Arrow Electronics Posts Second Quarter Results Ahead of Wall Street Consensus --- Strong Cash Flow And Earnings ---

Arrow Electronics, Inc. (NYSE:ARW) today reported secondquarter 2005 net income of $58.4 million ($.50 and $.48 per share on abasic and diluted basis, respectively) on sales of $2.77 billion,compared with net income of $66.9 million ($.58 and $.55 per share ona basic and diluted basis, respectively) on sales of $2.68 billion inthe second quarter of 2004. Cash flow from operations in the secondquarter of 2005 was $63.1 million, compared to a use of cash of $37.5million in the second quarter of 2004. The company's results for 2005and 2004 include a number of items that impact their comparability. Adescription of these items is provided below together with areconciliation under the heading "Certain Non-GAAP FinancialInformation". Excluding those items, net income for the quarter endedJuly 1, 2005 would have been $65.4 million ($.56 and $.54 per share ona basic and diluted basis, respectively) and net income for thequarter ended June 30, 2004 would have been $69.2 million ($.60 and$.57 per share on a basic and diluted basis, respectively). WallStreet consensus, as reported by First Call, was $.51 per share.

Consolidated operating income of $123.6 million, excluding theitems impacting comparability, was up 11% from $110.9 million in thefirst quarter. Operating income as a percentage of sales, excludingthe previously mentioned items impacting comparability, increased by40 basis points sequentially and decreased 20 basis pointsyear-on-year.

"We again delivered strong results as we continue to execute onour strategies to drive sales growth and greater operatingefficiencies," said William E. Mitchell, President and Chief ExecutiveOfficer of Arrow. "Our initiatives to streamline our organization,leverage our cost structure, and efficiently manage working capitalcontinue to drive strong operating results and cash flow," added Mr.Mitchell.

Worldwide components sales of $2.08 billion were essentially flatwith the first quarter and up 2% from last year's second quarter. "TheNorth American and Asia/Pacific components businesses posted solidsequential growth in sales and earnings", said Mr. Mitchell, "while inEurope operating performance improved despite the traditional seasonaldecline in sales."

Worldwide computer products sales of $691 million advanced 9% bothsequentially and year-over-year. "Our North American Computer Productsbusiness again posted record sales, advancing 12% over both thisyear's first quarter and last year's second quarter," added Mr.Mitchell. "This marked our North American Computer Products business'16th consecutive quarter of year-on-year growth in operating income."

The company's results for the second quarter of 2005 and 2004include a number of items outlined below that impact theircomparability:

-- The company announced, during the first quarter of 2005, that it would be taking additional actions to better optimize the use of its mainframe, reduce real estate costs, be more efficient in its distribution centers, and to be more productive. These actions are expected to reduce costs by approximately $50 million per annum with $40 million to be realized in 2005. Approximately $9 million of the expected 2005 cost reduction was achieved in the second quarter. The estimated net charges associated with these actions are expected to total approximately $7.5 million. In the second quarter of 2005, $4.8 million ($2.9 million net of related taxes or $.02 per share) of these charges were recorded.

-- During the second quarter of 2005, the company repurchased, through a series of transactions, $80.8 million accreted value of its zero coupon convertible debentures due in 2021, which could have been initially put to the company in February 2006 ("convertible debentures"). The related loss on the repurchase, including the premium paid and the write-off of related deferred financing costs, aggregated $1.7 million ($1.0 million net of related taxes or $.01 per share).

-- At July 1, 2005, the company determined that an other-than-temporary decline in the fair value of an investment occurred, and, accordingly, the company recorded a loss on the write-down of an investment of $3.0 million ($.03 per share) in accordance with Financial Accounting Standards Board Statement No. 115 and Emerging Issues Task Force Issue No. 03-1.

-- During the second quarter of 2004, the company recorded a restructuring gain of $1.2 million ($1.9 million net of related taxes or $.02 and $.01 per share on a basic and diluted basis, respectively).

-- During the second quarter of 2004, the company repurchased, through a series of transactions, $141.7 million accreted value of its convertible debentures. The related loss on the repurchase, including the premium paid and the write-off of related deferred financing costs, aggregated $7.1 million ($4.2 million net of related taxes or $.04 and $.03 per share on a basic and diluted basis, respectively).

"The components markets remain stable. Lead times are short,product is readily available, and customer ordering patterns haveremained relatively consistent for several quarters", said Paul J.Reilly, Senior Vice President and Chief Financial Officer. "We expectto see normal seasonality as we enter the third quarter. Based uponall of the information known to us today, we expect third quarterrevenues to be between $2.65 billion and $2.75 billion with earningsper share on a diluted basis, excluding charges, in the range of $.49to $.53 per share," said Mr. Reilly.

"We once again improved upon our industry leading levels ofearnings, profitability and return on investment by our strategy ofoutperforming the market, operational excellence, continuous processimprovement, and greater financial stability," said Mr. Mitchell, "andwe remain committed to creating greater levels of value for ourshareholders."

SIX MONTH RESULTS

Arrow's net income for the first six months of 2005 was $115.6million ($.99 and $.96 per share on a basic and diluted basis,respectively) on sales of $5.5 billion, compared with net income of$96.4 million ($.87 and $.82 per share on a basic and diluted basis,respectively) on sales of $5.3 billion in the first six months of2004.

Net income for the first six months of 2005 includes theaforementioned restructuring charges, write-down of an investment, andcharge associated with the loss on prepayment of debt. Additionally,during the first quarter of 2005, restructuring charges of $4.1million ($2.6 million net of related taxes or $.02 per share) relatedto the aforementioned actions to be more efficient and productive, aloss on prepayment of debt of $.4 million ($.2 million net of relatedtaxes) on the repurchase of $13.2 million accreted value of itsconvertible debentures, and an acquisition indemnification credit of$1.7 million ($1.3 million net of related taxes or $.01 per share on abasic basis) were recorded. Net income for the first six months of2004 includes the aforementioned restructuring gain and chargesassociated with the loss on prepayment of debt. Additionally, duringthe first quarter of 2004, restructuring charges of $8.8 million ($6.5million net of related taxes or $.06 and $.05 per share on a basic anddiluted basis, respectively) were recorded. Also, the companyrepurchased, through a series of transactions, $250.0 millionprincipal amount of its 8.7% senior notes due in October 2005 and$91.9 million accreted value of its convertible debentures. As aresult of these repurchases, a loss on prepayment of debt of $23.7million ($14.2 million net of related taxes or $.13 and $.12 per shareon a basic and diluted basis, respectively) was recorded in the firstquarter of 2004. Excluding these items, net income would have been$124.1 million ($1.06 and $1.03 per share on a basic and dilutedbasis, respectively) and $119.4 million ($1.08 and $1.01 per share ona basic and diluted basis, respectively) for the first six months of2005 and 2004,respectively.

Arrow Electronics is a major global provider of products,services, and solutions to industrial and commercial users ofelectronics components and computer products. Headquartered inMelville, New York, Arrow serves as a supply channel partner fornearly 600 suppliers and 150,000 original equipment manufacturers,contract manufacturers, and commercial customers through a globalnetwork of more than 200 locations in 53 countries and territories.

Certain Non-GAAP Financial Information

In addition to disclosing results that are determined inaccordance with Generally Accepted Accounting Principles ("GAAP"), thecompany provides certain non-GAAP financial information relating tooperating income, net income and net income per basic and dilutedshare, each as adjusted for certain charges, credits and losses thatthe company believes impact the comparability of its results ofoperations. These charges, credits and losses arise out of thecompany's acquisitions of other companies, the company's efficiencyenhancement initiatives, the prepayment of debt, and the write-down ofan investment. Reconciliations of the company's non-GAAP financialinformation to GAAP are set forth in the table below.

The company believes that such non-GAAP financial information isuseful to investors to assist in assessing and understanding thecompany's operating performance and underlying trends in the company'sbusiness because management considers the charges, credits and lossesreferred to above to be outside the company's core operating results.This non-GAAP financial information is among the primary indicatorsmanagement uses as a basis for evaluating the company's financial andoperating performance. In addition, the company's Board of Directorsmay use this non-GAAP financial information in evaluating managementperformance and setting management compensation.

The presentation of this additional non-GAAP financial informationis not meant to be considered in isolation or as a substitute for, oralternative to, operating income, net income and net income per basicand diluted share determined in accordance with GAAP. Analysis ofresults and outlook on a non-GAAP basis should be used as a complementto, and in conjunction with, data presented in accordance with GAAP.

ARROW ELECTRONICS, INC.
EARNINGS RECONCILIATION
(In thousands except per share data)

Three Months Ended Six Months Ended
July 1, June 30, July 1, June 30,
2005 2004 2005 2004
------- -------- ------- ---------

Operating income, as reported $118,758 $127,933 $227,251 $225,696
Acquisition indemnification
credit - - (1,672) -
Restructuring charges (gain) 4,847 (1,241) 8,885 7,577
-------------------- --------- ---------
Operating income, as adjusted $123,605 $126,692 $234,464 $233,273
==================== ========= =========

Net income, as reported $ 58,449 $ 66,859 $115,640 $ 96,384
Acquisition indemnification
credit - - (1,267) -
Restructuring charges (gain) 2,925 (1,914) 5,458 4,581
Loss on prepayment of debt 1,035 4,216 1,247 18,407
Write-down of investment 3,019 - 3,019 -
-------------------- --------- ---------
Net income, as adjusted $ 65,428 $ 69,161 $124,097 $119,372
==================== ========= =========

Net income per basic share, as
reported $ .50 $ .58 $ .99 $ .87
Acquisition indemnification
credit - - (.01) -
Restructuring charges (gain) .02 (.02) .04 .04
Loss on prepayment of debt .01 .04 .01 .17
Write-down of investment .03 - .03 -
-------------------- --------- ---------
Net income per basic share, as
adjusted $ .56 $ .60 $ 1.06 $ 1.08
==================== ========= =========

Net income per diluted share,
as reported* $ .48 $ .55 $ .96 $ .82
Restructuring charges (gain) .02 (.01) .03 .04
Loss on prepayment of debt .01 .03 .01 .15
Write-down of investment .03 - .03 -
-------------------- --------- ---------
Net income per diluted share,
as adjusted $ .54 $ .57 $ 1.03 $ 1.01
==================== ========= =========

* In computing net income per diluted share for the three and six
months ended July 1, 2005, net income was increased by $1,553 and
$3,226, respectively, for interest (net of taxes) related to the zero
coupon convertible debentures ("convertible debentures") which are
dilutive common stock equivalents. In addition, the diluted weighted
average number of shares outstanding for the three and six months
ended July 1, 2005 includes 5,883 shares and 6,195 shares,
respectively, related to the convertible debentures.

In computing net income per diluted share for the three and six
months ended June 30, 2004, net income was increased by $2,536 and
$5,906, respectively, for interest (net of taxes) related to the
convertible debentures which are dilutive common stock equivalents. In
addition, the diluted weighted average number of shares outstanding
for the three and six months ended June 30, 2004 includes 9,892 shares
and 11,659 shares, respectively, related to the convertible
debentures.

Safe Harbor

The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking statements. This press release
contains forward-looking statements that are subject to certain risks
and uncertainties which could cause actual results or facts to differ
materially from such statements for a variety of reasons including,
but not limited to: industry conditions, changes in product supply,
pricing, and customer demand, competition, other vagaries in the
computer and electronic components markets, changes in relationships
with key suppliers, the effects of additional actions taken to lower
costs, the ability of the company to generate additional cash flow and
the other risks described from time to time in the company's reports
to the Securities and Exchange Commission (including the company's
Annual Report on Form 10-K and Quarterly Reports on Form 10-Q).
Forward-looking statements are those statements, which are not
statements of historical fact. You can identify these forward-looking
statements by forward-looking words such as "expects," "anticipates,"
"intends," "plans," "may," "will," "believes," "seeks," "estimates,"
and similar expressions. Shareholders and other readers are cautioned
not to place undue reliance on these forward-looking statements, which
speak only as of the date on which they are made. The company
undertakes no obligation to update publicly or revise any
forward-looking statements.

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands except per share data)

Three Months Ended Six Months Ended
July 1, June 30, July 1, June 30,
2005 2004 2005 2004
---------- --------- ---------- ------------


Sales $2,767,547 $2,678,290 $5,494,418 $ 5,304,248
---------- ----------- ----------- ------------

Costs and expenses:
Cost of products sold 2,326,214 2,227,256 4,620,856 4,429,994
Selling, general and
administrative
expenses 304,235 310,379 613,078 611,892
Depreciation and
amortization 13,493 13,963 26,020 29,089
Acquisition
indemnification
credit - - (1,672) -
Restructuring charges
(gain) 4,847 (1,241) 8,885 7,577
----------- ---------- ----------- ------------

2,648,789 2,550,357 5,267,167 5,078,552
----------- ---------- ----------- ------------

Operating income 118,758 127,933 227,251 225,696

Equity in earnings of
affiliated companies 562 901 1,640 1,346

Loss on prepayment of
debt 1,731 7,051 2,086 30,781

Write-down of
investment 3,019 - 3,019 -

Interest expense, net 24,375 24,493 48,475 55,213
----------- ---------- ----------- ------------

Income before income
taxes and minority
interest 90,195 97,290 175,311 141,048

Provision for income
taxes 31,627 30,000 59,371 44,082
----------- ---------- ----------- ------------

Income before minority
interest 58,568 67,290 115,940 96,966

Minority interest 119 431 300 582
----------- ---------- ----------- ------------

Net income $ 58,449 $ 66,859 $ 115,640 $ 96,384
========== =========== =========== ============

Net income per share:
Basic $ .50 $ .58 $ .99 $ .87
========== =========== =========== ============

Diluted $ .48 $ .55 $ .96 $ .82
========== =========== =========== ============

Average number of
shares outstanding:
Basic 117,009 114,917 116,604 110,764

Diluted 124,241 126,698 124,136 124,198

This interim report is subject to independent audit at year-end.

ARROW ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)

July 1, December 31,
2005 2004
------- ------------
ASSETS

Current assets:
Cash and cash equivalents $ 616,213 $ 305,294
Short-term investments - 158,600
----------- -----------
Total cash and short-term investments 616,213 463,894
Accounts receivable, net 2,118,510 1,984,122
Inventories 1,359,081 1,486,478
Prepaid expenses and other assets 100,060 93,039
----------- -----------

Total current assets 4,193,864 4,027,533
----------- -----------

Property, plant and equipment at cost:
Land 38,507 40,340
Buildings and improvements 170,147 184,344
Machinery and equipment 409,779 418,721
----------- -----------
618,433 643,405
Less: accumulated depreciation and
amortization (386,453) (380,422)
----------- -----------

Property, plant and equipment, net 231,980 262,983
----------- -----------

Investments in affiliated companies 34,353 34,302
Cost in excess of net assets of companies
acquired 921,770 974,285
Other assets 200,079 209,998
----------- -----------

Total assets $5,582,046 $5,509,101
=========== ===========


LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable $1,451,602 $1,261,971
Accrued expenses 391,022 395,955
Short-term borrowings, including current
portion of long-term debt 229,658 8,462
----------- -----------

Total current liabilities 2,072,282 1,666,388
----------- -----------

Long-term debt 1,160,921 1,465,880
Other liabilities 177,369 182,647
Shareholders' equity:
Common stock, par value $1:
Authorized - 160,000 shares in 2005 and 2004
Issued - 118,272 shares in 2005 and 117,675
in 2004 118,272 117,675
Capital in excess of par value 809,241 797,828
Retained earnings 1,261,446 1,145,806
Foreign currency translation adjustment 7,904 190,595
----------- -----------
2,196,863 2,251,904
Less: Treasury stock (294 and 1,374 shares
in
2005 and 2004, respectively), at cost (7,861) (36,735)
Unamortized employee stock awards (2,626) (3,738)
Other (14,902) (17,245)
----------- -----------
Total shareholders' equity 2,171,474 2,194,186
----------- -----------

Total liabilities and shareholders'
equity $5,582,046 $5,509,101
=========== ===========

This interim report is subject to independent audit at year-end.

ARROW ELECTRONICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)

Six Months Ended
---------------------
July 1, June 30,
2005 2004
---------- ---------
Cash flows from operating activities:
Net income $ 115,640 $ 96,384
---------- ----------
Adjustments to reconcile net income to net
cash provided by (used for) operations:
Minority interest 300 582
Depreciation and amortization 26,020 29,089
Accretion of discount on convertible
debentures 5,395 9,880
Amortization of deferred financing costs
and discount
on notes 1,885 2,807
Amortization of restricted stock and
performance awards 3,010 5,936
Equity in earnings of affiliated companies (1,640) (1,346)
Deferred income taxes 705 1,568
Acquisition indemnification credit, net of
taxes (1,267) -
Restructuring charges, net of taxes 5,458 4,581
Loss on prepayment of debt, net of taxes 1,247 18,407
Write-down of investment 3,019 -
Change in assets and liabilities, net of
effects of acquired businesses:
Accounts receivable (207,839) (234,862)
Inventories 79,457 (191,974)
Prepaid expenses and other assets (6,123) (3,940)
Accounts payable 221,484 96,452
Accrued expenses (30,513) (567)
Other (124) 7,176
---------- ----------
Net cash provided by (used for) operating
activities 216,114 (159,827)
---------- ----------

Cash flows from investing activities:
Acquisition of property, plant and equipment,
net (4,564) (3,055)
Cash consideration paid for acquired
businesses (2,461) (12,179)
Proceeds from note receivable - 8,333
Purchase of short-term investments (230,456) (178,836)
Proceeds from sale of short-term investments 389,056 178,836
Other 3,711 (286)
---------- ----------
Net cash provided by (used for) investing
activities 155,286 (7,187)
---------- ----------

Cash flows from financing activities:
Change in short-term borrowings 9,493 (1,213)
Change in long-term debt (1,936) (947)
Repurchase of senior notes - (268,399)
Repurchase of convertible debentures (94,501) (241,790)
Proceeds from common stock offering - 312,789
Proceeds from exercise of stock options 35,563 12,701
---------- ----------
Net cash used for financing activities (51,381) (186,859)
---------- ----------

Effect of exchange rate changes on cash (9,100) 3,416
---------- ----------

Net increase (decrease) in cash and cash
equivalents 310,919 (350,457)
Cash and cash equivalents at beginning of period 305,294 612,404
---------- ----------
Cash and cash equivalents at end of period $ 616,213 $ 261,947
========== ==========

This interim report is subject to independent audit at year-end.

ARROW ELECTRONICS, INC.
SEGMENT INFORMATION
(In thousands)

Three Months Ended Six Months Ended
July 1, June 30, July 1, June 30,
2005 2004 2005 2004
----------- ---------- ---------- -----------

Sales:
Components $2,076,935 $2,043,329 $4,171,678 $4,077,182
Computer Products 690,612 634,961 1,322,740 1,227,066
----------- ----------- ----------- -----------
Consolidated $2,767,547 $2,678,290 $5,494,418 $5,304,248
=========== =========== =========== ===========


Operating income:
Components $ 105,550 $ 119,882 $ 201,297 $ 230,322
Computer Products 40,673 31,694 76,357 52,312
Corporate (a) (27,465) (23,643) (50,403) (56,938)
----------- ----------- ----------- -----------
Consolidated $ 118,758 $ 127,933 $ 227,251 $ 225,696
=========== =========== =========== ===========

(a) Includes restructuring charges of $4.8 million for the three
months ended July 1, 2005, a restructuring gain of $1.2 million
for the three months ended June 30, 2004, an acquisition
indemnification credit of $1.7 million and restructuring charges
of $8.9 million for the six months ended July 1, 2005, and
restructuring charges of $7.6 million for the six months ended
June 30, 2004.

This interim report is subject to independent audit at year-end