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Electronics Production | August 24, 2004

Arrow Settles French VAT Claim

Arrow Electronics, Inc. has settled a claim against its French subsidiary, Tekelec SA, in respect of French value-added tax.
In 2003, Arrow reserved EUR 11.3 million for the full amount of a claim asserted by the French tax authorities relating to alleged fraudulent activities concerning value-added tax by Tekelec. The alleged activities occurred prior to Arrow's purchase of Tekelec from Tekelec Airtronic SA ("Airtronic") in 2000. An agreement (the "settlement agreement") has been reached with the French tax authorities pursuant to which Tekelec will pay EUR 3.4 million in full settlement of this claim. Tekelec did not receive the consent of Airtronic to the settlement agreement. Arrow will record an acquisition indemnification credit of EUR 7.9 million ($9.7 million at the exchange rate prevailing on August 12, 2004) ($.08 per share based on the shares outstanding on August 12, 2004) in the third quarter of 2004 in connection with the settlement.
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