Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

There were 88,842,73087,619,244 shares of Common Stock outstanding as of May 1, 2017.April 30, 2018.

The accompanying consolidated financial statements of Arrow Electronics, Inc. (the "company") were prepared in accordance with accounting principles generally accepted in the United States and reflect all adjustments of a normal recurring nature, which are, in the opinion of management, necessary for a fair presentation of the consolidated financial position and results of operations at and for the periods presented.  The consolidated results of operations for the interim periods are not necessarily indicative of results for the full year.

These consolidated financial statements do not include all of the information or notes necessary for a complete presentation and, accordingly, should be read in conjunction with the company's audited consolidated financial statements and accompanying notes for the year ended December 31, 2016,2017, as filed in the company's Annual Report on Form 10-K.

The company operates on a quarterly calendar that closes on the Saturday closest to the end of the calendar quarter.

Certain prior period amounts were reclassified to conform to the current period presentation.presentation (See Note B). These reclassifications did not have a material impact on previously reported amounts.are included in the footnote tables for the quarter ended March 31, 2018.

2016-02, the company expects most existing operating lease commitments will be recognized as operating lease liabilities and right-of-use assets upon adoption.

In 2014,On January 1, 2018, the company established an implementation team (“team”) and engaged external advisersadopted Topic 606 applying the full retrospective method. The primary impact of adoption relates to develop a multi-phase plan to assess the company’s business and contracts, as well as any changes to processes or systems to adopt the requirementsapplication of the new standard. The team has updated the assessment for new ASU updates and for newly acquired businesses. The team is in the process of developing its conclusions on several aspects of the standard including principalgross versus agent considerations, identification of performance obligationsnet indicators and the determination of when control ofwhether goods and services transfersare distinct. In addition, the company is deferring certain revenue due to the company’s customers.determination of when transfer of control occurs. The deferrals are expected to be recognized within a year of the transaction date.

During the first quarter of 2017, the company acquired an additional 11.9% of the noncontrolling interest common shares of Data Modul AG for $23,350, increasing the company's ownership interest in Data Modul to 69.2%. The impact of this acquisition was not material to the company's consolidated financial position or results of operations.

Goodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. The company tests goodwill and other indefinite-lived intangible assets for impairment annually as of the first day of the fourth quarter, or more frequently if indicators of potential impairment exist.

During the first quarter of 20172018 and 2016,2017, the company recorded amortization expense related to identifiable intangible assets of $12,900$13,520 and $12,913,$12,900, respectively.

The company owns a 50% interest in several joint ventures with Marubun Corporation (collectively "Marubun/Arrow") and several interests ranging from 43% to 50% in other joint ventures and equity method investments.  These investments are accounted for using the equity method.

The following table presents the company's investment in affiliated companies:

The equity in earnings (losses) of affiliated companies consists of the following:

Under the terms of various joint venture agreements, the company is required to pay its pro-rata share of the third party debt of the joint ventures in the event that the joint ventures are unable to meet their obligations. At April 1, 2017,March 31, 2018, the company's pro-rata share of this debt was approximately $740.$2,770. There were no outstanding borrowings under the third party debt agreements of the joint ventures as of December 31, 2017. The company believes that there is sufficient equity in each of the joint ventures to meet theirthe obligations. 

Accounts receivable, net, consists of the following:

The company maintains allowances for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments.  The allowances for doubtful accounts are determined using a combination of factors, including the length of time the receivables are outstanding, the current business environment, and historical experience. The company also has notes receivables with certain customers.  As of April 1,March 31, 2018 and December 31, 2017,  the company has one customer with a combined note and accounts receivable balance of approximately $19,500.$24,200 and $24,600, respectively.  The customer became delinquent on its repayment of the note during the fourth quarter of 2016. The company believes that it will recover all amounts due;has adequately reserved for potential losses; however, it is possible that it could incur a loss.loss in excess of the reserve.

Short-term borrowings, including current portion of long-term debt, consists of the following:

Other short-term borrowings are primarily utilized to support working capital requirements. The weighted-average interest rate on these borrowings was 4.0% and 2.6% and 2.4% at April 1, 2017March 31, 2018 and December 31, 2016,2017, respectively.

The estimated fair market value, using quoted market prices, is as follows:

The carrying amount of the company's short-term borrowings in various countries, revolving credit facility, asset securitization program, commercial paper, and other obligations approximate their fair value.

The company has a commercial paper program and the maximum aggregate balance of commercial paper outstanding may not exceed the borrowing capacity of $1,200,000. The company had $85,239 in outstanding borrowings under the commercial paper program at April 1, 2017 with a weighted average interest rate of 1.40%. The company had no outstanding borrowings under this program at March 31, 2018 and December 31, 2016.2017. The program had an effective interest rate of 2.17% for the first quarter of 2018.

The company has an asset securitization program collateralized by accounts receivable of certain of its subsidiaries. The company may borrow up to $910,000 under the asset securitization program, which matures in September 2019. The asset securitization program is conducted through Arrow Electronics Funding Corporation ("AFC"), a wholly-owned, bankruptcy remote subsidiary. The asset securitization program does not qualify for true sale treatment. Accordingly, the accounts receivable and related debt obligation remain on the company's consolidated balance sheets. Interest on borrowings is calculated using a base rate or a commercial paper rate plus a spread (.40% at April 1, 2017)March 31, 2018), which is based on the company's credit ratings, or an effective interest rate of 1.45%2.27% at April 1, 2017.March 31, 2018. The facility fee is .40%.

At April 1, 2017March 31, 2018 and December 31, 2016,2017, the company had $480,000$810,000 and $460,000,$490,000, respectively, in outstanding borrowings under the asset securitization program, which was included in "Long-term debt" in the company's consolidated balance sheets. Total collateralized accounts receivable of approximately $1,681,144$2,109,500 and $2,045,464,$2,270,500, respectively, were held by AFC and were included in "Accounts receivable, net" in the company's consolidated balance sheets. Any accounts receivable held by AFC would likely not be available to other creditors of the company in the event of bankruptcy or insolvency proceedings before repayment of any outstanding borrowings under the asset securitization program.

Both the revolving credit facility and asset securitization program include terms and conditions that limit the incurrence of additional borrowings and require that certain financial ratios be maintained at designated levels. The company was in compliance with all covenants as of April 1, 2017March 31, 2018 and is currently not aware of any events that would cause non-compliance with any covenants in the future.  

The company has a $100,000 uncommitted line of credit. There wereThe company had no outstanding borrowings under the uncommitted line of credit at April 1, 2017March 31, 2018 and December 31, 2016.2017.

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to goodwill and identifiable intangible assets (see Note CD and D)E). The company tests these assets for impairment if indicators of potential impairment exist.exist or at least annually if indefinite lived. 

During the first quarter of 20172018 and 2016,2017, there were no transfers of assets (liabilities) measured at fair value between the three levels of the fair value hierarchy.

The company uses various financial instruments, including derivative instruments, for purposes other than trading. Certain derivative instruments are designated at inception as hedges and measured for effectiveness both at inception and on an ongoing basis. Derivative instruments not designated as hedges are marked-to-market each reporting period with any unrealized gains or losses recognized in earnings.

The company occasionally enters into interest rate swap transactions that convert certain fixed-rate debt to variable-rate debt or variable-rate debt to fixed-rate debt in order to manage its targeted mix of fixed- and floating-rate debt. The company uses the hypothetical derivative method to assess the effectiveness of its interest rate swaps designated as fair value hedges on a quarterly basis. The effective portion of the change in the fair value of designated interest rate swaps designated as fair value hedges is recorded as a change to the carrying value of the related hedged debt.debt, and the effective portion of the change in fair value of interest rate swaps designated as cash flow hedges is recorded in the shareholders' equity section in the company's consolidated balance sheets in

"Accumulated other comprehensive loss." The ineffective portion of the interest rate swaps, if any, is recorded in "Interest and other financing expense, net" in the company's consolidated statements of operations. As of April 1, 2017March 31, 2018 and December 31, 2016,2017, all outstanding interest rate swaps were designated as fair value hedges.

The terms of our outstanding interest rate swap contracts at April 1, 2017March 31, 2018 are as follows:

The company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase the product. The company’s transactions in its foreign operations are denominated primarily in the following currencies: Euro, Chinese Renminbi, Indian Rupee, and British pound, Taiwan Dollar, and Australian Dollar.Pound. The company enters into foreign exchange forward, option, or swap contracts (collectively, the "foreign exchange contracts") to mitigate the impact of changes in foreign currency exchange rates.  These contracts are executed to facilitate the hedging of foreign currency exposures resulting from inventory purchases and sales and generally have terms of no more than six months. Gains or losses on these contracts are deferred and recognized when the underlying future purchase or sale is recognized or when the corresponding asset or liability is revalued. The company does not enter into foreign exchange contracts for trading purposes. The risk of loss on a foreign exchange contract is the risk of nonperformance by the counterparties, which the company minimizes by limiting its counterparties to major financial institutions.  The fair value of the foreign exchange contracts are estimated using

Gains and losses related to non-designated foreign currency exchange contracts are recorded in "Cost of sales" in the company's consolidated statements of operations. Gains and losses related to designated foreign currency exchange contracts, are recorded in "Cost of sales," "Selling, general, and administrative expenses"expenses," and "Interest and other financing expense, net" based upon the nature of the underlying hedged transaction, in the company's consolidated statements of operations and were not material for the first quartersquarter of 20172018 and 2016.2017.

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

Restructuring initiatives are due to the company's continued efforts to lower cost and drive operational efficiency. Integration costs are primarily related to the integration of acquired businesses within the company's pre-existing business and the consolidation of certain operations. The following table presents the components of the restructuring, integration, and other charges:

The following table presents the activity in the restructuring and integration accrual for the first quarter of 20172018 related to restructuring and integration actions taken in 2016:2017:

Included in restructuring, integration, and other charges for the first quarter of 20172018 are restructuring and integration charges of $80$92 related to restructuring and integration actions taken prior to 2016.2017. The restructuring and integration charge (credits) includes adjustments to personnel costs of $143,$(1,078) and facilities costs of $(44), and other costs of $(19).$1,170. The restructuring and integration accruals at April 1, 2017March 31, 2018 related to actions taken prior to 20162017 of $4,019$9,033 include accruals for personnel costs of $1,557 and$7,173, accruals for facilities costs of $2,462.$1,713, and accruals for other costs of $147.

The restructuring and integration accruals aggregate to $20,772$34,542 at April 1, 2017,March 31, 2018, all of which are expected to be spent in cash, and are expected to be utilized as follows:

Included in restructuring, integration, and other charges for the first quarter of 20172018 are other expenses of $5,420.$8,390. Included in these expenses are acquisition-related expensescharges of $2,679 consisting of charges$6,154 related to contingent consideration for acquisitions completed in prior years which were conditional upon the financial performance of the acquired companies and the continued employment of the selling shareholders, as well as professional and other fees directly related to recent acquisition activity.

Included in restructuring, integration, and other charges for the first quarter of 20162017 are other expenses of $16,214.$5,420. Included in these expenses is a fraud lossare acquisition-related charges of $13,195 and acquisition-related expenses$2,679 consisting of $1,624charges related to contingent consideration for acquisitions completed in prior years which were conditional upon the financial performance of the acquired companies and the continued employment of the selling shareholders, as well as professional and other fees directly related to recent acquisition activity.

The following table presents the computation of net income per share on a basic and diluted basis (shares in thousands):