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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 30, 1998
AVNET, INC.
(Exact name of Registrant as Specified in its Charter)
New York 1-4224 11-1890605
(State or other jurisdiction (Commission IRS Employer
of Incorporation) File Number) Identification No.)
2211 South 47 Street, Phoenix, Arizona 85034
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code602-643-2000
80 Cutter Mill Road, Great Neck, New York 11021
(Former name or former address if changed since last report)
Item 5. Other Events
The following Press Release of Avnet, Inc. was issued July 30, 1998. Such Press
Release is filed as Exhibit 99 attached hereto.
Item 7. Financial Statements and Exhibits
(a) See Exhibit 99.
(b) Inapplicable.
(c) Exhibits:
27 Financial Data Schedule (electronic filing only)
99 Press Release of Avnet, Inc.
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Avnet, Inc.
(Registrant)
Date: August 5, 1998 By: s/Raymond Sadowski
Raymond Sadowski
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
Exhibit Number Description of Exhibit
27 Financial Data Schedule (electronic filing only)
99 Press Release of Avnet, Inc. issued July 30, 1998
July 30, 1998
AVNET REPORTS RESULTS FOR FISCAL 1998
Phoenix, AZ - Avnet, Inc. (NYSE:AVT) reported results today for its fourth
quarter and fiscal year ended June 26, 1998. For the fourth quarter,
diluted earnings per share, excluding special charges referred to below,
were $1.01 as compared with $1.13 in last year's fourth quarter.
Consolidated net income, excluding special charges, was $37.7 million as
compared with last year's fourth quarter net income of $47.4 million. The
comparative net income, excluding special charges, was negatively impacted
by the interest expense associated with the Company's stock repurchase
program. Sales increased to a record $1.54 billion, up 10% as compared
with sales of $1.40 billion in the prior year's fourth quarter. Including
the special charges discussed below, the current year's fourth quarter net
income and diluted earnings per share were $16.6 million and $0.44,
respectively.
Included in the Company's current year fourth quarter results are $35.4
million pre-tax and $21.2 million after-tax ($0.57 per share on a diluted
basis) of incremental special charges associated principally with the
reorganization of its Electronic Marketing Group. Approximately $25.7
million of the pre-tax charge is included in operating expenses and $9.7
million is included in cost of sales. These charges include severance;
real property lease termination costs; inventory reserves required related
to supplier terminations; the writedown of goodwill and other items.
For the 1998 fiscal year, net income, excluding special charges and a one-
time gain, was $163.9 million, or $4.12 per share on a diluted basis.
This compares with last year's net income of $182.8 million, or $4.25 per
share. Sales were a record $5.92 billion, up 10% from last year's sales
of $5.39 billion. Net income and diluted earnings per share, including
special items, were $151.4 million and $3.80 per share, respectively.
Diluted earnings per share for fiscal 1998 in total exceeds by $0.04 the
sum of the applicable amounts for each of the quarters of 1998 due to the
effect of the stock repurchase program and the special charges.
In addition to the fourth quarter special charges referred to above, the
fiscal 1998 results include the second quarter $33.8 million pre-tax gain
on the sale of the Company's former Channel Master business and $13.3
million of costs relating to the divestiture of Avnet Industrial, the
closure of the Company's Corporate Headquarters in Great Neck, NY, and the
loss on the sale of Company owned real estate. The net effect of these
items was to increase the second quarter's pre-tax income, net income, and
earnings per share on a diluted basis by $20.5 million, $8.7 million, and
$0.21 per share, respectively.
Roy Vallee, Avnet's Chairman and CEO, said that the special charges in the
fourth quarter arose out of the Company's decision to change its
organizational structure to better focus on its core businesses in order
to better meet the needs of both its customers and suppliers. As a
result, the Company now consists of two major strategic business units --
the Electronics Marketing Group (EMG) and the Computer Marketing Group
(CMG). EMG, which consists of three regional operations -- the Americas,
EMEA (Europe, Middle East, and Africa) and Asia/Pacific regions -- focuses
on the global distribution and value-added services associated with
electronic components. CMG focuses on middle to high end, value-added
computer products distribution in North America, Europe, and Australia.
The principal amount of the special charges reflect the impact of the
Company's decision described above on its EMG Americas operation.
Although it is expected that EMG EMEA will be reorganized along lines
similar to that of the Americas during the first quarter of fiscal 1999,
a final detailed plan has not been firmly established by management nor
are the plans at a stage where the aggregate costs associated therewith
can be accurately quantified.
Mr. Vallee reported that sales for CMG grew 21% and 29% for the fourth
quarter and fiscal year, respectively, as compared with last year. He
indicated that the market which CMG serves remains strong. He further
reported that although average selling prices and margins continue to be
depressed due to the global inventory correction cycle, sales for EMG for
the fourth quarter and fiscal year were up 11% and 8%, respectively, as
compared with the prior year period.
During the fourth quarter, the Company completed its current stock
repurchase program. Since the program was announced in August 1996, the
Company has used $450 million, including approximately $132 million in
this year's fourth quarter, to repurchase almost 7.5 million shares.
AVNET, INC.
FINANCIAL HIGHLIGHTS AND STATEMENTS
FISCAL YEAR ENDED JUNE 26, 1998
PAGES
7 - Fiscal Year and Fourth Quarter Highlights
8 - Consolidated Statements of Income - Fiscal Year
9 - Consolidated Statements of Income - Fourth Quarter
10 - Consolidated Balance Sheets
The complete financial statements, including notes thereto and the
management discussion and analysis, will appear in the Company's annual
report to shareholders. The information contained herein is derived from
such statements.
AVNET, INC.
(millions except per share data)
Fiscal Years Ended
June 26, June 27,
1998 * 1997 % Change
Sales 5,916.3 5,390.6 + 10%
Income before income taxes 267.3 313.4 - 15%
Net income 151.4 182.8 - 17%
Earnings per share:
Basic $3.85 $4.29 - 10%
Diluted $3.80 $4.25 - 11%
Fourth Quarters Ended
June 26, June 27,
1998 ** 1997 % Change
Sales $1,544.6 $1,398.6 + 10%
Income before income taxes 29.8 80.4 - 63%
Net income 16.6 47.4 - 65%
Earnings per share:
Basic $0.45 $1.15 - 61%
Diluted $0.44 $1.13 - 61%
* Fiscal year 1998 results include the net positive impact of special
items amounting to $20.5 million pre-tax, $8.7 million after-tax and $0.21
per share on a diluted basis recorded in the second quarter, and the
negative impact of special charges amounting to $35.4 million pre-tax,
$21.2 million after-tax and $0.57 per share on a diluted basis recorded in
the fourth quarter and as described below.
**Fiscal year 1998 fourth quarter results include the impact of
incremental special charges associated with the reorganization of the
Company's Electronic Marketing Group amounting to $35.4 million pre-tax,
$21.2 million after-tax and $0.57 per share on a diluted basis.
AVNET, INC.
CONSOLIDATED STATEMENTS OF INCOME
(thousands, except per share data)
Fiscal Years Ended
June 26, June 27,
1998 1997
Sales $5,916,267 $5,390,626
Cost of sales 4,935,848 4,428,779
Gross profit 980,419 961,847
Operating expenses 709,243 634,101
Operating income 271,176 327,746
Other income, net 2,363 11,749
Interest expense (39,988) (26,076)
Gain on sale of Channel Master 33,795 -
Income before income taxes 267,346 313,419
Income taxes 115,922 130,656
Net income $ 151,424 $ 182,763
Earnings per share:
Basic $3.85 $4.29
Diluted $3.80 $4.25
Shares used to compute earnings per share:
Basic 39,375 42,598
Diluted 39,823 43,049
AVNET, INC.
CONSOLIDATED STATEMENTS OF INCOME
(thousands, except per share data)
Fourth Quarters Ended
June 26, June 27,
1998 1997
Sales $1,544,576 $1,398,635
Cost of sales 1,304,270 1,152,944
Gross profit 240,306 245,691
Operating expenses 198,612 159,942
Operating income 41,694 85,749
Other income, net 924 1,818
Interest expense (12,806) (7,173)
Income before income taxes 29,812 80,394
Income taxes 13,248 33,021
Net income $ 16,564 $ 47,373
Earnings per share:
Basic $0.45 $1.15
Diluted $0.44 $1.13
Shares used to compute earnings per share:
Basic 37,142 41,344
Diluted 37,434 41,879
AVNET, INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
June 26, June 27,
1998 1997
Assets:
Current assets:
Cash and cash equivalents $ 82,607 $ 59,312
Receivables 894,289 800,015
Inventories 1,061,739 1,007,074
Other 29,722 30,035
Total current assets 2,068,357 1,896,436
Property, plant & equipment 155,491 181,509
Goodwill 460,882 476,935
Other assets 48,967 39,191
Total assets $2,733,697 $2,594,071
Liabilities:
Current liabilities:
Borrowings due within one year $ 243 $ 178
Accounts payable 451,441 433,762
Accrued expenses and other 155,423 143,513
Total current liabilities 607,107 577,453
Long-term debt, less due within one year 810,695 514,426
Total liabilities 1,417,802 1,091,879
Shareholders' equity $1,315,895 $1,502,192