<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
------------------------
COMMISSION FILE #1-4224
AVNET, INC.
INCORPORATED IN NEW YORK
------------------------
IRS EMPLOYER IDENTIFICATION NO. 11-1890605
2211 SOUTH 47TH STREET, PHOENIX, ARIZONA 85034
(480) 643-2000
------------------------
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 [ ]
The total number of shares outstanding of the registrant's Common Stock
(net of treasury shares) as of January 31, 2000 -- 43,878,441 shares.
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<PAGE> 2
AVNET, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C> <C>
Forward-Looking Statements..................................................... 2
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets December 31, 1999 and July 2, 3
1999........................................................
Consolidated Statements of Income -- First Halves Ended 4
December 31, 1999 and January 1, 1999.......................
Consolidated Statements of Income -- Second Quarters Ended 5
December 31, 1999 and January 1, 1999.......................
Consolidated Statements of Cash Flows -- First Halves Ended 6
December 31, 1999 and January 1, 1999.......................
Notes to Consolidated Financial Statements.................. 7-10
Item 2. Management's Discussion and Analysis of Financial Condition 11-16
and Results of Operations............................................
Item 3. Quantitative and Qualitative Disclosures About Market Risk... 16
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security Holders.......... 17
Item 6. Exhibits and Reports on Form 8-K............................. 17-18
Signature Page................................................................. 19
</TABLE>
1
<PAGE> 3
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements with respect to the
financial condition, results of operations and business of Avnet, Inc. ("Avnet"
or the "Company"). You can find many of these statements by looking for words
like "believes," "expects," "anticipates," "estimates" or similar expressions in
this report or in documents incorporated by reference in this report.
These forward-looking statements are subject to numerous assumptions, risks
and uncertainties. Factors that may cause actual results to differ materially
from those contemplated by the forward-looking statements include the following:
- Competitive pressures among distributors of electronic components and
computer products may increase significantly through industry
consolidation, entry of new competitors or otherwise.
- General economic or business conditions, domestic and foreign, may be
less favorable than we expected, resulting in lower sales than we
expected.
- Costs or difficulties related to the integration into Avnet of
newly-acquired businesses, or businesses we expect to acquire, may be
greater than we expected.
- Avnet may lose customers or suppliers as a result of the integration into
Avnet of newly-acquired businesses.
- Legislative or regulatory changes may adversely affect the businesses in
which Avnet is engaged.
- Adverse changes may occur in the securities markets.
- Changes in interest rates and currency fluctuations may reduce Avnet's
profit margins.
- Avnet may be adversely affected by the allocation of products by
suppliers.
Because forward-looking statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or implied by them. We
caution you not to place undue reliance on these statements, which speak only as
of the date of this report.
We do not undertake any obligation to update publicly or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
2
<PAGE> 4
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, JULY 2,
1999 1999
------------ ----------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Assets:
Current assets:
Cash and cash equivalents.............................. $ 71,529 $ 311,982
Receivables, less allowances of $35,814 and $27,626,
respectively.......................................... 1,398,341 960,639
Inventories (Note 3)................................... 1,624,726 997,247
Other.................................................. 84,355 43,455
---------- ----------
Total current assets.............................. 3,178,951 2,313,323
Property, plant & equipment, net.......................... 264,168 194,012
Goodwill, net of accumulated amortization of $67,481 and
$60,404, respectively.................................. 762,542 385,648
Other assets.............................................. 186,777 91,714
---------- ----------
Total assets...................................... $4,392,438 $2,984,697
========== ==========
Liabilities:
Current liabilities:
Borrowings due within one year......................... $ 617,103 $ 288
Accounts payable....................................... 742,994 480,377
Accrued expenses and other............................. 232,033 315,198
---------- ----------
Total current liabilities......................... 1,592,130 795,863
Long-term debt, less due within one year.................. 1,069,202 791,226
---------- ----------
Total liabilities................................. 2,661,332 1,587,089
---------- ----------
Commitments and contingencies (Note 4)
Shareholders' equity (Notes 5 and 6):
Common stock $1.00 par, authorized 120,000,000 shares,
issued 45,048,000 shares and 44,416,000 shares,
respectively........................................... 45,048 44,416
Additional paid-in capital................................ 327,726 435,930
Retained earnings......................................... 1,521,945 1,496,357
Cumulative translation adjustments........................ (46,816) (46,041)
Valuation adjustment...................................... 12,910 --
Treasury stock at cost, 2,408,082 shares and 9,224,599
shares, respectively................................... (129,707) (533,054)
---------- ----------
Total shareholders' equity........................ 1,731,106 1,397,608
---------- ----------
Total liabilities and shareholders' equity........ $4,392,438 $2,984,697
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FIRST HALVES ENDED
---------------------------
DECEMBER 31, JANUARY 1,
1999 1999
------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Sales....................................................... $3,757,094 $3,108,505
Cost of sales (Note 7)...................................... 3,243,622 2,647,805
---------- ----------
Gross profit................................................ 513,472 460,700
Selling, shipping, general and administrative expenses (Note
7)........................................................ 420,869 361,398
---------- ----------
Operating income............................................ 92,603 99,302
Other income, net........................................... 2,820 1,446
Interest expense............................................ (27,600) (26,169)
---------- ----------
Income before income taxes.................................. 67,823 74,579
Income taxes................................................ 30,545 32,387
---------- ----------
Net income.................................................. $ 37,278 $ 42,192
========== ==========
Earnings per share (Note 8):
Basic..................................................... $ 0.98 $ 1.17
========== ==========
Diluted................................................... $ 0.97 $ 1.16
========== ==========
Shares used to compute earnings per share (Note 8):
Basic..................................................... 38,158 36,029
========== ==========
Diluted................................................... 38,410 36,480
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 6
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SECOND QUARTERS ENDED
---------------------------
DECEMBER 31, JANUARY 1,
1999 1999
------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Sales....................................................... $2,102,771 $1,526,902
Cost of sales (Note 7)...................................... 1,820,102 1,298,112
---------- ----------
Gross profit................................................ 282,669 228,790
Selling, shipping, general and administrative expenses (Note
7)........................................................ 238,509 170,614
---------- ----------
Operating income............................................ 44,160 58,176
Other income, net........................................... 2,007 753
Interest expense............................................ (17,734) (13,021)
---------- ----------
Income before income taxes.................................. 28,433 45,908
Income taxes................................................ 13,301 19,374
---------- ----------
Net income.................................................. $ 15,132 $ 26,534
========== ==========
Earnings per share (Note 8):
Basic..................................................... $ 0.37 $ 0.74
========== ==========
Diluted................................................... $ 0.37 $ 0.74
========== ==========
Shares used to compute earnings per share (Note 8):
Basic..................................................... 41,117 35,629
========== ==========
Diluted................................................... 41,415 36,004
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 7
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FIRST HALVES ENDED
---------------------------
DECEMBER 31, JANUARY 1,
1999 1999
------------ -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 37,278 $ 42,192
Non-cash and other reconciling items:
Depreciation and amortization.......................... 30,172 25,392
Deferred taxes......................................... 3 (1,756)
Other, net (Notes 7 and 9)............................. 17,422 17,226
--------- ---------
84,875 83,054
Changes in (net of effects of businesses acquired):
Receivables............................................ (91,236) (2,779)
Inventories............................................ (317,124) (41,632)
Payables, accruals and other, net...................... (165,552) (17,164)
--------- ---------
Net cash flows (used for) provided from operating
activities............................................ (489,037) 21,479
--------- ---------
Cash flows from financing activities:
Repurchase of common stock................................ -- (63,640)
Issuance of notes in public offering, net of issuance
costs.................................................. -- 198,242
Proceeds from (payment of) commercial paper and bank debt,
net.................................................... 882,637 (137,684)
Payment of other debt, net................................ (70) (63)
Cash dividends (Note 9)................................... (5,279) (11,117)
Other, net................................................ 6,972 (3,671)
--------- ---------
Net cash flows provided from (used for) financing
activities............................................ 884,260 (17,933)
--------- ---------
Cash flows from investing activities:
Purchases of property, plant and equipment................ (43,516) (17,986)
Acquisitions of operations (Note 9)....................... (592,042) (16,542)
--------- ---------
Net cash flows used for investing activities........... (635,558) (34,528)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents............................................... (118) 989
--------- ---------
Cash and cash equivalents:
-- decrease............................................... (240,453) (29,993)
-- at beginning of year................................... 311,982 82,607
--------- ---------
-- at end of period....................................... $ 71,529 $ 52,614
========= =========
Additional cash flow information (Note 9)
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE> 8
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the Company's
financial position as of December 31, 1999 and July 2, 1999; the results of
operations for the first halves and second quarters ended December 31, 1999
and January 1, 1999; and the cash flows for the first halves ended December
31, 1999 and January 1, 1999. For further information, refer to the
consolidated financial statements and accompanying footnotes included in the
Company's Annual Report on Form 10-K for the fiscal year ended July 2, 1999.
2. The results of operations for the first half and second quarter ended
December 31, 1999 are not necessarily indicative of the results to be
expected for the full year. The results of operation for the second half of
fiscal 2000 will be significantly impacted by the acquisition of Marshall
Industries, which was completed on October 20, 1999 (See Note 10), and the
acquisition of Eurotronics B.V., which was completed on January 3, 2000.
3. Inventories:
<TABLE>
<CAPTION>
DECEMBER 31, JULY 2,
1999 1999
------------ --------
(THOUSANDS)
<S> <C> <C>
Finished goods.................................... $1,537,379 $909,609
Work in process................................... 4,991 5,625
Purchased parts and raw materials................. 82,356 82,013
---------- --------
$1,624,726 $997,247
========== ========
</TABLE>
4. From time to time, the Company may become liable with respect to pending and
threatened litigation, taxes, and environmental and other matters. The
Company has been designated a potentially responsible party or has had other
claims made against it in connection with environmental clean-ups at several
sites. Based upon the information known to date, management believes that
the Company has appropriately reserved for its share of the costs of the
clean-ups and it is not anticipated that any contingent matters will have a
material adverse impact on the Company's financial condition, liquidity or
results of operations.
<TABLE>
<S> <C>
5. Number of shares of common stock reserved for stock
option and stock incentive programs as of December 31,
1999..................................................... 5,015,616
=========
</TABLE>
6. Comprehensive income -- Effective as of the beginning of fiscal 1999, the
Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes
reporting standards designed to measure all of the changes in shareholders'
equity that result from transactions and other economic events of the period
excluding transactions with shareholders ("Comprehensive Income").
Comprehensive Income for the Company consists of net income, equity foreign
currency translation adjustments, and at December 31, 1999 an unrealized
gain on investments in marketable securities. Comprehensive Income for the
first halves of fiscal years 2000 and 1999 was $49,413,000 and $53,730,000,
respectively, and for the second quarters of fiscal years 2000 and 1999 was
$22,391,000 and $24,705,000, respectively.
7. During the second quarter of fiscal 2000, the Company recorded $28,030,000
pre-tax and $17,573,000 after-tax ($0.42 per share on a diluted basis) of
incremental special charges associated with the integration of Marshall
Industries into the Company ($18,413,000 pre-tax), the reorganization of the
Company's Electronics Marketing Asian operations ($5,409,000 pre-tax) and
costs related to the consolidation of the Company's Electronics Marketing
European warehousing operations and costs incurred in connection with its
lawsuit against Wyle Laboratories, Inc. ($4,208,000 pre-tax). The charges
related to the integration of Marshall Industries and the reorganization of
the Asian operations are comprised of severance, inventory reserves required
related to supplier terminations, real property lease terminations, employee
and facility relocation costs, special incentive payments and other items.
7
<PAGE> 9
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Approximately $17,739,000 of the pre-tax charge was included in operating
expenses, most of which have required or will require an outflow of cash,
and $10,291,000 was included in cost of sales, which represented a non-cash
write-down.
In addition to the second quarter special charge described in the previous
paragraph, the results for the first half of fiscal 2000 include $6,112,000
pre-tax and $3,976,000 after-tax ($0.11 per share on a diluted basis) of
incremental special charges recorded in the first quarter of fiscal 2000
associated with the reorganization of the Electronics Marketing European
operations consisting primarily of costs related to the consolidation of
warehousing operations. The entire $6,112,000 is included in operating
expenses, most of which have required or will require an outflow of cash.
These charges include severance, adjustments of the carrying value of fixed
assets, real property lease terminations and other items. The total amount
of special charges recorded in the first half of fiscal 2000 amounted to
$34,142,000 pre-tax, $21,549,000 after-tax, and $0.53 per share on a diluted
basis.
During the first quarter of fiscal 1999, the Company recorded $26,519,000
pre-tax and $15,740,000 after-tax ($0.43 per share on a diluted basis) of
incremental special charges associated principally with the reorganization
of its Electronics Marketing European sales and marketing activities.
Approximately $18,613,000 of the pre-tax charge was included in operating
expenses, most of which required an outflow of cash, and $7,906,000 was
included in cost of sales, which represented a non-cash write-down. These
charges included severance, inventory reserves required related to supplier
terminations and other items.
8. Earnings per share -- The Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share" ("SFAS 128") during fiscal 1998.
Under SFAS 128, basic earnings per share is computed based on the weighted
average number of common shares outstanding and excludes any potential
dilution; diluted earnings per share reflects potential dilution from the
exercise or conversion of securities into common stock. The number of
dilutive securities for the first halves of fiscal years 2000 and 1999
amounting to 252,000 shares and 451,000 shares, respectively, and for the
second quarters of fiscal years 2000 and 1999 amounting to 298,000 shares
and 375,000 shares, respectively, relate to stock options and restricted
stock awards.
9. Additional cash flow information:
Other non-cash and other reconciling items primarily includes the provision
for doubtful accounts and certain non-recurring items (see Note 7).
Due to the Company's fiscal calendar and its historical dividend payment
dates, the first half of fiscal 2000 contained one quarterly dividend
payment as compared with two payments in the first half of fiscal 1999.
Acquisitions of operations in the first half of fiscal 2000 include
primarily the cash expended in connection with (1) the acquisitions of
Marshall Industries, SEI Macro Group, Cosco Electronics/Jung Kwang (Avnet
Korea), Integrand Solutions, PCD Italia S.r.l. and Matica S.p.A., (2)
investments made in Questlink Technology, Inc., ChipCenter, and Eurotronics
B.V (the initial 16% investment), and (3) businesses acquired in prior
years. Acquisitions of operations in the first half of fiscal 1999 include
primarily the cash expended in connection with the acquisition of joint
venture interests in Avnet Max, Ltd. and in Avnet Gallium. The purchase
prices for the acquisitions accounted for as purchases have been allocated,
on a preliminary basis, to the assets acquired and liabilities assumed based
upon estimated fair values as of the acquisition date and are subject to
adjustment when additional information concerning asset and liability
valuations is finalized.
Interest and income taxes paid in the first halves were as follows:
<TABLE>
<CAPTION>
FISCAL FISCAL
2000 1999
-------- -------
(THOUSANDS)
<S> <C> <C>
Interest.................................................... $ 27,393 $22,133
Income taxes................................................ 170,890 27,787
</TABLE>
8
<PAGE> 10
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. Unaudited pro forma results: The following unaudited pro forma results
reflect the acquisition of Marshall Industries as if it occurred on June 27,
1998, the first day of the Company's 1999 fiscal year, and does not purport
to present what actual results would have been had the acquisition, in fact,
occurred at June 27, 1998, or to project results for any future period:
<TABLE>
<CAPTION>
FIRST HALVES ENDED
----------------------------
DECEMBER 31, JANUARY 1,
1999 1999
------------- -----------
(THOUSANDS, EXCEPT PER SHARE
DATA)
<S> <C> <C>
Sales...................................................... $4,319,800 $4,005,000
Income before income taxes................................. 77,200 86,800
Net income................................................. 41,900 47,000
Diluted earnings per share................................. $ 0.99 $ 1.08
</TABLE>
The unaudited pro forma results shown above include the special charges
referred to in Note 7 to the consolidated financial statements contained in
this report. In addition, the unaudited pro forma results shown above
exclude any potential benefits that might result from the acquisition due to
synergies that may be derived and from the elimination of any duplicate
costs.
11. Segment information: The Company currently consists of three major
operating groups, Electronics Marketing ("EM"), the Computer Marketing Group
("CMG") and Avnet Applied Computing ("AAC"), which started operating as a
separate group effective as of the beginning of the second quarter of fiscal
2000. EM focuses on the global distribution of, and value-added services
associated with, electronic components and CMG focuses on
middle-to-high-end, value-added computer products distribution and related
services. AAC serves the needs of personal computer OEMs and system
integrators by providing leading-edge technologies such as microprocessors,
and serves the needs of embedded systems OEMs that require technical
services such as product prototyping, configurations and other value-added
services.
<TABLE>
<CAPTION>
FIRST HALVES ENDED
--------------------------
DECEMBER 31, JANUARY 1,
1999 1999
------------ ----------
(THOUSANDS)
<S> <C> <C>
Sales:
Electronics Marketing.................................... $2,732,974 $2,381,029
Computer Marketing....................................... 887,721 727,476
Avnet Applied Computing.................................. 136,399 --
---------- ----------
$3,757,094 $3,108,505
========== ==========
Operating Income:
Electronics Marketing.................................... $ 133,880 $ 128,865
Computer Marketing....................................... 17,035 22,994
Avnet Applied Computing.................................. 3,763 --
Corporate & Special Charges.............................. (62,075) (52,557)
---------- ----------
$ 92,603 $ 99,302
========== ==========
</TABLE>
9
<PAGE> 11
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FIRST HALVES ENDED
--------------------------
DECEMBER 31, JANUARY 1,
1999 1999
------------ ----------
(THOUSANDS)
<S> <C> <C>
Assets:
Electronics Marketing.................................... $2,557,392 $1,705,520
Computer Marketing....................................... 626,238 460,460
Avnet Applied Computing.................................. 103,655 --
Corporate................................................ 1,105,153 624,103
---------- ----------
$4,392,438 $2,790,083
========== ==========
Sales, by geographic area:
Americas................................................. $2,813,200 $2,373,692
EMEA..................................................... 741,975 637,418
Asia/Pacific............................................. 201,919 97,395
---------- ----------
$3,757,094 $3,108,505
========== ==========
Assets, by geographic area:
Americas................................................. $3,270,490 $2,128,263
EMEA..................................................... 908,059 573,491
Asia/Pacific............................................. 213,889 88,329
---------- ----------
$4,392,438 $2,790,083
========== ==========
</TABLE>
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Effective as of the beginning of fiscal 1999, Avnet, Inc. (the "Company")
changed its organizational structure to strengthen its focus on its core
businesses and thereby better meet the needs of both its customers and its
suppliers. This change involved dividing the former Electronic Marketing Group
into its two major lines of business: the distribution of electronic components
and the distribution of computer products. This change resulted in the creation
of two operating groups, Electronics Marketing ("EM") and the Computer Marketing
Group ("CMG"). EM, which focuses on the global distribution of and value-added
services associated with electronic components, is comprised of three regional
operations -- EM Americas, EM EMEA (Europe, Middle East and Africa) and EM Asia.
CMG, which focuses on middle-to high-end value-added computer products
distribution and related services, consists of Avnet Computer, Hall-Mark Global
Solutions and a number of other specialty businesses. In addition, the Company
has a third operating group -- Avnet Applied Computing ("AAC") which began
operating in the Americas effective as of the beginning of the second quarter of
fiscal 2000. AAC, which was created by combining certain segments from EM's and
CMG's operations, consists of two major business units -- Applied Computing
Components, which serves the needs of manufacturers of general purpose
computers, and Applied Computing Solutions, which provides design, integration,
marketing and financial services to developers of application-specific computer
solutions. Applied Computing Components focuses on personal computer OEMs and
system integrators by providing leading-edge technologies such as
microprocessors. Applied Computing Solutions focuses on embedded systems OEMs
that require technical services such as product prototyping, configurations and
other value-added services. AAC type activities in Europe and Asia are still
included as part of EM. It is expected that these operations will be included as
part of AAC no later than the beginning of fiscal 2001. References below under
Results of Operations to "EM", "CMG" and "AAC" are to the new group structure.
The results for AAC in the Americas prior to the beginning of the second quarter
of fiscal 2000 are included in EM and CMG as the results of the operating groups
have not been restated. Therefore, the group information supplied below for
fiscal 2000 is not comparable to the information for prior periods. The results
for the second quarter of fiscal 2000 included the impact of the Company's
October 20, 1999 acquisition of Marshall Industries, the largest acquisition in
the history of the electronics components distribution industry, which is more
fully described in the "Acquisitions" section to follow in this Management's
Discussion and Analysis of Financial Condition and Results of Operations
("MD&A"). Marshall Industries has been merged primarily into the Company's EM
group with a relatively small portion having been merged into AAC.
RESULTS OF OPERATIONS
Consolidated sales were a record $2.10 billion in the second quarter of
fiscal 2000 ended December 31, 1999, up 38% as compared with $1.53 billion in
the prior year second quarter. Excluding the impact of acquisitions and
divestitures, Avnet's consolidated second quarter fiscal 2000 sales were
approximately 9% higher than the second quarter of last year, and were up
roughly 2% as compared with the first quarter of fiscal 2000. Sales for EM in
the second quarter of fiscal 2000 were $1.51 billion, up 31% as compared with
last year's second quarter sales of $1.15 billion and up 23% when compared with
sales of $1.23 billion in the immediately preceding first quarter of fiscal
2000. On a proforma basis, EM's sales (excluding the impact of acquisitions,
dispositions and AAC which was separated into its own group as described above)
were up approximately 16% and 1%, respectively, as compared with the second
quarter of last year and the first quarter of the current year. As far as sales
by region are concerned, EM Americas' sales were $1,045.6 million in the second
quarter of this year, up 30% as compared with the prior year second quarter
sales of $801.3 million and up 20% as compared with sales of $871.8 million in
the immediately preceding first quarter of fiscal 2000. Sales for EM EMEA and EM
Asia in the current year's second quarter were $363.8 million and $97.5 million,
respectively, representing a 22% increase for EM EMEA and an 84% increase for EM
Asia as compared with last year's second quarter. As compared with the first
quarter of fiscal 2000, EM EMEA's second quarter fiscal 2000 sales were up 34%
and EM Asia's sales were up 19%. CMG's sales for the second quarter of fiscal
2000 were $459.5 million, up 23% as compared with $375.0 million in the second
quarter of last year and up 7% as compared with the immediately preceding first
quarter of fiscal 2000. Avnet's newly formed group, AAC, recorded sales of
$136.4 million in the second quarter of fiscal 2000. AAC's sales for Europe and
Asia in
11
<PAGE> 13
the second quarter of fiscal 2000, which were included in EM's sales indicated
above, were approximately $132.3 million and $9.2 million, respectively, making
AAC's global sales approximately $277.9 million.
Included in the Company's current year second quarter results are $28.0
million pre-tax ($17.7 million included in operating expenses and $10.3 million
included in cost of sales), $17.6 million after-tax and $0.42 per share on a
diluted basis of incremental special charges associated with the integration of
Marshall Industries into the Company, the reorganization of EM Asia, costs
related to the consolidation of the Company's Electronics Marketing European
warehousing operations and costs incurred in the second quarter in connection
with its lawsuit against Wyle Laboratories, Inc. and certain individuals. Of the
$28.0 million special charge, $16.9 million requires the use of cash ($9.5
million of which has been expended at December 31, 1999) and $11.1 million
represented a non-cash charge. The charges related to the integration of
Marshall Industries ($18.4 million) and the reorganization of the Asian
operations ($5.4 million) are comprised of severance, inventory reserves
required related to supplier terminations, real property lease terminations,
employee and facility relocation costs, special incentive payments and other
items. The costs associated with the consolidation of the European warehousing
operations ($1.5 million) were due to the longer-than-expected startup of
operations of the European distribution center located in Tongeren, Belgium and
consist primarily of duplicative employee and property related costs. The costs
incurred pertaining to the Wyle lawsuit ($2.7 million) in which the Company is
the plaintiff related to legal and professional fees associated with the trial
of the case, which commenced in September 1999. On February 4, 2000, a jury in
Tampa, Florida returned a verdict in the case absolving the defendants of any
liability. The Company is in the process of reviewing its alternatives with
respect to post-trial motions and appeals. In addition, the defendants may file
an application to the trial court for attorneys' fees and costs. According to
comments of defendants' counsel, those fees and costs "may be in the range of
seven figures." The Company, if necessary, will report the appropriate charge in
the third quarter of fiscal 2000.
The results for the first half of fiscal 2000 also include $6.1 million
pre-tax (included in operating expenses), $4.0 million after-tax and $0.11 per
share on a diluted basis of incremental special charges recorded in the first
quarter associated with the reorganization of the Company's Electronics
Marketing European operations consisting primarily of costs related to the
centralization of warehousing operations in the Company's new facility located
in Tongeren, Belgium. These charges, most of which have required or will require
an outflow of cash, were for severance, adjustment of the carrying value of
fixed assets, real property lease terminations and other items. The balance of
cash to be expended in connection with the first quarter of fiscal 2000 special
charges, amounting to approximately $5.4 million, is expected to be paid by the
end of fiscal 2000, except for amounts associated with long-term real property
lease terminations, the amounts of which are not material. As noted above, the
startup of operations of the new European distribution center in Belgium has
taken longer than expected resulting in a delay of some of the anticipated cash
payments that were accrued for in the first quarter of fiscal 2000.
The first half of fiscal 1999 results mentioned below do not include $26.5
million pre-tax, $15.7 million after-tax and $0.43 per share on a diluted basis
of incremental special charges recorded in the first quarter associated
principally with the reorganization of the Company's Electronics Marketing
European operations. Approximately $18.6 million of the pre-tax charge was
included in operating expenses, most of which required an outflow of cash, and
$7.9 million was included in cost of sales which represented a non-cash
write-down. These charges included severance, inventory reserves required
related to supplier terminations and other items. The first quarter charges in
fiscal 1999 also included some incremental costs associated with the completion
of the reorganization of EM Americas, most of the costs for which were recorded
in the fourth quarter of fiscal 1998. These costs included primarily employee
relocations and special incentive payments as well as some additional severance
costs. At December 31, 1999, the only cash remaining to be expended in
connection with the first quarter fiscal 1999 special charges were amounts
associated with long-term real property lease terminations and contractual
commitments, the amounts of which are not material.
As described above, the second quarter of fiscal 2000 results were
negatively impacted by incremental special charges associated with the
reorganization of EM Asia, and both the current year and prior year first half
results were negatively impacted by costs associated primarily with the
reorganization of the European portion of EM EMEA's operations. Management
expects that the Company's future results of operations will
12
<PAGE> 14
benefit from the expected cost savings resulting from these reorganizations, and
that the impact on liquidity and sources and uses of capital will not be
material. In addition, management expects some special charges to be recorded in
the second half of fiscal 2000 associated with the integration of Eurotronics
B.V., which the Company recently acquired as described below in the
"Acquisitions" section of this MD&A.
Consolidated gross profit margins (before special charges) of 13.9% in the
second quarter of fiscal 2000 were lower by 1.1% of sales as compared with 15.0%
in the second quarter of last year. This downward trend is due primarily to the
competitive environment in the electronics distribution industry as a result of
the global industry cyclical downtrend in recent years as well as to the
increased sales of computer products, including microprocessors, DRAMs and disk
drives, which have lower gross profit margins than other products in the
Company's product line. In addition, the disposition of Allied Electronics,
which had higher gross margins than the remaining Avnet businesses, and the
acquisition of Marshall Industries, which had lower gross margins than the
Company's EM Americas' operations into which it was primarily merged, also
somewhat negatively impacted consolidated gross profit margins. Although
operating expenses (before special charges) in absolute dollars were higher in
the second quarter of fiscal 2000 as compared with the fiscal 1999 second
quarter, they decreased as a percentage of sales from 11.2% in fiscal 1999 to
10.5% in the current year. As a result, operating income (before special
charges) of $72.2 million in the second quarter of fiscal 2000 represented 3.4%
of sales as compared with $58.2 million or 3.8% of sales in the second quarter
of fiscal 1999. EM's second quarter of fiscal 2000 operating income before
special charges and before the allocation of corporate expenses, which included
the impact of Marshall since its acquisition on October 20, 1999, and excluded
the results of AAC which was separated into its own group at the beginning of
the quarter, was $74.6 million in the second quarter of fiscal 2000, up 21% as
compared with $61.5 million in the prior year quarter. CMG's operating income
before the allocation of corporate expenses was $8.5 million in the second
quarter of fiscal 2000 as compared with $9.5 million in the second quarter of
last year, which included the results for the portion of CMG's operations which
were subsequently transferred to AAC. AAC, Avnet's new operating group, recorded
operating income of $4.2 million in the second quarter of fiscal 2000 before
allocation of corporate expenses. Operating expenses recorded at the corporate
level were $15.1 million in the second quarter of fiscal 2000 and $12.8 million
in the second quarter of fiscal 1999.
Interest expense for the second quarter of fiscal 2000 was higher than last
year's second quarter due primarily to the increased borrowings required to fund
the acquisitions that were completed during the fiscal 2000 quarter and to fund
the additional working capital requirements to support the growth in business.
As a result of the factors described above, net income, excluding special
charges, in the second quarter of fiscal 2000 was $32.7 million, or $0.79 per
share on a diluted basis, as compared with $26.5 million, or $0.74 per share on
a diluted basis, in the prior year's second quarter. Including the special
charges referred to above, the current year's second quarter net income was
$15.1 million, or $0.37 per share on a diluted basis, as compared with $26.5
million, or $0.74 per share on a diluted basis, in the prior year's second
quarter.
Consolidated sales for the first half of fiscal 2000 were $3.757 billion,
up 21% as compared with $3.109 billion in the first half of last year. EMG's
sales of $2.733 billion and CMG's sales of $888 million in the first half of
fiscal 2000 were up 15% and 22%, respectively, as compared with the prior year
first half sales of $2.381 billion for EMG and $728 million for CMG. AAC which
began operations in the second quarter of fiscal 2000 had sales of $136 million
in the first half of fiscal 2000.
Consolidated gross profit margins (before special charges) in the first
half of fiscal 2000 were 13.9% as compared with 15.1% in the prior year period.
Even though operating expenses (before special charges) as a percentage of sales
decreased to 10.6% in the first half of fiscal 2000 from 11.0% in the first half
of last year, the decrease was not enough to fully offset the decline in gross
profit margins. As a result, operating income (before special charges) as a
percentage of sales decreased to 3.4% in this year's first half as compared with
4.0% in the same period last year. Interest expense was only slightly higher in
the first half of fiscal 2000 as compared with the first half of fiscal 1999 due
primarily to the impact of increased borrowing to fund acquisitions and to fund
the additional working capital requirements to support the growth in business,
offset by the reduced interest expense due to cash received from the sale of
Allied Electronics on July 2, 1999.
13
<PAGE> 15
Net income (before special items) for the first half of fiscal 2000 was
$58.8 million, or $1.53 per share on a diluted basis, as compared with $57.9
million, or $1.59 per share on a diluted basis, in the first half of last year.
Including the special items referred to above, net income in the first half of
fiscal 2000 was $37.3 million, or $0.97 per share on a diluted basis, as
compared with net income of $42.2 million, or $1.16 per share on a diluted basis
in the first half of fiscal 1999. Diluted earnings per share for the first half
of fiscal 2000 was less by $0.03 than the sum of the applicable amounts for the
first and second quarters due to the effect of the issuance of shares in
connection with the acquisition of Marshall Industries and the amount of the
special charges.
LIQUIDITY AND CAPITAL RESOURCES
During the first half of fiscal 2000, the Company generated $84.9 million
from income before depreciation, amortization and other non-cash items, and used
$573.9 million to increase working capital, resulting in $489.0 million of net
cash flows being used for operations. Approximately $134.7 million of the cash
used for operations related to the income taxes paid during the first quarter in
connection with the gain on the sale of Allied. In addition, the Company used
$42.1 million for other normal business operations including purchases of
property, plant and equipment ($43.5 million) and dividends ($5.3 million),
offset by cash generated from other items ($6.8 million). This resulted in
$531.1 million being used for normal business operations. The Company also used
$592.1 million for acquisitions and the payment of other debt. Of this overall
use of cash of $1,123.1 million, $882.6 million was provided from an increase in
debt and $240.5 million was provided from available cash and cash equivalents.
The Company's quick assets at December 31, 1999 totaled $1.470 billion as
compared with $1.273 billion at July 2, 1999. At December 31, 1999, quick assets
were less than the Company's current liabilities by $122.3 million as compared
with a $476.8 million excess at the end of fiscal 1999. Working capital at
December 31, 1999 was $1.587 billion as compared with $1.517 billion at July 2,
1999. At December 31, 1999 to support each dollar of current liabilities, the
Company had $0.92 of quick assets and $1.08 of other current assets, for a total
of $2.00 as compared with $2.91 at the end of the prior fiscal year. The above
balance sheet amount at December 31, 1999 was significantly impacted by the
acquisition of Marshall Industries, and the balance sheet amount at July 2, 1999
was significantly impacted by the $377.0 million of cash received on July 2,
1999 in connection with the sale of Allied Electronics. On July 2, 1999, cash
and cash equivalents included $240.1 million of before-tax proceeds from the
sale of Allied Electronics with the balance of the cash received at closing
having been used to reduce commercial paper outstanding. In addition, current
liabilities at July 2, 1999 included approximately $134.7 million of accrued
income taxes payable as a result of the gain on the sale of Allied Electronics,
payment of most of which was made in the current year's first quarter.
In order to partially finance the cash component of the acquisition of
Marshall Industries as described below and to provide additional working capital
capacity, the Company entered into a $500 million 364-day credit facility in
October 1999 with a syndicate of banks led by Bank of America. The Company may
select from various interest rate options and maturities under this facility,
although the Company intends to utilize the facility primarily as a back-up of
its commercial paper program pursuant to which the Company is authorized to
issue short-term notes for current operational business requirements. The credit
agreement contains various covenants, none of which management believes limit
the Company's financial flexibility to pursue its intended business strategy.
Subsequent to the end of the second quarter, on February 8, 2000, the
Company issued $360.0 million of 7 7/8% Notes due February 15, 2005 (the
"Notes"). The net proceeds received by the Company from the sale of the Notes
were approximately $356.2 million after deduction of the underwriting discounts
and other expenses associated with the sale of the Notes. The net proceeds from
the Notes have been used to repay commercial paper indebtedness which the
Company may re-borrow for general corporate purposes, including capital
expenditures, acquisitions, repurchase of the Company's common stock and working
capital needs.
During the first half of fiscal 2000, the Company's shareholders' equity
increased by $333.5 million to $1,731.1 million at December 31, 1999, while
total debt increased by $894.8 million to $1,686.3 million. As a result, the
total debt to capital (shareholders' equity plus total debt) ratio was 49.3% at
December 31, 1999 as
14
<PAGE> 16
compared with 36.2% at July 2, 1999. The increase in shareholders' equity
includes the impact of the issuance of common stock to fund the acquisition of
Marshall Industries amounting to $269.3 million. The Company's favorable balance
sheet ratios would facilitate additional financing, if, in the opinion of
management, such financing would enhance the future operations of the Company.
Currently, the Company does not have any material commitments for capital
expenditures.
The Company and the former owners of a Company-owned site in Oxford, North
Carolina have entered into a Consent Decree and Court Order with the
Environmental Protection Agency (EPA) for the environmental clean-up of the
site, the cost of which, according to the EPA's remedial investigation and
feasibility study, is estimated to be approximately $6.3 million, exclusive of
the $1.5 million in EPA past costs paid by the potentially responsible parties
(PRP's). Pursuant to a Consent Decree and Court Order entered into between the
Company and the former owners of the site, the former owners have agreed to bear
at least 70% of the clean-up costs of the site, and the Company will be
responsible for not more than 30% of those costs. In addition, the Company has
received notice from a third party of its intention to seek indemnification for
costs it may incur in connection with an environmental clean-up at a site in
Rush, Pennsylvania resulting from the alleged disposal of wire insulation
material at the site by a former unit of the Company. Based upon the information
known to date, management believes that the Company has appropriately accrued in
its financial statements for its share of the costs of the clean-ups at all the
above mentioned sites. The Company is also a PRP, or has been notified of claims
made against it, at an environmental clean-up site in Huguenot, New York. At
this time, management cannot estimate the amount of the Company's potential
liability, if any, for clean-up costs in connection with this site but does not
anticipate that this matter or any other contingent matters will have a material
adverse impact on the Company's financial condition, liquidity or results of
operations.
Management is not now aware of any commitments, contingencies or events
within the Company's control which may significantly change its ability to
generate sufficient cash from internal or external sources to meet its needs.
ACQUISITIONS
During the last few months, the Company has acquired three businesses which
are expected to have a substantial positive impact on the Company. On October
20, 1999, the Company acquired Marshall Industries, one of the world's largest
distributors of electronic components and computer products, for a combination
of cash and Avnet stock. Holders of Marshall common stock who elected to receive
all Avnet common stock in the transaction received 0.82063 of a share of Avnet
common stock for each share of Marshall common stock and cash in lieu of any
fractional shares. The other holders of Marshall common stock received the
following in exchange for each share of Marshall common stock: (1) $22.91835 in
cash, (2) 0.33839 of a share of Avnet common stock and (3) cash in lieu of any
fractional share interest. The exchange ratio as well as the price paid for
fractional shares was based on the $42.7719 average closing price of Avnet
common stock on the New York Stock Exchange for the twenty (20) consecutive
trading days ending on October 12, 1999. The total cost of the acquisition of
Marshall including estimated expenses was approximately $741.8 million,
consisting of the cost for the Marshall shares of $326.8 million in cash, $269.3
million in Avnet stock and $7.0 million in Avnet stock options (net of related
tax benefits of $4.8 million) as well as $11.5 million for direct transaction
expenses and $127.2 million for the refinancing of Marshall net debt. The above
dollar value of Avnet stock reflects the issuance of 6,817,943 shares of Avnet
stock valued at an assumed price of $39.50 based on the average closing price of
Avnet common stock for a period commencing two trading days before and ending
two trading days after October 12, 1999, the day on which the exchange ratio for
the Avnet stock component of the purchase price was determined pursuant to the
merger agreement.
On October 14, 1999, the Company acquired 94% of the SEI Macro Group, an
electronics components distributor headquartered in the United Kingdom, and
during the second quarter of fiscal 2000 acquired 16% of Eurotronics B.V. (which
does business under the name SEI), a pan-European electronics components
distributor headquartered in the Netherlands. On January 3, 2000, the Company
completed its acquisition of
15
<PAGE> 17
the SEI Macro Group and Eurotronics B.V. The combined annual sales of
Eurotronics and the SEI Macro Group are approximately $750 million.
To capitalize on growing world markets for electronic components and
computer products, the Company has pursued and expects to continue to pursue
strategic acquisitions to expand its business. Management believes that the
Company has the ability to generate sufficient capital resources from internal
or external sources in order to continue its expansion program. In addition, as
with past acquisitions, management does not expect that future acquisitions will
materially impact the Company's liquidity.
MARKET RISKS
Certain of the Company's operations, primarily its international
subsidiaries, occasionally purchase and sell products in currencies other than
their functional currencies. This subjects the Company to the risks associated
with fluctuations of foreign currency exchange rates. The Company reduces this
risk by utilizing natural hedging (offsetting receivables and payables) as well
as by creating offsetting positions through the use of derivative financial
instruments, primarily forward foreign exchange contracts with maturities of
less than sixty days. The market risk related to the foreign exchange contracts
is offset by the changes in valuation of the underlying items being hedged. The
amount of risk and the use of derivative financial instruments described above
is not material to the Company's financial position or results of operations. As
of February 11, 2000, approximately 36% of the Company's outstanding debt was in
fixed rate instruments and 64% was subject to variable short-term interest
rates. Accordingly, the Company will be impacted by any change in short-term
interest rates. The Company does not hedge either its investment in its foreign
operations or its floating interest rate exposures.
THE YEAR 2000 ISSUE
As reported in the Company's prior filings, the Company was engaged in
modifying its computer systems and applications which use two-digit fields to
designate a year ("Year 2000 Issue"). The Company engaged outside consulting
firms and utilized its internal resources to perform a comprehensive remediation
of the Company's computer systems before the Year 2000. The Company has incurred
costs of approximately $17 million in these remediation efforts. As of the date
of this report, neither the Company, nor to its knowledge, any of its major
customers or suppliers, have experienced any significant disruption of business
due to Year 2000 issues.
THE EURO
Effective on January 1, 1999, a single European currency (the "Euro") was
introduced and certain member countries of the European Union established fixed
conversion rates between their existing national currencies and the Euro. The
participating countries adopted the Euro as their common legal currency on that
date, and during the transition period through January 1, 2002 either the Euro
or the participating country's national currency will be accepted as legal
currency. The Company is addressing the issues raised by the introduction of the
Euro including, among other things, the potential impact on its internal
systems, tax and accounting considerations, business issues and foreign exchange
rate risks. Although management is still evaluating the impact of the Euro,
management does not anticipate, based upon information currently available, that
the introduction of the Euro will have a material adverse impact on the
Company's financial condition or results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Note 1 to the Consolidated Financial Statements included in the
Company's Annual Report on Form 10-K for the year ended July 2, 1999 and the
"Liquidity and Capital Resources" section of the MD&A in Item 2 of this Form
10-Q.
16
<PAGE> 18
PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
I. (a) A Special Meeting of Shareholders was held on October 19, 1999.
(b) Not applicable. The Special Meeting did not involve the election of
directors.
(c) The shareholders of the Company were asked to vote upon a proposal to
adopt the Amended and Restated Agreement and Plan of Merger dated as of
June 25, 1999 between the Company and Marshall Industries pursuant to
which Marshall Industries would merge into the Company and the Company
would be the surviving corporation. The proposal was adopted by the
shareholders as follows:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
---------- ------- -------
<S> <C> <C>
24,903,846 119,113 47,989
</TABLE>
(d) Not applicable.
II. (a) The 1999 Annual Meeting of Shareholders of the Company was held on
November 22, 1999.
(b) Not required. Proxies were solicited by the Company pursuant to
Regulation 14A under the Securities Exchange Act of 1934, and no
solicitation in opposition to management's nominees for the board of
directors was made. All of the nominees were elected.
(c) The shareholders of the Company were asked to vote upon (i) a proposal
to approve and adopt an amendment to the 1994 Avnet Incentive Stock
Program, (ii) a proposal to approve and adopt the Avnet 1999 Stock
Option Plan, (iii) ratification of the appointment of Arthur Andersen
LLP as independent auditors for fiscal year 2000, and (iv) election of
directors. All proposals were adopted by the shareholders by the
following votes:
<TABLE>
<CAPTION>
MATTER FOR AGAINST ABSTAIN
------ ---------- --------- ---------
<S> <C> <C> <C>
Approve and adopt an amendment to the 1994 Avnet
Incentive Stock Program........................ 23,241,814 1,080,675 550,893
Approve and adopt the Avnet 1999 Stock Option
Plan........................................... 18,387,801 5,937,686 547,895
Ratification of the appointment of Arthur
Andersen LLP as independent auditors........... 28,553,783 131,509 47,741
</TABLE>
<TABLE>
<CAPTION>
ELECTION OF DIRECTORS: FOR WITHHELD
---------------------- ---------- ---------
<S> <C> <C> <C>
Eleanor Baum..................................... 28,612,254 120,779
J. Veronica Biggins.............................. 28,607,099 125,934
Joseph F. Caligiuri.............................. 20,993,795 7,739,238
Lawrence W. Clarkson............................. 28,610,175 122,858
Ehud Houminer.................................... 28,616,811 116,222
James A. Lawrence................................ 28,614,892 118,141
Salvatore J. Nuzzo............................... 28,611,741 121,292
Frederic Salerno................................. 28,619,129 113,904
Roy Vallee....................................... 28,620,951 112,082
Frederick S. Wood................................ 28,609,816 123,217
</TABLE>
(d) Not applicable.
17
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
A. Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <S>
2. Amended and Restated Agreement and Plan of Merger dated as
of June 25, 1999, between the Company and Marshall
Industries (incorporated herein by reference to Appendix A
to the Joint Proxy Statement/Prospectus included in the
Company's Registration Statement on Form S-4, Registration
Number 333-86721).
3A. Restated Certificate of Incorporation of the Company
(incorporated herein by reference to the Company's Current
Report on Form 8-K bearing cover date of May 6, 1999,
Exhibit 3(i)(b)).
3B. By-Laws of the Company (incorporated herein by reference to
the Company's Current Report on Form 8-K bearing cover date
of February 12, 1996, Exhibit 3(ii)).
4. Note: The total amount of securities authorized under any
instrument which defines the rights of holders of the
Company's long-term debt does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated
basis. Therefore, none of such instruments are required to
be filed as exhibits to this Report. The Company agrees to
furnish copies of such instruments to the Commission upon
request.
27. Financial Data Schedule (electronic filing only).
</TABLE>
B. Reports on Form 8-K
The Company filed the following Current Reports on Form 8-K during the
quarter for which this report is filed: (i) Current Report on Form 8-K bearing
cover date of October 20, 1999 whereby the Company reported under Items 2 and 7
that it had completed its acquisition of Marshall Industries; and (ii) Current
Report on Form 8-K bearing cover date of December 22, 1999 whereby the Company
filed under Item 5 certain pro forma financial information relating to the
acquisition of Marshall Industries by the Company.
18
<PAGE> 20
SIGNATURES
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)
By: /s/ RAYMOND SADOWSKI
------------------------------------
Raymond Sadowski
Senior Vice President, Chief
Financial Officer and
Assistant Secretary
By: /s/ JOHN F. COLE
------------------------------------
John F. Cole
Controller and Principal Accounting
Officer
February 14, 2000
- -------------------
Date
19
<PAGE> 21
EXHIBIT INDEX
DESCRIPTION
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<C> <S>
2. Amended and Restated Agreement and Plan of Merger dated as
of June 25, 1999, between the Company and Marshall
Industries (incorporated herein by reference to Appendix A
to the Joint Proxy Statement/Prospectus included in the
Company's Registration Statement on Form S-4, Registration
Number 333-86721).
3A. Restated Certificate of Incorporation of the Company
(incorporated herein by reference to the Company's Current
Report on Form 8-K bearing cover date of May 6, 1999,
Exhibit 3(i)(b)).
3B. By-Laws of the Company (incorporated herein by reference to
the Company's Current Report on Form 8-K bearing cover date
of February 12, 1996, Exhibit 3(ii)).
4. Note: The total amount of securities authorized under any
instrument which defines the rights of holders of the
Company's long-term debt does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated
basis. Therefore, none of such instruments are required to
be filed as exhibits to this Report. The Company agrees to
furnish copies of such instruments to the Commission upon
request.
27. Financial Data Schedule (electronic filing only).
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-03-1999
<PERIOD-END> DEC-31-1999
<CASH> 71,529
<SECURITIES> 0
<RECEIVABLES> 1,434,155
<ALLOWANCES> 35,814
<INVENTORY> 1,624,726
<CURRENT-ASSETS> 3,178,951
<PP&E> 571,642
<DEPRECIATION> 307,474
<TOTAL-ASSETS> 4,392,438
<CURRENT-LIABILITIES> 1,592,130
<BONDS> 1,069,202
0
0
<COMMON> 45,048
<OTHER-SE> 1,686,058
<TOTAL-LIABILITY-AND-EQUITY> 4,392,438
<SALES> 3,757,094
<TOTAL-REVENUES> 3,757,094
<CGS> 3,243,622
<TOTAL-COSTS> 3,664,491
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,600
<INCOME-PRETAX> 67,823
<INCOME-TAX> 30,545
<INCOME-CONTINUING> 37,278
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,278
<EPS-BASIC> 0.98
<EPS-DILUTED> 0.97
</TABLE>
