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Arrow Q3 EPS Triples

MELVILLE, N.Y. — Arrow Electronics, Inc. (NYSE:ARW) today reported third quarter 2010 net income of $118.5 million ($1.01 and $1.00 per share on a basic and diluted basis, respectively) on sales of $4.66 billion, compared with net income of $12.6 million ($.10 per share on both a basic and diluted basis) on sales of $3.67 billion in the third quarter of 2009.

“The positive momentum we have seen in our businesses during the first half of the year has continued with another quarter of terrific performance. Earnings per share came in well ahead of our expectations and almost tripled year over year to a record third-quarter level”

The company's results for the third quarters of 2010 and 2009 include a number of items outlined below that impact their comparability. A complete reconciliation of these items is provided under the heading “Certain Non-GAAP Financial Information.” Excluding those items, on a non-GAAP basis, net income for the quarter ended October 2, 2010 would have been $128.0 million ($1.09 and $1.08 per share on a basic and diluted basis, respectively) and net income for the quarter ended October 3, 2009 would have been $44.9 million ($.37 per share on both a basic and diluted basis).

“The positive momentum we have seen in our businesses during the first half of the year has continued with another quarter of terrific performance. Earnings per share came in well ahead of our expectations and almost tripled year over year to a record third-quarter level,” said Michael J. Long, chairman, president, and chief executive officer. “Our strategy to accelerate growth and gain market share through sales excellence, value-added services, and expansion of markets served is paying off.”

“The third quarter results once again demonstrate our ability to deliver industry-leading results and drive gross margin improvements, and the significant operating leverage we have in the model, with operating income growing more than 5x faster than sales on a year-over-year basis,” said Paul J. Reilly, executive vice president, finance and operations and chief financial officer. “Equally important, our returns continue to reflect our strategic accomplishments, with both our return on working capital and return on invested capital almost doubling year over year.”

Global components sales of $3.44 billion increased 35 percent year over year. “Our components business experienced its fifth consecutive quarter of better than normal seasonality. Gross and operating margins have also seen sequential improvements over the past year,” Mr. Long said.

Global enterprise computing solutions (“ECS”) sales of $1.22 billion increased 8 percent year over year. “Storage, software, and industry-standard servers grew at very strong double-digits rates on a year-over-year basis,” said Mr. Long. “We also saw terrific growth in some of our newer initiatives including security and networking,” Mr. Long added.

The company's results for the third quarters of 2010 and 2009 include the items outlined below that impact their comparability:

• restructuring, integration, and other charges of $14.3 million ($9.5 million net of related taxes or $.08 per share on both a basic and diluted basis) in 2010 and $37.6 million ($29.1 million net of related taxes or $.24 per share on a both basic and diluted basis) in 2009.

• loss on prepayment of debt of $5.3 million ($3.2 million net of related taxes or $.03 per share on both a basic and diluted basis) in 2009.

NINE-MONTH RESULTS

Arrow’s net income for the first nine months of 2010 was $321.7 million ($2.71 and $2.68 per share on a basic and diluted basis, respectively) on sales of $13.51 billion, compared with net income of $60.4 million ($.50 per share on both a basic and diluted basis) on sales of $10.48 billion in the first nine months of 2009. Sales in the first nine months of 2010 increased 29 percent year over year.

Net income for the first nine months of 2010 includes restructuring, integration, and other charges of $27.4 million ($19.1 million net of related taxes or $.16 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies and a loss on prepayment of debt of $1.6 million ($1.0 million net of taxes or $.01 per share on both a basic and diluted basis). Excluding these items, net income would have been $341.9 million ($2.88 and $2.84 per share on a basic and diluted basis, respectively) for the first nine months of 2010.

Net income for the first nine months of 2009 includes restructuring, integration, and other charges of $80.9 million ($61.3 million net of related taxes or $.51 per share on both a basic and diluted basis) primarily related to initiatives taken by the company to improve operating efficiencies and a loss on prepayment of debt of $5.3 million ($3.2 million net of taxes or $.03 per share on both a basic and diluted basis). Excluding these items, net income would have been $124.9 million ($1.04 per share on both a basic and diluted basis) for the first nine months of 2009.

GUIDANCE

“Looking ahead, we believe that total fourth quarter sales will be between $5.0 and $5.4 billion, with global components sales between $3.325 and $3.525 billion and global enterprise computing solutions sales between $1.675 and $1.875 billion. Earnings per share, on a diluted basis, excluding any charges, are expected to be in the range of $1.22 to $1.32,” said Mr. Reilly.

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