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What changed in ARROW ELECTRONICS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ARROW ELECTRONICS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+273 added−320 removedSource: 10-K (2024-02-13) vs 10-K (2023-02-09)

Top changes in ARROW ELECTRONICS, INC.'s 2023 10-K

273 paragraphs added · 320 removed · 221 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeBelow are statistics related to gender and racial/ethnic diversity by employee population: Gender Diversity (Global) (% female) Underrepresented Race/Ethnicity (United States) (% underrepresented race/ethnicity) 2022 2021 Change 2022 2021 Change Executives (a) 27.3% 27.3% —% 27.3% 18.2% 9.1% Vice Presidents (a) 22.4% 22.8% (0.4)% 12.3% 13.8% (1.5)% Directors 29.9% 27.6% 2.3% 17.9% 16.4% 1.5% Managers 30.4% 29.8% 0.6% 30.0% 27.0% 3.0% Supervisors 50.3% 45.8% 4.5% 40.2% 42.6% (2.4)% Total Leadership 34.1% 32.6% 1.5% 26.5% 25.2% 1.3% Individual Contributors 43.7% 44.7% (1.0)% 39.2% 37.4% 1.8% Total Employee Population 42.0% 42.4% (0.4)% 36.9% 35.1% 1.8% (a) Executives includes executive officers of the company, and non-executive officers who are members of the executive committee. 2021 results have been adjusted to reflect current year presentation of executives and vice presidents.
Biggest changeBeginning in 2022, the annual incentive compensation plans for the company’s executives have included goals linked to the company’s diversity priorities. 6 Table of Contents Below are statistics related to gender and racial/ethnic diversity by employee population: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gender Diversity (Global) Underrepresented Race/Ethnicity (United States) ​ ​ (% female) ​ (% underrepresented race/ethnicity) ​ 2023 2022 Change 2023 2022 Change ​ Executives (a) 33.3 % 27.3 % 6.0 % 25.0 % 27.3 % (2.3) % Vice Presidents (a) 22.8 % 22.4 % 0.4 % 14.5 % 12.3 % 2.2 % Directors 30.9 % 29.9 % 1.0 % 17.1 % 17.9 % (0.8) % Managers 30.4 % 30.4 % — % 31.4 % 30.0 % 1.4 % Supervisors 47.6 % 50.3 % (2.7) % 37.2 % 40.2 % (3.0) % Total Leadership 33.3 % 34.1 % (0.8) % 26.5 % 26.5 % — % Individual Contributors 43.3 % 43.7 % (0.4) % 39.4 % 39.2 % 0.2 % Total Employee Population 41.7 % 42.0 % (0.3) % 37.1 % 36.9 % 0.2 % (a) Executives includes executive officers of the company, and non-executive officers who are members of the executive committee.
The company's financial objectives are to grow sales faster than the market, increase the markets served, grow profits faster than sales, generate earnings per share growth in excess of competitors’ earnings per share growth and market expectations, grow earnings per share at a rate that provides the capital necessary to support the company’s business strategy, allocate and deploy capital effectively so that return on invested capital exceeds the company’s cost of capital, and increase return on invested capital.
The company’s financial objectives are to grow sales faster than the market, increase the markets served, grow profits faster than sales, generate earnings per share growth in excess of competitors’ earnings per share growth and market expectations, grow earnings at a rate that provides the capital necessary to support the company’s business strategy, allocate and deploy capital effectively so that return on invested capital exceeds the company’s cost of capital, and increase return on invested capital.
Global ECS works with VARs and MSPs to tailor complex IT solutions for their end-users. Customers have access to various services including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. Global ECS suppliers benefit from demand creation, speed to market, and efficient supply chain management.
Global ECS works with VARs and MSPs to tailor complex IT solutions for their end-users. Arrow’s customers have access to various services including engineering and integration support, warehousing and logistics, marketing resources, and authorized hardware and software training. Global ECS suppliers benefit from demand creation, speed to market, and efficient supply chain management.
Most of the company's purchases are pursuant to distributor agreements, which are typically non-exclusive and cancellable by either party at any time or on short notice. Distribution Agreements Certain agreements with suppliers protect the company against the potential write-down of inventories due to technological change or suppliers' price reductions.
Most of the company’s purchases from suppliers are pursuant to distributor agreements, which are typically non-exclusive and cancellable by either party at any time or on short notice. Distribution Agreements Certain agreements with suppliers protect the company against the potential write-down of inventories due to technological change or suppliers’ price reductions.
The company guides innovation forward by helping its customers in the areas of industrial automation, edge computing, cloud computing, and smart and connected devices, homes, cities, and transportation to deliver new technologies that improve businesses' performance and consumers' lives.
The company guides innovation forward by helping its customers in the areas of industrial automation, edge computing, cloud computing, and smart and connected devices, homes, cities, and transportation to deliver new technologies that help to improve businesses’ performance and consumers’ lives.
However, certain parts of the company's business, such as the company's global ECS business segment, rely on a limited number of suppliers with the strategy of providing focused support, extensive product knowledge, and customized service to suppliers, MSPs, and VARs.
However, certain parts of the company’s business, such as the company’s global ECS business, rely on a limited number of suppliers with the strategy of providing focused support, extensive product knowledge, and customized service to suppliers, MSPs, and VARs.
A copy of any of the company's filings with the SEC, or any of the agreements or other documents that constitute exhibits to those filings, can be obtained by request directed to the company at the following address and telephone number: Arrow Electronics, Inc. 9201 East Dry Creek Road Centennial, Colorado 80112 (303) 824-4000 Attention: Corporate Secretary The company also makes these filings, and amendments to these filings, available, free of charge, through its Investor Relations website (investor.arrow.com/investors) as soon as reasonably practicable after the company files such materials with the SEC.
A copy of any of the company’s filings with the SEC, or any of the agreements or other documents that constitute exhibits to those filings, can be obtained by request directed to the company at the following address and telephone number: 7 Table of Contents Arrow Electronics, Inc. 9201 East Dry Creek Road Centennial, Colorado 80112 (303) 824-4000 Attention: Corporate Secretary The company also makes these filings, and amendments to these filings, available, free of charge, through its Investor Relations website (investor.arrow.com/investors) as soon as reasonably practicable after the company files such materials with the SEC.
Zech 53 Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer Set forth below is a brief account of the business experience during the past five years of each executive officer of the company. Sean J. Kerins was appointed President, Chief Executive Officer in June 2022. Prior thereto, he served as Chief Operating Officer since December 2020.
Zech 54 Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer ​ Set forth below is a brief account of the business experience during the past five years of each executive officer of the company. Sean J. Kerins was appointed President, Chief Executive Officer in June 2022. Prior thereto, he served as Chief Operating Officer since December 2020.
Arrow also offers a suite of enterprise leadership training and development programs. These programs create value by growing employee capability, which in turn facilitates business growth, while also providing career growth opportunities for employees. For example, over 70% of open manager-level and above positions were filled internally during 2022 and 2021.
Arrow also offers a suite of enterprise leadership training and development programs. These programs create value by growing employee capability, which in turn facilitates business growth, while also providing career growth opportunities for employees. For example, over 70% of open manager-level and above positions were filled internally during 2023 and 2022.
Expanded Human Capital Disclosure Additional human capital information is included in the company's Environmental, Social, and Governance Report ("ESG Report"), which is available on the Arrow.com website. Information contained in the company's ESG Report and website is not deemed part of, or incorporated by reference into, this Annual Report on Form 10-K.
Expanded Human Capital Disclosure Additional human capital information is included in the company’s Environmental, Social, and Governance Report (“ESG Report”), which is available on the Arrow.com website. Information contained in the company’s ESG Report and website is not deemed part of, or incorporated by reference into, this Annual Report on Form 10-K.
The size of the company's competitors vary across market sectors, as do the resources the company has allocated to the sectors in which it does business. Therefore, some of the company's competitors may have a more extensive customer and/or supplier base than the company in one or more of its market sectors.
The size of the company’s competitors vary across vertical markets, as do the resources the company has allocated to the sectors in which it does business. Therefore, some of the company’s competitors may have a more extensive customer and/or supplier base than the company in one or more of its market sectors.
Available Information The company files its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and other documents with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 (as amended, the "Exchange Act").
Available Information The company files its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements, and other documents with the U.S. Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”).
By making cloud-based solutions available through ArrowSphere, suppliers benefit from greater subscription adoption, consumption, and utilization.
By making software and cloud-based solutions available through ArrowSphere, suppliers benefit from greater subscription adoption, consumption, and utilization.
Global ECS further supports customers by enabling their cloud solutions businesses through ArrowSphere, a cloud marketplace and management platform. ArrowSphere helps VARs and MSPs to manage, differentiate, and scale their cloud businesses. It simplifies the operational complexity of delivering hybrid multi-cloud solutions while providing the business intelligence that IT solution providers need to drive growth.
Global ECS further supports customers by enabling their software and cloud solutions businesses through ArrowSphere, a software and cloud marketplace and management platform. ArrowSphere helps VARs and MSPs to manage, differentiate, and scale their as-a-service businesses. It simplifies the operational complexity of delivering hybrid multi-cloud solutions while providing the business intelligence that IT solution providers need to drive growth.
Global ECS The company's global ECS business segment is a leading value-added provider of comprehensive computing solutions and services. Global ECS's portfolio includes datacenter, cloud, security, and analytics solutions. Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its VARs and MSPs meet the needs of their end-users.
Global ECS The company’s global ECS business is a leading value-added provider of comprehensive computing solutions and services. The Global ECS portfolio includes datacenter, cloud, security, and analytics solutions. Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its VARs and MSPs meet the needs of their end-customers.
A supplier electing to terminate a distribution agreement may be required to purchase from the company the total amount of its products carried in inventory. As of December 31, 2022, this type of repurchase arrangement covered approximately 50% of the company's consolidated inventories.
A supplier electing to terminate a distribution agreement may be required to purchase from the company the total amount of its products carried in inventory. As of December 31, 2023, this type of repurchase arrangement covered approximately 60% of the company’s consolidated inventories.
The company's sales teams focus on an extensive portfolio of products and services to support customers' material management and production needs, including connecting customers to the company's field application engineers that provide technical support and serve as a gateway to the company's supplier partners.
The company’s sales teams focus on an extensive portfolio of products and services to support customers’ material management and production needs, including connecting customers to the company’s FAEs that provide technical support and serve as a gateway to the company’s supplier partners.
Government Regulation The company is subject to and endeavors to comply with various government regulations in the United States as well as various jurisdictions where it operates. These regulations cover several diverse areas including trade compliance, anti-bribery, anti-corruption, money laundering, securities, environmental, and data and privacy protection.
Government Regulation The company is subject to, and endeavors to comply with, various government regulations in the United States and various foreign jurisdictions in which it operates. These regulations cover several diverse areas including trade compliance, anti-bribery, anti-corruption, money laundering, securities, environmental, and data and privacy protection.
Regulatory or government authorities where the company operates may have enforcement powers that can subject the company to legal penalties or other measures and can impose changes or conditions in the way it conducts business.
Regulatory or 5 Table of Contents government authorities where the company operates may have enforcement powers that can subject the company to legal penalties or other measures and can impose changes or conditions in the way it conducts business.
As of December 31, 2022, this type of arrangement covered approximately 54% of the company's consolidated inventories. In addition, under the terms of many such agreements, the 4 Index company has the right to return to the supplier, for credit, a defined portion of those inventory items purchased within a designated period of time.
As of December 31, 2023, this type of arrangement covered approximately 55% of the company’s consolidated inventories. In addition, under the terms of many such agreements, the company has the right to return to the supplier, for credit, a defined portion of those inventory items purchased within a designated period of time.
The company's talent ecosystem spans 54 countries, with the strategic vision of excelling in the business to drive more scale, extending the company's value, and winning in the market with the diversity of its people and the strength of its culture, to benefit all stakeholders.
The company’s talent ecosystem spans 53 countries, with the strategic vision of excelling in the business to drive more scale, extending the company’s value, and winning in the market with the diversity of its people and the strength of its culture.
In addition, the company may conduct, or it may be required to conduct, internal investigations or face audits or investigations by one or more domestic or foreign government or regulatory agencies, which could be costly and time-consuming, and could divert management and key personnel from the company’s business operations. See Risk Factors in Part I, Item 1A.
In addition, the company may conduct, or it may be required to conduct, internal investigations or face audits or investigations by one or more domestic or foreign government or regulatory agencies, which could be costly and time-consuming, and could divert management and key personnel from the company’s business operations.
The company is committed to helping employees receive a return on their investment, in the form of compounding knowledge, skills, abilities, and earnings opportunity as their careers grow within the company. The company supports employees through targeted curriculum and tools focused on building skills and capabilities within each workforce segment.
The company is committed to helping employees receive a return on their investment, in the form of compounding knowledge, skills, abilities, and earnings opportunity as their careers grow within the company. The company supports employees through targeted curricula and tools focused on building skills and capabilities at each career stage.
Talent Acquisition, Development, and Retention The company believes in work that elevates career opportunity for all and views its employees as career investors. Employees invest in Arrow by bringing their unique talents, experiences, and perspectives to the organization through their daily work.
Talent Acquisition, Development, and Retention The company believes in work that elevates career opportunity for employees and views its employees as career investors. Employees bring their unique talents, experiences, and perspectives to the organization through their daily work.
The company has operations in each of the three largest electronics markets; the Americas; the Europe, Middle East, and Africa (“EMEA”); and the Asia/Pacific regions. Arrow's business strategy is to be the premier, technology-centric, go-to-market and supply chain services company on the planet.
The company maintains over 180 sales facilities and 39 distribution and value-added centers, serving over 85 countries. The company has operations in each of the three largest electronics markets; the Americas; the Europe, Middle East, and Africa (“EMEA”); and the Asia/Pacific regions. Arrow’s business strategy is to be the premier, technology-centric, go-to-market and supply chain services company on the planet.
Customers and Suppliers The company and its affiliates serve over 210,000 industrial and commercial customers. Industrial customers range from major OEMs and CMs to small engineering firms, while commercial customers primarily include VARs, MSPs, and OEMs. No single customer accounted for more than 2% of the company's 2022 consolidated sales.
Industrial customers range from major OEMs and CMs to small engineering and manufacturing firms, while commercial customers primarily include VARs, MSPs, and OEMs. No single customer accounted for more than 2% of the company’s 2023 consolidated sales.
Prior thereto, he served as President of Arrow Global Enterprise Computing Solutions for more than five years. Michael J. Long was appointed Executive Chairman in June 2022. Prior thereto, he served as President, Chief Executive Officer of the company for more than five years. Rajesh K. Agrawal was appointed Senior Vice President, Chief Financial Officer in September 2022.
Prior thereto, he served as President, Global Enterprise Computing Solutions for more than five years. Rajesh K. Agrawal was appointed Senior Vice President, Chief Financial Officer in September 2022. Prior thereto, he served as Executive Vice President, Chief Financial Officer for The Western Union Company for more than five years. Carine L.
Within the global components business segment for 2022, net sales of approximately 79% consist of semiconductor products and related services; approximately 13% consist of passive, electro-mechanical, and interconnect products, such as capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; approximately 5% consist of computing and memory; and approximately 3% consist of other products and services.
Within the global components business for 2023, net sales of approximately 79% consist of semiconductor products and related services; approximately 14% consist of IP&E products, such as capacitors, resistors, potentiometers, power supplies, relays, switches, and connectors; approximately 5% consist of computing and memory; and approximately 2% consist of other products and services.
Item 1. Business . Arrow Electronics, Inc. (the “company” or “Arrow”) is a global provider of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions.
Item 1. Business . Arrow Electronics, Inc. (the “company” or “Arrow”) is a global provider of products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions. The company has one of the world’s broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers.
Prior thereto, she served as Senior Vice President and Chief Human Resources Officer of the company for more than five years. 8 Index
Zech was appointed Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer in February 2022. Prior thereto, she served as Senior Vice President and Chief Human Resources Officer of the company for more than five years. ​ 8 Table of Contents
Prior thereto, he served as Executive Vice President, Chief Financial Officer for The Western Union Company for more than five years. Carine L. Jean-Claude was appointed Senior Vice President, Chief Legal Officer and Secretary in June 2021. Prior thereto, she served as Vice President, Interim Chief Legal Officer and Secretary since December 2020.
Jean-Claude was appointed Senior Vice President, Chief Legal Officer and Secretary in June 2021. Prior thereto, she served as Vice President, Interim Chief Legal Officer and Secretary since December 2020. Prior thereto, she served as Vice President, Chief Compliance Officer for more than five years. Richard J. Marano was appointed President, Global Components in August 2023.
The company distributes electronic components to OEMs and CMs through its global components business segment and provides enterprise computing solutions to VARs and MSPs through its global ECS business segment. For 2022, approximately 78% of the company's sales were from the global components business segment, and approximately 22% of the company's sales were from the global ECS business segment.
The company has two reportable segments, the global components business and the global enterprise computing solutions (“ECS”) business. The company distributes electronic components to OEMs and CMs through its global components reportable segment and provides enterprise computing solutions to VARs and MSPs through its global ECS reportable segment.
The company believes its deep capabilities and broad services are made possible by a broad group of professionals who understand its customer's problems from numerous perspectives and curate forward-looking, comprehensive solutions.
The company believes its deep capabilities and broad services are made possible by a broad group of professionals who understand its customers’ problems from numerous perspectives and curate forward-looking, comprehensive solutions. The company believes its employees’ diverse backgrounds, talents, experiences, and perspectives frame how its global network of engineers, suppliers, and manufacturers work together, and enhance value for customers.
Arrow's compensation and benefits programs are aligned with the local external market to attract, grow, and retain talent. Arrow’s commitment to rewarding employees fairly based on skills, experience, contribution/performance, internal equity, and the external market enables us to maximize employees’ return on their career investment.
The company’s commitment to rewarding employees fairly based on skills, experience, contribution/performance, internal equity, and the external market enables us to maximize employees’ return on their career investment. The company reviews its compensation and benefits programs and practices regularly to ensure they remain competitive and equitable.
The following table shows the company's approximate headcount by region: Americas EMEA Asia/Pacific Headcount 6,500 7,400 8,400 Gender and Racial/Ethnic Diversity The company has a long-standing goal for gender representation share growth at all levels of the organization globally, and for race/ethnicity representation share growth at all levels of the organization in the United States.
The following table shows the company’s approximate headcount by region: ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas EMEA Asia/Pacific Headcount 6,500 7,600 8,000 ​ Gender and Racial/Ethnic Diversity The company has long-standing goals for fostering diversity within the organization and strives to provide all employees with equal opportunities at all levels of the organization.
Attracting and retaining early career talent enables Arrow to grow employee capability from the ground up.
Attracting and retaining early career talent enables Arrow to grow employee capability from the ground up. Through the company’s university intern and graduate programs, apprenticeship programs, and management trainee programs, Arrow builds a diverse talent pipeline.
The company has one of the world's broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers, coupled with a range of services, solutions, and software, the company helps industrial and commercial customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness.
Coupled with a range of services, solutions, and software, the company helps industrial and commercial customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness. Arrow was incorporated in New York in 1946.
The company offers the convenience of accessing, from a single source, multiple technologies and products from its suppliers with rapid or scheduled deliveries. Most of the company's customers require delivery of their orders on schedules or volumes that are generally not available on direct purchases from manufacturers.
The company offers the convenience of accessing, from a single source, multiple technologies and products from its suppliers with rapid or scheduled deliveries.
Efforts towards employee diversity share growth are reflected in the company’s talent strategy through (a) internal talent development programs that advance career opportunity for women and underrepresented employees, (b) hiring, (c) retention, (d) programs that promote gender and race/ethnicity representation specifically in early career talent, and (e) training programs designed to emphasize and expand diversity and inclusion priorities that align to the company's business strategy .
Efforts towards fostering a diverse talent pipeline and supporting a diverse employee population are reflected in the company’s talent strategy through (a) internal talent development programs and retention initiatives that advance career opportunity for all employees, (b) hiring from a wide range of sources in support of a talent pool with a diverse set of experiences and skills, and, (c) training programs designed to emphasize and expand diversity and inclusion priorities that align to the company’s business strategy.
Substantially all of the company's sales are made on an order-by-order basis, rather than through long-term sales contracts. As such, the nature of the company's business does not provide visibility of material forward-looking information from its customers and suppliers beyond a few months. One supplier accounted for approximately 13% of the company's consolidated sales in 2022.
As such, the nature of the company’s business does not provide visibility of material forward-looking information from its customers and suppliers beyond a few months. One supplier accounted for approximately 10% of the company’s consolidated sales in 2023. The company believes that many of the products it sells are available from other sources at competitive prices.
Through the company’s university intern and graduate programs, apprenticeship programs, and management trainee programs, Arrow builds a diverse talent pipeline. 6 Index The company believes in rewards that improve performance outcomes for all and endorses a pay-for-performance philosophy via performance differentiation and rewarding employees through compensation and benefits.
The company believes in rewards that improve performance outcomes for all and endorses a pay-for-performance philosophy via performance differentiation and rewarding employees through compensation and benefits. The company believes its compensation and benefits programs are aligned with the local external market to attract, grow, and retain talent.
Within the global ECS business segment for 2022, net sales of approximately 33% consist of storage, 21% consist of software applications, 19% consist of security, 15% consist of compute, 6% consist of data intelligence, 4% consist of networking, and 2% consist of other products and services.
Within the global ECS business for 2023, net sales of approximately 28% consist of storage, 20% consist of security, 17% consist of software applications, 14% consist of compute, 6% consist of data intelligence, 7% consist of networking, and 8% consist of other products and services. Customers and Suppliers The company and its affiliates serve thousands of industrial and commercial customers.
The company's sales representatives generally focus on a specific customer segment, particular product lines, or a specific geography, and provide end-to-end product offerings and solutions with an emphasis on helping customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness.
The company’s sales representatives provide end-to-end product offerings and solutions with an emphasis on helping customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness. Substantially all of the company’s sales are made on an order-by- 4 Table of Contents order basis, rather than through long-term sales contracts.
Providing these services generally lead to longer and more profitable relationships that benefit the company as well as the company's suppliers and customers. 3 Index Beyond the traditional source of sales and profits tied to the buying and selling of electronic components, the global components business is expanding its supply chain service offerings, including procurement, logistics, warehousing, and insights from data analytics.
Beyond integration and engineering services, and the traditional source of sales and profits tied to the buying and selling of electronic components, the global components business has been expanding its supply chain service offerings, including procurement, logistics, warehousing, financial management, and insights from data analytics. Through these services, the most complex electronics supply chains in the world are targeted.
Kerins 60 President, Chief Executive Officer Michael J. Long 64 Executive Chairman Rajesh K. Agrawal 57 Senior Vice President, Chief Financial Officer Carine L. Jean-Claude 55 Senior Vice President, Chief Legal Officer and Secretary Kristin D. Russell 52 President, Arrow Global Enterprise Computing Solutions Kirk D. Schell 57 President, Arrow Global Components Gretchen K.
Jean-Claude 56 Senior Vice President, Chief Legal Officer and Secretary Richard J. Marano 59 President, Global Components Kristin D. Russell 53 President, Global Enterprise Computing Solutions Gretchen K.
Factors that may affect the company's ability to attract and retain qualified employees include employee morale, its reputation, competition from other employers, and availability of qualified individuals. The company and its affiliates employed approximately 22,300 employees worldwide as of December 31, 2022.
The company’s business results depend in part on its ability to successfully manage human capital resources, including attracting, identifying, and retaining key talent. Factors that may affect the company’s ability to attract and retain qualified employees include employee morale, its reputation, competition from other employers, and availability of qualified individuals.
Global Components The company's global components business segment markets and distributes electronic components enabled by a comprehensive range of value-added capabilities and services. The company provides customers with the ability to deliver the latest technologies to the market with the help of value-added services and capabilities such as design engineering, global marketing and integration, global logistics, and supply chain management.
The company utilizes its vast marketing, integration and global logistics footprint to provide customers with the ability to deliver the latest semiconductor and interconnect, passive and electromechanical (“IP&E”) technologies to the market along with the help of value-added services and capabilities such as new product component integration, also known as, demand creation, design engineering services, and supply chain management.
Prior thereto, she served as Vice President, Legal Affairs since 2017. Kristin D. Russell was appointed President, Arrow Global Enterprise Computing Solutions in December 2020. Prior thereto, she served as President, Arrow Intelligent Systems from May 2016 to December 2020. Kirk D. Schell was appointed President, Arrow Global Components in May 2022.
Prior thereto, he served as President, Americas Components since January 2020. Prior thereto, he served as Vice President, Sales, Americas Components for more than five years. Kristin D. Russell was appointed President, Global Enterprise Computing Solutions in December 2020. Prior thereto, she served as President, Global Services for more than five years. Gretchen K.
These customers include manufacturers of industrial equipment (such as machine tools, factory automation, and robotic equipment) and consumer products serving industries ranging from industrial, automotive and transportation, telecommunications, contract manufacturing, and consumer products, among others. The company has two business segments, the global components business and the global enterprise computing solutions (“ECS”) business.
Arrow’s diverse worldwide customer base consists of original equipment manufacturers (“OEMs”), value-added resellers (“VARs”), managed service providers (“MSPs”), contract manufacturers (“CMs”), and other commercial customers. These customers include manufacturers of industrial equipment (such as machine tools, factory automation, and robotic equipment) and products serving industries ranging from industrial, automotive and transportation, telecommunications, and consumer electronics, among others.
The company does not intend this internet address to be an active link or to otherwise incorporate the contents of the website into this Annual Report on Form 10-K. 7 Index Information about the Executive Officers The following table sets forth the names, ages, and the positions held by each of the executive officers of the company as of February 9, 2023: Name Age Position Sean J.
The company also uses its website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure. The company does not intend this internet address to be an active link or to otherwise incorporate the contents of the website into this Annual Report on Form 10-K.
The financial information about the company's business segments and geographic operations is found in Note 15 to the consolidated financial statements. The company maintains over 220 sales facilities and 43 distribution and value-added centers, serving over 90 countries.
For 2023, approximately 77% of the company’s sales were from the global components reportable segment, and approximately 23% of the company’s sales were from the global ECS reportable segment. The financial information about the company’s reportable segments and geographic operations is found in Note 16 to the consolidated financial statements.
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Arrow was incorporated in New York in 1946 and serves over 210,000 customers worldwide. Arrow's diverse worldwide customer base consists of original equipment manufacturers (“OEMs”), value-added resellers (“VARs”), managed service providers (“MSPs”), contract manufacturers (“CMs”), and other commercial customers.
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Global Components The company’s global components business markets and distributes electronic components enabled by a comprehensive range of value-added capabilities and services.
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The global components business design, engineering, global marketing and integration services provide a variety of mechanisms, commonly known as demand creation, to promote the future sale of suppliers’ products. Most notably, the company intends to register engineered designs and schematics showing the use of suppliers’ components in the company’s customers’ future products.
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Most of the company’s customers require delivery of their orders on schedules or volumes that are generally not available directly from manufacturers. 3 Table of Contents The company’s demand creation efforts are intended to promote the future sale of suppliers’ products through registered engineered designs and schematics showing the use of suppliers’ components in the company’s customers’ future products.
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No other single supplier accounted for more than 7% of the company's consolidated sales in 2022. The company believes that many of the products it sells are available from other sources at competitive prices.
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Providing these services, primarily through the efforts of field application engineers (“FAEs”) generally leads to longer and more profitable relationships that benefit the company as well as the company’s suppliers and customers.
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The company's employees’ diverse backgrounds have melded into rich perspectives that sharpen the company, frame how its global network of engineers, suppliers, and manufacturers work together, and enhance value for customers. 5 Index The company's business results depend in part on its ability to successfully manage human capital resources, including attracting, identifying, and retaining key talent.
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In addition to demand creation, the company utilizes its sizable engineering resources to engage with customers in a variety of design engineering services, including software development, product design and integrated circuit design. Arrow’s integration services provide a full suite of product lifecycle solutions for our customers.
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Demonstrating the company’s commitment to employee diversity at all levels of the organization, in 2022, the company established quantitative short-term and multi-year goals to grow representation of women leaders globally and leaders who are of underrepresented race/ethnicity in the United States by 0.5 percentage points each year from 2022 – 2025, in order to achieve growth of two percentage points by 2025.
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Services include design engineering from prototyping to volume production readiness, worldwide logistics and fulfillment capabilities, and scalable manufacturing and customer support.
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Leaders are considered to include supervisors and above, shown as "Total Leadership" in the table below. Beginning in 2022, compensation plans for the company's executives include goals linked to the achievement of these annual targets.
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Arrow provides logistics support and process and systems expertise to improve customer’s supply chain execution, visibility, resilience, and optimization. The company’s supply chain services are intended to serve our customer’s direct supply chain and provide fee-based revenue opportunities.
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The company reviews its compensation and benefits programs and practices regularly to ensure they remain competitive and equitable. Arrow’s Response to COVID-19 Arrow has remained resilient in these extraordinary times, in large part, due to the company's focus on serving its customers and the communities where they work and live.
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A liability for environmental remediation and other environmental costs is accrued when the company considers it probable that a liability has been incurred and the amount of loss can be reasonably estimated. Environmental costs and accruals are presently not material to the company’s operations, cash flows or financial position.
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The company continued to provide a safe work environment as the COVID-19 pandemic persisted during 2022. It aligned with and followed the guidance of the world’s leading health authorities, as well as related local, regional, and national government directives.
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Although there is no assurance that existing or future environmental laws applicable to the company’s operations or products will not have a material adverse effect on its operations, cash flows or financial condition, the company does not currently anticipate material capital expenditures for environmental control facilities. ​ See Risk Factors in Part I, Item 1A.
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Prior thereto, he served as Senior Vice President, Client Solutions Group Sales at Dell Technologies for more than five years. Gretchen K. Zech was appointed Senior Vice President, Chief Governance, Sustainability, and Human Resources Officer in February 2022.
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The company and its affiliates employed approximately 22,100 employees worldwide as of December 31, 2023.
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Information about the Executive Officers The following table sets forth the names, ages, and the positions held by each of the executive officers of the company as of February 13, 2024: ​ ​ ​ ​ ​ ​ Name Age Position Sean J. Kerins 61 President, Chief Executive Officer Rajesh K. Agrawal 58 Senior Vice President, Chief Financial Officer Carine L.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny such incident, whether successful or unsuccessful, could result in, without limitation, significant legal, regulatory, and financial exposure, damage to the company’s reputation, significant costs related to rebuilding internal systems, managing company brand and reputation, litigation, damages, responding to regulatory inquiries, and taking other remedial steps; loss of competitive advantage; and a loss of confidence in the security of the company’s information technology systems, in each case, that could potentially have an adverse impact on the company’s business.
Biggest changeThe company’s information technology systems could be subject to significant cyber security and privacy incidents, including, but not limited to, invasion, inducement (fraudulent or otherwise) by third parties to obtain information from employees, customers, or suppliers; cyber-attacks; ransom demands; or cybersecurity breaches caused by third parties as well as employees and others with authorized access. ​ Any such incident, whether successful or unsuccessful, could result in, without limitation, disruption to the company’s operations; loss or compromise of, or damage to, the company’s or any of its customers’ or suppliers’ data, confidential information; significant legal, regulatory, and financial exposure; damage to the company’s reputation; significant costs related to rebuilding internal systems, managing company brand and reputation, litigation, damages, responding to regulatory inquiries, and taking other remedial steps; loss of competitive advantage; and a loss of confidence in the security of the company’s information technology systems.
For example, the ability for customers to access their accounts, place orders, and otherwise interface with the company using digital technology is an important aspect of the distribution industry, and distribution companies are rapidly introducing new digital and other technology-driven products and services that aim to offer a better customer experience and reduce costs.
For example, the ability of customers to access their accounts, place orders, and otherwise interface with the company using digital technology is an important aspect of the distribution industry, and distribution companies are rapidly introducing new digital and other technology-driven products and services that aim to offer a better customer experience and reduce costs.
Ongoing economic weakness, uncertainty in markets throughout the world, and other adverse economic conditions may result in decreased net revenue, gross margin, earnings, growth rates or cash flows, and in increased expenses and difficulty in managing inventory levels, collecting customer receivables, and accurately forecasting revenue, gross margin, cash flows and expenses.
Ongoing economic weakness, uncertainty in markets throughout the world, and other adverse economic conditions may result in decreased net revenue, gross margin, earnings, growth rates or cash flows, and increased expenses and difficulty managing inventory levels, collecting customer receivables, and accurately forecasting revenue, gross margin, cash flows and expenses.
A variety of conditions over which the company has little or no control, both specific to each customer or generally affecting each customer’s industry or the broader market may cause customers to cancel, reduce, or delay orders that were either previously made or anticipated, file for bankruptcy protection, or default on their payments.
A variety of conditions over which the company has little or no control, both specific to each customer or generally affecting each customer’s industry or the broader market may cause customers to cancel, reduce, or delay orders that were either previously made or anticipated, file for bankruptcy protection, or default on their payments owed to the company.
The market for the company’s products and services is subject to rapid technological changes, evolving industry standards, changes in end-market demand, evolving customer expectations, oversupply of product, and regulatory requirements, which can contribute to the decline in value or obsolescence of inventory.
The market for the company’s products and services is subject to rapid technological changes, evolving industry standards, changes in end-market demand, evolving customer expectations and demands, oversupply of product, and regulatory requirements, which can contribute to the decline in value or obsolescence of inventory.
Licenses or proper license exemptions may be required by local jurisdictions’ export regulations, including EAR, for the shipment of certain U.S. Products to certain countries, including China, India, Russia, and other countries in which the company operates.
Licenses or proper license exemptions may be required by local jurisdictions’ export regulations, including EAR, for the shipment of certain U.S. Products to certain countries, including China, India, and other countries in which the company operates.
Therefore, the company is not fully protected from declines in the value of the company’s inventory, and such decline could have a material adverse effect on the company’s business. The company’s lack of long-term sales contracts may have a material adverse effect on its business.
Therefore, the company is not fully protected from a decline in the value of the company’s inventory, and such decline could have a material adverse effect on the company’s business. ​ The company’s lack of long-term sales contracts may have a material adverse effect on its business.
Any downgrade in the company’s current debt rating or tightening of credit availability could impair the 16 Index company’s ability to obtain additional financing, redeem existing indebtedness, or renew existing credit facilities on acceptable terms, if at all, negatively impact the price of the company’s common stock, increase its interest payments under existing debt agreements and have other negative implications on its business, many of which are beyond the company’s control.
Any downgrade in the company’s current debt rating or tightening of credit availability could impair the company’s ability to obtain additional financing; redeem existing indebtedness or renew existing credit facilities on acceptable terms, if at all; negatively impact the price of the company’s common stock; increase its interest payments under existing debt agreements; and have other negative implications on its business, many of which are beyond the company’s control.
Further, the company may be unable to borrow additional amounts under the existing credit facility, and as a result may be unable to make acquisitions, fund share repurchases, or meet other financial obligations, and the lenders thereunder may be able to accelerate the company’s obligations under the credit facility.
Further, the company may be unable to borrow additional amounts under the relevant credit facility, and as a result may be unable to make acquisitions, fund share repurchases, or meet other financial obligations, and the lenders thereunder may be able to accelerate the company’s obligations under the credit facility.
General Risks If the company fails to maintain an effective system of internal controls or discovers material weaknesses in its internal controls over financial reporting, it may not be able to report its financial results accurately or timely or detect fraud, which could have a material adverse effect on its business.
If the company fails to maintain an effective system of internal controls or discovers material weaknesses in its internal control over financial reporting, it may not be able to report its financial results accurately or timely or detect fraud, which could have a material adverse effect on its business.
A decline in general economic conditions, a substantial increase in market interest rates, and increase in income tax rates, or the company’s inability to meet long-term working capital or operating income projections could impact future valuations of the company’s reporting units, and the company could be required to record an impairment charge in the future, which could impact the company’s consolidated balance sheets, as well as the company’s consolidated statements of operations.
A decline in general economic conditions, a substantial increase in market interest rates or persistence of a high market-interest rate environment, and increase in income tax rates, or the company’s inability to meet long-term working capital or operating income projections could impact future valuations of the company’s reporting units, and the company could be required to record an impairment charge in the future, which could impact the company’s consolidated balance sheets, as well as the company’s consolidated statements of operations.
This circumstance would have a material adverse effect on the company’s financial position and results of operations. The company’s goodwill and identifiable intangible assets could become impaired, which could reduce the value of its assets and reduce its net income in the year in which the write-off occurs.
This circumstance would have a material adverse effect on the company’s financial position and results of operations. 17 Table of Contents The company’s goodwill and identifiable intangible assets could become impaired, which could reduce the value of its assets and reduce its net income in the year in which the write-off occurs.
Business Risks If the company is unable to maintain its relationships with its suppliers, if the suppliers materially change the terms of their existing agreements with the company, if suppliers cease selling their products through distribution generally, or if supply chain shortages and other disruptions occur, the company’s business could be materially adversely affected.
Business Risks If the company is unable to maintain its relationships with its suppliers, if the suppliers materially change the terms of their existing agreements with the company or the company fails to abide by the terms of such agreements, if suppliers cease selling their products through distribution generally, or if supply chain shortages and other disruptions occur, the company’s business could be materially adversely affected.
In addition, the company may be subject to sanctions or investigation by 17 Index regulatory authorities, such as the SEC or the NYSE.
In addition, the company may be subject to sanctions or investigation by regulatory authorities, such as the SEC or the NYSE.
For example, future rules and regulations that provide for enhanced and standardized climate-related disclosures, if adopted, may result in additional legal, accounting, and financial compliances costs; make some activities more difficult, time-consuming and costly; and strain the company’s personnel, systems, and resources.
For example, future rules and regulations that provide for enhanced and standardized climate-related disclosures, if adopted, may result in additional legal, accounting, and financial compliances costs; make some activities more difficult, time-consuming and costly; and strain the company’s personnel, systems, and resources. Item 1B. Unresolved Staff Comments . None.
The company may be obligated to indemnify and defend its customers if the products or services the company sells are alleged to infringe any third party’s intellectual property rights.
The 15 Table of Contents company may be obligated to indemnify and defend its customers if the products or services the company sells are alleged to infringe any third-party’s intellectual property rights.
Further, the supplier landscape has continued to experience a consolidation, which could negatively impact the company if the surviving, consolidated suppliers decide to exclude the company from their supply chain efforts, and which could expose the company to increased risks, including increased pricing and dependence on a smaller number of suppliers.
Further, the supplier landscape has continued to experience a consolidation, which could negatively impact the company if the surviving, consolidated suppliers decide to exclude the company from their supply chains, and which could expose the company to increased pricing and dependence on a smaller number of suppliers, among other risks.
It is not always possible to identify and deter employee misconduct, and any other precautions the company takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses, or in protecting the company from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
It is not always possible to identify and deter employee misconduct, and any other precautions the company takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses, or in protecting the company from governmental investigations or other actions, including lawsuits on behalf of third-parties, including customers or suppliers, stemming from a failure to comply with these laws or regulations.
In addition, a U.S. or global recession or a banking crisis triggered by a pandemic, including the COVID-19 pandemic, could have a material adverse effect on the company’s business, financial results and financial condition, including by reducing the demand for its products and services, reducing the access to its supplies, increasing customer defaults, reducing its access to capital, and reducing the value of its common stock.
In addition, a U.S. or global recession or a banking crisis triggered by an epidemic, pandemic, or other public health crises could have a material adverse effect on the company’s business, financial results and financial condition, including by reducing the demand for its products and services, reducing the access to its supplies, increasing customer defaults, reducing its access to capital, and reducing the value of its common stock.
General business conditions are vulnerable to the effects of epidemics and pandemics, such as the COVID-19 pandemic, which could materially disrupt the company’s business and have a negative impact on the company’s financial results and financial condition. The company is vulnerable to the general economic effects of epidemics, pandemics, and other public health crises, such as the COVID-19 pandemic.
General Risks General business conditions are vulnerable to the effects of epidemics and pandemics which could materially disrupt the company’s business and have a negative impact on the company’s financial results and financial condition. The company is vulnerable to the general economic effects of epidemics, pandemics, and other public health crises.
The company relies on the expertise and experience of certain key executives in developing business strategies, business operations, and maintaining relationships with customers and suppliers.
The company relies on the expertise and experience of certain key executives in developing business strategies, managing business operations, and cultivating new and maintaining existing relationships with customers and suppliers.
The company competes with other large multinational and national electronic components and enterprise computing solutions distributors, as well as numerous other smaller, specialized competitors who generally focus on narrower market sectors, products, or industries. The company also competes for customers with its suppliers.
The company operates in a highly competitive international environment. The company competes with other large multinational and national electronic components and enterprise computing solutions distributors, as well as numerous other smaller, specialized competitors who generally focus on narrower market sectors, products, or industries. The company also competes for customers with its suppliers.
Because the techniques used to gain unauthorized access, disable, or sabotage the company’s information technology systems and data stored on those systems change frequently and often are not recognized until launched, the company may be unable to anticipate these techniques or to implement adequate preventive or protective measures.
Because the techniques used to cause these incidents and gain unauthorized access to, disable, or sabotage the company’s information technology systems and data stored on those systems change frequently and often are not recognized until launched, the company may 13 Table of Contents be unable to anticipate these techniques or to implement adequate preventive or protective measures to guard against them.
In addition, to the extent that the company’s suppliers modify the terms of their contracts to the detriment of the company, limit supplies due to capacity constraints, or other factors, there could be a material adverse effect on the company’s business.
In addition, to the extent the company’s suppliers modify the terms of their contracts to the detriment of the company, limit supplies due to capacity constraints or other factors, or cancel such contracts or exercise remedies thereunder due to the company’s breach of contract terms, there could be a material adverse effect on the company’s business.
A substantial portion of the company’s inventory is purchased from suppliers with which the company has entered into non-exclusive distribution agreements. These agreements are typically cancellable at any time or on short notice (generally 30 to 90 days).
A substantial portion of the company’s inventory is purchased from suppliers with which the company has entered into non-exclusive distribution agreements. These agreements are typically cancellable at any time or on short notice (generally 30 to 90 days). Some of the company’s businesses rely on a limited number of suppliers to provide a high percentage of their revenues.
In the event that the company communicates certain initiatives or goals regarding environmental, social, and governance matters, it could fail, or be perceived to fail, in its achievement of such initiatives or goals, or it could be criticized for the scope of such initiatives or goals.
In the event that the company communicates certain initiatives or goals regarding environmental, social, and governance matters, it could fail, or be perceived to fail, in its achievement of such initiatives or goals, or it could be criticized for the scope of such initiatives or goals or even subject to litigation or other liabilities associated with such disclosure.
The company can be held liable for the corrupt or other illegal activities of its employees, agents, contractors, and counterparties, even if it does not explicitly authorize or have actual knowledge of such activities.
The company can be held liable under these laws for the corrupt or other illegal activities of its employees, agents, contractors, counterparties, and third parties it engages to provide services, even if it does not explicitly authorize or have actual knowledge of such activities.
Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. §201, and other national and sub-national anti-bribery and anti-money laundering laws in the countries in which it conducts business.
Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute contained in 18 U.S.C. §201, and other national and sub-national anti-bribery and anti-money laundering laws in the countries in which it conducts business. Anti-corruption laws have been enforced aggressively in recent years and are interpreted broadly.
Further, third parties, such as hosted solution providers, could be a source of risk in the event of a failure of their own systems and infrastructure or could experience their own privacy or security event which could create risks similar to those described above.
Further, third parties, such as hosted solution providers, are a source of risk because they could be subject to the same or other similar types of incidents, for example in the event of a failure of their own systems and infrastructure or if they experience their own privacy or security event, which could create risks similar to those described above.
The company’s distribution process also includes the use of third parties that operate outside of the company’s direct control. Noncompliance with applicable import, export, and other laws and regulations by these third parties may negatively impact the company. Further, the company is also subject to the U.S.
The company’s distribution process also includes the use of third parties that operate outside of the company’s direct control. Noncompliance with applicable import, export, and other laws and regulations by these third parties may result in substantial liability to the company and harm the company’s reputation. 14 Table of Contents Further, the company is also subject to the U.S.
As a result of the company’s international sales and locations, its operations are subject to a variety of risks inherent in international operations, including the following: • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, regulations, treaties, and technical standards, including with respect to tax; • potential restrictions on transfers of funds; • trade protection measures, import and export tariffs and other restrictions, duties and value-added taxes; • transportation delays and interruptions; • uncertainties arising from local business practices and cultural considerations; • foreign laws that potentially discriminate against or disfavor companies headquartered outside the relevant jurisdiction; • stringent antitrust regulations in local jurisdictions; 10 Index • volatility associated with sovereign debt of certain international economies; • various jurisdictions' environmental protection laws and regulations, including those related to climate change; • potential social unrest, military conflicts, government shutdowns and disruptions, and other geopolitical risks and uncertainties; and • currency fluctuations.
As a result of the significant extent of the company’s international sales and number of foreign locations, its operations are subject to a variety of risks inherent in international operations, including the following: ​ 10 Table of Contents • import and export regulations that could erode profit margins or restrict exports; • the burden and cost of compliance with international laws, regulations, treaties, and technical standards, including, without limitation, with respect to tax; • potential restrictions on transfers of funds; • trade protection measures, import and export tariffs and other restrictions, duties, and value-added taxes; • transportation delays and interruptions; • uncertainties arising from local business practices and cultural considerations; • foreign laws that potentially discriminate against or disfavor companies headquartered outside the relevant jurisdiction; • stringent antitrust regulations in local jurisdictions; • volatility associated with sovereign debt of certain international economies; • various jurisdictions’ environmental protection laws and regulations, including those related to climate change; • potential social unrest, military conflicts, government shutdowns and disruptions, and other geopolitical risks and uncertainties; and • currency fluctuations. ​ Refer to “Foreign Currency Exchange Risk” in Item 7.A Quantitative and Qualitative Disclosures About Market Risk for a further discussion of the company’s description of the impacts of foreign currency exchange rates on the company’s results and projections. ​ Further, the impact of lower gross margins in certain regions could have a material adverse effect on the company’s business.
However, there may be occasions, including through acquisitions, where environmental liability arises. For example, the company assumed responsibility for environmental remediation on two sites that it acquired as part of the Wyle Electronics (“Wyle”) acquisition in August 2000, which such remediation and related assessment remains ongoing.
For example, the company assumed responsibility for environmental remediation on two sites that it acquired as part of the Wyle Electronics (“Wyle”) acquisition in August 2000, which such remediation and related assessment remains ongoing.
Also, by electing to establish and publicly share the company’s sustainability standards, the company’s business may face increased scrutiny related to sustainability activities, and the company’s reputation could be harmed. In addition, sustainability related laws, regulations, requirements, and initiatives may increase compliance costs.
Also, by electing to establish and publicly disclose the company’s environmental, social, and governance goals, including sustainability standards, the company’s business may face increased scrutiny and potential liability related to such activities, and the company’s reputation could be harmed. In addition, sustainability related laws, regulations, requirements, and initiatives may significantly increase compliance costs.
If the company is not successful in mitigating or insuring against such risks, it could have a material adverse effect on the company’s business. 11 Index If the company is not able to invest successfully in and introduce digital and other technological developments, or its suppliers are not able to continue to offer competitive components and electronic computing solutions, it could materially adversely impact results.
If the company is not able to successfully manage any of these risks in relation to future acquisitions or divestitures, it could have a material adverse effect on the company’s business. ​ If the company is not able to or fails to adequately invest successfully in and introduce digital and other technological developments, or its suppliers are not able to continue to offer competitive components and electronic computing solutions, it could materially adversely impact results.
There is significant competition within each market sector and geography that creates pricing and margin pressure and the need for constant attention to improve service and product offerings and increase market share.
There is also significant competition within each market sector and geography that creates pricing and margin pressure and continuous demand for the company to improve service and product offerings.
For example, economic uncertainty or adverse economic conditions resulting from the impacts of and responses to pandemics and other public health issues (including the COVID-19 pandemic), natural disasters, changes in global, national, or regional economies, inflation, governmental policies, political unrest, military action and armed conflicts (such as the 2022 Russian invasion of Ukraine), terrorist activities, political and social turmoil, civil unrest, and other crises could result in significant or sustained disruption of global financial markets, thereby reducing the company’s access to capital.
For example, economic uncertainty or adverse economic conditions resulting from the impacts of and responses to pandemics and other public health issues, natural disasters, changes in global, national, or regional economies, inflation, governmental policies, political unrest, military action and armed conflicts, terrorist activities, political and social turmoil, civil unrest, and other crises could result in significant or sustained disruption of global financial markets, thereby reducing the company’s access to capital. ​ Further, any increase in the company’s level of debt or deterioration of its operating results may cause a reduction in its current debt ratings.
A cyclical downturn in the technology industry could have a material adverse effect on the company’s business and negatively impact its ability to maintain historical profitability levels. 9 Index The competitive pressures the company faces, such as pricing and margin reductions, could have a material adverse effect on the company’s business. The company operates in a highly competitive international environment.
A prolongation or worsening of the current weakness in semiconductor markets, or a future cyclical downturn in the technology industry, could have a material adverse effect on the company’s business and negatively impact its ability to maintain historical profitability levels. 9 Table of Contents The competitive pressures the company faces, such as pricing and margin reductions, could have a material adverse effect on the company’s business.
Further, these new executives may have different backgrounds, experiences and perspectives from those individuals who previously served in these roles and thus may have different views on the issues that will determine the company’s future, potentially resulting in employee, customer, and supplier uncertainty.
Further, new executives may have different backgrounds, experiences, and perspectives from those individuals who previously served in these roles and thus may have different views on the issues that will determine the company’s future, potentially resulting in employee, customer, and supplier uncertainty. ​ The company relies heavily on its internal information systems, which, if not properly functioning, could materially adversely affect the company’s business.
The company also faces competition from companies in the logistics and product fulfillment, catalog distribution, e-commerce, and supply chain services markets. As the company continues to expand its business into new areas in order to stay competitive in the market, the company may encounter increased competition from its current and/or new competitors, making it difficult to retain its market share.
As the company continues to expand its business into new areas in order to stay competitive in the market, the company may encounter increased competition from its current and/or new competitors, making it difficult to retain or increase its market share.
The agreements governing some of the company’s financing arrangements contain various covenants and restrictions that limit some of management’s discretion in operating the business and could prevent the company from engaging in some activities that may be beneficial to its business.
An increase in the company’s financing costs or loss of access to cost-effective capital resources could have a material adverse effect on the company’s business. ​ The agreements governing some of the company’s financing arrangements contain various covenants and restrictions that limit some of management’s discretion in operating the business and could prevent the company from engaging in some activities that may be beneficial to its business.
Additionally, the company’s tax returns are subject to periodic audits by U.S. and foreign tax authorities. These audits may result in global reallocation of income and expense that is different from what has been estimated in the company's financial results.
These audits may result in global reallocation of income and expense that is different from what has been estimated in the company's financial results.
The company’s business and financial performance depend on worldwide economic conditions and the demand for technology products and services in the markets in which the company competes.
Global, regional, and local economic weakness and uncertainty could have a material adverse effect on the company’s financial performance. The company’s business and financial performance depend on worldwide economic conditions and the demand for technology products and services in the markets in which the company competes.
The company’s ability to satisfy its cash needs depends on its ability to generate cash from operations and to access the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond its control. The company may, in the future, need to access the financial markets to satisfy its cash needs.
The company’s ability to satisfy its cash needs depends on its ability to generate cash from operations and to access the financial markets, both of which are subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond its control. ​ The company’s ability to obtain external financing is affected by various factors, including general financial market conditions and the company’s debt ratings.
The discovery of contamination for which the company is responsible, the enactment of new laws and regulations, or changes in how existing regulations are enforced, could require the company to incur costs for compliance or subject it to unexpected liabilities. 14 Index Additionally, long-term climate change impacts, including the frequency and magnitude of severe weather events, and natural disasters, may significantly impact the company’s operations and business, either directly or indirectly, by adversely affecting the price and availability of energy, and the supply of other services or materials throughout the company’s supply chain, any of which could have a material adverse effect on the company’s business.
Additionally, long-term climate change impacts, including the frequency and magnitude of severe weather events, and natural disasters, may significantly impact the company’s operations and business, either directly or indirectly, by adversely affecting the price and availability of energy, and the supply of other services or materials throughout the company’s supply chain, any of which could have a material adverse effect on the company’s business.
Additionally, management transitions, such as the company's transition to a new Chief Executive Officer and Chief Financial Officer in 2022, may create uncertainty, divert resources and management attention, or impact public or market perception, any of which could negatively impact the company's ability to operate effectively or execute its strategies and result in an adverse impact on its business.
Restrictions on immigration or changes in immigration laws could limit the company’s access to qualified and skilled professionals, increase the cost of doing business, or otherwise disrupt operations. ​ Additionally, management transitions, such as the company's transition to a new president of the global components business in 2023, may create uncertainty, divert resources and management attention, or impact public or market perception, any of which could negatively impact the company's ability to operate effectively or execute its strategies and result in an adverse impact on its business.
Under these laws and regulations, the company may be responsible for investigating, removing, or otherwise remediating hazardous substances released at properties or facilities it owns or operates, regardless of when such substances were released. As the distribution business, in general, does not involve the manufacture of products, it is typically not subject to significant liability in this area.
Under these laws and regulations, the company may be responsible for investigating, removing, or otherwise remediating hazardous substances released at properties or facilities it owns or operates, regardless of when such substances were released.
Whether or not the company is successful in defending against such actions or investigations, it could incur substantial costs, including legal fees, and divert the attention of management in defending itself against any of these claims or investigations. Financial Risks The company may not have adequate or cost-effective liquidity or capital resources.
Whether or not the company is successful in defending against such actions, it could incur substantial costs, including legal fees, and divert the attention of management in defending itself against them. 16 Table of Contents Financial Risks The company may not have adequate or cost-effective liquidity or capital resources, which could have a material adverse impact on its ability to maintain cash necessary to operate its business.
Further, the company’s gross margins in the components business in the Asia/Pacific region tend to be lower than those in other markets in which the company sells products and services. If sales in this market increase as a percentage of overall sales, consolidated gross margins will be lower.
For example, the company’s gross margins in the components business in the Asia/Pacific region tend to be lower than those in other markets in which the company sells products and services.
The sale of the company’s PEMCO products closely tracks the semiconductor market. Accordingly, the company’s revenues and profitability, particularly in its global components business segment, may be adversely affected by weakness in the semiconductor market.
Accordingly, the company’s revenues and profitability, particularly in its global components reportable segment, may be adversely affected by weakness in the semiconductor market, which the company has experienced during 2023.
Further, royalty or license arrangements may not be available at all, which would then require the company to stop selling certain products or using certain technologies, which could negatively affect the company’s ability to compete effectively. 15 Index Restrictions on immigration or changes in immigration laws could limit the company’s access to qualified and skilled professionals, increase the cost of doing business, or otherwise disrupt operations.
Further, royalty or license arrangements may not be available at all, which would then require the company to stop selling certain products or using certain technologies, which could negatively affect the company’s ability to compete effectively.
Changes in the company’s global mix of earnings, and changes in tax law and policy, could cause fluctuations in the company's effective tax rate, and could materially adversely impact results.
If sales in this market increase as a percentage of overall sales, consolidated gross margins will be lower. ​ Changes in the company’s global mix of earnings, and changes in tax law and policy, could cause fluctuations in the company’s effective tax rate, and could materially adversely impact results.
Global privacy legislation, enforcement, and policy activity are also rapidly expanding and creating a complex compliance environment. The company’s actual or perceived failure to comply with federal, state, or international privacy related or data protection laws and regulations could result in proceedings against the company by governmental entities or others, which could have a material adverse effect on its business.
The company’s actual or perceived failure to comply with federal, state, or international privacy related or data protection laws and regulations could result in proceedings against the company by governmental entities or others, which could have a material adverse effect on its business. ​ Regulatory and Legal Risks Products sold by the company may be found to be defective and, as a result, warranty and/or product liability claims may be asserted against the company, which may have a material adverse effect on the company.
Such misconduct could result in legal or regulatory sanctions and cause serious harm to the company, including to its reputation.
Such misconduct could result in legal or regulatory sanctions and threatened or filed lawsuits on behalf of impacted third-parties, including customers and suppliers, against the company, and, as a result, cause serious harm to the company, including to its reputation.
The company relies heavily on its internal information systems, which, if not properly functioning, could materially adversely affect the company’s business. The company’s current global operations reside on multiple technology platforms. The size and complexity of the company’s computer systems make them potentially vulnerable to breakdown, malicious intrusion, and random attack.
The company’s current global operations reside on multiple technology platforms. The size and complexity of the company’s computer systems make them potentially vulnerable to breakdown, malicious intrusion, and ransom attack. Failure to properly or adequately address any unaccounted for or unforeseen issues could impact the company’s ability to perform necessary business operations, which could materially adversely affect the company’s business.
The company requires cash or committed liquidity facilities for general corporate purposes, such as funding its ongoing working capital, acquisitions, and capital expenditure needs, as well as to refinance indebtedness. At December 31, 2022, the company had cash and cash equivalents of $176.9 million.
The company requires cash or committed liquidity facilities for general corporate purposes, such as funding its ongoing working capital, acquisitions, capital expenditure needs, refinancing indebtedness, and returning capital to shareholders. The company’s committed and undrawn liquidity stands at over $2.2 billion in addition to $218.1 million of cash on hand at December 31, 2023.
If any of the described events occur, the company’s business, results of operations, financial condition, liquidity, or access to the capital markets could be materially adversely affected. When stated below that a risk may have a material adverse effect on the company’s business, it means that such risk may have one or more of these effects.
If any one or more of the described events occur, the company’s business, reputation, results of operations, financial condition, stock price, liquidity, or access to the capital markets could be materially adversely affected.
The company’s industry is subject to rapid and significant technological changes, and the company’s ability to meet its customers’ needs and expectations is key to the company’s ability to grow sales and earnings.
The company’s industry is subject to rapid and significant technological changes, and the company’s ability to meet its customers’ needs and expectations is key to the company’s ability to grow sales and earnings. The company’s customers and suppliers increasingly expect the company’s platforms to include digital technologies to facilitate distribution of components and electronic computing solutions over time.
Proposed and existing efforts to address concerns over climate change by reducing greenhouse gas emissions could directly or indirectly affect the company’s costs of energy and other operating costs. Investors, customers, and other stakeholders are also placing a greater emphasis on environmental, social, and governance factors, and the company may be unable to meet investor expectations in this regard.
Proposed and existing efforts to address concerns over climate change by reducing greenhouse gas emissions could also directly or indirectly affect the company’s costs of energy and other operating costs.
Acquisitions involve numerous risks, including the following: • effectively combining the acquired operations, technologies, or products; • unanticipated costs or assumed liabilities, including those associated with regulatory actions or investigations; • not realizing the anticipated financial benefit from the acquired companies; • diversion of management’s attention; • negative effects on existing customer and supplier relationships; and • potential loss of key employees of the acquired companies.
Acquisitions involve numerous risks, including the following: ​ • effectively combining the acquired operations, technologies, or products; • unanticipated costs or assumed liabilities, including, but not limited to, those associated with combining and integrating operations, technologies, and facilities; • costs associated with regulatory actions or investigations; • the inability to retain and obtain required regulatory approvals, licenses, and permits: • not realizing the anticipated financial benefit from the acquired companies; • in the event the acquisition is funded with proceeds of indebtedness, increased interest costs; • diversion of management’s attention; • negative effects on existing customer and supplier relationships; • disruption due to the integration and rationalization of operations, products, technologies, and personnel; and • potential loss of key employees of the acquired companies. ​ The company has in the past, and may in the future, divest or reduce its investment in certain businesses or product lines from time to time.
Such tax audit developments could have an adverse effect on the company’s tax liability, increase effective tax rates, increase the complexity and cost of tax compliance, all of which could impact the company’s operating results, cash flows, and financial condition.
Such tax audits could result in an adverse effect on the company’s tax liability, increase effective tax rates, and increase the complexity and cost of tax compliance, all of which could adversely impact the company’s operating results, cash flows, and financial condition. ​ When the company makes acquisitions, it may take on additional liabilities or may not be able to successfully integrate such acquisitions.
Political developments impacting international trade, trade disputes and increased tariffs, particularly between the United States and China, may negatively impact markets and cause weaker macroeconomic conditions, weakening demand for the company's products and services.
Political developments impacting international trade, trade disputes and increased tariffs, particularly between the United States and China; and political instability, such as armed conflicts (including the conflicts in Russia, Belarus, and Ukraine, and 18 Table of Contents Israel and the Gaza Strip), each, or collectively may negatively impact markets and cause weaker macroeconomic conditions, weakening demand for the company’s products and services, particularly due to the company’s extensive international operations and business.
Other competitive factors include rapid technological changes, product availability, credit availability, speed of delivery, ability to tailor solutions to changing customer needs, and quality and depth of product lines and training, as well as service and support provided by the distributor to the customer.
Other competitive factors include rapid technological changes, product availability, credit availability, speed of delivery, ability to tailor solutions to changing customer needs, quality and depth of product lines and training, and increasing demand for customer service and support. The company also faces competition from companies in the logistics and product fulfillment, catalog distribution, e-commerce, and supply chain services markets.
The company’s revenues originate primarily from the sales of semiconductor, (passive, electro-mechanical and connector) (PEMCO), and IT hardware and software products, the sales of which are traditionally cyclical and may be impacted by shortages and other disruptions in the global supply chain.
The company’s revenues originate primarily from the sales of semiconductor, IP&E (Interconnect, Passive & Electromechanical), and IT hardware and software products, the sales of which are traditionally cyclical and may be impacted by shortages and other disruptions in the global supply chain. ​ The semiconductor industry historically has experienced fluctuations in product supply and demand, often associated with changes in technology and manufacturing capacity and significant economic market upturns and downturns.
That lawsuit was ultimately settled, but 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. The presence of environmental contamination at any of the company's locations could also interfere with ongoing operations or adversely affect the company’s ability to sell or lease its properties.
The presence of environmental contamination at any of the company’s locations could also interfere with ongoing operations or adversely affect the company’s ability to sell or lease its properties.
Further, the company has made, and may continue to make acquisitions of, or investments in new services, businesses or technologies to expand its current service offerings and product lines. Some of these may involve risks that may differ from those traditionally associated with the company’s core distribution business.
The company may also incur significant costs associated with exit or disposal activities, related impairment charges, or both. ​ Further, the company has made, and may continue to make acquisitions of, or investments in new services or technologies to expand its current service offerings and product lines.
The company’s sales are also partially dependent on continued innovations in components and electronic computing solutions by its suppliers, the competitiveness of its suppliers’ offerings, and the company’s ability to partner with new and emerging technology providers.
If the company is unable to maintain and enhance its digital platforms to keep pace with competitors and align with evolving customer and supplier expectations and demands, it could adversely impact the company’s sales revenues and ability to retain existing, and attract new, customers. 12 Table of Contents ​ The company’s sales are also partially dependent on continued innovations in components and electronic computing solutions by its suppliers, the competitiveness of its suppliers’ offerings, and the company’s ability to partner with new and emerging technology providers.
In addition, the company's effective tax rate for future periods could be impacted by mergers and acquisitions.
Some of these may involve risks that may differ from those traditionally associated with the company’s core distribution business. In addition, the company's effective tax rate for future periods could be impacted by mergers and acquisitions.
Poor financial performance of asset markets combined with lower interest rates and the adverse effects of fluctuating currency exchange rates could lead to higher pension and post-retirement benefit expenses. Economic downturns also may lead to future restructuring actions and associated expenses, any of which could have a material adverse effect on the company’s business. Item 1B. Unresolved Staff Comments .
Economic downturns also may lead to future restructuring actions and associated expenses, any of which could have a material adverse effect on the company’s business.
Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022, have been incorporated into the company’s financial results. However, the U.S. Department of Treasury, Internal Revenue Service ("IRS"), and other standard-setting bodies could issue future legislation or guidance that might be different from the company’s interpretation.
Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022, have been incorporated into the company’s financial results. However, the U.S.
The company’s non-U.S. sales represent a significant portion of its revenues, and consequently, the company is exposed to risks associated with operating internationally. In 2022, 2021, and 2020, approximately 65%, 66%, and 65%, respectively, of the company’s sales came from its operations outside the United States.
In 2023, 2022, and 2021, approximately 66%, 65%, and 66%, respectively, of the company’s sales came from its operations outside the United States.
Significant or numerous cancellations, reductions, delays in orders by customers, loss of customers, changing in pricing driven by changing environmental laws and regulations, or the effects of climate change on pricing and sourcing, and/or customer defaults on payments could materially adversely affect the company’s business.
Significant or numerous cancellations, reductions, delays in orders by customers, loss of customers, changes in pricing and sourcing, and/or customer defaults on payments could materially adversely affect the company’s business. ​ The company’s non-U.S. sales represent a significant portion of its revenues, and consequently, the company is exposed to risks associated with operating internationally.
Such tax developments could further increase uncertainty and have a material adverse impact on the company’s cash flows, effective tax rate and financial results. Additional changes to U.S. or foreign tax laws could have broader implications, including impacts to the economy, currency markets, inflation or competitive dynamics, which are difficult to predict, and may positively or negatively impact the company.
Any new legislation could impact the company’s tax obligations in countries where it does business and result in increased taxation of our international earnings, but should not have an adverse impact on its business. ​ Changes to U.S. or foreign tax laws could have broader implications, including impacts to the economy, currency markets, inflation, or competitive dynamics, which are difficult to predict, and may negatively impact the company.
Non-compliance with the EAR, OFAC regulations, or other applicable export regulations can result in a wide range of penalties including the denial of export privileges, fines, criminal penalties, and the seizure of inventories.
The company may not be able to effectively monitor the activities of all of its employees involved in regulated export or shipment activities, which may lead to the company’s failure to prevent violations of such regulations. ​ Non-compliance with the EAR, OFAC regulations, or other applicable export regulations can result in a wide range of penalties including the denial or restriction of export privileges, significant fines, criminal penalties, and the seizure of inventories, any of which could have a material adverse effect on the company’s business.
Some of the company’s businesses rely on a limited number of suppliers to provide a high percentage of their revenues. For example, sales of products from one of the company’s suppliers accounted for approximately 13% of the company’s consolidated sales in 2022.
For example, sales of products from one of the company’s suppliers accounted for approximately 10% of the company’s consolidated sales in 2023.
The company is actively monitoring the conflict in Ukraine to assess its impact on its business, as well as on the company’s vendors, suppliers, customers, and other parties with whom the company does business. 12 Index Cyber Risk Cyber security and privacy incidents as well as ransomware may hurt the company’s business, damage its reputation, increase its costs, and cause losses.
Cybersecurity and Privacy Risk Cybersecurity incidents as well as ransomware may hurt the company’s business, damage its reputation, increase its costs, and cause losses.
When the company makes acquisitions, it may take on additional liabilities or may not be able to successfully integrate such acquisitions. As part of the company’s history and growth strategy, it has acquired other businesses.
As part of the company’s history and growth strategy, it has acquired other businesses, and continues to evaluate strategic opportunities to acquire additional businesses from time to time.
Further, when relying on contractual liability exclusions, the company could lose customers if their claims are not addressed to their satisfaction. Tariffs may result in increased prices and could adversely affect the company’s business and results of operations.
Further, when relying on contractual liability exclusions, the company could lose customers if their claims are not addressed to their satisfaction. The company is subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, anti-bribery laws, and anti-money laundering laws and regulations.
The semiconductor industry historically has experienced fluctuations in product supply and demand, often associated with changes in technology and manufacturing capacity and subject to significant economic market upturns and downturns. Sales of semiconductor products and related services represented approximately 60%, 57%, and 54%, of the company’s consolidated sales in 2022, 2021, and 2020, respectively.
Sales of semiconductor products and related services represented approximately 60%, 60%, and 57%, of the company’s consolidated sales in 2023, 2022, and 2021, respectively. The sale of the company’s IP&E products closely tracks the semiconductor market.
There may be additional risks that are not presently material or known.
When stated below that a risk may have a material adverse effect on the company’s business, it means that such risk may have one or more of these effects. There may be additional risks that are not presently material or known.
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However, the recent global semi-conductor shortages have resulted in some suppliers increasing the amount of non-cancellable orders, which limits the company’s ability to adjust down its inventory levels in the event of market downturns, and could have a negative impact on the financial results of the company, particularly if the company is unable to pass such non-cancellable terms on to customers.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties . The company has executive offices located in Centennial, Colorado under a long-term lease expiring in 2033. The company leases six major warehouses and logistics centers with approximately 2.5 million square feet of space located in Reno, Nevada, Phoenix, Arizona, Hong Kong, Shenzhen, China, Johor Bahru, Malaysia, and Venlo, Netherlands.
Biggest changeItem 2. Properties . The company has its principal executive offices located in Centennial, Colorado under a lease expiring in 2024. The company leases eight major warehouses and logistics centers with approximately 2.8 million square feet of space located in Reno, Nevada, two in the Phoenix, Arizona area, Hong Kong, Shenzhen, China, Johor Bahru, Malaysia, Zapopan, Mexico, and Venlo, Netherlands.
The company has 37 smaller distribution centers with approximately 1.2 million square feet of space located throughout the Americas, EMEA, and Asia/Pacific regions. The company believes its facilities are well maintained and suitable for company operations, and does not anticipate significant difficulty in renewing its leases as they expire or securing replacement facilities.
The company has 31 smaller distribution centers with approximately 1.0 million square feet of space located throughout the Americas, EMEA, and Asia/Pacific regions. The company believes its facilities are well maintained and suitable for company operations, and does not anticipate significant difficulty in renewing its leases as they expire or securing replacement facilities.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings . See Note 14 , Contingencies, to the consolidated financial statements included in Part II, Item 8 of this 10-K for information regarding certain legal proceedings in which the company is involved. Item 4. Mine Safety Disclosures . Not applicable. 18 Index PART II
Biggest changeItem 3. Legal Proceedings . See Note 15, Contingencies, to the consolidated financial statements included in Part II, Item 8 of this 10-K for information regarding certain legal proceedings in which the company is involved. 20 Table of Contents Item 4. Mine Safety Disclosures . Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeTotal return indices reflect reinvestment of dividends and are weighted on the basis of market capitalization at the time of each reported data point. 2017 2018 2019 2020 2021 2022 Arrow Electronics 100 86 105 121 167 130 Peer Group 100 95 129 133 205 181 S&P 400 MidCap Stock Index 100 88 109 121 149 127 20 Index Issuer Purchases of Equity Securities The following table shows the share-repurchase activity for the quarter ended December 31, 2022: (thousands except share and per share data) 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 (a) October 2 through October 29, 2022 621,824 $ 96.72 621,824 $ 568,838 October 30 through November 26, 2022 1,066,980 107.87 1,066,980 453,745 November 27 through December 31, 2022 1,180,668 105.87 1,180,668 328,745 Total 2,869,472 2,869,472 (a) During 2021, the company was authorized to purchase up to $1.2 billion of its common stock under the share-repurchase program.
Biggest changeTotal return indices reflect reinvestment of dividends and are weighted on the basis of market capitalization at the time of each reported data point. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2018 2019 2020 2021 2022 2023 Arrow Electronics 100 123 141 195 152 177 Peer Group 100 130 138 203 182 235 S&P 400 MidCap Stock Index 100 124 139 171 146 167 ​ 22 Table of Contents Issuer Purchases of Equity Securities The following table shows the share-repurchase activity for the quarter ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Dollar Value of ​ ​ ​ ​ ​ ​ ​ Shares ​ Shares that May ​ ​ Total ​ ​ ​ ​ Purchased as ​ Yet be ​ ​ Number of ​ Average ​ Part of Publicly ​ Purchased ​ ​ Shares ​ Price Paid ​ Announced ​ Under the (thousands except share and per share data) Purchased per Share (a) Program Programs (b) October 1 through October 28, 2023 — ​ $ — — ​ $ 621,586 October 29 through November 25, 2023 375,753 ​ 119.76 375,753 ​ 576,154 November 26 through December 31, 2023 — ​ — — ​ 576,154 Total 375,753 ​ ​ 375,753 ​ (a) Average price paid per share excludes 1% excise tax on share repurchases.
During 2022, the companies included in the Peer Group are Avnet, Inc., CDW Corp., Celestica Inc., Flex Ltd., HP Enterprise Co., HP Inc., Jabil Inc., TD Synnex, and WESCO International, Inc. The graph assumes $100 invested on December 31, 2017 in the company, the S&P 400 MidCap Stock Index, and the Peer Group.
During 2023, the companies included in the Peer Group are Avnet, Inc., CDW Corp., Celestica Inc., Flex Ltd., HP Enterprise Co., HP Inc., Jabil Inc., TD Synnex, and WESCO International, Inc. The graph assumes $100 invested on December 31, 2018 in the company, the S&P 400 MidCap Stock Index, and the Peer Group.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . Market Information The company's common stock is listed on the NYSE (trading symbol: “ARW”). Record Holders On February 2, 2023, there were approximately 1,282 shareholders of record of the company's common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . Market Information The company’s common stock is listed on the NYSE (trading symbol: “ARW”). Record Holders On February 6, 2024, there were approximately 1,246 shareholders of record of the company’s common stock.
On January 31, 2023, the company's Board of Directors approved a $1.0 billion increase to the company's share-repurchase program. The company's share-repurchase programs do not have expiration dates. Item 6. [Reserved]. 21 Index
(b) On January 31, 2023, the company’s Board of Directors approved a $1.0 billion increase to the company’s share-repurchase program. The company’s share-repurchase program does not have an expiration date.
On September 14, 2022, the company's Board of Directors approved an additional share-repurchase program of $600.0 million. As of December 31, 2022, the total authorized dollar value of shares available for repurchase was $2.4 billion of which $2.1 billion has been utilized, while the $328.7 million in the table represents the remaining amount available for repurchase under the program.
As of December 31, 2023, the total authorized dollar value of shares available for repurchase was $2.8 billion of which $2.2 billion has been utilized, while the $576.2 million in the table represents the remaining amount available for repurchase under the program. ​
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 1,757,856 $ 88.66 5,632,472 Total 1,757,856 $ 88.66 5,632,472 19 Index Performance Graph The following graph compares the performance of the company's common stock for the periods indicated with the performance of the Standard & Poor's MidCap 400 Index (“S&P 400 MidCap Stock Index”) and the average performance of a group consisting of the company's peer companies (“Peer Group”) on a line-of-business basis.
Equity Compensation Plan Information The following table summarizes information, as of December 31, 2023, relating to the Omnibus Incentive Plan, which was approved by the company’s shareholders and under which cash-based awards, non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, covered employee annual incentive awards, and other stock-based awards may be granted. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ Securities to be ​ Weighted- ​ ​ ​ ​ Issued Upon ​ Average Exercise ​ ​ ​ ​ Exercise of ​ Price of ​ Number of ​ ​ Outstanding ​ Outstanding ​ Securities ​ ​ Options, ​ Options, ​ Remaining ​ ​ Warrants and ​ Warrants and ​ Available for Plan Category Rights Rights Future Issuance Equity compensation plans approved by security holders 1,436,332 ​ $ 102.53 5,041,938 Total 1,436,332 ​ $ 102.53 5,041,938 ​ ​ 21 Table of Contents Performance Graph The following graph compares the performance of the company’s common stock for the periods indicated with the performance of the Standard & Poor’s MidCap 400 Index (“S&P 400 MidCap Stock Index”) and the average performance of a group consisting of the company’s peer companies (“Peer Group”) on a line-of-business basis.
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Equity Compensation Plan Information The following table summarizes information, as of December 31, 2022, relating to the Omnibus Incentive Plan, which was approved by the company's shareholders and under which cash-based awards, non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance share units, covered employee annual incentive awards, and other stock-based awards may be granted.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFollowing is an analysis of net sales by reportable segment for the years ended December 31: (millions) 2022 2021 Change Consolidated sales, as reported $ 37,124 $ 34,477 7.7 % Impact of changes in foreign currencies — (1,178) Consolidated sales, constant currency $ 37,124 $ 33,299 11.5 % Global components sales, as reported $ 28,788 $ 26,358 9.2 % Impact of changes in foreign currencies — (812) Global components sales, constant currency $ 28,788 $ 25,546 12.7 % Global ECS sales, as reported $ 8,336 $ 8,120 2.7 % Impact of changes in foreign currencies — (366) Global ECS sales, constant currency $ 8,336 $ 7,753 7.5 % The sum of the components for sales, as reported, and on a constant currency basis may not agree to totals, as presented, due to rounding. 24 Index Consolidated sales in 2022 increased by 7.7% due to an increase in global components business segment sales of $2.4 billion, or 9.2%, and an increase in global ECS business segment sales of $216.9 million, or 2.7%, compared with the year-earlier period.
Biggest changeRefer to Note 1, “Summary of Significant Accounting Policies” to the consolidated financial statements for further discussion of the company’s revenue recognition policies. ​ ​ ​ 26 Table of Contents Results of Operations Sales by reportable segment Following is an analysis of the company’s sales by reportable segment for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Consolidated sales, as reported ​ $ 33,107 ​ $ 37,124 (10.8) % Impact of changes in foreign currencies ​ — ​ 52 ​ Consolidated sales, constant currency ​ $ 33,107 ​ $ 37,176 (10.9) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components sales, as reported ​ $ 25,420 ​ $ 28,788 (11.7) % Impact of changes in foreign currencies ​ — ​ 8 ​ Global components sales, constant currency ​ $ 25,420 ​ $ 28,796 (11.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS sales, as reported ​ $ 7,687 ​ $ 8,336 (7.8) % Impact of changes in foreign currencies ​ — ​ 44 ​ Global ECS sales, constant currency ​ $ 7,687 ​ $ 8,381 (8.3) % The sum of the components for sales, as reported, and sales on a constant currency basis may not agree to totals, as presented, due to rounding. ​ Reportable segment sales by geographic region ​ Following is an analysis of the company’s reportable segment sales by geographic region for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ ​ (millions) ​ Sales ​ % of Sales ​ Sales ​ % of Sales ​ % Change Americas components sales ​ $ 7,955 ​ 24.0 % ​ $ 9,593 ​ 25.8 % ​ (17.1) % EMEA components sales ​ ​ 8,075 ​ 24.4 % ​ ​ 7,628 ​ 20.5 % ​ 5.9 % Asia/Pacific components sales ​ ​ 9,390 ​ 28.4 % ​ ​ 11,567 ​ 31.2 % ​ (18.8) % Global components sales ​ $ 25,420 ​ 76.8 % ​ $ 28,788 ​ 77.5 % ​ (11.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ECS sales ​ $ 4,160 ​ 12.6 % ​ $ 4,847 ​ 13.1 % ​ (14.2) % EMEA ECS sales ​ ​ 3,527 ​ 10.6 % ​ ​ 3,489 ​ 9.4 % ​ 1.1 % Global ECS sales ​ $ 7,687 ​ 23.2 % ​ $ 8,336 ​ 22.5 % ​ (7.8) % Consolidated sales ​ $ 33,107 ​ 100.0 % ​ $ 37,124 ​ 100.0 % ​ (10.8) % During 2023, global components sales decreased compared to the year-earlier period primarily due to the following impacts: ● sales declined in the Americas region primarily due to decreases in shortage market activity; ● sales declined in the Asia/Pacific region primarily due to softer demand across most verticals; ● partially offset by growth in the EMEA region for the first three quarters of 2023 across most major verticals, with the fourth quarter results declining relative to the prior year.
Information Relating to Forward-Looking Statements This report includes "forward-looking statements," as the term is defined under the federal securities laws. Forward-looking statements are those statements which are not statements of historical fact. These forward-looking statements can be identified by forward-looking words such as “expects,” “anticipates,” “intends,” “plans,” “may,” “will,” “believes,” “seeks,” “estimates,” and similar expressions.
Information Relating to Forward-Looking Statements This report includes “forward-looking statements,” as the term is defined under the federal securities laws. Forward-looking statements are those statements which are not statements of historical fact. These forward-looking statements can be identified by forward-looking words such as “expects,” “anticipates,” “intends,” “plans,” “may,” “will,” “believes,” “seeks,” “estimates,” and similar expressions.
The company's strategic initiatives include the following: • Offering a variety of value-added demand creation services in the global components business, including design, engineering, global marketing and integration services to promote the future sale of suppliers’ products, which generally lead to longer and more profitable relationships with its suppliers and customers. • Continuing to develop global supply chain service offerings such as procurement, logistics, warehousing, and insights from data analytics. • Enabling customer cloud solutions through the global ECS business' cloud marketplace and management platform, ArrowSphere, which helps VARs and MSPs to manage, differentiate, and scale their cloud businesses while providing the business intelligence that IT solution providers need to drive growth.
The company’s strategic initiatives include the following: ● Offering a variety of value-added services in the global components business, including demand creation, design, engineering, global marketing and integration services to promote the future sale of suppliers’ products, which generally lead to longer and more profitable relationships with its suppliers and customers. ● Providing global supply chain service offerings such as procurement, logistics, warehousing, and insights from data analytics. ● Enabling customer cloud solutions through the global ECS business’ cloud marketplace and management platform, ArrowSphere, which helps VARs and MSPs to manage, differentiate, and scale their cloud businesses while providing the business intelligence that IT solution providers need to drive growth.
The assessment of the need for a valuation allowance requires considerable judgment on the part of management with respect to the benefits that could be realized from future taxable income, as well as other positive and negative factors.
The assessment of the need for a valuation allowance requires judgment on the part of management with respect to the benefits that could be realized from future taxable income, as well as other positive and negative factors.
Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
The assumptions included in the income approach include forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, income tax rates, and long-term discount rates, among others, all of which require significant judgments by management. Actual results may differ from those assumed in the company’s forecasts.
The assumptions included in the income approach include forecasted revenues, gross profit margins, operating income margins, working capital, perpetual growth rates, income tax rates, and long-term discount rates, among others, all of which require significant judgments by management. Actual results may differ from those assumed in the company’s forecasts.
Most of the company's purchases are pursuant to distributor agreements, which are typically non-exclusive and cancellable by either party at any time or on short notice. Trade Accounts and Notes Receivable Trade accounts and notes receivable are reported at amortized cost, net of the allowance for credit losses in the consolidated balance sheets.
Most of the company’s purchases are pursuant to distributor agreements, which are typically non-exclusive and cancelable by either party at any time or on short notice. Trade Accounts and Notes Receivable Trade accounts and notes receivable are reported at amortized cost, net of the allowance for credit losses in the consolidated balance sheets.
The company also reconciles 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 2022, 2021, and 2020, the company's annual impairment testing did not indicate impairment at any of the company's reporting units.
The company also reconciles 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 2023, 2022, and 2021, the company’s annual impairment testing did not indicate impairment at any of the company’s reporting units.
Actual amounts could be different from those estimated. 31 Index Income Taxes Income taxes are accounted for under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.
Actual amounts could be different from those estimated. Income Taxes Income taxes are accounted for under the liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.
The stock-repurchase authorization does not have an expiration date and the pace of the repurchase activity will depend on factors such as the company’s working capital needs, cash requirements for acquisitions, debt repayment obligations or repurchases of debt, stock price, and economic and market conditions.
The share-repurchase authorization does not have an expiration date and the pace of the repurchase activity will depend on factors such as the company’s working capital needs, cash requirements for acquisitions, debt repayment obligations or repurchases of debt, share price, and economic and market conditions.
Additional Capital Requirements and Sources Recent and expected other capital requirements and sources, in addition to the above matters, also include the items described below: • Employee Benefit Plans : The company maintains an unfunded executive pension plan under which the company will pay supplemental pension benefits to certain employees upon retirement.
Refer to Note 14. Additional Capital Requirements and Sources Recent and expected other capital requirements and sources, in addition to the above matters, also include the items described below: ● Employee Benefit Plans : The company maintains an unfunded executive pension plan under which the company will pay supplemental pension benefits to certain employees upon retirement.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations . This section of the Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . This section of the Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The company has $3.3 billion of undistributed earnings of its foreign subsidiaries which it deems indefinitely reinvested, and recognizes that it may be subject to additional foreign taxes and U.S. state income taxes, if it reverses its indefinite reinvestment assertion on these foreign earnings.
The company has $4.8 billion of undistributed earnings of its foreign subsidiaries which it deems indefinitely reinvested, and recognizes that it may be subject to additional foreign taxes and U.S. state income taxes, if it reverses its indefinite reinvestment assertion on these foreign earnings.
Under this method, deferred tax assets and liabilities are determined on the basis of differences between the tax bases of assets and liabilities and their financial reporting amounts using enacted tax rates in effect for the year in which the differences are expected to reverse.
Under this method, deferred tax assets and liabilities are determined on the basis of differences between the tax bases of assets and liabilities and their financial reporting amounts using enacted tax rates in effect for the year in 35 Table of Contents which the differences are expected to reverse.
The company's current committed and undrawn liquidity stands at over $2.1 billion in addition to $176.9 million of cash on hand at December 31, 2022. The company also may issue debt or equity securities in the future and management believes the company will have adequate access to the capital markets, if needed.
The company’s committed and undrawn liquidity stands at over $2.2 billion in addition to $218.1 million of cash on hand at December 31, 2023. The company also may issue debt or equity securities in the future and management believes the company will have adequate access to the capital markets, if needed.
If the company increased the discount rates used by 100 basis points, the fair value of all reporting units would still exceeded their carrying values by more than 10%.
If the company increased the discount rates used by 100 basis points, the fair value of all reporting units would still exceed their carrying values by more than 8%.
These forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: unfavorable economic conditions; disruptions or inefficiencies in the supply chain, including any potential adverse effects of the ongoing global COVID-19 pandemic; political instability; impacts of military conflict, including the conflict in Ukraine; industry conditions; changes in product supply, pricing and customer demand; competition; other vagaries in the global components and the global enterprise computing solutions (“ECS”) markets; deteriorating economic conditions, including economic recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; the effects of natural or man-made catastrophic events; changes in relationships with key suppliers; increased profit margin pressure; changes in legal and regulatory matters; non-compliance with certain regulations, such as export, antitrust, and anti-corruption laws; foreign tax and other loss contingencies; and the company's ability to generate cash flow.
These forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which could cause actual results or facts to differ materially from such statements for a variety of reasons, including, but not limited to: unfavorable economic conditions; disruptions or inefficiencies in the supply chain; political instability; impacts of military conflict and sanctions; industry conditions; changes in product supply, pricing and customer demand; competition; other vagaries in the global components and the global enterprise computing solutions (“ECS”) markets; deteriorating economic conditions, including economic recession, inflation, tax rates, foreign currency exchange rates, or the availability of capital; the effects of natural or man-made catastrophic events; changes in relationships with key suppliers; increased profit margin pressure; changes in legal and regulatory matters; non-compliance with certain regulations, such as export, antitrust, and anti-corruption laws; foreign tax and other loss contingencies; breaches of security or privacy of business information; outbreaks, epidemics, pandemics, or public health crises; and the company’s ability to generate positive cash flow.
Refer to Note 8, “Restructuring, Integration, and Other Charges” of the Notes to the Consolidated Financial Statements for further discussion of the company's restructuring and integration activities.
Refer to Note 9, “Restructuring, Integration, and Other Charges” and Note 15, “Contingencies” of the Notes to the Consolidated Financial Statements for further discussion of the company’s restructuring and integration activities.
For the purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.
The company estimates the fair value of a reporting unit using the income approach. For the purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate.
The company bases its estimates on historical experience and on various other assumptions that are believed reasonable under the circumstances; the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The company evaluates its estimates on an ongoing basis. The company bases its estimates on historical experience and on various other assumptions that are believed reasonable under the circumstances; the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
As of December 31, 2022, the company had designated $108.6 million in assets to cover the ongoing costs of SERP payouts for both current and former executives. The projected benefit obligation at December 31, 2022 and 2021, was $84.1 million and $105.5 million, respectively.
As of December 31, 2023, the company had designated $114.9 million in assets to cover the ongoing costs of SERP payouts for both current and former executives. The projected benefit obligation at December 31, 2023 and 2022, was $88.1 million and $84.1 million, respectively.
Examples of such events and circumstances that the company would consider include the following: • macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; • industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company’s products or services, or a regulatory or political development; • cost factors such as increases in inventory, labor, or other costs that have a negative effect on earnings and cash flows; • overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; • other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, contemplation of bankruptcy, or litigation; • events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and • a sustained decrease in share price (considered in both absolute terms and relative to peers).
Examples of such events and circumstances that the company would consider include the following: ● macroeconomic conditions such as deterioration in general economic conditions, limitations on accessing capital, fluctuations in foreign exchange rates, or other developments in equity and credit markets; ● industry and market considerations such as a deterioration in the environment in which the company operates, an increased competitive environment, a decline in market-dependent multiples or metrics (considered in both absolute terms and relative to peers), a change in the market for the company’s products or services, or a regulatory or political development; ● cost factors such as increases in inventory, labor, or other costs that have a negative effect on earnings and cash flows; ● overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; ● other relevant entity-specific events such as changes in management, key personnel, strategy, or customers, contemplation of bankruptcy, or litigation; ● events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more likely than not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit; and ● a sustained decrease in share price (considered in both absolute terms and relative to peers). 36 Table of Contents Goodwill is tested at a level of reporting referred to as “the reporting unit.” The company’s reporting units are defined as: ● each of the three regional businesses within the global components reportable segment: ◦ Americas Components; ◦ Europe, the Middle East, and Africa (“EMEA”) Components; ◦ Asia/Pacific Components; ● eInfochips, which is part of the global components reportable segment; and ● each of the two regional businesses within the global ECS reportable segment: ◦ ECS Americas; ◦ ECS EMEA The company performs a quantitative goodwill impairment test annually and this test is used to both identify and measure impairment by comparing the fair value of a reporting unit with its carrying amount, including goodwill.
The following table presents the company's effective income tax rate deviation from the non-GAAP effective tax rate for the years ended December 31: 2022 2021 Effective income tax rate 23.8 % 22.7 % Identifiable intangible asset amortization 0.1 % 0.1 % Non-GAAP effective income tax rate 23.8 % 22.7 % The sum of the components for non-GAAP effective income tax rate may not agree to totals, as presented, due to rounding.
The following table presents the company's effective income tax rate deviation from the non-GAAP effective tax rate for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ Effective income tax rate, as reported ​ ​ 21.9 % ​ 23.8 % Identifiable intangible asset amortization ​ ​ 0.1 ​ ​ 0.1 ​ Restructuring, integration, and other charges ​ ​ 0.1 ​ ​ — ​ Impact of tax legislation changes ​ ​ (0.1) ​ ​ — ​ Non-GAAP effective income tax rate ​ ​ 22.0 % ​ 23.8 % The sum of the components for non-GAAP effective income tax rate may not agree to totals, as presented, due to rounding.
The company believes the following critical accounting policies involve the more significant judgments and estimates used in the preparation of its consolidated financial statements: 30 Index Revenue Recognition The company recognizes revenue as control of products is transferred to customers, which generally happens at the point of shipment.
Actual results may differ from these estimates under different assumptions or conditions. The company believes the following critical accounting policies involve the more significant judgments and estimates used in the preparation of its consolidated financial statements: Revenue Recognition The company recognizes revenue as control of products is transferred to customers, which generally happens at the point of shipment.
The company has one of the world's broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers, coupled with a range of services, solutions and tools that help industrial and commercial customers introduce innovative products, reduce their time to market, and enhance their overall competitiveness.
The company has one of the world’s broadest portfolios of product offerings available from leading electronic components and enterprise computing solutions suppliers, coupled with a range of services, solutions, and tools that enables its suppliers to distribute their technologies and help its industrial and commercial customers to source, build upon, and leverage these technologies to grow their businesses, reduce their time to market, and enhance their overall competitiveness.
If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. The company estimates the fair value of a reporting unit using the income approach.
If the carrying amount of the reporting unit is less than its fair value, no impairment exists. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit.
As of December 31, 2022 and 2021, all such contracts were in an asset position in the amount of $116.9 million and $62.4 million, respectively. Refer to Note 6. • Sales of trade receivables : In the normal course of business, certain of the company’s subsidiaries have agreements to sell, without recourse, selected trade receivables to financial institutions.
As of December 31, 2023, all such contracts were in an asset position in the amount of $47.2 million. Refer to Note 7. ● Sales of trade receivables : In the normal course of business, certain of the company’s subsidiaries have agreements to sell, without recourse, selected trade receivables to financial institutions.
Gross Profit Following is an analysis of gross profit for the years ended December 31: (millions) 2022 2021 Change Consolidated gross profit, as reported $ 4,837 $ 4,202 15.1 % Impact of changes in foreign currencies — (161) Consolidated gross profit, constant currency $ 4,837 $ 4,041 19.7 % Consolidated gross profit as a percentage of sales, as reported 13.0 % 12.2 % 80 bps Consolidated gross profit as a percentage of sales, constant currency 13.0 % 12.1 % 90 bps The sum of the components for gross profit on a constant currency basis may not agree to totals, as presented, due to rounding.
Gross Profit Following is an analysis of the company’s consolidated gross profit for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Consolidated gross profit, as reported ​ $ 4,149 ​ $ 4,837 (14.2) % Impact of changes in foreign currencies ​ — ​ 8 Consolidated gross profit, constant currency ​ $ 4,149 ​ $ 4,844 (14.4) % Consolidated gross profit as a percentage of sales, as reported ​ 12.5 % 13.0 % (50) bps Consolidated gross profit as a percentage of sales, constant currency ​ 12.5 % 13.0 % (50) bps The sum of the components for gross profit on a constant currency basis may not agree to totals, as presented, due to rounding.
ASU No. 2022-04 requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, and potential magnitude.
In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) Disclosure of Supplier Finance Program Obligations (“ASU No. 2022-04”). ASU No. 2022-04 requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, and potential magnitude.
As of December 31, 2022, the company has $2.0 billion of goodwill, of which approximately $569.0 million and $107.0 million was allocated to the Americas and EMEA reporting units within the global components business segment, respectively, $782.2 million and $372.4 million was allocated to the North America and EMEA reporting units within the global ECS business segment, respectively, and $197.0 million was allocated to the eInfochips reporting unit.
As of December 31, 2023, the company has $2.1 billion of goodwill, of which approximately $568.2 million and $110.0 million was allocated to the Americas and EMEA reporting units within the global components reportable segment, respectively, $783.6 million and $391.7 million was allocated to the North America and EMEA reporting units within the global ECS reportable segment, respectively, and $197.0 million was allocated to the eInfochips reporting unit.
These arrangements 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 logistic services for the delivery of inventory for which the company does not assume the risks and rewards of ownership.
The company is the agent in these arrangements, which relate to the sale of supplier-provided service contracts to customers or the rendering of logistics services for the delivery of inventory for which the company does not assume the risks and rewards of ownership.
Cash Flows from Investing Activities The net amount of cash used for investing activities during 2022 and 2021 was $57.7 million and $60.1 million, respectively. The change in cash used for investing activities related primarily to proceeds from the sale of property plant and equipment during 2021, offset largely by proceeds from collection of notes receivable during 2022.
Cash Flows from Investing Activities The net amount of cash used for investing activities during 2023 and 2022 was $72.3 million and $57.7 million, respectively. The change in cash used for investing activities related primarily to proceeds from the settlement of the net investment hedge in 2023 offset by the proceeds from collections of notes receivable during 2022.
Operating Expenses Following is an analysis of operating expenses for the years ended December 31: (millions) 2022 2021 Change Operating expenses, as reported $ 2,768 $ 2,646 4.6 % Identifiable intangible asset amortization (35) (37) Restructuring, integration, and other charges (14) (15) Impact of changes in foreign currencies — (101) Non-GAAP operating expenses $ 2,720 $ 2,492 9.1% Operating expenses as a percentage of sales 7.5 % 7.7 % (20) bps Non-GAAP operating expenses as a percentage of non-GAAP sales 7.3 % 7.5 % (20) bps The sum of the components for non-GAAP operating expenses may not agree to totals, as presented, due to rounding. 25 Index The decrease in operating expense as a percentage of sales in 2022 relates primarily to operating leverage the company generates when sales are growing.
Operating Expenses Following is an analysis of the company’s consolidated operating expenses for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Operating expenses, as reported ​ $ 2,678 ​ $ 2,768 (3.3) % Identifiable intangible asset amortization ​ (31) ​ (35) Restructuring, integration, and other charges ​ (84) ​ (14) Impact of changes in foreign currencies ​ — ​ 6 Non-GAAP operating expenses ​ $ 2,563 ​ $ 2,726 (6.0) % Operating expenses as a percentage of sales ​ 8.1 % 7.5 % 60 bps Non-GAAP operating expenses as a percentage of non-GAAP sales ​ 7.7 % 7.3 % 40 bps The sum of the components for non-GAAP operating expenses may not agree to totals, as presented, due to rounding.
The remaining debt has maturity dates in 2024 through 2032. During February 2022, the company repaid $350.0 million principal amount of its 3.50% notes due April 2022. Refer to Note 5. • Amounts related to total interest on long-term debt at December 31, 2022 totaled $346.9 million, with $84.4 million expected to be paid within the next 12 months.
During March 2023, the company repaid $300.0 million principal amount of its 4.50% notes due March 2023. Refer to Note 6. ● Amounts related to total interest on long-term debt at December 31, 2023 totaled $338.0 million, with $107.9 million expected to be paid within the next 12 months.
Sales are recorded net of discounts, rebates, and returns, which historically have not been material. The company allows its customers to return product for exchange or credit in limited circumstances. A liability is recorded at the time of sale for estimated product returns based upon historical experience.
Sales are recorded net of discounts, rebates, and returns, which historically have not been material. The company allows its customers to return product for exchange or credit in limited circumstances. The company also provides volume rebates and other discounts to certain customers which are considered a variable consideration.
The company also provides volume rebates and other discounts to certain customers which are considered a variable consideration. A provision for customer rebates and other discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience.
A provision for customer rebates and other discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience. Tariffs are included in sales as the company has enforceable rights to additional consideration to cover the cost of tariffs.
Cash Flows The following table summarizes the company’s cash flows by category for the periods presented: (millions) 2022 2021 Change Net cash provided by (used for) operating activities $ (33) $ 419 $ (452) Net cash used for investing activities (58) (60) 2 Net cash provided by (used for) financing activities 110 (463) 573 28 Index Cash Flows from Operating Activities The net amount of cash used for the company's operating activities during 2022 was $33.1 million and the net amount of cash provided by the company's operating activities during 2021 was $419.0 million.
Cash Flows The following table summarizes the company’s cash flows by category for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Net cash provided by (used for) operating activities ​ $ 705 ​ $ (33) ​ $ 738 Net cash used for investing activities ​ (72) ​ (58) ​ (14) Net cash (used for) provided by financing activities ​ (666) ​ 110 ​ (776) 32 Table of Contents Cash Flows from Operating Activities The net amount of cash provided by the company’s operating activities during 2023 was $705.4 million and the net amount of cash used for the company’s operating activities during 2022 was $33.1 million.
Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also discloses certain non-GAAP financial information, including: • Non-GAAP sales and non-GAAP gross profit (referred to as "sales on a constant currency basis" and "gross profit on a constant currency basis") excludes the impact of changes in foreign currencies by re-translating prior period results at current period foreign exchange rates. • Non-GAAP operating expenses excludes restructuring, integration, and other charges, identifiable intangible asset amortization and the impact of changes in foreign currencies. • Non-GAAP operating income excludes identifiable intangible asset amortization, and restructuring, integration, and other charges. • Non-GAAP effective tax rate and non-GAAP net income attributable to shareholders exclude identifiable intangible asset amortization, restructuring, integration, and other charges, pension settlement loss, and net gains and losses on investments.
Non-GAAP financial information includes the following: ● Non-GAAP sales and non-GAAP gross profit (referred to as “sales on a constant currency basis” and “gross profit on a constant currency basis”) excludes the impact of changes in foreign currencies by retranslating prior period results at current period foreign exchange rates. ● Non-GAAP operating expenses excludes identifiable intangible asset amortization, restructuring, integration, and other charges, and the impact of changes in foreign currencies. ● Non-GAAP operating income excludes identifiable intangible asset amortization and restructuring, integration, and other charges. ● Non-GAAP effective tax rate and non-GAAP net income attributable to shareholders exclude identifiable intangible asset amortization, restructuring, integration, and other charges, gain (loss) on investments, net, and the impact of tax legislation changes.
Income Tax The company records a provision for income taxes for the anticipated tax consequences of the reported financial results of operations using the asset and liability method.
Refer to the section below titled “Liquidity and Capital Resources” for more information on changes in borrowings. Income Tax The company records a provision for income taxes for the anticipated tax consequences of the reported financial results of operations using the asset and liability method.
The following table presents selected financial information related to liquidity at December 31: (millions) 2022 2021 Change Working capital $ 7,182 $ 5,709 $ 1,473 Cash and cash equivalents 177 222 (45) Short-term debt 590 383 207 Long-term debt 3,183 2,244 939 Working Capital The company maintains a significant investment in working capital which the company defines as accounts receivable, net, plus inventories less accounts payable.
The following table presents selected financial information related to liquidity at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Working capital ​ $ 7,355 ​ $ 7,182 ​ $ 173 Cash and cash equivalents ​ 218 ​ 177 ​ 41 Short-term debt ​ 1,654 ​ 590 ​ 1,064 Long-term debt ​ 2,154 ​ 3,183 ​ (1,029) ​ Working Capital The company maintains a significant investment in working capital which the company defines as accounts receivable, net, plus inventories less accounts payable. ​ Working capital, as a percentage of sales, which is defined as working capital divided by annualized quarterly sales, increased to 23.4% at December 31, 2023 compared to 19.3% at December 31, 2022.
A portion of the company’s business involves shipments directly from its suppliers to its customers, in these transactions, the company is generally 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.
The company is the principal in these transactions, as it is principally responsible for fulfilling the order, which includes 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.
The change in the effective tax rate to 23.8% for 2022 from 22.7% for 2021 was primarily driven by the mix of income in jurisdictions with higher tax. 26 Index Net Income Attributable to Shareholders Following is an analysis of net income attributable to shareholders for the years ended December 31: (millions) 2022 2021 Net income attributable to shareholders, as reported $ 1,427 $ 1,108 Identifiable intangible asset amortization* 34 36 Restructuring, integration, and other charges 14 15 (Gain) loss on investments, net 3 (13) Tax effect of adjustments above (13) (10) Non-GAAP net income attributable to shareholders $ 1,465 $ 1,137 * Identifiable intangible asset amortization also excludes amortization related to the noncontrolling interest.
Net Income Attributable to Shareholders Following is an analysis of the company’s consolidated net income attributable to shareholders for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Net income attributable to shareholders, as reported ​ $ 904 ​ $ 1,427 Identifiable intangible asset amortization (a) ​ 30 ​ 34 Restructuring, integration, and other charges ​ 84 ​ 14 (Gain) loss on investments, net ​ (19) ​ 3 Tax effect of adjustments above ​ (23) ​ (13) Impact of tax legislation changes ​ ​ 1 ​ ​ — Non-GAAP net income attributable to shareholders ​ $ 977 ​ $ 1,465 (a) Identifiable intangible asset amortization also excludes amortization related to the noncontrolling interest.
Global ECS' portfolio of computing solutions includes datacenter, cloud, security, and analytics solutions. Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its value-added resellers (“VARs”) and managed service providers (“MSPs”) meet the needs of their end-users.
Global ECS brings broad market access, extensive supplier relationships, scale, and resources to help its value-added resellers (“VARs”) and managed service providers (“MSPs”) meet the needs of their end-users. For 2023, approximately 77% and 23% of the company’s sales were from the global components business and the global ECS business, respectively.
The company does not retain financial or legal interests in these receivables, and, accordingly, they are accounted for as sales of the related receivables and the receivables are removed from the company’s consolidated balance sheets. Critical Accounting Estimates The company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States.
The company does not retain financial or legal interests in these receivables, and, accordingly, they are accounted for as sales of the related receivables and the receivables are removed from the company’s consolidated balance sheets. Refer to Note 4 for further discussion of the company’s factoring arrangements.
The preparation of these consolidated financial statements requires the company to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingent assets and liabilities. The company evaluates its estimates on an ongoing basis.
Critical Accounting Estimates The company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires the company to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and related disclosure of contingent assets and liabilities.
As of the date of the company's 2022 annual impairment test, the fair value of all reporting units exceeded their carrying values by more than 20%. (See Note 2).
As of the date of the company’s 2023 annual impairment test, the fair value of all reporting units exceeded their carrying values by more than 19%. Refer to Note 2. Discount rates are one of the more significant assumptions used in the income approach.
The company believes that many of the products it sells are available from other sources at competitive prices. However, certain parts of the company's business, such as the company's global ECS business segment, rely on a limited number of suppliers with the strategy of providing focused support, extensive product knowledge, and customized service to suppliers, MSPs, and VARs.
However, certain parts of the company’s business, such as the company’s global ECS reportable segment, rely on a limited number of suppliers with the strategy of providing focused support, extensive product knowledge, and customized service to suppliers, value-added resellers (“VARs”), and managed service providers (“MSPs”).
Operating Income Following is an analysis of operating income for the years ended December 31: (millions) 2022 2021 Change Consolidated operating income, as reported $ 2,068 $ 1,557 32.9 % Identifiable intangible asset amortization 35 37 Restructuring, integration, and other charges 14 15 Non-GAAP consolidated operating income $ 2,117 $ 1,609 31.6 % Consolidated operating income as a percentage of sales, as reported 5.6 % 4.5 % 110 bps Non-GAAP consolidated operating income, as a percentage of sales 5.7 % 4.7 % 100 bps The sum of the components for non-GAAP consolidated operating income may not agree to totals, as presented, due to rounding.
Operating Income Following is an analysis of the company’s consolidated operating income, and operating income for the company’s two reportable segments for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 2022 Change Consolidated operating income, as reported ​ $ 1,471 ​ $ 2,068 (28.9) % Identifiable intangible asset amortization ​ 31 ​ 35 Restructuring, integration, and other charges ​ 84 ​ 14 Non-GAAP consolidated operating income ​ $ 1,586 ​ $ 2,117 (25.1) % Consolidated operating income as a percentage of sales, as reported ​ 4.4 % 5.6 % (120) bps Non-GAAP consolidated operating income, as a percentage of sales ​ 4.8 % 5.7 % (90) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global components operating income, as reported ​ $ 1,459 ​ $ 1,961 (25.6) % Identifiable intangible asset amortization ​ 27 ​ 27 Non-GAAP global components operating income ​ $ 1,486 ​ $ 1,988 (25.3) % Global components operating income as a percentage of sales ​ 5.7 % 6.8 % (110) bps Non-GAAP global components operating income as a percentage of sales ​ 5.8 % 6.9 % (110) bps ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Global ECS operating income, as reported ​ $ 367 ​ $ 409 (10.2) % Identifiable intangible asset amortization ​ 5 ​ 8 Non-GAAP global ECS operating income ​ $ 372 ​ $ 417 (10.7) % Global ECS operating income as a percentage of sales ​ 4.8 % 4.9 % (10) bps Non-GAAP global ECS operating income as a percentage of sales ​ 4.8 % 5.0 % (20) bps The sum of the components of consolidated operating income do not agree to totals, as presented, because operating income for the corporate segment is not included in the table above.
The company has two business segments, the global components business segment and the global enterprise computing solutions (“ECS”) business segment. The company's global components business segment 22 Index markets and distributes electronic components enabled by a comprehensive range of value-added capabilities and services. The company's global ECS business segment is a leading value-added provider of comprehensive computing solutions and services.
The company’s global components business, enabled by a comprehensive range of value-added capabilities and services, markets, and distributes electronic components to original equipment manufacturers (“OEMs”) and contract manufacturers (“CMs”). The company’s global ECS business is a leading value-added provider of comprehensive computing solutions and services. The global ECS portfolio of computing solutions includes datacenter, cloud, security, and analytics solutions.
Cash Flows from Financing Activities The net amount of cash provided by financing activities during 2022 was $109.8 million and the net amount of cash used for the company's financing activities during 2021 was $463.3 million. The change in cash provided by financing activities related primarily to a $1.0 billion overall increase in borrowings during 2022 relative to 2021.
Cash Flows from Financing Activities The net amount of cash used for financing activities during 2023 was $666.2 million and the net amount of cash provided by financing activities in 2022 was $109.8 million.
Restructuring initiatives and integration costs are due to the company's continued efforts to lower costs, drive operational efficiency, integrate acquired businesses, and the consolidation of certain operations, as necessary. The company recorded restructuring, integration, and other charges of $13.7 million and $15.4 million for 2022 and 2021, respectively.
Refer to Note 15, “Contingencies” of the Notes to the Consolidated Financial Statements, for discussion of the legal settlement funds received. 28 Table of Contents Restructuring, Integration, and Other Charges Restructuring initiatives and integration costs are due to the company’s continued efforts to lower costs, drive operational efficiency, integrate acquired businesses, and consolidate certain operations, as necessary.
Refer to Note 5. • Purchase obligations of $13.4 billion represent an estimate of non-cancellable inventory purchase orders and other contractual obligations related to information technology and facilities as of December 31, 2022 with $11.0 billion expected to be paid within the next 12 months and $2.0 billion in 2024. • Non-cancellable inventory purchase orders were in line with the year-earlier period, and remain elevated above historic levels, primarily due to significant increases in prices and lead times for orders during both 2021 and 2022.
Refer to Note 6. ● Purchase obligations of $7.4 billion represent an estimate of non-cancellable inventory purchase orders and other contractual obligations related to information technology and facilities as of December 31, 2023 with $5.9 billion expected to be paid within the next 12 months and $1.1 billion in 2025. 33 Table of Contents ● Non-cancellable inventory purchase orders have decreased in comparison with the year-earlier period, primarily due to reductions in lead times, normalization of shortage market activities, and a decline in demand.
Liquidity and Capital Resources Management believes that the company’s current cash availability, its current borrowing capacity under its revolving credit facility and asset securitization programs, and its expected ability to generate future operating cash flows are sufficient to meet its projected cash flow needs for the next 12 months and the foreseeable future.
The sum of the components for non-GAAP net income attributable to shareholders may not agree to totals, as presented, due to rounding. ​ The decrease in net income attributable to shareholders in 2023 compared to the year-earlier period relates primarily to the changes in sales, gross margins, operating expenses, and interest expense discussed above. 30 Table of Contents Liquidity and Capital Resources Management believes that the company’s current cash availability, its current borrowing capacity under its revolving credit facility and asset securitization programs, and its expected ability to generate future operating cash flows are sufficient to meet its projected cash flow needs for the next 12 months and the foreseeable future.
Products sold by the company are generally delivered via shipment from the company's facilities, drop shipment directly from the vendor, or by electronic delivery of keys for software products.
Other taxes imposed by governmental authorities on the company’s revenue producing activities with customers, such as sales taxes and value-added taxes, are excluded from net sales. 34 Table of Contents Products sold by the company are generally delivered via shipment from the company's facilities, drop shipment directly from the vendor, or by electronic delivery of keys for software products.
Sales for the fourth quarter of 2022 and 2021 were $9.3 billion and $9.0 billion, respectively. 27 Index 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.
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. At December 31, 2023 and 2022, the company had cash and cash equivalents of $218.1 million and $176.9 million, respectively, of which $160.0 million and $160.8 million, respectively, were held outside the United States.
Refer to Note 12. • Environmental liabilities : The company is involved in certain ongoing environmental cleanup activities and legal proceedings, which are inherently uncertain with respect to outcomes, estimates and assumptions that it makes as of each reporting period, are inherently unpredictable.
Refer to Note 13. ● Environmental liabilities : The company is involved in certain ongoing environmental cleanup activities and legal proceedings, which are inherently uncertain with respect to outcomes. Refer to Note 15. ● Hedging activities : The company has entered into certain foreign exchange forward contracts designated as net investment hedges.
The stock-repurchase program may be accelerated, suspended, delayed or discontinued at any time subject to the approval by the company’s Board of Directors. 29 Index Contractual Obligations The company has contractual obligations for short-term and long-term debt, interest on short-term and long-term debt, purchase obligations, and operating leases. • At December 31, 2022, the company had $3.8 billion of total debt outstanding, $589.9 million of which matures in the next twelve months.
Contractual Obligations The company has contractual obligations for short-term and long-term debt, interest on short-term and long-term debt, purchase obligations, and operating leases. ● At December 31, 2023, the company had $3.8 billion of total debt outstanding, $1.7 billion of which matures in the next twelve months. The remaining debt has maturity dates in 2025 through 2032.
Interest and Other Financing Expense, Net The company recorded net interest and other financing expense of $185.6 million for 2022, compared with $131.7 million in the year-earlier period. The increase in 2022 primarily relates to higher interest rates on credit facilities and higher borrowings.
Interest and Other Financing Expense, Net ​ ​ ​ ​ ​ ​ ​ (millions) ​ 2023 ​ 2022 Interest and other financing expense, net ​ $ (329) ​ $ (186) The increase for 2023 primarily relates to higher interest rates on outstanding borrowings and floating rate credit facilities.
Revolving Credit Facilities and Debt The following table summarizes the company’s credit facilities by category at December 31: Borrowing capacity Outstanding borrowings Average daily balance outstanding (millions) 2022 2021 2022 2021 North American asset securitization program $ 1,500 $ 1,235 $ — $ 1,004 $ 516 Revolving credit facility 2,000 — — 182 10 Commercial paper program (a) 1,200 173 — 498 316 Uncommitted lines of credit 200 78 — 7 — (a) Amounts outstanding under the commercial paper program are backstopped by available commitments under the company’s revolving credit facility.
The company has $2.1 billion of foreign earnings that are not deemed permanently reinvested and are available for distribution in future periods as of December 31, 2023. 31 Table of Contents Revolving Credit Facilities and Debt The following table summarizes the company’s credit facilities by category at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Borrowing ​ Outstanding borrowings (millions) capacity 2023 2022 North American asset securitization program ​ $ 1,500 ​ $ 198 ​ $ 1,235 Revolving credit facility ​ 2,000 ​ — ​ — Commercial paper program (a) ​ 1,200 ​ 1,122 ​ 173 Uncommitted lines of credit ​ 500 ​ — ​ 78 (a) Amounts outstanding under the commercial paper program are backstopped by available commitments under the company’s revolving credit facility. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Daily Balance Outstanding ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ Effective Interest Rate ​ ​ ​ December 31, ​ December 31, ​ ​ December 31, ​ December 31, ​ (millions) 2023 2022 ​ 2023 ​ 2022 ​ North American asset securitization program ​ $ 1,092 ​ $ 1,004 ​ ​ 5.85 % 4.86 % Revolving credit facility ​ 131 ​ 182 ​ ​ 6.42 % 4.79 % Commercial paper program ​ 774 ​ 498 ​ ​ 5.90 % 5.15 % Uncommitted lines of credit ​ 178 ​ 7 ​ ​ 5.83 % 5.22 % ​ The company also has an EMEA asset securitization program under which it continuously sells its interest in designated pools of trade accounts receivables of certain of its subsidiaries in the EMEA region.
However, analysis of results on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP. Reconciliations of non-GAAP financial measures to the most directly comparable reported GAAP financial measures are included within this MD&A.
However, analysis of results on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP. 24 Table of Contents For a discussion of what is included within “Restructuring, integration, and other charges” and “Gain (loss) on investments, net” refer to the similarly captioned sections of this item below.
As the principal with the customer, the company recognizes revenue upon receiving notification from the supplier that the product was shipped. The company has contracts with certain customers where the company’s performance obligation is to arrange for the products or services to be provided by another party.
Sales, where the company is the principal in the transaction, are reported on the gross amount billed to a customer less discounts, rebates, and returns (referred to as “sales recognized on a gross basis”). The company has contracts with certain customers where the company’s performance obligation is to arrange for the products or services to be provided by another party.
The following table summarizes recent events impacting the company's capital resources: (millions) Activity Date Notional amount 3.50% notes, due April 2022 Repaid February 2022 $ 350 2.95% notes, due February 2032 Issued December 2021 $ 500 5.125% notes, due March 2021 Repaid March 2021 $ 131 North American asset securitization program Increase in Capacity September 2022 $ 250 EMEA asset securitization program Increase in Capacity September 2022 € 200 Refer to Note 5, “Debt” of the Notes to the Consolidated Financial Statements for further discussion of the company's short-term and long-term debt and available financing.
The following table summarizes recent events impacting the company’s capital resources: ​ ​ ​ ​ ​ ​ ​ ​ ​ (millions) Activity Date Notional amount Uncommitted lines of credit ​ Increase in Capacity ​ May 2023 ​ $ 300 4.50% notes, due March 2023 ​ Repaid ​ March 2023 ​ $ 300 6.125% notes, due March 2026 (a) ​ Issued ​ March 2023 ​ $ 500 3.50% notes, due April 2022 Repaid February 2022 ​ $ 350 North American asset securitization program Increase in Capacity September 2022 ​ $ 250 EMEA asset securitization program Increase in Capacity September 2022 ​ € 200 (a) Upon issuance of the 6.125% notes due March 2026, the company entered into an interest rate swap, which effectively converts the 6.125% notes to floating rate notes based on SOFR + 0.508%, or an effective interest rate of 5.87%.
To achieve its objectives, the company seeks to capture significant opportunities to grow across products, markets, and geographies. To supplement its organic growth strategy, the company continually evaluates strategic acquisitions to broaden its product and value-added service offerings, increase its market penetration, and expand its geographic reach.
To achieve its objectives, the company seeks to capture significant opportunities to grow across products, markets, and geographies.
The amendments in this ASU will be applied retrospectively to each period in which a balance sheet is presented, with the exception of a new requirement to disclose a rollforward of program activity, which will be applied prospectively. The amendments in the ASU are effective for fiscal years beginning after December 15, 2022, with early adoption permitted.
The amendments in this ASU were applied retrospectively to each period in which a balance sheet was presented, with the exception of a new requirement to disclose a roll forward of program activity, which was applied prospectively. Effective January 1, 2023, the company adopted the provisions of ASU No. 2022-04 on a prospective basis. Refer to Note 5.
The company also has an EMEA asset securitization program under which it continuously sells its interest in designated pools of trade accounts receivables of certain of its subsidiaries in the EMEA region. Receivables sold under the program are excluded from “Accounts receivable, net” and no corresponding liability is recorded on the company’s consolidated balance sheets.
Receivables sold under the program are excluded from “Accounts receivable, net” and no corresponding liability is recorded on the company’s consolidated balance sheets. During 2023 and 2022, the average daily balance outstanding under the EMEA asset securitization program was $626.4 million and $472.7 million, respectively.
Share-Repurchase Program The company repurchased 9.3 million shares of common stock for $1.0 billion and 7.7 million shares of common stock for $900.0 million in 2022 and 2021, respectively. On September 14, 2022, the company's Board of Directors approved a $600.0 million increase to the company's share-repurchase program. As of December 31, 2022, approximately $328.7 million remained available for repurchase.
During 2023, the company accrued $6.6 million of excise tax, which is recorded within “Treasury stock” on the company’s consolidated balance sheets and reduces the share-repurchase authorization. On January 31, 2023, the company’s Board of Directors approved a $1.0 billion increase to the company’s share-repurchase program. As of December 31, 2023, approximately $576.2 million remained available for repurchase.
Margins in the EMEA region somewhat softened due to product mix shifting towards lower margin products. Global supply chain services offerings continued to have a positive impact on gross margins.
Global components supply chain services offerings continued to have a positive impact on gross margins. ● The increase in global ECS gross profit margins during 2023, compared with the year-earlier period, related primarily to product mix shifting towards a higher proportion of revenue recognized on a net basis in the current year.
No single customer accounted for more than 2% of the company’s 2022 consolidated sales. One supplier accounted for approximately 13% of the company's consolidated sales in 2022. No other single supplier accounted for more than 7% of the company's consolidated sales in 2022.
Sales, where the company is the agent, are reported as the amount billed to the customer net of the cost of the sale (referred to as “sales recognized on a net basis”). No single customer accounted for more than 2% of the company’s 2023 consolidated sales. One supplier accounted for approximately 10% of the company’s consolidated sales in 2023.
The increases were partially offset by increased share repurchases and redemption of notes outstanding. Capital Expenditures Capital expenditures were $78.8 million and $83.1 million in 2022 and 2021, respectively. The company expects capital expenditures to be approximately $80.0 million for fiscal year 2023.
The company expects capital expenditures to be approximately $90.0 million for fiscal year 2024. Share-Repurchase Program The company repurchased 6.1 million shares of common stock for $745.9 million and 9.3 million shares of common stock for $1.0 billion in 2023 and 2022, respectively, under the share-repurchase program, excluding excise taxes.
Refer to discussion of the company's revenue recognition policy in Note 1. • Amounts related to future lease payments for operating lease obligations at December 31, 2022 totaled $348.5 million, with $80.3 million expected to be paid within the next 12 months. Refer to Note 13.
Additionally, limitations on cancelation terms with many vendors have normalized. Many of the company’s non-cancellable purchase orders are backed by customer purchase orders with Arrow, that are also non-cancellable. ● Amounts related to future lease payments for operating lease obligations at December 31, 2023 totaled $320.8 million, with $83.6 million expected to be paid within the next 12 months.
During 2022 and 2021, the average daily balance outstanding under the EMEA asset securitization program was $472.7 million and $458.5 million, respectively. Refer to Note 4 “Accounts Receivables” of the Notes to the Consolidated Financial Statements for further discussion.
Refer to Note 4 “Accounts Receivable” of the Notes to the Consolidated Financial Statements for further discussion.
The disclosures required by this ASU would be required in the company's consolidated financial statements beginning in the first quarter of 2023. The company is currently evaluating the potential effects of adopting the provisions of ASU No. 2022-04. 33 Index
The amendments in the ASU are effective for fiscal years beginning after December 15, 2023, and interim periods after December 15, 2024. The amendments in this ASU will be applied retrospectively for all prior periods presented in the financial statements. The company is currently evaluating the potential effects of adopting the provisions of ASU No. 2023-07.
Gross profit margins from the global ECS business also increased compared to the year-earlier period primarily due to strong growth in demand in the EMEA region as well as beneficial product mix, partially offset by the impact of changes in foreign currency.
The decrease in gross profit for 2023 related to declines in sales and gross profit margins for the global components business, partially offset by increases in gross profit margins from the global ECS business. ● The decrease in global components gross profit margins during 2023, compared with the year-earlier period, related primarily to declines in shortage market activity in the Americas region and product mix shifting toward lower margin products within the Asia/Pacific region.
Removed
The company distributes electronic components to original equipment manufacturers (“OEMs”) and contract manufacturers (“CMs”) through its global components business segment and provides enterprise computing solutions to VARs and MSPs through its global ECS business segment. For 2022, approximately 78% and 22% of the company's sales were from the global components business and the global ECS business, respectively.
Added
Certain Non-GAAP Financial Information In addition to disclosing financial results that are determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the company also discloses certain non-GAAP financial information in the sections below captioned “Sales,” “Gross Profit,” “Operating Expenses,” “Operating Income,” “Income Tax,” and “Net Income Attributable to Shareholders”.
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Executive Summary Consolidated sales for 2022 increased by 7.7% compared with the year-earlier period. The increase for 2022 was driven by a 9.2% increase in the global components business segment sales and a 2.7% increase in global ECS business segment sales. Consolidated sales on a constant currency basis increased 11.5% in 2022 compared with the year-earlier period.
Added
Refer to these sections below for reconciliations of non-GAAP financial measures to the most directly comparable reported GAAP financial measures.
Removed
The company reported net income attributable to shareholders of $1.4 billion in 2022 compared with a net income of $1.1 billion in the year-earlier period. Non-GAAP net income attributable to shareholders for 2022 was $1.5 billion compared with $1.1 billion in the year-earlier period.
Added
The company is a trusted partner in a complex value chain and is uniquely positioned through its electronics components and IT content portfolios to increase value for stakeholders. The company has two reportable segments, the global components business and the global ECS business.
Removed
Non-GAAP net income attributable to shareholders is adjusted for the following items: • restructuring, integration, and other charges of $13.7 million in 2022 and $15.4 million in 2021; • identifiable intangible asset amortization of $34.7 million in 2022 and $36.9 million in 2021; • net gain (loss) on investments of $(2.9) million in 2022 and $13.0 million in 2021.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThis resulted in decreased growth in sales and operating income of $1.2 billion and $58.8 million, respectively, for 2022, compared with the year-earlier period, based on 2021 sales and operating income re-translated at average foreign currency exchange rates for 2022.
Biggest changeThis increased sales and operating income by $51.8 million and $1.4 million respectively, for 2023, compared with the year-earlier period, based on 2022 sales and operating income re-translated at average foreign currency exchange rates for 2023. These exposures may change over time and changes in foreign currency exchange rates could materially impact the company’s financial results in the future.
The fair value of the foreign exchange contracts are estimated using foreign currency spot rates and forward rates quoted by third party financial institutions. The notional amount of the foreign exchange contracts inclusive of foreign exchange contracts designated as a net investment hedge at December 31, 2022 and 2021, was $1.3 billion and $1.1 billion, respectively.
The fair value of the foreign exchange contracts are estimated using foreign currency spot rates and forward rates quoted by third-party financial institutions. The notional amount of the foreign exchange contracts inclusive of foreign exchange contracts designated as a net investment hedge at December 31, 2023 and 2022, was $1.0 billion and $1.3 billion, respectively.
These amounts were determined by considering the impact of a hypothetical foreign exchange rate on the sales and operating income of the company's international operations. Interest Rate Risk The company's interest expense, in part, is sensitive to the general level of interest rates in North America, Europe, and the Asia/Pacific region.
These amounts were determined by considering the impact of a hypothetical foreign exchange rate on the sales and operating income of the company’s international operations. 38 Table of Contents Interest Rate Risk The company’s interest expense, in part, is sensitive to the general level of interest rates in North America, Europe, and the Asia/Pacific region.
However, due to the uncertainty of the specific actions that might be taken and their possible effects, the sensitivity analysis assumes no changes in the company’s financial structure.
However, due to the uncertainty of the specific actions that might be taken and their possible effects, the sensitivity analysis assumes no changes in the company’s financial structure. ​ ​ ​ 39 Table of Contents
During 2022, the average outstanding balance on the company’s floating rate debt was $1.7 billion, and a one percentage point change in average interest rates would have caused net interest and other financing expense during 2022 to increase by $16.9 million.
During 2023, the average outstanding balance on the company’s floating rate debt was $2.2 billion, and a one percentage point change in average interest rates would have caused net interest and other financing expense during 2023 to increase by $21.7 million.
The company's non-U.S. dollar results of operations are negatively impacted during periods when the U.S. dollar strengthens and positively impacted during periods when the U.S. dollar weakens. During 2022, the U.S dollar strengthened substantially against most other currencies.
The company’s non-U.S. dollar results of operations are negatively impacted during periods when the U.S. dollar strengthens and positively impacted during periods when the U.S. dollar weakens. During 2023, the U.S dollar weakened against most other currencies.
At December 31, 2022, 60% of the company's debt was subject to fixed rates and 40% was subject to floating rates.
At December 31, 2023, 64% of the company’s debt was subject to fixed rates and 36% was subject to floating rates.
In the event of a change in the level of economic activity, which may adversely impact interest rates, the company could likely take actions to further mitigate any potential negative exposure to the change.
This was determined by considering the impact of a hypothetical interest rate on the company’s average outstanding balance of floating rate debt during 2023. In the event of a change in the economic environment, which may adversely impact interest rates, the company could likely take actions to mitigate potential negative exposure to changes in interest rates.
These exposures may change over time and changes in foreign currency exchange rates could materially impact the company's financial results in the future. For example, sales and operating income would decrease by approximately $810.0 million and $42.7 million, respectively, if the U.S dollar strengthened by another 10% against the Euro.
For example, sales and operating income would decrease by approximately $863.8 million and $51.0 million, respectively, if the U.S. dollar strengthened by another 10% against the Euro.
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This was determined by considering the impact of a hypothetical interest rate on the company’s average outstanding balance of floating rate debt during 2022. This analysis does not consider the effect of the level of overall economic activity that could exist.
Removed
As a result of recent regulatory guidance and proposals for reform, the ICE Benchmark Administration Limited, the administrator of LIBOR, ceased publication for the one-week and two-month USD LIBOR settings on December 31, 2021 and is expected to phase out the remaining USD LIBOR settings on July 1, 2023.
Removed
The Alternative Reference Rate Committee ("ARRC") has proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR.
Removed
The company has a revolving credit facility, certain lines of credit, and interest rate swaps that are indexed to USD-LIBOR. At the time LIBOR is discontinued, the interest rates in these contracts will be based on a fallback reference rate specified in the 34 Index applicable documentation governing such debt or swaps or as otherwise agreed upon.
Removed
Such an event would not affect the company's ability to borrow or maintain already outstanding borrowings or swaps, but the alternative reference rate could be higher and more volatile than LIBOR. The company continues to monitor developments by the ARRC and the potential impact of LIBOR changes on its business. 35 Index

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