Avnet Inc. Reports Third Quarter Fiscal Year 2002 Results; Component Sales Resume Growth While Computer Sales Decline.Business Editors PHOENIX--(BUSINESS WIRE)--April 23, 2002 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. ) Tuesday Tuesday: see week. reported results for its third quarter ended March 29, 2002. The company reported a net loss of $1.25 million, or $0.01 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, for the third quarter of fiscal 2002 as compared with a net loss of $2.58 million, or $0.02 per share, for the prior sequential One after the other in some consecutive order such as by name or number. quarter. Net income in the third quarter of fiscal 2001 was $66.8 million, or $0.56 per share on a diluted basis. Sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , top line revenues declined by 6 percent to $2.21 billion, down from $2.36 billion in the prior quarter due to greater than expected softness in the computer businesses. Enterprise sales for the third quarter of fiscal 2001 were $3.46 billion. Commenting on Avnet's results, 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, Avnet's chairman and chief executive officer stated, "Our Electronics Marketing group grew revenue sequentially by 4 percent. On the other hand, Applied Computing computing - computer and Computer Marketing revenues were down more than expected, due to limited corporate capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. in the computing market segments served by these two operating groups. "Applied Computing and Computer Marketing revenues were down by 7 percent and 22 percent, respectively. Consequently, the combined computer businesses accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 45 percent of the enterprise revenue mix for the third quarter, down from the previous quarter." Vallee also stated: "Gross margin improved sequentially, primarily due to the shift in business mix towards the higher margin component revenues. In addition, our efforts to manage gross margins during a difficult business environment are paying dividends as gross margin increased in all three operating groups. "Also, taking into account the $7 million sequential reduction in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , our third quarter results reflect a reduction of annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. operating expenses in excess of $270 million, as compared with the run rate of expenses at the end of the December December: see month. 2000 quarter. "And, despite revenue declines at the enterprise level, the combination of EM's sales growth, higher gross margins and lower operating expenses, enterprise 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. margin also improved slightly over the prior sequential quarter." Vallee went on to say, "Looking at our balance sheet, we continue to make strides in working capital efficiency and debt reduction. Again this quarter, driven primarily by a reduction in working capital, and taking into account amounts outstanding under our asset securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. program, we reduced enterprise debt by approximately $120 million. "These actions continue to contribute to the P&L through interest expense reductions. Since the end of December 2000, excluding the impact of our accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying securitization program, we have reduced debt by over $1.35 billion. We remain committed to building and maintaining a strong balance sheet." Commenting on the upcoming June June: see month. quarter, Vallee stated, "We expect the combination of CM and AC revenues to be approximately flat on a sequential basis and we expect continued sequential growth in EM, similar to the third quarter's performance. "Based upon a stronger mix in business revenues, operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and interest expense reductions, earnings per share should improve for the third consecutive quarter, leading the enterprise back into the black. At this point, we anticipate fiscal fourth quarter EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. to range between $0.02 and $0.05." Additionally, the company reported that sales for the first nine months of fiscal 2002, ending in March were $6.78 billion as compared with $10.28 billion for the same period of fiscal 2001. For the first nine months of the current fiscal year, the company reported a net loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before accumulative LEGACY, ACCUMULATIVE. An accumulative legacy is a second bequest given by the same testator to the same legatee, whether it be of the same kind of thing, as money, or whether it be of different things, as, one hundred dollars, in one legacy, and a thousand dollars in another, or whether effect of change in accounting principle of $23.0 million, or $0.19 per share on a diluted basis, as compared with net income from continuing operations of $231.1 million, or $1.93 per share on a diluted basis in last year's first nine months. Including income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. and the cumulative effect of change in accounting principle related to goodwill, net income for the first nine months of fiscal 2002 was a loss of $603.5 million, or $5.10 per share on a diluted basis compared to last year's first nine months net income after all special items of $251.5 million, or $2.09 per share on a diluted basis. 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 the forward-looking statements. The forward-looking statements herein include statements addressing future financial and operating results of Avnet. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in business conditions and the economy in general, changes in market demand and pricing pressures, allocations of products by suppliers, failure to obtain and retain expected synergies from newly acquired businesses, 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 Annual Report 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. for fiscal 2001. Avnet is under no obligation to (and expressly disclaims any such obligation to) update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. Additional Information Phoenix-based Avnet Inc., a Fortune 500 company, is one of the world's largest distributors of semiconductors, interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. , passive and electromechanical The use of electricity to run moving parts. Disk drives, printers and motors are examples. Electromechanical systems must be designed for the eventual deterioration of moving components that wear over time. The first TVs were electromechanical systems (see video/TV history). components, enterprise network and computer equipment, and embedded Inserted into. See embedded system. sub-systems from leading manufacturers. Serving customers in 63 countries, Avnet markets, inventories and adds value to these products and provides world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. supply-chain management and engineering services. Avnet's Web site is located at www.avnet.com.
AVNET INC.
(MILLIONS EXCEPT PER SHARE DATA)
THIRD QUARTERS ENDED
MARCH 29, MARCH 30,
2002 2001 % CHANGE
Sales $2,214.5 $3,457.2 (36%)
Income (loss) before income taxes (3.0) 116.1 (103%)
Net income (loss) ($1.3) $66.8 (102%)
Net earnings (loss) per share:
Basic ($0.01) $0.57 (102%)
Diluted ($0.01) $0.56 (102%)
AVNET INC.
(MILLIONS EXCEPT PER SHARE DATA)
NINE MONTHS ENDED
MARCH 29, MARCH 30,
2002 (a) 2001 (a) % CHANGE
Sales $6,775.5 $10,276.3 (34%)
Income (loss) from continuing
operations before income taxes (42.9) 402.8 (111%)
Income (loss) from continuing
operations (23.0) 231.1 (110%)
Income from discontinued operations,
net of income taxes - 20.4 (100%)
Income (loss) before cumulative effect
of change in accounting principle (23.0) 251.5 (109%)
Cumulative effect of change in
accounting principle (580.5) - -
Net income (loss) ($603.5) $251.5 (340%)
Earnings (loss) per share from
continuing operations:
Basic ($0.19) $1.97 (110%)
Diluted ($0.19) $1.93 (110%)
Earnings (loss) per share before
cumulative effect of change in
accounting principle:
Basic ($0.19) $2.15 (109%)
Diluted ($0.19) $2.09 (109%)
Net earnings (loss) per share:
Basic ($5.10) $2.15 (337%)
Diluted ($5.10) $2.09 (344%)
(a) Effective as of the beginning of fiscal 2002, the Company adopted
Statement of Financial Accounting Standards No. 142 ("SFAS 142"),
"Goodwill and Other Intangible Assets," which requires, among
other things, that goodwill no longer be amortized. Had last
year's results also excluded the amortization of goodwill, the
third quarter and first nine months net income for fiscal 2001
would have been higher by $8.2 million ($0.07 per share) and $24.4
million ($0.20 per share), respectively.
AVNET INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(THOUSANDS EXCEPT PER SHARE DATA)
THIRD QUARTERS ENDED
MARCH 29, MARCH 30,
2002 (a) 2001 (a)
Sales $2,214,451 $3,457,170
Cost of sales 1,903,462 2,934,410
Gross profit 310,989 522,760
Operating expenses 287,978 361,621
Operating income 23,011 161,139
Other income, net 961 9,083
Interest expense (26,959) (54,153)
Income (loss) from continuing
operations before income taxes (2,987) 116,069
Income taxes (1,736) 49,225
Income (loss) from continuing
operations (1,251) 66,844
Income from discontinued operations,
net of income taxes - -
Income (loss) before cumulative
effect of change in accounting principle (1,251) 66,844
Cumulative effect of change in accounting
principle - -
Net income (loss) ($1,251) $66,844
Earnings (loss) per share from continuing
operations:
Basic ($0.01) $0.57
Diluted ($0.01) $0.56
Earnings (loss) per share before cumulative
effect of change in accounting principle:
Basic ($0.01) $0.57
Diluted ($0.01) $0.56
Net earnings (loss) per share:
Basic ($0.01) $0.57
Diluted ($0.01) $0.56
Shares used to compute earnings (loss) per
share:
Basic 118,859 117,259
Diluted 118,859 118,609
NINE MONTHS ENDED
MARCH 29, MARCH 30,
2002 (a) 2001 (a)
Sales $6,775,496 $10,276,255
Cost of sales 5,835,329 8,723,161
Gross profit 940,167 1,553,094
Operating expenses 889,725 1,021,815
Operating income 50,442 531,279
Other income, net 4,750 17,097
Interest expense (98,131) (145,567)
Income (loss) from continuing
operations before income taxes (42,939) 402,809
Income taxes (19,905) 171,677
Income (loss) from continuing
operations (23,034) 231,132
Income from discontinued operations,
net of income taxes - 20,416
Income (loss) before cumulative
effect of change in accounting principle (23,034) 251,548
Cumulative effect of change in accounting
principle (580,495) -
Net income (loss) ($603,529) $251,548
Earnings (loss) per share from continuing
operations:
Basic ($0.19) $1.97
Diluted ($0.19) $1.93
Earnings (loss) per share before cumulative
effect of change in accounting principle:
Basic ($0.19) $2.15
Diluted ($0.19) $2.09
Net earnings (loss) per share:
Basic ($5.10) $2.15
Diluted ($5.10) $2.09
Shares used to compute earnings (loss) per
share:
Basic 118,282 117,118
Diluted 118,282 122,243
(a) Effective as of the beginning of fiscal 2002, the Company adopted
Statement of Financial Accounting Standards No. 142 ("SFAS 142"),
"Goodwill and Other Intangible Assets," which requires, among
other things, that goodwill no longer be amortized. Had last
year's results also excluded the amortization of goodwill, the
third quarter and first nine months net income for fiscal 2001
would have been higher by $8.2 million ($0.07 per share) and $24.4
million ($0.20 per share), respectively.
AVNET INC.
CONSOLIDATED BALANCE SHEETS
(THOUSANDS)
MARCH 29, JUNE 29,
2002 (a) 2001 (a)
Assets:
Current assets:
Cash and cash equivalents $134,525 $97,279
Receivables 1,332,836 1,629,566
Inventories 1,485,375 1,917,044
Other 104,311 103,600
Total current assets 3,057,047 3,747,489
Property, plant & equipment 408,270 417,159
Goodwill 832,930 1,404,863
Other assets 310,860 294,637
Total assets 4,609,107 5,864,148
Less liabilities:
Current liabilities:
Borrowings due within one year 66,398 1,302,129
Accounts payable 885,134 853,196
Accrued expenses and other 295,601 414,740
Total current liabilities 1,247,133 2,570,065
Long-term debt, less due within one year 1,590,745 919,493
Total liabilities 2,837,878 3,489,558
Shareholders' equity $1,771,229 $2,374,590
(a) The Company has an accounts receivable securitization program
whereby it sells an interest in a pool of its trade accounts
receivable. The purpose of the program is to provide the Company
with an additional source of liquidity at interest rates more
favorable than it could receive through other forms of financing.
At March 29, 2002 and June 29, 2001, the Company had sold $314.4
million and $350.0 million, respectively, of receivables under the
program which is reflected as a reduction of receivables in the
above balance sheet.
AVNET INC.
SEGMENT INFORMATION
(MILLIONS)
THIRD QUARTERS ENDED NINE MONTHS ENDED
MARCH 29, MARCH 30, MARCH 29, MARCH 30,
SALES 2002 2001 2002 2001
Electronics Marketing $1,215.8 $2,193.6 $3,625.3 $6,732.8
Computer Marketing 551.7 717.2 1,828.4 2,235.8
Applied Computing 447.0 546.4 1,321.8 1,307.7
Consolidated $2,214.5 $3,457.2 $6,775.5 $10,276.3
OPERATING INCOME (LOSS)
Electronics Marketing $11.4 $144.9 $4.6 $490.9
Computer Marketing 10.1 22.2 44.0 71.7
Applied Computing 13.5 19.9 45.0 47.0
Corporate (12.0) (25.9) (43.2) (78.3)
Consolidated $23.0 $161.1 $50.4 $531.3
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