Avnet, Inc.
AVNET INC (Form: 10-Q, Received: 10/28/2016 15:17:51)

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM 10-Q


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 1, 2016


Commission File #1-4224

AVNET, INC.

Incorporated in New York


IRS Employer Identification No. 11-1890605

2211 South 47 th Street, Phoenix, Arizona 85034

(480) 643-2000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☑

  

Accelerated filer ☐

  

Non-accelerated filer ☐

  

Smaller Reporting Company ☐

 

 

 

 

(Do not check if a smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of October 20, 2016, the total number of shares outstanding of the registrant’s Common Stock was 127,630,975 shares, net of treasury shares.

 

 

 

 


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

INDEX

 

 

Page No.

PART I. FINANCIAL INFORMATION  

 

 

 

Item 1. Financial Statements  

 

 

 

Consolidated Balance Sheets at October 1, 2016 and July 2, 2016  

2

 

 

Consolidated Statements of Operations for the first quarters ended October 1, 2016 and October 3, 2015  

3

 

 

Consolidated Statements of Comprehensive Income for the first quarters ended October 1, 2016 and October 3, 2015  

4

 

 

Consolidated Statements of Cash Flows for the first quarters ended October 1, 2016 and October 3, 2015  

5

 

 

Notes to Consolidated Financial Statements  

6

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations  

21

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk  

28

 

 

Item 4. Controls and Procedures  

29

 

 

PART II. OTHER INFORMATION  

29

 

 

Item 1. Legal Proceedings  

29

 

 

Item 1A. Risk Factors  

30

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  

32

 

 

Item 6. Exhibits  

33

 

 

Signature Page  

35

 

 

 

1


 

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

AVNET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

    

October 1,

    

July 2,

 

 

 

2016

 

2016

 

 

 

(Thousands, except share

 

 

 

amounts)

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,196,545

 

$

1,031,478

 

Receivables, less allowances of $30,756 and $27,448, respectively

 

 

2,876,346

 

 

2,803,678

 

Inventories

 

 

2,418,761

 

 

2,589,659

 

Prepaid and other current assets

 

 

76,514

 

 

81,196

 

Assets held for sale (Note 3)

 

 

3,131,587

 

 

2,497,962

 

Total current assets

 

 

9,699,753

 

 

9,003,973

 

Property, plant and equipment, net

 

 

471,321

 

 

453,209

 

Goodwill

 

 

620,850

 

 

621,852

 

Intangible assets, net

 

 

20,823

 

 

22,571

 

Other assets

 

 

233,376

 

 

239,133

 

Non-current assets held for sale (Note 3)

 

 

 —

 

 

899,067

 

Total assets

 

$

11,046,123

 

$

11,239,805

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Short-term debt

 

$

98,017

 

$

1,152,599

 

Accounts payable

 

 

1,463,555

 

 

1,616,694

 

Accrued expenses and other

 

 

419,445

 

 

394,888

 

Liabilities held for sale (Note 3)

 

 

1,452,851

 

 

1,778,312

 

Total current liabilities

 

 

3,433,868

 

 

4,942,493

 

Long-term debt

 

 

2,609,617

 

 

1,339,204

 

Other liabilities

 

 

213,612

 

 

223,053

 

Non-current liabilities held for sale (Note 3)

 

 

 —

 

 

43,769

 

Total liabilities

 

 

6,257,097

 

 

6,548,519

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common stock $1.00 par; authorized 300,000,000 shares; issued 127,574,528 shares and 127,377,466 shares, respectively

 

 

127,575

 

 

127,377

 

Additional paid-in capital

 

 

1,470,725

 

 

1,452,678

 

Retained earnings

 

 

3,679,438

 

 

3,632,271

 

Accumulated other comprehensive loss

 

 

(488,495)

 

 

(520,775)

 

Treasury stock at cost, 25,613 shares and 27,314 shares, respectively

 

 

(217)

 

 

(265)

 

Total shareholders’ equity

 

 

4,789,026

 

 

4,691,286

 

Total liabilities and shareholders’ equity

 

$

11,046,123

 

$

11,239,805

 

 

See notes to consolidated financial statements. 

2


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

 

    

October 1,

    

October 3,

 

 

 

2016

 

2015

 

 

 

(Thousands, except per share amounts)

 

Sales

 

$

4,173,405

 

$

4,600,802

 

Cost of sales

 

 

3,647,920

 

 

4,037,546

 

Gross profit

 

 

525,485

 

 

563,256

 

Selling, general and administrative expenses

 

 

365,025

 

 

380,751

 

Restructuring, integration and other expenses

 

 

29,469

 

 

12,518

 

Operating income

 

 

130,991

 

 

169,987

 

Other income (expense), net

 

 

(13,733)

 

 

882

 

Interest expense

 

 

(27,237)

 

 

(22,032)

 

Income from continuing operations before income taxes

 

 

90,021

 

 

148,837

 

Income tax expense

 

 

21,435

 

 

37,849

 

Income from continuing operations

 

 

68,586

 

 

110,988

 

Income from discontinued operations, net of income taxes of $21,295 and $9,403, respectively

 

 

257

 

 

19,266

 

Net income

 

$

68,843

 

$

130,254

 

 

 

 

 

 

 

 

 

Earnings per share - basic:

 

 

 

 

 

 

 

Continuing operations

 

$

0.54

 

$

0.83

 

Discontinued operations

 

 

0.00

 

 

0.14

 

Net income per share - basic

 

$

0.54

 

$

0.97

 

 

 

 

 

 

 

 

 

Earnings per share - diluted:

 

 

 

 

 

 

 

Continuing operations

 

$

0.53

 

$

0.82

 

Discontinued operations

 

 

0.00

 

 

0.14

 

Net income per share - diluted

 

$

0.53

 

$

0.96

 

 

 

 

 

 

 

 

 

Shares used to compute earnings per share:

 

 

 

 

 

 

 

Basic

 

 

127,531

 

 

133,783

 

Diluted

 

 

129,763

 

 

136,326

 

Cash dividends paid per common share

 

$

0.17

 

$

0.17

 

 

See notes to consolidated financial statements.

3


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

    

October 1,

    

October 3,

 

 

2016

 

2015

 

 

(Thousands)

Net income

 

$

68,843

 

$

130,254

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

Foreign currency translation adjustments and other

 

 

31,661

 

 

(40,248)

Pension adjustments, net

 

 

619

 

 

2,067

Total comprehensive income

 

$

101,123

 

$

92,073

 

See notes to consolidated financial statements.

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Table of Contents

AVNET, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

    

October 1,

    

October 3,

 

 

2016

 

2015

 

 

(Thousands)

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

68,843

 

$

130,254

Less: Income from discontinued operations, net of tax

 

 

257

 

 

19,266

Income from continuing operations

 

 

68,586

 

 

110,988

 

 

 

 

 

 

 

Non-cash and other reconciling items:

 

 

 

 

 

 

Depreciation

 

 

19,694

 

 

16,737

Amortization

 

 

1,930

 

 

2,436

Deferred income taxes

 

 

6,412

 

 

3,381

Stock-based compensation

 

 

17,576

 

 

24,350

Other, net

 

 

10,714

 

 

9,411

Changes in (net of effects from businesses acquired):

 

 

 

 

 

 

Receivables

 

 

(64,587)

 

 

124,076

Inventories

 

 

182,240

 

 

(282,846)

Accounts payable

 

 

(164,777)

 

 

(2,476)

Accrued expenses and other, net

 

 

33,522

 

 

(33,535)

Net cash flows provided (used) for operating activities - continuing operations

 

 

111,310

 

 

(27,478)

Net cash flows used for operating activities - discontinued operations

 

 

(111,446)

 

 

(6,263)

Net cash flows used for operating activates

 

 

(136)

 

 

(33,741)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Repayment of notes

 

 

(300,000)

 

 

(250,000)

Repayments under accounts receivable securitization, net

 

 

(150,265)

 

 

(33,045)

Borrowings of bank and revolving debt, net

 

 

669,803

 

 

418,756

Repurchases of common stock (Note 10)

 

 

 —

 

 

(143,725)

Dividends paid on common stock

 

 

(21,676)

 

 

(22,612)

Other, net

 

 

682

 

 

(2,503)

Net cash flows provided (used) for financing activities - continuing operations

 

 

198,544

 

 

(33,129)

Net cash flows used for financing activities - discontinued operations

 

 

(4,756)

 

 

(160)

Net cash flows provided (used) for financing activities

 

 

193,788

 

 

(33,289)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(34,729)

 

 

(31,205)

Other, net

 

 

432

 

 

1,568

Net cash flows used for investing activities - continuing operations

 

 

(34,297)

 

 

(29,637)

Net cash flows used for investing activities - discontinued operations

 

 

(95)

 

 

(2,395)

Net cash flows used for investing activities

 

 

(34,392)

 

 

(32,032)

 

 

 

 

 

 

 

Effect of currency exchange rate changes on cash and cash equivalents

 

 

5,807

 

 

(8,796)

Net change in cash and cash equivalents

 

 

165,067

 

 

(107,858)

Cash and cash equivalents at beginning of period

 

 

1,031,478

 

 

932,553

Cash and cash equivalents at end of period

 

$

1,196,545

 

$

824,695

 

See notes to consolidated financial statements.

 

 

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Table of Contents

AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of presentation and new accounting pronouncements

 

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments necessary to present fairly Avnet, Inc.’s and its consolidated subsidiaries’ (collectively, the “Company” or “Avnet”) financial position, results of operations, comprehensive income (loss) and cash flows. All such adjustments are of a normal recurring nature.

 

The preparation of financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results may differ from these estimates.

 

Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2016.

 

Discontinued Operations

 

The results of operations for Avnet’s Technology Solutions (“TS”) business have been classified as discontinued operations for all periods presented in the consolidated statements of operations and the consolidated statements of cash flows. The assets and liabilities of TS are classified as held for sale in the consolidated balance sheets. See Note 3 for additional information.

 

Fiscal year

 

The Company operates on a “52/53 week” fiscal year and fiscal 2017 contains 52 weeks compared to 53 weeks in fiscal 2016. As a result, the first quarter of fiscal 2017 contained 13 weeks compared to the first quarter of fiscal 2016, which contained 14 weeks.

 

New accounting pronouncements

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The update requires a lessee to recognize assets and liabilities on the consolidated balance sheets for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The update will be effective for the Company in the first quarter of fiscal 2020, using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements. 

 

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), as amended, to supersede nearly all existing revenue recognition guidance under GAAP. The core principles of ASU 2014-09 are to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Application of the guidance in ASU 2014-09 may require more judgment and estimates within the revenue recognition process compared to existing GAAP. In July 2015, the FASB approved a one-year delay in the effective date of ASU 2014-09, which makes the effective date for the Company the first quarter of fiscal 2019. The Company may adopt the requirements of ASU 2014-09 using either of two acceptable adoption methods: (i) retrospective adoption to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) adoption with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined within ASU 2014-09. The Company is currently evaluating the impact of the future adoption of ASU 2014-09 on its consolidated financial statements, including the method of adoption to be used. 

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Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

 

 

2. Acquisitions

 

In July 2016, the Company publicly announced an offer to acquire all of the outstanding and to be issued share capital of Premier Farnell plc (“PF”), a public limited company organized under English law, in exchange for £1.85 per share, representing a purchase price offer of approximately £691 million. In connection with the acquisition, in September 2016, the Company entered into foreign currency derivative financial instruments to economically hedge the foreign currency purchase price. The Company used a combination of foreign cash on hand and new borrowings to fund the purchase price. See Note 5 and Note 6 for additional information. In October 2016, subsequent to the end of the first quarter of fiscal 2017, the Company completed its acquisition of PF.  

 

During the second quarter of fiscal 2016, the Company acquired two businesses with aggregated annualized sales of approximately $120.0 million for an aggregate purchase price of $36.4 million. The Company paid cash of $19.7 million, net of cash acquired, for such acquisitions in the second quarter of fiscal 2016. The Company has not disclosed the pro-forma impact of the fiscal 2016 acquisitions, as such impact was not material to the Company’s consolidated financial position or results of operations. 

 

3. Discontinued operations

 

In September 2016, the Company entered into a definitive agreement to sell its TS business to Tech Data Corporation, a Florida corporation (the “Buyer”), for approximately $2.60 billion in a combination of $2.40 billion in cash and 2.8 million shares of the Buyer. The ultimate selling price and related sale proceeds will be adjusted for changes in certain net assets provided to the Buyer as of the closing date, as compared to certain net assets expected in the definitive agreement. As a result of the agreement, at October 1, 2016, the assets and liabilities of the Company’s TS business were classified as held for sale, and the TS business has been classified as  a discontinued operation for all periods presented as the sale of the TS business represents a strategic shift to Avnet. As of October 1, 2016, the TS business continues to be a reportable segment, as discussed in Note 13.  Upon completion of the sale of TS, which is expected to occur by the end of fiscal 2017, the Company expects to record a gain on sale as the selling price is in excess of the carrying value.  After completion of the sale of TS, the Company will provide certain customary transition services to the Buyer for a period of time, and the compensation received for such transition services will be reflected as a reduction to the underlying expenses incurred by the Company to provide such transition services.

 

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Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Summarized assets and liabilities of the TS business, classified as held for sale as of October 1, 2016, and July 2, 2016, are as follows:

 

 

 

 

 

 

 

 

 

 

    

October 1,

    

July 2,

 

 

 

2016

 

2016

 

 

 

(Thousands)

 

Receivables, less allowances of $36,452 and $39,356, respectively

 

$

1,945,304

 

$

2,171,442

 

Inventories

 

 

226,668

 

 

266,572

 

Prepaid and other current assets

 

 

57,487

 

 

59,948

 

Total current assets

 

 

2,229,459

 

 

2,497,962

 

Property, plant and equipment, net

 

 

153,194

 

 

159,449

 

Goodwill

 

 

661,812

 

 

659,368

 

Intangible assets, net

 

 

51,571

 

 

55,826

 

Other assets

 

 

35,551

 

 

24,424

 

Total assets

 

$

3,131,587

 

$

3,397,029

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,253,698

 

$

1,617,087

 

Accrued expenses and other

 

 

148,475

 

 

161,225

 

Total current liabilities

 

 

1,402,173

 

 

1,778,312

 

Other Long-term liabilities

 

 

50,678

 

 

43,769

 

Total liabilities

 

$

1,452,851

 

$

1,822,081

 

 

Summarized results of the TS business discontinued operations for the three months ended October 1, 2016, and October 3, 2015 are as follows:

 

 

 

 

 

 

 

 

 

 

    

October 1,

    

October 3,

 

 

 

2016

 

2015

 

 

 

(Thousands)

 

Sales

 

$

1,866,901

 

$

2,368,892

 

Cost of sales

 

 

1,676,458

 

 

2,140,672

 

Gross profit

 

 

190,443

 

 

228,220

 

Selling, general and administrative expenses

 

 

164,672

 

 

177,805

 

Restructuring, integration and other expenses

 

 

4,224

 

 

13,440

 

Operating income

 

 

21,547

 

 

36,975

 

Interest and other income (expense), net

 

 

5

 

 

(8,306)

 

Income from discontinued operations before income taxes

 

 

21,552

 

 

28,669

 

Income tax expense

 

 

21,295

 

 

9,403

 

Income from discontinued operations, net of taxes

 

$

257

 

$

19,266

 

 

Sales in the first quarter of fiscal 2016 included the impact of an extra week of sales as discussed further in Note 1.

 

Included within selling, general and administrative expenses of discontinued operations was $12.5 million and $15.1 million of Corporate expenses specific to or benefiting the TS business for the first quarters ending October 1, 2016, and October 3, 2015, respectively. Corporate costs related to general overhead were not allocated to the TS business. Also included in selling, general and administrative expenses of discontinued operations was $4.5 million and $4.6 million of amortization expense for the first quarters ending October 1, 2016, and October 3, 2015, respectively.

 

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Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Included in income tax expense from discontinued operations in the first quarter of fiscal 2017, as discussed further in Note 8, was $17.0 million of deferred tax expense associated with the establishment of a non-cash deferred tax liability.  The establishment of such deferred tax liability was the result of the TS business being classified as held for sale, which impacted the Company’s historical assertion related to foreign earnings of the TS business being permanently reinvested.  Upon completion of the sale, the Company will incur cash taxes related to the gain on sale. 

 

 

4. Goodwill and intangible assets

 

Goodwill

 

The following table presents the change in goodwill by reportable segment for the three months ended October 1, 2016. All of the accumulated impairment was recognized in fiscal 2009.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Electronics

    

Technology

    

 

 

 

 

 

Marketing

 

Solutions

 

Total

 

 

 

(Thousands)

 

Gross goodwill

 

$

1,666,962

 

$

993,992

 

$

2,660,954

 

Accumulated impairment

 

 

(1,045,110)

 

 

(334,624)

 

 

(1,379,734)

 

Carrying value at July 2, 2016

 

 

621,852

 

 

659,368

 

 

1,281,220

 

Additions

 

 

 —

 

 

 —

 

 

 —

 

Adjustments

 

 

 —

 

 

 —

 

 

 —

 

Foreign currency translation

 

 

(1,002)

 

 

2,444

 

 

1,442

 

Carrying value at October 1, 2016

 

$

620,850

 

$

661,812

 

$

1,282,662

 

Gross goodwill

 

$

1,665,960

 

$

996,436

 

$

2,662,396

 

Accumulated impairment

 

 

(1,045,110)

 

 

(334,624)

 

 

(1,379,734)

 

Carrying value at October 1, 2016

 

$

620,850

 

$

661,812

 

$

1,282,662

 

 

As discussed in Note 3, the Company classified goodwill related to the TS reporting units as held for sale as of October 1, 2016, and July 2, 2016. During the first quarter of fiscal 2017, in connection with the planned sale of the TS business, the Company evaluated goodwill related to TS for impairment and concluded that goodwill related to the TS business was recoverable as the negotiated TS selling price was in excess of its carrying value.

 

Intangible Assets

 

The following table presents the Company’s acquired intangible assets at October 1, 2016, and July 2, 2016, respectively.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

October 1, 2016

 

July 2, 2016

 

 

 

Acquired

 

Accumulated

 

Net Book

 

  Acquired 

 

 Accumulated 

 

 Net Book 

 

 

    

Amount

    

Amortization

    

Value

    

Amount

    

Amortization

    

Value

 

 

 

(Thousands)

 

Customer related

 

$

210,466

 

$

(149,278)

 

$

61,188

 

$

211,169

 

$

(142,994)

 

$

68,175

 

Trade name

 

 

3,773

 

 

(1,537)

 

 

2,236

 

 

4,875

 

 

(2,731)

 

 

2,144

 

Other

 

 

14,884

 

 

(5,914)

 

 

8,970

 

 

12,356

 

 

(4,278)

 

 

8,078

 

 

 

$

229,123

 

$

(156,729)

 

$

72,394

 

$

228,400

 

$

(150,003)

 

$

78,397

 

 

As discussed in Note  3, the Company classified intangible assets and amortization expense related to the TS business as held for sale as of October 1, 2016, and July 2, 2016.

9


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

 

Intangible asset amortization expense was $6.4 million and $6.9 million for the first quarters of fiscal 2017 and 2016, respectively. Of these amounts, amortization expense from continuing operations totaled $1.9 million and $2.4 million for the first quarters of fiscal 2017 and 2016, respectively.  As a result of the TS business being classified as held for sale as of October 1, 2016, the amortization of TS specific intangible assets has ceased. Intangible assets from continuing operations have a weighted average remaining useful life of approximately 3 years. The following table presents the estimated future amortization expense from continuing operations for the remainder of fiscal 2017, the next five fiscal years and thereafter (in thousands):

 

 

 

 

 

 

 

Fiscal Year

    

 

 

Remainder of fiscal 2017

 

 

6,592

 

2018

 

 

5,488

 

2019

 

 

4,071

 

2020

 

 

2,283

 

2021

 

 

848

 

Thereafter

 

 

1,541

 

Total

 

$

20,823

 

 

 

 

5. Debt

 

Short-term debt consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

October 1, 2016

    

July 2, 2016

    

October 1, 2016

    

July 2, 2016

 

 

 

Interest Rate

 

Carrying Balance

 

Bank credit facilities and other

 

5.42

%

 

4.62

%

 

$

98,017

 

$

122,599

 

Accounts receivable securitization program

 

 —

 

 

0.93

%

 

 

 —

 

 

730,000

 

Notes due September 2016

 

 —

 

 

6.63

%

 

 

 —

 

 

300,000

 

Short-term debt

 

 

 

 

 

 

 

$

98,017

 

$

1,152,599

 

 

Bank credit facilities and other consists primarily of various committed and uncommitted lines of credit and other forms of bank debt with financial institutions utilized primarily to support the working capital requirements of the Company including its foreign operations.

 

In September 2016, the Company settled the $300.0 million of outstanding 6.63% Notes due September 2016, upon their maturity.

 

10


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Long-term debt consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

October 1, 2016

    

July 2, 2016

    

October 1, 2016

    

July 2, 2016

 

 

 

Interest Rate

 

Carrying Balance

 

Revolving credit facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable securitization program

 

1.16

%

 

 —

 

 

$

580,000

 

$

 —

 

Credit Facility

 

1.94

%

 

1.72

%

 

 

840,000

 

 

150,000

 

Notes due:

 

 

 

 

 

 

 

 

 

 

 

 

 

June 2020

 

5.88

%

 

5.88

%

 

 

300,000

 

 

300,000

 

December 2022

 

4.88

%

 

4.88

%

 

 

350,000

 

 

350,000

 

April 2026

 

4.63

%

 

4.63

%

 

 

550,000

 

 

550,000

 

Other long-term debt

 

2.02

%

 

1.92

%

 

 

1,460

 

 

1,551

 

Long-term debt before discount and debt issuance costs

 

 

 

 

 

 

 

 

2,621,460

 

 

1,351,551

 

Discount and debt issuance costs

 

 

 

 

 

 

 

 

(11,843)

 

 

(12,347)

 

Long-term debt

 

 

 

 

 

 

 

$

2,609,617

 

$

1,339,204

 

 

In August 2016, the Company amended and extended its accounts receivable securitization program (the “Program”) with a group of financial institutions to allow the Company to transfer, on an ongoing revolving basis, an undivided interest in a designated pool of trade accounts receivable, to provide security or collateral for borrowings up to a maximum of $800.0 million. The Program does not qualify for off balance sheet accounting treatment and any borrowings under the Program are recorded as debt in the consolidated balance sheets. Under the Program, the Company legally sells and isolates certain U.S. trade accounts receivable into a wholly owned and consolidated bankruptcy remote special purpose entity. Such receivables, which are recorded within “Receivables” in the consolidated balance sheets, totaled $1.52 billion and $1.46 billion at October 1, 2016, and July 2, 2016, respectively. The Program contains certain covenants relating to the quality of the receivables sold. The Program also requires the Company to maintain certain minimum interest coverage and leverage ratios, which the Company was in compliance with as of October 1, 2016, and July 2, 2016. The Program has a two-year term that expires in August 2018 and as a result is considered long-term debt as of October 1, 2016. Interest on borrowings is calculated using a base rate or a commercial paper rate plus a spread of 0.40%. The facility fee is 0.40%.

 

The Company has a five-year $1.25 billion senior unsecured revolving credit facility (the “Credit Facility”) with a syndicate of banks, consisting of revolving credit facilities and the issuance of up to $150.0 million of letters of credit, which expires in July 2019. Subject to certain conditions, the Credit Facility may be increased up to $1.5 billion. Under the Credit Facility, the Company may select from various interest rate options, currencies and maturities. The Credit Facility contains certain covenants including various limitations on debt incurrence, share repurchases, dividends, investments and capital expenditures. The Credit Facility also includes financial covenants requiring the Company to maintain minimum interest coverage and leverage ratios, which the Company was in compliance with as of October 1, 2016, and July 2, 2016. As of October 1, 2016, and July 2, 2016, there were $6.1 million and $5.6 million, respectively, in letters of credit issued under the Credit Facility.

 

In July 2016, in connection with the PF acquisition discussed in Note 2, the Company entered into a Senior Unsecured Bridge Credit Agreement (the “Bridge Credit Agreement”). The Bridge Credit Agreement provides for a single borrowing of (i) tranche A-1 bridge loans of up to £557.0 million and tranche B bridge loans of up to $250.0 million, each with a maturity date of 364 days from the date of borrowing, and (ii) tranche A-2 bridge loans of up to £150.0 million, with a maturity date of 90 days from the date of borrowing. The Company’s ability to borrow under the Bridge Credit Agreement is subject to customary limited conditionality. Borrowings under the Bridge Credit Agreement will bear interest at a variable interest rate. As of October 1, 2016 there were no borrowings made under the Bridge Credit Agreement.

 

11


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In September 2016, certain foreign subsidiaries of the Company (the “Borrowers”) entered into a Senior Unsecured Term Loan Credit Agreement (the “Term Loan Credit Agreement”) with a group of banks.  The Term Loan Credit Agreement provides for a single borrowing by the Borrowers of up to €500 million in the aggregate with a maturity date of three years from the date of borrowing. As of October 1, 2016, there were no borrowings made under the Term Loan Credit Agreement.  The proceeds from borrowings under the Term Loan Credit Agreement will be used to finance a portion of the cash consideration and any fees and expenses related to the Company’s acquisition of PF discussed further in Note 2.

 

The Company has agreed to guarantee the obligations of the Borrowers under the Term Loan Credit Agreement. The Term Loan Credit Agreement is unsecured and contains financial covenants consistent with the Credit Facility. The obligations of the lenders to fund loans under the Term Loan Credit Agreement expires on February 27, 2017, or earlier as provided in the Term Loan Credit Agreement. The Borrowers’ ability to borrow under the Term Loan Credit Agreement is subject to customary limited conditionality. Borrowings under the Term Loan Credit Agreement will bear interest at a variable annual rate based on LIBOR plus an applicable margin based on the credit rating at that time for the Company’s long-term senior unsecured indebtedness.  The Company’s and the Borrowers’ failure to satisfy the covenants under the Term Loan Credit Agreement or the occurrence of other specified events that could constitute an event of default could, among other things, permit the lenders thereunder to terminate their commitments or accelerate the Borrowers’ repayment obligations.

 

Subject to the satisfaction of certain conditions, upon the effectiveness of the Term Loan Credit Agreement, the tranche A-1 commitments under the Bridge Credit Agreement discussed above were automatically and permanently reduced from £557 million to £137 million and the tranche A-2 commitments under the bridge facility were terminated.  In addition, to facilitate entry into the Term Loan Credit Agreement, the Company entered into certain amendments to the Bridge Credit Agreement and the Credit Facility.   In October 2016, the Company entered into an amendment and waiver to the Bridge Credit Agreement to extend the draw down period for tranche B bridge loans to December 5, 2016.  In addition, the Company terminated the tranche A-1 commitments under the Bridge Credit Agreement.

 

As of October 1, 2016, the carrying value and fair value of the Company’s total debt was $2.71 billion and $2.79 billion, respectively. At July 2, 2016, the carrying value and fair value of the Company’s total debt was $2.49 billion and $2.59 billion, respectively. Fair value for the notes was estimated based upon quoted market prices and for other forms of debt fair value approximates carrying value due to the market based variable nature of the interest rates on those debt agreements.

 

6. Derivative financial instruments

 

Many of the Company’s subsidiaries purchase and sell products in currencies other than their functional currencies. This subjects the Company to the risks associated with fluctuations in foreign currency exchange rates. The Company reduces this risk by utilizing natural hedging (i.e., offsetting receivables and payables in the same foreign currency) as well as by creating offsetting positions through the use of derivative financial instruments, primarily forward foreign exchange contracts typically with maturities of less than sixty days (“economic hedges”). The Company continues to have exposure to foreign currency risks to the extent they are not hedged. The Company adjusts any economic hedges to fair value through the consolidated statements of operations primarily within “other expense, net.” Therefore, the changes in valuation of the underlying items being economically hedged are offset by the changes in fair value of the forward foreign currency exchange contracts. The fair value of forward foreign exchange contracts, which are based upon Level 2 criteria under the ASC 820 fair value hierarchy, are classified in the captions “other current assets” or “accrued expenses and other,” as applicable, in the accompanying consolidated balance sheets as of October 1, 2016, and July 2, 2016. The Company’s master netting and other similar arrangements with various financial institutions related to derivative financial instruments allow for the right of offset. The Company’s policy is to present derivative financial instruments with the same counterparty as either a net asset or liability when the right of offset exists.

 

12


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company generally does not hedge its investments in its foreign operations. The Company does not enter into derivative financial instruments for trading or speculative purposes and monitors the financial stability and credit standing of its counterparties.

 

The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase from suppliers. The Company’s foreign operations transactions are denominated primarily in the following currencies: U.S. Dollar, Euro, British Pound, Canadian Dollar, Japanese Yen, Chinese Yuan, Taiwan Dollar, Australian Dollar and Mexican Peso. The Company also, to a lesser extent, has foreign operations transactions in other European, Latin American and Asian foreign currencies.

 

The fair values of derivative financial instruments in the Company’s consolidated balance sheets are as follows:

 

 

 

 

 

 

 

 

 

 

 

October 1,

    

July 2,

 

 

 

2016

 

2016

 

 

 

(Thousands)

 

Forward foreign currency exchange contracts not receiving hedge accounting treatment recorded in:

 

 

 

 

 

 

 

Other current assets

 

$

2,999

 

$

9,681

 

Accrued expenses

 

 

21,153

 

 

6,656

 

 

Included in accrued expenses as of October 1, 2016 is approximately $16.0 million of foreign currency derivative financial instruments that economically hedge the British Pound purchase price of the PF acquisition discussed in Note 2.

 

The amounts recorded to other expense, net related to derivative financial instruments are as follows:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

October 1,

    

October 3,

 

 

 

2016

 

2015

 

 

 

(Thousands)

 

Net derivative financial instrument gain (loss)

 

$

(8,646)

 

$

18,769

 

 

Included in other expenses in the first quarter of fiscal 2017 is approximately $8.0 million of derivative financial instrument losses associated with foreign currency derivative financial instruments purchased to economically hedge the British Pound purchase price of the PF acquisition discussed in Note 2.  Such unrealized losses are economically offset through a lower PF purchase price as a result of the weakening of the British Pound during the first quarter of fiscal 2017.

 

The Company’s outstanding economic hedges had average maturities of 47 days and 53 days as of October 1, 2016, and July 2, 2016, respectively. Under the Company’s economic hedging policies, gains and losses on the derivative financial instruments are substantially offset by the gains and losses on the underlying assets or liabilities being hedged.

 

7. Commitments and contingencies

 

From time to time, the Company may become a party to, or be otherwise involved in various lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of conducting its business. While litigation is subject to inherent uncertainties, management does not anticipate that any such matters will have a material adverse effect on the Company’s financial condition, liquidity or results of operations.

 

13


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company is also currently subject to various pending and potential legal matters and investigations relating to compliance with governmental laws and regulations, including import/export and environmental matters. For certain of these matters it is not possible to determine the ultimate outcome, and the Company cannot reasonably estimate the maximum potential exposure or the range of possible loss for such matters due primarily to being in the preliminary stages of the related proceedings and investigations. The Company currently believes that the resolution of such matters will not have a material adverse effect on the Company’s financial position or liquidity, but could possibly be material to its results of operations in any one reporting period.

 

During the first quarter of fiscal 2017, the Company reached a final settlement related to the compliance investigation conducted by the Customs and Border Protection for potential unpaid import duties associated with the acquisition of Bell Microproducts Inc. for $8.5 million, which was accrued for in connection with the acquisition in fiscal 2011.

 

As of October 1, 2016, the Company had aggregate estimated liabilities of $11.7 million, classified within accrued expenses and other for such compliance-related matters that were reasonably estimable as of such dates.

 

8. Income taxes

 

The Company’s effective tax rate on its income before income taxes from continuing operations was 23.8% in the first quarter of fiscal 2017 as compared with 25.4% in the first quarter of fiscal 2016. During the first quarters of fiscal 2017 and fiscal 2016, the Company’s effective tax rate was favorably impacted primarily by the mix of income in lower tax jurisdictions.

 

Included in income tax expense from discontinued operations in the first quarter of fiscal 2017 discussed further in Note 3, was $17.0 million of deferred tax expense associated with the establishment of a non-cash deferred tax liability.  The establishment of such deferred tax liability was the result of the TS business being classified as held for sale, which impacted the Company’s historical assertion related to foreign earnings of TS business being permanently reinvested.   

 

The Company applies the guidance in ASC 740, which requires management to use its judgment for the appropriate weighting of all available evidence when assessing the need for the establishment or the release of valuation allowances. As part of this analysis, the Company examines all available evidence on a jurisdiction by jurisdiction basis and weighs the positive and negative evidence when determining the need for full or partial valuation allowances. The evidence considered for each jurisdiction includes, among other items: (i) the historic levels of income or losses over a range of time periods, which may extend beyond the most recent three fiscal years depending upon the historical volatility of income in an individual jurisdiction; (ii) expectations and risks associated with underlying estimates of future taxable income, including considering the historical trend of down-cycles in the semiconductor and related industries; (iii) jurisdictional specific limitations on the utilization of deferred tax assets including when such assets expire; and (iv) prudent and feasible tax planning strategies.

 

The Company continues to evaluate the need for the valuation allowances against its deferred tax assets and will adjust valuation allowances as appropriate, which, if adjusted, could result in a significant decrease or increase to the effective tax rate in the period of the adjustment.

 

14


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. Pension plan

 

The Company has a noncontributory defined benefit pension plan (the “Plan”) for which the components of net periodic pension costs were as follows (includes amounts related to discontinued operations):

 

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

    

October 1,

    

October 3,

 

 

2016

 

2015

 

 

(Thousands)

Service cost

 

$

10,848

 

$

10,486

Interest cost

 

 

3,774

 

 

5,328

Expected return on plan assets

 

 

(10,588)

 

 

(10,071)

Recognized net actuarial loss

 

 

3,851

 

 

3,183

Amortization of prior service credits

 

 

(393)

 

 

(393)

Net periodic pension cost

 

$

7,492

 

$

8,533

 

The Company made contributions to the Plan of $20.0 million during the first quarter of fiscal 2017. The Company expects to make an additional contribution to the Plan of $20.0 million over the remaining three quarters of fiscal 2017.

 

The Plan meets the definition of a defined benefit plan and as a result, the Company must apply ASC 715 pension accounting to the Plan. The Plan itself, however, is a cash balance plan that is similar in nature to a defined contribution plan in that a participant’s benefit is defined in terms of a stated account balance. A cash balance plan provides the Company with the benefit of applying any earnings on the Plan’s investments beyond the fixed return provided to participants, toward the Company’s future cash funding obligations.

 

In connection with the completion of the sale of the TS business discussed in Note 3, the Company expects to recognize an immaterial pension curtailment expense as a component of discontinued operations.

 

Amounts reclassified out of accumulated other comprehensive income (loss), net of tax, to operating expenses during the first quarters of fiscal 2017 and fiscal 2016 were not material and substantially all related to net periodic pension costs including recognition of actuarial losses and amortization of prior service credits.

 

10. Shareholders’ equity

 

Share repurchase program

 

In August 2015, the Company’s Board of Directors amended the Company’s existing share repurchase program to authorize the repurchase of up to $1.25 billion of common stock in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased will depend on a variety of factors such as share price, corporate and regulatory requirements, and prevailing market conditions. During the first quarter of fiscal 2017, the Company did not repurchase any shares under this program. Since the beginning of the repurchase program through the end of the first quarter of fiscal 2017, the Company has repurchased 31.4 million shares at an aggregate cost of $1.08 billion, and $174.9 million remains available for future repurchases.

 

Common stock dividend

 

In August 2016, the Company’s Board of Directors approved a dividend of $0.17 per common share and dividend payments of $21.7 million were made in September 2016.

 

15


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

11. Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

 

October 1,

 

October 3,

 

 

2016

  

2015

 

 

(Thousands, except per share data)

Numerator:

 

 

 

   

 

 

Net income - continuing operations

 

$

68,586

 

$

110,988

Net income - discontinued operations

 

 

257

 

 

19,266

Net income

 

$

68,843

 

$

130,254

Denominator:

 

 

 

 

 

 

Weighted average common shares for basic earnings per share

 

 

127,531

 

 

133,783

Net effect of dilutive stock options, restricted stock units and performance share units

 

 

2,232

 

 

2,543

Weighted average common shares for diluted earnings per share

 

 

129,763

 

 

136,326

Basic earnings per share - continuing operations

 

$

0.54

 

$

0.83

Basic earnings per share - discontinued operations

 

 

0.00

 

 

0.14

Basic earnings per share

 

$

0.54

 

$

0.97

Diluted earnings per share - continuing operations

 

$

0.53

 

$

0.82

Diluted earnings per share - discontinued operations

 

 

0.00

 

 

0.14

Diluted earnings per share

 

$

0.53

 

$

0.96

Stock options excluded from earnings per share calculation due to anti-dilutive effect

 

 

674

 

 

422

 

See Note 3 and Note 8 for additional information on net income from discontinued operations and the related income tax expense associated with discontinued operations.

 

 

 

12. Additional cash flow information

 

Interest and income taxes paid were as follows:

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

    

October 1,

    

October 3,

 

 

2016

 

2015

 

 

(Thousands)

Interest

 

$

19,250

 

$

24,205

Income taxes

 

$

16,336

 

$

10,143

 

The Company includes book overdrafts as part of accounts payable on its consolidated balance sheets and reflects changes in such balances as part of cash flows from operating activities in its consolidated statements of cash flows.

 

Non-cash investing activities related to purchases of property, plant and equipment that have been accrued, but not paid for, were $11.1 million and $18.7 million as of October 1, 2016, and October 3, 2015, respectively.

 

Included in cash and cash equivalents as of October 1, 2016, was $11.3 million of cash equivalents, which was primarily comprised of overnight time deposits whose fair value was determined using Level 1 measurements under the ASC 820 fair value hierarchy.

 

16


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

13. Segment information

 

Electronics Marketing (“EM”) and Technology Solutions (“TS”) are the Company’s reportable segments (“operating groups”). EM markets and sells semiconductors and interconnect, passive and electromechanical devices and embedded products to a diverse customer base serving many end-markets. TS focuses on the value-added distribution of enterprise computing servers and systems, software, storage, services and complex solutions from the world’s foremost technology manufacturers and software developers. TS also provides the latest hard disk drives, microprocessor, motherboard and DRAM module technologies to manufacturers of general-purpose computers and system builders.

 

At the beginning of fiscal 2017, in alignment with Avnet’s goal to build a global embedded solutions business, the Company transferred a portion of its embedded computing solutions business to EM from TS. As a result of this change, sales, operating income and assets previously reported in the TS operating group in fiscal 2016 will be included within the EM operating group in fiscal 2017. The Company does not view the amount of sales, operating income, or assets of such transferred operations to be a material change to the composition of its operating groups for financial reporting purposes. Sales of approximately $129.4 million related to such transferred operations reported in the TS operating group in the first quarter of fiscal 2016 have been reflected within EM in the tables below for comparability between fiscal years. The transfer of such operations between operating groups did not impact the determination of the Company’s operating groups or its previously reported consolidated financial results.

 

As discussed further in Note 3, the Company entered into a definitive agreement to sell the TS operating group during the first quarter of fiscal 2017.  Although the TS operating group is classified as a discontinued operation in this Quarterly Report on Form 10-Q, the Company still owns and operates the TS operating group.  As a result, the Company has not changed its reportable segments or its historical measures of segment results and profitability as of October 1, 2016.  In connection with the planned sale and discontinued operation classification of the TS operating group, the Company has included the estimated Corporate expenses specific to or benefiting the TS operating group as a component of discontinued operations.

 

 

 

 

 

 

 

 

 

 

 

 

First Quarters Ended

 

 

 

October 1,

 

October 3,

 

 

 

2016

 

2015

 

 

 

(Thousands)

 

Sales:

    

 

    

    

 

    

 

Electronics Marketing (continuing operations)

 

$

4,173,405

 

$

4,600,802

 

Technology Solutions (discontinued operations)

 

 

1,866,901

 

 

2,368,892

 

 

 

 

 

 

 

 

 

Operating income (expense):

 

 

 

 

 

 

 

Electronics Marketing (continuing operations)

 

$

186,528

 

$

213,031

 

Technology Solutions (discontinued operations)

 

 

42,674

 

 

74,538

 

Corporate - continuing operations

 

 

(23,600)

 

 

(32,058)

 

Corporate - discontinued operations

 

 

(12,500)

 

 

(15,100)

 

 

 

 

193,102

 

 

240,411

 

Restructuring, integration and other expenses - continuing operations

 

 

(29,469)

 

 

(12,518)

 

Restructuring, integration and other expenses - discontinued operations

 

 

(4,224)

 

 

(13,440)

 

Amortization of acquired intangible assets and other - continuing operations

 

 

(2,378)

 

 

(2,848)

 

Amortization of acquired intangible assets and other - discontinued operations

 

 

(4,493)

 

 

(4,643)

 

Less: TS discontinued operations

 

 

(21,547)

 

 

(36,975)

 

Operating Income

 

$

130,991

 

$

169,987

 

 

 

 

 

 

 

 

 

Sales, by geographic area:

 

 

 

 

 

 

 

Americas (1)

 

$

2,349,343

 

$

2,773,943

 

17


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

EMEA (2)

 

 

1,845,550

 

 

2,015,219

 

Asia/Pacific (3)

 

 

1,845,413

 

 

2,180,532

 

Less: TS discontinued operations

 

 

1,866,901

 

 

2,368,892

 

Sales

 

$

4,173,405

 

$

4,600,802

 

 


(1) Includes sales from the United States of $2.14 billion and $2.52 billion for the quarters ended October 1, 2016, and October 3, 2015, respectively.

 

(2) Includes sales from Germany and the United Kingdom of $762.2 million and $254.7 million, respectively, for the quarter ended October 1, 2016. Includes sales from Germany and the United Kingdom of $800.6 million and $340.6 million, respectively, for the quarter ended October 3, 2015.

 

(3) Includes sales from China (including Hong Kong) and Taiwan of $668.7 million and $589.5 million, respectively, for the quarter ended October 1, 2016. Includes sales from China (including Hong Kong) and Taiwan of $714.5 million and $822.1 million, respectively, for the quarter ended October 3, 2015.

 

 

 

 

 

 

 

 

 

 

 

 

October 1,

 

July 2,

 

 

 

2016

 

2016

 

 

 

(Thousands)

 

Assets:

    

 

    

    

 

    

 

Electronics Marketing

 

$

7,037,730

 

$

7,234,008

 

Technology Solutions

 

 

3,131,587

 

 

3,397,029

 

Corporate

 

 

876,806

 

 

608,768

 

Assets

 

$

11,046,123

 

$

11,239,805

 

 

 

 

 

 

 

 

 

Property, plant, and equipment, net, by geographic area:

 

 

 

 

 

 

 

Americas (1)

 

$

414,141

 

$

404,992

 

EMEA (2)

 

 

179,624

 

 

178,123

 

Asia/Pacific

 

 

30,750

 

 

29,543

 

Less: TS discontinued operations

 

 

153,194

 

 

159,449

 

Property, plant, and equipment, net,

 

$

471,321

 

$

453,209

 

 


(1) Includes property, plant and equipment, net, of $404.3 million and $395.0 million as of October 1, 2016, and July 2, 2016, respectively, in the United States.

 

(2) Includes property, plant and equipment, net, of $79.6 million and $69.4 million in Germany and Belgium, respectively, as of October 1, 2016, and $76.4 million and $69.8 million in Germany and Belgium, respectively, as of July 2, 2016.

 

18


 

Table of Contents

AVNET, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

14. Restructuring, integration and other expenses

 

Fiscal 2017