Analysts Su Chen Thanh Le Gina Huang Presented: November 17, 2011

Business Summary  Arrow Electronics, Inc. distributes products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions worldwide. Source: Arrow 2010 Annual Report Locations: 340 locations in 52 countries Corporate Headquarters: Melville, New York Customers: 115, Sales:$18.7 billion Global Components:$13.2 billion ECS:$5.6 billion Employees:12,700; Suppliers:1,200 Fortune 500 Rank:140

Arrow Worldwide Source: Arrow 201 Fast fact

Global Customer Base Source: Introduction to Arrow Electronic_9_16_2011 pg. 4

Electronic Components Source: Introduction to Arrow Electronic_9_16_2011 pg. 10

Electronic Components  Core Drivers  Broad line card –1,200+ suppliers  Broad customer base –100,000+  Engineering focus  Demand creation  Value-added programs  Differentiators  Global strength and depth  Design win performance  Highest ranked level of customer service  Industry leading operating margins  Financial resources Source: Introduction to Arrow Electronic_9_16_2011 pg. 11

Enterprise Computing Solutions  Differentiators Customer service Customer and OEM relations Solutions focused Non-compete relationship with reseller customers Unparalleled line card  Core Drivers Small and medium sized customers – 13,000 VAR partners Business continuity Server consolidation Compliance/regulatory environment Engineering and technical expertise Education and training services Enterprise Solutions Centers (Atlanta & Minneapolis) Financing programs Business development & marketing expertise Innovation and investments Enterprise Computing Solutions (ECS) – 30% of 2010 ARW Revenue Arrow ECS is the global business group that provides enterprise and midrange computing products, services and solutions to value-added resellers and system integrators -ECS Americas –72% of ECS sales --4 Billion -ECS Europe –28% of ECS sales Billion Source: Introduction to Arrow Electronic_9_16_2011 pg. 12

Industry Structure Low Concentration Level High Competition Level Medium Barriers to Entry Low Industry Globalization Decline Life Cycle Stage Medium Revenue Volatility Low Technology Change High Capital Intensity Source: IBISWorld

Wholesale Annual Sales Growth Source: First Research

Industry Trends, Opportunity, Challenge, external revenue drive Consolidation Growth of Independent Distributors Product Specialization Trends Demand Depends on Cyclical Computer Manufacture International Trade Risks Risk of Inventory Obsolescence Receivable Risk Demand Imbalance Challenge Supply Chain Management Value-Added Services Information Technology Opportunity Per Capital disposable income Price of semiconductor and electronic components Percentage of households with at least one computer Industry systems and technology Revenue Drivers Source: First Research & IBISWorld

Per Capital Disposable Income Source: IBISWorld

Products & Services  Major products: semiconductors (computer chips); connectors; electromechanical devices.  Other products disk and tape drives, computer subsystems, microwave and fiber optic components, transistors, diodes, power supplies, switches.  Services: purchasing; marketing; warehousing; packing, shipping, and delivery; customized packaging private labeling minor repair and refurbishment simple assembly. Source: IBISWorld

Global Semiconductor Sales Source: First Research

Demand for communications equipment  Expanding consumer and enterprise reliance upon voice, video and data communications has increased demand for carrier network bandwidth.  Demand for wireless handsets over the next five years will be influenced by the degree to which consumers respond to an increasing number of products with multimedia capability and with functions previously found in other products. Source: First Research

Demand for electronic parts  Demand for electronic components will be promoted by the continued substitution of mechanical devices for electronic devices and growth in sales of final electronic products.  Adversely effected by slow growth in final electronic product manufacturing industries Source: First Research

Domestic Industry Forecast Source: First Research

Global Strategy Drive growth in the core, services & high-growth product sets Source: Introduction to Arrow Electronic_9_16_2011 pg. 6

Source: Introduction to Arrow Electronic_9_16_2011 pg. 7

Powering the Supply Chain: ECS Source: Introduction to Arrow Electronic_9_16_2011 pg. 13

10 years price performance Source: Capital IQ

10 years revenue performance Source: Capital IQ

Financial Ratios Growth Source: Arrow Electronic website

Acquisition Activities 2011 Nu Horizons Electronics Corp. On January 3, 2011, the company acquired Nu Horizons Electronics Corp. ("Nu Horizons"), a global distributor of advanced technology semiconductor, display, illumination, and power solutions to a wide variety of commercial OEMs and electronic manufacturing services providers. This acquisition builds on the company's strategy to expand its global capabilities, particularly in the fast-growing Asia Pacific region. Source: Arrow Electronic 2010 Annual reports

Acquisition Activities 2011 Richardson RFPD On October 1, 2010, the company announced an agreement to acquire all the assets and operations of the RF, Wireless and Power Division ("RFPD") of Richardson Electronics, Ltd. ("Richardson") a leading value-added global component distributor and provider of engineered solutions serving the global radio frequency and wireless communications market. This acquisition supports the company's strategy to expand its portfolio of products and strategic capabilities, such as value-added services, to help it meet the evolving needs of its suppliers and customers. The acquisition is done. Source: Arrow Electronic 2010 Annual reports

Acquisition Activities  In February 2008, it acquired the components distribution business of Hynetic Electronics and Shreyanics Electronics ("Hynetic") in India.  In February 2008, it acquired all the assets and operations of ACI Electronics LLC ("ACI")  In December 2008, it acquired Excel Tech, Inc. ("Excel Tech")  In December 2009, it acquired A.E. Petsche Company, Inc. ("Petsche") Source: Arrow Electronic 2010 Annual reports

Acquisition Activities  In April 2010, it acquired Verical Incorporated ("Verical")  In June 2010, it acquired PCG Parent Corp.  In August 2010, it acquired Transim Technology Corporation ("Transim")  In October 2010, it acquired Eshel Technology Group, Inc. ("ETG")  In December 2010, it acquired all of the assets and operations of INT Holdings, LLC Source: Arrow Electronic 2010 Annual reports

Competitors AVNET Incdistributes electronic components, enterprise computer and embedded subsystems Watsco Incdistributes refrigeration equipment and offer flexible marketing programs, technical support Brightpoint Inc distributes information technology products,offers logistics management and other value- added services Network Engines, Inc provides application platforms and appliance solutions for original equipment manufacturers and independent software vendors worldwide Tech Data Corp. distributes information technology products, as well as offers logistics management and other value-added services

Competitors Financial Ratio Enterprise Value EBIT REVENU E P/EP/BP/S ROAROE AVTAVNET Inc x %18.45% WSOWatsco Inc x %13.32% CellBrightpoint Inc x %19.15% NEI Network Engines, Inc x %8.93% TECDTech Data Corp x %11.39%

Multiple Valuation MethodWeightPriceRelative Price P/E33%$41.18$13.59 TEV/Revenue33%$39.26$12.96 TEV/EBIT33%$38.25$12.62 Estimated Value $39.17

ARW valuation $42.16 DCF (70%) $43.45 Multiple (30%) $39.17

Recommendation  Current price: $37  Recommendation: Put on the watched list