Avnet Inc. Reports First Quarter Fiscal Year 2005 Results; Net Income up Significantly Year over Year.PHOENIX -- Avnet Avnet, Inc. (NYSE: AVT) is a technology B2B distributor headquartered in Phoenix, Arizona. The company states on their website that:
See: New York Stock Exchange :AVT AVT avian arginine vasotocin. See vasotocin. ) today reported results for the first quarter fiscal year 2005, which ended Oct. 2, 2004. Revenues were $2.60 billion for the quarter, an increase of 8.0% over first quarter fiscal 2004, which included an extra week due to Avnet's fiscal calendar. Net income for first quarter fiscal 2005 was $36.3 million, or $0.30 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, as compared with a net loss of $11.4 million, or $0.09 per share on a diluted basis in the same quarter in fiscal 2004. Current year first quarter net income represents an improvement of $25.5 million, or 236%, over the prior year's first quarter net income of $10.8 million, or $0.09 per share on a diluted basis, excluding certain charges (which are further discussed in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial statements). Roy Roy, city (1990 pop. 24,603), Weber co., N Utah, near Great Salt Lake; settled by Mormons 1877, inc. 1937. Computer equipment is manufactured, and many residents work at nearby Hill Air Force Base. Vallee, chairman and chief executive officer, commented, "On a year-over-year basis, revenue growth of 8% would have been significantly higher if adjusted for the fact that last year's first quarter included an additional week of sales due to Avnet's fiscal calendar. Year over year, Electronics Marketing (EM) posted double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sales per week growth in all three regions and Technology Solutions (TS) sales per week growth was in the mid-single digits. I am pleased that Avnet continued to grow at a double-digit rate on a sales per week basis. This performance is a testament to our team's strong focus on delivering value to our customers." Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for first quarter fiscal 2005 was $73.1 million, an improvement of $64.7 million over operating income of $8.4 million in first quarter fiscal 2004. Excluding certain charges, operating income for first quarter fiscal 2004 was $40.5 million. Operating income as a percent of sales increased 113 basis points from 1.68% in first quarter fiscal 2004, excluding certain charges, to 2.81% in the current year quarter. This represents the ninth consecutive quarter of year-over-year improvement in operating income dollars and margin, excluding certain charges. "Despite slower revenue growth, our gains in productivity over the past several quarters have allowed us to vastly improve our profitability over the prior year," said Ray Sadowski, chief financial officer. "On revenue growth of 8% we delivered operating income growth, excluding certain charges, of 80% as we continue to identify opportunities and implement operating efficiencies throughout our business to facilitate continued profit expansion." Operating Groups - First Quarter Electronics Marketing sales of $1.56 billion grew 15% over the prior year first quarter, and were down less than 3% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . Year over year, EM's sales per week were up approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 24%. Roughly half of the sequential One after the other in some consecutive order such as by name or number. decline was due to the normal seasonal slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. while the remainder appears to be due to customer inventory reductions. EM's year-over-year revenue growth was led by the increase in revenue in the EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. region with growth of 28%. EM's operating income of $58.9 million for first quarter fiscal 2005 was 76% higher than prior year first quarter operating income of $33.4 million, and its operating income margin of 3.76% represented a 130 basis point improvement over the prior year first quarter. Technology Solutions sales of $1.04 billion were down 1% year over year and flat as compared with fourth quarter fiscal 2004. Year over year, TS' sales per week grew approximately 6%. TS' operating income was $27.3 million, a 50% increase as compared with first quarter fiscal 2004 operating income of $18.3 million, and its operating income margin of 2.64% increased 90 basis points over prior year first quarter. This improvement in operating income margin was driven by all three regions with EMEA showing the greatest progress. Vallee added, "The Avnet team continues to focus on profitable growth worldwide as evidenced by our growth in the EMEA region and continued profitability in Asia. Over the last three years, Avnet has focused on value-based management and operational excellence initiatives, which have significantly improved our expense and asset productivity metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. . These initiatives are designed to improve profitability through cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. market changes and increase shareholder return over time." Outlook Looking forward to Avnet's second quarter fiscal 2005, Vallee stated, "We continue to believe we are in a mid-cycle correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. for the electronic components business that will be completed within the next quarter or two and we expect Electronics Marketing revenues to be flat to down 3% sequentially. Business spending on technology products continues to grow at a moderate pace and we expect revenue for Technology Solutions to increase 20% to 25% sequentially due to normal seasonal strength. Therefore, Avnet's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: sales should be in the range of $2.75 billion to $2.85 billion in the second quarter fiscal 2005. We expect earnings to increase sequentially and be in the range of $0.35 to $0.40 per share on a diluted basis, up significantly from GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). income of $0.07 per share and pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma income of $0.21 per share in the prior year December December: see month. quarter." Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on management's current expectations and are subject to uncertainty and changes in factual circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . The forward-looking statements herein include statements addressing future financial and operating results of Avnet and may include words such as "anticipate," "expect," believe," and "should." Actual results may vary materially from the expectations contained in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the company's ability to retain and grow market share, the company's ability to generate additional cash flow, any significant and unanticipated sales decline, changes in business conditions and the economy in general, changes in market demand and pricing pressures, allocations of products by suppliers, and other competitive and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. factors affecting the businesses of Avnet generally. More detailed information about these and other factors is set forth in Avnet's filings with the Securities and Exchange Commission, including the company's reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and Form 10-Q Form 10-Q See 10-Q. . Avnet is under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. Non-GAAP and Pro Forma Financial Information In addition to disclosing financial results that are determined in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP), the company also discloses pro forma or non-GAAP results of operations that exclude certain items. Management believes that providing this additional information is useful to investors to better assess and understand operating performance, especially when comparing results with previous periods or forecasting performance for future periods. Management believes the pro forma measures also help indicate underlying trends in the business. Management also uses pro forma measures to establish operational goals and, in some cases, for measuring performance for compensation purposes. However, analysis of results and outlook on a pro forma or non-GAAP basis should be used as a complement to, and in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with, data presented in accordance with GAAP. Reconciliations of the company's analysis of results to GAAP for the current quarter are attached. Teleconference Webcast and Upcoming Events Avnet will host a webcast of its quarterly teleconference today at 5 p.m. Eastern time. The live webcast event, as well as other financial information including financial statement reconciliations of GAAP and non-GAAP financial measures, can be accessed through www.ir.avnet.com. Please logon See login. 1. (jargon) logon - login. 2. (networking) logon - In ACF/VTAM, an unformatted session-initiation request for a session between two logical units. to the site 15 minutes prior to the start of the event to register or download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. any necessary software. An archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. copy of the presentation will also be available after the webcast. Additional upcoming events and other information can be accessed by visiting Avnet's Investor Relations Investor relations The process by which the corporation communicates with its investors. Web site at www.ir.avnet.com. About Avnet Avnet enables success from the center of the technology industry, providing cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. services and solutions vital to a broad base of more than 100,000 customers and 250 suppliers. The company markets, distributes and adds value to a wide variety of electronic components, enterprise computer products and embedded Inserted into. See embedded system. subsystems. Through its premier market position, Avnet brings a breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is and depth of capabilities that help its trading partners accelerate growth and realize cost efficiencies. Avnet generated more than $10 billion in revenue in fiscal 2004 (year ended July July: see month. 3, 2004) through sales in 68 countries. Visit Avnet's Investor Relations Web site at www.ir.avnet.com or contact us at investorrelations@avnet.com.
AVNET INC.
(MILLIONS EXCEPT PER SHARE DATA)
INCLUDING RESTRUCTURING FIRST QUARTERS ENDED
AND OTHER CHARGES (1) --------------------
OCT. 2, OCT. 4,
2004 (2) 2003 (1)(2)
------------ ------------
Sales $2,600.0 $2,407.6
Income (loss) before income taxes 52.5 (16.5)
Net income (loss) 36.3 (11.4)
Net income (loss) per share:
Basic $0.30 ($0.09)
Diluted $0.30 ($0.09)
----------------------------------------------------------------------
EXCLUDING RESTRUCTURING FIRST QUARTERS ENDED
AND OTHER CHARGES --------------------
OCT. 2, OCT. 4,
2004 (2) 2003 (2)
------------ ------------
Sales $2,600.0 $2,407.6
Income before income taxes 52.5 15.7
Net income 36.3 10.8
Net income per share:
Basic $0.30 $0.09
Diluted $0.30 $0.09
(1) The results for the first quarter of fiscal 2004 shown above
include the impact of incremental restructuring and other charges
recorded primarily in connection with cost-cutting initiatives and
the combination of the Computer Marketing and Applied Computing
operating groups into one operating group now called Avnet
Technology Solutions. These restructuring and other charges
amounted to $32.2 million pre-tax (all of which is included in
operating expenses), $22.2 million after-tax and $0.18 per diluted
share. See the Consolidated Statements of Operations included
herein for further disclosure of the impacts of these
restructuring and other charges.
(2) Due to Avnet's fiscal calendar, the quarter ended Oct. 2, 2004
contained 13 weeks while the quarter ended Oct. 4, 2003 contained
14 weeks.
AVNET INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
FIRST QUARTERS ENDED
-----------------------------------------------
OCT. 4, 2003 (1)(2)
----------------------------------
RESTRUCT-
OCT. 2, REPORTED URING AND ADJUSTED
2004 (2) RESULTS OTHER CHGS. RESULTS
----------- ----------- ----------- -----------
Sales $2,600,001 $2,407,650 $ - $2,407,650
Cost of sales 2,250,391 2,098,553 - 2,098,553
----------- ----------- ----------- -----------
Gross profit 349,610 309,097 - 309,097
Selling, general and
administrative
expenses 276,539 268,552 - 268,552
Restructuring and other
charges (1) - 32,153 (32,153) -
----------- ----------- ----------- -----------
Operating income 73,071 8,392 32,153 40,545
Other income, net 273 2,303 - 2,303
Interest expense (20,871) (27,158) - (27,158)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 52,473 (16,463) 32,153 15,690
Income tax provision
(benefit) 16,142 (5,104) 9,967 4,863
----------- ----------- ----------- -----------
Net income (loss) $36,331 ($11,359) $22,186 $10,827
=========== =========== =========== ===========
Net earnings (loss)
per share:
Basic $0.30 ($0.09) $0.18 $0.09
=========== =========== =========== ===========
Diluted $0.30 ($0.09) $0.18 $0.09
=========== =========== =========== ===========
Shares used to compute
earnings (loss) per
share:
Basic 120,523 119,597 119,597 119,597
=========== =========== =========== ===========
Diluted 121,280 119,597 119,597 119,597
=========== =========== =========== ===========
(1) The results for the first quarter of fiscal 2004 shown above
include the impact of incremental restructuring and other charges
recorded primarily in connection with cost cutting initiatives and
the combination of the Computer Marketing and Applied Computing
operating groups into one operating group now called Avnet
Technology Solutions. These charges included severance costs,
charges for consolidation of certain owned and leased facilities,
write-offs of certain capitalized IT-related initiatives and the
write-off of the remaining unamortized deferred loan costs
associated with the company's multi-year credit facility
terminated in September 2003. These restructuring and other
charges amounted to $32.2 million pre-tax (all of which was
included in operating expenses), $22.2 million after-tax and $0.18
per diluted share.
(2) Due to Avnet's fiscal calendar, the quarter ended Oct. 2, 2004
contained 13 weeks while the quarter ended Oct. 4, 2003 contained
14 weeks.
AVNET INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
OCT.2, JULY 3,
2004 2004
----------- -----------
Assets:
Current assets:
Cash and cash equivalents $260,466 $312,667
Receivables, net 1,725,661 1,743,962
Inventories 1,447,983 1,364,037
Other 57,532 63,320
----------- -----------
Total current assets 3,491,642 3,483,986
Property, plant and equipment, net 183,640 187,339
Goodwill 895,975 894,882
Other assets 293,247 297,444
----------- -----------
Total assets 4,864,504 4,863,651
----------- -----------
Less liabilities:
Current liabilities:
Borrowings due within one year 119,992 160,660
Accounts payable 1,093,427 1,099,703
Accrued expenses and other 373,381 384,630
----------- -----------
Total current liabilities 1,586,800 1,644,993
Long-term debt, less due
within one year 1,202,710 1,196,160
Other long-term liabilities 64,166 69,072
----------- -----------
Total liabilities 2,853,676 2,910,225
----------- -----------
Shareholders' equity $2,010,828 $1,953,426
=========== ===========
AVNET INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS)
FIRST QUARTERS
ENDED
-------------------
OCT. 2, OCT. 4,
2004 2003
--------- ---------
Cash flows from:
Operations:
Net income (loss) $36,331 ($11,359)
Add non-cash and other reconciling items:
Depreciation and amortization 15,089 18,406
Deferred taxes 9,383 (1,562)
Non-cash restructuring and other charges - 14,830
Other, net 9,409 10,424
--------- ---------
70,212 30,739
Receivables 32,706 (58,431)
Inventories (71,086) (1,268)
Accounts payable (21,425) 119,028
Accrued expenses and other, net (17,650) (33,008)
--------- ---------
Net cash flows provided from (used for)
operating activities (7,243) 57,060
--------- ---------
Financing:
Repayment of notes (2,956) (40,859)
Proceeds from (repayment of) bank debt, net (38,095) 3,621
Proceeds from other debt, net (89) 32
Other, net (151) 753
--------- ---------
Net cash flows used for financing
activities (41,291) (36,453)
--------- ---------
Investing:
Purchases of property, plant, and equipment (6,246) (7,757)
Cash proceeds from sales of property, plant
and equipment 459 1,052
Acquisition of operations, net (1,045) (1,448)
--------- ---------
Net cash flows used for investing activities (6,832) (8,153)
--------- ---------
Effect of exchange rates on cash and cash
equivalents 3,165 3,147
--------- ---------
Cash and cash equivalents:
increase (52,201) 15,601
at beginning of year 312,667 395,467
--------- ---------
at end of period $260,466 $411,068
========= =========
AVNET INC.
SEGMENT INFORMATION
(MILLIONS)
FIRST QUARTERS ENDED
---------------------
OCT. 2, OCT.4,
SALES 2004 2003
--------------------------- --------- ---------
Avnet Electronics Marketing $1,564.2 $1,357.9
Avnet Technology Solutions 1,035.8 1,049.7
--------- ---------
Consolidated $2,600.0 $2,407.6
========= =========
OPERATING INCOME (LOSS)
-----------------------
Avnet Electronics Marketing $58.9 $33.4
Avnet Technology Solutions 27.3 18.3
Corporate (13.1) (11.1)
--------- ---------
Consolidated Before Restructuring and
Other Charges 73.1 40.6
Restructuring and Other Charges - (32.2)
--------- ---------
Consolidated $73.1 $8.4
========= =========
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