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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) APRIL 25, 2000
AVNET, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEW YORK 1-4224 11-1890605
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
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2211 SOUTH 47TH STREET, PHOENIX, ARIZONA 85034
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE -- (480) 643-2000
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)
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ITEM 5. OTHER EVENTS.
In connection with registration statements to be filed by Avnet, Inc.
("Avnet") pursuant to the Securities Act of 1933, the following pro forma
financial information relating to the acquisition by Avnet of Marshall
Industries ("Marshall") on October 20, 1999 is filed herewith. The acquisition
was previously reported in a Form 8-K of Avnet bearing cover date of October 20,
1999.
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PAGES
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Introduction................................................ 3
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the first half ended December 31, 1999......... 4
Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Income....................................... 5
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
INTRODUCTION
The following Unaudited Pro Forma Condensed Consolidated Statement of
Income for the first half ended December 31, 1999 has been prepared to
illustrate the effect of the merger of Marshall into Avnet. Avnet's actual
consolidated balance sheet at December 31, 1999 includes the impact of the
October 20, 1999 acquisition of Marshall and accordingly, a pro forma balance
sheet is not applicable. The Unaudited Pro Forma Condensed Consolidated
Statement of Income is based on the historical consolidated financial statements
of Avnet for the first half ended December 31, 1999 and the historical
consolidated financial statements of Marshall for the period covering July 1,
1999 through October 20, 1999, the date of the merger of Marshall into Avnet.
The Unaudited Pro Forma Condensed Consolidated Statement of Income for the
first half ended December 31, 1999 assumes that the merger had been consummated
as of the first day of Avnet's fiscal year 2000 (July 3, 1999).
The pro forma adjustments are based on preliminary estimates, which are
derived from available information and certain assumptions. Although Avnet
believes, based on available information, that the fair values and allocation of
the merger consideration included in the unaudited pro forma condensed
consolidated statement of income are reasonable estimates, final purchase
accounting adjustments will be made on the basis of future evaluations and
estimates. As a result, the final allocation of costs related to the merger may
differ significantly from that presented herein. The Unaudited Pro Forma
Condensed Consolidated Statement of Income excludes any potential benefits that
might result from the merger due to synergies that may be derived and from the
elimination of any duplicate costs other than those benefits actually realized
since the merger of Marshall into Avnet, which are included in Avnet's second
quarter of fiscal year 2000 results. As indicated in Note 1 on page 4, Avnet's
actual first half results include adjustments to reflect acquisition related
costs relating to restructuring, integration, abandonment of assets and other
similar items, in connection with the acquisition of Marshall. The Unaudited Pro
Forma Condensed Consolidated Statement of Income does not purport to be
indicative of the results that actually would have occurred if the merger
occurred on July 3, 1999 or of results which may be obtained in the future. The
Unaudited Pro Forma Condensed Consolidated Statement of Income should be read in
conjunction with (1) the notes to the Unaudited Pro Forma Condensed Consolidated
Statement of Income which appear in this report; (2) the historical condensed
consolidated financial statements and accompanying notes for Marshall at August
31, 1999 and for the first quarter then ended, which appear in Avnet's Current
Report on Form 8-K bearing cover date of October 20, 1999; and (3) the
historical condensed consolidated financial statements and accompanying notes
for Avnet at December 31, 1999 and for the first half then ended, which appear
in its Quarterly Report on Form 10-Q for the first half ended December 31, 1999.
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AVNET, INC. AND MARSHALL INDUSTRIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE FIRST HALF ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
The following unaudited pro forma condensed consolidated statement of
income for the first half ended December 31, 1999 assumes that the merger was
completed as of July 3, 1999.
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FIRST HALF ENDED DECEMBER 31, 1999
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PRO FORMA
AVNET(1) MARSHALL ADJUSTMENTS PRO FORMA
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Sales..................................... $3,757,094 $562,710 $ -- $4,319,804
Cost of sales............................. 3,243,622 477,755 -- 3,721,377
---------- -------- ------- ----------
Gross profit.............................. 513,472 84,955 -- 598,427
Operating expenses........................ 420,869 61,241 1,295(b) 483,405
---------- -------- ------- ----------
Operating income.......................... 92,603 23,714 (1,295) 115,022
Interest expense.......................... (27,600) (3,320) (5,076)(c) (35,996)
Other income, net......................... 2,820 (258) (572)(c) 1,990
---------- -------- ------- ----------
Income before taxes....................... 67,823 20,136 (6,943) 81,016
Income taxes.............................. 30,545 8,405 (2,289)(d) 36,661
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Net income................................ $ 37,278 $ 11,731 $(4,654) $ 44,355
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Earnings per share(e):
Basic................................... $ 0.98 $ 1.05
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Diluted................................. $ 0.97 $ 1.04
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Shares used to compute earnings per share
Basic................................... 38,158 42,242
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Diluted................................. 38,410 42,493
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(1) The condensed consolidated statement of income for Avnet for its first half
ended December 31, 1999 includes incremental special charges associated
with: (i) the reorganization of its Electronic Marketing European operations
consisting primarily of costs related to the consolidation of warehousing
operations; (ii) the integration of Marshall Industries into Avnet; (iii)
the reorganization of the Company's Electronic Marketing Asian operations;
and (iv) costs incurred in connection with its lawsuit against Wyle
Laboratories, Inc. The negative effect on first half pre-tax income, net
income after-tax and diluted earnings per share were $34,142, $21,549 and
$0.53, respectively.
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NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF INCOME
($ IN THOUSANDS, EXCEPT PER SHARE DATA)
1. AVNET HISTORICAL FINANCIAL DATA
The historical data presented represents the statement of income of Avnet
for the first half ended December 31, 1999. The condensed consolidated statement
of income for Avnet for its first half ended December 31, 1999 includes
incremental special charges associated with (a) the reorganization of its
Electronic Marketing European operations consisting primarily of costs related
to the consolidation of warehousing operations; (b) the integration of Marshall
Industries into Avnet; (c) the reorganization of Avnet's Electronic Marketing
Asian operations; and (d) costs incurred in connection with its lawsuit against
Wyle Laboratories, Inc. The total amount of special charges recorded in the
first half of fiscal 2000 amounted to $34,142 pre-tax, $21,549 after-tax and
$0.53 per share on a diluted basis. More detailed information can be found in
the consolidated financial statements and the accompanying notes which appear in
Avnet's Form 10-Q for the first half ended December 31, 1999.
2. MARSHALL HISTORICAL FINANCIAL DATA
The historical data presented represents the statement of income for the
period July 1, 1999 through October 20, 1999, the date of Avnet's acquisition of
Marshall. As permitted by regulations of the Securities and Exchange Commission,
Marshall's operations for the month ended June 30, 1999 have been omitted from
the Unaudited Proforma Condensed Consolidated Statement of Income. Marshall's
sales, gross profit, operating income, income before taxes and net income for
this period were $143,487, $21,440, $5,409, $4,173 and $2,253, respectively.
3. PRO FORMA ADJUSTMENTS
(a) Avnet expects to achieve operating efficiencies from the merger. It is
anticipated that cost savings will result principally from such areas
as warehousing, sales facilities, administration, operations and
computer systems. Such anticipated cost savings other than those cost
savings actually achieved from the date of acquisition through December
31, 1999, the end of Avnet's first half, have not been reflected in the
accompanying pro forma condensed consolidated statement of income.
(b) Adjustment to reflect the incremental amortization of estimated
goodwill determined on a straight-line basis over 40 years resulting
from the purchase accounting related to the merger amounting to $1,295.
The amount of the incremental amortization of estimated goodwill takes
into account the fact that the Marshall historical statements of income
already include amortization of goodwill which will be part of the
goodwill recorded by Avnet following the merger.
(c) Adjustment to reflect the net increase in interest expense and the
decrease in interest income, based upon a presumption of, but not a
commitment for, the execution of the transactions described below:
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FIRST HALF ENDED
DEC. 31, 1999
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(IN THOUSANDS)
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Proposed issuance of short-term borrowings at an assumed
interest rate of 6%....................................... $ 8,396
Elimination of interest on certain Marshall debt which is
assumed repaid............................................ (3,320)
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Net increase in interest expense............................ $ 5,076
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Decrease in interest income (included in 'Other income
(expense), net') resulting from the utilization of
available cash and interest-bearing investments........... $ 572
=======
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A 1/8% change in interest rates will result in a change in interest
expense of $294 per annum.
(d) The income tax impact, assuming an effective tax rate of 40.525%,
applied to the deductible pro forma adjustments to the condensed
consolidated statement of income described above. (Note: the
amortization of goodwill described in note (b) above is not tax
benefitted.)
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(e) Assumes the issuance of 6,818,000 shares of Avnet common stock from
treasury to consummate the merger and additional diluted shares of
177,000 relating to the conversion of Marshall stock options into Avnet
stock options.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
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EXHIBIT NO.
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2 Amended and Restated Agreement and Plan of Merger dated as
of June 25, 1999, between Avnet, Inc. and Marshall
Industries, filed as Appendix A to the Joint Proxy
Statement/Prospectus constituting Part I of Avnet's
Registration Statement on Form S-4, Registration No.
333-86721, and incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AVNET, INC.
(Registrant)
By: /s/ RAYMOND SADOWSKI
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Raymond Sadowski
Senior Vice President and
Chief Financial Officer
Date: April 25, 2000
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