<PAGE> 1
As Filed Pursuant to Rule 424(b)(5)
Registration No. 333-39530
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS ARE NOT AN OFFER TO SELL THESE SECURITIES
AND ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 4, 2000
PROSPECTUS SUPPLEMENT
-----------------------------------
(To Prospectus dated September 29, 2000)
$
[AVNET LOGO] AVNET, INC.
% NOTES DUE 200
----------------------
Avnet will pay interest on the notes on and of each
year, beginning , 2001. The notes will mature on , 200 .
Avnet may not redeem the notes before maturity.
The notes will be unsecured and will rank equally with Avnet's other
unsecured senior indebtedness. We will issue the notes only in registered form
in denominations of $1,000.
----------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public offering price(1)............................... % $
Underwriting discount.................................. % $
Proceeds, before expenses, to Avnet.................... % $
</TABLE>
(1) Plus accrued interest from , 2000 if settlement occurs
after that date.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The notes will be ready for delivery in book-entry form only through The
Depository Trust Company on or about , 2000.
----------------------
MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC CHASE SECURITIES INC.
ABN AMRO INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
FLEET SECURITIES, INC.
----------------------
The date of this prospectus supplement is , 2000.
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements.................................. S-2
Use of Proceeds............................................. S-3
Capitalization.............................................. S-4
Selected Financial Data..................................... S-5
Business.................................................... S-6
Description of the Notes.................................... S-10
Underwriting................................................ S-13
Legal Matters............................................... S-14
PROSPECTUS
About this Prospectus....................................... 3
The Company................................................. 4
Ratios of Earnings to Fixed Charges......................... 4
Use of Proceeds............................................. 5
Description of Debt Securities.............................. 5
Description of Common Stock................................. 14
Description of Warrants..................................... 17
Description of Stock Purchase Contracts and Stock Purchase
Units..................................................... 19
Description of Units........................................ 19
Plan of Distribution........................................ 20
Legal Matters............................................... 21
Experts..................................................... 21
Where You Can Find More Information......................... 22
</TABLE>
------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus supplement and the accompanying
prospectus is accurate only as of the date on the front cover of this prospectus
supplement. Our business, financial condition, results of operations and
prospects may have changed since that date.
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the attached prospectus contain or
incorporate by reference forward-looking statements with respect to Avnet's
financial condition, results of operations and business. You can find many of
these statements by looking for words like "believes," "expects," "anticipates,"
"estimates" or similar expressions.
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.
S-2
<PAGE> 3
- General economic or business conditions, domestic and foreign, may be
less favorable than 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 prospectus supplement.
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.
USE OF PROCEEDS
We estimate that the net proceeds to Avnet from the sale of the notes will
be about $ after deducting the underwriting discounts and the estimated
expenses of this offering. We intend to use all of these net proceeds to fund
Avnet's purchase of the European operations of the VEBA Electronics Group. See
"Business -- Recent Developments." If the acquisition of the European operations
of the VEBA Electronics Group is not completed, we intend to use all of the net
proceeds from this offering to repay commercial paper and other short-term
indebtedness. Pending such use, we may invest the net proceeds temporarily in
short-term securities. At September 29, 2000, the weighted average interest rate
on Avnet's outstanding commercial paper was approximately 6.86%. Avnet may issue
additional commercial paper for general corporate purposes, such as capital
expenditures, acquisitions, repurchases of Avnet's common stock, and working
capital.
Depending on market conditions, the financial needs of Avnet and other
factors, we may, from time to time, undertake additional financings. We cannot
at this time predict the precise amount and timing of such financings, if any,
but we do anticipate issuing equity or equity-linked securities within six
months following the completion of our acquisition of the European operations of
the VEBA Electronics Group.
S-3
<PAGE> 4
CAPITALIZATION
The following table sets forth the consolidated capitalization and
short-term debt of Avnet at June 30, 2000, and as adjusted to reflect (1) the
sale of the notes in this offering and the application of the net proceeds and
additional short-term borrowings to fund the purchase of the European operations
of the VEBA Electronics Group (see "Business -- Recent Developments"), and (2)
the equity which Avnet issued and the debt it assumed in connection with its
acquisition of Savoir Technology Group, Inc. on July 3, 2000. You should read
this table together with Avnet's audited and unaudited financial statements that
are incorporated by reference in this prospectus supplement. See "Where You Can
Find More Information" in the attached prospectus.
<TABLE>
<CAPTION>
JUNE 30, 2000
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS)
<S> <C> <C>
Short-term debt(1).......................................... $ 499.3 $
-------- --------
Long-term debt, less amounts due within one year:
Commercial paper.......................................... 80.8 80.8
6.45% Notes due August 15, 2003........................... 200.0 200.0
6 7/8% Notes due March 15, 2004........................... 100.0 100.0
7 7/8% Notes due February 15, 2005(2)..................... 360.0 360.0
% Notes due , 200 offered hereby............. --
Bank credit facilities.................................... 689.7 689.7
Other..................................................... 8.1 12.0
-------- --------
Total long-term debt........................................ 1,438.6
-------- --------
Total debt.................................................. 1,937.9
-------- --------
Shareholders' equity:
Common stock, $1.00 par value............................. 90.8 92.1
Additional paid-in capital................................ 309.6 356.8
Retained earnings......................................... 1,616.7 1,616.7
Cumulative translation adjustments........................ (54.6) (54.6)
Valuation adjustments..................................... 2.3 2.3
Treasury stock, at cost................................... (62.8) (0.5)
-------- --------
Total shareholders' equity.................................. 1,902.0 2,012.8
-------- --------
Total capitalization........................................ $3,839.9 $
======== ========
</TABLE>
---------------
(1) Short-term debt includes commercial paper which is backed by a credit
facility which expires within twelve months following June 30, 2000.
(2) Does not reflect original issue discount of $1.5 million which represents
the difference between the face amount of the notes and the price paid by
the public.
S-4
<PAGE> 5
SELECTED FINANCIAL DATA
We have derived the selected financial data below from the consolidated
financial statements of Avnet. We refer you to those financial statements and
accompanying notes that appear in the documents incorporated by reference in
this prospectus supplement. Earnings per share data and shares used to compute
earnings per share in the table and footnotes below have been restated to
reflect a two-for-one split of Avnet's common stock distributed on September 28,
2000, to shareholders of record on September 18, 2000.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------
JUNE 28, JUNE 27, JUNE 26, JULY 2, JUNE 30,
1996 1997 1998(1) 1999(2) 2000(3)
-------- -------- -------- -------- --------
(IN MILLIONS EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.......................................... $5,207.8 $5,390.6 $5,916.3 $6,350.0 $9,172.2
Cost of sales.................................. 4,238.7 4,428.8 4,935.9 5,401.4 7,883.7
-------- -------- -------- -------- --------
Gross profit................................... 969.1 961.8 980.4 948.6 1,288.5
Operating expenses............................. 620.1 634.1 709.2 775.4 954.5
-------- -------- -------- -------- --------
Operating income............................... 349.0 327.7 271.2 173.2 334.0
Interest expense............................... (25.9) (26.1) (40.0) (52.1) (84.3)
Other income, net.............................. 2.0 11.8 2.3 1.9 4.8
Gain on dispositions of businesses............. -- -- 33.8 252.3 --
-------- -------- -------- -------- --------
Income before income taxes..................... 325.1 313.4 267.3 375.3 254.5
Income taxes................................... 136.8 130.6 115.9 200.8 109.4
-------- -------- -------- -------- --------
Net income..................................... $ 188.3 $ 182.8 $ 151.4 $ 174.5 $ 145.1
======== ======== ======== ======== ========
Earnings per share(4):
Basic........................................ $ 2.17 $ 2.15 $ 1.92 $ 2.45 $ 1.77
======== ======== ======== ======== ========
Diluted...................................... $ 2.15 $ 2.12 $ 1.90 $ 2.43 $ 1.75
======== ======== ======== ======== ========
Shares used to compute earnings per share:(4)
Basic........................................ 86.7 85.2 78.8 71.2 82.2
======== ======== ======== ======== ========
Diluted...................................... 87.4 86.1 79.6 71.8 83.1
======== ======== ======== ======== ========
BALANCE SHEET DATA AT END OF PERIOD:
Working capital................................ $1,293.9 $1,319.0 $1,461.3 $1,517.5 $1,969.5
Total assets................................... 2,521.7 2,594.1 2,733.7 2,984.7 5,244.4
Long-term debt................................. 497.2 514.4 810.7 791.2 1,438.6
Shareholders' equity........................... 1,505.2 1,502.2 1,315.9 1,397.6 1,902.0
</TABLE>
---------------
(1) Includes the net negative impact of $14.9 million on income before income
taxes and $12.5 million on net income ($0.16 per share on a diluted basis)
for (a) the gain on the sale of Channel Master of $33.8 million pre-tax and
$17.2 million after-tax, (b) costs relating to the divesture of Avnet
Industrial, the closure of Avnet's corporate headquarters in Great Neck, New
York, and the anticipated loss on the sale of Avnet-owned real estate,
amounting to $13.3 million pre-tax and $8.5 million after-tax, and (c)
incremental special charges associated with the reorganization of EM,
amounting to $35.4 million pre-tax and $21.2 million after-tax.
(2) Includes the net gain on exiting the printed catalog business recorded in
the fourth quarter of fiscal 1999 offset by special charges recorded in the
first quarter associated with the reorganization of EM. The net positive
effect on fiscal 1999 income before income taxes, net income and diluted
earnings per share was $183.0 million, $64.0 million, and $0.89,
respectively.
S-5
<PAGE> 6
(3) Includes special charges associated with: (a) the integration of Marshall
Industries, Eurotronics B.V. (SEI) and the SEI Macro Group into EM, (b) the
integration of JBA Computer Solutions into Computer Marketing 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 Avnet. The effect of the special charges for fiscal
2000 amounted to $49.0 million on income before income taxes, $30.4 million
on net income and $0.37 per share on a diluted basis.
(4) Earnings per share have been restated to conform with the provisions of SFAS
No. 128, "Earnings Per Share."
BUSINESS
Avnet, Inc., a New York corporation, together with its subsidiaries, is one
of the world's largest industrial distributors of electronic components and
computer products, with sales in fiscal 2000 of $9.17 billion. Avnet is a vital
link in the chain that connects suppliers of semiconductors, interconnect
products and passive and electromechanical devices to original equipment
manufacturers ("OEMs") and contract manufacturers that design and build the
electronic equipment for end-market use, and to other industrial customers. In
addition, Avnet distributes a variety of computer products and services to both
the end user and the reseller channels. Through its electronic components
distribution activities, Avnet acts as an extension of a supplier's sales force
by marketing products to a larger base of customers than individual suppliers
could do economically. While many suppliers can only serve a few hundred of the
larger OEMs and contract manufacturers, Avnet is authorized to sell products of
more than 100 of the world's leading component manufacturers to a global
customer base of approximately 100,000 OEMs and contract manufacturers. We ship
electronic components as we receive them from Avnet's suppliers or with assembly
or other value added. As part of our distribution activities, we add various
processes that customize products to meet individual OEM customer
specifications, and we provide material management and logistic services.
In order to better focus on our core business and to capitalize on growing
world markets for electronic components and computer products, we have pursued
and continue to pursue strategic acquisitions with a focus on international
expansion. Since June 1991, Avnet has completed 35 acquisitions, including the
acquisition of Savoir Technology Group, Inc. completed in July 2000 after the
end of Avnet's fiscal year 2000. During Avnet's last three fiscal years, it
completed 16 acquisitions: six in Europe; five in the Asia/ Pacific region;
three in North America; one in the Middle East and one in South America.
The acquisitions completed in fiscal 2000 included the acquisition in
October 1999 of Marshall Industries and its wholly-owned subsidiary Sterling
Electronics, then the largest acquisition in the history of electronics
distribution. Marshall Industries was one of the world's largest distributors of
electronic components and computer products. Marshall Industries had sales of
$1.72 billion in its last full fiscal year ended May 31, 1999. This acquisition
made Avnet's Electronics Marketing group the largest electronic components
distribution business in the Americas, with fiscal 2000 sales of $6.64 billion.
The acquisition of Marshall Industries strengthened Avnet's line card and
provides Avnet with a significant opportunity to enhance its operational
efficiency with significant cost savings.
Currently, Avnet has approximately 11,500 employees globally and maintains
locations throughout the United States, Canada, Mexico, Europe, Asia, Australia,
New Zealand, South Africa and South America. In fiscal 2000, Avnet derived
approximately 27% of its sales from operations outside of North America as
compared with 23% in fiscal 1999. At the same time, Avnet disposed of those
operations which we concluded were outside of Avnet's core business, including
the disposition in July 1999 of Allied Electronics, a distributor by way of a
printed catalog of active and passive electronic components, test equipment and
electronic equipment, and the disposition in 1998 of Avnet's Channel Master
business, the sole remaining operation in Avnet's former Video Communications
Group.
S-6
<PAGE> 7
On January 3, 2000, Avnet completed its acquisition of the SEI Macro Group,
an electronic components distributor headquartered in the United Kingdom, and
Eurotronics B.V. (which did business under the name SEI), a pan-European
electronic components distributor headquartered in the Netherlands. The combined
annual sales of Eurotronics B.V. and the SEI Macro Group were approximately $750
million in the fiscal year prior to acquisition.
RECENT DEVELOPMENTS
On August 7, 2000, after the end of fiscal 2000, Avnet entered into an
agreement to purchase part of the VEBA Electronics Group from Germany-based E.On
AG (formerly VEBA AG) for a cash purchase price of approximately $740 million,
including the assumption of debt. Under the terms of the agreement, Avnet will
acquire (a) the Munich, Germany-headquartered EBV Group, comprised of EBV
Elektronik and WBC, both pan-European semiconductor distributors, and Atlas
Services Europe, logistics provider for the EBV Group; and (b) the Nettetal,
Germany-based RKE Systems, a computer products and services distributor. The
combined companies being acquired from E.On AG reported calendar 1999 sales of
approximately $1.8 billion using average exchange rates for calendar 1999. We
currently expect to complete this acquisition during the fiscal quarter ended
December 29, 2000, subject to receipt of necessary governmental approvals. See
"Use of Proceeds."
ORGANIZATIONAL STRUCTURE
Effective as of the beginning of fiscal 1999 (June 27, 1998), we changed
our organizational structure to strengthen our focus on our core businesses and
to better meet the needs of both our customers and our suppliers. Avnet
currently consists of three major operating groups: Electronics Marketing
("EM"), Computer Marketing ("CM") and Avnet Applied Computing ("AAC").
ELECTRONICS MARKETING ("EM")
Electronics Marketing is Avnet's largest operating group, with fiscal 2000
sales of $6.64 billion, representing approximately 72.4% of Avnet's consolidated
sales. EM is comprised of three regional operations: EM Americas, which had
sales of $4.69 billion in fiscal 2000, or approximately 51.1% of Avnet's
consolidated sales; EM EMEA (Europe, Middle East and Africa), which had sales of
$1.55 billion in fiscal 2000, or approximately 16.9% of Avnet's consolidated
sales; and EM Asia, which had sales of $0.40 billion in fiscal 2000, or
approximately 4.4% of Avnet's consolidated sales.
As part of Avnet's overall reorganization effective at the beginning of
fiscal 1999, we reorganized EM Americas to provide more value to our customers
and suppliers through increased product specialization, and to provide focused
services to our customers through a single account manager. Immediately before
the reorganization, EM Americas consisted primarily of four business
units -- Hamilton Hallmark, Time Electronics, Penstock and Allied Electronics
(as stated above, Allied Electronics was sold in July 1999).
In the EM Americas reorganization, the sales forces of Hamilton Hallmark,
Time Electronics and Penstock were combined. Through a single account manager,
customers now have complete access to the products and services of Avnet's core
distribution business, including those of the former Hamilton Hallmark, Time
Electronics and Penstock divisions, as well as complete access to the following
global brands (services):
- Core Value Services -- Focuses on the transactional needs of the
traditional electronic components distribution market, offering one of
the industry's broadest line cards and convenient one-stop shopping with
an emphasis on on-time delivery, responsiveness and quality.
- Avnet Design Services -- Provides an array of engineering and technical
services for customers, including turnkey logic designs, reference
designs and product designs, and demand creation services for suppliers.
- Avnet Integrated Material Services -- Provides customer-specific
materials management, including leading-edge, information
technology-based services, and pin-point logistics. Integrated Material
S-7
<PAGE> 8
Services develops and implements innovative materials management
solutions for EM's major customers and their contract manufacturers.
These Avnet global brands offer focused services and unique financial
models in the other two EM geographic regions (EM EMEA and EM Asia) as well as
in EM Americas.
In addition, the EM Americas reorganization has created product business
groups which specialize in the various product categories that we sell as
opposed to being organized along individual supplier lines. There are currently
three product business groups which are responsible for purchasing, inventory
management, supplier relationships and product marketing: (1) Semiconductor; (2)
Interconnect, Passive and Electromechanical; and (3) Radio Frequency and
Microwave. EM has reorganized its EM EMEA and EM Asia/Pacific operations along
similar lines to more effectively position itself as a true global distributor.
EM EMEA, the second largest distributor of electronic components in Europe
as measured by sales, distributes semiconductors, interconnect, passive and
electromechanical devices, and technical communication products in 40 western
and eastern European countries, South Africa and Israel. It also provides the
full range of value-added services associated with the products it sells through
Avnet Integrated Material Services and Avnet Design Services.
EM EMEA has completed its reorganization and has opened its new central
European warehouse in Tongeren, Belgium. The facility will be the primary source
for inventory shipments throughout Europe. Also, small proximity warehouses will
continue to operate in certain locations to satisfy customer requirements. The
new operating structure for EM EMEA is made possible by the functionality
provided by Avnet's multi-lingual, multi-currency client/server based SAP
computer system which operates on a wide area network throughout Europe.
EM Asia is a value-added distributor of electronic components and services
in 10 Asian countries and Australia and New Zealand. All the EM Asia operations
have complete access to the products and services provided by the Avnet global
brands. In July 1999, following the successful implementation of their SAP
computer system, the companies comprising EM Asia began operating as an
integrated business unit headed by Avnet Asia Pte Ltd., with its regional
headquarters and centralized warehouse in Singapore. In December 1999, Avnet
acquired the business of Korea-based Cosco Electronics/Jung Kwang, electronics
component distribution companies.
COMPUTER MARKETING ("CM")
Computer Marketing is an international distributor of computer products to
value-added resellers and end users focusing primarily on middle- to high-end,
value-added computer products and services. CM's fiscal 2000 sales were $1.86
billion, representing approximately 20.3% of Avnet's consolidated sales. CM
consists of three major business units -- Hall-Mark Global Solutions (re-branded
Avnet Computer Marketing, Hall-Mark Division on July 3, 2000), Avnet Computer
(re-branded Avnet Computer Marketing, Enterprise Solutions Division), and Avnet
Computer Marketing, Convergent Technologies Division.
Hall-Mark Global Solutions concentrates on sales of computer systems,
peripherals and components to the reseller channel. We believe that Hall-Mark
Global Solutions is the industry's leading technical distributor of open systems
that support a limited line card of the foremost computer and peripherals
manufacturers, which include Compaq, Hewlett-Packard, IBM and Intel. Hall-Mark
Global Solutions provides those manufacturers' products to value-added
resellers, along with complementary value-added solutions and in-house
engineering support, complex systems integration and configuration services.
Avnet Computer sells industry leading high-end systems, mid-range servers,
workstations, PCs, software, storage, networking, peripherals and services to
end-user customers. Avnet Computer is a technology solutions integrator,
providing hardware, software and services for corporate-wide infrastructure
needs. Avnet Computer leverages its array of financial, acquisition and
technical services to bring value to
S-8
<PAGE> 9
businesses intent on managing their total cost of technology
infrastructure -- from the data center, through the network, to the desktop.
Convergent Technologies is a distributor of point-of-sale systems including
bar-code scanning, automatic identification systems and wireless computing
technologies integrated with local area networks. It markets to North America
value added resellers.
During 1998, CM expanded its operations into Europe by starting an
operation in Germany and then expanding its European operations into Austria,
Switzerland, Poland, The Czech Republic, Belgium and Hungary. It further
expanded its international operations by completing a number of
acquisitions -- Bytech Systems Ltd. in the United Kingdom in May 1998, Integrand
Solutions in Australia in July 1999, and PCD Italia S.r.1. and Matica S.p.A. in
Italy in November 1999. CM strengthened its focus on the IBM product line with
the January 1999 acquisition of the JBA Computer Solutions Division of JBA
International and the July 2000 acquisition of Savoir Technology Group, Inc.
Savoir was one of the leading distributors of IBM mid-range server products in
the Americas with calendar 1999 sales of $767 million.
AVNET APPLIED COMPUTING ("AAC")
In October 1999, Avnet Applied Computing began operations in the Americas
as a separate group. AAC was created from portions of Electronics Marketing (OEM
Systems Product Business Group and Personal Computer Components) and Computer
Marketing (Hall-Mark Computer Components). AAC focuses on the unique
requirements of the OEM market for computing technology. AAC's fiscal 2000 sales
were $670.5 million, representing approximately 7.3% of Avnet's consolidated
sales. AAC consists of three major business segments -- Applied Computing
Components, which serves the needs of manufacturers of general purpose
computers, Applied Computing Solutions, which provides design, integration,
marketing and financial services to developers of application specific computer
solutions, and Applied Computer Enabling Technologies, which serves systems
integrators. Applied Computing Components focuses on personal computer OEMs and
system integrators by providing leading-edge technology 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.
LOCATIONS AND MAJOR PRODUCTS
One of Avnet's critical strengths is the breadth and quality of the
suppliers whose products it distributes. Listed below are the major product
categories and the approximate sales in fiscal 2000, the percentage of Avnet's
consolidated sales and the major suppliers in each category:
- Semiconductors: Sales of semiconductors in fiscal 2000 were
approximately $5.83 billion, or 64% of consolidated sales. Avnet's major
suppliers of semiconductors are Advanced Micro Devices, Agilent
Technologies, Analog Devices, Hitachi, Integrated Device Technology,
Intel, Intersil, LSI Logic, Micron Semiconductors, Motorola, National
Semiconductor, ON Semiconductor, Philips, Texas Instruments and Xilinx.
- Computer Products: Sales of computer products in fiscal 2000 from all of
Avnet's business units were approximately $2.10 billion, or 23% of
consolidated sales. Our major suppliers of computer products are
Cabletron, Compaq Computer Corporation, Computer Associates,
Hewlett-Packard, IBM, Intel, Oracle and Wyse Technology.
- Connectors: Sales of connector products in fiscal 2000 were
approximately $0.63 billion, or 7% of consolidated sales. Our major
suppliers of connectors are AMP, Amphenol, AVX, ITT Cannon, Molex, T&B
and 3M.
- Passives, Electromechanical and Other: Sales of passives,
electromechanical and other products in fiscal 2000 were approximately
$0.61 billion, or 6% of consolidated sales. Our major suppliers of these
products are Aromat, Artesyn Technologies, AVX, Bourns, ITT/C&K, Kemet,
Murata, Pulse and Vishay.
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<PAGE> 10
Most of Avnet's product lines are covered by nonexclusive distributor
agreements with suppliers, cancelable upon 30 to 180 days notice. Most of these
agreements provide for the periodic return to the supplier of obsolete inventory
and the return of all standard inventory upon termination of the contract.
The combined sales for EM, CM and AAC by major product class for the last
three years were as follows:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
--------------------------------
JUNE 30, JULY 2, JUNE 26,
2000 1999 1998
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Semiconductors....................................... $5,827.8 $3,573.1 $3,223.0
Computer products.................................... 2,102.9 1,731.0 1,589.1
Connectors........................................... 632.3 437.9 506.2
Other (primarily passives and electromechanical
devices)........................................... 609.2 608.0 559.6
-------- -------- --------
$9,172.2 $6,350.0 $5,877.9
======== ======== ========
</TABLE>
As of June 30, 2000, Avnet had about 184 locations in the United States,
Canada, Mexico, Europe, the Middle East, South Africa, South America, and the
Asia/Pacific region, many of which contain sales, warehousing and administrative
functions for multiple business units. Avnet also has a small number of stores
in customers' facilities. Avnet sells to customers in 60 countries.
DESCRIPTION OF THE NOTES
Avnet will issue the notes in this offering under an indenture dated as of
, 2000, between Avnet and Bank One Trust Company, NA, as trustee
(the "Indenture"). The following description of the notes, together with the
description of the general terms of Avnet's Debt Securities in the attached
prospectus, is a summary of all the material provisions of the notes and the
Indenture but does not include all the provisions of the Indenture. We urge you
to read the Indenture because it fully defines the rights of holders of the
notes. You may obtain a copy of the Indenture without charge. See "Where You Can
Find More Information" in the attached prospectus.
GENERAL
The notes initially will be limited to $ aggregate principal
amount, will be issued only in fully registered form in denominations of $1,000
and integral multiples of $1,000, will bear interest from , 2000, at
the annual rate set forth on the cover page of this prospectus supplement, and
will mature on , 200 . Avnet will pay interest twice a year on
and of each year, beginning , 2001, to the persons
in whose names the notes (or any predecessor notes) are registered in the
security register at the close of business on the applicable regular record
date, which is the or next preceding such interest payment date. Avnet
will have the ability to reopen the series of notes and issue additional notes
of the series. Avnet will not be able to redeem the notes before their stated
maturity date, and the notes do not provide for any sinking fund.
The notes will be unsecured obligations and will rank equally with Avnet's
other present and future unsecured senior indebtedness, which amounted to $1.22
billion at June 30, 2000. The notes will not be guaranteed by any of Avnet's
subsidiaries and so will be effectively subordinated to all of the debt of these
subsidiaries, which amounted to $718.1 million at June 30, 2000. Substantially
all of the debt of Avnet's subsidiaries has been incurred by foreign
subsidiaries, primarily to fund their working capital.
The notes will be subject to defeasance and discharge and to defeasance of
certain obligations as described in the attached prospectus under the caption
"Description of Debt Securities -- Defeasance and Discharge."
S-10
<PAGE> 11
DEPOSITARY
The notes will be issued in the form of one or more fully registered global
certificates (the "Global Notes"). Avnet will deposit each Global Note with, or
on behalf of, The Depository Trust Company (the "Depositary") as the securities
depositary, registered in the name of the Depositary or its nominee, Cede & Co.
Unless and until a Global Note is exchanged in whole or in part for Notes in
definitive form, such Global Note may not be transferred except as a whole by
the Depositary to a nominee of the Depositary, or by such a nominee to the
Depositary or another nominee of the Depositary, or by the Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor.
The Depositary has advised Avnet as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. The Depositary holds securities that its participants ("Participants")
deposit with it and also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in accounts of the
Participants, thereby eliminating the need for physical movement of securities
certificates. The Depositary's Participants include securities brokers and
dealers (including the underwriters in this offering of notes), banks, trust
companies, clearing corporations and other similar organizations. The Depositary
is owned by a number of its Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the Depositary's book-entry system is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to the Depositary and its Participants are on file with the SEC.
Purchases of the notes under the Depositary's system must be made by or
through Participants, which will receive a credit for the notes on the records
of the Depositary. The ownership interest of each actual purchaser of a note (a
"Beneficial Owner") is in turn to be recorded on the Participants' or Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from the Depositary of a purchase, but Beneficial Owners should receive written
confirmations providing details of a purchase, as well as periodic statements of
their holdings, from the Participant or Indirect Participant through which the
Beneficial Owner made the purchase. Ownership of beneficial interests in Global
Notes will be shown on, and the transfers of such ownership interests will be
effected only through, records maintained by the Depositary (with respect to
interests of Participants) and on the records of Participants (with respect to
interests of persons held through Participants). The laws of some states of the
United States may require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to own, transfer or pledge beneficial interests in Global
Notes.
So long as the Depositary or its nominee is the registered owner of a
Global Note, it will be considered the sole owner or holder of the notes
represented by such Global Note for all purposes under the Indenture. Except as
provided below, a Beneficial Owner of a note will not be entitled to have it
registered in his, her or its name, will not receive or be entitled to receive a
certificate evidencing the note, and will not be considered the owner or holder
of the note under the Indenture. Thus, each Beneficial Owner of an interest in a
Global Note must rely on the procedures of the Depositary and, if such
Beneficial Owner is not a Participant, on the procedures of the Participant
through which such Beneficial Owner owns its interest, to exercise any rights of
a holder under the Indenture. Avnet understands that under existing industry
practices, if Avnet requests the Noteholders to take any action, or Beneficial
Owners of interests in a Global Note desire to take any action which Noteholders
are entitled to take under the Indenture, the Depositary would authorize the
Participants holding the relevant interests to take such action, and such
Participants would authorize Beneficial Owners owning through such Participants
to take such action or would otherwise act upon the instruction of Beneficial
Owners. Conveyance of notices and other communications by the Depositary to
Participants, by Participants to Indirect Participants, and
S-11
<PAGE> 12
by Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Principal and interest payments on notes registered in the name of the
Depositary or its nominee will be made to the Depositary or its nominee as the
registered holder of the Global Notes. None of Avnet, the trustee under the
Indenture or any agent of Avnet or of the trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Notes, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. We expect that when the Depositary or its nominee receives
any payment of principal or interest in respect of a Global Note, it will credit
the Participants' accounts with payments in amounts proportionate to their
respective interests in the principal amount of the Global Notes as shown on the
records of the Depositary. We also expect that payments by Participants to
Beneficial Owners will be governed by standing customer instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participants.
If (1) the Depositary is at any time unwilling or unable to continue as
Depositary and Avnet does not appoint a successor Depositary within 60 days, or
(2) Avnet executes and delivers to the trustee under the Indenture an order to
the effect that the Global Notes shall be exchangeable, or (3) an Event of
Default under the Indenture has occurred and is continuing, the Global Note or
Notes will be exchangeable for notes in definitive form of like tenor and of an
equal aggregate principal amount, in denominations of $1,000 and integral
multiples of $1,000. Such definitive notes shall be registered in such name or
names as the Depositary shall instruct the trustee. We expect that such
instructions may be based upon directions received by the Depositary from
Participants with respect to ownership of beneficial interests in Global Notes.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to the financial community for informational
purposes only and is not intended to serve as a representation, warranty or
contract modification of any kind.
S-12
<PAGE> 13
UNDERWRITING
GENERAL
We intend to offer our notes through the underwriters. Merrill Lynch,
Pierce, Fenner & Smith Incorporated is acting as representative of the
underwriters named below. Subject to the terms and conditions in a pricing
agreement between Avnet and the underwriters, Avnet has agreed to sell to the
underwriters, and the underwriters severally have agreed to purchase from Avnet,
the principal amount of the notes set forth opposite their names below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
UNDERWRITER ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $
Banc of America Securities LLC..............................
Chase Securities Inc. ......................................
ABN AMRO Incorporated.......................................
Banc One Capital Markets, Inc. .............................
First Union Securities, Inc. ...............................
Fleet Securities, Inc. .....................................
------------
Total.......................................... $
============
</TABLE>
The underwriters have agreed to purchase all of the notes sold pursuant to
the pricing agreement if any of these notes are purchased. If an underwriter
defaults, the pricing agreement provides that the purchase commitments of the
nondefaulting underwriters may be increased or the pricing agreement may be
terminated.
Avnet has agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments the
underwriters may be required to make in respect of those liabilities.
The underwriters are offering the notes, subject to prior sale, when, as
and if issued to and accepted by them, subject to approval of legal matters by
their counsel, including the validity of the notes and other conditions
contained in the pricing agreement, such as receipt by the underwriters of
officers' certificates and legal opinions. The underwriters reserve the right to
withdraw, cancel or modify offers to the public and to reject orders in whole or
in part.
COMMISSIONS AND DISCOUNTS
The underwriters have advised us that they propose initially to offer the
notes to the public at the public offering price on the cover page of this
prospectus supplement, and to dealers at that price less a concession not in
excess of % of the principal amount of the notes. The underwriters may allow,
and these dealers may reallow, a discount not in excess of % of the principal
amount of the notes to other dealers. After this offering, the public offering
price, concession and discount may be changed.
The expenses of the offering, not including the underwriting discount, are
estimated at $ and are payable by Avnet.
NEW ISSUE OF NOTES
The notes are a new issue of securities with no established trading market.
We do not intend to apply for listing of the notes on any national securities
exchange or for quotation of the notes on any automated dealer quotation system.
We have been advised by the underwriters that they presently intend to make a
market in the notes after the completion of the offering. However, they are
under no obligation to do so and may discontinue any market-making activities at
any time without any notice. We cannot assure the
S-13
<PAGE> 14
liquidity of the trading market for the notes or that an active public market
for the notes will develop. If an active public trading market for the notes
does not develop, the market price and liquidity of the notes may be adversely
affected.
PRICE STABILIZATION AND SHORT POSITIONS
In connection with the offering, the underwriters are permitted to engage
in transactions that stabilize the market price of the notes. Such transactions
consist of bids or purchases to peg, fix or maintain the price of the notes. If
the underwriters create a short position in the notes in connection with the
offering, that is, if they sell more notes than is set forth on the cover page
of this prospectus supplement, the underwriters may reduce that short position
by purchasing notes in the open market. Purchases of a security to stabilize the
price or to reduce a short position could cause the price of the security to be
higher than it might be in the absence of such purchases.
Neither we nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the notes. In addition, neither Avnet
nor any of the underwriters makes any representation that the underwriters will
engage in these transactions or that these transactions, once commenced, will
not be discontinued without notice.
OTHER RELATIONSHIPS
Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as Avnet's
financial advisor in connection with Avnet's October 1999 acquisition of
Marshall Industries and its July 2000 acquisition of Savoir Technology Group,
Inc., and as an underwriter in the public offering in 1994 of Avnet's 6 7/8%
Notes due March 15, 2004. Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Chase Securities Inc. and NationsBanc Montgomery Securities LLC (a predecessor
to Banc of America Securities LLC) acted as underwriters in the public offering
in 1998 of Avnet's 6.45% Notes due August 15, 2003. Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Banc of America Securities LLC, Chase Securities
Inc. and Banc One Capital Markets, Inc. acted as underwriters in the public
offering in February 2000 of Avnet's 7 7/8% Notes due February 15, 2005. In
addition, Merrill Lynch Capital Corporation, an affiliate of Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and its
affiliate, Bank of America, N.A., The Chase Manhattan Bank, an affiliate of
Chase Securities Inc., Bank One, N.A., an affiliate of Banc One Capital Markets,
Inc., and Fleet National Bank, an affiliate of Fleet Securities, Inc., have been
or continue to be agents, arrangers, book managers or lenders under various
credit facilities with Avnet. These banks and financial institutions, together
with ABN AMRO Incorporated, First Union Securities, Inc. and their respective
affiliates, may serve in the same or similar capacities in the future under
credit facilities with Avnet and the underwriters and their affiliates may
engage in other general financing and banking transactions, including investment
banking transactions, with Avnet. Bank One Trust Company, NA, which is an
affiliate of both Bank One, N.A. and Banc One Capital Markets, Inc., is the
trustee under the indenture under which the notes will be issued.
LEGAL MATTERS
The validity of the notes will be passed upon for Avnet by David R. Birk,
its Senior Vice President and General Counsel. Mr. Birk beneficially owns
120,185 shares of Avnet's common stock, which includes 114,250 shares issuable
upon exercise of employee stock options. Certain legal matters with respect to
the notes will be passed upon for the underwriters by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), One New
York Plaza, New York, New York 10004.
S-14
<PAGE> 15
PROSPECTUS
[AVNET LOGO]
AVNET, INC.
$1,500,000,000
DEBT SECURITIES, COMMON STOCK,
STOCK PURCHASE CONTRACTS, STOCK PURCHASE UNITS,
DEBT WARRANTS, EQUITY WARRANTS AND UNITS
-------------------------
Avnet, Inc. may offer from time to time, in one or more series or issuances
and at prices and on terms that it will determine at the time of offering, up to
$1,500,000,000 in gross proceeds to Avnet of
- unsecured debt securities,
- shares of common stock,
- contracts to purchase common stock,
- contracts to purchase common stock sold as units with other securities of
Avnet or other issuers,
- warrants to purchase debt securities,
- warrants to purchase common stock, or
- units consisting of two or more of the above securities.
Avnet's common stock is listed on the New York Stock Exchange and the
Pacific Exchange under the symbol "AVT."
We will provide specific terms of these securities in supplements to this
prospectus at the time when we offer them. You should read this prospectus and
the applicable supplement carefully before you invest in any of these
securities.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
-------------------------
The date of this prospectus is September 29, 2000.
<PAGE> 16
We have not authorized any dealer, salesman or other person to give any
information or to make any representation other than those contained or
incorporated by reference in this prospectus and any accompanying prospectus
supplement. You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus or a prospectus
supplement. This prospectus and any accompanying prospectus supplement do not
contain an offer to sell or the solicitation of an offer to buy any securities
other than the registered securities to which they relate, or an offer to sell
or the solicitation of an offer to buy securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus and
any accompanying prospectus supplement is accurate as of the dates on their
covers. When we deliver this prospectus or a supplement or make a sale pursuant
to this prospectus, we are not implying that the information is current as of
the date of the delivery or sale.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
ABOUT THIS PROSPECTUS....................................... 3
THE COMPANY................................................. 4
RATIOS OF EARNINGS TO FIXED CHARGES......................... 4
USE OF PROCEEDS............................................. 5
DESCRIPTION OF DEBT SECURITIES.............................. 5
Ranking of Debt Securities................................ 7
Conversion Rights......................................... 8
Exchange, Registration, Transfer and Payment.............. 8
Global Debt Securities.................................... 8
Covenants................................................. 9
Events of Default......................................... 12
Modification of the Indenture............................. 13
Defeasance and Discharge.................................. 13
Concerning the Trustee.................................... 14
DESCRIPTION OF COMMON STOCK................................. 14
Board of Directors........................................ 15
Power to Call Special Shareholders Meetings............... 15
Actions by Written Consent of Shareholders................ 15
Dividends and Repurchases of Shares....................... 16
Approval of Certain Business Combinations and
Reorganizations........................................ 16
Business Combination Following a Change in Control........ 16
Dissenters' Appraisal Rights.............................. 16
DESCRIPTION OF WARRANTS..................................... 17
Debt Warrants............................................. 17
Equity Warrants........................................... 18
Exercise of Warrants...................................... 19
</TABLE>
2
<PAGE> 17
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE
UNITS..................................................... 19
DESCRIPTION OF UNITS........................................ 19
PLAN OF DISTRIBUTION........................................ 20
LEGAL MATTERS............................................... 21
EXPERTS..................................................... 21
WHERE YOU CAN FIND MORE INFORMATION......................... 22
</TABLE>
-------------------------
Whenever we refer to "Avnet" or to "us," or use the terms "we" or "our" in
this prospectus, we are referring to Avnet, Inc. a New York corporation, and its
consolidated subsidiaries. However, for purposes of the sections entitled
"Description of Debt Securities," "Description of Common Stock," "Description of
Warrants," "Description of Stock Purchase Contracts and Stock Purchase Units,"
and "Description of Units," whenever we refer to "Avnet" or to "us," or use the
terms "we" or "our," we are referring only to Avnet, Inc.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings resulting in
gross proceeds to us of up to $1,500,000,000. This prospectus provides you with
a general description of the securities we may offer. Each time we sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. To the extent
that any statement that we make in a prospectus supplement is inconsistent with
statements made in this prospectus, you should assume that the statements made
in the prospectus supplement modify or supersede those made in this prospectus.
You should read both this prospectus and any prospectus supplement together with
additional information described under the heading "Where You Can Find More
Information."
3
<PAGE> 18
THE COMPANY
Avnet is one of the world's largest distributors of electronic components
and computer products sold principally to industrial customers, with operations
in the United States, Canada, Mexico, Europe, Asia, Australia, New Zealand,
South Africa and South America. Avnet's principal suppliers are Intel, Motorola,
National Semiconductor, Texas Instruments, Advanced Micro Devices, Compaq
Computer Corporation, AMP, ITT Cannon, Amphenol/Bendix, Hewlett-Packard,
Hitachi, IBM and Toshiba. Its primary customers are original equipment
manufacturers. Avnet ships electronic components either as Avnet receives them
from its suppliers, or with assembly or other value added by Avnet. Avnet also
provides integrated materials management services with respect to the electronic
components it sells.
Avnet's principal executive offices are located at 2211 South 47th Street,
Phoenix, Arizona 85034, telephone (480) 643-2000.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratios of Avnet's earnings to fixed
charges, on a consolidated basis, for the periods indicated:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------
JUNE 28, JUNE 27, JUNE 26, JULY 2, JUNE 30,
1996 1997 1998(1) 1999(2) 2000(3)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
10.7 10.3 6.5 7.1 3.6
</TABLE>
-------------------------
(1) Income before income taxes for the fiscal year ended June 26, 1998, includes
(a) the gain on the sale of Channel Master amounting to $33.8 million, (b)
costs relating to the divestiture of Avnet Industrial, the closure of
Avnet's corporate headquarters in Great Neck, New York, and the anticipated
loss on the sale of Avnet-owned real estate, amounting to $13.3 million in
the aggregate, and (c) incremental special charges associated principally
with the reorganization of Avnet's Electronic Marketing group amounting to
$35.4 million. Had such one-time items (amounting to $14.9 million pre-tax,
net) not been included, the ratio of earnings to fixed charges for the year
ended June 26, 1998 would have been 6.8 on a pro forma basis.
(2) Income before income taxes for the fiscal year ended July 2, 1999, includes
(a) incremental special charges associated primarily with the reorganization
of the European portion of Avnet's Electronics Marketing group, amounting to
$26.5 million, and (b) the net gain from the sale of Allied Electronics
amounting to $252.3 million, offset in part by charges of $42.8 million
recorded in connection with the intended disposition of the Avnet Setron
catalog operation in Germany. Had such one-time items (amounting to $183.0
million pre-tax, net) not been included, the ratio of earnings to fixed
charges for the year ended July 2, 1999 would have been 4.1 on a pro forma
basis.
(3) Income before income taxes for the fiscal year ended June 30, 2000, includes
incremental special charges associated with (a) the reorganization of
Avnet's Electronics Marketing European operations amounting to $9.2 million,
consisting primarily of costs related to the centralization of warehousing
operations, (b) the integration of acquired businesses into Avnet amounting
to $31.7 million, (c) the reorganization of Avnet's Electronics Marketing
Asian operations amounting to $5.4 million, and (d) costs incurred in
connection with Avnet's lawsuit against Wyle Laboratories, Inc. and certain
individuals amounting to $2.7 million. Had such one-time items (amounting to
$49.0 million pre-tax) not been included, the ratio of earnings to fixed
charges for the year ended June 30, 2000 would have been 4.1 on a pro forma
basis.
4
<PAGE> 19
USE OF PROCEEDS
Unless we identify other uses of proceeds in a prospectus supplement, we
intend to use the net proceeds from the sale of the securities for Avnet's
general corporate purposes, which may include repayment of debt, capital
expenditures, acquisitions, repurchases of Avnet's common stock, and working
capital. Pending these uses, the net proceeds may also be temporarily invested
in short-term securities.
Depending on market conditions and Avnet's financial needs, Avnet may, from
time to time, undertake additional financings. We cannot at this time estimate
the amount and timing of such financings, if any.
DESCRIPTION OF DEBT SECURITIES
The following description summarizes the general terms and provisions of
any debt securities which Avnet may offer under this prospectus. When Avnet
offers a particular series of debt securities, we shall deliver with this
prospectus a prospectus supplement which will describe the particular terms of
the offered series and the extent to which the general terms below may apply to
that series.
Avnet will issue the debt securities under an indenture between Avnet and a
trustee chosen by Avnet and qualified to act under the Trust Indenture Act of
1939. The form of indenture is an exhibit to the registration statement of which
this prospectus is a part. Avnet will execute the indenture if and when it
issues any debt securities and will file the executed indenture as an exhibit to
a Form 8-K filing with the SEC. The executed indenture will be available for
inspection at the corporate trust office of the trustee, or you may obtain a
copy from Avnet without charge. See "Where You Can Find More Information." The
indenture will be subject to, and governed by, the Trust Indenture Act. The
statements contained in this prospectus relating to the indenture and the debt
securities we may issue under the indenture are summaries of their material
terms but do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all provisions of the indenture (including those
terms made a part of the indenture by reference to the Trust Indenture Act) and
these debt securities.
Avnet can issue an unlimited amount of debt securities in one or more
series under the indenture, with the same or various maturities, at par, at a
premium, or at a discount. The terms of each series of debt securities will be
established by or pursuant to a resolution of Avnet's Board of Directors or a
committee of the Board or by a supplemental indenture. We will describe, in a
prospectus supplement relating to any series of debt securities being offered,
the aggregate principal amount and the terms of that series, including
- the title of the series,
- whether the series is senior debt or subordinated debt or any combination
of the two and, if subordinated debt, the subordination terms relating to
the series,
- the price or prices, expressed as a percentage of the aggregate principal
amount, at which Avnet will sell the series of debt securities,
- any limit upon the aggregate principal amount of the series,
- the date or dates on which Avnet will pay the principal on the series,
- the rate or rates (which may be fixed or variable) or the method by which
such rate or rates will be determined, at which the series of debt
securities will bear interest, if any,
- the date or dates from which any interest will accrue, the dates upon
which any interest will be payable, and the record dates for payment of
interest,
- the place or places where Avnet will pay principal of, and any premium or
interest on, the series of debt securities,
5
<PAGE> 20
- any obligation Avnet has to redeem, repurchase or repay all or part of
the series under any sinking fund or analogous provisions or at the
option of a holder of the series, and the price or prices at which and
the period or periods within which and the terms and conditions upon
which Avnet will redeem, repurchase or repay the series,
- the denominations in which the series will be issued, if other than
denominations of U.S. $1,000 and any whole number multiple thereof,
- the portion of the principal amount of the series payable upon
declaration of the acceleration of the maturity date, if other than the
principal amount,
- any addition to, exclusion of or change in the covenants in the indenture
as they apply to the series,
- any addition to or change in the events of default described in this
prospectus or in the indenture with respect to the series,
- whether Avnet will issue the series in global form and, if so, any terms
and conditions upon which global debt securities may be exchanged for
other individual securities, and the name of the depositary for the debt
securities,
- any terms and conditions upon which the series may be exchanged for or
converted into Avnet common stock or other securities,
- the form and terms of any guarantee of the series,
- if the principal amount payable at the stated maturity of a series of
debt securities will not be determinable as of any one or more dates
prior to the stated maturity, the amount which will be deemed to be the
principal amount as of any date for any purpose, including the principal
amount which will be due and payable upon any maturity other than the
stated maturity or which will be deemed to be outstanding as of any such
date (or, in any such case, the manner in which such deemed principal
amount is to be determined),
- the applicability to the series of the provisions of the indenture
relating to defeasance and discharge,
- whether the debt securities will be sold as part of units consisting of
debt securities and other securities that Avnet may offer under the
indenture,
- whether the debt securities will be listed on any securities exchange or
included in any other market or quotation or trading system,
- any trustee or fiscal or authenticating or payment agent, issuing and
paying agent, transfer agent or registrar or any other person or entity
to act in connection with the series of debt securities for or on our
behalf or on behalf of the holders of the series, and
- any other terms of the series of debt securities, which may modify or
exclude any provision of the indenture as it applies to that series.
Avnet may issue debt securities at a discount below their stated principal
amount or provide for less than the entire principal amount of the debt
securities to be payable upon declaration of acceleration of maturity. In that
event, we will describe any material federal income tax considerations and other
material considerations in the applicable prospectus supplement.
Avnet may issue debt securities in bearer form, with or without coupons. In
that event, we will describe any material federal income tax considerations and
other material considerations in the applicable prospectus supplement.
6
<PAGE> 21
RANKING OF DEBT SECURITIES
Any series of debt securities issued under the indenture as senior
indebtedness will rank equally with all of Avnet's other unsecured and
unsubordinated indebtedness.
Any series of debt securities issued under the indenture as subordinated
indebtedness will be subordinate in right of payment to all senior indebtedness
of Avnet. With respect to any series of subordinated debt securities, except as
otherwise set forth in the applicable prospectus supplement, Avnet's "senior
indebtedness" means the principal of, and premium, if any, and any interest
(including interest accruing after the commencement of any proceeding for
Avnet's bankruptcy or reorganization under any applicable bankruptcy, insolvency
or similar law now or hereafter in effect) and all other monetary obligations of
every kind or nature due on or in connection with,
- all Avnet's indebtedness (including senior debt securities) regardless of
when incurred (a) for borrowed money or (b) in connection with its
acquisition of assets other than in the ordinary course of business, for
the payment of which Avnet is liable directly or indirectly by guarantee,
letter of credit, obligation to purchase or acquire or otherwise, or the
payment of which is secured by a lien, charge or encumbrance on assets
Avnet acquired,
- amendments, modifications, renewals, extensions and deferrals of any such
indebtedness, and
- any indebtedness issued in exchange for any such indebtedness.
However, with respect to any series of debt securities issued under the
indenture as subordinated indebtedness, "senior indebtedness" will not include
any debt evidenced by, or issued pursuant to, an instrument which:
(a) expressly provides that such debt is subordinate in right of payment to
all Avnet's debt not expressly subordinated to such debt, or
(b) refers explicitly to any subordinated debt securities of Avnet and
states that such debt shall not be senior in right of payment to such
securities.
Avnet may not make any payment with respect to any subordinated debt
securities unless all amounts of principal, premium, if any, and interest then
due on all applicable senior indebtedness has been paid in full or if there has
occurred and is continuing beyond any applicable grace period a default in any
payment with respect to any applicable senior indebtedness, or if there has
occurred any event of default with respect to any applicable senior indebtedness
permitting the holders to accelerate the maturity of the senior indebtedness, or
if any judicial proceeding is pending with respect to any such default. However,
Avnet may make payments with respect to the subordinated debt securities if a
default in payment or an event of default with respect to the senior
indebtedness permitting the holder to accelerate the maturity of the senior
indebtedness has occurred and is continuing and judicial proceedings with
respect thereto have not been commenced within a certain number of days of such
default in payment or event of default.
Upon any distribution of Avnet's assets upon dissolution, winding-up,
liquidation or reorganization, the holders of its senior indebtedness will be
entitled to receive payment in full of principal, premium, if any, and interest
(including interest accruing after the commencement of any proceeding for
Avnet's bankruptcy or reorganization under any applicable bankruptcy, insolvency
or similar law) before any payment is made on the subordinated debt securities.
By reason of the subordination, if Avnet becomes insolvent, holders of its
senior indebtedness may receive more, ratably, and holders of the subordinated
debt securities having a claim pursuant to the subordinated debt securities may
receive less, ratably, than Avnet's other creditors. Such subordination will not
prevent the occurrence of any event of default in respect of the subordinated
debt securities.
If Avnet offers debt securities, the applicable prospectus supplement will
set forth the aggregate amount of outstanding indebtedness, if any, as of the
most recent practicable date that by the terms of
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such debt securities would be senior to such debt securities. The applicable
prospectus supplement will also set forth any limitation on Avnet's ability to
issue any additional senior indebtedness and will describe in more detail the
material terms of the subordination provisions of these securities, including
relevant definitions.
CONVERSION RIGHTS
Any provisions for the exchange or conversion of a series of debt
securities into shares of Avnet common stock will be set forth in the applicable
prospectus supplement.
EXCHANGE, REGISTRATION, TRANSFER AND PAYMENT
Unless we specify otherwise in a prospectus supplement, payment of
principal of, and any premium and interest on, the debt securities will be
payable, and the exchange of and the transfer of debt securities will be
registrable, at the office of the trustee or at any other office or agency
maintained by Avnet for that purpose subject to the limitations of the
indenture. Unless we specify otherwise in a prospectus supplement, Avnet will
issue the debt securities in denominations of U.S. $1,000 or whole number
multiples thereof. Avnet will not require a service charge for any registration
of transfer or exchange of the debt securities, but it may require payment of a
sum sufficient to cover any tax or other governmental charge.
GLOBAL DEBT SECURITIES
Avnet may issue the debt securities of a series in the form of one or more
global security certificates. Avnet will deposit each global security with a
depositary or its nominee or custodian, which will be The Depository Trust
Company and its nominee Cede & Co unless we name another depositary or nominee
in a prospectus supplement, and each global security will bear a legend
regarding the restrictions on exchanges and registration of transfer thereof
referred to below and any other matters as may be provided for in the indenture.
Notwithstanding any provision of the indenture or any debt security, no
global security may be transferred to, or registered or exchanged for debt
securities registered in the name of, any person or entity other than the
depositary for the global security or any nominee of the depositary, and no such
transfer may be registered, unless
- the depositary has notified Avnet that it is unwilling or unable to
continue as depositary for the global security or has ceased to be
qualified to act as such; or
- Avnet executes and delivers to the trustee an order that the global
security will be so transferable, registrable and exchangeable, and those
transfers will be registrable, or
- the applicable prospectus supplement describes other circumstances under
which the global security will be so transferable, registrable or
exchangeable, or under which transfers will be so registrable.
All debt securities issued in exchange for a global security or any portion
of a global security will be registered in such names as the depositary may
direct.
Unless we specify otherwise in a prospectus supplement, debt securities
which are to be represented by a global security will be registered in the name
of the depositary or its nominee. Upon the issuance of a global security, and
the deposit of the global security with or on behalf of the depositary for the
global security, the depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of the debt securities
represented by the global security to the accounts of institutions that have
accounts with the depositary or its nominee ("participants"). The accounts to be
credited will be designated by the underwriters or agents of the debt
securities, or by Avnet if it directly offers and sells the debt securities.
Ownership of beneficial interests in the global security will be limited to
participants or
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persons that may hold interests through participants. Ownership of beneficial
interests by participants in the global security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the depositary or its nominee for the global security. Ownership
of beneficial interests in the global security by persons that hold through
participants will be shown on, and the transfer of that ownership interest
within such participant will be effected only through, records maintained by the
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of the securities in certificate form. The
foregoing limitations and these laws may impair the ability to transfer
beneficial interests in the global securities.
So long as the depositary for a global security, or its nominee, is the
registered owner of the global security, the depositary or its nominee will be
considered the sole owner or holder of the debt securities represented by the
global security for all purposes under the indenture. Unless otherwise specified
in a prospectus supplement, owners of beneficial interests in the global
security will not be entitled to have debt securities of the series represented
by the global security registered in their names, will not receive or be
entitled to receive physical delivery of debt securities of the series in
certificate form and will not be considered the holders thereof for any purposes
under the indenture. Therefore, each person owning a beneficial interest in the
global security must rely on the procedures of the depositary and, if that
person is not a participant, on the procedures of the participant through which
the person owns its interest, to exercise any rights of a holder under the
indenture. If we request any action of holders or if an owner of a beneficial
interest in a global security desires to give any notice or take any action a
holder is entitled to give or take under the indenture, the depositary will
authorize the participants to give that notice or take that action, and
participants would authorize beneficial owners owning through those participants
to give that notice or take that action or would otherwise act upon the
instructions of beneficial owners owning through them.
Notwithstanding any contrary provisions in the indenture, the rights of the
beneficial owners of the debt securities to receive payment of the principal of,
and any premium or interest on, the debt securities on or after the respective
due dates expressed in the debt securities, or to institute suit for the
enforcement of these payments on or after these respective dates, will not be
impaired or affected without the consent of the beneficial owners.
Principal of and any premium or interest on a global security will be
payable in the manner described in the applicable prospectus supplement.
COVENANTS
The indenture provides that Avnet will be subject to the covenants below
for the benefit of each series of debt securities which does not specifically
provide otherwise.
DEFINITIONS
"Attributable Debt" means, as to any particular lease, the greater of
- the fair market value of the property subject to the lease (as determined
by Avnet's board of directors), or
- the total net amount of rent required to be paid during the remaining
term of the lease, discounted by the weighted average effective interest
cost per annum of the outstanding debt securities of all series,
compounded semi-annually.
"Consolidated Net Assets" means total assets after deducting all current
liabilities as set forth in the most recent balance sheet of Avnet and its
consolidated Subsidiaries and computed in accordance with generally accepted
accounting principles.
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"Funded Debt" means
- all indebtedness for money borrowed having a maturity of more than twelve
months from the date as of which the determination is made, or having a
maturity of twelve months or less but by its terms being renewable or
extendible beyond twelve months from such date at the option of the
borrower, and
- rental obligations payable more than twelve months from such date under
leases which are capitalized in accordance with generally accepted
accounting principles (such rental obligations to be included as Funded
Debt at the amount so capitalized and to be included as an asset for the
purposes of the definition of Consolidated Net Assets).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal Property" means any manufacturing or processing plant or
warehouse owned at the date of the indenture or thereafter acquired by Avnet or
any Restricted Subsidiary of Avnet which is located within the United States and
the gross book value (including related land and improvements thereon and all
machinery and equipment included therein without deduction of any depreciation
reserves) of which on the date as of which the determination is being made
exceeds 2% of Consolidated Net Assets, other than
- any such manufacturing or processing plant or warehouse or any portion
thereof (together with the land on which it is erected and fixtures
comprising a part thereof) which is financed by industrial development
bonds which are tax exempt pursuant to Section 103 of the Internal
Revenue Code (or which receive similar tax treatment under any subsequent
amendments thereto or any successor laws thereof or under any other
similar statute of the United States),
- any property which in the opinion of Avnet's board of directors is not of
material importance to the total business conducted by Avnet as an
entirety, or
- any portion of a particular property which is similarly found not to be
of material importance to the use or operation of such property.
"Restricted Subsidiary" means a Subsidiary of Avnet (i) substantially all
the property of which is located, or substantially all the business of which is
carried on, within the United States, and (ii) which owns a Principal Property.
"Subsidiary" means any corporation more than 50% of the outstanding Voting
Stock of which at the time of determination is owned, directly or indirectly, by
Avnet and/or by one or more other Subsidiaries.
"Voting Stock" means capital stock of a corporation of the class or classes
having general voting power under ordinary circumstances to elect at least a
majority of the board of directors, managers or trustees of such corporation
(irrespective of whether or not at the time stock of any other class or classes
shall have or might have voting power upon the occurrence of any contingency).
HIGHLY LEVERAGED TRANSACTIONS
Unless otherwise described in a prospectus supplement relating to any
series of debt securities, there are no covenants or provisions in the indenture
which may afford the holders of debt securities direct protection in the event
of a highly leveraged transaction involving Avnet.
RESTRICTIONS ON SECURED DEBT
Avnet covenants in the Indenture, for the benefit of each series of debt
securities other than any series which specifically provides otherwise, that if
Avnet or any Restricted Subsidiary shall after the date of the indenture incur
or guarantee any loans, notes, bonds, debentures or other similar evidences of
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indebtedness for money borrowed ("Debt") secured by a mortgage, pledge or lien
("Mortgage") on any Principal Property of Avnet or any Restricted Subsidiary, or
on any share of stock or Debt of any Restricted Subsidiary, Avnet will secure or
cause such Restricted Subsidiary to secure the debt securities equally and
ratably with (or, at Avnet's option, before) such secured Debt, unless the
aggregate amount of all such secured Debt (plus all Attributable Debt which is
not excluded as described below under the caption "-- Restrictions on Sale and
Leaseback Financings") would not exceed 10% of Consolidated Net Assets.
This restriction will not apply to, and there will be excluded from secured
Debt in any computation of the above restriction, Debt secured by
(a) Mortgages on property of, or on any shares of stock of or Debt of, any
corporation existing at the time such corporation becomes a Restricted
Subsidiary,
(b) Mortgages in favor of Avnet or a Restricted Subsidiary,
(c) Mortgages in favor of governmental bodies to secure progress, advance
or other payments,
(d) Mortgages on property, shares of stock or Debt existing at the time of
acquisition thereof (including acquisition through merger or consolidation) and
purchase money and construction or improvement Mortgages which are entered into
within 180 days after the acquisition of such property, shares or Debt or, in
the case of real property, within 180 days after the later of
(1) the completion of construction on, substantial repair to,
alteration or development of, or substantial improvement to, such property,
or
(2) the commencement of commercial operations on such property,
(e) mechanics' and similar liens arising in the ordinary course of business
in respect of obligations not due or being contested in good faith,
(f) Mortgages arising from deposits with, or the giving of any form of
security to, any governmental agency required as a condition to the transaction
of business or to the exercise of any privilege, franchise or license,
(g) Mortgages for taxes, assessments or government charges or levies which
are not then due or, if delinquent, are being contested in good faith,
(h) Mortgages (including judgment liens) arising from legal proceedings
being contested in good faith,
(i) Mortgages existing at the date of the indenture, and
(j) any extension, renewal or refunding of any Mortgage referred to in the
clauses (a) through (i) above.
RESTRICTIONS ON SALE AND LEASEBACK FINANCINGS
Avnet covenants in the indenture, for the benefit of each series of debt
securities other than any series which specifically provides otherwise, that
Avnet will not itself, and will not permit any Restricted Subsidiary to, enter
into any sale and leaseback transaction involving any Principal Property, unless
after giving effect thereto the aggregate amount of all Attributable Debt with
respect to all such transactions, plus all secured Debt which is not excluded as
described above under the caption "-- Restrictions on Secured Debt," would not
exceed 10% of Consolidated Net Assets.
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This restriction will not apply to, and there will be excluded from
Attributable Debt in any computation of the above restriction, any sale and
leaseback transaction if
- the lease is for a period, including renewal rights, of not in excess of
three years,
- the sale or transfer of the Principal Property is made within 180 days
after its acquisition or within 180 days after the later of
(1) the completion of construction on, substantial repair to, alteration
or development of, or substantial improvement to, such property, or
(2) the commencement of commercial operations thereon,
- the transaction is between Avnet and a Restricted Subsidiary, or between
Restricted Subsidiaries,
- Avnet or a Restricted Subsidiary would be entitled to incur a Mortgage on
such Principal Property pursuant to clauses (a) through (j) above under
the heading "-- Restrictions on Secured Debt," or
- Avnet or a Restricted Subsidiary, within 180 days after the sale or
transfer is completed, applies to the retirement of Funded Debt of Avnet
or a Restricted Subsidiary ranking on a parity with or senior to the debt
securities, or to the purchase of other property which will constitute a
Principal Property having a fair market value at least equal to the fair
market value of the Principal Property leased, an amount equal to the
greater of the net proceeds of the sale of the Principal Property or the
fair market value (as determined by Avnet's board of directors) of the
Principal Property leased at the time of entering into such arrangement
(as determined by the board of directors).
RESTRICTIONS ON MERGERS AND CONSOLIDATIONS
Avnet covenants in the indenture that it will not consolidate with or merge
into any other Person, or sell, convey, transfer or lease all or substantially
all of its assets unless
- the successor Person is a corporation organized under the laws of the
United States (including any state thereof and the District of Columbia)
which assumes Avnet's obligations in the debt securities and under the
indenture, and
- after giving effect to such transaction, Avnet or the successor Person
would not be in default under the indenture.
EVENTS OF DEFAULT
Unless we specify otherwise in a prospectus supplement for a particular
series of debt securities, an event of default under the indenture with respect
to any series of debt securities is:
- a default in the payment of any installment of interest on that series
for 30 days after becoming due;
- a default in the payment of principal on that series when due;
- a default in the deposit of any sinking fund payment on that series when
due;
- a default in the performance of any other covenant in the indenture
(other than a covenant included in the indenture solely for the benefit
of any series of debt securities other than that series) for 90 days
after notice;
- certain events of bankruptcy, insolvency or reorganization; and
- any other Event of Default provided with respect to that series of debt
securities.
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If an event of default occurs and is continuing with respect to the debt
securities of any series, either the trustee or the holders of at least 25% in
principal amount of the debt securities then outstanding of that series may
declare the principal amount of the debt securities of such series (or, in the
case of debt securities sold at an original issue discount, the amount specified
in the terms thereof) and the accrued interest thereon, if any, to be due and
payable immediately. Under certain conditions, such a declaration may be
rescinded.
The indenture provides that the trustee will, within 90 days after the
occurrence of a default known to it, give the affected holders of debt
securities notice of all uncured defaults known to it (the term "default" to
mean the events specified above without grace periods). However, except in the
case of default in the payment of principal of or interest on any debt security,
the trustee will be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the interest of the
affected holders of debt securities.
Avnet must furnish to the trustee annually a statement by certain officers
of Avnet certifying that there are no defaults or specifying any default.
The holders of a majority in principal amount of the outstanding debt
securities of any series will have the right, with certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee with respect to the debt securities of such series, and to waive certain
defaults with respect thereto. The indenture provides that if an event of
default occurs and is continuing, the trustee shall exercise such of its rights
and powers under the indenture, and use the same degree of care and skill in
exercising the same, as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs. Subject to such
provisions, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any of the holders of
debt securities unless they shall have offered to the trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by the trustee in compliance with such request.
MODIFICATION OF THE INDENTURE
With certain exceptions, the indenture may be modified or amended with the
consent of the holders of not less than a majority in principal amount of the
outstanding debt securities of each series affected by the modification or
amendment. However, no such modification or amendment may be made, without the
consent of the holder of each debt security affected, which would
- reduce the principal amount of or the interest on any debt security, or
change the stated maturity of the principal of, or any installment of
interest on, any debt security or the other terms of payment thereof, or
- reduce the above-stated percentage of debt securities, the consent of the
holders of which is required to modify or amend the indenture, or the
percentage of debt securities of any series, the consent of the holders
of which is required to waive certain past defaults.
DEFEASANCE AND DISCHARGE
The indenture provides that Avnet may elect, with respect to the debt
securities of any series, to terminate (and be deemed to have satisfied) any and
all of its obligations in respect of such debt securities (except for certain
obligations to register the transfer or exchange of debt securities, to replace
stolen, lost or mutilated debt securities, to maintain paying agencies and hold
monies for payment in trust and, if so specified with respect to the debt
securities of a certain series, to pay the principal of, and any premium or
interest on, such specified debt securities) on the 91st day after the deposit
with the trustee, in trust, of money and/or government obligations (as defined)
which, through the payment of interest thereon and principal thereof in
accordance with their terms, will provide money in an amount sufficient to pay
any
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installment of principal of (and premium, if any), and interest, if any, on, and
any mandatory sinking fund payments in respect of, such debt securities on the
stated maturity of such payments in accordance with the terms of the Indenture
and such debt securities. Such a trust may be established only if, among other
things, Avnet has delivered to the trustee an opinion of counsel (who may be
counsel to Avnet) to the effect that, based upon applicable Federal income tax
law or a ruling published by the United States Internal Revenue Service, such a
defeasance and discharge will not be deemed, or result in, a taxable event with
respect to holders of such debt securities. If so specified with respect to the
debt securities of a series, such a trust may be established only if
establishment of the trust would not cause the debt securities of any such
series listed on any nationally recognized securities exchange to be de-listed
as a result thereof.
CONCERNING THE TRUSTEE
Bank One Trust Company, N.A. is the proposed trustee under the indenture
and the proposed initial security registrar with regard to all debt securities.
Avnet currently does, and from time to time in the future may, maintain lines of
credit and have customary banking relationships with Bank One, N.A., an
affiliate of the trustee. The trustee currently serves as trustee under the
indenture with Avnet dated as of February 1, 1994, which provides for Avnet's
currently outstanding 6 7/8% Notes due 2004, 6.45% Notes due 2003 and 7 7/8%
Notes due 2005, and may serve as trustee for other debt securities issued by
Avnet from time to time in the future.
The indenture and provisions of the Trust Indenture Act incorporated by
reference in the indenture contain certain limitations on the rights of the
trustee, should it become our creditor, to obtain payment of claims, or to
realize on certain property received in respect of any claim, as security or
otherwise. The trustee and its affiliates may engage in, and will be permitted
to continue to engage in, other transactions with Avnet and its affiliates;
however, if the trustee acquires any conflicting interest (as defined in the
Trust Indenture Act), it must eliminate that conflict or resign.
DESCRIPTION OF COMMON STOCK
Avnet is authorized to issue 120,000,000 shares of common stock, par value
$1.00 per share. At the close of business on September 15, 2000, it had
outstanding 92,210,128 shares of common stock and 5,078 treasury shares. These
numbers have been adjusted to reflect a two-for-one stock split distributed on
September 28, 2000. All outstanding shares of common stock are fully paid and
nonassessable.
The holders of shares of Avnet's common stock have equal rights to
dividends from funds legally available for the payment of dividends when, as and
if declared by Avnet's board of directors, and are entitled, upon liquidation,
to share ratably in any distribution in which holders of common stock
participate. The common stock is not redeemable, has no preemptive or conversion
rights and is not liable for assessments or further calls. The holders of shares
of Avnet's common stock are entitled to one vote for each share at all meetings
of shareholders.
The transfer agent and registrar for Avnet's common stock is The Bank of
New York. Avnet's common stock is listed on the New York Stock Exchange and the
Pacific Exchange.
Under its certificate of incorporation, Avnet is authorized to issue up to
3,000,000 shares of preferred stock, in series. For each series of preferred
stock, Avnet's board of directors may fix the relative rights, preferences and
limitations as between the shares of such series, the shares of other series of
Avnet preferred stock, and the shares of Avnet common stock. No shares of Avnet
preferred stock are outstanding.
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BOARD OF DIRECTORS
Although New York law permits the certificate incorporation of a New York
corporation to provide for cumulative voting in the election of directors,
Avnet's certificate of incorporation does not so provide.
New York law permits the certificate of incorporation or by-laws of a New
York corporation to divide its directors into as many as four classes with
staggered terms of office. However, Avnet's certificate and by-laws do not so
provide for a classified board of directors. Therefore, all of its directors are
elected annually for one-year terms.
Under New York law, shareholders may remove any or all directors for cause.
New York law also allows directors to be removed without cause if provided in
the certificate of incorporation. The Avnet certificate of incorporation
authorizes any or all of the directors to be removed with or without cause at
any time by the vote of the holders of a majority of the stock of Avnet and
provides that the terms of the removed directors shall forthwith terminate.
New York law provides that newly created directorships resulting from an
increase in the number of directors and vacancies arising for any reason may be
filled by vote of the board of directors, whether or not constituting a quorum,
except that:
- vacancies resulting from the removal of directors without cause may be
filled only by a vote of the shareholders, unless the certificate of
incorporation or a specific provision of a by-law adopted by the
shareholders provides that such a vacancy may be filled by a vote of the
board of directors; and
- the certificate of incorporation or by-laws may provide that all newly
created directorships and vacancies may be filled only by a vote of the
shareholders.
The Avnet by-laws provide that any vacancy created by the removal of a
director by the shareholders with or without cause may be filled only by a vote
of the shareholders, and that any vacancy created for any other reason may be
filled by a vote of the board of directors or the shareholders.
POWER TO CALL SPECIAL SHAREHOLDERS MEETINGS
Under New York law, a special meeting of shareholders may be called by the
board of directors and by such person or persons as may be authorized to do so
in the certificate of incorporation or by-laws. Avnet's by-laws provide that
special meetings of shareholders may be called by resolution of the board of
directors or by the Chairman of the Board, and shall be called by the Chairman
of the Board, the President or the Secretary at the request in writing by
shareholders owning 75% of the capital stock issued and outstanding and entitled
to vote at special meetings. In addition, if an annual shareholder meeting has
not been held for a certain period of time and a sufficient number of directors
were not elected to conduct the business of the corporation, the board must call
a special meeting for the election of directors. If the board fails to do so, or
sufficient directors are not elected within a certain period of time, holders of
10% of the votes of the shares entitled to vote in an election of directors may
call a special meeting for such an election.
ACTIONS BY WRITTEN CONSENT OF SHAREHOLDERS
New York law provides that any action which may be taken by shareholders by
vote may be taken without a meeting by written consent, signed by holders of all
outstanding shares entitled to vote, or if authorized by the certificate of
incorporation, by holders of the minimum number of shares necessary to authorize
the action at a meeting of shareholders at which all shares entitled to vote are
present and voted. The Avnet certificate of incorporation does not authorize
shareholders to act by less than unanimous written consent.
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DIVIDENDS AND REPURCHASES OF SHARES
Under New York law, dividends may be declared or paid and other
distributions may be made out of surplus only, so that the net assets of the
corporation remaining after a dividend or distribution must at least equal the
amount of the corporation's stated capital. A corporation may declare and pay
dividends or make other distributions except when the corporation is currently
insolvent or would thereby be made insolvent or when the declaration, payment or
distribution would be contrary to any restrictions contained in its certificate
of incorporation.
APPROVAL OF CERTAIN BUSINESS COMBINATIONS AND REORGANIZATIONS
Under New York law, two-thirds of the votes of all outstanding shares
entitled to vote thereon are required to approve mergers, consolidations, share
exchanges or sales, leases or other dispositions of all or substantially all the
assets of a corporation if not made in the usual or regular course of business.
New York law was amended in 1998 to permit a New York corporation then in
existence to reduce the required vote to a majority of the outstanding shares,
but Avnet has not done so.
BUSINESS COMBINATION FOLLOWING A CHANGE IN CONTROL
New York law prohibits any business combination (defined to include a
variety of transactions, including mergers, consolidations, sales or
dispositions of assets, issuances of stock, liquidations, reclassifications and
the receipt of certain benefits from the corporation, including loans or
guarantees) with, involving or proposed by any interested shareholder (defined
generally as any person that beneficially owns, directly or indirectly, 20% or
more of the outstanding voting stock of a New York corporation or any person
that is an affiliate or associate of a New York corporation and at any time
within the past five years was a beneficial owner of 20% or more of the
outstanding voting stock) for a period of five years after the date on which the
interested shareholder first became an interested shareholder, unless the
transaction is approved by the board of directors prior to the date on which the
interested shareholder became an interested shareholder. After this five-year
period, a business combination between a New York corporation and the interested
shareholder is prohibited unless either certain "fair price" provisions are
complied with or the business combination is approved by a majority of the
outstanding voting stock not beneficially owned by the interested shareholder.
Under New York law, corporations may elect not to be governed by the statute
described above, but Avnet's certificate of incorporation does not contain such
an election.
DISSENTERS' APPRAISAL RIGHTS
Under New York law, any shareholder of a corporation has the right to
obtain payment for the fair value of the shareholder's shares in the event of
- certain amendments or changes to the certificate of incorporation
adversely affecting the rights of the shareholder,
- certain mergers or consolidation of the corporation if the shareholder is
entitled to vote thereon,
- a merger or consolidation where the shareholder is not entitled to vote
or if the shareholder's shares will be canceled or exchanged for cash or
other consideration other than shares of the surviving or consolidated
corporation or another corporation,
- certain sales, leases, exchanges or other dispositions of all or
substantially all of the assets of the corporation which require
shareholder approval other than a transaction solely for cash, and
- certain share exchanges.
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However, no appraisal rights will be available in a merger to a shareholder of
the surviving corporation whose rights are not adversely affected or whose
shares were, at the record date to vote on the plan of merger, either listed on
a national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association of
Securities Dealers, Inc.
DESCRIPTION OF WARRANTS
Avnet may issue warrants to purchase debt securities, or "debt warrants,"
as well as warrants to purchase common stock, or "equity warrants." We refer
below to debt warrants and equity warrants collectively as "warrants." Warrants
may be issued independently or together with any securities and may be attached
to or separate from those securities. We will issue warrants under warrant
agreements to be entered into between us and a bank or trust company, as warrant
agent. When we issue warrants, we will describe the specific terms of the
warrants in a prospectus supplement.
DEBT WARRANTS
A prospectus supplement will describe the terms of debt warrants offered
thereby, the warrant agreement relating to the debt warrants and the debt
warrant certificates representing the debt warrants, including the following:
- the title of the debt warrants;
- the aggregate number of debt warrants;
- the price or prices at which the debt warrants will be issued;
- the designation, aggregate principal amount and terms of the debt
securities purchasable upon exercise of the debt warrants, and the
procedures and conditions relating to the exercise of the debt warrants;
- the designation and terms of any related debt securities with which the
debt warrants are issued, and the number of the debt warrants issued with
each debt security;
- any date on and after which the debt warrants and the related debt
securities will be separately transferable;
- the principal amount of debt securities purchasable upon exercise of each
debt warrant;
- the date on which the right to exercise the debt warrants will commence,
and the date on which those rights will expire;
- the maximum or minimum number of debt warrants which may be exercised at
any time;
- information with respect to any book-entry procedures for the
registration and transfer of debt warrants;
- a discussion of any material federal income tax considerations applicable
to holding, transferring or exercising debt warrants; and
- any other terms of the debt warrants and terms, procedures and
limitations relating to the exercise of the debt warrants.
Debt warrant certificates will be exchangeable for new debt warrant
certificates of different denominations. Debt warrants may be exercised at the
corporate trust office of the warrant agent or any other office indicated in the
prospectus supplement. Prior to the exercise of their debt warrants, holders of
debt warrants will not have any of the rights of holders of the debt securities
purchasable upon the
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exercise and will not be entitled to payment of principal of, or any premium or
interest on, the debt securities purchasable upon the exercise.
EQUITY WARRANTS
A prospectus supplement will describe the terms of equity warrants offered
thereby, the warrant agreement relating to the equity warrants and the equity
warrant certificates representing the equity warrants, including the following:
- the title of the equity warrants;
- the price or prices at which the equity warrants will be issued;
- if applicable, the number of equity warrants issued with shares of Avnet
common stock;
- any date on and after which the equity warrants and such common stock
will be separately transferable;
- the date on which the right to exercise the equity warrants will
commence, and the date on which those rights will expire;
- the maximum or minimum number of equity warrants which may be exercised
at any time;
- information with respect to any book-entry procedures for the
registration and transfer of equity warrants;
- a discussion of any material federal income tax considerations applicable
to holding, transferring or exercising equity warrants; and
- any other terms of the equity warrants, including terms, procedures and
limitations relating to the exercise of the equity warrants.
Unless we specify otherwise in a prospectus supplement, holders of equity
warrants will not be entitled, by virtue of being such holders, to vote,
consent, receive dividends, receive notice as stockholders with respect to any
meeting of Avnet stockholders, or to exercise any rights whatsoever as Avnet
stockholders.
As described in a prospectus supplement, the exercise price payable and the
number of shares of common stock purchasable upon the exercise of each equity
warrant will be adjusted in certain events, including the issuance of a stock
dividend to holders of common stock or a stock split, reverse stock split,
combination, subdivision or reclassification of common stock. Instead of
adjusting the number of shares of common stock purchasable upon exercise of each
equity warrant, Avnet may elect to adjust the number of equity warrants. Unless
otherwise provided in a prospectus supplement, no adjustments in the number of
shares purchasable upon exercise of the equity warrants will be required until
cumulative adjustments require an adjustment of at least 1% thereof. Avnet may,
at its option, reduce the exercise price at any time. No fractional shares will
be issued upon exercise of equity warrants, but we will pay the cash value of
any fractional shares otherwise issuable. Unless we specify otherwise in a
prospectus supplement, in case of any consolidation, merger, or sale or
conveyance of Avnet's property as an entirety or substantially as an entirety,
the holder of each outstanding equity warrant shall have the right to the kind
and amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of common stock into which the
equity warrant was exercisable immediately prior to the particular triggering
event.
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EXERCISE OF WARRANTS
Each warrant will entitle the holder to purchase the principal amount or
number of securities at the exercise price as shall in each case be set forth
in, or be determinable as set forth in, the applicable prospectus supplement.
Warrants may be exercised at any time up to the close of business on the
expiration date set forth in the prospectus supplement relating to the warrants
offered thereby. After the close of business on the expiration date, unexercised
warrants will become void.
We will describe the procedures for exercising warrants in a prospectus
supplement. Upon receipt of payment and the warrant certificate properly
completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the applicable prospectus supplement, Avnet
will, as soon as practicable, forward the securities purchasable upon that
exercise. If less than all of the warrants represented by a particular warrant
certificate are exercised, a new warrant certificate will be issued for the
remaining warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
Avnet may issue stock purchase contracts, representing contracts obligating
holders to purchase from Avnet, and Avnet to sell to the holders, a specified
number of shares of Avnet's common stock at a future date or dates. The price
per share of common stock may be fixed at the time the stock purchase contracts
are issued or may be determined by reference to a specific formula set forth in
the stock purchase contracts. The stock purchase contracts may be issued
separately or as a part of units, which are referred to as stock purchase units,
consisting of a stock purchase contract and, as security for the holder's
obligations to purchase the common stock under stock purchase contracts, either
- senior debt securities, subordinated debt securities or junior
subordinated debt securities of Avnet, or
- debt obligations of third parties, including U.S. Treasury securities.
The stock purchase contracts may require Avnet to make periodic payments to
the holders of the stock purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The stock purchase contracts may require
holders to secure their obligations thereunder in a specified manner, and in
certain circumstances Avnet may deliver newly issued prepaid stock purchase
contracts, which are referred to as prepaid securities, upon release to a holder
of any collateral securing such holder's obligations under the original stock
purchase contract.
The applicable prospectus supplement will describe the terms of any stock
purchase contracts or stock purchase units and, if applicable, prepaid
securities. The description in the prospectus supplement will only be a summary
and will be qualified in its entirety by reference to the stock purchase
contracts, the collateral arrangements and depositary arrangements, if
applicable, relating to such stock purchase contracts or stock purchase units
and, if applicable, the prepaid securities and the document pursuant to which
such prepaid securities will be issued.
DESCRIPTION OF UNITS
Avnet may issue units consisting of two or more constituent securities.
These units may be issuable as, and for a specified period of time may be
transferable as, a single security only, rather than the separate constituent
securities comprising such units. If Avnet issues units, it will describe the
specific terms of the units in a prospectus supplement, including
- the title of any series of units,
- identification and description of the separate constituent securities
comprising the units,
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- the price or prices at which the units will be issued,
- any date on and after which the constituent securities comprising the
units will become separately transferable,
- information with respect to any book-entry procedures for the
registration and transfer of the units or the constituent securities,
- a discussion of any material federal income tax considerations applicable
to holding, transferring or exercising units or any constituent security,
and
- any other terms of the units and their constituent securities.
PLAN OF DISTRIBUTION
Avnet may sell the securities offered in this prospectus to or through one
or more underwriters or dealers, directly to institutional investors or other
purchasers, through agents, or through a combination of such or other methods.
Avnet may distribute the securities from time to time in one or more
transactions at a fixed price or prices, which may be changed, or at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
If Avnet uses underwriters in a sale, the underwriters will acquire the
securities for their own account and may resell them from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. We may offer the
securities to the public either through underwriting syndicates represented by
one or more managing underwriters or directly by one or more firms acting as
underwriters. The underwriter or underwriters in a particular underwritten
offering of securities will be named in the prospectus supplement for such
offering and, if an underwriting syndicate is used, the name of the managing
underwriter or underwriters will appear on the cover of such prospectus
supplement.
Avnet may sell the securities directly or through agents designated by
Avnet from time to time. Any agent involved in the offer or sale of the
securities will be named, and any commissions Avnet pays to such agent will be
disclosed, in the prospectus supplement relating to that offer and sale. Unless
otherwise indicated in the prospectus supplement, any such agent will be acting
on a best efforts basis for the period of its appointment.
In connection with the sale of securities, underwriters or agents may
receive compensation from Avnet or from purchasers of securities for whom they
may act as agents in the form of discounts, concessions or commissions.
Underwriters may sell securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agents. Underwriters, dealers and agents that participate in the distribution of
securities may be deemed to be underwriters, and any discounts or commissions
received by them from Avnet and any profit on the resale of securities by them
may be deemed to be underwriting discounts and commissions, under the Securities
Act. Any such underwriter or agent will be identified, and any such compensation
received from Avnet will be described, in the related prospectus supplement.
If so indicated in a prospectus supplement, Avnet will authorize
underwriters or other persons acting as the agents to solicit offers by certain
institutions to purchase securities from Avnet at the public offering price set
forth in the prospectus supplement pursuant to contracts providing for payment
and delivery on a future date. Institutions with which such contracts may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions, but in all cases such institutions must be approved by Avnet. The
obligations of any purchaser under any such contract will be subject to the
condition that the purchase of the securities will not at the time of delivery
be prohibited under the laws of the jurisdiction to which such purchaser is
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subject. The underwriters and such other agents will not have any responsibility
in respect of the validity or performance of such contracts.
Under agreements which Avnet may enter into, underwriters and agents who
participate in the distribution of securities may be entitled to indemnification
by Avnet against certain civil liabilities, including liabilities under the
Securities Act of 1933, or to contribution by Avnet with respect to payments
they may be required to make in respect thereof.
The underwriters or agents and their affiliates may engage in transactions
with and perform services for Avnet or its affiliates in the ordinary course of
their respective businesses.
If underwriters or dealers are used in a sale of securities, until the
distribution of the securities is completed, rules of the Securities and
Exchange Commission may limit the ability of any such underwriters and certain
selling group members, if any, to bid for and purchase the securities. As an
exception to these rules, representatives of any underwriters may engage in
certain transactions that stabilize the price of the securities. Such
transactions may consist of bids or purchases for the purpose of pegging, fixing
or maintaining the price of the securities.
If the underwriters create a short position in the securities in connection
with the offerings, that is, if they sell more securities than are set forth on
the cover page of the prospectus supplement, the representatives of the
underwriters may reduce that short position by purchasing securities in the open
market. The representatives of the underwriters may also elect to reduce any
short position by exercising all or part of any overallotment option described
in the prospectus supplement.
The securities may or may not be listed on a national securities exchange
or traded in the over-the-counter market. We cannot give you any assurances as
to the liquidity of the trading market for any of the securities.
LEGAL MATTERS
The validity of any offered securities will be passed upon for Avnet by
David R. Birk, its Senior Vice President and General Counsel. Mr. Birk
beneficially owns 120,185 shares of Avnet's common stock, which includes 114,250
shares issuable upon exercise of employee stock options. Certain legal matters
with respect to offered securities will be passed upon for the underwriters,
dealers or agents, if any, by their counsel.
EXPERTS
The consolidated financial statements and schedule of Avnet incorporated by
reference in this prospectus from Avnet's Annual Report on Form 10-K for the
three years in the period ended June 30, 2000 have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated herein by reference in reliance upon the
authority of that firm as experts in giving such report.
The consolidated financial statements of Marshall Industries incorporated
by reference in this prospectus from Avnet's Current Report on Form 8-K bearing
cover date of October 20, 1999, for the fiscal years ended May 31, 1999, 1998
and 1997 have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of that firm as
experts in giving such report.
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WHERE YOU CAN FIND MORE INFORMATION
This prospectus is a part of a registration statement on Form S-3,
Registration No. 333-39530, which Avnet filed with the Securities and Exchange
Commission under the Securities Act of 1933. We refer you to this registration
statement for further information concerning Avnet and any offering of
securities.
Avnet files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (Commission File
Number 1-4224). These filings contain important information which does not
appear in this prospectus. For further information about Avnet, you may obtain
these filings over the internet at the SEC's web site at http://www.sec.gov. You
may also read and copy these filings at the SEC's public reference room at 450
Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the public reference room by calling the SEC at 1-800-SEC-0330, and
may obtain copies of Avnet's filings from the public reference room by calling
(202) 942-8090.
The SEC allows Avnet to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents which Avnet has filed or will file with the
SEC. We are incorporating by reference in this prospectus
- Avnet's Annual Report on Form 10-K for the fiscal year ended June 30,
2000,
- Avnet's Current Reports on Form 8-K bearing cover dates of October 20,
1999, July 11, 2000, August 7, 2000, September 25, 2000, and September
27, 2000, and
- The description of Avnet's common stock which appears in Avnet's
Registration Statement for the registration of the common stock under
Section 12(b) of the Securities Exchange Act of 1934, including any
amendment or report filed to update this description.
All documents which Avnet has filed or will file with the SEC pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the
reports listed above and before the termination of this offering of Avnet's
securities will be deemed to be incorporated by reference in this prospectus and
to be a part of it from the filing dates of such documents. Certain statements
in and portions of this prospectus update and replace information in the above
listed documents incorporated by reference. Likewise, statements in or portions
of a future document incorporated by reference in this prospectus may update and
replace statements in and portions of this prospectus or the above listed
documents.
We shall provide you without charge, upon your written or oral request, a
copy of the indenture, any warrant agreement or other agreement relating to
Avnet's securities offered in this prospectus, and any of the documents
incorporated by reference in this prospectus, other than exhibits to such
documents which are not specifically incorporated by reference into such
documents. Please direct your written or telephone requests to the Corporate
Secretary, Avnet, Inc., 2211 South 47th Street, Phoenix, Arizona 85034
(Telephone 480-643-2000).
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[AVNET LOGO]
$
AVNET, INC.
% NOTES DUE 200
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
BANC OF AMERICA SECURITIES LLC
CHASE SECURITIES INC.
ABN AMRO INCORPORATED
BANC ONE CAPITAL MARKETS, INC.
FIRST UNION SECURITIES, INC.
FLEET SECURITIES, INC.
, 2000
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