ARROW ELECTRONICS, INC. Revenue Disclosure

Revenue Recognition

The company recognizes revenue as control of products is transferred to customers, which generally happens at the point of shipment, or when the service has occurred. 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. 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. Sales are recorded net of discounts, rebates, and returns, which historically have not been material. Tariffs are included in sales as the company has enforceable rights to additional consideration to cover the cost of tariffs. 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.

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.

​

The company is the principal in transactions when it is principally responsible for fulfilling the order, which includes negotiating pricing, payment to the supplier, establishing payment terms with the customer, product returns, and has risk of loss if the customer does not make payment. Additionally, the company is the principal in transactions where it is primarily responsible for providing services that include logistics, warehousing, financial management, and analytic services. 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 company is the agent in these arrangements, which pertain to the sale of supplier-provided service contracts to customers or delivery of product for which the company does not have control of the product as part of logistics services rendered to customers. 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”).

​

Within the company’s global ECS segment, in certain periods, changes in the mix of sales of IT solutions impact the proportion of the company’s revenue that is recorded on a net basis compared to a gross basis. These changes increase or decrease sales during a period without a corresponding change in gross profit. This is driven by the company’s responsibilities in the sale of various IT solutions, which is based on terms and conditions in place with its partners.

​