Exhibit 99.1
|
Avnet, Inc. 2211 South 47th Street Phoenix, AZ 85034 |
PRESS RELEASE
Avnet, Inc. Reports Third Quarter Fiscal Year 2011 Results
Strong Revenues Globally Drive Continued Growth in Profits
Strong Revenues Globally Drive Continued Growth in Profits
Phoenix, April 28, 2011 - Avnet, Inc. (NYSE:AVT) today announced results for the third fiscal
quarter ended April 2, 2011.
| Three Months Ended | ||||||||||||
| April 2, | April 3, | Net | ||||||||||
| 2011 | 2010 | Change | ||||||||||
| $ in millions, except per share data | ||||||||||||
Sales |
$ | 6,672.4 | $ | 4,756.8 | 40.3 | % | ||||||
GAAP Operating Income |
$ | 240.7 | $ | 167.2 | 44.0 | % | ||||||
Adjusted Operating Income (1) |
$ | 257.0 | $ | 174.6 | 47.2 | % | ||||||
GAAP Net Income |
$ | 151.0 | $ | 114.5 | 31.9 | % | ||||||
Adjusted Net Income (1) |
$ | 169.7 | $ | 115.8 | 46.6 | % | ||||||
GAAP Diluted EPS |
$ | 0.98 | $ | 0.75 | 30.7 | % | ||||||
Adjusted Diluted EPS (1) |
$ | 1.10 | $ | 0.76 | 44.7 | % | ||||||
| (1) | A reconciliation of GAAP to non-GAAP financial measures is presented in the Non-GAAP
Financial Information section in this press release. |
| • | Sales for the third fiscal quarter increased 40% year over year to $6.7 billion; pro forma
revenue (as defined later in this release) was up 16% year over year |
| • | Adjusted operating income increased 47% to $257 million and adjusted operating income
margin of 3.85% was up 18 basis points year over year |
| • | Adjusted diluted earnings per share increased 45% over the prior year quarter to a record
$1.10 per share |
Roy Vallee, Chairman and Chief Executive Officer, commented, “Our revenue in the March quarter was
much stronger than expected at both operating groups, driving operating income margin higher
sequentially and year over year. This solid performance drove a fourth consecutive quarter of
record adjusted EPS with return on capital employed (ROCE) within our target range of 14% — 16%,
even as we are integrating our most recent significant investments in value creating M&A.
Electronics Marketing delivered another very strong quarter as double-digit organic growth drove
both margins and returns above our long-term targets. As the technology markets continue to lead
the economic recovery, we remain focused on driving performance across our portfolio of businesses
and leveraging revenue growth into increased shareholder value and higher EPS.”
Avnet Electronics Marketing Results
| Year-over-Year Growth Rates | ||||||||||||
| Q3 FY11 | Reported | Pro forma(2) | ||||||||||
| Revenue | Revenue | Revenue | ||||||||||
| (in millions) | ||||||||||||
Total |
$ | 3,925.2 | 36.0 | % | 18.3 | % | ||||||
Excluding FX (1) |
35.6 | % | 18.0 | % | ||||||||
Americas |
$ | 1,316.2 | 46.7 | % | 11.3 | % | ||||||
EMEA |
$ | 1,328.5 | 30.3 | % | — | |||||||
Excluding FX (1) |
30.5 | % | — | |||||||||
Asia |
$ | 1,280.5 | 32.1 | % | 14.8 | % | ||||||
| Q3 FY11 | Q3 FY10 | Change | ||||||||||
Operating Income |
$ | 224.8 | $ | 144.2 | $ | 80.6 | ||||||
Operating Income Margin |
5.73 | % | 5.00 | % | 73 | bps | ||||||
| (1) | Year-over-year revenue growth rate excluding the impact of changes in foreign currency
exchange rates. |
|
| (2) | Pro forma revenue is defined later in this release. Pro forma growth rates are not presented
for EM EMEA as revenue comparisons to prior year were not impacted by acquisitions. |
| • | Record revenue of $3.93 billion was up 36% year over year while pro forma revenue grew 18% |
| • | Operating income margin improved 73 basis points year over year and 57 basis points
sequentially |
| • | Return on working capital (ROWC) was up 170 basis points year over year and 380 basis
points sequentially |
Mr. Vallee added, “Demand for electronic components remained strong this quarter as sequential
revenue growth of 10% was driven by above normal seasonal trends in all three regions. Growth was
strongest in EMEA as high demand in the industrial and automotive markets drove revenue up 23%
sequentially and 30% year over year. The combination of strong growth in the western regions, gross
profit margin improvements and continued expense efficiencies resulted in operating income growing
2.2 times faster than revenue sequentially while operating income margin increased 57 basis points.
ROWC increased 170 basis points year over year and was above our target of 30% globally as EM
continues to translate growth into record economic profit. At EM, the book to bill ratio remained
positive for the March quarter which indicates that end demand in our served markets remains solid.
We are well positioned to continue leveraging our profitable growth initiatives and deliver
returns within our target range.”
2
Avnet Technology Solutions Results
| Year-over-Year Growth Rates | ||||||||||||
| Q3 FY11 | Reported | Pro forma(2) | ||||||||||
| Revenue | Revenue | Revenue | ||||||||||
| (in millions) | ||||||||||||
Total |
$ | 2,747.2 | 46.9 | % | 13.2 | % | ||||||
Excluding FX (1) |
45.4 | % | 12.1 | % | ||||||||
Americas |
$ | 1,506.6 | 38.9 | % | 20.4 | % | ||||||
EMEA |
$ | 847.0 | 59.5 | % | -2.9 | % | ||||||
Excluding FX (1) |
57.8 | % | -3.9 | % | ||||||||
Asia |
$ | 393.6 | 54.8 | % | 30.0 | % | ||||||
| Q3 FY11 | Q3 FY10 | Change | ||||||||||
Operating Income |
$ | 57.3 | $ | 49.9 | $ | 7.4 | ||||||
Operating Income Margin |
2.09 | % | 2.67 | % | -58 | bps | ||||||
| (1) | Year-over-year revenue growth rate excluding the impact of changes in foreign currency
exchange rates. |
|
| (2) | Pro forma revenue is defined later in this release. |
| • | Revenue grew 47% year over year while pro forma revenue grew 13% |
| • | Operating income grew 15% year over year while operating income margin declined 58 basis
points primarily due to the impact of acquisitions |
| • | Year to date ROWC remains in line with our long-term business model |
Mr. Vallee further added, “Technology Solutions revenue came in at the high end of expectations as
the sequential declines were less than normal for a March quarter in the Americas and Asia regions.
Pro forma revenue was down 12% sequentially versus a typical decline of 16% to 20% and was up 12%
year over year in constant dollars. At a product level, this year-over-year growth was driven
primarily by sales of servers and storage. Operating income margin decreased 58 basis points from
the year ago quarter due primarily to the impact of acquisitions while the sequential decline of
119 basis points was worse than seasonal due primarily to product mix. We continue to see progress
in recent M+A investments as operating income margin improved from the September quarter in both
Latin America and the Asia region as we apply our value-based management discipline and grow the
businesses. In EMEA, where the recovery has been weaker than in other regions, we completed the
Bell Micro IT conversions which will lead to the realization of additional synergies as planned.”
Cash Flow
| • | Cash generated from operations was $188 million for the quarter and $121 million for the
last four quarters |
| • | Cash and cash equivalents at the end of the quarter was $782 million; net debt (total debt
less cash and cash equivalents) was $1.1 billion |
Ray Sadowski, Chief Financial Officer, stated, “Strong profits combined with excellent working
capital management resulted in $188 million of positive cash flow from operations for the quarter.
At EM, working capital grew at half the rate of sales as a $22 million sequential decline in
inventory contributed to a 2.5 reduction in its overall net days from the December quarter. During
the
quarter, we used $104 million to retire the Bell Micro convertible notes that were put to us which
further strengthened our already strong balance sheet and credit statistics.
Outlook For Fiscal 4th Quarter Ending on July 2, 2011
| • | EM sales are expected to be in the range of $3.85 billion to $4.25 billion and TS sales are
expected to be between $2.75 billion and $3.05 billion |
| • | Consolidated sales are forecasted to be between $6.60 billion and $7.30 billion |
3
| • | Adjusted diluted earnings per share (“EPS”) is expected to be in the range of $1.10 to
$1.22 per share |
| • | While it is difficult to gauge the impact of the Japan earthquake and tsunami on our June
quarter revenue, we continue to work closely with our suppliers to understand what products
are most impacted and meet the needs of our supply chain customers. The expected sales range
for EM and, therefore, for Avnet indicated above is wider than normal to account for the
uncertainly associated with the impact from the Japan earthquake and tsunami. The EPS range
has been widened as well. |
The above EPS guidance does not include any potential restructuring charges or any charges related
to acquisitions and post-closing integration activities. In addition, the above guidance assumes
that the average Euro to U.S. Dollar currency exchange rate for the fourth quarter of fiscal 2011
is $1.44 to €1.00. This compares with an average exchange rate of $1.27 to €1.00 in the fourth
quarter of fiscal 2010 and $1.37 to €1.00 in the third quarter of fiscal 2011.
Forward-Looking Statements
This press release contains certain “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These statements are based on management’s current expectations and are subject to
uncertainty and changes in facts and circumstances. The forward-looking statements herein include
statements addressing future financial and operating results of Avnet and may include words such as
“will,” “anticipate,” “expect,” believe,” “forecast,” and “should,” and other words and terms of
similar meaning in connection with any discussions of future operating or financial performance,
business prospects or market conditions. Actual results may vary materially from the expectations
contained in the forward-looking statements.
The following factors, among others, could cause actual results to differ materially from those
described in the forward-looking statements: the Company’s ability to retain and grow market share
and to generate additional cash flow, risks associated with any acquisition activities and the
successful integration of acquired companies, any significant and unanticipated sales decline,
changes in business conditions and the economy in general, changes in market demand and pricing
pressures, any material changes in the allocation of product or product rebates by suppliers, other
competitive and/or regulatory factors affecting the businesses of Avnet generally.
More detailed information about these and other factors is set forth in Avnet’s filings with the
Securities and Exchange Commission, including the Company’s reports on Form 10-K, Form 10-Q and
Form 8-K. Avnet is under no obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
Non-GAAP Financial Information
In addition to disclosing financial results that are determined in accordance with generally
accepted accounting principles in the United States (“GAAP”), the Company also discloses in this
press release certain non-GAAP financial information including adjusted operating income, adjusted
net income and adjusted diluted earnings per share, as well as revenue adjusted for the impact of
acquisitions and other items (as defined in the Pro Forma (Organic) Revenue section of this
release). Management believes pro forma revenue is a useful measure for evaluating current period
performance as compared with prior periods and for understanding underlying trends.
Management believes that operating income adjusted for restructuring, integration and other items
is a useful measure to help investors better assess and understand the Company’s operating
performance, especially when comparing results with previous periods or forecasting performance for
future periods, primarily because management views the excluded items to be outside of Avnet’s
normal operating results. Management analyzes operating income without the impact of these items
as an indicator of ongoing margin performance and underlying trends in the business. Management
also uses these non-GAAP measures to establish operational goals and, in some cases, for measuring
performance for compensation purposes.
4
Management believes net income and EPS adjusted for the impact of the items described above is
useful to investors because it provides a measure of the Company’s net profitability on a more
comparable basis to historical periods and provides a more meaningful basis for forecasting future
performance. Additionally, because of management’s focus on generating shareholder value, of which
net profitability is a primary driver, management believes net income and EPS excluding the impact
of these items provides an important measure of the Company’s net results of operations for the
investing public. However, analysis of results and outlook on a non-GAAP basis should be used as a
complement to, and in conjunction with, data presented in accordance with GAAP.
Third Quarter Fiscal 2011
| Third Quarter Ended Fiscal 2011 | ||||||||||||||||
| Diluted | ||||||||||||||||
| Op Income | Pre-tax | Net Income | EPS | |||||||||||||
| $ in thousands, except per share data | ||||||||||||||||
GAAP results |
$ | 240,737 | $ | 213,161 | $ | 151,031 | $ | 0.98 | ||||||||
Restructuring, integration and other charges |
16,273 | 16,273 | 11,887 | 0.08 | ||||||||||||
Loss on investments |
— | 6,308 | 3,857 | 0.02 | ||||||||||||
Income tax adjustments |
— | — | 2,959 | 0.02 | ||||||||||||
Total adjustments |
16,273 | 22,581 | 18,703 | 0.12 | ||||||||||||
Adjusted results |
$ | 257,010 | $ | 235,742 | $ | 169,734 | $ | 1.10 | ||||||||
Items impacting the third quarter of fiscal 2011 consisted of the following:
| • | Restructuring, integration and other charges of $16.3 million pre-tax which were incurred
primarily in connection with the acquisition and integration of acquired businesses and
consisted of $4.4 million pre-tax for severance, $3.3 million pre-tax for facility exit
related costs, fixed asset write downs and other related charges, $8.0 million pre-tax for
integration-related costs, $3.5 million pre-tax for transaction costs associated with
acquisitions, $0.9 million pre-tax for other charges, and a reversal of $3.8 million pre-tax
to release liabilities associated with a prior acquisition and to adjust prior year
restructuring reserves; |
| • | Loss on investments of $6.3 million pre-tax related to the write down of investments in
smaller technology start-up companies; and |
| • | Income tax adjustments of $3.0 million primarily related to uncertainty surrounding
deferred tax assets, additional transfer pricing exposure and audit settlements. |
Third Quarter Fiscal 2010
| Third Quarter Ended Fiscal 2010 | ||||||||||||||||
| Diluted | ||||||||||||||||
| Op Income | Pre-tax | Net Income | EPS | |||||||||||||
| $ in thousands, except per share data | ||||||||||||||||
GAAP results |
$ | 167,220 | $ | 156,594 | $ | 114,505 | $ | 0.75 | ||||||||
Restructuring, integration and other charges |
7,347 | 7,347 | 5,587 | 0.04 | ||||||||||||
Gain on sale of assets |
— | (3,202 | ) | (1,987 | ) | (0.01 | ) | |||||||||
Net tax benefit |
— | — | (2,303 | ) | (0.02 | ) | ||||||||||
Total adjustments |
7,347 | 4,145 | 1,297 | 0.01 | ||||||||||||
Adjusted results |
$ | 174,567 | $ | 160,739 | $ | 115,802 | 0.76 | |||||||||
5
Items impacting third quarter of fiscal 2010 consisted of the following:
| • | Restructuring, integration and other charges of $7.3 million pre-tax which included (i)
$6.5 million pre-tax for a value-added tax exposure in Europe related to an audit of prior
years, (ii) $2.1 million pre-tax related to acquisition-related costs, and (iii) a credit of
$1.3 million pre-tax related to reversals of restructuring reserves no longer deemed
necessary. |
| • | A gain on the sale of assets of $3.2 million pre-tax as a result of a final earn-out
payment associated with the earlier sale of the Company’s equity investment in Calence LLC. |
| • | A net tax benefit of $2.3 million related to adjustments for a prior year tax return and a
benefit from a favorable income tax audit settlement partially offset by additional tax
reserves for existing tax positions. |
Pro Forma (Organic) Revenue
Pro forma or Organic revenue is defined as reported revenue adjusted for (i) the impact of
acquisitions by adjusting Avnet’s prior periods to include the sales of businesses acquired as if
the acquisitions had occurred at the beginning of fiscal 2010; (ii) the impact of a divestiture by
adjusting Avnet’s prior periods to exclude the sales of the business divested as if the divestiture
had occurred at the beginning of the period presented; (iii) the impact of the extra week of sales
in the prior year first quarter due to the “52/53 week” fiscal year; and (iv) the impact of the
transfer of the existing embedded business from TS Americas to EM Americas that occurred in the
first quarter of fiscal 2011, which did not have an impact to Avnet on a consolidated basis but did
impact the pro forma sales for the groups by $97 million in the third quarter of fiscal 2010.
Sales taking into account the combination of these adjustments is referred to as “pro forma sales”
or “organic sales”.
Revenue adjusted for this impact is presented in the following table:
| Acquisition / | ||||||||||||||||
| Revenue | Divested | Extra Week | Pro forma | |||||||||||||
| as Reported | Revenue | in Q1 FY10 | Revenue | |||||||||||||
| (in thousands) | ||||||||||||||||
Q1 Fiscal 2011 |
$ | 6,182,388 | $ | (41,261 | ) | $ | — | $ | 6,141,127 | |||||||
Q2 Fiscal 2011 |
$ | 6,767,495 | $ | (102,385 | ) | $ | — | $ | 6,665,110 | |||||||
Q3 Fiscal 2011 |
$ | 6,672,404 | $ | — | $ | 6,672,404 | ||||||||||
Fiscal year 2011 |
$ | 19,622,287 | $ | (143,646 | ) | $ | — | $ | 19,478,641 | |||||||
Q1 Fiscal 2010 |
$ | 4,355,036 | $ | 884,224 | $ | (417,780 | ) | $ | 4,821,480 | |||||||
Q2 Fiscal 2010 |
4,834,524 | 1,043,732 | — | 5,878,256 | ||||||||||||
Q3 Fiscal 2010 |
4,756,786 | 987,295 | — | 5,744,081 | ||||||||||||
Q4 Fiscal 2010 |
5,213,826 | 878,290 | — | 6,092,116 | ||||||||||||
Fiscal year 2010 |
$ | 19,160,172 | $ | 3,793,541 | $ | (417,780 | ) | $ | 22,535,933 | |||||||
6
“Acquisition Revenue” as presented in the preceding table includes the following acquisitions:
| Acquired Business | Operating Group | Acquisition Date | ||
Vanda Group |
TS | October 2009 | ||
Sunshine Joint Stock Company |
TS | November 2009 | ||
PT Datamation |
TS | April 2010 | ||
Servodata HP Division |
TS | April 2010 | ||
Bell Micro Products Inc. |
TS/EM | July 2010 | ||
Tallard Technologies |
TS | July 2010 | ||
Unidux |
EM | July 2010 | ||
Broadband |
EM | October 2010 | ||
Eurotone |
EM | October 2010 | ||
Center Cell |
EM | November 2010 | ||
itX Technologies |
TS | January 2011 |
The table above also reflects the divestiture of New ProSys Corp. which occurred in January 2011.
Teleconference Webcast and Upcoming Events
Avnet will host a Webcast of its quarterly teleconference today at 2:00 p.m. Eastern Time. The
live Webcast event, as well as other financial information including Ray Sadowski’s, Chief
Financial Officer, CFO Review of Results and financial statement reconciliations of GAAP and
non-GAAP financial measures, will be available through www.ir.avnet.com. Please log onto the site
15 minutes prior to the start of the event to register or download any necessary software. An
archive copy of the presentation will also be available after the Webcast.
For a listing of Avnet’s upcoming events and other information, please visit Avnet’s investor
relations website at www.ir.avnet.com.
About Avnet
Avnet, Inc. (NYSE:AVT), a Fortune 500 Company, is one of the largest distributors of electronic
components, computer products and embedded technology serving customers in more than 70 countries
worldwide. Avnet accelerates its partners’ success by connecting the world’s leading technology
suppliers with a broad base of more than 100,000 customers by providing cost-effective, value-added
services and solutions. For the fiscal year ended July 3, 2010, Avnet generated revenue of $19.16
billion. For more information, visit www.avnet.com. (AVT_IR)
Investor Relations Contact:
Avnet, Inc.
Vincent Keenan
Investor Relations
(480) 643-7053
investorrelations@avnet.com
Avnet, Inc.
Vincent Keenan
Investor Relations
(480) 643-7053
investorrelations@avnet.com
7
AVNET, INC.
FINANCIAL HIGHLIGHTS
(MILLIONS EXCEPT PER SHARE DATA)
FINANCIAL HIGHLIGHTS
(MILLIONS EXCEPT PER SHARE DATA)
| THIRD QUARTERS ENDED | ||||||||
| APRIL 2, | APRIL 3, | |||||||
| 2011 * | 2010 * | |||||||
Sales |
$ | 6,672.4 | $ | 4,756.8 | ||||
Income before income taxes |
213.2 | 156.6 | ||||||
Net income |
151.0 | 114.5 | ||||||
Net income per share: |
||||||||
Basic |
$ | 0.99 | $ | 0.75 | ||||
Diluted |
$ | 0.98 | $ | 0.75 | ||||
| NINE MONTHS ENDED | ||||||||
| APRIL 2, | APRIL 3, | |||||||
| 2011 * | 2010 * | |||||||
Sales |
$ | 19,622.3 | $ | 13,946.3 | ||||
Income before income taxes |
621.0 | 384.9 | ||||||
Net income |
430.2 | 269.3 | ||||||
Net income per share: |
||||||||
Basic |
$ | 2.82 | $ | 1.78 | ||||
Diluted |
$ | 2.79 | $ | 1.76 | ||||
| * | See Notes to Consolidated Statements of Operations on Page 13. |
8
AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
| THIRD QUARTERS ENDED | NINE MONTHS ENDED | |||||||||||||||
| APRIL 2, | APRIL 3, | APRIL 2, | APRIL 3, | |||||||||||||
| 2011 * | 2010 * | 2011 * | 2010 * | |||||||||||||
Sales |
$ | 6,672,404 | $ | 4,756,786 | $ | 19,622,287 | $ | 13,946,346 | ||||||||
Cost of sales |
5,885,789 | 4,173,999 | 17,339,333 | 12,311,931 | ||||||||||||
Gross profit |
786,615 | 582,787 | 2,282,954 | 1,634,415 | ||||||||||||
Selling, general and administrative
expenses |
529,605 | 408,220 | 1,546,701 | 1,190,489 | ||||||||||||
Restructuring, integration
and other charges (Note 1 *) |
16,273 | 7,347 | 73,452 | 25,419 | ||||||||||||
Operating income |
240,737 | 167,220 | 662,801 | 418,507 | ||||||||||||
Other income, net |
2,289 | 1,499 | 5,268 | 3,581 | ||||||||||||
Interest expense |
(23,557 | ) | (15,327 | ) | (69,830 | ) | (45,925 | ) | ||||||||
Gain on sale of assets (Note 2 *) |
— | 3,202 | — | 8,751 | ||||||||||||
Gain on bargain purchase and other (Note 3 *) |
(6,308 | ) | — | 22,715 | — | |||||||||||
Income before income taxes |
213,161 | 156,594 | 620,954 | 384,914 | ||||||||||||
Income tax provision |
62,130 | 42,089 | 190,715 | 115,663 | ||||||||||||
Net income |
$ | 151,031 | $ | 114,505 | $ | 430,239 | $ | 269,251 | ||||||||
Net earnings per share: |
||||||||||||||||
Basic |
$ | 0.99 | $ | 0.75 | $ | 2.82 | $ | 1.78 | ||||||||
Diluted |
$ | 0.98 | $ | 0.75 | $ | 2.79 | $ | 1.76 | ||||||||
Shares used to compute earnings
per share: |
||||||||||||||||
Basic |
152,859 | 151,890 | 152,333 | 151,519 | ||||||||||||
Diluted |
154,611 | 153,215 | 154,172 | 152,932 | ||||||||||||
| * | See Notes to Consolidated Statements of Operations on Page 13. |
9
AVNET, INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
| APRIL 2, | JULY 3, | |||||||
| 2011 | 2010 | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 781,749 | $ | 1,092,102 | ||||
Receivables, net |
4,706,561 | 3,574,541 | ||||||
Inventories |
2,514,163 | 1,812,766 | ||||||
Prepaid and other current assets |
213,266 | 150,759 | ||||||
Total current assets |
8,215,739 | 6,630,168 | ||||||
Property, plant and equipment, net |
395,558 | 302,583 | ||||||
Goodwill |
908,275 | 566,309 | ||||||
Other assets |
320,405 | 283,322 | ||||||
Total assets |
9,839,977 | 7,782,382 | ||||||
Less liabilities: |
||||||||
Current liabilities: |
||||||||
Borrowings due within one year |
632,435 | 36,549 | ||||||
Accounts payable |
3,412,849 | 2,862,290 | ||||||
Accrued expenses and other |
679,733 | 540,776 | ||||||
Total current liabilities |
4,725,017 | 3,439,615 | ||||||
Long-term debt |
1,250,516 | 1,243,681 | ||||||
Other long-term liabilities |
129,970 | 89,969 | ||||||
Total liabilities |
6,105,503 | 4,773,265 | ||||||
Shareholders’ equity |
$ | 3,734,474 | $ | 3,009,117 | ||||
10
AVNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
| NINE MONTHS ENDED | ||||||||
| APRIL 2, | APRIL 3, | |||||||
| 2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 430,239 | $ | 269,251 | ||||
Non-cash and other reconciling items: |
||||||||
Depreciation and amortization |
59,100 | 46,084 | ||||||
Deferred income taxes |
(12,284 | ) | 35,234 | |||||
Stock-based compensation |
25,015 | 24,007 | ||||||
Gain on sale of assets |
— | (8,751 | ) | |||||
Gain on bargain purchase and other |
(22,715 | ) | — | |||||
Other, net |
45,348 | 11,793 | ||||||
Changes in (net of effects from businesses acquired): |
||||||||
Receivables |
(391,624 | ) | (732,466 | ) | ||||
Inventories |
(262,696 | ) | (356,434 | ) | ||||
Accounts payable |
45,038 | 583,878 | ||||||
Accrued expenses and other, net |
81,209 | (27,305 | ) | |||||
Net cash flows used for operating activities |
(3,370 | ) | (154,709 | ) | ||||
Cash flows from financing activities: |
||||||||
Borrowings under accounts receivable securitization program, net |
485,000 | — | ||||||
Repayment of notes |
(109,600 | ) | — | |||||
Proceeds from bank debt, net |
42,238 | 14,909 | ||||||
Proceeds from (repayment of) other debt, net |
13,572 | (1,440 | ) | |||||
Other, net |
3,231 | 3,998 | ||||||
Net cash flows provided by financing activities |
434,441 | 17,467 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of property, plant, and equipment |
(105,221 | ) | (42,905 | ) | ||||
Cash proceeds from sales of property, plant and |
||||||||
equipment |
2,356 | 6,334 | ||||||
Acquisitions of operations, net of cash acquired |
(690,997 | ) | (36,361 | ) | ||||
Cash proceeds from divestitures |
10,458 | 11,785 | ||||||
Net cash flows used for investing activities |
(783,404 | ) | (61,147 | ) | ||||
Effect of exchange rates on cash and cash equivalents |
41,980 | 9,042 | ||||||
Cash and cash equivalents: |
||||||||
— decrease |
(310,353 | ) | (189,347 | ) | ||||
— at beginning of period |
1,092,102 | 943,921 | ||||||
— at end of period |
$ | 781,749 | $ | 754,574 | ||||
11
AVNET, INC.
SEGMENT INFORMATION
(MILLIONS)
SEGMENT INFORMATION
(MILLIONS)
| THIRD QUARTERS ENDED | NINE MONTHS ENDED | |||||||||||||||
| APRIL 2, | APRIL 3, | APRIL 2, | APRIL 3, | |||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
SALES: |
||||||||||||||||
Electronics Marketing |
$ | 3,925.2 | $ | 2,886.6 | $ | 11,104.5 | $ | 7,841.8 | ||||||||
Technology Solutions |
2,747.2 | 1,870.2 | 8,517.8 | 6,104.5 | ||||||||||||
Consolidated |
$ | 6,672.4 | $ | 4,756.8 | $ | 19,622.3 | $ | 13,946.3 | ||||||||
OPERATING INCOME (LOSS): |
||||||||||||||||
Electronics Marketing |
$ | 224.8 | $ | 144.2 | $ | 600.3 | $ | 317.8 | ||||||||
Technology Solutions |
57.3 | 49.9 | 219.2 | 189.5 | ||||||||||||
Corporate |
(25.1 | ) | (19.5 | ) | (83.2 | ) | (63.4 | ) | ||||||||
| $ | 257.0 | $ | 174.6 | $ | 736.3 | $ | 443.9 | |||||||||
Restructuring, integration and other charges |
(16.3 | ) | (7.4 | ) | (73.5 | ) | (25.4 | ) | ||||||||
Consolidated |
$ | 240.7 | $ | 167.2 | $ | 662.8 | $ | 418.5 | ||||||||
12
AVNET, INC.
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 2011
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 2011
(1) The results for the third quarter of fiscal 2011 included restructuring, integration and
other charges which totaled $16,273,000 pre-tax, $11,887,000 after tax and $0.08 per share on a
diluted basis and were incurred primarily in connection with the acquisitions and integrations of
acquired businesses. The charges included restructuring charges consisting of severance of
$4,427,000 pre-tax and facility exit related costs, fixed asset write downs and related costs of
$3,293,000 pre-tax which were incurred primarily as a result of the integration activities
associated with the acquisitions. Integration costs of $7,969,000 pre-tax included professional
fees associated with legal and IT consulting, facility moving costs, travel, meeting, marketing and
communication costs that were incrementally incurred as a result of the integration activity. Also
included in integration costs are incremental salary and associated employee benefit costs,
primarily of the acquired businesses’ personnel who were retained by Avnet for extended periods
following the close of the acquisitions solely to assist in the integration of the acquired
business’ IT systems and administrative and logistics operations into those of Avnet. These
identified personnel have no other meaningful day-to-day operational responsibilities outside of
the integration effort. Transaction costs of $3,529,000 pre-tax consisted primarily of broker
fees, professional fees for legal and accounting due diligence and related costs. The Company
recorded other charges of $902,000 pre-tax and a reversal of $3,847,000 pre-tax primarily related
to the release of liabilities associated with a prior acquisition and to adjust restructuring
reserves established in prior years which were no longer needed.
Results for the first nine months of fiscal 2011 included restructuring, integration and other
charges which totaled $73,452,000 pre-tax, $52,876,000 after tax and $0.34 per share on a diluted
basis and consisted of $23,361,000 pre-tax for severance, $16,259,000 pre-tax for facilities
related costs, fixed asset write downs and related costs, $24,066,000 pre-tax for integration
costs, $15,597,000 pre-tax for transactions costs associated with acquisitions and $1,848,000
pre-tax for other charges as well as a reversal of $7,679,000 pre-tax primarily related to the
release of liabilities associated with a prior acquisition and to adjust reserves related to prior
year restructuring activity that were no longer needed.
The results for third quarter of fiscal 2010 included restructuring, integration and other charges
which totaled $7,347,000 pre-tax, $5,587,000 after tax and $0.04 per share on a diluted basis and
consisted of $6,477,000 pre-tax for a value-added tax exposure in Europe related to an audit of
prior years, $2,157,000 pre-tax for acquisition-related costs and a credit of $1,287,000 pre-tax
related to the reversal of previously recognized restructuring reserves which were determined to be
no longer necessary.
13
The results for the first nine months of fiscal 2010 included restructuring, integration and other
charges which totaled $25,419,000 pre-tax, $18,789,000 after tax and $0.12 per share on a diluted
basis. Restructuring costs of $15,991,000 pre-tax related to the remaining cost reductions that
began in fiscal 2009 and consisted of severance, facility exit costs and fixed asset write-downs
associated with the exited facilities. The Company also recognized $2,931,000 of integration costs
associated with acquired businesses, $6,477,000 pre-tax for
the value-added tax exposure previously mentioned, $3,261,000 of other charges including
acquisition-related costs and a credit of $3,241,000 related to the reversal of restructuring
reserves established in prior periods.
(2) The Company recognized a gain on the sale of assets amounting to $3,202,000 pre-tax,
$1,987,000 after tax and $0.01 per share on a diluted basis during the third quarter of fiscal 2010
and $8,751,000 pre-tax, $5,370,000 after tax and $0.03 per share on a diluted basis during the
first nine months of fiscal 2010 as a result of certain earn-out provisions associated with the
sale of the Company’s prior equity investment in Calence LLC.
(3) During the third quarter of fiscal 2011, the Company recognized a loss of $6,308,000 pre-tax,
$3,857,000 after tax and $0.02 per share on a diluted basis related to the write down of
investments in smaller technology start-up companies.
During the first nine months of fiscal 2011, the Company recognized a gain on bargain purchase and
other of $22,715,000 pre-tax, $25,720,000 after tax and $0.17 per share on a diluted basis. During
the first quarter of fiscal 2011, the Company acquired Unidux, Inc., a Japanese publicly traded
electronics component distributor, through a tender offer. Even though the purchase price per share
offered by Avnet, Inc. was below book value, it represented a premium to the trading levels at that
time and 95% of the Unidux shareholders tendered their shares. After evaluating all assets acquired
and liabilities assumed, the consideration paid was below the fair value of the acquired net assets
and, as a result, the Company recognized a gain on bargain purchase of $30,990,000 pre- and after
tax, and $0.20 per share on a diluted basis. The Company also recognized other charges of
$1,967,000 pre-tax, $1,413,000 after tax and $0.01 per share on a diluted basis primarily related
to the write down of two buildings in EMEA. As mentioned above, the Company recognized a loss on
investments of $6,308,000 pre-tax.
14