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PURSUANT TO RULE 424(b)(5)
REGISTRATION NO. 33-51835
INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT
TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO
THE TIME THAT A FINAL PROSPECTUS SUPPLEMENT IS DELIVERED. THIS PRELIMINARY
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS SUPPLEMENT DATED MARCH 3, 1994
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 3, 1994)
$100,000,000
[LOGO] AVNET, INC.
% NOTES DUE MARCH 15, 2004
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INTEREST ON THE NOTES IS PAYABLE SEMIANNUALLY ON MARCH 15 AND SEPTEMBER 15,
COMMENCING SEPTEMBER 15, 1994. THE NOTES ARE NOT REDEEMABLE PRIOR TO MATURITY
AND HAVE NO SINKING FUND PROVISIONS.
OWNERSHIP OF THE NOTES WILL BE MAINTAINED IN BOOK-ENTRY FORM THROUGH THE
DEPOSITORY (AS HEREINAFTER DEFINED). INTERESTS IN THE NOTES WILL BE SHOWN ON,
AND TRANSFERS THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY THE
DEPOSITORY AND ITS PARTICIPANTS. BENEFICIAL OWNERS OF THE NOTES WILL NOT HAVE
THE RIGHT TO RECEIVE PHYSICAL CERTIFICATES EVIDENCING THEIR OWNERSHIP EXCEPT
UNDER THE LIMITED CIRCUMSTANCES DESCRIBED HEREIN. BENEFICIAL INTERESTS IN THE
NOTES MAY BE ACQUIRED, OR SUBSEQUENTLY TRANSFERRED, ONLY IN DENOMINATIONS OF
$1,000 AND INTEGRAL MULTIPLES THEREOF.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC* COMMISSIONS+ COMPANY*++
PER NOTE................................. % % %
TOTAL.................................... $ $ $
- ---------------
* PLUS ACCRUED INTEREST, IF ANY, FROM MARCH , 1994.
+ THE COMPANY HAS AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN
LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED.
++ BEFORE DEDUCTING EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $350,000.
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THE NOTES ARE BEING OFFERED BY THE UNDERWRITERS AS SET FORTH UNDER THE
CAPTION "UNDERWRITING" HEREIN. IT IS EXPECTED THAT DELIVERY OF NOTES WILL BE
MADE IN NEW YORK, NEW YORK, ON OR ABOUT MARCH , 1994, AGAINST PAYMENT THEREFOR
IN NEW YORK FUNDS.
DILLON, READ & CO. INC. MERRILL LYNCH & CO.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS , 1994.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE COMPANY
Avnet, Inc., a New York corporation (the "Company"), is the largest
industrial distributor in the United States of electronic components, such as
semiconductors, connectors and passives, and of computer products. In addition,
the Company produces or distributes other electronic, electrical and video
communications products. See "Business."
The principal executive offices of the Company are located at 80 Cutter
Mill Road, Great Neck, New York 11021, telephone (516) 466-7000.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
being offered hereby are estimated at $ after the deduction of the
underwriting discounts and the estimated expenses of this offering. The Company
intends to use the net proceeds from this offering to repay outstanding bank
borrowings which were incurred to pay part of the funding required for the
acquisition of Hall-Mark Electronics Corporation ("Hall-Mark"). See
"Business -- Electronic Marketing Group." Such borrowings currently bear
interest at a weighted average rate of 3.6% per annum and mature on various
dates not later than March 31, 1994.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of the Company's earnings to fixed
charges, on a consolidated basis, for the periods indicated:
YEAR ENDED JUNE 30, SIX MONTHS
- ---------------------------------------- ENDED
1989 1990 1991 1992 1993 DECEMBER 31, 1993
- ---- ---- ---- ---- ---- -----------------
4.6 5.5 6.2 5.5 8.7 7.0(1)(2)
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(1) Income from continuing operations before income taxes for the six months
ended December 31, 1993 includes restructuring and integration charges of
$22.7 million which are principally attributable to the acquisition of
Hall-Mark. Had such one-time charges not been included, the ratio of
earnings to fixed charges for the six months ended December 31, 1993 would
have been 9.3.
(2) Had the Company utilized the net proceeds of this offering to repay its
outstanding bank borrowings as described under "Use of Proceeds," the ratio
of earnings to fixed charges for the six months ended December 31, 1993
would have been 6.1 on a pro forma basis. In addition, had the one-time
charges referred to in footnote (1) above not been included in income from
continuing operations before income taxes, the ratio of earnings to fixed
charges for the six months ended December 31, 1993 would have been 8.1 on a
pro forma basis.
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For purposes of the foregoing ratios, earnings were calculated by adding
fixed charges to income before income taxes, and then deducting capitalized
interest. Fixed charges were calculated by adding interest expense (including
amortization of debt expense and any discount or premium relating to
indebtedness, and interest expense relating to certain guarantees), capitalized
interest and the interest component of rental expense.
CAPITALIZATION
The following table sets forth the consolidated capitalization and
short-term debt of the Company at December 31, 1993, and as adjusted to give
effect to the issuance of the Notes pursuant to this offering and the
application of the net proceeds therefrom:
DECEMBER 31, 1993
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ACTUAL AS ADJUSTED
-------- -----------
(IN MILLIONS,
UNAUDITED)
Short-term debt:
Bank debt.............................................................. $ 75.0 --
Other.................................................................. 0.6 $ 0.6
-------- -----------
$ 75.6 $ 0.6
-------- -----------
-------- -----------
Long-term debt, less amounts due within one year:
% Notes due March 15, 2004........................................... -- $ 100.0
Revolving bank credit facility......................................... $ 136.0 112.0
6% Convertible Subordinated Debentures due April 15, 2012.............. 105.3 105.3
Other.................................................................. 2.8 2.8
-------- -----------
Total long-term debt..................................................... 244.1 320.1
-------- -----------
Shareholders' equity:
Common stock, $1.00 par................................................ 41.0 41.0
Additional paid-in capital............................................. 306.3 306.3
Retained earnings...................................................... 738.1 738.1
Cumulative translation adjustments..................................... (15.5) (15.5)
Treasury stock, at cost................................................ (11.3) (11.3)
-------- -----------
Total shareholders' equity............................................... 1,058.6 1,058.6
-------- -----------
Total capitalization..................................................... $1,302.7 $ 1,378.7
-------- -----------
-------- -----------
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SUMMARY FINANCIAL DATA
The summary financial data set forth below for the fiscal years 1989
through 1993 have been derived from the financial statements of the Company
audited by the Company's independent public accountants. The summary financial
data relating to the six months ended December 31, 1993 and January 1, 1993 have
been derived from the unaudited financial statements of the Company and, in the
opinion of the Company's management, include all adjustments (consisting of
normal recurring adjustments) necessary for the fair presentation thereof.
Reference is hereby made to the financial statements of the Company and
accompanying notes that are included in the documents incorporated by reference
in this Prospectus Supplement and the Prospectus to which it relates.
YEAR ENDED JUNE 30, SIX MONTHS ENDED
------------------------------------------------------------ ----------------------
1989 1990 1991 1992 1993 1/1/93 12/31/93(1)
-------- -------- -------- -------- -------- -------- -----------
(IN MILLIONS)
INCOME STATEMENT DATA:
Revenues:
Sales.................. $1,918.7 $1,751.3 $1,740.8 $1,759.0 $2,238.0 $1,060.0 $ 1,728.5
Investment income and
other, net........... 13.7 25.9 26.6 27.2 20.4 13.7 0.9
-------- -------- -------- -------- -------- -------- -----------
1,932.4 1,777.2 1,767.4 1,786.2 2,258.4 1,073.7 1,729.4
Cost and expenses:
Cost of sales.......... 1,470.6 1,312.4 1,318.3 1,350.7 1,751.2 826.3 1,390.5
Selling, shipping,
general and
administrative....... 359.2 340.9 335.8 338.7 384.0 187.8 248.6
Interest............... 16.5 15.3 13.3 13.4 9.0 5.4 6.6
Disposition,
restructuring and
integration expenses
(gain), net.......... (1.1) 9.9 -- -- -- -- 22.7
-------- -------- -------- -------- -------- -------- -----------
1,845.2 1,678.5 1,667.4 1,702.8 2,144.2 1,019.5 1,668.4
Income before income
taxes and cumulative
effect of accounting
change................. 87.2 98.7 100.0 83.4 114.2 54.2 61.0
Income taxes............. 33.2 42.2 38.4 32.9 45.1 21.8 27.3
-------- -------- -------- -------- -------- -------- -----------
Income before cumulative
effect of accounting
change................. 54.0 56.5 61.6 50.5 69.1 32.4 33.7
Cumulative effect of
change in method of
accounting for income
taxes.................. -- -- -- -- -- -- (2.8)
-------- -------- -------- -------- -------- -------- -----------
Net income............... $ 54.0(2) $ 56.5(3) $ 61.6 $ 50.5 $ 69.1 $ 32.4 $ 30.9
-------- -------- -------- -------- -------- -------- -----------
-------- -------- -------- -------- -------- -------- -----------
BALANCE SHEET DATA (AT
END OF PERIOD):
Working capital........ $ 803.1 $ 843.8 $ 858.9 $ 848.9 $ 803.1 $ 777.7 $ 786.2
Total assets........... 1,126.0 1,157.5 1,181.5 1,242.7 1,247.3 1,199.8 1,672.7
Long-term debt......... 211.1 201.9 201.1 175.3 106.6 106.7 244.1
Shareholders' equity... 735.4 769.7 801.4 837.2 868.2 844.9 1,058.6
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(1) The results for the six months ended December 31, 1993 (a) include
restructuring and integration charges of $22.7 million pre-tax and $13.5
million after-tax which are principally attributable to the acquisition of
Hall-Mark, and (b) were negatively impacted by $3.3 million after-tax to
reflect the cumulative effect of change in method of accounting for income
taxes and the retroactive effect of the change in United States income tax
rates.
(2) After $1.3 million net gain on the disposition of four operations.
(3) After $9.8 million net loss on the disposition of one operation and the
restructuring of two operations.
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BUSINESS
The Company is the largest industrial distributor of electronic components
and computer products in the United States. Electronic component distributors
are a vital link in the chain that connects suppliers of semiconductors,
interconnect products, passives and electro-mechanical devices to original
equipment manufacturers ("OEMs") who design and build the complete spectrum of
electronic equipment that utilizes the components. Distributors such as Avnet
also add value to the components which they sell by customizing them prior to
shipment to meet individual OEM customer specifications. The Company estimates
that during calendar 1993 its Electronic Marketing Group, including Hall-Mark on
a pro forma basis, had more than a 20% share of the United States electronic
components distribution market. In addition to the activities of the Electronic
Marketing Group, the Company produces or distributes other electronic,
electrical and video communications products.
The Company's principal industry segments are as follows:
1. The Electronic Marketing Group is engaged in the marketing,
assembly and/or processing, principally for industrial, commercial and
military use, of electronic and electro-mechanical components and computer
products.
2. The Video Communications Group is engaged in the manufacture,
assembly and/or marketing of TV signal processing equipment. The Company's
Channel Master division is a leading manufacturer of TV roof antennas and
satellite receive-only antennas.
3. The Electrical and Industrial Group, which includes the Company's
Brownell Electro, Mechanics Choice and Freeman Products operations, is
engaged in the distribution of electric motors and parts, industrial
supplies, maintenance and repair parts and measuring and control devices,
and the production of trophy component parts.
ELECTRONIC MARKETING GROUP
The Electronic Marketing Group (the "EMG") continues to be the dominant
segment of the Company, accounting for 86% of sales and 97% of earnings in
fiscal 1993. On July 1, 1993, the Company acquired Hall-Mark, which was the
third largest distributor of electronic components and computer products in the
United States. For the twelve months ended June 30, 1993, Hall-Mark had sales of
$744 million. This acquisition added additional distribution franchises and
approximately 25,000 customers to the EMG.
In fiscal 1993, the EMG posted record sales of $1.917 billion, a gain of
30% over the prior year. The EMG's sales in the first half of fiscal 1994 were
over $1.5 billion. Hamilton Avnet (renamed Hamilton Hallmark after the
acquisition of Hall-Mark), Avnet Computer Group and Time Electronics are the
largest operations in the EMG, with fiscal 1993 sales of approximately $1.059
billion, $300 million and $258 million, respectively. In addition, the companies
comprising Avnet EMG Europe had sales of approximately $300 million in fiscal
1993.
Hamilton Hallmark is a distributor of semiconductors, computer products,
connectors, passives and electro-mechanical products for industrial, commercial
and military use. It is the only distributor in the United States to be
franchised by all of the top five United States semiconductor manufacturers:
Advanced Micro Devices, Intel, Motorola, National Semiconductor and Texas
Instruments. Hamilton Hallmark's customers are principally computer,
telecommunications and aerospace OEMs.
Avnet Computer Group is an international distributor of computer products
operating through two business units. Avnet Computer sells computer systems and
products primarily to end users. Hall-Mark Computer Products concentrates on
sales of peripherals and components to the reseller channel.
Time Electronics is the leading U.S. distributor of interconnect products,
including value-added connectors, electro-mechanical and passive components and
cable assembly services. Time also distributes semiconductors. Time's customers
are principally electronics and aerospace OEMs.
Allied Electronics, Inc. (formerly a subsidiary of Hall-Mark) is a
broad-line industrial distributor of active and passive electronic components,
test equipment and electronic equipment, which it sells by means of
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its catalog and telesales operations. Allied Electronics' principal customers
are maintenance and repair organizations, as well as research and development
and engineering departments of OEMs. In the 12-month period ended June 30, 1993,
immediately prior to the Company's acquisition of Hall-Mark, sales of Allied
Electronics totaled approximately $60 million.
The EMG's activities in Europe are conducted by Avnet EMG Europe, with
operations in all five major European geographic markets. The Company created
its European operations through a series of acquisitions, beginning in June 1991
with Avnet EMG Ltd. (formerly known as The Access Group), a United Kingdom
electronic components distributor. In April 1992, the Company acquired Avnet
France (formerly known as FHTec Composants), a French electronic components
distributor. In July 1992, the Company acquired Avnet Nortec (formerly known as
The Nortec Group), the leading Scandinavian electronic components distributor
with operations in Sweden, Denmark, Norway, Finland and Estonia. In January
1993, the Company acquired Avnet E2000 (formerly known as Electronic 2000 AG) a
leading German electronic components distributor with operations in Germany,
Austria and Switzerland. At the end of September 1993, the Company acquired
Avnet Adelsy (formerly known as Adelsy), an Italian electronic components
distributor with annual sales of approximately $20 million. Also in September
1992, the Company created Avnet Time, a unit of Avnet EMG Ltd., which operates
in the United Kingdom as a distributor of connectors and electro-mechanical and
passive devices.
One of the EMG's critical strengths is the breadth and quality of the
suppliers whose products it carries. Listed below are the major product
categories and the approximate sales in fiscal 1993, the percentage of EMG total
sales and the major suppliers in each category:
- - SEMICONDUCTORS: Sales of semiconductors in fiscal 1993 were approximately
$1.103 billion, or 57% of the EMG's sales. The EMG's major suppliers of
semiconductors are Advanced Micro Devices, Analog Devices, Harris,
Hewlett-Packard, Integrated Device Technology, Intel, LSI Logic, Micron
Semiconductor, Motorola, National Semiconductor, Philips/Signetics, Texas
Instruments, Xilinx and Zilog.
- - COMPUTER PRODUCTS: Sales of computer products in fiscal 1993 were
approximately $355 million, or 19% of the EMG's sales. The EMG's major
suppliers of computer products are Adaptec, Apple, Archive, Connor
Peripherals, Dataram, Data General, Diamond Flower, Digital Equipment,
Emulex, Esprit, Hewlett-Packard, Intel, Kodak, Maxtor, Multitech, NCR,
Okidata, Seagate Technology, Standard Microsystems, SyQuest, Tecmar, Texas
Instruments, 3Com, UNISYS, Universal Data Systems and Wyse.
- - CONNECTORS: Connector sales in fiscal 1993 were approximately $250 million, or
13% of the EMG's sales. The EMG's major suppliers of connectors are AMP,
Amphenol, Augat, Bendix, ELCO, General Connector, ITT Cannon, Kings, Matrix
Science, Molex, Pyle-National, T&B Ansley, 3M, TI Connector, Viking and
Winchester.
- - PASSIVES: Sales of passives in fiscal 1993 were approximately $209 million, or
11% of the EMG's sales. The EMG's major suppliers of passives are AVX,
Bourns, Cherry, Communications Instruments, CTS, Cutler-Hammer, EECO,
Fairchild Weston, General Electric, Grayhill, Leach, Murata-Erie, NDK
America, Philips, Teledyne, United Chemi-Con, Valor and Vishay.
VIDEO COMMUNICATIONS GROUP
The Video Communications Group, which accounted for approximately 6% of the
Company's sales in fiscal 1993, develops and manufactures TV signal processing
equipment. Channel Master is primarily a manufacturer/distributor of TV
antennas, TV rotators and home satellite TV signal receiving and descrambling
systems. Its products are used by home TV viewers and the SMATV (Satellite
Master Antenna TV) and cable television industries. Channel Master produces
antennas that can be utilized in a variety of DBS (Direct Broadcast Satellite)
projects worldwide. Channel Master also operates a small cable TV system in and
around Johnston County, North Carolina. Channel Master has two principal
manufacturing facilities, one each in the United States and England.
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ELECTRICAL AND INDUSTRIAL GROUP
The Electrical and Industrial Group, which accounted for approximately 8%
of the Company's sales in fiscal 1993, operates primarily in the electrical and
electronic industrial equipment distribution industry and in the industrial
maintenance and repair fields.
Brownell Electro, the largest company in the Group, distributes electric
motors, electrical insulation and magnet wire, measuring instruments and control
equipment. It also supplies parts, such as bearings, switches and electrical
tapes, for the rebuilding and replacement of motors used in industrial air
conditioning, refrigeration, heating and ventilation appliances. Brownell's
customers include maintenance and repair organizations, OEMs, and small regional
distributors and resellers.
The Mechanics Choice division supplies the industrial, commercial,
institutional, agricultural, governmental, mining and utility markets with a
broad line of industrial maintenance and factory supplies. The Group also
includes Freeman Products, a trophy manufacturing business.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes offered
hereby (referred to herein as the "Notes" and in the attached Prospectus as the
"Offered Debt Securities") supplements, and to the extent inconsistent
therewith, replaces, the description of the general terms and provisions of the
Debt Securities set forth in the attached Prospectus dated March 3, 1994 (the
"Prospectus"), to which description reference is hereby made. The following
summary description of the Notes is qualified in its entirety by reference to
the Indenture referred to in the Prospectus.
GENERAL
The Notes will be limited to $100,000,000 in aggregate principal amount.
The Notes will be issued only in book-entry form, in denominations of $1,000 and
integral multiples of $1,000, will bear interest from March , 1994, at the
annual rate set forth on the cover page of this Prospectus Supplement, and will
mature on March 15, 2004. Interest will be payable semiannually on March 15 and
September 15, commencing September 15, 1994, to the Persons in whose names the
Notes are registered at the close of business on the applicable Regular Record
Date, which is the March 1 or September 1 next preceding such interest payment
date. The Notes will not be redeemable by the Company prior to their stated
maturity date and will not be subject to any sinking fund.
The Notes will be unsecured and will rank pari passu with all other
unsecured and unsubordinated indebtedness of the Company.
The Notes will be subject to defeasance and discharge as described under
the caption "Description of Debt Securities -- Defeasance and Discharge" in the
Prospectus.
DEPOSITORY
Upon issuance, all Notes will be represented by one or more fully
registered global securities (the "Global Notes"). Each Global Note will be
deposited with, or on behalf of, The Depository Trust Company (the "Depository")
and registered in the name of the Depository or its nominee. Unless and until a
Global Note is exchanged in whole or in part for Notes in definitive form, such
Global Note may not be transferred except as a whole by the Depository to a
nominee of the Depository, or by such a nominee to the Depository or another
nominee of the Depository, or by the Depository or any such nominee to a
successor of such Depository or a nominee of such successor.
The Depository has advised the Company as follows: The Depository is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. The Depository holds securities of its participants
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("Participants") and facilitates the settlement among Participants of securities
transactions in deposited securities through electronic book-entry changes in
accounts of the Participants, thereby eliminating the need for the physical
movement of securities certificates. The Depository's Participants include
securities brokers and dealers (including the Underwriters named herein), banks,
trust companies, clearing corporations and certain other organizations. The
Depository is owned by a number of its Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depository's book-entry system is also
available to others, such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants"). The Rules
applicable to the Depository and its Participants are on file with the
Securities and Exchange Commission.
Purchases of Notes under the Depository's system must be made by or through
Participants, which will receive a credit for the Notes on the records of the
Depository. The ownership interest of each actual purchaser of each Note (a
"Beneficial Owner") is in turn to be recorded on the Participants' or Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from the Depository of a purchase, but Beneficial Owners are expected to receive
written confirmation providing details of the purchase, as well as periodic
statements of their holdings, from the Participant or Indirect Participant
through which the Beneficial Owner entered into the purchase. Ownership of
beneficial interests in Global Notes will be shown on, and the transfer of such
ownership interests will be effected only through, records maintained by the
Depository (with respect to interests of Participants) and on the records of
Participants (with respect to interests of persons held through Participants).
The laws of some states may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to own, transfer or pledge beneficial interests in
Global Notes.
So long as the Depository or its nominee is the registered owner of a
Global Note, the Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by such Global Note
for all purposes under the Indenture. Except as provided below, Beneficial
Owners of a Global Note will not be entitled to have the Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of the Notes in definitive form and will not be
considered the owners or holders thereof under the Indenture. Accordingly, each
person owning a beneficial interest in a Global Note must rely on the procedures
of the Depository and, if such person is not a Participant, on the procedures of
the Participant through which such person owns its interest, to exercise any
rights of a holder under the Indenture. The Company understands that under
existing industry practices, in the event that the Company requests any action
of Noteholders, or an owner of a beneficial interest in a Global Note desires to
take any action which a Noteholder is entitled to take under the Indenture, the
Depository would authorize the Participants holding the relevant beneficial
interests to take such action, and such Participants would authorize Beneficial
Owners owning through such Participants to take such action or would otherwise
act upon the instruction of Beneficial Owners. Conveyance of notices and other
communications by the Depository to Participants, by Participants to Indirect
Participants, and by Participants and Indirect Participants to Beneficial Owners
will be governed by arrangements among themselves, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payment of principal of, and interest on, Notes registered in the name of
the Depository or its nominee will be made to the Depository or its nominee, as
the case may be, as the holder of the Global Note or Notes representing such
Notes. None of the Company, the Trustee or any other agent of the Company or of
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests, or for supervising or reviewing any records relating to such
beneficial ownership interests. The Company expects that the Depository, upon
receipt of any payment of principal or interest in respect of a Global Note,
will credit the accounts of beneficial interest in such Global Note as shown on
the records of the Depository. The Company also expects that payments by
Participants to Beneficial Owners will be governed by standing customer
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participants.
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If (x) the Depository is at any time unwilling or unable to continue as
Depository and a successor depository is not appointed by the Company within 60
days, or (y) the Company executes and delivers to the Trustee an order to the
effect that the Global Notes shall be exchangeable, or (z) an Event of Default
has occurred and is continuing with respect to the Notes, the Global Note or
Notes will be exchangeable for Notes in definitive form of like tenor and of an
equal aggregate principal amount, in denominations of $1,000 and integral
multiples thereof. Such definitive Notes shall be registered in such name or
names as the Depository shall instruct the Trustee. It is expected that such
instructions may be based upon directions received by the Depository from
Participants with respect to ownership of beneficial interest in Global Notes.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
and related Pricing Agreement referred to therein, the Company has agreed to
sell to each of the Underwriters named below, and each of the Underwriters has
severally agreed to purchase, the principal amounts of the Notes set forth
opposite its name below.
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------------
Dillon, Read & Co. Inc............................................ $
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................
----------------
Total................................................ $
----------------
----------------
The Underwriting Agreement and related Pricing Agreement provide that the
Underwriters are obligated to purchase all of the Notes, if any are purchased.
The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public at the offering price set forth on the
cover page of this Prospectus Supplement, and to certain dealers at such price
less a concession not in excess of % of the principal amount, and that the
Underwriters and such dealers may reallow a discount not in excess of % of the
principal amount to other dealers. The public offering price and the concession
and discount to dealers may be changed by the Underwriters after the initial
public offering.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including civil liabilities under the Securities Act of
1933, or to contribute to payments the Underwriters may be required to make in
respect thereof.
The Notes are a new issue of securities with no established trading market,
and the Company does not intend to apply for the listing of the Notes on any
securities exchange. The Company has been advised by the Underwriters that they
intend to make a market in the Notes, but are not obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Notes.
Alvin E. Friedman, a director of the Company, acts as a senior advisor and
is a former director of Dillon, Read & Co. Inc. Dillon, Read & Co. Inc. has
provided from time to time, and may in the future provide, investment banking
services to the Company, for which it has received and would receive customary
fees and commissions.
Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as the Company's
financial advisor in connection with the Company's acquisition of Hall-Mark in
1993 and may in the future provide investment banking services to the Company,
for which it would receive customary fees and commissions.
S-9
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[LOGO] AVNET, INC.
DEBT SECURITIES
Avnet, Inc., a New York corporation (the "Company"), may offer, from time
to time, debt securities consisting of debentures, notes and/or other unsecured
evidences of indebtedness (the "Debt Securities") at an aggregate principal
amount not to exceed $200,000,000 or, if the principal of the Debt Securities is
payable in a foreign or composite currency, the equivalent thereof at the time
of the initial offerings. The Debt Securities may be offered as separate series
and may be offered in amounts, at prices and on terms to be determined at the
time of sale. When a particular series of Debt Securities (the "Offered Debt
Securities") are offered, a supplement to this Prospectus (a "Prospectus
Supplement") will be delivered with this Prospectus setting forth the terms of
such Offered Debt Securities including, if applicable, the specific designation,
aggregate principal amount, denominations, currency, purchase price, maturity,
rate (which may be fixed or variable) and time of payment of interest,
redemption terms, and any listing on a securities exchange of such Offered Debt
Securities.
The Debt Securities may be issued in registered or bearer form or both. In
addition, all or a portion of the Debt Securities of a series may be issued in
temporary or permanent global form. Debt Securities in bearer form will be
offered only to non-United States persons and to offices located outside the
United States of certain United States financial institutions.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
---------------------
Offered Debt Securities may be sold directly by the Company, or indirectly
through agents designated from time to time or through underwriters or dealers,
or through a combination of such methods. See "Plan of Distribution." If any
agents of the Company or any underwriters or dealers are involved in the sale of
Offered Debt Securities, the names of such agents, underwriters or dealers and
any applicable commissions or discounts will also be set forth in the Prospectus
Supplement. The net proceeds to the Company from such sale will be set forth in
the Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS MARCH 3, 1994.
11
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional
offices of the Commission: New York Regional Office, 7 World Trade Center, 13th
Floor, New York, New York 10048; and Chicago Regional Office, Suite 1500,
Northwest Atrium Center, 500 West Madison Avenue, Chicago, Illinois 60661-2511.
Copies of such materials can be obtained at prescribed rates from the Public
Reference Branch of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material can also be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005, and the Pacific Stock Exchange, Inc., 301 Pine Street, San
Francisco, California 94104 or 618 South Spring Street, Los Angeles, California
90014, on which exchanges the common stock of the Company is listed.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(which, together with all amendments and exhibits thereto, is referred to herein
as the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement, and
reference is hereby made to the Registration Statement for further information
with respect to the Company and the Debt Securities offered hereby. Any
statement contained herein concerning the provisions of any contract or other
document is not necessarily complete, and is qualified in its entirety by
reference to the copy of such contract or other document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. The
Registration Statement may be inspected without charge at the office of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and copies thereof may be obtained from the Commission at prescribed
rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-4224) are incorporated herein by reference:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1993 and Amendment No. 1 to such Report;
2. The Company's definitive proxy statement dated October 15, 1993 for
the annual meeting of the shareholders of the Company held on November 17,
1993;
3. The Company's Quarterly Reports on Form 10-Q for the quarters ended
October 1, 1993 and December 31, 1993; and
4. The Company's Current Reports on Form 8-K bearing cover dates of
July 1, 1993 and January 6, 1994.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the offering
of the Debt Securities shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in any subsequently filed
document deemed to be incorporated herein, or contained in the accompanying
Prospectus Supplement, modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of the Registration Statement or this
Prospectus.
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The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference (other
than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the documents that this Prospectus incorporates).
Requests for such copies should be directed to Raymond Sadowski, Senior Vice
President, Avnet, Inc., 80 Cutter Mill Road, Great Neck, New York 11021
(telephone (516) 466-7000).
THE COMPANY
The Company is the largest industrial distributor of electronic components
and computer products in the United States. Its primary customers are original
equipment manufacturers, including military contractors. Electronic components
are shipped either as received from the Company's suppliers or with assembly or
other value added. The Company also produces or distributes other electronic,
electrical and video communications products.
The Company's principal industry segments are as follows:
1. The Electronic Marketing Group (86% of total sales and 97% of
earnings in the fiscal year ended June 30, 1993) is engaged in the
marketing, assembly and/or processing, principally for industrial,
commercial and military use, of electronic and electromechanical components
and computer products. The Group's principal suppliers are Intel, Motorola,
National Semiconductor, Texas Instruments, Advanced Micro Devices, Harris
Corporation, AMP, Inc., ITT Cannon, Bendix Corporation, Digital Equipment
Corporation, Connor Peripherals and Seagate Technology.
2. The Video Communications Group (6% of total sales) is engaged in
the manufacture, assembly and marketing of television signal processing
equipment.
3. The Electrical and Industrial Group (8% of total sales), which
includes the Company's Brownell Electro, Mechanics Choice and Freeman
Products operations, is engaged in the distribution of electrical
insulation, magnet wire, electric motors and parts, measuring instruments,
control equipment, seals and industrial maintenance products, and the
production of trophy component parts and certain other items.
On July 1, 1993, the Company acquired Hall-Mark Electronics Corporation
("Hall-Mark") which was the third largest distributor of electronic components
and computer products in the United States. For the twelve months ended June 30,
1993, Hall-Mark had sales of $744 million. The acquisition added additional
distribution franchises and approximately 25,000 customers to the Company's
Electronic Marketing Group.
RATIO OF EARNINGS TO FIXED CHARGES
A description of the ratio of the Company's earnings to fixed charges, on a
consolidated basis, appears in a Prospectus Supplement.
USE OF PROCEEDS
Except as may be set forth in a Prospectus Supplement, the Company intends
to use the net proceeds from the sale of the Debt Securities for general
corporate purposes, which may include repayment of debt, capital expenditures,
possible acquisitions and working capital. Pending such use, the net proceeds
may be temporarily invested in short-term securities.
Depending on market conditions, the financial needs of the Company and
other factors, the Company may, from time to time, undertake additional
financings. The amount and timing of such financings, if any, cannot be
determined at this time.
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DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may apply to the Offered Debt
Securities will be described in the Prospectus Supplement relating to such
Offered Debt Securities.
The Debt Securities are to be issued under an Indenture (the "Indenture")
dated as of February 1, 1994, between the Company and The First National Bank of
Chicago, as Trustee (the "Trustee"), the form of which is filed as an exhibit to
the Registration Statement. The following summary of certain general provisions
of the Indenture and the Debt Securities does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the provisions of
the Indenture, including the definitions therein of certain terms. Whenever
particular provisions in the Indenture are referred to herein, such provisions
are incorporated by reference herein. Unless otherwise defined herein, all
capitalized terms in this section have the same meanings given to such terms in
the Indenture.
GENERAL
The aggregate principal amount of Debt Securities which can be issued under
the Indenture is unlimited. The Debt Securities to which this Prospectus relates
will be issued from time to time in one or more series in amounts the proceeds
of which will aggregate up to $200,000,000 and will be offered to the public on
terms determined by market conditions at the time of sale. The Debt Securities
will be unsecured and will rank pari passu with all other unsecured and
unsubordinated indebtedness of the Company. The Indenture does not limit the
amount of other indebtedness or securities, other than certain secured
indebtedness as described below, that may be issued by the Company.
Debt Securities of a series may be issued in registered form ("Registered
Securities") or bearer form ("Bearer Securities") or both as specified in the
terms of the series. Debt Securities in bearer form will be offered only to
non-United States persons and to offices located outside the United States of
certain United States financial institutions. Debt Securities of a series may be
issued in whole or in part in the form of one or more global securities ("Global
Securities") registered in the name of a depository or its nominee and, in such
case, beneficial interests in the Global Securities will be shown on, and
transfers thereof will be effected only through, records maintained by the
designated depository and its participants.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms of the
Offered Debt Securities:
- The designation, aggregate principal amount and authorized
denominations;
- The issue price expressed as a percentage of the aggregate principal
amount;
- The date or dates of maturity;
- The interest rate per annum (fixed or floating) or the method by
which such interest rate will be determined;
- The dates interest will commence accruing and, if applicable, be
paid and, for Registered Securities, the record dates for interest
payments;
- Where principal and interest, if any, will be paid;
- Any optional or mandatory sinking fund provisions;
- The dates and redemption prices relating to any optional or
mandatory redemption provisions and other terms and provisions of any
optional or mandatory redemptions;
- The denominations of Registered Securities if other than
denominations of $1,000 and any multiple thereof, and the denominations of
Bearer Securities if other than denominations of $5,000;
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- The portion of the principal amount payable on declaration of
acceleration of maturity or provable in bankruptcy, if other than the
principal amount;
- Any Events of Default, if not set forth in the Indenture;
- The currency or currencies, including composite currencies, of
payment of the principal (and premium, if any) and interest (if any), if
other than the currency of the United States of America;
- If the principal (and premium, if any) or interest, if any, are to
be payable, at the election of the Company or any Holder thereof, in coin
or currency other than that in which the Offered Debt Securities of the
series are stated to be payable, the period or periods within which, and
the terms and condition on which, such election may be made;
- If such securities are to be denominated in a currency or
currencies, including composite currencies, other than the currency of the
United States of America, the equivalent price in the currency of the
United States of America for purposes of determining the voting rights of
Holders of such Offered Debt Securities as Outstanding Securities under the
Indenture;
- If the amount of payments of principal (and premium, if any), or
portions thereof, or interest may be determined with reference to an index,
formula or other method, the manner of determining such amounts;
- Whether the Offered Debt Securities will be issuable in registered
or bearer form or both, any restrictions applicable to the offer, sale or
delivery of the Offered Debt Securities in bearer form, and whether the
Offered Debt Securities in bearer form will be exchangeable (and the terms
on which such exchange may be made) for Offered Debt Securities in
registered form;
- Whether Offered Debt Securities will be issued in whole or in part
in the form of one or more Global Securities and, if so, the method of
transferring beneficial interest in such Global Security or Global
Securities;
- The application, if any, of certain provisions of the Indenture
relating to defeasance and discharge, and related conditions;
- Any additional restrictive covenants or other material terms
relating thereto which may not be inconsistent with the Indenture; and
- Any applicable federal income tax consequences.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
principal (and premium, if any) will be payable, and the Registered Securities
will be transferable, at the corporate trust office of the Trustee in New York,
New York. Unless other arrangements are made, interest, if any, will be paid by
checks mailed to the Holders of Registered Securities at their registered
addresses. To the extent set forth in the Prospectus Supplement relating
thereto, Bearer Securities and the coupons appertaining thereto will be payable,
against surrender thereof, subject to any applicable laws and regulations, at
the offices of such paying agencies outside the United States as the Company may
appoint from time to time. No service charge will be made for any transfer or
exchange of the Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
One or more series of the Debt Securities may be issued as discounted Debt
Securities (bearing no interest or interest at a rate which at the time of
issuance is below market rates) to be sold at a substantial discount below their
stated principal amount. Federal income tax consequences and other special
considerations applicable to any such discounted Debt Securities will be
described in the Prospectus Supplement relating thereto.
The Company will comply with Section 14(e) of the Exchange Act, and any
tender offer rules of the Commission under the Exchange Act which may then be
applicable, in connection with any obligation of the Company to purchase Offered
Debt Securities at the option of the holders thereof. Any such obligation
applicable to a series of Debt Securities will be described in the Prospectus
Supplement relating thereto.
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The Company may at any time purchase Debt Securities at any price in the
open market or otherwise. Debt Securities so purchased by the Company may, at
its sole option, be held, resold or surrendered to the Trustee for cancellation.
CERTAIN DEFINITIONS
"Attributable Debt" means, as to any particular lease, the greater of (i)
the fair market value of the property subject to the lease (as determined by the
Company's Board of Directors), or (ii) the total net amount of rent required to
be paid during the remaining term of the lease, discounted by the weighted
average effective interest cost per annum of the outstanding Debt Securities of
all series, compounded semiannually.
"Consolidated Net Assets" means total assets after deducting therefrom all
current liabilities as set forth in the most recent balance sheet of the Company
and its consolidated Subsidiaries and computed in accordance with generally
accepted accounting principles.
"Funded Debt" means (i) all indebtedness for money borrowed having a
maturity of more than twelve months from the date as of which the determination
is made or having a maturity of twelve months or less but by its terms being
renewable or extendible beyond twelve months from such date at the option of the
borrower and, (ii) rental obligations payable more than twelve months from such
date under leases which are capitalized in accordance with generally accepted
accounting principles (such rental obligations to be included as Funded Debt at
the amount so capitalized and to be included as an asset for the purposes of the
definition of Consolidated Net Assets).
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Principal Property" means any manufacturing or processing plant or
warehouse owned at the date hereof or hereafter acquired by the Company or any
Restricted Subsidiary of the Company which is located within the United States
and the gross book value of which (including related land and improvements
thereon and all machinery and equipment included therein without deduction of
any depreciation reserves) on the date as of which the determination is being
made exceeds 2% of Consolidated Net Assets, other than (i) any such
manufacturing or processing plant or warehouse or any portion thereof (together
with the land on which it is erected and fixtures comprising a part thereof)
which is financed by industrial development bonds which are tax exempt pursuant
to Section 103 of the Internal Revenue Code (or which receive similar tax
treatment under any subsequent amendments thereto or any successor laws thereof
or under any other similar statute of the United States), (ii) any property
which in the opinion of the Company's Board of Directors is not of material
importance to the total business conducted by the Company as an entirety, or
(iii) any portion of a particular property which is similarly found not to be of
material importance to the use or operation of such property.
"Restricted Subsidiary" means a Subsidiary of the Company (i) substantially
all the property of which is located, or substantially all the business of which
is carried on, within the United States, and (ii) which owns a Principal
Property.
"Subsidiary" means any corporation more than 50% of the outstanding Voting
Stock of which at the time of determination is owned, directly or indirectly, by
the Company and/or by one or more other Subsidiaries.
"Voting Stock" means capital stock of a corporation of the class or classes
having general voting power under ordinary circumstances to elect at least a
majority of the Board of Directors, managers or trustees of such corporation
(irrespective of whether or not at the time stock of any other class or classes
shall have or might have voting power upon the occurrence of any contingency).
HIGHLY LEVERAGED TRANSACTIONS
Unless otherwise described in a Prospectus Supplement relating to any
Offered Debt Securities, there are no covenants or provisions contained in the
Indenture which may afford the holders of Offered Debt Securities direct
protection in the event of a highly leveraged transaction involving the Company.
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RESTRICTIONS ON SECURED DEBT
The Company covenants in the Indenture, for the benefit of each series of
Debt Securities other than any series which specifically provides otherwise,
that if the Company or any Restricted Subsidiary shall after the date of the
Indenture incur or guarantee any evidence of indebtedness for money borrowed
("Debt") secured by a mortgage, pledge or lien ("Mortgage") on any Principal
Property of the Company or any Restricted Subsidiary, or on any share of stock
or Debt of any Restricted Subsidiary, the Company will secure or cause such
Restricted Subsidiary to secure the Debt Securities, other than any series of
Debt Securities established by or pursuant to a Board Resolution or in one or
more supplemental indentures which specifically provide otherwise, equally and
ratably with (or, at the Company's option, prior to) such secured Debt, unless
the aggregate amount of all such secured Debt (plus all Attributable Debt which
is not excluded as described below under the caption "-- Restrictions on Sale
and Leaseback Financings") would not exceed 10% of Consolidated Net Assets.
This restriction will not apply to, and there will be excluded from secured
Debt in any computation of the above restriction, Debt secured by (a) Mortgages
on property of, or on any shares of stock of or Debt of, any corporation
existing at the time such corporation becomes a Restricted Subsidiary, (b)
Mortgages in favor of the Company or a Restricted Subsidiary, (c) Mortgages in
favor of governmental bodies to secure progress, advance or other payments, (d)
Mortgages on property, shares of stock or Debt existing at the time of
acquisition thereof (including acquisition through merger or consolidation) and
purchase money and construction or improvement Mortgages which are entered into
within 180 days after the acquisition of such property, shares or Debt or, in
the case of real property, within 180 days after the later of (1) the completion
of construction on, substantial repair to, alteration or development of, or
substantial improvement to, such property, or (2) the commencement of commercial
operations on such property, (e) mechanics' and similar liens arising in the
ordinary course of business in respect of obligations not due or being contested
in good faith, (f) Mortgages arising from deposits with, or the giving of any
form of security to, any governmental agency required as a condition to the
transaction of business or to the exercise of any privilege, franchise or
license, (g) Mortgages for taxes, assessments or government charges or levies
which are not then due or, if delinquent, are being contested in good faith, (h)
Mortgages (including judgment liens) arising from legal proceedings being
contested in good faith, (i) Mortgages existing at the date of the Indenture and
(j) any extension, renewal or refunding of any Mortgage referred to in the
foregoing clauses (a) through (i) inclusive.
RESTRICTIONS ON SALE AND LEASEBACK FINANCINGS
The Company covenants in the Indenture, for the benefit of each series of
Debt Securities other than any series which specifically provides otherwise,
that the Company will not itself, and will not permit any Restricted Subsidiary
to, enter into any sale and leaseback transaction involving any Principal
Property, unless after giving effect thereto the aggregate amount of all
Attributable Debt with respect to all such transactions, plus all secured Debt
which is not excluded as described above under the caption "-- Restrictions on
Secured Debt," would not exceed 10% of Consolidated Net Assets.
This restriction will not apply to, and there will be excluded from
Attributable Debt in any computation of the above restriction, any sale and
leaseback transaction if (a) the lease is for a period, including renewal
rights, of not in excess of three years, (b) the sale or transfer of the
Principal Property is made within 180 days after its acquisition or within 180
days after the later of (1) the completion of construction on, substantial
repair to, alteration or development of, or substantial improvement to, such
property, or (2) the commencement of commercial operations thereon, (c) the
transaction is between the Company and a Restricted Subsidiary, or between
Restricted Subsidiaries, (d) the Company or a Restricted Subsidiary would be
entitled to incur a Mortgage on such Principal Property securing Debt in an
amount equal to the Attributable Debt with respect to such transaction without
equally or ratably securing the Securities, or (e) the Company or a Restricted
Subsidiary, within 180 days after the sale or transfer is completed, applies to
the retirement of Funded Debt of the Company or a Restricted Subsidiary ranking
on a parity with or senior to the Debt Securities, or to the purchase of other
property which will constitute a Principal Property having a fair market value
at least equal to the fair market value of the Principal Property leased, an
amount equal to the greater of the net proceeds of the sale of the Principal
Property or the fair market value (as determined by the
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Company's Board of Directors) of the Principal Property leased at the time of
entering into such arrangement (as determined by the Board of Directors).
RESTRICTIONS ON MERGERS AND CONSOLIDATIONS
The Company covenants in the Indenture that it will not merge or sell,
convey, transfer or lease all or substantially all of its assets unless (i) the
successor Person is the Company or another Person organized under the laws of
the United States (including any state thereof and the District of Columbia)
which assumes the Company's obligations in the Debt Securities and under the
Indenture, and (ii) after giving effect to such transaction, the Company or the
successor Person would not be in default under the Indenture.
EVENTS OF DEFAULT
The Indenture defines "Events of Default" with respect to the Debt
Securities of any series as being one of the following events: (i) default in
the payment of any installment of interest on that series for 30 days after
becoming due; (ii) default in the payment of principal of that series when due;
(iii) default in the deposit of any sinking fund payment on that series when
due; (iv) default in the performance of any other covenant in the Debt
Securities of that series or the Indenture (other than a covenant included in
the Indenture solely for the benefit of any series of Debt Securities other than
that series) for 90 days after notice; (v) certain events of bankruptcy,
insolvency or reorganization; and (vi) any other Event of Default provided with
respect to Debt Securities of that series. If an Event of Default shall occur
and be continuing with respect to the Debt Securities of any series, either the
Trustee or the holders of at least 25% in principal amount of the Debt
Securities then outstanding of that series may declare the principal amount of
the Debt Securities of such series (or, in the case of Debt Securities sold at
an original issue discount, the amount specified in the terms thereof) and the
accrued interest thereon, if any, to be due and payable. Under certain
conditions, such a declaration may be rescinded.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default known to it, give the affected holders of Debt
Securities notice of all uncured defaults known to it (the term "default" to
mean the events specified above without grace periods); provided that, except in
the case of default in the payment of principal of or interest on any Debt
Security, the Trustee shall be protected in withholding such notice if it in
good faith determines that the withholding of such notice is in the interest of
the affected holders of Debt Securities.
The Company will be required to furnish to the Trustee annually a statement
by certain officers of the Company certifying that there are no defaults or
specifying any default.
The holders of a majority in principal amount of the outstanding Debt
Securities of any series will have the right, subject to certain limitations, to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee with respect to the Debt Securities of such series, and to waive certain
defaults with respect thereto. The Indenture provides that in case an Event of
Default shall occur and be continuing, the Trustee shall exercise such of its
rights and powers under the Indenture, and use the same degree of care and skill
in exercising the same, as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the holders of
Debt Securities unless they shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by the Trustee in compliance with such request.
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MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture may be modified or amended with the
consent of the holders of not less than a majority in principal amount of the
outstanding Debt Securities of each series affected by the modification;
provided that no such modification or amendment may be made, without the consent
of the holder of each Debt Security affected, which would (i) reduce the
principal amount of or the interest on any Debt Security, or change the stated
maturity of the principal of, or any installment of interest on, any Debt
Security or the other terms of payment thereof, or (ii) reduce the above-stated
percentage of Debt Securities, the consent of the holders of which is required
to modify or amend the Indenture, or the percentage of Debt Securities of any
series, the consent of the holders of which is required to waive certain past
defaults.
DEFEASANCE AND DISCHARGE
The Indenture provides that the Company may elect, with respect to the Debt
Securities of any series, to terminate (and be deemed to have satisfied) any and
all its obligations in respect of such Debt Securities (except for certain
obligations to register the transfer or exchange of Debt Securities, to replace
stolen, lost or mutilated Debt Securities, to maintain paying agencies and hold
monies for payment in trust and, if so specified with respect to the Debt
Securities of a certain series, to pay the principal of (and premium, if any)
and interest, if any, on such specified Debt Securities) on the 91st day after
the deposit with the Trustee, in trust, of money and/or U.S. Government
Obligations (as defined) which, through the payment of interest thereon and
principal thereof in accordance with their terms, will provide money in an
amount sufficient to pay any installment of principal of (and premium, if any),
and interest, if any, on, and any mandatory sinking fund payments in respect of,
such Debt Securities on the stated maturity of such payments in accordance with
the terms of the Indenture and such Debt Securities. Such a trust may be
established only if, among other things, the Company has delivered to the
Trustee an Opinion of Counsel (who may be counsel to the Company) to the effect
that, based upon applicable Federal income tax law or a ruling published by the
United States Internal Revenue Service, such a defeasance and discharge will not
be deemed, or result in, a taxable event with respect to holders of such Debt
Securities. If so specified with respect to the Debt Securities of a series,
such a trust may be established only if establishment of the trust would not
cause the Debt Securities of any such series listed on any nationally recognized
securities exchange to be delisted as a result thereof.
CONCERNING THE TRUSTEE
The First National Bank of Chicago is the Trustee under the Indenture and
has been appointed by the Company as initial Security Registrar with regard to
the Debt Securities. The Company currently does, and from time to time in the
future may, maintain lines of credit and have customary banking relationships
with the Trustee. The Trustee may serve as trustee for other debt securities
issued by the Company from time to time.
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PLAN OF DISTRIBUTION
The Company may sell Offered Debt Securities (i) to or through underwriters
or dealers, (ii) through agents, (iii) directly to purchasers, or (iv) through a
combination of any of the foregoing. Any such underwriter, dealer or agent may
be deemed to be an underwriter within the meaning of the Securities Act. Any
Prospectus Supplement relating to Offered Debt Securities will set forth their
offering terms, including the name or names of any underwriters, the purchase
price of the Offered Debt Securities and the proceeds to the Company from such
sale, any underwriting discounts, commissions and other items constituting
underwriters' compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers, and any securities
exchanges on which the Offered Debt Securities may be listed.
If underwriters are used in the sale, the Offered Debt Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, at a fixed price or prices, which may be
changed, or at market prices prevailing at the time of sale, or at prices
related to such prevailing market prices, or at negotiated prices. The Offered
Debt Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more of such firms. Unless otherwise set forth in the Prospectus Supplement,
the obligations of the underwriters to purchase the Offered Debt Securities will
be subject to certain conditions precedent and the underwriters will be
obligated to purchase all the Offered Debt Securities if any are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time. Under agreements
which may be entered into by the Company, underwriters, dealers and agents who
participate in the distribution of Offered Debt Securities may be entitled to
indemnification or contribution by the Company against certain liabilities,
including liabilities under the Securities Act.
The specific terms and manner of sale of Offered Debt Securities are set
forth or summarized in the Prospectus Supplement relating thereto.
If so indicated in a Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Offered Debt Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases will be
subject to acceptance by the Company. The obligations of any purchaser under any
such contracts will be subject to the conditions that the purchase of Offered
Debt Securities shall not at the time of delivery be prohibited under the laws
of the jurisdiction to which such purchaser is subject. The underwriters and
such other persons will not have any responsibility in respect of the validity
or performance of such contracts.
LEGAL MATTERS
The validity of the Offered Debt Securities will be passed upon for the
Company by David R. Birk, Senior Vice President and General Counsel of the
Company. Mr. Birk beneficially owns 7,632 shares of the Company's common stock,
including 7,250 shares issuable upon exercise of employee stock options. Certain
legal matters with respect to the Offered Debt Securities will be passed upon
for the underwriters, dealers or agents, if any, by Cahill Gordon & Reindel, a
partnership including a professional corporation, unless otherwise specified in
the Prospectus Supplement.
EXPERTS
The consolidated financial statements and schedules of the Company and its
subsidiaries incorporated by reference in this Prospectus have been audited by
Arthur Andersen & Co., independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
The consolidated financial statements of Hall-Mark and its subsidiaries
incorporated in this Prospectus by reference to the Current Report on Form 8-K
of the Company bearing cover date of January 6, 1994 have been so incorporated
in reliance on the report of Coopers & Lybrand, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
10
20
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED BY THE COMPANY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF. THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
The Company........................... S-2
Use of Proceeds....................... S-2
Ratio of Earnings to Fixed Charges.... S-2
Capitalization........................ S-3
Summary Financial Data................ S-4
Business.............................. S-5
Description of the Notes.............. S-7
Underwriting.......................... S-9
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Ratio of Earnings to Fixed Charges.... 3
Use of Proceeds....................... 3
Description of Debt Securities........ 4
Plan of Distribution.................. 10
Legal Matters......................... 10
Experts............................... 10
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[LOGO]
$100,000,000
AVNET, INC.
% NOTES DUE MARCH 15, 2004
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PROSPECTUS SUPPLEMENT
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DILLON, READ & CO. INC.
MERRILL LYNCH & CO.
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