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EX-99.2 - EXHIBIT 99.2 - AVNET INC | c23695exv99w2.htm |
8-K - FORM 8-K - AVNET INC | c23695e8vk.htm |
Exhibit 99.1
Avnet, Inc. 2211 South 47th Street Phoenix, AZ 85034 |
PRESS RELEASE
Avnet, Inc. Reports First Quarter Fiscal Year 2012 Results
Growth Slows, TS Improves, Buyback Begins
Growth Slows, TS Improves, Buyback Begins
Phoenix, October 27, 2011 Avnet, Inc. (NYSE:AVT) today announced results for the first quarter
fiscal year 2012 ended October 1, 2011.
Q1 Fiscal 2012 Results
First Quarter Ended | ||||||||||||
October 1, | October 2, | |||||||||||
2011 | 2010 | Change | ||||||||||
$ in millions, except per share data | ||||||||||||
Sales |
$ | 6,426.0 | $ | 6,182.4 | 3.9 | % | ||||||
GAAP Operating Income |
$ | 223.1 | $ | 194.5 | 14.7 | % | ||||||
Adjusted Operating Income (1) |
$ | 223.1 | $ | 222.5 | 0.2 | % | ||||||
GAAP Net Income |
$ | 139.0 | $ | 138.2 | 0.6 | % | ||||||
Adjusted Net Income (1) |
$ | 139.0 | $ | 142.7 | -2.6 | % | ||||||
GAAP Diluted EPS |
$ | 0.90 | $ | 0.90 | 0.0 | % | ||||||
Adjusted Diluted EPS (1) |
$ | 0.90 | $ | 0.93 | -3.2 | % |
(1) | A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the Non-GAAP Financial Information section in this press release. |
| Sales for the quarter ended October 1, 2011 increased 3.9% year over year to $6.43 billion;
pro forma revenue was up 3.6% year over year and roughly flat in constant currency |
|
| Adjusted operating income of $223.1 million, or 3.5% of sales, was essentially flat with
last year |
|
| Adjusted diluted earnings per share were $0.90, down 3.2% year over year, primarily due to
higher than normal other expense of $5.4 million primarily related to foreign currency. |
Rick Hamada, Chief Executive Officer, commented, Our team
delivered a strong Q1 performance despite a challenging macro environment. After seven consecutive quarters of strong
year-over-year growth, our business slowed this quarter as pro forma revenue was roughly flat year
over year in constant currency. While Q1 is typically our weakest
revenue quarter, the actual sequential revenue decline we experienced this year was more than normal seasonality due
primarily to the double-digit sequential revenue declines
experienced in our EMEA region at both operating groups after adjusting for the impact of acquisitions and currency. As a result, adjusted
operating income came in roughly flat as compared with last year and operating income margin
declined 13 basis points. Although it is difficult to forecast future demand in the current macro
economic environment, we are encouraged by the speed with which the electronics supply chain is
rebalancing and the relative strength of our computer business outside of EMEA. We remain
confident that our experience through many industry cycles will
continue to serve us well as we work through the current environment and we continue
to focus on driving long-term shareholder value creation.
Avnet Electronics Marketing Results
Year-over-Year Growth Rates | ||||||||||||
Q1 FY12 | Reported | Pro forma | ||||||||||
Revenue | Revenue | Revenue (2) | ||||||||||
(in millions) | ||||||||||||
Total |
$ | 3,816.3 | 5.4 | % | -0.1 | % | ||||||
Excluding FX (1) |
2.3 | % | -3.1 | % | ||||||||
Americas |
$ | 1,383.2 | 9.8 | % | 0.3 | % | ||||||
EMEA |
$ | 1,123.8 | 4.1 | % | | |||||||
Excluding FX (1) |
-4.6 | % | | |||||||||
Asia |
$ | 1,309.3 | 2.2 | % | -3.9 | % |
Q1 FY12 | Q1 FY11 | Change | ||||||||||
Operating Income |
$ | 191.2 | $ | 192.1 | $ | (0.9 | ) | |||||
Operating Income Margin |
5.01 | % | 5.31 | % | -30 bps | |||||||
(1) | Year-over-year revenue growth rate excluding the impact of changes in
foreign currency exchange rates. |
|
(2) | Pro forma growth rates for EM EMEA are not presented as revenue comparisons to
prior year were not impacted by acquisitions. |
| Reported revenue increased 5.4% year over year to $3.82 billion while pro forma revenue in
constant dollars was down 3.1% |
|
| Operating income margin decreased 30 basis points year over year to 5.0% due primarily to
lower pro forma revenue and the impact of the transfer of the Latin America computing
components business from TS at the beginning of fiscal 2012 |
|
| Working capital (defined as receivables plus inventory less accounts payables) increased 7%
sequentially, after adjusting for acquisitions and changes in foreign currency exchange rates,
primarily due to a reduction in accounts payable as we reduced inventory purchases in response
to lower customer bookings |
|
| In the quarter, inventory increased 3.5% sequentially after adjusting for acquisitions and
changes in foreign currency exchange rates |
|
| Return on working capital (ROWC) was down 728 basis points sequentially due primarily to
the increase in working capital and, to a lesser extent, the decline in operating income
margin |
Mr. Hamada added, EM sales were negatively impacted by the current supply chain correction as pro
forma revenue declined 7% sequentially as compared with a typical range of up 1% to down 3%. While
EMEA was our relatively weakest region, we also saw slightly lower than expected revenue in America
and Asia. Despite these challenges, operating income was roughly flat with the year ago quarter
and operating income margin of 5.0% was within our long-term target range. EMs book to bill ratio
declined sequentially in the September quarter, but has shown some improvement through the first three
weeks of October. It appears that customers are rapidly adjusting their inventory and backlog to an
environment of slower growth and shorter product lead times. We remain focused on delivering
margins and returns within our target range through these cycles.
2
Avnet Technology Solutions Results
Year-over-Year Growth Rates | ||||||||||||
Q1 FY12 | Reported | Pro forma | ||||||||||
Revenue | Revenue | Revenue | ||||||||||
(in millions) | ||||||||||||
Total |
$ | 2,609.7 | 1.9 | % | 9.7 | % | ||||||
Excluding FX (1) |
-1.3 | % | 6.3 | % | ||||||||
Americas |
$ | 1,388.4 | -5.0 | % | 13.3 | % | ||||||
EMEA |
$ | 778.5 | -3.6 | % | -5.9 | % | ||||||
Excluding FX (1) |
-10.4 | % | -12.5 | % | ||||||||
Asia |
$ | 442.8 | 51.4 | % | 35.6 | % |
Q1 FY12 | Q1 FY11 | Change | ||||||||||
Operating Income |
$ | 65.0 | $ | 56.7 | $ | 8.3 | ||||||
Operating Income Margin |
2.49 | % | 2.21 | % | 28 bps | |||||||
(1) | Year-over-year revenue
growth rate excluding the impact of changes in foreign currency exchange rates. |
| Reported revenue grew 1.9% year over year to $2.6 billion and pro forma revenue
increased 9.7% in reported dollars and 6.3% in constant dollars. Software grew greater than
40% year over year, while hardware grew more than 30% led by industry standard servers and
storage |
|
| Operating income margin increased 28 basis points year over year to 2.5% with all three
regions contributing to the improvement |
|
| Return on working capital (ROWC) increased both sequentially and year over year |
Mr. Hamada further added, Despite our top line growth challenges in EMEA, TS delivered year over
year improvements in profitability and returns this quarter across all three regions. In the
Americas, pro forma revenue grew 13% year over year and operating income margin was up both
sequentially and year over year. Pro forma revenue in Asia grew 35% year over year and operating
income margin increased 60 basis points, the fourth consecutive quarter of year-over-year
improvement in this important metric. In EMEA, gross profit margin was up significantly year over
year, and operating income margin increased both sequentially and year over year despite the
challenging market conditions. The improvements in TS performance this quarter demonstrate the
potential for increased profitability as we continue to apply our portfolio management discipline
across the business and leverage the investments we have made in higher growth markets. We remain
committed to the attainment of our long-range financial targets.
Cash Flow/Buyback
| Cash used for operations was $204 million for the quarter as the growth in working capital,
primarily due to cash used for accounts payables, offset cash generated by profits |
|
| Cash flow from operations on a rolling four quarter basis was $186 million as strong
profits out-paced the investment in working capital despite rapid revenue growth |
|
| During the quarter, 3.45 million of shares were repurchased under the recently authorized
$500 million share repurchase program for an aggregate cost of $90.9 million, $81.9 million of
which was settled during the quarter |
|
| Cash and cash equivalents at the end of the quarter was $622 million; net debt (total debt
less cash and cash equivalents) was $1.29 billion |
3
Ray Sadowski, Chief Financial Officer, stated, As we announced in August, Avnets Board of
Directors approved a $500 million share repurchase program. Consequently, with a market value range
during the quarter of roughly $24.00 $28.00 per share and a book value of approximately $26.00
per share, we took the opportunity to make a sound investment in our company by being fairly
aggressive in buying back our shares. From August 15th when the program was made effective through the first three
weeks of October, we have repurchased about 5
million shares. It should be noted that the impact on average shares outstanding used to calculate
earnings per share for the first quarter was relatively small due to the impact of daily averaging
but will positively impact EPS next quarter. We used more cash for operations than expected as the
slowdown in business had the short term impact of pushing working capital higher; however, as we
know from previous market cycles, our cash flow should improve significantly as we lower our
working capital.
Outlook For 2nd Quarter of Fiscal 2012 Ending on December 31, 2011
| EM sales are expected to be in the range of $3.45 billion to $3.75 billion and TS sales are
expected to be between $3.00 billion and $3.40 billion |
|
| Consolidated sales are forecasted to be between $6.45 billion and $7.15 billion |
|
| Adjusted diluted earnings per share (EPS) is expected to be in the range of $1.01 to
$1.09 per share |
|
| The EPS guidance assumes
150.6 million average diluted shares outstanding used to determine earnings per share and a tax rate of 29% to 31% |
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 second quarter of fiscal 2012
is $1.39 to 1.00. This compares with an average exchange rate of $1.36 to 1.00 in the second
quarter of fiscal 2011 and $1.41 to 1.00 in the first quarter of fiscal 2012.
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 managements 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, 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 Companys 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, declines in sales, 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, allocations of products 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 Avnets filings with the
Securities and Exchange Commission, including the Companys reports on Form 10-K, Form 10-Q and
Form 8-K. Except as required by law, Avnet is under no obligation to update any forward-looking
statements, whether as a result of new information, future events or otherwise.
4
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 Companys 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 Avnets
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.
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 Companys net profitability on a more
comparable basis to historical periods and provides a more meaningful basis for forecasting future
performance. Additionally, because of managements 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 Companys net results of operations for the
investing public.
Other metrics management monitors in its assessment of business performance include return on
working capital (ROWC), return on capital employed (ROCE) and working capital velocity (WC
velocity).
| ROWC is defined as annualized operating income, excluding restructuring, integration
and other items, divided by the sum of the monthly average balances of receivables and
inventory less accounts payable. |
||
| ROCE is defined as annualized, tax effected operating income, excluding
restructuring, integration and other items, divided by the monthly average balances of
interest-bearing debt and equity (including the impact of restructuring, integration,
impairment charges and other items) less cash and cash equivalents. |
||
| WC velocity is defined as annualized sales divided by the sum of the monthly average
balances of receivable and inventory less accounts payable. |
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.
5
First Quarter Fiscal 2011
First Quarter Fiscal 2011 | ||||||||||||||||
Diluted | ||||||||||||||||
Op Income | Pre-tax | Net Income | EPS | |||||||||||||
$ in thousands, except per share data | ||||||||||||||||
GAAP results |
$ | 194,462 | $ | 204,799 | $ | 138,174 | $ | 0.90 | ||||||||
Restructuring, integration and other charges |
28,067 | 28,067 | 20,161 | 0.13 | ||||||||||||
Gain on bargain purchase and other |
| (29,023 | ) | (29,577 | ) | (0.19 | ) | |||||||||
Income tax adjustments |
| | 13,932 | 0.09 | ||||||||||||
Total adjustments |
28,067 | (956 | ) | 4,516 | 0.03 | |||||||||||
Adjusted results |
$ | 222,529 | $ | 203,843 | $ | 142,690 | 0.93 | |||||||||
Items impacting the first quarter of fiscal 2011 consisted of the following:
| restructuring, integration and other charges of $28.1 million pre-tax which were incurred
primarily in connection with the acquisition and integration of acquired businesses and
consisted of $10.8 million for transaction costs associated with the recent acquisitions, $8.3
million for severance, $7.3 million for integration-related costs, $2.4 million for facility
exit related costs and other charges, and a reversal of $0.7 million to adjust prior year
restructuring reserves; |
|
| a gain on the bargain purchase of $31.0 million pre-and after tax related to the Unidux
acquisition for which the gain was not taxable partially offset by $2.0 million pre-tax of
charges primarily related to the write down of two buildings in EMEA; and |
|
| an income tax adjustment of $13.9 million primarily related to the non-cash write-off of a
deferred tax asset associated with the integration of an acquisition. |
Pro Forma (Organic) Revenue
Pro forma or Organic revenue is defined as reported revenue adjusted for (i) the impact of
acquisitions by adjusting Avnets prior periods to include the sales of businesses acquired as if
the acquisitions had occurred at the beginning of fiscal 2011; (ii) the impact of a fiscal 2011
divestiture by adjusting Avnets prior periods to exclude the sales of the business divested as if
the divestiture had occurred at the beginning of fiscal 2011; and (iii) the impact of a transfer of
the Latin America computing components business from TS Americas to EM Americas that occurred in
the first quarter of fiscal 2012, which did not have an impact to Avnet on a consolidated basis but
did impact the pro forma sales for the groups by $116 million in the first quarter of fiscal 2011.
Sales taking into account the combination of these adjustments is referred to as pro forma sales
or organic sales.
Acquisition / | ||||||||||||
Revenue | Divested | Pro forma | ||||||||||
as Reported | Revenue | Revenue | ||||||||||
(in thousands) | ||||||||||||
Q1 Fiscal 2012 |
$ | 6,426,006 | $ | 19,277 | $ | 6,445,283 | ||||||
Q1 Fiscal 2011 |
$ | 6,182,388 | $ | 37,156 | $ | 6,219,544 | ||||||
Q2 Fiscal 2011 |
6,767,495 | (23,329 | ) | 6,744,166 | ||||||||
Q3 Fiscal 2011 |
6,672,404 | 84,920 | 6,757,324 | |||||||||
Q4 Fiscal 2011 |
6,912,126 | 89,316 | 7,001,442 | |||||||||
Fiscal year 2011 |
$ | 26,534,413 | $ | 188,063 | $ | 26,722,476 | ||||||
6
Acquisition Revenue as presented in the preceding table includes the acquisitions listed below.
The preceding table also reflects the divestiture of New ProSys Corp. which occurred in January
2011.
Acquired Business | Operating Group | Acquisition Date | ||
Bell Microproducts 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 Group Ltd |
TS | January 2011 | ||
Amosdec |
TS | July 2011 | ||
Prospect Technology |
EM | August 2011 | ||
JC Tally Trading & subsidiary |
EM | August 2011 |
ROWC, ROCE and WC Velocity
The following table presents the calculation for ROWC, ROCE and WC velocity.
Q1 FY 12 | Q1 FY 11 | |||||||
Sales |
$ | 6,426,006 | $ | 6,182,388 | ||||
Sales,
annualized (a) |
25,704,024 | 24,729,552 | ||||||
Adjusted operating income (1) |
$ | 223,064 | $ | 222,529 | ||||
Adjusted
operating income, annualized (b) |
892,254 | 890,115 | ||||||
Adjusted effective tax rate (2) |
29.00 | % | 27.97 | % | ||||
Adjusted
operating income, net after tax (c) |
$ | 633,501 | $ | 641,150 | ||||
Average monthly working capital (3) |
||||||||
Accounts receivable |
$ | 4,541,536 | $ | 4,089,995 | ||||
Inventory |
2,727,916 | 2,295,139 | ||||||
Accounts payable |
(3,243,209 | ) | (3,140,987 | ) | ||||
Average
working capital (d) |
$ | 4,026,243 | $ | 3,244,147 | ||||
Average
monthly total capital (3) (e) |
$ | 5,168,910 | $ | 4,197,598 | ||||
ROWC = (b) / (d) |
22.16 | % | 27.44 | % | ||||
WC Velocity = (a) / (d) |
6.38 | 7.62 | ||||||
ROCE = (c ) / (e) |
12.26 | % | 15.27 | % |
(1) | See reconciliation to GAAP amounts in the preceding tables in this Non-GAAP
Financial Information Section. |
|
(2) | Adjusted effective tax rate is based upon a year-to-date (full fiscal year rate
for FY11) calculation excluding restructuring, integration and other charges and
tax adjustments as described in the reconcilation to GAAP amounts in this Non-GAAP
Financial Information Section. |
|
(3) | For averaging purposes, the working capital and total capital for Bell Micro
was included as of the beginning of fiscal 2011. |
7
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 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 Avnets upcoming events and other information, please visit Avnets 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 worlds 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 2, 2011, Avnet generated revenue of $26.5
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
8
AVNET, INC.
FINANCIAL HIGHLIGHTS
(MILLIONS EXCEPT PER SHARE DATA)
FINANCIAL HIGHLIGHTS
(MILLIONS EXCEPT PER SHARE DATA)
FIRST QUARTERS ENDED | ||||||||
OCTOBER 1, | OCTOBER 2, | |||||||
2011 | 2010 * | |||||||
Sales |
$ | 6,426.0 | $ | 6,182.4 | ||||
Income before income taxes |
195.8 | 204.8 | ||||||
Net income |
139.0 | 138.2 | ||||||
Net income per share: |
||||||||
Basic |
$ | 0.91 | $ | 0.91 | ||||
Diluted |
$ | 0.90 | $ | 0.90 |
* | See Notes to Consolidated Statements of Operations on Page 14. |
9
AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
FIRST QUARTERS ENDED | ||||||||
OCTOBER 1, | OCTOBER 2, | |||||||
2011 | 2010 * | |||||||
Sales |
$ | 6,426,006 | $ | 6,182,388 | ||||
Cost of sales |
5,672,409 | 5,459,243 | ||||||
Gross profit |
753,597 | 723,145 | ||||||
Selling, general and administrative
expenses |
530,533 | 500,616 | ||||||
Restructuring, integration and other
charges (Note 1*) |
| 28,067 | ||||||
Operating income |
223,064 | 194,462 | ||||||
Other (expense) income, net |
(5,376 | ) | 3,339 | |||||
Interest expense |
(21,871 | ) | (22,025 | ) | ||||
Gain on bargain purchase and other (Note 2*) |
| 29,023 | ||||||
Income before income taxes |
195,817 | 204,799 | ||||||
Income tax provision |
56,787 | 66,625 | ||||||
Net income |
$ | 139,030 | $ | 138,174 | ||||
Net earnings per share: |
||||||||
Basic |
$ | 0.91 | $ | 0.91 | ||||
Diluted |
$ | 0.90 | $ | 0.90 | ||||
Shares used to compute earnings
per share: |
||||||||
Basic |
152,270 | 152,004 | ||||||
Diluted |
154,506 | 153,646 | ||||||
* | See Notes to Consolidated Statements of Operations on Page 14. |
10
AVNET, INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
OCTOBER 1, | JULY 2, | |||||||
2011 | 2011 | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 622,430 | $ | 675,334 | ||||
Receivables, net |
4,593,519 | 4,764,293 | ||||||
Inventories |
2,643,838 | 2,596,470 | ||||||
Prepaid and other current assets |
207,069 | 191,110 | ||||||
Total current assets |
8,066,856 | 8,227,207 | ||||||
Property, plant and equipment, net |
432,668 | 419,173 | ||||||
Goodwill |
939,268 | 885,072 | ||||||
Other assets |
343,762 | 374,117 | ||||||
Total assets |
9,782,554 | 9,905,569 | ||||||
Less liabilities: |
||||||||
Current liabilities: |
||||||||
Borrowings due within one year |
756,947 | 243,079 | ||||||
Accounts payable |
3,175,069 | 3,561,633 | ||||||
Accrued expenses and other |
660,933 | 673,016 | ||||||
Total current liabilities |
4,592,949 | 4,477,728 | ||||||
Long-term debt |
1,150,773 | 1,273,509 | ||||||
Other long-term liabilities |
107,815 | 98,262 | ||||||
Total liabilities |
5,851,537 | 5,849,499 | ||||||
Shareholders equity |
$ | 3,931,017 | $ | 4,056,070 | ||||
11
AVNET,INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
FIRST QUARTERS ENDED | ||||||||
OCTOBER 1, | OCTOBER 2, | |||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 139,030 | $ | 138,174 | ||||
Non-cash and other reconciling items: |
||||||||
Depreciation and amortization |
22,301 | 20,843 | ||||||
Deferred income taxes |
12,901 | (13,020 | ) | |||||
Stock-based compensation |
14,252 | 8,602 | ||||||
Gain on bargain purchase and other |
| (29,023 | ) | |||||
Other, net |
15,188 | 21,270 | ||||||
Changes in (net of effects from businesses acquired): |
||||||||
Receivables |
125,422 | (110,909 | ) | |||||
Inventories |
(88,989 | ) | (269,768 | ) | ||||
Accounts payable |
(373,793 | ) | 130,710 | |||||
Accrued expenses and other, net |
(70,459 | ) | (9,209 | ) | ||||
Net cash flows used for operating activities |
(204,147 | ) | (112,330 | ) | ||||
Cash flows from financing activities: |
||||||||
Borrowings under accounts receivable securitization program |
325,000 | 190,000 | ||||||
Repayment of notes |
| (5,205 | ) | |||||
Proceeds from bank debt, net |
64,281 | 60,445 | ||||||
(Repayments of) proceeds from other debt, net |
(256 | ) | 16,210 | |||||
Repurchases of common stock |
(81,921 | ) | | |||||
Other, net |
588 | 82 | ||||||
Net cash flows provided by financing activities |
307,692 | 261,532 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of property, plant, and equipment |
(39,666 | ) | (31,938 | ) | ||||
Cash proceeds from sales of property, plant and
equipment |
443 | 388 | ||||||
Acquisitions of operations, net of cash acquired |
(103,232 | ) | (574,815 | ) | ||||
Net cash flows used for investing activities |
(142,455 | ) | (606,365 | ) | ||||
Effect of exchange rates on cash and cash equivalents |
(13,994 | ) | 26,767 | |||||
Cash and cash equivalents: |
||||||||
- decrease |
(52,904 | ) | (430,396 | ) | ||||
- at beginning of period |
675,334 | 1,092,102 | ||||||
- at end of period |
$ | 622,430 | $ | 661,706 | ||||
12
AVNET, INC.
SEGMENT INFORMATION
(MILLIONS)
SEGMENT INFORMATION
(MILLIONS)
FIRST QUARTERS ENDED | ||||||||
OCTOBER 1, | OCTOBER 2, | |||||||
2011 | 2010 | |||||||
SALES: |
||||||||
Electronics Marketing |
$ | 3,816.3 | $ | 3,620.6 | ||||
Technology Solutions |
2,609.7 | 2,561.8 | ||||||
Consolidated |
$ | 6,426.0 | $ | 6,182.4 | ||||
OPERATING INCOME (LOSS): |
||||||||
Electronics Marketing |
$ | 191.2 | $ | 192.1 | ||||
Technology Solutions |
65.0 | 56.7 | ||||||
Corporate |
(33.1 | ) | (26.3 | ) | ||||
223.1 | 222.5 | |||||||
Restructuring, integration and
other charges |
| (28.1 | ) | |||||
Consolidated |
$ | 223.1 | $ | 194.4 | ||||
13
AVNET, INC.
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
FIRST QUARTER OF FISCAL 2012
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
FIRST QUARTER OF FISCAL 2012
(1) The results for the prior year first quarter of fiscal 2011 included restructuring,
integration and other charges which totaled $28,067,000 pre-tax, $20,161,000 after tax and $0.13
per share on a diluted basis and were incurred primarily in connection with the acquisitions and
integrations of acquired businesses. The charges included transaction costs of $10,762,000 pre-tax
associated with the Bell, Tallard and Unidux acquisitions and primarily included broker fees,
professional fees for legal and accounting due diligence and related costs. Restructuring charges
of $10,704,000 pre-tax consisted of severance costs of $8,279,000 and facility exit related costs
and other charges of $2,425,000 which were incurred as a result of the integration activities
associated with the acquisitions. Integration costs of $7,322,000 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 were 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 had no other meaningful day-to-day operational responsibilities outside of the
integration effort. The Company also recorded a reversal of $721,000 pre-tax related to
restructuring reserves established in prior years.
(2) During the prior year 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. In addition,
the Company 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.
14