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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q
TABLE OF CONTENTS

Commission file number 1-7201

AVX CORPORATION
(Exact name of registrant as specified in its charter)

801 17th Avenue South, Myrtle Beach, South Carolina 29577
(Address of principal executive offices)

(843) 448-9411
(Registrant's phone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X

No ___

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

AVX CORPORATION
INDEX

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AVX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

See accompanying notes to consolidated financial statements.

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AVX CORPORATION AND SUBSIDIARIES

1. Basis of Presentation:

The consolidated financial statements of AVX Corporation and subsidiaries (the "Company" or "AVX") include the accounts of the Company and its subsidiaries. All significant intercompany transactions and accounts have been eliminated. In the opinion of management, the accompanying unaudited financial statements reflect all adjustments (consisting of normal recurring accruals) that are necessary to a fair presentation of the results for the interim periods shown. These financial statements should be read in conjunction with the Company's audited financial statements for the fiscal year ended March 31, 2002.

Certain prior period amounts have been reclassified to conform to the current presentation.

On April 1, 2002, the Company adopted Financial Accounting Standards Board Statements of Financial Accounting Standards No. 141 "Business Combinations" ("SFAS 141") and No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142"). Under SFAS 142, goodwill and intangible assets deemed to have indefinite lives are no longer amortized, but are subject to annual impairment reviews. Accordingly, the Company ceased amortizing goodwill effective April 1, 2002. The following table adjusts certain first quarter fiscal 2002 information as if the non-amortization provisions of SFAS 142 had been required at that time:

During the quarter ended June 30, 2002, the Company reviewed goodwill for impairment as required by SFAS 142 and determined there was no impairment of assets. Accordingly, the Company was not required to write down existing goodwill as of June 30, 2002. Aside from goodwill, the Company does not have a significant amount of intangible assets. The adoption of SFAS 141 did not have a material impact on the Company.

On April 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. The adoption of SFAS 144 did not have a material impact on the Company.

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2. Trade Accounts Receivable:

Trade accounts receivable consisted of:

3. Inventories:

Inventories consisted of:

4. Restructuring and Special Charges:

The Company recorded $60,141 of restructuring and special charges during the previous fiscal year ended March 31, 2002. The restructuring costs included $11,146, of which $3,706 was included in the quarter ended June 30, 2001, for employee separations covering 6,100 production, technical, administrative and support employees in the Americas and Europe. As of June 30, 2002, $5,432 of severance costs have been paid. The remaining accrual of $5,714 includes $995 of long-term payments to be paid under an early retirement program, while the balance is expected to be paid within the next twelve months.

5. Environmental Matters and Contingencies:

The Company has been named as a potentially responsible party in state and federal administrative proceedings seeking contribution for costs associated with the correction and remediation of environmental conditions at various waste disposal sites. Once it becomes probable that the Company will incur costs in connection with remediation of a site and such costs can be reasonably estimated, the Company establishes reserves or adjusts its reserve for its projected share of these costs. Management believes that it has adequate reserves with respect to these matters. Actual costs may vary from these estimated reserves, but such costs are not expected to have a material adverse effect on the Company's financial condition or results of operations.

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6. Comprehensive Income:

Comprehensive income represents total non-shareowner changes in equity during a period except those resulting from investments by and distributions to shareowners. The specific components include net income and deferred gains and losses resulting from foreign currency translation and qualified foreign currency cash flow hedges.

Comprehensive income for the three months ended June 30, 2001 and 2002, includes the following components:

The accumulated balance of comprehensive income (loss), as of June 30, 2001 and 2002 is as follows:

7. Earnings Per Share:

Basic earnings per share are computed by dividing net earnings by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share are computed by dividing net earnings by the sum of (a) the weighted average number of shares of common stock outstanding during the period and (b) the dilutive effect of potential common stock equivalents during the period. Stock options are the only common stock equivalents currently used by the Company and are computed using the treasury stock method.

The table below represents the basic and diluted weighted average number of shares of common stock and potential common stock equivalents outstanding for the three months ended June 30,

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Common stock equivalents not included in the computation of diluted earnings per share because the option's exercise price was greater than the average market price of the common shares were 362,136 and 341,464 for the three months ended June 30, 2001 and 2002, respectively.

8. Segment Information:

The Company has three reportable operating segments: Passive Components, Connectors and Research and Development. The Company is organized, exclusive of research and development, on the basis of products being separated into six units. Five of the units which manufacture or distribute ceramic, tantalum, film and power capacitors, ferrites and other passive devices have been aggregated into the segment "Passive Components".

The Company evaluates performance of its segments based upon sales and operating profit. There are no intersegment revenues. The tables below present information about reported segments for the three months ended June 30,

9. Subsequent Event:

On July 23, 2002, the Company declared a $0.0375 dividend per share of common stock with respect to the quarter ended June 30, 2002, payable on August 16, 2002.

On July 29, 2002, the Company filed a complaint against Cabot Corporation ("Cabot") in the U.S. District Court for the Commonwealth of Massachusetts with respect to its existing supply agreement with Cabot for tantalum powder, ore and wire. The complaint filed by the company claims unfair and deceptive trade practices by Cabot, breach of contract and other related matters. The Company uses tantalum materials in the manufacture of tantalum capacitors. The Company seeks, pursuant to the action, injunctive relief, actual and treble damages in amounts to be determined at trial and attorneys' fees.

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Results of Operations

Net sales in the three months ended June 30, 2002 decreased 19.2% to $294.9 million from $365.1 million in the three months ended June 30, 2001. Passive component sales declined 19.8% from $338.3 million to $271.2 million, while connector sales declined 11.8% from $26.8 million to $23.6 million for the periods ended June 30, 2001 and 2002, respectively. The decline in sales was primarily a result of lower selling prices for certain commodity related products and the continuing trend toward smaller part sizes, which traditionally have lower average selling prices. The decrease in revenue for both segments was also attributable to the continued soft demand across all markets, particularly the telecommunications and information technology hardware industries. Geographically, compared to the same period last year, sales as a percentage of total sales declined slightly in the Americas and 8.5% in Europe, offset by an increase of 8.8% in the Far East. This shift in geographic sales was due to the migration of customers' production to the Far East.

Gross profit in the three months ended June 30, 2002 was 7.2% of net sales or $21.2 million compared to 19.5% of net sales or $71.2 million in the three months ended June 30, 2001. Despite a continued reduction in operating expenses and higher manufacturing volumes, gross profit was negatively impacted by lower sales prices and higher raw material cost, particularly for tantalum powder.

Selling, general and administrative expenses in the three months ended June 30, 2002 were $23.0 million (7.8% of net sales) compared with $28.9 million (7.9% of net sales) in the three months ended June 30, 2001. The decrease in selling, general and administrative expenses was a result of the cost savings measures initiated last year combined with decreased selling expenses resulting from lower sales.

As a result of the above factors, the Company reported a loss from operations of $1.8 million in the three months ended June 30, 2002 compared to a profit from operations of $38.5 million in the three months ended June 30, 2001.

Net income in the three months ended June 30, 2002 was $1.3 million compared to $29.4 million in the three months ended June 30, 2001. The decrease in net income was a result of the factors set forth above and lower interest income on invested cash due to lower interest rates. This decrease was partially offset by a $0.5 million one-time state tax refund, net of federal tax, resulting from a multiple year high technology investment tax credit received during the quarter ended June 30, 2002.

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The continued uncertainty in the global economy and end market demand makes it difficult to predict near-term events. As of June 30, 2002, we believe the industry's distribution channels and our customers have significantly reduced their passive component inventory accumulated during the year 2000. Despite this decrease in inventory, we expect the uncertainty in the global economy to lead to continued soft demand through at least the next quarter. We also expect a continued, but more modest, decline in average selling prices for certain commodity related products resulting from the imbalance of the industry's supply capacity and end market demand. Reduced selling prices may continue to depress operating margins.

In reaction to the slow down in near-term demand, the Company has significantly reduced its labor force and operating costs. The Company continues to evaluate its cost structure and manufacturing capabilities in conjunction with current demand and future expectations. The Company will continue to take strategic actions in response to changes in current or future economic conditions.

Despite the current uncertainties, we are optimistic that opportunities for long-term growth and improved profitability exist due to the following: (a) an increase in worldwide demand for electronic components, (b) cost reductions and improvements in our production processes and (c) opportunities for growth in our advanced product line due to advances in component design.

The Company's liquidity needs arise primarily from working capital requirements, dividend payments, capital expenditures and acquisitions. Historically, the Company has satisfied its liquidity requirements through internally generated funds. As of June 30, 2002, the Company had a current ratio of 5.4 to 1, $691.0 million of cash, cash equivalents and long-term investments, $1,514.5 million of stockholders' equity and an insignificant amount of long-term debt.

Net cash from operating activities was $23.7 million in the three months ended June 30, 2002 compared to $154.5 million in the three months ended June 30, 2001. The decrease in cash flow from operations was a result of lower net income and changes in net working capital.

Purchases of property and equipment were $8.1 million in the three-month period ended June 30, 2002 and $30.9 million in the three-month period ended June 30, 2001. Expenditures for the current fiscal year were primarily for expanding production capabilities of new advanced technology products and process improvements for the passive component and connector product lines in North America, Europe and Asia.

Although the majority of the Company's funding is internally generated, certain European subsidiaries of the Company have from time to time borrowed local currencies under various bank agreements.

Based on the financial condition of the Company as of June 30, 2002, the Company believes that cash on hand and expected to be generated from operating activities will be sufficient to satisfy the Company's anticipated financing needs for working capital, capital expenditures, research, development and engineering expenses, and any dividend payments to be made in the next year. Additionally, the Company does not anticipate any significant changes in its ability to generate or meet its liquidity needs in the long-term.

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The Company's market risk exposure at June 30, 2002 is consistent with the types of market risk and amount of exposures, including foreign currency and materials risks, presented in the Annual Report on Form 10-K for the year ended March 31, 2002.

This report may contain "forward-looking" information within the meaning of the federal securities laws. The forward-looking information may include, among other information, statements concerning the Company's outlook for fiscal year 2003, overall volume and pricing trends, cost reduction strategies and their anticipated results, and expectations for research and development, and capital expenditures. There may also be other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The forward-looking information and statements in this report are subject to risks and uncertainties, including those discussed in the Company's Annual Report on Form 10-K for fiscal year ended March 31, 2002, that could cause actual results to differ materially from those expressed in or implied by the information or statements.

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The Company filed a complaint on July 29, 2002, against Cabot Corporation in the U.S. District Court for the Commonwealth of Massachusetts with respect to its existing supply agreement with Cabot for tantalum powder, ore and wire. The complaint filed by the Company claims unfair and deceptive trade practices by Cabot, breach of contract and other related matters. The Company uses tantalum materials in the manufacture of tantalum capacitors. The Company seeks, pursuant to the action, injunctive relief, actual and treble damages in amounts to be determined at trial and attorneys' fees.

The Company held its Annual Meeting of Stockholders on July 23, 2002 for the purpose of electing four directors, ratifying an amendment to the AVX Corporation Non-Employee Directors' Stock Option Plan and ratifying the appointment of independent accountants. Proxies for the meeting were solicited pursuant to Regulation 14A of the Securities Exchange Act of 1934, and there was no solicitation in opposition to management's solicitations.

Proposal 1:

Election of Class III directors with terms expiring at the Annual Meeting in July of 2005 was approved with the following vote:

The following is a summary of directors who were not up for election and continue in office:

Proposal 2:

Ratification of an amendment to the AVX Corporation Non-Employee Directors' Stock Option Plan to increase the number of shares that may be issued under the Plan by an additional 150,000 shares was approved with the following vote:

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Proposal 3:

Ratification of appointment of PricewaterhouseCoopers, LLP as the Company's independent accountants for fiscal 2003 was approved with the following vote:

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 14, 2002

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