307 added · 203 removed between the two most recent 10-Ks. The risks a company starts — or stops — disclosing are often the story.
Newly disclosed
Evaluation of Americas Components and Americas ECS reporting units for impairment of goodwill Description of the Matter At December 31, 2025, the Company’s consolidated goodwill was $2.1 billion, with $565 million allocated to the Americas Components reporting unit and $781 million allocated to the Americas ECS reporting unit.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Years Ended December 31, 2025 2024 2023 Cash flows from operating activities: Consolidated net income $ 569,694 $ 393,507 $ 909,363 Adjustments to reconcile consolidated net income to net cash provided by operations: Depreciation and amortization 137,750 162,994 181,116 Amortization of stock-based compensation 27,883 34,631 41,569 Equity in earnings of affiliated companies ( 3,198 ) ( 1,368 ) ( 6,407 ) Deferred income taxes ( 36,182 ) ( 99,866 ) ( 93,980 ) Loss on extinguishment of debt — 1,657 — (Gain) loss on investments, net ( 110,269 ) 5,068 ( 10,822 ) Other 351 5,520 20,946 Change in assets and liabilities, net of effects of acquired businesses: Accounts receivable, net ( 6,342,006 ) ( 1,013,091 ) 189,425 Inventories ( 286,180 ) 421,063 139,313 Accounts payable 6,107,791 1,092,488 ( 457,382 ) Accrued expenses 60,415 ( 140,871 ) 38,601 Other assets and liabilities ( 62,000 ) 268,681 ( 246,293 ) Net cash provided by operating activities 64,049 1,130,413 705,449 Cash flows from investing activities: Acquisition of property, plant, and equipment ( 101,254 ) ( 92,703 ) ( 83,285 ) Proceeds from sale of property, plant, and equipment — 5,157 — Cash consideration paid for acquired businesses, net of cash acquired — ( 34,834 ) — Proceeds from settlement of net investment hedges 24,858 10,635 10,725 Proceeds from sale of investments in equity securities 100,000 — — Other — 17,303 237 Net cash provided by (used for) investing activities 23,604 ( 94,442 ) ( 72,323 ) Cash flows from financing activities: Change in short-term and other borrowings ( 592 ) ( 1,155,909 ) 866,012 Proceeds from (repayments of) long-term bank borrowings, net 302,820 470,347 ( 1,031,881 ) Redemption of notes ( 350,000 ) ( 1,000,000 ) ( 300,000 ) Net proceeds from note offering — 989,564 496,268 Proceeds from exercise of stock options 3,452 5,354 17,010 Repurchases of common stock ( 161,669 ) ( 265,142 ) ( 770,200 ) Settlement of forward-starting interest rate swap — — 56,711 Other ( 148 ) ( 1,041 ) ( 142 ) Net cash used for financing activities ( 206,137 ) ( 956,827 ) ( 666,222 ) Effect of exchange rate changes on cash 236,144 ( 108,390 ) 74,234 Net increase (decrease) in cash and cash equivalents 117,660 ( 29,246 ) 41,138 Cash and cash equivalents at beginning of year 188,807 218,053 176,915 Cash and cash equivalents at end of year $ 306,467 $ 188,807 $ 218,053 See accompanying notes. 51 Index ARROW ELECTRONICS, INC.
As of the first day of the fourth quarters of 2025, 2024, and 2023, the company’s annual impairment testing did not indicate impairment of any of the company’s reporting units.
As of the first day of the fourth quarters of 2025, 2024, and 2023, the company’s annual impairment testing did not indicate impairment of any of the company’s reporting units.
We also tested the Company’s reconciliation of the fair value of its reporting units to the Company’s market value as of the impairment test date. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1975.
In many regions in Asia, for example, sales and purchases are primarily denominated in U.S. dollars, resulting in a “natural hedge.” Natural hedges exist in most countries in which the company operates, although the percentage of natural offsets, as compared with offsets that need to be hedged by foreign exchange contracts, will vary from country to country.
For example, we tested controls over management’s review of excess and obsolete inventories for Global Components which includes their review of the assumptions supporting current product demand, supplier protections, evaluation of aging of inventories and consideration of inventory turnover.
As of the date of the company’s 2025 annual impairment test, the fair value of all reporting units exceeded their carrying values by more than 20 %.
As of the date of the company’s 2025 annual impairment test, the fair value of all reporting units exceeded their carrying values by more than 20%.
For example, sales and operating income would decrease by approximately $780.0 million and $26.9 million, respectively, if the U.S. dollar strengthened by 10% against the Euro.
Contingencies and Litigation From time to time, the company is subject to legal claims, regulatory proceedings, and lawsuits related to environmental, intellectual property, labor, product liability, tax, and other matters and assesses the likelihood of an adverse judgment or outcome for these matters, as well as the range of potential losses.
Refer to Note 15 - “Contingencies” within Item 8 for further discussion. 41 Table of Contents Goodwill 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.
No longer disclosed
For example, the company is currently obligated to perform environmental remediation on two sites that it obtained as part of an acquisition transaction (refer to Note 15 of the Notes to the Consolidated Financial Statements).
For example, the OECD has advanced new tax proposals affecting international taxation, including the establishment of a global minimum tax of 15%, which many countries are either considering implementing or have already implemented.
For example, sales of products from one of the company’s suppliers accounted for approximately 8% of the company’s consolidated sales in 2024.
For example, many of the company’s suppliers will not allow products to be returned after they have been held in inventory beyond a certain amount of time, and, in most instances, the return rights are limited to a certain percentage of the amount of products the company purchased in a particular time frame.
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.
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.
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. If the company’s leverage ratios or other measures tracked by credit rating agencies exceed thresholds generally permitted by such agencies for an investment grade credit rating for an extended period of time it may cause a reduction in the company’s current debt ratings to a level below investment grade.
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 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.
Acquisitions and divestitures involve numerous risks, including: • effectively combining the acquired operations, technologies, or products; • unanticipated costs or assumed or retained liabilities, including, but not limited to, those associated with combining and integrating operations, technologies, and facilities; • costs associated with regulatory actions or investigations; • difficulty identifying potential acquirers or other divestiture options on favorable terms; • the inability to retain and obtain required regulatory approvals, licenses, and permits; • delayed completion due to local consultation laws; • 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; • liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, data privacy and security issues, violations of laws, commercial disputes, tax liabilities, environmental issues and remediation expenditures, and other known and unknown liabilities; • change in the company’s effective tax rate; • difficulty separating assets or businesses (or portions thereof) from the company’s other businesses; • decrease in margins, loss of revenue, operating income, or disruption to customer relationships as a result of a divestiture; 13 Table of Contents • litigation or other claims in connection with an acquired company or a divestiture, including claims from terminated employees, customers, current or former equity holders, or other third parties; • significant costs associated with exit or disposal activities or related impairment charges; and • potential loss of key employees of the company or acquired companies. 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 fails to adequately invest successfully in and introduce digital, artificial intelligence (“AI”), 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 unable to maintain and enhance its digital platforms, cloud platforms, and artificial intelligence related tools 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.
Datasets used to train the models which support the company’s AI offerings or internal use may be insufficient or contain biased information or lead to unexpected or unintended outcomes, which could erode trust in the company’s AI systems and subject the company to competitive harm, regulatory action, and legal liability.