earnings as they are permanently reinvested in the company's international operations.

Income taxes paid, net of income taxes refunded, amounted to $90,340, $144,215, and $189,620 in 2009, 2008, and 2007, respectively.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

9. Restructuring, Integration, and Other Charges

In 2009, 2008, and 2007, the company recorded restructuring, integration, and other charges of $105,514 ($75,720 net of related taxes or $.63 per share on both a basic and diluted basis), $80,955 ($61,867 net of related taxes of $.51 per share on both a basic and diluted basis), and $11,745 ($7,036 net of related taxes or $.06 per share on both a basic and diluted basis), respectively.

The following table presents the components of the restructuring, integration, and other charges for 2009, 2008, and 2007:

	2009			2008			2007

Current year restructuring charge	$	100,274		$	69,836		$	9,708
Current year integration charge		-			551			2,944
Adjustments to prior year restructuring accruals		2,643			(322	)		(907	)
Adjustments to prior year integration accruals		(1,279	)		-			-
Acquisition-related expenses		3,876			-			-
Preference claim from 2001		-			10,890			-
	$	105,514		$	80,955		$	11,745

2009 Restructuring Charge

The following table presents the components of the 2009 restructuring charge of $100,274 and activity in the related restructuring accrual for 2009:

	Personnel Costs			Facilities			Other			Total

Restructuring charge	$	90,896		$	8,016		$	1,362		$	100,274
Payments		(65,524	)		(1,747	)		(1,138	)		(68,409	)
Foreign currency translation		8			18			-			26
December 31, 2009	$	25,380		$	6,287		$	224		$	31,891

The restructuring charge of $100,274 in 2009 primarily includes personnel costs of $90,896 and facilities costs of $8,016. The personnel costs are related to the elimination of approximately 1,605 positions within the global components business segment and approximately 320 positions within the global ECS business segment. The facilities costs are related to exit activities for 28 vacated facilities worldwide due to the company's continued efforts to streamline its operations and reduce real estate costs. These initiatives are due to the company's continued efforts to lower cost and drive operational efficiency.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

2008 Restructuring Charge

The following table presents the components of the 2008 restructuring charge of $69,836 and activity in the related restructuring accrual for 2008 and 2009:

	Personnel Costs			Facilities			Asset Write- Downs			Other			Total

Restructuring charge	$	39,383		$	4,305		$	25,423		$	725		$	69,836
Payments		(24,238	)		(474	)		-			(225	)		(24,937	)
Non-cash usage		-			-			(25,423	)		-			(25,423	)
Reclassification of capital lease		-			810			-			-			810
Foreign currency translation		(949	)		78			-			-			(871	)
December 31, 2008		14,196			4,719			-			500			19,415
Restructuring charge (credit)		505			141			2,112			(49	)		2,709
Payments		(13,069	)		(2,308	)		-			(55	)		(15,432	)
Non-cash usage		-			-			(2,112	)		(197	)		(2,309	)
Foreign currency translation		(75	)		84			-			9			18
December 31, 2009	$	1,557		$	2,636		$	-		$	208		$	4,401

The restructuring charge of $69,836 in 2008 primarily includes personnel costs of $39,383, facility costs of $4,305, and a write-down of a building and related land of $25,423. These initiatives are the result of the company's continued efforts to lower cost and drive operational efficiency. The personnel costs are primarily associated with the elimination of approximately 750 positions across multiple functions and multiple locations. The facilities costs are related to the exit activities of 9 vacated facilities in North America and Europe. During the fourth quarter of 2008, the company recorded an impairment charge of $25,423 in connection with an approved plan to actively market and sell a building and related land in North America within the company's global components business segment. The decision to exit this location was made to enable the company to consolidate facilities and reduce future operating costs. The company wrote-down the carrying values of the building and related land to their estimated fair values less cost to sell and ceased recording depreciation. During 2009, the company recorded an impairment charge of $2,112 as a result of further declines in real estate valuations. As of December 31, 2009 and 2008, the assets were designated as held-for-sale, and the carrying values of $7,388 and $9,500, respectively, were included in "Prepaid expenses and other assets" on the company's consolidated balance sheets. The sale is expected to be completed in the first quarter of 2010.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

2007 Restructuring Charge

The following table presents the components of the 2007 restructuring charge of $9,708 and activity in the related restructuring accrual for 2007, 2008, and 2009:

	Personnel Costs			Facilities			Other			Total

Restructuring charge (credit)	$	11,312		$	(1,947	)	$	343		$	9,708
Payments/proceeds		(7,563	)		7,896			(258	)		75
Foreign currency translation		66			(133	)		(71	)		(138	)
December 31, 2007		3,815			5,816			14			9,645
Restructuring charge		586			540			-			1,126
Payments		(3,807	)		(1,245	)		(14	)		(5,066	)
Foreign currency translation		(129	)		(1,286	)		-			(1,415	)
December 31, 2008		465			3,825			-			4,290
Restructuring charge		-			144			-			144
Payments		(461	)		(663	)		-			(1,124	)
Foreign currency translation		(4	)		300			-			296
December 31, 2009	$	-		$	3,606		$	-		$	3,606

The restructuring charge of $9,708 in 2007 primarily includes personnel costs of $11,312 and a facilities credit of $1,947. The personnel costs are related to the elimination of approximately 400 positions. These positions were primarily within the company's global components business segment in North America and related to the company's continued focus on operational efficiency. The facilities credit is primarily related to a gain on the sale of the Harlow, England facility of $8,506 that was vacated in 2007. This was offset by facilities costs of $6,559, primarily related to exit activities for a vacated facility in Europe due to the company's continued efforts to reduce real estate costs.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Restructuring Accrual Related to Actions Taken Prior to 2007

The following table presents the activity in the restructuring accrual during 2007, 2008, and 2009 related to actions taken prior to 2007:

	Personnel Costs			Facilities			Other			Total

December 31, 2006	$	2,601		$	3,051		$	2,806		$	8,458
Restructuring charge (credit)		(506	)		961			(1,362	)		(907	)
Payments		(1,782	)		(1,457	)		-			(3,239	)
Foreign currency translation		32			169			183			384
December 31, 2007		345			2,724			1,627			4,696
Restructuring credit		(73	)		(124	)		(1,251	)		(1,448	)
Payments		(59	)		(1,006	)		-			(1,065	)
Non-cash usage		-			-			(201	)		(201	)
Foreign currency translation		(6	)		(181	)		105			(82	)
December 31, 2008		207			1,413			280			1,900
Restructuring charge (credit)		-			60			(270	)		(210	)
Payments		(42	)		(1,120	)		-			(1,162	)
Foreign currency translation		3			81			(10	)		74
December 31, 2009	$	168		$	434		$	-		$	602

Integration

Included in the restructuring, integration, and other charges referenced above is an integration credit of $1,279 for 2009, primarily related to adjustments to integration reserves established in prior years, an integration charge of $551 for 2008, primarily related to the ACI and KeyLink acquisitions, and an integration charge of $2,944 for 2007, primarily related to the acquisition of KeyLink.

The following table presents the integration charge and activity for 2007, 2008, and 2009:

	Personnel Costs			Facilities			Other			Total

December 31, 2006	$	-		$	2,735		$	658		$	3,393
Integration costs (a)		1,666			(535	)		2,609			3,740
Payments		(1,109	)		(684	)		(251	)		(2,044	)
Foreign currency translation		-			58			-			58
December 31, 2007		557			1,574			3,016			5,147
Integration costs (b)		774			435			(323	)		886
Payments		(1,091	)		(1,186	)		-			(2,277	)
Foreign currency translation		-			11			-			11
December 31, 2008		240			834			2,693			3,767
Integration credit		(207	)		(3	)		(1,069	)		(1,279	)
Payments		(30	)		(831	)		(10	)		(871	)
December 31, 2009	$	3		$	-		$	1,614		$	1,617

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

(a)

Integration costs of $3,740 in 2007 include $2,944 recorded as an integration charge and $796 recorded as additional costs in excess of net assets of companies acquired. The integration costs include personnel costs of $1,666 associated with the elimination of approximately 50 positions in North America related to the acquisition of KeyLink, a credit of $535 primarily related to the reversal of excess facility-related accruals in connection with certain acquisitions made prior to 2005 and other costs of $2,609.

(b)

Integration costs of $886 in 2008 include $551 recorded as an integration charge and $335 recorded as additional costs in excess of net assets of companies acquired. Integration costs primarily include personnel costs of $774 related to the elimination of 11 positions in North America related to the ACI and KeyLink acquisitions and 1 position in Europe related to the Centia/AKS acquisition. Integration costs also include costs related to a vacated facility in Asia associated with the Achieva acquisition.

Restructuring and Integration Accrual Summary

In summary, the restructuring and integration accruals aggregate $42,117 at December 31, 2009, of which $41,685 is expected to be spent in cash, and are expected to be utilized as follows:

·	The accruals for personnel costs of $27,108 to cover the termination of personnel are primarily expected to be spent within one year.

·	The accruals for facilities totaling $12,963 relate to vacated leased properties that have scheduled payments of $5,604 in 2010, $2,884 in 2011, $1,766 in 2012, $1,583 in 2013, $615 in 2014, and $511 thereafter.

·	Other accruals of $2,046 are expected to be utilized over several years.

Acquisition-Related Expenses

In 2009, the company recorded acquisition-related expenses of $2,841 related to contingent consideration for an acquisition completed in a prior year which was conditional upon the financial performance of the acquired company and the continued employment of the selling shareholders. In addition, the company recorded other acquisition-related expenses of $1,035.

Preference Claim From 2001

In 2008, an opinion was rendered in a bankruptcy proceeding (Bridge Information Systems, et. anno v. Merisel Americas, Inc. & MOCA) in favor of Bridge Information Systems ("Bridge"), the estate of a former global ECS customer that declared bankruptcy in 2001. The proceeding is related to sales made in 2000 and early 2001 by the MOCA division of ECS, a company Arrow purchased from Merisel Americas in the fourth quarter of 2000. The court held that certain of the payments received by the company at the time were preferential and must be returned to Bridge. Accordingly, during 2008, the company recorded a charge of $10,890, in connection with the preference claim from 2001, including legal fees.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

10. Shareholders' Equity

The following table sets forth the activity in the number of shares outstanding (in thousands):

	Common Stock Issued		Treasury Stock			Common Stock Outstanding

Common stock outstanding at December 31, 2006		122,626		207			122,419
Shares issued for stock-based compensation awards		2,413		(70	)		2,483
Repurchases of common stock		-		2,075			(2,075	)
Common stock outstanding at December 31, 2007		125,039		2,212			122,827
Shares issued for stock-based compensation awards		9		(313	)		322
Repurchases of common stock		-		3,841			(3,841	)
Common stock outstanding at December 31, 2008		125,048		5,740			119,308
Shares issued for stock-based compensation awards		239		(418	)		657
Repurchases of common stock		-		137			(137	)
Common stock outstanding at December 31, 2009		125,287		5,459			119,828

The company has 2,000,000 authorized shares of serial preferred stock with a par value of one dollar. There were no shares of serial preferred stock outstanding at December 31, 2009 and 2008.

11. Net Income (Loss) Per Share

The following table sets forth the computation of net income per share on a basic and diluted basis for the years ended December 31 (shares in thousands):

	2009		2008			2007

Net income (loss) attributable to shareholders, as reported	$	123,512	$	(613,739	)	$	407,792
Net income (loss) per share:
Basic	$	1.03	$	(5.08	)	$	3.31
Diluted (a)	$	1.03	$	(5.08	)	$	3.28
Weighted average shares outstanding-basic		119,800		120,773			123,176
Net effect of various dilutive stock-based compensation awards		689		-			1,253
Weighted average shares outstanding-diluted		120,489		120,773			124,429

(a)	Stock-based compensation awards for the issuance of 3,851, 4,368, and 43 shares for the years ended December 31, 2009, 2008, and 2007, respectively, were excluded from the computation of net income (loss) per share on a diluted basis as their effect is anti-dilutive.

12. Employee Stock Plans

Omnibus Plan

The company maintains the Arrow Electronics, Inc. 2004 Omnibus Incentive Plan (the "Omnibus Plan"), which replaced the Arrow Electronics, Inc. Stock Option Plan, the Arrow Electronics, Inc. Restricted Stock Plan, the 2002 Non-Employee Directors Stock Option Plan, the Non-Employee Directors Deferral Plan,

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

and the 1999 CEO Bonus Plan (collectively, the "Prior Plans"). The Omnibus Plan broadens the array of equity alternatives available to the company when designing compensation incentives. The Omnibus Plan permits the grant of cash-based awards, non-qualified stock options, incentive stock options ("ISOs"), stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, covered employee annual incentive awards, and other stock-based awards. The Compensation Committee of the company's Board of Directors (the "Compensation Committee") determines the vesting requirements, termination provision, and the terms of the award for any awards under the Omnibus Plan when such awards are issued.

Under the terms of the Omnibus Plan, a maximum of 13,300,000 shares of common stock may be awarded, subject to adjustment. There were 3,715,621 and 6,957,960 shares available for grant under the Omnibus Plan as of December 31, 2009 and 2008, respectively. Shares currently subject to awards granted under the Prior Plans, which cease to be subject to such awards for any reason other than exercise for, or settlement in, shares will also be available under the Omnibus Plan. Generally, shares are counted against the authorization only to the extent that they are issued. Restricted stock, restricted stock units, and performance shares count against the authorization at a rate of 1.69 to 1.

After adoption of the Omnibus Plan, there were no additional awards made under any of the Prior Plans, though awards previously granted under the Prior Plans will survive according to their terms.

Stock Options

Under the Omnibus Plan, the company may grant both ISOs and non-qualified stock options. ISOs may only be granted to employees, subsidiaries, and affiliates. The exercise price for options cannot be less than the fair market value of Arrow's common stock on the date of grant. Options granted under the Prior Plans become exercisable in equal installments over a four-year period, except for stock options authorized for grant to directors, which become exercisable in equal installments over a two-year period. Options currently outstanding have terms of ten years.

The following information relates to the stock option activity for the year ended December 31, 2009:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value

Outstanding at December 31, 2008	4,367,941		$	31.42
Granted	832,092			17.00
Exercised	(247,056	)		17.14
Forfeited	(427,531	)		31.89
Outstanding at December 31, 2009	4,525,446			29.50	77 months	$	16,246
Exercisable at December 31, 2009	2,656,057			30.86	63 months	$	5,883

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the company's closing stock price on the last trading day of 2009 and the exercise price, multiplied by the number of in-the-money options) received by the option holders had all option holders exercised their options on December 31, 2009. This amount changes based on the market value of the company's stock.

The total intrinsic value of options exercised during 2009, 2008, and 2007 was $2,106, $1,398, and $30,739, respectively.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Cash received from option exercises during 2009, 2008, and 2007 was $4,234, $4,392, and $55,228, respectively, and is included within the financing activities section in the company's consolidated statements of cash flows. The actual tax benefit realized from share-based payment awards during 2009, 2008, and 2007 was $3,025, $3,551, and $11,249, respectively.

The fair value of stock options was estimated using the Black-Scholes valuation model with the following weighted-average assumptions for the years ended December 31:

	2009	2008		2007

Volatility (percent) *	35		33		29
Expected term (in years) **	5.9		5.5		3.6
Risk-free interest rate (percent) ***	2.1		2.9		4.6

*	Volatility is measured using historical daily price changes of the company's common stock over the expected term of the option.

**	The expected term represents the weighted average period the option is expected to be outstanding and is based primarily on the historical exercise behavior of employees.

***	The risk-free interest rate is based on the U.S. Treasury zero-coupon yield with a maturity that approximates the expected term of the option.

There is no expected dividend yield.

The weighted-average fair value per option granted was $6.07, $11.63, and $11.03 during 2009, 2008, and 2007, respectively.

Performance Shares

The Compensation Committee, subject to the terms and conditions of the Omnibus Plan, may grant performance unit and/or performance share awards. The fair value of a performance unit award is the fair market value of the company's common stock on the date of grant. Such awards will be earned only if performance goals over performance periods established by or under the direction of the Compensation Committee are met. The performance goals and periods may vary from participant-to-participant, group-to-group, and time-to-time. The performance shares will be delivered in common stock at the end of the service period based on the company's actual performance compared to the target metric and may be from 0% to 200% of the initial award. Compensation expense is recognized using the graded vesting method over the service period, which is generally two to four years and is adjusted each period based on the current estimate of performance compared to the target metric.

Restricted Stock

Subject to the terms and conditions of the Omnibus Plan, the Compensation Committee may grant shares of restricted stock and/or restricted stock units. Restricted stock units are similar to restricted stock except that no shares are actually awarded to the participant on the date of grant. Shares of restricted stock and/or restricted stock units awarded under the Omnibus Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable period of restriction established by the Compensation Committee and specified in the award agreement (and in the case of restricted stock units until the date of delivery or other payment). Compensation expense is recognized on a straight-line basis as shares become free of forfeiture restrictions (i.e., vest) generally over a four-year period.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Non-Employee Director Awards

The company's Board of Directors (the "Board") shall set the amounts and types of equity awards that shall be granted to all non-employee directors on a periodic, nondiscriminatory basis pursuant to the Omnibus Plan, as well as any additional amounts, if any, to be awarded, also on a periodic, nondiscriminatory basis, based on each of the following: the number of committees of the Board on which a non-employee director serves, service of a non-employee director as the chair of a Committee of the Board, service of a non-employee director as Chairman of the Board or Lead Director, or the first selection or appointment of an individual to the Board as a non-employee director. Non-employee directors currently receive annual awards of fully-vested restricted stock units valued at $90. All restricted stock units are settled in common stock one year following the director's separation from the Board.

Unless a non-employee director gives notice setting forth a different percentage, 50% of each director's annual retainer fee is deferred and converted into units based on the fair market value of the company's stock as of the date it was payable. Upon a non-employee director's retirement from the Board, each unit in their deferral account will be converted into a share of company stock and distributed to the non-employee director as soon as practicable following such date.

Summary of Non-Vested Shares

The following information summarizes the changes in non-vested performance shares, restricted stock, restricted stock units, and non-employee director awards for 2009:

	Shares			Weighted Average Grant Date Fair Value

Non-vested shares at December 31, 2008		1,427,247		$	33.88
Granted		2,079,254			17.23
Vested		(472,871	)		32.35
Forfeited		(400,095	)		31.51
Non-vested shares at December 31, 2009		2,633,535			21.37

As of December 31, 2009, there was $29,868 of total unrecognized compensation cost related to non-vested shares which is expected to be recognized over a weighted-average period of 2.8 years. The total fair value of shares vested during 2009, 2008, and 2007 was $8,809, $10,313, and $11,803, respectively.

Stock Ownership Plan

The company maintains a noncontributory employee stock ownership plan, which enables most North American employees to acquire shares of the company's common stock. Contributions, which are determined by the Board, are in the form of common stock or cash, which is used to purchase the company's common stock for the benefit of participating employees. Contributions to the plan in 2009 which pertained to 2008 were $0, and contributions to the plan in 2008 which pertained to 2007 were $10,857.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

13. Employee Benefit Plans

Supplemental Executive Retirement Plans ("SERP")

The company maintains an unfunded Arrow SERP under which the company will pay supplemental pension benefits to certain employees upon retirement. There are 12 current and 13 former corporate officers participating in this plan. The Board determines those employees who are eligible to participate in the Arrow SERP.

The Arrow SERP, as amended, provides for the pension benefits to be based on a percentage of average final compensation, based on years of participation in the Arrow SERP. The Arrow SERP permits early retirement, with payments at a reduced rate, based on age and years of service subject to a minimum retirement age of 55. Participants whose accrued rights under the Arrow SERP, prior to the 2002 amendment, which were adversely affected by the amendment, will continue to be entitled to such greater rights.

The company acquired Wyle Electronics ("Wyle") in 2000. Wyle also sponsored an unfunded SERP for certain of its executives. Benefit accruals for the Wyle SERP were frozen as of December 31, 2000. There are 19 participants in this plan.

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

	2009			2008

Accumulated benefit obligation	$	49,058		$	46,286

Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	$	53,885		$	53,065
Service cost (Arrow SERP)		2,320			2,587
Interest cost		3,017			2,929
Actuarial (gain)/loss		848			(1,768	)
Benefits paid		(3,018	)		(2,928	)
Projected benefit obligation at end of year	$	57,052		$	53,885

Funded status	$	(57,052	)	$	(53,885	)

Components of net periodic pension cost:
Service cost (Arrow SERP)	$	2,320		$	2,587
Interest cost		3,017			2,929
Amortization of net loss		(174	)		321
Amortization of prior service cost (Arrow SERP)		591			549
Amortization of transition obligation (Arrow SERP)		410			411
Net periodic pension cost	$	6,164		$	6,797

Weighted average assumptions used to determine benefit obligation:
Discount rate		5.50	%		6.00	%
Rate of compensation increase (Arrow SERP)		5.00	%		5.00	%

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

	2009		2008
Weighted average assumptions used to determine net periodic pension cost:
Discount rate	6.00	%	5.75	%
Rate of compensation increase (Arrow SERP)	5.00	%	5.00	%

The amounts reported for net periodic pension cost and the respective benefit obligation amounts are dependent upon the actuarial assumptions used. The company reviews historical trends, future expectations, current market conditions, and external data to determine the assumptions. The discount rate represents the market rate for a high quality corporate bond. The rate of compensation increase is determined by the company, based upon its long-term plans for such increases. The actuarial assumptions used to determine the net periodic pension cost are based upon the prior year's assumptions used to determine the benefit obligation.

Benefit payments are expected to be paid as follows:

2010	$	3,674
2011		3,656
2012		3,789
2013		3,820
2014		3,780
2015 - 2019		22,242

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Wyle Defined Benefit Plan

Wyle provided retirement benefits for certain employees under a defined benefit plan. Benefits under this plan were frozen as of December 31, 2000 and former participants were permitted to participate in the company's employee stock ownership and 401(k) plans. The company uses a December 31 measurement date for this plan. Pension information for the years ended December 31 is as follows:

	2009			2008

Accumulated benefit obligation	$	108,124		$	101,077

Changes in projected benefit obligation:
Projected benefit obligation at beginning of year	$	101,077		$	101,494
Interest cost		5,844			5,769
Actuarial (gain)/loss		6,444			(1,033	)
Benefits paid		(5,241	)		(5,153	)
Projected benefit obligation at end of year	$	108,124		$	101,077

Changes in plan assets:
Fair value of plan assets at beginning of year	$	62,328		$	81,364
Actual return on plan assets		13,821			(19,691	)
Company contributions		4,500			5,808
Benefits paid		(5,241	)		(5,153	)
Fair value of plan assets at end of year	$	75,408		$	62,328

Funded status	$	(32,716	)	$	(38,749	)

Components of net periodic pension cost:
Interest cost	$	5,844		$	5,769
Expected return on plan assets		(5,048	)		(6,830	)
Amortization of net loss		3,526			1,552
Net periodic pension cost	$	4,322		$	491

Weighted average assumptions used to determine benefit obligation:
Discount rate		5.50	%		6.00	%
Expected return on plan assets		8.25	%		8.00	%

Weighted average assumptions used to determine net periodic pension cost:
Discount rate		6.00	%		5.75	%
Expected return on plan assets		8.00	%		8.50	%

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

represents the market rate for a high quality corporate bond. The expected return on plan assets is based on current and expected asset allocations, historical trends, and expected returns on plan assets. The actuarial assumptions used to determine the net periodic pension cost are based upon the prior year's assumptions used to determine the benefit obligation.

The company makes contributions to the plan so that minimum contribution requirements, as determined by government regulations, are met. The company made contributions of $4,500 in 2009 and expects to make estimated contributions in 2010 of $600.

Benefit payments are expected to be paid as follows:

2010	$	6,035
2011		6,072
2012		6,176
2013		6,311
2014		6,430
2015 - 2019		34,141

The fair values of the company’s pension plan assets at December 31, 2009, utilizing the fair value hierarchy discussed in Note 7, follow:

	Level 1		Level 2		Level 3		Total

Cash Equivalents :
Common collective trusts	$	-	$	879	$	-	$	879

Equities :
U.S. common stocks		25,063		-		-		25,063
International mutual funds		11,281		-		-		11,281
Index mutual funds		12,428		-		-		12,428

Fixed Income :
Mutual funds		25,031		-		-		25,031
Insurance contracts		-		726		-		726
Total	$	73,803	$	1,605	$	-	$	75,408

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

Comprehensive Income items

In 2009, 2008, and 2007, actuarial (gains)/losses of $(1,038), $14,045, and $3,749, respectively, were recognized in comprehensive income, net of related taxes, related to the company's defined benefit plans. In 2009, 2008, and 2007, the following amounts were recognized as a reclassification adjustment of comprehensive income, net of related taxes, as a result of being recognized in net periodic pension cost: transition obligation of $251, $299, and $293, respectively, prior service cost of $186, $323, and $315,

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

respectively, and an actuarial loss of $2,019, $939, and $1,274, respectively.

Included in accumulated other comprehensive loss at December 31, 2009 and 2008 are the following amounts, net of related taxes, that have not yet been recognized in net periodic pension cost: unrecognized transition obligation of $506 and $757, respectively, unrecognized prior service costs of $103 and $289, respectively, and unrecognized actuarial losses of $28,893 and $31,950, respectively.

The transition obligation, prior service cost, and actuarial loss included in accumulated other comprehensive loss, net of related taxes, which are expected to be recognized in net periodic pension cost for the year ended December 31, 2010 are $18, $159, and $2,759, respectively.

Defined Contribution Plan

The company has a defined contribution plan for eligible employees, which qualifies under Section 401(k) of the Internal Revenue Code. The company's contribution to the plan, which is based on a specified percentage of employee contributions, amounted to $7,821, $9,420, and $8,783 in 2009, 2008, and 2007, respectively. Certain international subsidiaries maintain separate defined contribution plans for their employees and made contributions thereunder, which amounted to $15,588, $17,759, and $11,113 in 2009, 2008, and 2007, respectively.

14. Lease Commitments

The company leases certain office, distribution, and other property under non-cancelable operating leases expiring at various dates through 2022. Rental expense under non-cancelable operating leases, net of sublease income, amounted to $57,612, $67,334, and $60,173 in 2009, 2008, and 2007, respectively.

Aggregate minimum rental commitments under all non-cancelable operating leases, exclusive of real estate taxes, insurance, and leases related to facilities closed as a result of the integration of acquired businesses and the restructuring of the company, are as follows:

2010	$	53,036
2011		42,755
2012		31,876
2013		25,932
2014		16,365
Thereafter		14,180

15. Contingencies

Tekelec Matters

In 2000, the company purchased Tekelec Europe SA ("Tekelec") from Tekelec Airtronic SA ("Airtronic") and certain other selling shareholders. Subsequent to the closing of the acquisition, Tekelec received a product liability claim in the amount of €11,333. The product liability claim was the subject of a French legal proceeding started by the claimant in 2002, under which separate determinations were made as to whether the products that are subject to the claim were defective and the amount of damages sustained by the purchaser. The manufacturer of the products also participated in this proceeding. The claimant has commenced legal proceedings against Tekelec and its insurers to recover damages in the amount of €3,742 and expenses of €312 plus interest.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Environmental and Related Matters

Wyle Claims

In connection with the 2000 purchase of Wyle from the VEBA Group ("VEBA"), the company assumed certain of the then outstanding obligations of Wyle, including Wyle's 1994 indemnification of the purchasers of its Wyle Laboratories division for environmental clean-up costs associated with any then existing contamination or violation of environmental regulations. Under the terms of the company’s purchase of Wyle from VEBA, VEBA agreed to indemnify the company for costs associated with the Wyle environmental indemnities, among other things. The company is aware of two Wyle Laboratories facilities (in Huntsville, Alabama and Norco, California) at which contaminated groundwater was identified. Each site will require remediation, the final form and cost of which is undetermined.

Wyle Laboratories has demanded indemnification from the company with respect to the work at both sites (and in connection with the litigation discussed below), and the company has, in turn, demanded indemnification from VEBA. VEBA merged with a publicly–traded, German conglomerate in June 2000. The combined entity, now known as E.ON AG, remains responsible for VEBA’s liabilities. E.ON AG acknowledged liability under the terms of the VEBA contract in connection with the Norco and Huntsville sites and made an initial, partial payment. Neither the company’s demands for subsequent payments nor its demand for defense and indemnification in the related litigation and other costs associated with the Norco site were met.

Related Litigation

In October 2005, the company filed suit against E.ON AG in the Frankfurt am Main Regional Court in Germany. The suit seeks indemnification, contribution, and a declaration of the parties’ respective rights and obligations in connection with the Riverside County litigation (discussed below) and other costs associated with the Norco site. In its answer to the company’s claim filed in March 2009 in the German proceedings, E.ON AG filed a counterclaim against the company for approximately $16,000. The company is in the process of preparing a response to the counterclaim. The company believes it has reasonable defenses to the counterclaim and plans to defend its position vigorously. The company believes that the ultimate resolution of the counterclaim will not materially adversely impact the company’s consolidated financial position, liquidity, or results of operations. The litigation is currently suspended while the company engages in a court-facilitated mediation with E.ON AG. The mediation commenced in December 2009 and will continue well into 2010.

The company was named as a defendant in several suits related to the Norco facility, all of which were consolidated for pre-trial purposes. In January 2005, an action was filed in the California Superior Court in Riverside County, California (Gloria Austin, et al . v. Wyle Laboratories, Inc. et al .). Approximately 90 plaintiff landowners and residents sued a number of defendants under a variety of theories for unquantified damages allegedly caused by environmental contamination at and around the Norco site. Also filed in the Superior Court in Riverside County were Jimmy Gandara, et al. v. Wyle Laboratories, Inc. et al. in January 2006, and Lisa Briones, et al . v. Wyle Laboratories, Inc. et al . in May 2006; both of which contain allegations similar to those in the Austin case on behalf of approximately 20 additional plaintiffs. All of these matters have now been resolved to the satisfaction of the parties.

The company was also named as a defendant in a lawsuit filed in September 2006 in the United States District Court for the Central District of California (Apollo Associates, L.P., et anno. v. Arrow Electronics, Inc. et al. ) in connection with alleged contamination at a third site, an industrial building formerly leased by Wyle Laboratories, in El Segundo, California. The lawsuit was settled, though the possibility remains that government entities or others may attempt to involve the company in further characterization or remediation of groundwater issues in the area.

Environmental Matters – Huntsville

Characterization of the extent of contaminated soil and groundwater continues at the site in Huntsville, Alabama. Under the direction of the Alabama Department of Environmental Management, approximately $3,000 was spent to date. The pace of the ongoing remedial investigations, project management and regulatory oversight is likely to increase somewhat and though the complete scope of the activities is not

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

yet known, the company currently estimates additional investigative and related expenditures at the site of approximately $500 to $1,000. The nature and scope of both feasibility studies and subsequent remediation at the site has not yet been determined, but assuming the outcome includes source control and certain other measures, the cost is estimated to be between $2,500 and $4,000.

Environmental Matters – Norco

In October 2003, the company entered into a consent decree with Wyle Laboratories and the California Department of Toxic Substance Control (the "DTSC") in connection with the Norco site. In April 2005, a Remedial Investigation Work Plan was approved by DTSC that provided for site-wide characterization of known and potential environmental issues. Investigations performed in connection with this work plan and a series of subsequent technical memoranda continued until the filing of a final Remedial Investigation Report early in 2008. The development of a final Remedial Action Work Plan is ongoing. An estimated $28,000 was expended to date on project management, regulatory oversight, and investigative and feasibility study activities.

Work is under way pertaining to the remediation of contaminated groundwater at certain areas on the Norco site and of soil gas in a limited area immediately adjacent to the site. In the first quarter of 2008, a hydraulic containment system was installed to capture and treat groundwater before it moves into the adjacent offsite area. Approximately $8,000 was expended on remediation to date, and it is anticipated that these activities, along with the initial phases of the treatment of contaminated groundwater in the offsite area and remaining Remedial Action Work Plan costs, will give rise to an additional estimated $9,650 to $20,250.

Costs categories related to environmental activities at Norco include those for project management and regulatory oversight, remedial investigations, feasibility studies, and interim remedial actions. Project management and regulatory oversight include costs incurred by Wyle Laboratories and project consultants for project management and costs billed by DTSC to provide regulatory oversight.

The company currently estimates that the additional cost of project management and regulatory oversight will range from $500 to $750. Ongoing remedial investigations (including costs related to soil and groundwater investigations), and the preparation of a final remedial investigation report are projected to cost between $400 and $700.

Despite the amount of work undertaken and planned to date, the complete scope of work under the consent decree is not yet known, and, accordingly, the associated costs have not yet been determined.

Impact on Financial Statements

The company believes that any cost which it may incur in connection with environmental conditions at the Norco, Huntsville, and El Segundo sites and the related litigation is covered by the contractual indemnifications (except, under the terms of the environmental indemnification, for the first $450), discussed above. The company believes that the recovery of costs incurred to date associated with the environmental clean-up of the Norco and Huntsville sites, is probable. Accordingly, the company increased the receivable for amounts due from E.ON AG by $7,293 during 2009 to $40,912. The company’s net costs for such indemnified matters may vary from period to period as estimates of recoveries are not always recognized in the same period as the accrual of estimated expenses.

Also included in the proceedings against E.ON AG is a claim for the reimbursement of pre-acquisition tax liabilities of Wyle in the amount of $8,729 for which E.ON AG is also contractually liable to indemnify the company. E.ON AG has specifically acknowledged owing the company not less than $6,335 of such amounts, but its promises to make payments of at least that amount were not kept. The company also believes that the recovery of these amounts is probable.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

In connection with the acquisition of Wyle, the company acquired a $4,495 tax receivable due from E.ON AG (as successor to VEBA) in respect of certain tax payments made by Wyle prior to the effective date of the acquisition, the recovery of which the company also believes is probable.

As successor-in-interest to Wyle, the company is the beneficiary of various Wyle insurance policies that covered liabilities arising out of operations at Norco and Huntsville. Certain of the insurance carriers implicated in the Riverside County litigation have undertaken substantial portions of the defense of the company, and the company has recovered approximately $13,000 from them to date. The company has sued certain of the umbrella liability policy carriers, however, because they have yet to make payment on the tendered losses.

The company believes strongly in the merits of its positions regarding the E.ON AG indemnity and the liabilities of the insurance carriers.

Other

From time to time, in the normal course of business, the company may become liable with respect to other pending and threatened litigation, environmental, regulatory, labor, product, and tax matters. While such matters are subject to inherent uncertainties, it is not currently anticipated that any such matters will materially impact the company’s consolidated financial position, liquidity, or results of operations.

16. Segment and Geographic Information

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 distributes electronic components to original equipment manufacturers and contract manufacturers through its global components business segment and enterprise computing solutions to VARs through its global ECS business segment. As a result of the company's philosophy of maximizing operating efficiencies through the centralization of certain functions, selected fixed assets and related depreciation, as well as borrowings, are not directly attributable to the individual operating segments and are included in the corporate business segment.

Sales and operating income (loss), by segment, for the years ended December 31 follows:

	2009			2008			2007

Sales:
Global components	$	9,751,305		$	11,319,482		$	11,223,751
Global ECS		4,932,796			5,441,527			4,761,241
Consolidated	$	14,684,101		$	16,761,009		$	15,984,992

Operating income (loss):
Global components	$	318,866		$	533,126		$	604,217
Global ECS		167,748			196,269			202,223
Corporate (a)		(213,827	)		(1,222,964	)		(119,535	)
Consolidated	$	272,787		$	(493,569	)	$	686,905

(a)	Includes restructuring, integration, and other charges of $105,514, $80,955, and $11,745 in 2009, 2008, and 2007, respectively. Also included in 2008 is a non-cash impairment charge of $1,018,780 associated with goodwill.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

Total assets, by segment, at December 31 follow:

		2009	2008

Global components	$	4,512,141	$	4,093,118
Global ECS		2,258,803		2,325,095
Corporate		991,422		700,072
Consolidated	$	7,762,366	$	7,118,285

Sales, by geographic area, for the years ended December 31 follow:

	2009		2008		2007

North America (b)	$	7,017,389	$	8,366,124	$	8,565,247
EMEASA		4,287,405		5,392,805		4,970,585
Asia/Pacific		3,379,307		3,002,080		2,449,160
	$	14,684,101	$	16,761,009	$	15,984,992

(b)	Includes sales related to the United States of $6,374,447, $7,705,048, and $7,962,526 in 2009, 2008, and 2007, respectively.

Net property, plant and equipment, by geographic area, at December 31 follow:

	2009		2008

North America (c)	$	381,581	$	324,385
EMEASA		62,206		68,215
Asia/Pacific		16,919		17,940
	$	460,706	$	410,540

(c)	Includes net property, plant and equipment related to the United States of $380,576 and $323,561 in 2009 and 2008, respectively.

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

17. Quarterly Financial Data (Unaudited)

During 2009, the company began operating on a revised interim quarterly reporting calendar that closes on the Saturday following the end of the calendar quarter. There were 65, 63, and 65 shipping days for the first, second, and third quarters of 2009 compared with 64, 64, and 65 shipping days for each of the year-earlier periods, respectively.

A summary of the company's consolidated quarterly results of operations is as follows:

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter

2009
Sales	$	3,417,428		$	3,391,823		$	3,671,865		$	4,202,985
Gross profit		430,996			402,194			421,061			496,643
Net income attributable to shareholders		26,741	(b)		21,097	(c)		12,581	(d)		63,093		(e)

Net income per share (a):
Basic	$	.22	(b)	$	.18	(c)	$	.10	(d)	$	.53		(e)
Diluted		.22	(b)		.18	(c)		.10	(d)		.52		(e)

2008
Sales	$	4,028,491		$	4,347,477		$	4,295,314		$	4,089,727
Gross profit		586,291			612,471			563,855			520,096
Net income (loss) attributable to shareholders		85,871	(f)		96,215	(g)		76,070	(h)		(871,895	)	(i)

Net income (loss) per share (a):
Basic	$	.70	(f)	$	.79	(g)	$	.64	(h)	$	(7.30	)	(i)
Diluted		.69	(f)		.79	(g)		.63	(h)		(7.30	)	(i)

(a)

Quarterly net income per share is calculated using the weighted average number of shares outstanding during each quarterly period, while net income per share for the full year is calculated using the weighted average number of shares outstanding during the year. Therefore, the sum of the net income per share for each of the four quarters may not equal the net income per share for the full year.

(b)	Includes restructuring, integration, and other charges ($16,069 net of related taxes or $.13 per share on both a basic and diluted basis).

(c)	Includes restructuring, integration, and other charges ($16,124 net of related taxes or $.13 per share on both a basic and diluted basis).

(d)	Includes restructuring, integration, and other charges ($29,075 net of related taxes or $.24 per share on both a basic and diluted basis) and a loss on prepayment of debt ($3,228 net of related taxes or $.03 per share on both a basic and diluted basis).

(e)	Includes restructuring, integration, and other charges ($14,452 net of related taxes or $.12 per share on both a basic and diluted basis).

(f)	Includes restructuring, integration, and other charges ($11,981 net of related taxes or $.10 per

ARROW ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share data)

share on both a basic and diluted basis).

(g)	Includes restructuring, integration, and other charges ($5,929 net of related taxes or $.05 per share on both a basic and diluted basis).

(h)	Includes restructuring, integration, and other charges ($7,635 net of related taxes or $.06 per share on both a basic and diluted basis).

(i)

Includes a non-cash impairment charge associated with goodwill ($905,069 net of related taxes or $7.58 per share on both a basic and diluted basis), restructuring, integration, and other charges ($36,331 net of related taxes or $.30 per share on both a basic and diluted basis), and a loss on the write-down of an investment ($10,030 net of related taxes or $.08 per share on both a basic and diluted basis). Also includes a reduction of the provision for income taxes ($8,450 net of related taxes or $.07 per share on both a basic and diluted basis) and an increase in interest expense ($962 net of related taxes or $.01 per share on both a basic and diluted basis) primarily related to the settlement of certain international income tax matters.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .

None.

Item 9A. Controls and Procedures .

Disclosure Controls and Procedures

The company's management, under the supervision and with the participation of the company's Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of the design and operation of the company's disclosure controls and procedures as of December 31, 2009 (the "Evaluation"). Based upon the Evaluation, the company's Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) are effective.

Management's Report on Internal Control Over Financial Reporting

The company's management is responsible for establishing and maintaining adequate "internal control over financial reporting" (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Management evaluates the effectiveness of the company's internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework. Management, under the supervision and with the participation of the company's Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2009, and concluded that it is effective.

The company acquired A.E. Petsche Company, Inc. ("Petsche") in December 2009. The company has excluded Petsche from its annual assessment of and conclusion on the effectiveness of the company's internal control over financial reporting. Petsche accounted for 2.4 percent of total assets as of December 31, 2009 and less than 1 percent of the company's consolidated sales and net income attributable to shareholders for the year ended December 31, 2009.

The company's independent registered public accounting firm, Ernst & Young LLP, has audited the effectiveness of the company's internal control over financial reporting as of December 31, 2009, as stated in their report, which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders

Arrow Electronics, Inc.

We have audited Arrow Electronics, Inc.’s (the "company") internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of A.E. Petsche Company, Inc. ("Petsche") acquired by the company on December 20, 2009, which is included in the company’s 2009 consolidated financial statements and constituted 2.4 percent of total assets as of December 31, 2009 and less than 1 percent of the sales and net income attributable to shareholders for the year then ended. Our audit of internal control over financial reporting of the company also did not include an evaluation of the internal control over financial reporting of Petsche.

In our opinion, Arrow Electronics, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Arrow Electronics, Inc. as of December 31, 2009 and 2008, and the related consolidated statements of operations, equity, and cash flows for each of the three years in the period ended December 31, 2009 and our report dated February 3, 2010 expressed an unqualified opinion thereon.

/s/ ERNST & YOUNG LLP

New York, New York

February 3, 2010

Changes in Internal Control Over Financial Reporting

There was no change in the company's internal control over financial reporting that occurred during the company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

Item 9B.

Other Information .

None.

PART III

Item 10. Directors, Executive Officers, and Corporate Governance .

See "Executive Officers" in Part I of this Annual Report on Form 10-K. In addition, the information set forth under the headings "Election of Directors" and "Section 16(A) Beneficial Ownership Reporting Compliance" in the company's Proxy Statement, filed in connection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, are incorporated herein by reference.

Information about the company's audit committee financial experts set forth under the heading "The Board and its Committees" in the company's Proxy Statement, filed in connection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, is incorporated herein by reference.

Information about the company's code of ethics governing the Chief Executive Officer, Chief Financial Officer, and Corporate Controller, known as the "Finance Code of Ethics," as well as a code of ethics governing all employees, known as the "Worldwide Code of Business Conduct and Ethics," is available free-of-charge on the company's website at http://www.arrow.com and is available in print to any shareholder upon request.

Information about the company's "Corporate Governance Guidelines" and written committee charters for the company's Audit Committee, Compensation Committee, and Corporate Governance Committee is available free-of-charge on the company's website at http://www.arrow.com and is available in print to any shareholder upon request.

Item 11. Executive Compensation .

The information required by Item 11 is included in the company's Proxy Statement filed in connection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, and is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters .

The information required by Item 12 is included in the company's Proxy Statement filed in connection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, and is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence .

The information required by Item 13 is included in the company's Proxy Statement filed in connection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, and is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services .

The information required by Item 14 is included in the company's Proxy Statement filed in connection with the Annual Meeting of Shareholders scheduled to be held on May 4, 2010, and is incorporated herein by reference.

PART IV

Item 15. Exhibits and Financial Statement Schedules .

(a)	The following documents are filed as part of this report:
			Page
	1.	Financial Statements.
		Report of Independent Registered Public Accounting Firm	42

		Consolidated Statements of Operations for the years ended December 31, 2009, 2008, and 2007	43

		Consolidated Balance Sheets as of December 31, 2009 and 2008	44

		Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2008, and 2007	45

		Consolidated Statements of Equity for the years ended December 31, 2009, 2008, and 2007	46

		Notes to Consolidated Financial Statements	48

	2.	Financial Statement Schedule.

		Schedule II – Valuation and Qualifying Accounts	99

		All other schedules are omitted since the required information is not present, or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements, including the notes thereto.

	3.	Exhibits.

		See Index of Exhibits included on pages 93 - 98

Exhibit 10(i)

ARROW ELECTRONICS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as amended and restated effective January 1, 2009)

Table of Contents

		Page

ARTICLE I	Normal and Early Retirement Benefits		2

ARTICLE II	Payment of Benefits		5

ARTICLE III	Amendment, Termination, or Curtailment of Benefits		11

ARTICLE IV	Definitions		14

ARTICLE V	Miscellaneous		18

ARROW ELECTRONICS, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(as amended and restated effective January 1, 2009)

INTRODUCTION

Purpose of Plan . The Arrow Electronics, Inc. Supplemental Executive Retirement Plan (“ SERP ”) is an unfunded retirement plan for a select group of employees designated as SERP participants by the Arrow Board of Directors (including the Compensation Committee of the Board) and who have been so notified in writing. References below to “you” and the like are to the participants who have been so notified. The SERP is administered by Arrow’s Management Pension and Investment Oversight Committee or its delegees, subject to the ultimate authority of the Board.

Section 409A Compliance . In order to ensure continued compliance with the Federal income tax laws applicable to nonqualified deferred compensation, the Company, without formal amendment of the plan document for the SERP, made such changes in operation of the SERP as it deemed necessary or advisable for the period from January 1, 2005 to December 31, 2008 by reason of the enactment of Section 409A of the Internal Revenue Code of 1986, as amended (“ Section 409A ”), taking into account Notice 2005-1 and other guidance thereunder (“ Regulations ”). The Plan was amended, generally effective as of December 31, 2008, (i) to require all benefits under the SERP, other than “ Grandfathered Benefits ” described below,” be payable only at a time and manner compliant with Section 409A and the Regulations and (ii) to require that all offsets be determined under an objective and nondiscretionary formula not under the control of the Participant and not subject to Company discretion within the meaning of Treas. Reg. § 1.409A-3(i). By this further restatement, the SERP is amended to set forth more definitively the benefit formula effective as of January 1, 2009. In no case will a Participant’s benefit be less than the benefit accrued under the “old Plan” as of December 31, 2008.

Table of Contents

Page

“ Grandfathered Benefits .” If you met the requirements for retirement under the SERP (including disability retirement) on December 31, 2004, your accrued benefit at that date, calculated under the terms of the Plan in effect on October 3, 2004 based solely on service and compensation up to December 31, 2004 and in accordance with provisions of the Regulations defining benefits earned and vested on December 31, 2004, is a “Grandfathered Benefit” and will be payable in accordance with the terms of the SERP in effect on October 3, 2004. The provisions of the Plan set forth below apply to all benefits hereunder in excess of the Grandfathered Benefits, hereinafter referred to as “ Section 409A Benefits .”

Construction . The SERP is intended to comply and shall at all times be administered in accordance with the provisions of Section 409A and the Regulations. Any ambiguities in the language of the SERP shall be resolved, and any terms not otherwise defined shall be construed, in a manner compliant with, Section 409A and the Regulations. To the maximum extent permitted by law, no provision of the SERP inconsistent with Section 409A or the Regulations shall be valid or given any effect whatever.

ARTICLE I

Normal and Early Retirement Benefits

1.1 Normal Retirement Date . Your normal retirement date is the date on which you reach age 60, except as the Board may otherwise specify in written notice to you (which notice shall be part of the SERP).

1.2 Early Retirement Date . Your early retirement date is the date on which your combined years of age and service equal at least 72 and you are at least age 55, or if applicable, such other date as the Board may specify in written notice to you (which notice shall be part of the SERP). Fractional years of age and service shall be combined in determining eligibility for early retirement (or any similar determination).

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1.3 Retirement Income Target . In the letter continuing your participation in the SERP as amended and restated effective December 31, 2008, or admitting you to participation if you were not previously a participant (which “participation letter” shall be part of the SERP), the Board will specify the retirement income target that will be used to determine your retirement pension under the SERP, subject where applicable to the Other Benefits Formula Offset and Assumed Social Security Offset to be applied as set forth below. Your retirement income target may be expressed either as a fixed dollar amount or as an “income replacement percentage” applied to your Final Average Compensation, and your retirement income based thereon shall be based on your Years of SERP Participation.

1.4 Retirement Benefit Based on Income Replacement Percentage . If your retirement income target is based on an income replacement percentage, your participation letter will specify the income replacement percentage assigned to you for purposes of (i) your normal retirement pension payable on retirement at or after your normal retirement date, and (ii) the early retirement pension that would be payable to you on early retirement at first date of eligibility for retirement and at each later age at which you may be eligible for early retirement, with the percentage applicable at intervening ages being determined on similar principles. Your SERP normal or early retirement pension will then be calculated by multiplying your Final Average Compensation by your applicable income replacement percentage and then subtracting (i)) the actuarial equivalent of your Other Benefits Formula Offset as of your actual date of retirement, calculated based on the Plan Actuarial Assumptions, and (ii) your Assumed Social Security Offset.

1.5 Other Benefits Formula Offset . The Other Benefits Formula Offset is the sum of

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(a) an amount equal to the aggregate employer contributions to the Arrow Electronics Stock Ownership Plan and its predecessors, and the Arrow Electronics Savings Plan including its predecessors (excluding participant elective contributions and voluntary rollovers) taken into account in determining the offset for defined contribution plan benefits under the Plan in effect prior to January 1, 2009, increased by interest at an annual rate of 7% credited and compounded annually to December 31, 2008, as definitively determined and recorded in the records of the Committee as of December 31, 2008, plus

(b) 3% of the compensation limit applicable under section 401(a)(17) of the Code for each calendar year beginning on or after January 1, 2009 and ending with the calendar year in which you retire (whether early, or at or after your normal retirement date), provided that such limit shall be prorated for such last year based on the number of completed months therein ending prior to your date of retirement, increased by interest at an annual rate of 7% credited and compounded annually from December 31, 2008 to your retirement date

1.6 Assumed Social Security Offset . Your Assumed Social Security Offset shall be a monthly amount equal to fifty percent (50%) of your Assumed Primary Insurance Amount at age 62 or later date of actual retirement

1.7 Retirement Benefit in a Fixed Dollar Amount . If your income replacement target is determined as a fixed dollar amount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at or after your normal retirement and at each age on which you may be eligible for early retirement.

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ARTICLE II

Payment of Benefits

Section 409A Benefits shall be payable only upon your (i) Separation from Service after reaching a retirement date hereunder, (ii) suffering a Change in Control Termination or (iii) upon your Disability as herein defined. If you separate from service under any other circumstances, the SERP provides no benefit to you or your beneficiary.

2.1 Separation from Service . The terms “retirement” or “termination of employment” and similar phrases as used in the SERP shall, as applicable, refer to separation from service within the meaning of the Regulations, other than by reason of death, determined by reference to the presumptive rule of Treasury Reg. § 1.409A-1(h)(l)(ii) (under which a reasonable expectation of a permanent reduction in the level of service to no more than 20% of the average level during the prior 36-month or other applicable period is presumed to result in a separation from service), and determined by treating Arrow and all Subsidiaries as single employer. In addition:

(a) Subsidiary Change in Control Event . If you are employed by a Subsidiary and are affected by a Subsidiary Change which occurs after you have reached early or normal retirement date, distribution shall thereupon be made to you under the rules herein provided in the event of a Separation from Service, except that no six-month delay shall be required by reason of your being a specified employee.

(b) Leaves, etc . Your employment relationship shall be treated as continuing while you are on military leave, sick leave, or other bona fide leave of absence (such as temporary employment by the government) if the period of such leave does not exceed six months, or if longer, so long as your right to reemployment with the Company is provided either by statute or by contract. If the period of leave exceeds six months your right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate immediately following such six-month period.

(c) Separation incident to sale of a division or other substantial assets . Notwithstanding the foregoing, a separation from service shall not occur for purposes of the SERP to the extent that the Committee determines otherwise in accordance with Treas. Reg. § 1.409A-1(h)(4).

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(d) Coordination with employment agreements . In the event that you have an employment agreement with the Company that defines termination of employment or separation from service in a manner consistent with the Regulations, that definition shall govern for purpose of the SERP unless its application would for any reason (such as effectively an impermissible change in the time of payment of benefits) be inconsistent with the Regulations.

2.2 Normal Retirement Benefit . If you separate from service on or after your normal retirement date, you will receive a normal retirement pension calculated as provided in Article I based on (a) your retirement income target, Final Average Compensation (if such target is based on an income replacement percentage), Years of SERP Participation and/or other relevant such factors set forth in your participation letter as of your normal retirement date and (b) if your retirement income target is based on an income replacement percentage, your Other Benefits Formula Offset and Assumed Social Security Offset at your actual retirement date Your normal retirement pension will commence on the first day of the month following your separation from service, or if you are a specified employee as of the date of such separation from service, on the first day of the seventh month following your separation from service. No adjustment in your retirement income target shall be made by reason of the delay in commencement of your benefit between your normal retirement date and date of actual retirement.

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2.3 Early Retirement Benefit .

(a) Based on Percentage of Final Average Compensation . If you retire early and your SERP pension is based on a percentage of Final Average Compensation, your benefit will be calculated in the same manner as a normal retirement pension, but your income replacement percentage will be reduced based on the Early Payment Discount Assumption to reflect the fact that your pension is beginning before normal retirement. If your Years of SERP Participation at early retirement are fewer than the maximum number of Years of SERP Participation assumed in determining your normal retirement pension, your early retirement pension will be further reduced on a pro-rata basis based on the ratio of your actual Years of SERP Participant to such maximum The letter admitting you to participation in the SERP will set forth the percentage of your Final Average Compensation that would be payable to you on early retirement at each whole age from your first date of eligibility for retirement to you’re your normal retirement date. Your actual SERP early retirement benefit will then be calculated by multiplying your Final Average Compensation at your early retirement date by the reduced income replacement percentage as so determined and subtracting the Other Benefits Formula Offset and Assumed Social Security Offset.

(b) Based on Fixed Dollar Amount . If your retirement income target is determined as a fixed dollar amount, the letter advising you of your participation in the SERP will set forth the amount payable on retirement at each date on which you may be eligible for early retirement. Because the amount is “fixed” rather than based on a percentage of Final Average Compensation, the Other Benefits Formula Offset and Assumed Social Security Offset will not apply

(c) Time of Commencement . If you separate from service on or after your early retirement date and prior to your normal retirement date, you will be entitled to an early retirement pension calculated as provided in Article I based on your Final Average Compensation, Years of SERP Participation, and/or other relevant factors set forth in your participation letter, as of your date of separation from service. Payment of your early retirement pension will commence on the first day of the month following your separation from service or, if you are a specified employee on the date of such separation from service, on the first day of the seventh month following your separation from service.

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2.4 Six-month delay . If distribution becomes due under the SERP based on the separation from service of a Participant who is a specified employee as of the date of such event, such distribution shall be not be made until the first day of the seventh month after the date of separation, in an amount actuarially increased to reflect such delay based on the Plan Actuarial Assumptions.

Choice of Form of Benefit

Normal Form of Pension – Single Life Annuity with 60-month Guarantee

Under the normal form of pension, SERP pension payments are payable for your life only. However, if you die after your pension payments begin but before you have received 60 monthly payments, then monthly payments will continue to your Beneficiary in the same amount you received prior to your death, until a total of 60 payments have been made. No benefits are payable under the SERP if you die before your pension payments begin. The Other Benefits Formula Offset and Assumed Social Security Offset described above are calculated assuming the normal form of payment.

Optional Joint and 50% or 66-2/3% Surviving Spouse Annuity

Under this optional form of pension, your monthly pension will still be payable for your lifetime, but in an actuarially reduced amount calculated based on the Plan Actuarial Assumptions and without the guarantee of 60 monthly payments The surviving spouse’s pension will be equal to either 50% or 66-2/3% of the reduced monthly benefit you were receiving, whichever you elect.

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Your election to take a surviving spouse pension must be made before your pension begins and cannot be changed after the pension begins. If you elect this benefit form, no benefits will be payable after the death of both you and your spouse. If you start to receive a reduced monthly pension under this form and your spouse then dies before you, you will continue to receive the reduced benefit for the remainder of your life. If you start to receive a reduced monthly pension under this form and you then die before your spouse, 50% or 66-2/3% of the reduced benefit (as you elected) will be paid to your surviving spouse for the remainder of his or her life.

Your "spouse" for purposes of the above means and is limited to the individual to whom you are legally married on your retirement date. For example, that spouse may become entitled to the survivorship pension under this option even if the marriage should later end by divorce; and a new spouse whom you marry after a divorce, or after your "spouse" as defined above may die, will not be entitled to benefits under this optional form.

Your election of an optional benefit form can be revoked by you (without the consent of your spouse or any other person) at any time prior to the date as of which payment is to begin, but not thereafter. If you elect a Joint and Surviving Spouse Annuity and your spouse dies (or you become divorced) before your retirement, your election will automatically be revoked and your benefit will then be payable in the normal form.

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Early Payment Upon Certain Events

Change in Control Termination

(1) If there is a Change in Control of Arrow, and within 24 months after such Change in Control you separate from service either (a) involuntarily other than for Cause or Disability or (b) voluntarily for Good Reason, your separation from service is considered to be a “Change in Control Termination.” For this purpose, “Change of Control of Arrow” shall mean a change in control event as defined in the Regulations that also qualifies as a “Change in Control” under the definition contained in Arrow’s standard form of change in control agreement, and “Cause” shall have the meaning given in such agreement. If the definition in Arrow's standard form of such agreement shall subsequently be revised or there shall cease to be a standard form of such agreement, the definition in the prior sentence shall continue to govern for purposes of this Agreement unless the Committee shall otherwise direct and the change in such definition is permitted to be given effect under the Regulations.

(2) If you incur a “Change in Control Termination” after attaining age 50 and prior to either your early retirement date or normal retirement date, then except as otherwise provided in paragraph 3 below, you will receive your Section 409A Benefit accrued to your date of termination in the form of a normal retirement pension beginning on the first day of the month coincident with or next following the date you attain age 60, calculated based on your Years of SERP Participation as of your date of termination as if your date of termination were an early retirement hereunder but without any discount for early payment.

(3) If you were a participant in the SERP and had attained age 50 and completed 15 years of SERP participation prior to January 1, 2002, and thereafter incur a “Change in Control Termination,” paragraph 2 above will not apply and you will receive beginning on the first day of the month following the termination (in addition to any Grandfathered Benefit payable), the greater of (i) the normal retirement benefit you would have received under the terms of the SERP as in effect on December 31, 2001 based on your aggregate service to December 31, 2008, less the amount of any Grandfathered Benefit payable, or (ii) your Section 409A Benefit calculated based on your Years of SERP Participation as of your termination date as if your termination were an early retirement hereunder and reduced for payment prior to normal retirement date based on the Early Payment Discount Assumption, in lieu of any other benefit under the Plan.

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Disability.

If you incur Disability prior to either your early retirement date or normal retirement date or change of control termination, your Section 409A Benefit accrued to your date of Disability, calculated based on your Years of SERP Participation as if your Disability were an early retirement hereunder and reduced for payment. Prior to normal retirement date based on the Early Payment Discount Assumption, will be become payable on the first day of the month following your normal retirement date; provided, that any SERP pension payments will be reduced by the full amount of any disability benefits you receive for the same period that are attributable to Company contributions. “Disability” for purposes hereof shall mean the Participant’s inability to perform each and every duty of his or her occupation or position of employment as a result of a medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than 12 months, provided that the Participant by reason thereof either (a) is unable to engage in any substantial gainful activity or (b) receives income replacement benefits for a period of not less than 3 months under an accident and health plan maintained by the Employer or a Subsidiary. Notwithstanding the foregoing, a determination of total disability by the Social Security Administration shall be conclusive proof of Disability.

ARTICLE III

Amendment, Termination, or Curtailment of Benefits

Period of participation . Your participation in the SERP begins on the date designated by the Board. The Board may act at any time to end your participation or to suspend your accrual of additional benefits or modify on a prospective basis the formula for determining your benefits hereunder.

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Amendment or Termination . The Board reserves the right to amend or terminate the SERP at any time. However, no such action may adversely change any benefit you (or your spouse or beneficiary) are currently receiving, or in any other case, reduce the amount of your benefit accrued under the Plan as of the date of such action or adversely affect the right of the participant (and the participant’s beneficiary or surviving spouse, if applicable) to receive payment in respect of such amount upon completion by the participant of the conditions precedent to entitlement to a retirement pension as they exist under the terms of the SERP in effect immediately prior to such action, and at the time and on the terms then in effect, except with your consent. A termination of the Plan shall not cause the acceleration of payments under the Plan unless the Committee determines, after consultation with counsel, that the terms and conditions of such termination are within exceptions provided by applicable regulations to the general Section 409A prohibition against acceleration. Notwithstanding anything herein to the contrary, the Board shall have the right and power to adopt any and all such amendments to the SERP as it shall deem necessary or advisable to ensure compliance with Section 409A and the Regulations, including amendments with retroactive effect.

Termination of SERP Benefits/Effect of Competition

When you become eligible for SERP payments, your annual SERP pension will be paid to you in monthly installments. Payments will end with the payment for the month in which you die, except for any benefits payable to your beneficiary on your death before receiving at least 60 monthly payments, if your pension was payable in the normal form described above (or for any surviving pension to your spouse, if your pension was paid as a surviving spouse pension as described above), or earlier if you compete with Arrow, as defined below.

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You compete with Arrow if, directly or indirectly, alone, as an employee, agent, independent contractor, lender, consultant, owner, partner or joint venturer, or as an officer, director, or stockholder of any corporation, or otherwise, are employed by, participate in, are engaged in, or are connected with any person or entity which is engaged in a business of the type and character engaged in, and competitive with that conducted by Arrow. Ownership of 3% or less of the stock or other securities of a corporation, the stock of which is listed on a national securities exchange or is quoted on the NASDAQ National Market, will not constitute a violation of this provision, so long as you do not in fact have the power to control, or direct the management of, or are not otherwise associated with, such corporation.

The provision terminating SERP benefits if you compete with Arrow as described above will not be applicable if your payments are made on account of a Change In Control Termination as defined in Part II hereof, or if your termination of employment would constitute a Change In Control Termination except for your failure to have the 15 years of SERP participation required for individuals who became participants in the SERP prior to January 1, 2002.

Prior Plan Benefit Protected

If you were a participant in the SERP as in effect on December 31, 2001, your Section 409A Benefit, when added to your Grandfathered Benefit, will not be less than the amount you would have received under the SERP as in effect on December 31, 2001 as increased for service through December 31, 2008. Any additional benefit provided under this paragraph shall be determined by treating references to retirement or termination of employment under such predecessor plan as meaning Separation from Service as defined herein and shall be payable in the time and manner provided for under this amended SERP upon Separation from Service with vested rights.

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ARTICLE IV

Definitions:

“Arrow” means Arrow Electronics, Inc., or any successor thereof by merger, consolidation, purchase of substantially all of its business and assets, or otherwise.

“Assumed Primary Insurance Amount” means the primary insurance amount calculated to be payable on a monthly basis on your attainment of age 62 or year of retirement if later (excluding any benefit payable on behalf of a spouse or other dependent) as provided under the Federal Social Security Act or any other similar applicable national benefit program as in effect on such date, determined on the following assumptions, notwithstanding facts to the contrary:

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(1) Your salary history will begin with calendar year 1951 or the calendar year you attain age 22, whichever is later, and end with the calendar year preceding the later of the calendar year in which you attain age 62 or your calendar year of retirement, including years in which you were not employed by the Company (the “Salary History Period”);

(2) If you retire prior to age 62, the Social Security wage base for each year until the year you attain age 62 will be assumed to be the Social Security wage base in effect in your year of retirement;

(3) You will be deemed to have earned wages in excess of the Social Security Act wage base during each year of your Salary History Period.

(4) You will be deemed to have been employed in the United States during each year of the Salary History Period.

“Board” means the Board of Directors of Arrow or any duly constituted committee thereof, including the Compensation Committee.

“Beneficiary” means your beneficiary is the person (including a trust, estate, foundation, or other entity) you designate (at such time and in such manner as the Committee shall authorize) to receive the death benefit (if any) payable upon death after commencing to receive benefits, and before receiving at least 60 payments. If an individual is designated as beneficiary and dies prior to becoming entitled to benefits hereunder (or if no valid designation of beneficiary is in effect for any other reason), your beneficiary shall be your surviving spouse, if any, and otherwise shall be your estate unless otherwise provided in the beneficiary designation.

"Code" means the Internal Revenue Code of 1986, as it may be from time to time amended, or corresponding provisions of subsequent law.

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“Committee” means Arrow’s Management Pension and Investment Oversight Committee.

“Company” means Arrow and its Subsidiaries and their predecessors.

“Early Payment Discount Assumption” means interest credited and compounded annually at an annual rate of 7%.for each year (or fraction thereof in completed months) between your retirement date and your normal retirement date.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Final Average Compensation” means your highest average annual Performance Based Compensation (base salary plus targeted incentive compensation) for any three calendar years (which need not be consecutive) in the last five consecutive calendar years ending prior to your retirement (or such other period as the Board may specify), determined before reduction by any election to (i) make 401(k) contributions under the Arrow Electronics Savings Plan, (ii) defer compensation under any other elective deferred compensation plan, or (iii) pay the cost of health or other benefits with pre-tax contribution, and excluding all events payments made pursuant to stock appreciation rights, or otherwise pursuant to any plan for the grant of stock options, stock, or other stock rights.

“Plan Actuarial Assumptions” means interest at an annual rate of 7% compounded annually and the applicable mortality table in effect under section 417(e)(3)(A) of the Code in November prior to the calendar year in which payment is to begin.

“Specified Employee” means “specified employee” as determined in accordance with the procedures adopted by the Company in accordance with the Regulations for purposes of its nonqualified deferred compensation plans subject to Section 409A.

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“Subsidiary” means a subsidiary or affiliate that is a member of the same controlled group as Arrow within the meaning of section 414(b) or (c) of the Code.

“Subsidiary Change of Control Event” means a change in control event with respect to a Subsidiary within the meaning of the Regulations, pursuant to which Arrow ceases to have direct or indirect ownership of at least fifty-one percent (51%) of the value of the total equity or total combined voting power in respect of the Subsidiary.

“Years of SERP Participation” means your years of participation to your retirement date in the SERP as amended from time to time and in its predecessor plans, including the Unfunded Pension Plan for Selected Executives of Arrow Electronics, Inc. effective January 1, 1990. In addition, the determination of your income replacement percentage as set forth in the letter or notice your receive as described in Sections 1.3 and 1.4 may assume a minimum number of such years at your normal retirement date (which need not be the same as your projected years of service to normal retirement date). Years of SERP participation will be calculated in years and fractions of a year in completed months. In cases where the Board concludes that special circumstances so warrant (such as, but not limited to, when an executive is hired from a prior employer and after taking into account benefits accrued and/or lost under the prior employer’s plans), you may be granted additional years of SERP participation. Any such grant shall be evidenced by written notice to the affected participant.

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ARTICLE V

Miscellaneous

5.1 Committee .

(a) The Plan shall be administered by the Committee. The Committee shall have the responsibility, power and discretion to make all determinations, including as to matters of fact and construction and interpretation of the SERP, authorized or required of it by the terms of the SERP or deemed useful in carrying out its responsibilities hereunder. Except as the Compensation Committee of the Board may otherwise determine, all such determinations shall be final and binding on all persons. No member of the Committee shall be entitled to act on or decide any matter relating specifically to such member.

(b) The Committee shall have all powers and discretion necessary or helpful for purposes of administration of the SERP. Without limiting the generality of the foregoing, the Committee shall have the power and discretion to determine the benefits to which any participant, beneficiary, or spouse is or may become entitled to under the SERP, and to adopt such rules and procedures as it deems advisable to carry out its responsibilities hereunder.

(c) The Committee shall adopt procedures for applying for benefits and appealing a denial of benefits in accordance with applicable regulations under ERISA, under which the final determination of such appeal shall be made by the Compensation Committee of the Board.

(d) The Committee may allocate any of its responsibilities, powers and discretion under the SERP to one or more members of the Committee and delegate any of such responsibilities, powers and discretion to persons not members of the Committee (alone or together with one or more members of the Committee). The actions taken by any member or members of the Committee or any other such persons in the exercise of responsibilities, powers and discretion delegated hereunder shall have the same valid and binding effect under the SERP as action by the full Committee.

5.2 Direction to pay benefits . All benefit payments under the SERP shall be upon and in accordance with the written directions of the Committee or its agent.

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5.3 Liability limited; indemnification . The members of the Committee and each of them shall be free from all liability, joint and several, for their acts and conduct, and for the acts and conduct of any duly constituted agents. Arrow shall indemnify and save them harmless from the effects and consequences of their acts and conduct in such official capacity except to the extent that such effects and consequences flow from their own willful misconduct. Under no circumstances will members of the Committee be personally liable for the payment of SERP benefits.

5.4 Payment to incompetent . If any participant, beneficiary, or spouse entitled to benefits under the SERP shall be legally incompetent (or shall be a minor), such benefits may be paid in one or more of the following ways, as the Committee in its sole discretion s hall determine:

(a) To the legal representatives of the participant, beneficiary, or spouse;

(b) Directly to such participant, beneficiary, or spouse;

(c) To the spouse or guardian of such participant, beneficiary, or spouse or to the person with whom such participant, beneficiary, or spouse resides.

Payment to any person in accordance with these provisions will, to the extent of the payment, discharge Arrow, and none of the foregoing or the Committee will be required to see to the proper application of any such payment. Without in any manner limiting these provisions, in the event that any amount is payable hereunder to any legally incompetent participant, beneficiary, or spouse, the Committee may in its discretion utilize the procedures described in the following section.

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5.5 Doubt as to right to payment . If any doubt exists as to the right of any person to any benefits hereunder or the amount of time of payment of such benefits (including, without limitation, any case of doubt as to identity, or any case in which notice has been received from any person claiming any interest in amounts payable hereunder, or any case in which a claim from other persons may exist by reason of community property or similar laws), the Committee will be entitled, in its discretion, to direct that payment of such benefits be deferred until order of a court of competent jurisdiction, or to pay such sum into court in accordance with appropriate rules of law in such case then provided, or to make payment only upon receipt of a bond or similar indemnification (in such amount and in such form as is satisfactory to the Committee).

5.6 Withholding . All payments under the SERP shall be subject to any applicable withholding requirements imposed by any tax or other law.

5.7 Source of payment . All benefits under the SERP shall be paid by Arrow out of general assets, and any rights of a participant, beneficiary, or spouse under the SERP shall be mere unsecured contractual rights. Arrow and the participants intend that any arrangements made to assist Arrow to meet obligations under the SERP shall be unfunded for tax purposes and for purposes of Title I of ERISA, and no trust, security, escrow, or similar account shall be established in connection with the SERP. Arrow has, however, established a “rabbi trust” to assist in meeting its obligation to pay benefits under the SERP, and amounts paid from any such rabbi trust shall discharge the obligations of Arrow hereunder to the extent of the payments. No participant, beneficiary, or spouse shall have a preferred claim on or beneficial ownership interest in the assets of such rabbi trust. If a participant shall be employed by a subsidiary of Arrow, the subsidiary shall be jointly and severally liable with Arrow for the payment of benefits hereunder to that participant, and references to “Arrow” in the preceding provisions of this Section 5.7 shall include such subsidiary.

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5.8 Spendthrift clause . Except as otherwise provided by law, no benefit, distribution, or payment under the SERP may be anticipated, assigned (either at law or in equity), alienated, or subject to attachment, garnishment, levy, execution, or other legal or equitable process.

5.9 Reimbursement of legal expenses . In the event that any dispute shall arise between a participant and Arrow relating to rights under the SERP, and it is determined by agreement between the parties, or by a final judgment of a court of competent jurisdiction that is no longer subject to appeal, that the participant has been substantially successful in such dispute, reasonable legal fees and disbursements of the participant in connection with such dispute shall be paid by Arrow.

5.10 Usage . Whenever applicable, the singular, when used in the SERP, will include the plural.

5.11 Data . Any participant, beneficiary, or spouse entitled to benefits under the SERP must furnish to the Committee such documents, evidence, or information as the Committee considers necessary or desirable for the purpose of administering the SERP.

5.12 Separability . If any provision of the SERP is held invalid or unenforceable, its invalidity or unenforceability will not affect other provisions of the SERP, and the SERP will be construed and enforced as if such provision had not been included therein.

5.13 Captions . The captions contained herein are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge, or describe the scope or intent of the SERP; nor shall they, in any way, affect the SERP or the construction of any provision thereof.

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5.14 Name . The SERP may be known as the Arrow Electronics, Inc. Supplemental Executive Retirement Plan

5.15 Governing law . The SERP is intended to constitute an unfunded plan of deferred compensation for a select group of management or highly compensated employees, within the meaning of sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and no individual shall be eligible to participate in the SERP unless he is a member of such a group. If an individual formerly so eligible ceases to be a member of such a group, his participation and accrual of additional benefits shall be suspended, but benefits previously accrued shall not be reduced thereby. Except to the extent preempted by federal law, the SERP shall be construed and governed in all respects according to the laws of the State of New York, where it is adopted, without regard to principles of conflict of laws.

5.16 Right of discharge reserved . The establishment of the SERP shall not be construed to confer upon an employee or participant any legal right to be retained in the employ of Arrow or give any employee or any other person any right to benefits, except to the extent expressly provided hereunder. All employees will remain subject to discharge to the same extent as if the SERP had never been adopted, and may be treated without regard to the effect such treatment might have upon them under the SERP.

5.17 Grantor trust agreement/change of control . The powers, rights and duties of the Trustee under any rabbi trust created for the purpose of assisting Arrow in meeting its obligations under the SERP shall, following a “Change of Control” as defined in the trust agreement for such Trust, govern and prevail to the extent inconsistent with any of the provisions of the SERP, including without limitation SERP provisions making the Committee’s determinations final and binding (except as determined by the Compensation Committee of the Board), and provisions giving the Committee power and discretion to invoke the procedures described in Sections 5.4 and 5.5, to make the determinations and give directions with respect to the payment of benefits as provided in Section 5.2 above, including adopting a claims procedure as described in Section 5.1(c). Arrow shall make such contributions to such Trust as shall be required under the terms of such trust agreement, including, without limitation, such contributions as may be required thereunder upon an individual participant’s retirement or disability, or as may be required with respect to all participants upon any Potential Change of Control or Change of Control as such terms are defined in such trust agreement.

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5.18 Relationship to other agreements . In the event that an employment or other agreement with a participant substitutes a different or modified benefit formula or other provisions for the income replacement target or certain other provisions of the SERP, the benefits of such participants under the SERP shall be determined based on the provisions of such agreement to the extent consistent with Section 409A or the Regulations.

5.19 Acceleration Generally Prohibited . No acceleration of payments under the SERP shall be permitted except as authorized by the Regulations. Without limiting the generality of the foregoing:

(1) Ethics or conflict of interest requirements . Distribution may be accelerated as may be necessary to comply with ethics or conflict of interest requirements in accordance with Treasury Reg. § 1.409A-3(j)(4)(iii).

(2) Payment of employment taxes . Distribution may be accelerated in order to pay the Federal Insurance Contributions Act (FICA) tax imposed under section 3101, section 3121(a) and section 3121(v)(2) of the Code on deferrals under the SERP (the “FICA Amount”), Federal, state, local or foreign wage withholding taxes on the FICA Amount, and additional wage withholding taxes attributable to the pyramiding of wages subject to withholding and taxes. Acceleration shall be permitted under this paragraph (2) only to the extent that Committee determines that such tax obligations cannot be readily met from other sources, and the total payment under this paragraph (2) shall not exceed the aggregate of the FICA Amount and related income tax withholding.

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To evidence the adoption of this amended and restated Arrow Electronics, Inc. Supplemental Executive Retirement Plan, the undersigned has, pursuant to direction of the Management Pension and Investment Oversight Committee, under authority given by the Compensation Committee the Board of Directors, has executed this Plan document this 10 th day of December, 2009, effective as of January 1, 2009.

/s/ Peter S. Brown

Senior Vice President and General Counsel

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

50 Marcus Drive, Melville, New York			11747
(Address of principal executive offices)			(Zip Code)

Title of each class		Name of each exchange on which registered
Common Stock, $1 par value		New York Stock Exchange

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (do not check if a smaller reporting company)	Smaller reporting company o

Name	Age	Position

Michael J. Long	51	Chairman, President, and Chief Executive Officer
Peter S. Brown	59	Senior Vice President, General Counsel, and Secretary
Andrew S. Bryant	54	President, Arrow Global Enterprise Computing Solutions
Peter T. Kong	59	President, Arrow Global Components
John P. McMahon	57	Senior Vice President, Human Resources
Paul J. Reilly	53	Executive Vice President, Finance and Operations, and Chief Financial Officer

Year	High		Low

2009:
Fourth Quarter	$	30.10	$	24.85
Third Quarter		30.01		19.57
Second Quarter		25.88		18.61
First Quarter		21.32		15.00

2008:
Fourth Quarter	$	26.60	$	11.74
Third Quarter		36.00		24.95
Second Quarter		34.97		26.50
First Quarter		39.44		29.00

PART I

Item 1.	Business.	3
Item 1A.	Risk Factors.	9
Item 1B.	Unresolved Staff Comments.	16
Item 2.	Properties.	16
Item 3.	Legal Proceedings.	16
Item 4.	Submission of Matters to a Vote of Security Holders.	18

PART II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	19
Item 6.	Selected Financial Data.	22
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	24
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	40
Item 8.	Financial Statements and Supplementary Data.	42
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	88
Item 9A.	Controls and Procedures.	88
Item 9B.	Other Information.	90

PART III

Item 10.	Directors, Executive Officers, and Corporate Governance.	91
Item 11.	Executive Compensation.	91
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	91
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	91
Item 14.	Principal Accounting Fees and Services.	91

PART IV

Item 15.	Exhibits and Financial Statement Schedules.	92
SIGNATURES		100

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance

Equity compensation plans approved by security holders		6,464,861	$	27.30		3,715,621
Equity compensation plans not approved by security holders		-		-		-
Total		6,464,861	$	27.30		3,715,621

	2004		2005		2006		2007		2008		2009
Arrow Electronics		100		132		130		162		78		122
Peer Group		100		94		94		109		60		110
S&P 500 Stock Index		100		103		117		121		75		92

Month	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares that May Yet be Purchased Under the Program

October 4 through 31, 2009		93	$	25.65		-		-
November 1 through 30, 2009		4,008		26.85		-		-
December 1 through 31, 2009		1,558		27.40		-		-
Total		5,659				-

For the years ended December 31:	2009 (a)		2008 (b)			2007 (c)		2006 (d)(g)		2005 (e)(f)(g)

Sales	$	14,684,101	$	16,761,009		$	15,984,992	$	13,577,112	$	11,164,196
Operating income (loss)	$	272,787	$	(493,569	)	$	686,905	$	606,225	$	480,258
Net income (loss) attributable to shareholders	$	123,512	$	(613,739	)	$	407,792	$	388,331	$	253,609
Net income (loss) per share:
Basic	$	1.03	$	(5.08	)	$	3.31	$	3.19	$	2.15
Diluted	$	1.03	$	(5.08	)	$	3.28	$	3.16	$	2.09
At December 31:
Accounts receivable and inventories	$	4,533,809	$	4,713,849		$	4,961,035	$	4,401,857	$	3,811,914
Total assets		7,762,366		7,118,285			8,059,860		6,669,572		6,044,917
Long-term debt		1,276,138		1,223,985			1,223,337		976,774		1,138,981
Shareholders' equity		2,916,960		2,676,698			3,551,860		2,996,559		2,372,886

	2009		2008		% Change

Global components	$	9,751	$	11,319		(13.9	)%
Global ECS		4,933		5,442		(9.3	)%
Consolidated	$	14,684	$	16,761		(12.4	)%

	Within 1 Year		1-3 Years		4-5 Years		After 5 Years		Total

Debt	$	122,386	$	213,157	$	366,745	$	695,760	$	1,398,048
Interest on long-term debt		70,724		129,716		102,669		354,007		657,116
Capital leases		709		476		-		-		1,185
Operating leases		53,036		74,631		42,297		14,180		184,144
Purchase obligations (a)		2,675,031		11,614		4,701		-		2,691,346
Other (b)		33,310		24,104		11,357		2,914		71,685
	$	2,955,196	$	453,698	$	527,769	$	1,066,861	$	5,003,524

	Years Ended December 31,
	2009			2008			2007

Sales	$	14,684,101		$	16,761,009		$	15,984,992
Costs and expenses:
Cost of products sold		12,933,207			14,478,296			13,699,715
Selling, general and administrative expenses		1,305,566			1,607,261			1,519,908
Depreciation and amortization		67,027			69,286			66,719
Restructuring, integration, and other charges		105,514			80,955			11,745
Impairment charge		-			1,018,780			-
		14,411,314			17,254,578			15,298,087
Operating income (loss)		272,787			(493,569	)		686,905
Equity in earnings of affiliated companies		4,731			6,549			6,906
Loss on prepayment of debt		5,312			-			-
Loss on the write-down of an investment		-			10,030			-
Interest and other financing expense, net		83,285			99,863			101,628
Income (loss) before income taxes		188,921			(596,913	)		592,183
Provision for income taxes		65,416			16,722			180,697
Consolidated net income (loss)		123,505			(613,635	)		411,486
Noncontrolling interests		(7	)		104			3,694
Net income (loss) attributable to shareholders	$	123,512		$	(613,739	)	$	407,792
Net income (loss) per share:
Basic	$	1.03		$	(5.08	)	$	3.31
Diluted	$	1.03		$	(5.08	)	$	3.28
Average number of shares outstanding:
Basic		119,800			120,773			123,176
Diluted		120,489			120,773			124,429

	December 31,
	2009			2008 (A)
ASSETS
Current assets:
Cash and cash equivalents	$	1,137,007		$	451,272
Accounts receivable, net		3,136,141			3,087,290
Inventories		1,397,668			1,626,559
Prepaid expenses and other assets		168,812			180,647
Total current assets		5,839,628			5,345,768
Property, plant and equipment, at cost:
Land		23,584			25,127
Buildings and improvements		137,539			147,138
Machinery and equipment		779,105			698,156
		940,228			870,421
Less: Accumulated depreciation and amortization		(479,522	)		(459,881	)
Property, plant and equipment, net		460,706			410,540
Investments in affiliated companies		53,010			46,788
Cost in excess of net assets of companies acquired		926,296			905,848
Other assets		482,726			409,341
Total assets	$	7,762,366		$	7,118,285
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	2,763,237		$	2,459,922
Accrued expenses		445,914			455,547
Short-term borrowings, including current portion of long-term debt		123,095			52,893
Total current liabilities		3,332,246			2,968,362
Long-term debt		1,276,138			1,223,985
Other liabilities		236,685			248,888

Equity:
Shareholders' equity:
Common stock, par value $1:
Authorized – 160,000 shares in 2009 and 2008
Issued – 125,287 and 125,048 shares in 2009 and 2008, respectively		125,287			125,048
Capital in excess of par value		1,056,704			1,035,302
Treasury stock (5,459 and 5,740 shares in 2009 and 2008, respectively), at cost		(179,152	)		(190,273	)
Retained earnings		1,694,517			1,571,005
Foreign currency translation adjustment		229,019			172,528
Other		(9,415	)		(36,912	)
Total shareholders' equity		2,916,960			2,676,698
Noncontrolling interests		337			352
Total equity		2,917,297			2,677,050
Total liabilities and equity	$	7,762,366		$	7,118,285

Exhibit Number		Exhibit

2(a)		Share Purchase Agreement, dated as of August 7, 2000, among VEBA Electronics GmbH, EBV Verwaltungs GmbH i.L., Viterra Grundstucke Verwaltungs GmbH, VEBA Electronics LLC, VEBA Electronics Beteiligungs GmbH, VEBA Electronics (UK) Plc, Raab Karcher Electronics Systems Plc and E.ON AG and Arrow Electronics, Inc., Avnet, Inc., and Cherrybright Limited regarding the sale and purchase of the VEBA electronics distribution group (incorporated by reference to Exhibit 2(i) to the company's Annual Report on Form 10-K for the year ended December 31, 2000, Commission File No. 1-4482).

3(a)(i)		Restated Certificate of Incorporation of the company, as amended (incorporated by reference to Exhibit 3(a) to the company's Annual Report on Form 10-K for the year ended December 31, 1994, Commission File No. 1-4482).

3(a)(ii)		Certificate of Amendment of the Certificate of Incorporation of Arrow Electronics, Inc., dated as of August 30, 1996 (incorporated by reference to Exhibit 3 to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996, Commission File No. 1-4482).

3(a)(iii)		Certificate of Amendment of the Restated Certificate of Incorporation of the company, dated as of October 12, 2000 (incorporated by reference to Exhibit 3(a)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 2000, Commission File No. 1-4482).

3(b)		Amended Corporate By-Laws, dated July 29, 2004 (incorporated by reference to Exhibit 3(ii) to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, Commission File No. 1-4482).

4(a)(i)		Indenture, dated as of January 15, 1997, between the company and The Bank of New York Mellon (formerly, the Bank of Montreal Trust Company), as Trustee (incorporated by reference to Exhibit 4(b)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 1-4482).

4(a)(ii)		Officers' Certificate, as defined by the Indenture in 4(a)(i) above, dated as of January 22, 1997, with respect to the company's $200,000,000 7% Senior Notes due 2007 and $200,000,000 7 1/2% Senior Debentures due 2027 (incorporated by reference to Exhibit 4(b)(ii) to the company's Annual Report on Form 10-K for the year ended December 31, 1996, Commission File No. 1-4482).

4(a)(iii)		Officers' Certificate, as defined by the Indenture in 4(a)(i) above, dated as of January 15, 1997, with respect to the $200,000,000 6 7/8% Senior Debentures due 2018, dated as of May 29, 1998 (incorporated by reference to Exhibit 4(b)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 1998, Commission File No. 1-4482).

4(a)(iv)		Supplemental Indenture, dated as of February 21, 2001, between the company and The Bank of New York (as successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4.2 to the company's Current Report on Form 8-K, dated March 12, 2001, Commission File No. 1-4482).

Exhibit Number		Exhibit

4(a)(v)		Supplemental Indenture, dated as of December 31, 2001, between the company and The Bank of New York (as successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4(b)(vi) to the company's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

4(a)(vi)		Supplemental Indenture, dated as of March 11, 2005, between the company and The Bank of New York (as successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4(b)(vii) to the company's Annual Report on Form 10-K for the year ended December 31, 2004, Commission File No. 1-4482).

4(a)(vii)		Supplemental Indenture, dated as of September 30, 2009, between the company and The Bank of New York (as successor to the Bank of Montreal Trust Company), as trustee (incorporated by reference to Exhibit 4.1 to the company's Current Report on Form 8-K dated September 29, 2009, Commission File No. 1-4482).

10(a)		Arrow Electronics Savings Plan, as amended and restated on September 9, 2009 (incorporated by reference to Exhibit 10(a) to the company's Quarterly Report on Form 10-Q for the quarter ended October 3, 2009, Commission File No. 1-4482).

10(b)		Wyle Electronics Retirement Plan, as amended and restated on September 9, 2009 (incorporated by reference to Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended October 3, 2009, Commission File No. 1-4482).

10(c)		Arrow Electronics Stock Ownership Plan, as amended and restated on September 9, 2009 (incorporated by reference to Exhibit 10(c) to the company's Quarterly Report on Form 10-Q for the quarter ended October 3, 2009, Commission File No. 1-4482).

10(d)(i)		Arrow Electronics, Inc. 2004 Omnibus Incentive Plan as amended February 28, 2007 and February 27, 2008 (incorporated by reference to Exhibit 10.1 to the company's Current Report on Form 8-K, dated May 2, 2008, Commission File No. 1-4482).

10(d)(ii)		Form of Stock Option Award Agreement under 10(d)(i) above (incorporated by reference to Exhibit 10-0 to the company's Current Report on Form 8-K, dated March 23, 2006, Commission File No. 1-4482).

10(d)(iii)		Form of Performance Share Award Agreement under 10(d)(i) above (incorporated by reference to Exhibit 10-0 to the company's Current Report on Form 8-K, dated August 31, 2005, Commission File No. 1-4482).

10(d)(iv)		Form of Restricted Stock Award Agreement under 10(d)(i) above (incorporated by reference to Exhibit 10-0 to the company's Current Report on Form 8-K, dated September 14, 2005, Commission File No. 1-4482).

10(e)(i)		Arrow Electronics, Inc. Stock Option Plan, as amended and restated effective February 27, 2002 (incorporated by reference to Exhibit 10(d)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

Exhibit Number		Exhibit

10(e)(ii)		Paying Agency Agreement, dated November 11, 2003, by and between Arrow Electronics, Inc. and Wachovia Bank, N.A. (incorporated by reference to Exhibit 10(d)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(f)		Restricted Stock Plan of Arrow Electronics, Inc., as amended and restated effective February 27, 2002 (incorporated by reference to Exhibit 10(e)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(g)		2002 Non-Employee Directors Stock Option Plan as of May 23, 2002 (incorporated by reference to Exhibit 10(f) to the company's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(h)		Non-Employee Directors Deferral Plan as of May 15, 1997 (incorporated by reference to Exhibit 99(d) to the company's Registration Statement on Form S-8, Registration No. 333-45631).

10(i)		Arrow Electronics, Inc. Supplemental Executive Retirement Plan, as amended effective January 1, 2009.

10(j)		Arrow Electronics, Inc. Executive Deferred Compensation Plan as of October 1, 2004 (incorporated by reference to Exhibit 10(j) to the company's Annual Report on Form 10-K for the year ended December 31, 2005, Commission File No. 1-4482).

10(k)(i)		Employment Agreement, dated as of December 30, 2008, by and between the company and Michael J. Long (incorporated by reference to Exhibit 10(k)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 2008, Commission File No. 1-4482).

10(k)(ii)		Employment Agreement, dated as of December 30, 2008, by and between the company and Peter S. Brown (incorporated by reference to Exhibit 10(k)(ii) to the company's Annual Report on Form 10-K for the year ended December 31, 2008, Commission File No. 1-4482).

10(k)(iii)		Employment Agreement, dated as of December 30, 2008, by and between the company and Paul J. Reilly (incorporated by reference to Exhibit 10(k)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 2008, Commission File No. 1-4482).

10(k)(iv)		Employment Agreement, dated as of December 30, 2008, by and between the company and John P. McMahon (incorporated by reference to Exhibit 10(k)(vi) to the company’s Annual Report on Form 10-K for the year ended December 31, 2008, Commission File No. 1-4482).

10(k)(v)		Employment Agreement, dated as of December 30, 2008, by and between the company and Andrew S. Bryant.

10(k)(vi)		Employment Agreement, dated as of December 30, 2008, by and between the company and Peter Kong.

Exhibit Number		Exhibit

10(k)(vii)		Form of agreement providing extended separation benefits under certain circumstances between the company and certain employees party to employment agreements, including the employees listed in 10(k)(i)-(vi) above.

10(k)(viii)		Grantor Trust Agreement, as amended and restated on November 11, 2003, by and between Arrow Electronics, Inc. and Wachovia Bank, N.A. (incorporated by reference to Exhibit 10(i)(xvii) to the company's Annual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(k)(ix)		First Amendment, dated September 17, 2004, to the amended and restated Grantor Trust Agreement in 10(k)(viii) above by and between Arrow Electronics, Inc. and Wachovia Bank, N.A. (incorporated by reference to Exhibit 10(a) to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, Commission File No. 1-4482).

10(l)(i)		9.15% Senior Exchange Notes due October 1, 2010, dated as of October 6, 2000, among Arrow Electronics, Inc. and Goldman, Sachs & Co.; Chase Securities Inc.; Morgan Stanley & Co. Incorporated; Bank of America Securities LLC; Donaldson, Lufkin & Jenrette Securities Corporation; BNY Capital Markets, Inc.; Credit Suisse First Boston Corporation; Deutsche Bank Securities Inc.; Fleet Securities, Inc.; and HSBC Securities (USA) Inc., as underwriters (incorporated by reference to Exhibit 4.4 to the company's Registration Statement on Form S-4, Registration No. 333-51100).

10(l)(ii)		6.875% Senior Exchange Notes due 2013, dated as of June 25, 2003, among Arrow Electronics, Inc. and Goldman, Sachs & Co.; JPMorgan; and Bank of America Securities LLC, as joint book-running managers; Credit Suisse First Boston, as lead manager; and Fleet Securities, Inc.; HSBC, Scotia Capital; and Wachovia Securities, as co-managers (incorporated by reference to Exhibit 99.1 to the company's Current Report on Form 8-K dated June 25, 2003, Commission File No. 1-4482).

10(m)		Amended and Restated Five Year Credit Agreement, dated as of January 11, 2007, among Arrow Electronics, Inc. and certain of its subsidiaries, as borrowers, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Bank of America, N.A., The Bank of Nova Scotia, BNP Paribas and Wachovia Bank National Association, as syndication agents (incorporated by reference to Exhibit 10(n) to the company's Annual Report on Form 10-K for the year ended December 31, 2006, Commission File No. 1-4482).

10(n)(i)		Transfer and Administration Agreement, dated as of March 21, 2001, by and among Arrow Electronics Funding Corporation, Arrow Electronics, Inc., individually and as Master Servicer, the several Conduit Investors, Alternate Investors and Funding Agents and Bank of America, National Association, as administrative agent (incorporated by reference to Exhibit 10(m)(i) to the company's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

10(n)(ii)		Amendment No. 1 to the Transfer and Administration Agreement, dated as of November 30, 2001, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(m)(ii) to the company's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

Exhibit Number		Exhibit

10(n)(iii)		Amendment No. 2 to the Transfer and Administration Agreement, dated as of December 14, 2001, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(m)(iii) to the company's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

10(n)(iv)		Amendment No. 3 to the Transfer and Administration Agreement, dated as of March 20, 2002, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(m)(iv) to the company's Annual Report on Form 10-K for the year ended December 31, 2001, Commission File No. 1-4482).

10(n)(v)		Amendment No. 4 to the Transfer and Administration Agreement, dated as of March 29, 2002, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(v) to the company's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(n)(vi)		Amendment No. 5 to the Transfer and Administration Agreement, dated as of May 22, 2002, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(vi) to the company's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(n)(vii)		Amendment No. 6 to the Transfer and Administration Agreement, dated as of September 27, 2002, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(vii) to the company's Annual Report on Form 10-K for the year ended December 31, 2002, Commission File No. 1-4482).

10(n)(viii)		Amendment No. 7 to the Transfer and Administration Agreement, dated as of February 19, 2003, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 99.1 to the company's Current Report on Form 8-K dated February 6, 2003, Commission File No. 1-4482).

10(n)(ix)		Amendment No. 8 to the Transfer and Administration Agreement, dated as of April 14, 2003, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(ix) to the company's Annual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(n)(x)		Amendment No. 9 to the Transfer and Administration Agreement, dated as of August 13, 2003, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(x) to the company's Annual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(n)(xi)		Amendment No. 10 to the Transfer and Administration Agreement, dated as of February 18, 2004, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(n)(xi) to the company's Annual Report on Form 10-K for the year ended December 31, 2003, Commission File No. 1-4482).

10(n)(xii)		Amendment No. 11 to the Transfer and Administration Agreement, dated as of August 13, 2004, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, Commission File No. 1-4482).

Exhibit Number		Exhibit

10(n)(xiii)		Amendment No. 12 to the Transfer and Administration Agreement, dated as of February 14, 2005, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(o)(xiii) to the company's Annual Report on Form 10-K for the year ended December 31, 2004, Commission File No. 1-4482).

10(n)(xiv)		Amendment No. 13 to the Transfer and Administration Agreement, dated as of February 13, 2006, to the Transfer and Administration Agreement in (10)(n)(i) above (incorporated by reference to Exhibit 10(o)(xiv) to the company's Annual Report on Form 10-K for the year ended December 31, 2005, Commission File No. 1-4482).

10(n)(xv)		Amendment No. 14 to the Transfer and Administration Agreement, dated as of October 31, 2006, to the Transfer and Administration Agreement in 10(n)(i) above (incorporated by reference to Exhibit 10(o)(xv) to the company's Annual Report on Form 10-K for the year ended December 31, 2006, Commission File No. 1-4482).

10(n)(xvi)		Amendment No. 15 to the Transfer and Administration Agreement, dated as of February 12, 2007, to the Transfer and Administration Agreement in 10(n)(i) above (incorporated by reference to Exhibit 10(o)(xvi) to the company's Annual Report on Form 10-K for the year ended December 31, 2006, Commission File No. 1-4482).

10(n)(xvii)		Amendment No. 16 to the Transfer and Administration Agreement, dated as of March 27, 2007, to the Transfer and Administration Agreement in 10(n)(i) above (incorporated by reference to Exhibit 10(b) to the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, Commission File No. 1-4482).

10(o)		Form of Indemnification Agreement between the company and each director (incorporated by reference to Exhibit 10(g) to the company’s Annual Report on Form 10-K for the year ended December 31, 1986, Commission File No. 1-4482).

21		Subsidiary Listing.

23		Consent of Independent Registered Public Accounting Firm.

31(i)		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31(ii)		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32(i)		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32(ii)		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

For the three years ended December 31,	Balance at beginning of year		Charged to income		Other (a)		Write-down		Balance at end of year

Allowance for doubtful accounts

2009	$	52,786	$	7,515	$	1,001	$	21,628	$	39,674

2008	$	71,232	$	14,866	$	7,787	$	41,099	$	52,786

2007	$	75,404	$	14,211	$	1,372	$	19,755	$	71,232

By:	/s/ Michael J. Long
	Michael J. Long, Chairman, President, and Chief
	Executive Officer

By:	/s/ Paul J. Reilly
	Paul J. Reilly, Executive Vice President, Finance
	and Operations, and Chief Financial Officer

By:	/s/ Michael A. Sauro
	Michael A. Sauro, Vice President, Corporate Controller,
	and Chief Accounting Officer

By:	/s/ Daniel W. Duval
	Daniel W. Duval, Lead Independent Director

By:	/s/ Gail E. Hamilton
	Gail E. Hamilton, Director

By:	/s/ John N. Hanson
	John N. Hanson, Director

By:	/s/ Richard S. Hill
	Richard S. Hill, Director

By:	/s/ Fran Keeth
	Fran Keeth, Director

By:	/s/ Roger King
	Roger King, Director

By:	/s/ Stephen C. Patrick
	Stephen C. Patrick, Director

By:	/s/ Barry W. Perry
	Barry W. Perry, Director

By:	/s/ John C. Waddell
	John C. Waddell, Director

Date: February 3, 2010	By:	/s/ Michael J. Long
		Michael J. Long
		Chairman, President, and Chief Executive Officer