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EX-99.2 - EXHIBIT 99.2 - AVNET INC | c11539exv99w2.htm |
8-K - FORM 8-K - AVNET INC | c11539e8vk.htm |
Exhibit 99.1
Avnet, Inc. | ||
2211 South 47th Street | ||
Phoenix, AZ 85034 |
PRESS RELEASE
Avnet, Inc. Reports Second Quarter Fiscal Year 2011 Results
Record Revenue Drives Significant EPS Growth
Record Revenue Drives Significant EPS Growth
Phoenix, January 27, 2011 - Avnet, Inc. (NYSE:AVT) today announced results for the second quarter
fiscal year 2011 ended January 1, 2011.
Three Months Ended | ||||||||||||
January 1, | January 2, | Net | ||||||||||
2011 | 2010 | Change | ||||||||||
$ in millions, except per share data | ||||||||||||
Sales |
$ | 6,767.5 | $ | 4,834.5 | 40.0 | % | ||||||
GAAP Operating Income |
$ | 227.6 | $ | 162.3 | 40.2 | % | ||||||
Adjusted Operating Income (1) |
$ | 256.7 | $ | 162.3 | 58.2 | % | ||||||
GAAP Net Income |
$ | 141.0 | $ | 103.9 | 35.8 | % | ||||||
Adjusted Net Income (1) |
$ | 164.8 | $ | 100.5 | 64.0 | % | ||||||
GAAP Diluted EPS |
$ | 0.91 | $ | 0.68 | 33.8 | % | ||||||
Adjusted Diluted EPS (1) |
$ | 1.07 | $ | 0.66 | 62.1 | % |
(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 quarter ended January 1, 2011 increased 40% year over year to a record $6.8
billion; pro forma revenue (as defined later in this release) was up 14% year over year |
| Adjusted operating income increased 58% to $256.7 million and adjusted operating income
margin of 3.79% was up 43 basis points year over year and 19 basis points sequentially |
| Adjusted diluted earnings per share increased 62% over the prior year quarter to a record
$1.07 per share on a diluted basis |
| Included in GAAP net income is a total of $23.8 million after tax and $0.16 per share on a
diluted basis related to restructuring, integration and other charges |
Roy Vallee, Chairman and Chief Executive Officer, commented, The December quarter capped an
excellent calendar year as we continued to leverage the technology driven economic recovery and
delivered a fourth consecutive quarter of double-digit year-over-year organic revenue growth.
Reported revenue grew 40% year over year to a record $6.8 billion and adjusted operating income
grew nearly 1.5 times faster than revenue. The operating leverage in our model drove adjusted
operating income margin up both sequentially and year over year, with return on capital employed
(ROCE) within our target range of 14% 16% for the fifth consecutive quarter. Both operating
groups delivered ROCE above 15% in the December quarter even as we continued to invest in organic
growth initiatives and value-creating M&A in all three regions. With technology markets pointing
towards continued growth, we are optimistic that we can continue to grow revenue and EPS and
deliver increased shareholder value going forward.
Avnet Electronics Marketing Results
Year-over-Year Growth Rates | ||||||||||||
Q2 FY11 | Reported | Pro forma(2) | ||||||||||
Revenue | Revenue | Revenue | ||||||||||
(in millions) | ||||||||||||
Total |
$ | 3,558.6 | 41.4 | % | 23.0 | % | ||||||
Excluding FX (1) |
43.9 | % | 25.2 | % | ||||||||
Americas |
$ | 1,219.9 | 54.4 | % | 16.7 | % | ||||||
EMEA |
$ | 1,079.1 | 34.3 | % | | |||||||
Excluding FX (1) |
43.8 | % | | |||||||||
Asia |
$ | 1,259.6 | 36.4 | % | 20.6 | % | ||||||
Q2 FY11 | Q2 FY10 | Change | ||||||||||
Operating Income |
$ | 183.4 | $ | 92.2 | $ | 91.3 | ||||||
Operating Income Margin |
5.16 | % | 3.66 | % | 150 | 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. |
| Revenue of $3.56 billion was up 41% year over year and 44% in constant dollars |
| Pro forma revenue grew 23% year over year and 25% in constant dollars |
| Gross profit margin improved 22 basis points year over year and 10 basis points
sequentially |
| Operating income margin improved 150 basis points year over year with all three regions
contributing to the increase |
| Return on working capital (ROWC) was up 691 basis points year over year |
Mr. Vallee added, The technology supply chain seems to be effectively adjusting supply, backlogs
and inventories as product lead times approach more normal levels. While these adjustments
resulted in a sequential revenue decline for the December quarter that was slightly below normal
seasonality for EM, pro forma revenue grew 25% year over year in constant dollars. This strong
growth in revenue, along with gross profit margin expansion and expense productivity improvements,
resulted in a 150 basis improvement in operating margin and a near doubling of operating income
over the year ago quarter. ROWC was up 691 basis points year over year and is at our target of 30%
through the first six months of fiscal 2011. With capacity utilization and lead times returning to
more normal levels, and inventory being well managed across the supply chain, it appears that the
component markets will avoid the more dramatic corrections of past cycles and continue to grow in
2011. At EM, where bookings strengthened in the month of December and the book to bill ratio was
at parity for the entire quarter, we enter our seasonally stronger March quarter well positioned to
grow faster than the markets we serve and accelerate the generation of economic profit dollars.
2
Avnet Technology Solutions Results
Q2 FY11 | Reported | Pro forma(2) | ||||||||||
Revenue | Revenue | Revenue | ||||||||||
(in millions) | ||||||||||||
Total |
$ | 3,208.9 | 38.5 | % | 4.9 | % | ||||||
Excluding FX (1) |
40.9 | % | 6.7 | % | ||||||||
Americas |
$ | 1,823.8 | 30.3 | % | 4.9 | % | ||||||
EMEA |
$ | 1,045.5 | 55.4 | % | 1.0 | % | ||||||
Excluding FX (1) |
65.5 | % | 7.6 | % | ||||||||
Asia |
$ | 339.6 | 38.6 | % | 18.7 | % | ||||||
Q2 FY11 | Q2 FY10 | Change | ||||||||||
Operating Income |
$ | 105.2 | $ | 88.2 | $ | 17.0 | ||||||
Operating Income Margin |
3.28 | % | 3.80 | % | -52 | 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 38% year over year and 25% sequentially |
| Pro forma revenue grew year over year for the fifth consecutive quarter |
| Return on working capital (ROWC) improved 1,586 basis points sequentially |
| Year-over-year growth was driven by industry standard servers, storage, and networking
products |
Mr. Vallee further added, Reported revenue grew 38% year over year to $3.21 billion and pro forma
revenue was up 7% in constant dollars. Technology Solutions organic revenue grew year over year
for the fifth consecutive quarter, although the rate of organic growth slowed in comparison to the
previous four quarters of strong double-digit growth. TS sequential revenue increased 25% in line
with normal seasonality with all three regions contributing. Operating income grew 19% year over
year; and on a sequential basis, operating income grew almost 3.5 times faster than revenue.
Operating income margin increased 107 basis points over the September quarter with all three
regions delivering significant improvement. TS return on working capital improved 1,586 basis
points sequentially and was above our stated enterprise ROWC target of 30% for both the quarter and
first six months of fiscal 2011. As we proceed with the integrations of recent acquisitions, we
expect to continue improving our financial performance as we leverage our market position in mature
markets, expand our presence in new higher growth markets and fully realize the balance of expected
synergy cost savings.
Cash Flow
| Cash used for operations was $79 million for the quarter due to the increase in working
capital requirements to support the sequential growth in business |
| The Company used $52 million during the quarter for acquisitions, net of cash acquired |
| Cash and cash equivalents at the end of the quarter was $757 million; net debt (total
debt less cash and cash equivalents) was $1.3 billion |
Ray Sadowski, Chief Financial Officer, stated, We grew working capital again this quarter to
support the double-digit year-over-year organic growth at EM in fiscal 2011 as well as the
seasonally strong growth in the December quarter at TS. While working capital velocity metrics are
down from peak levels in the year ago quarter, they remain well above pre-recession levels as the
Avnet team did a good job managing through a period of rapid growth and declining product lead
times.
3
Outlook For Fiscal 3rd Quarter Ending on April 2, 2011
| EM sales are expected to be in the range of $3.55 billion to $3.85 billion and TS sales are
expected to be between $2.40 billion and $2.70 billion |
| Consolidated sales are forecasted to be between $5.95 billion and $6.55 billion |
| Adjusted diluted earnings per share (EPS) is expected to be in the range of $0.93 to
$1.01 per share |
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 third quarter of fiscal 2011 is
$1.36 to 1.00. This compares with an average exchange rate of $1.38 to 1.00 in the third quarter
of fiscal 2010 and $1.36 to 1.00 in the second 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 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, 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 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, 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 Avnets filings with the
Securities and Exchange Commission, including the Companys 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 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.
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 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. 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.
Second Quarter Fiscal 2011
Second Quarter Ended Fiscal 2011 | ||||||||||||||||
Diluted | ||||||||||||||||
Op Income | Pre-tax | Net Income | EPS | |||||||||||||
$ in thousands, except per share data | ||||||||||||||||
GAAP results |
$ | 227,602 | $ | 202,994 | $ | 141,034 | $ | 0.91 | ||||||||
Restructuring, integration and other charges |
29,112 | 29,112 | 20,827 | 0.14 | ||||||||||||
Income tax adjustments |
| | 2,935 | 0.02 | ||||||||||||
Total adjustments |
29,112 | 29,112 | 23,762 | 0.16 | ||||||||||||
Adjusted results |
$ | 256,714 | $ | 232,106 | $ | 164,796 | $ | 1.07 | ||||||||
Items impacting the second quarter of fiscal 2011 consisted of the following:
| restructuring, integration and other charges of $29.1 million pre-tax which were incurred
primarily in connection with the acquisition and integration of acquired businesses and
consisted of $10.6 million pre-tax for severance, $11.5 million pre-tax for facility exit
related costs, fixed asset write downs and other related charges, $8.8 million pre-tax for
integration-related costs, $1.3 million pre-tax for transaction costs associated with
acquisitions, $0.4 million pre-tax for other charges, and a reversal of $3.5 million to adjust
prior year restructuring reserves; and |
| income tax adjustments of $2.9 million primarily related to uncertainty surrounding
deferred tax assets and additional transfer pricing exposure. |
Second Quarter Fiscal 2010
Second Quarter Ended Fiscal 2010 | ||||||||||||||||
Diluted | ||||||||||||||||
Op Income | Pre-tax | Net Income | EPS | |||||||||||||
$ in thousands, except per share data | ||||||||||||||||
GAAP results |
$ | 162,287 | $ | 151,685 | $ | 103,851 | $ | 0.68 | ||||||||
Gain on sale of assets |
| (5,549 | ) | (3,383 | ) | (0.02 | ) | |||||||||
Adjusted results |
$ | 162,287 | $ | 146,136 | $ | 100,468 | 0.66 | |||||||||
Items impacting the second quarter of fiscal 2010 consisted of a gain on the sale of assets of $5.5
million pre-tax as a result of certain earn-out provisions associated with the earlier sale of the
Companys equity investment in Calence LLC.
5
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 2010; (ii) the impact of the extra week of
sales in the prior year first quarter due to the 52/53 week fiscal year; and (iii) 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 $93 million in the second 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:
Revenue | Acquisition | Extra Week | Pro forma | |||||||||||||
as Reported | Revenue | in Q1 FY10 | Revenue | |||||||||||||
(in thousands) | ||||||||||||||||
Q1 Fiscal 2011 |
$ | 6,182,388 | $ | 44,564 | $ | | $ | 6,226,952 | ||||||||
Q2 Fiscal 2011 |
$ | 6,767,495 | $ | 291 | $ | | $ | 6,767,786 | ||||||||
Fiscal year 2011 |
$ | 12,949,883 | $ | 44,855 | $ | | $ | 12,994,738 | ||||||||
Q1 Fiscal 2010 |
$ | 4,355,036 | $ | 980,555 | $ | (417,780 | ) | $ | 4,917,811 | |||||||
Q2 Fiscal 2010 |
4,834,524 | 1,119,106 | | 5,953,630 | ||||||||||||
Q3 Fiscal 2010 |
4,756,786 | 1,038,916 | | 5,795,702 | ||||||||||||
Q4 Fiscal 2010 |
5,213,826 | 939,497 | | 6,153,323 | ||||||||||||
Fiscal year 2010 |
$ | 19,160,172 | $ | 4,078,074 | $ | (417,780 | ) | $ | 22,820,466 | |||||||
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 |
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 Sadowskis, 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 Avnets upcoming events and other information, please visit Avnets investor
relations website at www.ir.avnet.com.
6
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 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
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)
SECOND QUARTERS ENDED | ||||||||
JANUARY 1, | JANUARY 2, | |||||||
2011 * | 2010 * | |||||||
Sales |
$ | 6,767.5 | $ | 4,834.5 | ||||
Income before income taxes |
203.0 | 151.7 | ||||||
Net income |
141.0 | 103.9 | ||||||
Net income per share: |
||||||||
Basic |
$ | 0.93 | $ | 0.69 | ||||
Diluted |
$ | 0.91 | $ | 0.68 |
FIRST HALVES ENDED | ||||||||
JANUARY 1, | JANUARY 2, | |||||||
2011 * | 2010 * | |||||||
Sales |
$ | 12,949.9 | $ | 9,189.6 | ||||
Income before income taxes |
407.8 | 228.3 | ||||||
Net income |
279.2 | 154.7 | ||||||
Net income per share: |
||||||||
Basic |
$ | 1.84 | $ | 1.02 | ||||
Diluted |
$ | 1.81 | $ | 1.01 |
* | 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)
SECOND QUARTERS ENDED | FIRST HALVES ENDED | |||||||||||||||
JANUARY 1, | JANUARY 2, | JANUARY 1, | JANUARY 2, | |||||||||||||
2011 * | 2010 * | 2011 * | 2010 * | |||||||||||||
Sales |
$ | 6,767,495 | $ | 4,834,524 | $ | 12,949,883 | $ | 9,189,560 | ||||||||
Cost of sales |
5,994,301 | 4,282,633 | 11,453,544 | 8,137,932 | ||||||||||||
Gross profit |
773,194 | 551,891 | 1,496,339 | 1,051,628 | ||||||||||||
Selling, general and administrative
expenses |
516,480 | 389,604 | 1,017,096 | 782,269 | ||||||||||||
Restructuring, integration and other
charges (Note 1 *) |
29,112 | | 57,179 | 18,072 | ||||||||||||
Operating income |
227,602 | 162,287 | 422,064 | 251,287 | ||||||||||||
Other income (expense), net |
(360 | ) | (835 | ) | 2,979 | 2,081 | ||||||||||
Interest expense |
(24,248 | ) | (15,316 | ) | (46,273 | ) | (30,597 | ) | ||||||||
Gain on sale of assets (Note 2 *) |
| 5,549 | | 5,549 | ||||||||||||
Gain on bargain purchase and other (Note 3 *) |
| | 29,023 | | ||||||||||||
Income before income taxes |
202,994 | 151,685 | 407,793 | 228,320 | ||||||||||||
Income tax provision |
61,960 | 47,834 | 128,585 | 73,574 | ||||||||||||
Net income |
$ | 141,034 | $ | 103,851 | $ | 279,208 | $ | 154,746 | ||||||||
Net earnings per share: |
||||||||||||||||
Basic |
$ | 0.93 | $ | 0.69 | $ | 1.84 | $ | 1.02 | ||||||||
Diluted |
$ | 0.91 | $ | 0.68 | $ | 1.81 | $ | 1.01 | ||||||||
Shares used to compute earnings
per share: |
||||||||||||||||
Basic |
152,137 | 151,391 | 152,071 | 151,333 | ||||||||||||
Diluted |
154,259 | 152,945 | 153,952 | 152,790 | ||||||||||||
* | See Notes to Consolidated Statements of Operations on Page 13. |
9
AVNET, INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
JANUARY 1, | JULY 3, | |||||||
2011 | 2010 | |||||||
Assets: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 756,931 | $ | 1,092,102 | ||||
Receivables, net |
4,816,088 | 3,574,541 | ||||||
Inventories |
2,549,591 | 1,812,766 | ||||||
Prepaid and other current assets |
245,301 | 150,759 | ||||||
Total current assets |
8,367,911 | 6,630,168 | ||||||
Property, plant and equipment, net |
367,410 | 302,583 | ||||||
Goodwill |
847,954 | 566,309 | ||||||
Other assets |
320,314 | 283,322 | ||||||
Total assets |
9,903,589 | 7,782,382 | ||||||
Less liabilities: |
||||||||
Current liabilities: |
||||||||
Borrowings due within one year |
777,235 | 36,549 | ||||||
Accounts payable |
3,610,080 | 2,862,290 | ||||||
Accrued expenses and other |
706,669 | 540,776 | ||||||
Total current liabilities |
5,093,984 | 3,439,615 | ||||||
Long-term debt |
1,247,906 | 1,243,681 | ||||||
Other long-term liabilities |
119,499 | 89,969 | ||||||
Total liabilities |
6,461,389 | 4,773,265 | ||||||
Shareholders equity |
$ | 3,442,200 | $ | 3,009,117 | ||||
10
AVNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
FIRST HALVES ENDED | ||||||||
JANUARY 1, | JANUARY 2, | |||||||
2011 | 2010 | |||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 279,208 | $ | 154,746 | ||||
Non-cash and other reconciling items: |
||||||||
Depreciation and amortization |
39,490 | 31,127 | ||||||
Deferred income taxes |
(21,696 | ) | 16,019 | |||||
Stock-based compensation |
20,769 | 19,799 | ||||||
Gain on bargain purchase and other |
(29,023 | ) | | |||||
Gain on sale of assets |
| (5,549 | ) | |||||
Other, net |
31,017 | 8,363 | ||||||
Changes in (net of effects from businesses acquired): |
||||||||
Receivables |
(545,192 | ) | (793,294 | ) | ||||
Inventories |
(341,101 | ) | (272,882 | ) | ||||
Accounts payable |
295,374 | 753,354 | ||||||
Accrued expenses and other, net |
79,682 | (2,988 | ) | |||||
Net cash flow used for operating activities |
(191,472 | ) | (91,305 | ) | ||||
Cash flows from financing activities: |
||||||||
Borrowings under accounts receivable securitization program, net |
450,000 | | ||||||
Repayment of notes |
(5,205 | ) | | |||||
Proceeds from bank debt, net |
62,520 | 39,660 | ||||||
Proceeds from other debt, net |
13,570 | 8 | ||||||
Other, net |
1,219 | 2,767 | ||||||
Net cash flows provided by financing activities |
522,104 | 42,435 | ||||||
Cash flows from investing activities: |
||||||||
Purchases of property, plant, and equipment |
(70,205 | ) | (24,465 | ) | ||||
Cash proceeds from sales of property, plant and
equipment |
1,727 | 5,441 | ||||||
Acquisitions of operations, net of cash acquired |
(626,871 | ) | (5,606 | ) | ||||
Cash proceeds from divestitures |
| 8,583 | ||||||
Net cash flows used for investing activities |
(695,349 | ) | (16,047 | ) | ||||
Effect of exchange rates on cash and cash equivalents |
29,546 | 15,867 | ||||||
Cash and cash equivalents: |
||||||||
- decrease |
(335,171 | ) | (49,050 | ) | ||||
- at beginning of period |
1,092,102 | 943,921 | ||||||
- at end of period |
$ | 756,931 | $ | 894,871 | ||||
11
AVNET, INC.
SEGMENT INFORMATION
(MILLIONS)
SEGMENT INFORMATION
(MILLIONS)
SECOND QUARTERS ENDED | FIRST HALVES ENDED | |||||||||||||||
JANUARY 1, | JANUARY 2, | JANUARY 1, | JANUARY 2, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
SALES: |
||||||||||||||||
Electronics Marketing |
$ | 3,558.6 | $ | 2,517.2 | $ | 7,179.2 | $ | 4,955.3 | ||||||||
Technology Solutions |
3,208.9 | 2,317.3 | 5,770.7 | 4,234.3 | ||||||||||||
Consolidated |
$ | 6,767.5 | $ | 4,834.5 | $ | 12,949.9 | $ | 9,189.6 | ||||||||
OPERATING INCOME (LOSS): |
||||||||||||||||
Electronics Marketing |
$ | 183.4 | $ | 92.2 | $ | 375.5 | $ | 173.6 | ||||||||
Technology Solutions |
105.2 | 88.2 | 161.9 | 139.5 | ||||||||||||
Corporate |
(31.9 | ) | (18.1 | ) | (58.2 | ) | (43.7 | ) | ||||||||
$ | 256.7 | $ | 162.3 | $ | 479.2 | $ | 269.4 | |||||||||
Restructuring, integration and other charges |
(29.1 | ) | | (57.2 | ) | (18.1 | ) | |||||||||
Consolidated |
$ | 227.6 | $ | 162.3 | $ | 422.0 | $ | 251.3 | ||||||||
12
AVNET, INC.
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
SECOND QUARTER AND FIRST HALF OF FISCAL 2011
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
SECOND QUARTER AND FIRST HALF OF FISCAL 2011
(1)
The results for the second quarter of fiscal 2011 included restructuring, integration and
other charges which totaled $29,112,000 pre-tax, $20,827,000 after tax and $0.14 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
$10,655,000 pre-tax and facility exit related costs, fixed asset write downs and related costs of
$11,488,000 pre-tax which were incurred primarily as a result of the integration activities
associated with the acquisitions. Integration costs of $8,774,000 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 $1,307,000 pre-tax consisted primarily of broker
fees, professional fees for legal and accounting due diligence and related costs. The Company
recorded other charges of $373,000 pre-tax and a reversal of $3,485,000 pre-tax primarily related
to the reversal of restructuring reserves established in prior years which were no longer needed.
Results for the first half of fiscal 2011 included restructuring, integration and other charges
which totaled $57,179,000 pre-tax, $40,989,000 after tax and $0.27 per share on a diluted basis and
consisted of $18,934,000 pre-tax for severance, $13,913,000 pre-tax for facilities related costs,
fixed asset write downs and related costs, $16,096,000 pre-tax for integration costs, $12,068,000
pre-tax for transactions costs associated with acquisitions and $373,000 pre-tax for other charges.
The Company also recorded a reversal of $4,205,000 pre-tax to adjust reserves related to prior
year restructuring activity that were no longer needed.
The results for the first half of fiscal 2010 included restructuring, integration and other charges
which totaled $18,072,000 pre-tax, $13,202,000 after tax and $0.09 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 pre-tax of integration costs
associated with acquired businesses, $1,104,000 pre-tax of other charges and a reversal of
$1,954,000 pre-tax related to restructuring reserves established in prior years.
13
(2)
During the second quarter and first half of fiscal 2010, the Company recognized a gain on the
sale of assets amounting to $5,549,000 pre-tax, $3,383,000 after tax and $0.02 per share as a
result of certain earn-out provisions associated with the sale of the Companys prior equity
investment in Calence LLC.
(3)
During the first quarter of fiscal 2011, the Company acquired Unidux, Inc., a Japanese
publicly traded electronics component distributor, through a tender offer. 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. It is not uncommon for the
trading price of certain Japanese public companies shares to be below book value, which was the
primary driver of the gain on bargain purchase. 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