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Table of Contents

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 30, 2003

AVNET, INC.

(Exact name of registrant as specified in its charter)

New York

(State or other jurisdiction of incorporation)
     
1-4224   11-1890605
(Commission File Number)   (I.R.S. Employer Identification No.)
         
2211 South 47th Street, Phoenix, Arizona       85034
(Address of principal executive offices)       (Zip Code)

(480) 643-2000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address if changed since last report)

 

TABLE OF CONTENTS

Item 5. Other Events.
Item 7. Financial Statements and Exhibits.
SIGNATURE

Table of Contents

Item 5. Other Events.

     Reconciliation of Non-GAAP financial information contained in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 28, 2002, Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 2002 and Quarterly Report on Form 10-Q for the fiscal quarter ended December 27, 2002. In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles (GAAP), the Company also discloses pro forma or non-GAAP results of operations that exclude certain items. Management believes that providing this additional information is useful to investors to better assess and understand operating performance, especially when comparing results with previous periods or forecasting performance for future periods. Management believes the pro forma measures also help indicate underlying trends in the business. Management also uses pro forma measures to establish operational goals and, in some cases, for measuring performance for compensation purposes.

Avnet, Inc.
Index of Reconciliation Schedules

             
Page #   Description   Periods covered   Schedule(s)
 
 
 
Form 10-K for the Year Ended June 28, 2002        
21-22   Per share impact of special charge activity (quarterly and fiscal year impacts)   Fiscal years 2000
through 2002 		  1 through 10
23-24   Gross profit margins, operating expense as a percentage of sales and operating profit margins before and after special charge activity   Fiscal years 2000
through 2002 		  1 through 3
24   Annualized operating expense reductions, including pro forma adjustment for VEBA Group operating expenses   2nd quarter of fiscal 2001 and 4th quarter of fiscal 2002   11
24-25   Operating margin by segment, before and after special charge activity   4th quarter of fiscal 2002 and 4th quarter of fiscal 2001   12
25-26   Income from continuing operations, net income and per share amounts before and after special charge activity   Fiscal years 2000
through 2002 		  1 through 3
 
Form 10-Q for Quarter Ended September 27, 2002        
15   Reconciliation of gross profit margins, before and after special charge activity, for the five quarters ended September 27, 2002 (trough of industry down-cycle) and for the six quarters ended June 29, 2001 (most recent industry up-cycle)   Quarter ended March 31, 2000 through quarter ended September 27, 2002   13
15-16   Operating expenses, operating expenses as a percentage of sales, operating income (loss), net income (loss) and earnings (loss) per share for the quarter ended June 28, 2002, before and after special charge activity   Quarter ended June
28, 2002 		  6
15   Operating expenses for the second quarter of fiscal 2001, including pro forma adjustment for VEBA Group operating expenses and the elimination of goodwill amortization   Quarter ended December 29, 2000   11
17   Operating margin by segment, before and after special charge activity   Quarter ended June
28, 2002 		  12
17   $1.6 billion pro forma debt reduction since second quarter of fiscal 2001, assuming asset securitization as debt   Quarter ended December 29, 2000 and quarter ended September 27, 2002   14
Form 10-Q for Quarter Ended December 27, 2002        
16-18   Operating expenses, operating expenses as a percentage of sales, operating income (loss), operating income (loss) as a percentage of sales, net income (loss) and earnings (loss) per share for the quarter ended December 27, 2002, before and after special charge activity   Quarter ended December 27, 2002   5
16   Quarterly operating expense reduction, including pro forma adjustment for VEBA Group operating expenses, the elimination of goodwill amortization and the impact of changes in foreign currency exchange rates.   Quarter ended December 29, 2000 and quarter ended December 27, 2002   15
16-18   Operating expenses, operating expenses as a percentage of sales, operating income (loss), operating income (loss) as a percentage of sales, net income (loss) and earnings (loss) per share for the first half ended December 27, 2002, before and after special charge activity.   First half ended December 27, 2002   4
18   $1.88 billion pro forma debt reduction since second quarter of fiscal 2001, assuming drawings under asset securitization as debt   Quarter ended December 29, 2000 and quarter ended December 27, 2002   14

 

Table of Contents

SCHEDULE 1

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        FISCAL YEAR ENDED JUNE 28, 2002 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 8,920,248     $ —     $ 8,920,248  
Cost of sales
     7,697,434       (21,600 )     7,675,834  
 
    
     
     
 
Gross profit
     1,222,814       (21,600 )     1,244,414  
   
Gross profit percentage
     13.71 %             13.95 %
Selling, general and administrative expenses
     1,225,799       (58,023 )     1,167,776  
   
SG&A expenses as percentage of sales
     13.74 %             13.09 %
 
    
     
     
 
Operating income (loss)
     (2,985 )     79,623       76,638  
   
Operating income (loss) as percentage of sales
     -0.03 %             0.86 %
Other income, net
     6,755       —       6,755  
Interest expense
     (124,583 )     —       (124,583 )
 
    
     
     
 
Loss before income taxes
     (120,813 )     79,623       (41,190 )
Income tax benefit
     (36,377 )     17,539       (18,838 )
 
    
     
     
 
Loss before cumulative effect of change in accounting principle
     (84,436 )     62,084       (22,352 )
Cumulative effect of change in accounting principle
     (580,495 )     —       (580,495 )
 
    
     
     
 
Net loss
     ($664,931 )   $ 62,084       ($602,847 )
 
    
     
     
 
Net loss per share before cumulative effect of change in accounting principle:
                        
 
Basic
     ($0.71 )   $ 0.52       ($0.19 )
 
    
     
     
 
 
Diluted
     ($0.71 )   $ 0.52       ($0.19 )
 
    
     
     
 
Net loss per share:
                        
 
Basic
     ($5.61 )   $ 0.52       ($5.09 )
 
    
     
     
 
 
Diluted
     ($5.61 )   $ 0.52       ($5.09 )
 
    
     
     
 
Shares used to compute loss per share:
                        
 
Basic
     118,561       118,561       118,561  
 
    
     
     
 
 
Diluted
     118,561       118,561       118,561  
 
    
     
     
 
     
(1)   The results for the fiscal year shown above exclude the impact of incremental special charges related to the value of assets acquired in connection with the acquisition of Kent Electronics, which was accounted for as a “Pooling-of-Interests,” the impairment of investments in Internet-related businesses and severance costs. The special charges amounted to $79.6 million pre-tax ($21.6 million included in cost of sales and $58.0 million included in selling, general and administrative expenses), $62.1 million after tax and $0.52 per diluted share.

 

Table of Contents

SCHEDULE 2

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        FISCAL YEAR ENDED JUNE 29, 2001 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 12,814,010     $ —     $ 12,814,010  
Cost of sales
     10,948,484       (80,596 )     10,867,888  
 
    
     
     
 
Gross profit
     1,865,526       (80,596 )     1,946,122  
   
Gross profit percentage
     14.56 %             15.19 %
Selling, general and administrative expenses
     1,611,874       (246,889 )     1,364,985  
   
SG&A expenses as percentage of sales
     12.58 %             10.65 %
 
    
     
     
 
Operating income
     253,652       327,485       581,137  
   
Operating income as percentage of sales
     1.98 %             4.54 %
Other income, net
     25,495       —       25,495  
Interest expense
     (191,895 )     —       (191,895 )
 
    
     
     
 
Income before income taxes
     87,252       327,485       414,737  
Income tax provision
     87,155       90,793       177,948  
 
    
     
     
 
Income from continuing operations
     97       236,692       236,789  
Income from discontinued operations, net of tax
     15,305       —       15,305  
 
    
     
     
 
Net income
   $ 15,402     $ 236,692     $ 252,094  
 
    
     
     
 
Earnings per share from continuing operations:
                        
 
Basic
   $ 0.00     $ 2.02     $ 2.02  
 
    
     
     
 
 
Diluted
   $ 0.00     $ 1.99     $ 1.99  
 
    
     
     
 
Net earnings per share:
                        
 
Basic
   $ 0.13     $ 2.02     $ 2.15  
 
    
     
     
 
 
Diluted
   $ 0.13     $ 1.99     $ 2.12  
 
    
     
     
 
Shares used to compute earnings per share:
                        
 
Basic
     117,263       117,263       117,263  
 
    
     
     
 
 
Diluted
     118,815       118,815       118,815  
 
    
     
     
 
     
(1)   The results for the fiscal year shown above exclude the impact of incremental special charges related to the acquisition and integration of Kent Electronics, which was accounted for as a “Pooling-of-Interests,” and other integration, restructuring and cost cutting initiatives taken in response to business conditions. The special charges amounted to $327.5 million pre-tax ($80.6 million included in cost of sales and $246.9 million included in selling, general and administrative expenses), $236.7 million after-tax and $1.99 per diluted share.

 

Table of Contents

SCHEDULE 3

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        FISCAL YEAR ENDED JUNE 30, 2000 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 9,915,042     $ —     $ 9,915,042  
Cost of sales
     8,470,257       (11,787 )     8,458,470  
 
    
     
     
 
Gross profit
     1,444,785       (11,787 )     1,456,572  
   
Gross profit percentage
     14.57 %             14.69 %
Selling, general and administrative expenses
     1,076,793       (37,177 )     1,039,616  
   
SG&A expenses as percentage of sales
     10.86 %             10.49 %
 
    
     
     
 
Operating income
     367,992       48,964       416,956  
   
Operating income as percentage of sales
     3.71 %             4.21 %
Other income, net
     10,452       —       10,452  
Interest expense
     (94,798 )     —       (94,798 )
 
    
     
     
 
Income before income taxes
     283,646       48,964       332,610  
Income tax provision
     121,082       18,538       139,620  
 
    
     
     
 
Income from continuing operations
     162,564       30,426       192,990  
Income from discontinued operations, net of tax
     828       —       28  
 
    
     
     
 
Net income
   $ 163,392     $ 30,426     $ 193,818  
 
    
     
     
 
Earnings per share from continuing operations:
                        
 
Basic
   $ 1.52     $ 0.29     $ 1.81  
 
    
     
     
 
 
Diluted
   $ 1.50     $ 0.28     $ 1.78  
 
    
     
     
 
Net earnings per share:
                        
 
Basic
   $ 1.53     $ 0.29     $ 1.82  
 
    
     
     
 
 
Diluted
   $ 1.51     $ 0.28     $ 1.79  
 
    
     
     
 
Shares used to compute earnings per share:
                        
 
Basic
     106,627       106,627       106,627  
 
    
     
     
 
 
Diluted
     108,257       108,257       108,257  
 
    
     
     
 
     
(1)   The results for the fiscal year shown above exclude the impact of incremental special charges associated with: (a) the integration of Marshall Industries, SEI Eurotronics and Macro into EM; (b) the integration of JBA Computer Solutions into CM North America; (c) the reorganization of EM Asia; (d) the reorganization of EM’s European operations including costs related to the consolidation of EM’s European warehousing operations; and (e) costs incurred in connection with certain litigation brought by the Company. The special charges amounted to $49.0 million pre-tax ($11.8 million included in cost of sales and $37.2 million included in selling, general and administrative expenses), $30.4 million after-tax and $0.28 per diluted share.

 

Table of Contents

SCHEDULE 4

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        FIRST HALF ENDED DECEMBER 27, 2002
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS (1)   RESULTS
       
 
 
Sales
   $ 4,520,555     $ —     $ 4,520,555  
Cost of sales
     3,907,370       —       3,907,370  
 
    
     
     
 
Gross profit
     613,185       —       613,185  
   
Gross profit percentage
     13.56 %             13.56 %
Selling, general and administrative expenses
     668,424       (106,765 )     561,659  
   
SG&A expenses as percentage of sales
     14.79 %             12.42 %
 
    
     
     
 
Operating income (loss)
     (55,239 )     106,765       51,526  
   
Operating income (loss) as percentage of sales
     -1.22 %             1.14 %
Other income, net
     10,596       —       10,596  
Interest expense
     (51,337 )     —       (51,337 )
 
    
     
     
 
Income (loss) before income taxes
     (95,980 )     106,765       10,785  
Income tax provision (benefit)
     (36,835 )     41,016       4,181  
 
    
     
     
 
Net income (loss)
     ($59,145 )   $ 65,749     $ 6,604  
 
    
     
     
 
Net earnings (loss) per share:
                        
 
Basic
     ($0.49 )   $ 0.55     $ 0.06  
 
    
     
     
 
 
Diluted
     ($0.49 )   $ 0.55     $ 0.06  
 
    
     
     
 
Shares used to compute earnings (loss) per share:
                        
 
Basic
     119,419       119,419       119,419  
 
    
     
     
 
 
Diluted
     119,419       119,419       119,419  
 
    
     
     
 
     
(1)   The results for the first half ended December 27, 2002 shown above include the impact of incremental special charges recorded in connection with cost cutting initiatives including severance costs, charges for consolidation of facilities and write-offs of certain capitalized IT-related initiatives. The special charges amounted to $106.8 million pre-tax (all of which is included in selling, general and administrative expenses), $65.7 million after-tax and $0.55 per diluted share.

 

Table of Contents

SCHEDULE 5

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        SECOND QUARTER ENDED DECEMBER 27, 2002
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS (1)   RESULTS
       
 
 
Sales
   $ 2,346,665     $ —     $ 2,346,665  
Cost of sales
     2,031,099       —       2,031,099  
 
    
     
     
 
Gross profit
     315,566       —       315,566  
   
Gross profit percentage
     13.45 %             13.45 %
Selling, general and administrative expenses
     390,758       (106,765 )     283,993  
   
SG&A expenses as percentage of sales
     16.65 %             12.10 %
 
    
     
     
 
Operating income (loss)
     (75,192 )     106,765       31,573  
   
Operating income (loss) as percentage of sales
     -3.20 %             1.35 %
Other income, net
     4,658       —       4,658  
Interest expense
     (24,306 )     —       (24,306 )
 
    
     
     
 
Income (loss) before income taxes
     (94,840 )     106,765       11,925  
Income tax provision (benefit)
     (36,183 )     41,016       4,833  
 
    
     
     
 
Net income (loss)
     ($58,657 )   $ 65,749     $ 7,092  
 
    
     
     
 
Net earnings (loss) per share:
                        
 
Basic
     ($0.49 )   $ 0.55     $ 0.06  
 
    
     
     
 
 
Diluted
     ($0.49 )   $ 0.55     $ 0.06  
 
    
     
     
 
Shares used to compute earnings (loss) per share:
                        
 
Basic
     119,419       119,419       119,419  
 
    
     
     
 
 
Diluted
     119,419       119,419       119,419  
 
    
     
     
 
     
(1)   The results for the second quarter ended December 27, 2002 shown above include the impact of incremental special charges recorded in connection with cost cutting initiatives including severance costs, charges for consolidation of facilities and write-offs of certain capitalized IT-related initiatives. The special charges amounted to $106.8 million pre-tax (all of which is included in selling, general and administrative expenses), $65.7 million after-tax and $0.55 per diluted share.

 

Table of Contents

SCHEDULE 6

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        FOURTH QUARTER ENDED JUNE 28, 2002 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 2,144,752     $ —     $ 2,144,752  
Cost of sales
     1,862,105       (21,600 )     1,840,505  
 
    
     
     
 
Gross profit
     282,647       (21,600 )     304,247  
   
Gross profit percentage
     13.18 %             14.19 %
Selling, general and administrative expenses
     336,074       (58,023 )     278,051  
   
SG&A expenses as percentage of sales
     15.67 %             12.96 %
 
    
     
     
 
Operating income (loss)
     (53,427 )     79,623       26,196  
   
Operating income (loss) as percentage of sales
     -2.49 %             1.22 %
Other income, net
     2,005       —       2,005  
Interest expense
     (26,451 )     —       (26,451 )
 
    
     
     
 
Income (loss) before income taxes
     (77,873 )     79,623       1,750  
Income tax provision (benefit)
     (16,472 )     17,539       1,067  
 
    
     
     
 
Net income (loss)
     ($61,401 )   $ 62,084     $ 683  
 
    
     
     
 
Net earnings (loss) per share:
                        
 
Basic
     ($0.51 )   $ 0.52     $ 0.01  
 
    
     
     
 
 
Diluted
     ($0.51 )   $ 0.52     $ 0.01  
 
    
     
     
 
Shares used to compute earnings (loss) per share:
                        
 
Basic
     119,397       119,397       119,397  
 
    
     
     
 
 
Diluted
     119,397       119,397       119,397  
 
    
     
     
 

(1)   The results for the fourth quarter shown above exclude the impact of incremental special charges related to the value of assets acquired in connection with the acquisition of Kent Electronics, which was accounted for as a “Pooling-of-Interests,” the impairment of investments in Internet-related businesses and severance costs. The special charges amounted to $79.6 million pre-tax ($21.6 million included in cost of sales and $58.0 million included in selling, general and administrative expenses), $62.1 million after tax and $0.52 per diluted share.

 

Table of Contents

SCHEDULE 7

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        FOURTH QUARTER ENDED JUNE 29, 2001 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 2,537,755     $ —     $ 2,537,755  
Cost of sales
     2,225,323       (80,596 )     2,144,727  
 
    
     
     
 
Gross profit
     312,432       (80,596 )     393,028  
   
Gross profit percentage
     12.31 %             15.49 %
Selling, general and administrative expenses
     590,058       (246,889 )     343,169  
   
SG&A expenses as percentage of sales
     23.25 %             13.52 %
 
    
     
     
 
Operating income (loss)
     (277,626 )     327,485       49,859  
   
Operating income (loss) as percentage of sales
     -10.94 %             1.96 %
Other income, net
     8,397       —       8,397  
Interest expense
     (46,328 )     —       (46,328 )
 
    
     
     
 
Income (loss) before income taxes
     (315,557 )     327,485       11,928  
Income tax provision (benefit)
     (84,521 )     90,793       6,272  
 
    
     
     
 
Income (loss) from continuing operations
     (231,036 )     236,692       5,656  
Loss from discontinued operations, net of tax
     (5,111 )     —       (5,111 )
 
    
     
     
 
Net income (loss)
     ($236,147 )   $ 236,692     $ 545  
 
    
     
     
 
Net earnings (loss) per share:
                        
 
Basic
     ($2.01 )   $ 2.01     $ 0.00  
 
    
     
     
 
 
Diluted
     ($2.01 )   $ 2.01     $ 0.00  
 
    
     
     
 
Shares used to compute earnings (loss) per share:
                        
 
Basic
     117,697       117,697       117,697  
 
    
     
     
 
 
Diluted
     117,697       117,697       117,697  
 
    
     
     
 

(1)   The results for the fourth quarter shown above exclude the impact of incremental special charges related to the acquisition and integration of Kent Electronics, which was accounted for as a “Pooling-of-Interests,” and other integration, restructuring and cost cutting initiatives taken in response to business conditions. The special charges amounted to $327.5 million pre-tax ($80.6 million included in cost of sales and $246.9 million included in selling, general and administrative expenses), $236.7 million after-tax and $2.01 per diluted share.

 

Table of Contents

SCHEDULE 8

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        THIRD QUARTER ENDED MARCH 31, 2000 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 2,884,498     $ —     $ 2,884,498  
Cost of sales
     2,459,921       (1,496 )     2,458,425  
 
    
     
     
 
Gross profit
     424,577       (1,496 )     426,073  
   
Gross profit percentage
     14.72 %             14.77 %
Selling, general and administrative expenses
     314,517       (13,327 )     301,190  
   
SG&A expenses as percentage of sales
     10.90 %             10.44 %
 
    
     
     
 
Operating income
     110,060       14,823       124,883  
   
Operating income as percentage of sales
     3.82 %             4.33 %
Other income, net
     1,403       —       1,403  
Interest expense
     (29,203 )     —       (29,203 )
 
    
     
     
 
Income before income taxes
     82,260       14,823       97,083  
Income tax provision
     34,755       5,946       40,701  
 
    
     
     
 
Income from continuing operations
     47,505       8,877       56,382  
Loss from discontinued operations, net of tax
     (971 )     —       (971 )
 
    
     
     
 
Net income
   $ 46,534     $ 8,877     $ 55,411  
 
    
     
     
 
Net earnings per share:
                        
 
Basic
   $ 0.41     $ 0.08     $ 0.49  
 
    
     
     
 
 
Diluted
   $ 0.41     $ 0.08     $ 0.49  
 
    
     
     
 
Shares used to compute earnings per share:
                        
 
Basic
     112,351       112,351       112,351  
 
    
     
     
 
 
Diluted
     114,168       114,168       114,168  
 
    
     
     
 

(1)   The results for the third quarter shown above exclude the impact of incremental special charges related to the (a) the integration Eurotronics BV and SEI Macro Group into EM EMEA; (b) the integration of JBA Computer Solutions into CM North America; and (c) costs related to the consolidation of EM’s European warehousing operations. The special charges amounted to $14.8 million pre-tax ($1.5 million included in cost of sales and $13.3 million included in selling, general and administrative expenses), $8.9 million after tax and $0.08 per diluted share.

 

Table of Contents

SCHEDULE 9

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        SECOND QUARTER ENDED DECEMBER 31, 1999 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 2,276,245     $ —     $ 2,276,245  
Cost of sales
     1,958,733       (10,291 )     1,948,442  
 
    
     
     
 
Gross profit
     317,512       (10,291 )     327,803  
   
Gross profit percentage
     13.95 %             14.40 %
Selling, general and administrative expenses
     268,040       (17,739 )     250,301  
   
SG&A expenses as percentage of sales
     11.78 %             11.00 %
 
    
     
     
 
Operating income
     49,472       28,030       77,502  
   
Operating income as percentage of sales
     2.17 %             3.40 %
Other income, net
     3,362       —       3,362  
Interest expense
     (20,309 )     —       (20,309 )
 
    
     
     
 
Income before income taxes
     32,525       28,030       60,555  
Income tax provision
     14,944       10,457       25,401  
 
    
     
     
 
Income from continuing operations
     17,581       17,573       35,154  
Income from discontinued operations, net of tax
     1,235       —       1,235  
 
    
     
     
 
Net income
   $ 18,816     $ 17,573     $ 36,389  
 
    
     
     
 
Net earnings per share:
                        
 
Basic
   $ 0.18     $ 0.16     $ 0.34  
 
    
     
     
 
 
Diluted
   $ 0.18     $ 0.16     $ 0.34  
 
    
     
     
 
Shares used to compute earnings per share:
                        
 
Basic
     106,588       106,588       106,588  
 
    
     
     
 
 
Diluted
     107,833       107,833       107,833  
 
    
     
     
 

(1)   The results for the second quarter shown above exclude the impact of incremental special charges related to the (a) the integration of Marshall Industries into the Company’s EM and AC operations; (b) the reorganization of the Company’s EM Asian operations; (c) costs related to the consolidation of the Company’s EM European warehousing operations; and (d) costs incurred in connection with certain litigation initiated by the Company. The special charges amounted to $28.0 million pre-tax ($10.3 million included in cost of sales and $17.7 million included in selling, general and administrative expenses), $17.6 million after tax and $0.16 per diluted share.

 

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SCHEDULE 10

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PERCENTAGES AND PER SHARE DATA)

                             
        FIRST QUARTER ENDED OCTOBER 1, 1999 (1)
       
        REPORTED   SPECIAL   ADJUSTED
        RESULTS   ITEMS   RESULTS
       
 
 
Sales
   $ 1,804,523     $ —     $ 1,804,523  
Cost of sales
     1,542,880       —       1,542,880  
 
    
     
     
 
Gross profit
     261,643       —       261,643  
   
Gross profit percentage
     14.50 %             14.50 %
Selling, general and administrative expenses
     207,730       (6,111 )     201,619  
   
SG&A expenses as percentage of sales
     11.51 %             11.17 %
 
    
     
     
 
Operating income
     53,913       6,111       60,024  
   
Operating income as percentage of sales
     2.99 %             3.33 %
Other income, net
     2,595       —       2,595  
Interest expense
     (12,444 )     —       (12,444 )
 
    
     
     
 
Income before income taxes
     44,064       6,111       50,175  
Income tax provision
     19,122       2,135       21,257  
 
    
     
     
 
Income from continuing operations
     24,942       3,976       28,918  
Loss from discontinued operations, net of tax
     (887 )     —       (887 )
 
    
     
     
 
Net income
   $ 24,055     $ 3,976     $ 28,031  
 
    
     
     
 
Net earnings per share:
                        
 
Basic
   $ 0.25     $ 0.04     $ 0.29  
 
    
     
     
 
 
Diluted
   $ 0.25     $ 0.04     $ 0.29  
 
    
     
     
 
Shares used to compute earnings per share:
                        
 
Basic
     94,737       94,737       94,737  
 
    
     
     
 
 
Diluted
     95,455       95,455       95,455  
 
    
     
     
 

(1)   The results for the first quarter shown above exclude the impact of incremental special charges related to the reorganization of the Company’s EM European operations. The special charges amounted to $6.1 million pre-tax (all of which is included in selling, general and administrative expenses), $4.0 million after tax and $0.04 per diluted share.

 

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SCHEDULE 11

AVNET, INC.
PRO FORMA FINANCIAL STATEMENTS FOR SECOND QUARTER OF FISCAL 2001
AND COMPARATIVE ANNUALIZED EXPENSE REDUCTION — 2ND QUARTER FISCAL 2001 TO 4TH QUARTER FISCAL 2002
(THOUSANDS)

                     
Second quarter of fiscal 2001 operating expenses, as reported
           $ 351,632  
 
Pro forma adjustments:
                
   
VEBA Group operating expenses from September 29, 2000 through acquisition date (1)
             15,716  
   
Remove amortization of goodwill (2)
             (8,817 )
 
            
 
Second quarter of fiscal 2001 operating expense, pro forma
           $ 358,531  
Second quarter of fiscal 2001 operating expense, pro forma and annualized
           $ 1,434,124  
Fourth quarter of fiscal 2002 operating expenses, excluding special charges (Schedule 6)
   $ 278,051          
Fourth quarter of fiscal 2002 operating expenses, excluding special charges and annualized
             1,112,204  
 
            
 
   
Annualized reduction in operating expenses since second quarter of fiscal 2001
           $ 321,920  
 
            
 

(1)   In October 2000, Avnet completed the acquisition of certain European operations of the VEBA Electronics Group consisting of (a) the Germany-headquartered EBV Group, including EBV Elektronik and WBC, and Atlas Services Europe and (b) the Germany-based RKE Systems (collectively, the “VEBA Group”). The results of operations of the VEBA Group are included in Avnet’s consolidated results of operations from the acquisition date forward. The pro forma adjustment noted above adds the VEBA Group’s estimated operating expenses for the period from the end of Avnet’s first quarter to the acquisition date in order to portray Avnet’s operating expenses as if the acquisition had occurred on the first day of the quarter.
 
(2)   Effective at the beginning of fiscal 2002, Avnet adopted Statement of Financial Accounting Standards No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets,” which requires, among other things, that goodwill no longer be amortized. The pro forma adjustment noted above removes $8.8 million of goodwill amortization costs from the reported operating expenses for the second quarter of fiscal 2001.

 

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SCHEDULE 12

AVNET, INC.
OPERATING PROFIT (LOSS) MARGIN BY SEGMENT
BEFORE AND AFTER SPECIAL CHARGE ACTIVITY
(THOUSANDS EXCEPT PERCENTAGES)

                             
        Second Quarter Ended December 27, 2002
       
        Including   Special   Excluding
        Special Charges   Charges   Special Charges
       
 
 
Sales
                        
 
EM
   $ 1,204,074     $ —     $ 1,204,074  
 
CM
     682,910       —       682,910  
 
AC
     459,681       —       459,681  
 
Corp.
     —       —       —  
 
    
     
     
 
   
Avnet, Inc.
   $ 2,346,665     $ —     $ 2,346,665  
Operating income (loss)
                        
 
EM
   $ (61,585 )   $ 84,096     $ 22,511  
 
CM
     (3,043 )     19,103       16,060  
 
AC
     3,393       2,209       5,602  
 
Corp.
     (13,957 )     1,357       (12,600 )
 
    
     
     
 
   
Avnet, Inc.
   $ (75,192 )   $ 106,765     $ 31,573  
Operating income (loss) margin
                        
 
EM
     -5.11 %             1.87 %
 
CM
     -0.45 %             2.35 %
 
AC
     0.74 %             1.22 %
 
Corp.
     N/A               N/A  
   
Avnet, Inc.
     -3.20 %             1.35 %
                             
        Fourth Quarter Ended June 28, 2002
       
        Including   Special   Excluding
        Special Charges   Charges   Special Charges
       
 
 
Sales
                        
 
EM
   $ 1,216,640     $ —     $ 1,216,640  
 
CM
     570,846       —       570,846  
 
AC
     357,266       —       357,266  
 
Corp.
     —       —       —  
 
    
     
     
 
   
Avnet, Inc.
   $ 2,144,752     $ —     $ 2,144,752  
Operating income (loss)
                        
 
EM
   $ 5,268     $ 12,811     $ 18,079  
 
CM
     (12,366 )     31,336       18,970  
 
AC
     (3,372 )     1,191       (2,181 )
 
Corp.
     (42,957 )     34,285       (8,672 )
 
    
     
     
 
   
Avnet, Inc.
   $ (53,427 )   $ 79,623     $ 26,196  
Operating income (loss) margin
                        
 
EM
     0.43 %             1.49 %
 
CM
     -2.17 %             3.32 %
 
AC
     -0.94 %             -0.61 %
 
Corp.
     N/A               N/A  
   
Avnet, Inc.
     -2.49 %             1.22 %

 

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SCHEDULE 12
(continued)

AVNET, INC.
OPERATING PROFIT (LOSS) MARGIN BY SEGMENT
BEFORE AND AFTER SPECIAL CHARGE ACTIVITY
(THOUSANDS EXCEPT PERCENTAGES)

                             
        Fourth Quarter Ended June 29, 2001
       
        Including   Special   Excluding
        Special Charges   Charges   Special Charges
       
 
 
Sales
                        
 
EM
   $ 1,553,866     $ —     $ 1,553,866  
 
CM
     619,738       —       619,738  
 
AC
     364,151       —       364,151  
 
Corp.
     —       —       —  
 
    
     
     
 
   
Avnet, Inc.
   $ 2,537,755     $ —     $ 2,537,755  
Operating income (loss)
                        
 
EM
   $ (55,448 )   $ 96,912     $ 41,464  
 
CM
     (2,350 )     17,062       14,712  
 
AC
     11,950       5,000       16,950  
 
Corp.
     (231,778 )     208,511       (23,267 )
 
    
     
     
 
   
Avnet, Inc.
   $ (277,626 )   $ 327,485     $ 49,859  
Operating income (loss) margin
                        
 
EM
     -3.57 %             2.67 %
 
CM
     -0.38 %             2.37 %
 
AC
     3.28 %             4.65 %
 
Corp.
     N/A               N/A  
   
Avnet, Inc.
     -10.94 %             1.96 %
                             
        Year Ended June 28, 2002
       
        Including   Special   Excluding
        Special Charges   Charges   Special Charges
       
 
 
Sales
                        
 
EM
   $ 4,841,923     $ —     $ 4,841,923  
 
CM
     2,399,246       —       2,399,246  
 
AC
     1,679,079       —       1,679,079  
 
Corp.
     —       —       —  
 
    
     
     
 
   
Avnet, Inc.
   $ 8,920,248     $ —     $ 8,920,248  
Operating income (loss)
                        
 
EM
   $ 9,895     $ 12,811     $ 22,706  
 
CM
     31,603       31,336       62,939  
 
AC
     41,665       1,191       42,856  
 
Corp.
     (86,148 )     34,285       (51,863 )
 
    
     
     
 
   
Avnet, Inc.
   $ (2,985 )   $ 79,623     $ 76,638  
Operating income (loss) margin
                        
 
EM
     0.20 %             0.47 %
 
CM
     1.32 %             2.62 %
 
AC
     2.48 %             2.55 %
 
Corp.
     N/A               N/A  
   
Avnet, Inc.
     -0.03 %             0.86 %

 

Table of Contents

SCHEDULE 13

AVNET, INC.
GROSS PROFIT MARGINS
BEFORE AND AFTER SPECIAL CHARGE ACTIVITY
(THOUSANDS EXCEPT PERCENTAGES)

                                                               
                  Gross Profit   Gross profit margin percentages
                 
 
          Sales   As reported   Special Charges           Adjusted   As reported   Adjusted
         
 
 
         
 
 
Quarter ended September 27, 2002
     2,173,890       297,619       —               297,619       13.69 %     13.69 %
Quarter ended June 28, 2002
     2,144,752       282,647       21,600   (1)         304,247       13.18 %     14.19 %
Quarter ended March 29, 2002
     2,214,451       310,988       —               310,988       14.04 %     14.04 %
Quarter ended December 28, 2001
     2,359,850       318,617       —               318,617       13.50 %     13.50 %
Quarter ended September 28, 2001
     2,201,195       310,562       —               310,562       14.11 %     14.11 %
 
    
     
     
             
                 
 
Totals for five quarters ended
                                                        
     
September 27, 2002
     11,094,138       1,520,433       21,600               1,542,033       13.70 %     13.90 %
Quarter ended June 29, 2001
     2,537,755       312,432       80,596   (2)         393,028       12.31 %     15.49 %
Quarter ended March 30, 2001
     3,457,170       522,760       —               522,760       15.12 %     15.12 %
Quarter ended December 29, 2000
     3,630,494       542,761       —               542,761       14.95 %     14.95 %
Quarter ended September 29, 2000
     3,188,591       487,573       —               487,573       15.29 %     15.29 %
Quarter ended June 30, 2000
     2,949,777       441,054       —               441,054       14.95 %     14.95 %
Quarter ended March 31, 2000
     2,884,498       424,577       1,496   (3)         426,073       14.72 %     14.77 %
 
    
     
     
             
                 
   
Totals for six quarters ended June 29, 2001
     18,648,285       2,731,157       82,092               2,813,249       14.65 %     15.09 %

(1)   See Schedule 6 for discussion of special charges
 
(2)   See Schedule 7 for discussion of special charges
 
(3)   See Schedule 8 for discussion of special charges

 

Table of Contents

SCHEDULE 14

AVNET, INC.
PRO FORMA DEBT REDUCTION
ASSUMING DRAWINGS ON ACCOUNTS RECEIVABLE SECURITIZATION PROGRAM AS DEBT
(THOUSANDS)

                   
Debt at December 29, 2000
   $ 3,323,287          
Drawings under accounts receivable securitization at December 29, 2000 (1)
     —          
 
    
         
 
Pro forma debt at December 29, 2000
             3,323,287  
Debt at September 27, 2002
     1,633,757          
Drawings under accounts receivable securitization at September 27, 2002 (1)
     100,000          
 
    
         
 
Pro forma debt at September 27, 2002
             1,733,757  
 
            
 
 
Reduction in debt, including accounts receivable securitization — December 29, 2000 to September 27, 2002
           $ 1,589,530  
 
            
 
Debt at December 27, 2002
     1,390,355          
Drawings under accounts receivable securitization at December 27, 2002 (1)
     50,000          
 
    
         
 
Pro forma debt at December 27, 2002
           $ 1,440,355  
 
            
 
 
Reduction in debt, including accounts receivable securitization — December 29, 2000 to December 27, 2002
           $ 1,882,932  
 
            
 

(1)   Avnet has an accounts receivable securitization program whereby it sells an interest in a pool of its trade accounts receivable. The purpose of the program is to provide Avnet with an additional source of liquidity at interest rates more favorable than it could receive through other forms of financing. At December 27, 2002, September 27, 2002 and December 29, 2000, the Company had sold $50.0 million, $100.0 million and $0, respectively, of receivables under the program. This is reflected as a reduction of receivables, with the proceeds used to pay down debt, in the Company’s consolidated balance sheets.

 

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SCHEDULE 15

AVNET, INC.
PRO FORMA FINANCIAL STATEMENTS FOR SECOND QUARTER OF FISCAL 2001
AND COMPARATIVE ANNUALIZED EXPENSE REDUCTION — 2ND QUARTER FISCAL 2001 TO 2ND QUARTER FISCAL 2003
(THOUSANDS)

                     
Second quarter of fiscal 2001 operating expenses, as reported
   $ 351,632          
 
Pro forma adjustments:
                
   
VEBA Group operating expenses from September 29, 2000 through acquisition date (1)
     15,716          
   
Remove amortization of goodwill (2)
     (8,817 )        
 
    
         
   
Second quarter of fiscal 2001 operating expense, pro forma
           $ 358,531  
Second quarter of fiscal 2003 operating expenses, excluding special charges (Schedule 5)
   $ 283,993          
 
Pro forma adjustment:
                
   
Adjustment to exclude the impact of changes in foreign currency exchange rates from 2nd quarter of fiscal 2001 to the 2nd quarter of fiscal 2003
     (14,424 )        
 
    
         
   
Second quarter of fiscal 2003 operating expenses, pro forma
             269,569  
 
            
 
   
Pro forma reduction in quarterly operating expenses
           $ 88,962  
 
            
 

(1)   In October 2000, Avnet completed the acquisition of certain European operations of the VEBA Electronics Group consisting of (a) the Germany-headquartered EBV Group, including EBV Elektronik and WBC, and Atlas Services Europe and (b) the Germany-based RKE Systems (collectively, the “VEBA Group”). The results of operations of the VEBA Group are included in Avnet’s consolidated results of operations from the acquisition date forward. The pro forma adjustment noted above adds the VEBA Group’s estimated operating expenses for the period from the end of Avnet’s first quarter to the acquisition date in order to portray Avnet’s operating expenses as if the acquisition had occurred on the first day of the quarter.
 
(2)   Effective at the beginning of fiscal 2002, Avnet adopted Statement of Financial Accounting Standards No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets,” which requires, among other things, that goodwill no longer be amortized. The pro forma adjustment noted above removes $8.8 million of goodwill amortization costs from the reported operating expenses for the second quarter of fiscal 2001.

 

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Item 7. Financial Statements and Exhibits.

  (a)   Inapplicable
 
  (b)   Inapplicable
 
  (c)   Exhibits: none

SIGNATURE

     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.

         
    AVNET, INC.
    (Registrant)
         
         
Date: July 30, 2003   By:   /s/ Raymond Sadowski
       
        Raymond Sadowski
        Senior Vice President and
        Chief Financial Officer