SEC Filing | Avnet, Inc.

Date: October 24, 2013

AVNET, INC.

Registrant

/s/ Kevin Moriarty

Name: Kevin Moriarty

Title: Senior Vice President and

Chief Financial Officer

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Form 8-K

UNITED STATES

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) October 24, 2013

AVNET, INC.

(Exact name of registrant as specified in its charter)


New York	1-4224	11-1890605
(State or other jurisdiction Of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2211 South 47th Street, Phoenix, Arizona		85034
(Address of principal executive offices)		(Zip Code)

(480) 643-2000

(Registrant’s telephone number, including area code.)

N/A

(Former name and former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13.e-4(c))

Item 2.02.

Results of Operations and Financial Condition.

On October 24, 2013, Avnet, Inc. issued a press release announcing its first quarter results of operations for fiscal 2014. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

Also attached is the CFO Review of Fiscal 2014 First Quarter Results as Exhibit 99.2 and incorporated by reference herein.

The information in this Current Report on Form 8-K and the exhibits attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933 except as shall be expressly set forth in such filing.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

The following materials are attached as exhibits to this Current Report on Form 8-K:


Exhibit Number		Description

99.1		Press Release, dated October 24, 2013.

99.2		CFO Review of Fiscal 2014 First Quarter Results.

SIGNATURES

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 hereunto duly authorized.

EX-99.1

Exhibit 99.1

LOGO

PRESS RELEASE

Avnet, Inc.

2211 South 47th Street

Phoenix, AZ 85034

Avnet, Inc. Reports First Quarter Fiscal Year 2014 Results

Revenue Growth and Operating Leverage Drive Strong Year-Over-Year EPS Growth

Phoenix, October 24, 2013—Avnet, Inc. (NYSE:AVT) today announced results for the first quarter fiscal year 2014 ended September 28, 2013.

Q1 Fiscal 2014 Results


	FIRST QUARTERS ENDED
	September 28, 2013		September 29, 2012		Change
	$ in millions, except per share data
Sales	$	6,345.5	$	5,870.1		8.1	%
GAAP Operating Income		179.0		100.0		79.0	%
Adjusted Operating Income (1)		199.5		144.5		38.1	%
GAAP Net Income		120.6		100.3		20.3	%
Adjusted Net Income (1)		126.0		88.9		41.7	%
GAAP Diluted EPS	$	0.86	$	0.70		22.9	%
Adjusted Diluted EPS (1)	$	0.90	$	0.62		45.2	%

⁽¹⁾

A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the Non-GAAP Financial Information section in this press release.

•

Sales for the quarter ended September 28, 2013 increased 8.1% year over year to $6.3 billion; organic revenue (as defined later in the document) grew 3.7% year over year and 3.5% in constant currency

•

Adjusted operating income of $199.5 million increased 38.1% year over year and adjusted operating income margin of 3.1% increased 68 basis points year over year

•

Adjusted net income of $126.0 million increased 41.7% and adjusted diluted earnings per share of $0.90 increased 45.2% year over year, primarily due to higher operating income at both operating groups as a result of revenue growth and the impact of cost reductions implemented in the prior fiscal year

Rick Hamada, Chief Executive Officer, commented, “Our team kicked off the new fiscal year with a solid performance as both operating groups leveraged year-over-year revenue growth into increased margins and returns. Enterprise revenue increased 8.1% from the year ago quarter and adjusted operating income grew approximately five times faster than revenue driven primarily by our disciplined approach to portfolio actions and expense management throughout fiscal 2013.

Adjusted operating income margin of 3.1% increased 68 basis points year over year and return on working capital was up 458 basis points to 19.8%. This represents the first time in seven quarters that these two important metrics expanded year over year. With our improving performance and overall financial profile, we were also pleased to announce our decision to initiate a dividend during our first quarter. Given our confidence in, and commitment to, long-term shareholder value creation, we believed it was an appropriate time to incorporate a more consistent element of returning cash to shareholders as part of our ongoing capital allocation priorities. With four consecutive quarters of seasonal growth and a strong balance sheet, we are positioned to build on this performance and continue progress toward our long-term goals.”

Avnet Electronics Marketing Results


				Year-over-Year Growth Rates
	Q1 FY14 Revenue			Reported Revenue			Organic Revenue
	(in millions)
EM Total	$	3,938.1			7.8	%		8.5	%
Excluding FX (1)					7.3	%		8.0	%
Americas	$	1,199.7			-6.8	%		1.2	%
EMEA	$	1,097.9			14.5	%		13.4	%
Excluding FX (1)					8.8	%		7.7	%
Asia	$	1,640.5			16.6	%		11.1	%

	Q1 FY14			Q1 FY13			Change
Operating Income	$	175.8		$	149.1			17.9	%
Operating Income Margin		4.5	%		4.1	%		38	bps

⁽¹⁾

Year-over-year revenue growth rate excluding the impact of changes in foreign currency exchange rates.

•

Reported revenue increased 7.8% year over year to $3.9 billion while organic revenue was up 8.0% in constant currency

•

After adjusting for acquisitions, the transfer of certain operations from EM to TS and currency, sequential revenue growth of 1.2% was at the high end of normal seasonality as better than expected growth in Asia offset seasonal declines in the western regions

•

Operating income margin of 4.5% increased 38 basis points from the year ago quarter primarily due to an improvement in the Americas region

•

Working capital velocity increased 4.9% year over year primarily due to an improvement in inventory turns

•

Return on working capital (ROWC) increased 302 basis points year over year due primarily to higher operating income

Mr. Hamada added, “Similar to the June quarter, EM sales were at the high end of normal seasonality as organic revenue in constant currency increased 1.2% sequentially with strong demand in the Asia region offsetting seasonal declines in the western regions. Asia revenue grew 12.6% sequentially, which helped drive EM’s year-over-year organic growth to 8.0% in constant currency. Operating income margin was flat sequentially and increased 38 basis points from the year ago quarter due to an improvement in the Americas region partially offset by a decline in EMEA and the geographic mix shift to Asia. The Asia region, which grew to represent 42% of EM sales this quarter, delivered record revenue and operating income while driving returns to their highest level in three years. In the EMEA region, we recently completed the first step of our acquisition of MSC Investoren, which will strengthen our position in semiconductor distribution and allow us to tap the embedded systems marketplace for new growth opportunities in Europe. With a strong competitive position and year-over-year growth rates improving, we expect to capitalize on profitable growth opportunities and drive further improvement in margins and returns across the EM portfolio.”

Avnet Technology Solutions Results


				Year-over-Year Growth Rates
	Q1 FY14 Revenue			Reported Revenue			Organic Revenue
	(in millions)
TS Total	$	2,407.4			8.6	%		-3.3	%
Excluding FX (1)					8.9	%		-3.0	%
Americas	$	1,288.9			10.7	%		-0.8	%
EMEA	$	694.3			9.3	%		-10.5	%
Excluding FX(1)					6.1	%		-13.1	%
Asia	$	424.2			1.8	%		2.3	%

	Q1 FY14			Q1 FY13			Change
Operating Income	$	62.6		$	38.7			61.9	%
Operating Income Margin		2.6	%		1.7	%		86	bps

⁽¹⁾

Year-over-year revenue growth rate excluding the impact of changes in foreign currency exchange rates.

•

Reported revenue increased 8.6% year over year to $2.4 billion and organic revenue declined 3.0% in constant currency

•

Operating income margin increased 86 basis points year over year to 2.6% primarily due to the improvements in the Americas and Asia regions

•

Return on working capital (ROWC) increased 632 basis points year over year primarily due to higher operating income

•

At a product level, year over year growth in services, storage and software was partially offset by a decline in servers

Mr. Hamada further added, “In the September quarter, TS revenue was within our expected range, though at the lower end of expectations. Revenue of $2.4 billion decreased 8.1% sequentially while year-over-year organic revenue was down 3.0% in constant currency. Organic revenue declined 11.1% sequentially in constant currency as compared with normal seasonality of down 5 to 10 percent. Operating income grew 61.9% from the year ago quarter driven primarily by an improvement in gross profit and from cost reduction initiatives implemented in fiscal 2013. At a regional level, both the Americas and Asia regions realized significant improvements in profitability, which contributed to an 86 basis point improvement in operating income margin from the year ago quarter. With the transfer of EM’s reverse logistics operations to the TS services offerings this quarter, we are further integrating our customer facing resources to leverage our VAR base to accelerate growth in higher margin services focused on software, education and lifecycle solutions. Despite some challenges in the marketplace, our focus on converged solutions supported by a broad line card and expanded services, positions us to capitalize on growth opportunities as we enter the seasonally strong December quarter.”

Cash Flow/Dividend

•

Cash used for operations was $126 million for the quarter

•

Cash flow from operations on a rolling four quarter basis was $489 million

•

The Company paid a dividend of $0.15 per share or $21 million in total

•

Cash and cash equivalents at the end of the quarter was $866 million; net debt (total debt less cash and cash equivalents) was approximately $1.2 billion

Kevin Moriarty, Chief Financial Officer, stated, “As is typical for us in a September quarter, we used some cash for operations as working capital grew faster than income primarily due to an increase in inventory and a decrease in accounts payable. Even with this growth in working capital, our net days remained consistent with the year ago quarter, our working capital velocity improved and we exited September with $866 million of cash. We also returned $21 million to shareholders via our recently announced dividend and have approximately $225 million available in our share repurchase program. With our dividend and share repurchase program in place, coupled with our strong financial position, we are able to optimize returns for our shareholders without impairing our ability to invest for future growth.”

Outlook For 2nd Quarter of Fiscal 2014 Ending on December 28, 2013

•

EM sales are expected to be in the range of $3.80 billion to $4.10 billion and TS sales are expected to be between $2.85 billion to $3.15 billion

•

After adjusting for acquisitions and changes in foreign currency exchange rates, the midpoint of the above guidance for EM and TS revenue would represent sequential growth of approximately -3% and +24%, respectively

•

Consolidated sales are forecasted to be between $6.65 billion and $7.25 billion

•

Adjusted diluted earnings per share (“EPS”) is expected to be in the range of $1.05 to $1.15 per share

•

The EPS guidance assumes 139.7 million average diluted shares outstanding and a tax rate of 27% to 31%

The above EPS guidance excludes the amortization of intangibles and any potential restructuring charges or any charges related to acquisitions and post-closing integration activities. In addition, the above guidance assumes that the average Euro to U.S. Dollar currency exchange rate for the second quarter of fiscal 2014 is $1.35 to €1.00. This compares with an average exchange rate of $1.30 to €1.00 in the second quarter of fiscal 2013 and $1.32 to €1.00 in the first quarter of fiscal 2014.

Forward-Looking Statements

This document contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on management’s current expectations and are subject to uncertainty and changes in facts and circumstances. The forward-looking statements herein include statements addressing future financial and operating results of Avnet and may include words such as “will,” “anticipate,” “estimate,” “forecast,” “expect,” “believe,” and “should,” and other words and terms of similar meaning in connection with any discussions of future operating or financial performance, business prospects or market conditions. Actual results may vary materially from the expectations contained in the forward-looking statements.

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the Company’s ability to retain and grow market share and to generate additional cash flow, risks associated with any acquisition activities and the successful integration of acquired companies, declines in sales, changes in business conditions and the economy in general, changes in market demand and pricing pressures, any material changes in the allocation of product or product rebates by suppliers, and other competitive and/or regulatory factors affecting the businesses of Avnet generally.

More detailed information about these and other factors is set forth in Avnet’s filings with the Securities and Exchange Commission, including the Company’s reports on Form 10-K, Form 10-Q and Form 8-K. Except as required by law, Avnet is under no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also discloses in this document certain non-GAAP financial information including adjusted operating income, adjusted net income and adjusted diluted earnings per share, as well as sales adjusted for the impact of acquisitions and other items (as defined in the Organic Revenue section of this document). Management believes organic revenue is a useful measure for evaluating current period performance as compared with prior periods and for understanding underlying trends.

Management believes that operating income adjusted for (i) restructuring, integration and other charges, and (ii) amortization of acquired intangible assets, is a useful measure to help investors better assess and understand the Company’s operating performance, especially when comparing results with previous periods or forecasting performance for future periods, primarily because management views the excluded items to be outside of Avnet’s normal operating results or non-cash in nature. Management analyzes operating income without the impact of these items as an indicator of ongoing margin performance and underlying trends in the business. Management also uses these non-GAAP measures to establish operational goals and, in some cases, for measuring performance for compensation purposes.

Management believes net income and EPS adjusted for (i) the impact of the items described above, (ii) certain items impacting income tax expense and (iii) the gain on legal settlement, bargain purchase and other is useful to investors because it provides a measure of the Company’s net profitability on a more comparable basis to historical periods and provides a more meaningful basis for forecasting future performance. Additionally, because of management’s focus on generating shareholder value, of which net profitability is a primary driver, management believes net income and EPS excluding the impact of these items provides an important measure of the Company’s net results of operations for the investing public.

Other metrics management monitors in its assessment of business performance include return on working capital (ROWC), return on capital employed (ROCE) and working capital velocity (WC velocity).

•

ROWC is defined as annualized adjusted operating income (as defined above) divided by the sum of the monthly average balances of receivables and inventory less accounts payable.

•

ROCE is defined as annualized, tax effected adjusted operating income (as defined above) divided by the monthly average balances of interest-bearing debt and equity (including the impact of adjustments to operating income discussed above) less cash and cash equivalents.

•

WC velocity is defined as annualized sales divided by the sum of the monthly average balances of receivable and inventory less accounts payable.

Any analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP.

First Quarter Fiscal 2014


	First Quarter Fiscal 2014
	Operating Income		Income Before Income Taxes			Net Income			Diluted EPS
	$ in thousands, except per share data
GAAP results	$	178,987	$	171,942		$	120,624		$	0.86
Restructuring, integration and other charges		12,099		12,099			8,851			0.06
Gain on legal settlement, bargain purchase and other		—		(19,137	)		(11,686	)		(0.08	)
Amortization of intangible assets		8,394		8,394			5,702			0.04
Income tax adjustments		—		—			2,496			0.02

Total adjustments		20,493		1,356			5,363			0.04

Adjusted results	$	199,480	$	173,298		$	125,987		$	0.90

Items impacting the first quarter of fiscal 2014 consisted of the following:

•

restructuring, integration and other charges of $12.1 million pre-tax consisted of $4.2 million for severance, $1.2 million for facility exit related costs, $0.3 million for other charges, $3.0 million for other costs including acquisition costs, $4.2 million for integration-related costs, and a benefit of $0.8 million to adjust prior year restructuring reserves. Restructuring, integration and other charges after tax was $8.9 million;

•

a gain on legal settlement of $19.1 million pre-tax and $11.7 million after tax related to an award payment received during the quarter;

•

amortization expense related to acquired intangible assets of $8.4 million pre-tax and $5.7 million after tax; and

•

an income tax adjustment of $2.5 million primarily related to certain items impacting the effective income tax rate in the first quarter of fiscal 2014.

First Quarter Fiscal 2013


	First Quarter Fiscal 2013
	Operating Income		Income Before Income Taxes			Net Income			Diluted EPS
	$ in thousands, except per share data
GAAP results	$	99,973	$	108,857		$	100,305		$	0.70
Restructuring, integration and other charges		37,408		37,408			27,101			0.19
Gain on legal settlement, bargain purchase and other		—		(31,291	)		(31,291	)		(0.22	)
Amortization of intangible assets		7,088		7,088			4,962			0.03
Income tax adjustments		—		—			(12,184	)		(0.08	)

Total adjustments		44,496		13,205			(11,412	)		(0.08	)

Adjusted results	$	144,469	$	122,062		$	88,893		$	0.62

Items impacting the first quarter of fiscal 2013 consisted of the following:

•

restructuring, integration and other charges of $37.4 million pre-tax consisted of $25.9 million for severance, $4.0 million for facility exit related costs, $0.3 million for other charges, $2.8 million primarily for transaction costs associated with recent acquisitions, $5.0 million for integration-related costs, and a benefit of $0.6 million to adjust prior year restructuring reserves. Restructuring, integration and other charges after tax was $27.1 million;

•

a gain on bargain purchase of $31.3 million pre- and after tax related to the Internix, Inc. acquisition for which the gain was not taxable;

•

amortization expense related to acquired intangible assets of $7.1 million pre-tax and $5.0 million after tax; and

•

an income tax adjustment of $12.2 million primarily related to certain items impacting the effective income tax rate in the first quarter of fiscal 2013 including a favorable settlement of an income tax audit.

Organic Revenue

Organic revenue is defined as reported sales adjusted for (i) the impact of acquisitions and divestitures by adjusting Avnet’s prior periods to include the sales of acquired businesses and exclude the sales of divested businesses as if the acquisitions and divestitures had occurred at the beginning of the earliest period presented and (ii) the impact of the transfer of a portion of certain operations between the EM and TS operating groups, which did not have an impact to Avnet on a consolidated basis but did impact the organic sales for the TS and EM operating groups by $119.6 million in the first quarter of fiscal 2013. Sales taking into account the combination of these adjustments are referred to as “organic revenue.”


	Revenue as Reported		Acquisition/ (Divestiture) Revenue		Organic Revenue
	(in thousands)
Q1 Fiscal 2014	$	6,345,475	$	—	$	6,345,475

Q1 Fiscal 2013	$	5,870,057	$	250,029	$	6,120,086
Q2 Fiscal 2013		6,699,465		50,215		6,749,680
Q3 Fiscal 2013		6,298,699		26,922		6,325,621
Q4 Fiscal 2013		6,590,703		8,998		6,599,701

Fiscal year 2013	$	25,458,924	$	336,164	$	25,795,088

“Acquisition/ (Divestiture) Revenue” as presented in the preceding table includes the effects of the acquisitions and divestitures included below:

Fiscal 2014

Seamless Technologies, Inc., in July 2013 in the TS Americas region

Nisko Semiconductors Ltd., in July 2013 in the EM EMEA region

Fiscal 2013

RTI Holdings, in April 2013 in the EM Asia Region

Divestiture in March 2013 of a small business in the EM Americas region

TSSLink, Inc., in December 2012 in the TS Americas region

Universal Semiconductor, Inc., in December 2012 in the EM Americas region

Genilogix, in November 2012 in the TS Americas region

Divestiture in December 2012 of a small business in the TS Asia region

Brightstar Partners, Inc., in November 2012 in the TS Americas region

Magirus AG, in October 2012 in the TS EMEA region

Tekdata Interconnections, Limited, in October 2012 in the EM EMEA region

Internix, Inc., in August 2012 in the EM Asia region

C.R.G. Electronics, Ltd., in August 2012 in the EM EMEA region

Pepperweed Consulting, in August 2012 in the TS Americas region

ROWC, ROCE and WC Velocity

The following table presents the calculation for ROWC, ROCE and WC velocity.


			Q1 FY14			Q1 FY13
Sales			$	6,345,475		$	5,870,057
Sales, annualized	(a	)	$	25,381,900		$	23,480,229
Adjusted operating income (1)			$	199,480		$	144,469
Adjusted annualized operating income	(b	)	$	797,920		$	577,876
Adjusted effective tax rate (2)				27.3	%		27.5	%
Adjusted annualized operating income, after tax	(c	)	$	580,088		$	419,076
Average monthly working capital
Accounts receivable			$	4,680,691		$	4,353,226
Inventory			$	2,465,802		$	2,448,301
Accounts payable			$	(3,125,452	)	$	(3,015,599	)

Average working capital	(d	)	$	4,021,041		$	3,785,929

Average monthly total capital	(e	)	$	5,532,305		$	5,110,368

ROWC = (b) / (d)				19.8	%		15.3	%
WC Velocity = (a) / (d)				6.3			6.2
ROCE = (c) / (e)				10.5	%		8.2	%

⁽¹⁾

See reconciliation to GAAP amounts in the preceding tables in this Non-GAAP Financial Information section.

⁽²⁾

Adjusted effective tax rate is based upon the anticipated annual effective tax rate, excluding the tax effect of the items described above in the reconciliation to GAAP amounts in this Non-GAAP Financial Information Section.

Teleconference Webcast and Upcoming Events

Avnet will host a Webcast of its quarterly teleconference today at 2:00 p.m. Eastern Time. The live Webcast event, as well as other financial information including financial statement reconciliations of GAAP and non-GAAP financial measures, will be available through www.ir.avnet.com. Please log onto the site 15 minutes prior to the start of the event to register or download any necessary software. An archive copy of the presentation will also be available after the Webcast.

For a listing of Avnet’s upcoming events and other information, please visit Avnet’s investor relations website at www.ir.avnet.com.

About Avnet

Avnet, Inc. (NYSE:AVT), a Fortune 500 company, is one of the largest distributors of electronic components, computer products and embedded technology serving customers globally. Avnet accelerates its partners’ success by connecting the world’s leading technology suppliers with a broad base of customers by providing cost-effective, value-added services and solutions. For the fiscal year ended June 29, 2013, Avnet generated revenue of $25.5 billion. For more information, visit www.avnet.com. (AVT_IR)

Investor Relations Contact:

Avnet, Inc.

Vincent Keenan

Investor Relations

(480) 643-7053

investorrelations@avnet.com

AVNET, INC.

FINANCIAL HIGHLIGHTS

(MILLIONS EXCEPT PER SHARE DATA)

(UNAUDITED)


	First Quarters Ended
	September 28, 2013		September 29, 2012
Sales	$	6,345.5	$	5,870.1
Income before income taxes		171.9		108.9
Net income		120.6		100.3
Net income per share:
Basic	$	0.88	$	0.71
Diluted	$	0.86	$	0.70

AVNET, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(THOUSANDS EXCEPT PER SHARE DATA)

(UNAUDITED)


	First Quarters Ended
	September 28, 2013			September 29, 2012
Sales	$	6,345,475		$	5,870,057
Cost of sales		5,610,305			5,185,680

Gross profit		735,170			684,377
Selling, general and administrative expenses		544,084			546,996
*Restructuring, integration and other charges (Note 1)**		12,099			37,408

Operating income		178,987			99,973
Other income (expense), net		795			1,483
Interest expense		(26,977	)		(23,890	)
*Gain on legal settlement, bargain purchase and other (Note 2)**		19,137			31,291

Income before income taxes		171,942			108,857
Income tax provision		51,318			8,552

Net income	$	120,624		$	100,305

Net earnings per share:
Basic	$	0.88		$	0.71

Diluted	$	0.86		$	0.70

Shares used to compute earnings per share:
Basic		137,414			140,767

Diluted		139,724			143,359

Cash dividends paid per common share	$	0.15		$	—

*	See Notes to Consolidated Statements of Operations

AVNET, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(THOUSANDS)

(UNAUDITED)


	September 28, 2013		June 29, 2013
Assets:
Current assets:
Cash and cash equivalents	$	865,613	$	1,009,343
Receivables, net		4,820,070		4,868,973
Inventories		2,510,777		2,264,341
Prepaid and other current assets		222,380		214,221

Total current assets		8,418,840		8,356,878
Property, plant and equipment, net		505,229		492,606
Goodwill		1,290,344		1,261,288
Other assets		343,851		363,908

Total assets	$	10,558,264	$	10,474,680

Liabilities and Shareholders’ Equity:
Current liabilities:
Borrowings due within one year	$	876,946	$	838,190
Accounts payable		3,184,037		3,278,152
Accrued expenses and other		658,619		705,102

Total current liabilities		4,719,602		4,821,444
Long-term debt		1,202,303		1,206,993
Other long-term liabilities		140,886		157,118

Total liabilities		6,062,791		6,185,555
Shareholders’ equity		4,495,473		4,289,125

Total liabilities and shareholders’ equity	$	10,558,264	$	10,474,680

AVNET, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(THOUSANDS)

(UNAUDITED)


	First Quarters Ended
	September 28, 2013			September 29, 2012
Cash flows from operating activities:
Net income	$	120,624		$	100,305
Non-cash and other reconciling items:
Depreciation and amortization		29,291			28,208
Deferred income taxes		9,544			(2,889	)
Stock-based compensation		18,730			18,905
Gain on bargain purchase		—			(31,291	)
Other, net		23,842			14,988
Changes in (net of effects from businesses acquired):
Receivables		89,718			277,687
Inventories		(220,165	)		102,672
Accounts payable		(128,045	)		(382,870	)
Accrued expenses and other, net		(69,730	)		(44,738	)

Net cash flows (used for) provided by operating activities		(126,191	)		80,977

Cash flows from financing activities:
(Repayments of) borrowings under accounts receivable securitization program, net		(32,000	)		41,000
Borrowings of bank and other debt, net		67,773			131,140
Repurchases of common stock		—			(128,707	)
Dividends paid on common stock		(20,620	)
Other, net		3,871			1,280

Net cash flows provided by financing activities		19,024			44,713

Cash flows from investing activities:
Purchases of property, plant and equipment		(27,384	)		(24,385	)
Cash proceeds from sale of assets		1,664			304
Acquisitions of businesses, net of cash acquired		(20,950	)		(87,176	)
Cash proceeds from divestitures, net of cash divested		—			4,500


Net cash flows used for investing activities		(46,670	)		(106,757	)

Effect of exchange rate changes on cash and cash equivalents		10,107			17,236

Cash and cash equivalents:
— (decrease) increase		(143,730	)		36,169
— at beginning of period		1,009,343			1,006,864

— at end of period	$	865,613		$	1,043,033

AVNET, INC.

SEGMENT INFORMATION

(MILLIONS)

(UNAUDITED)


	First Quarters Ended
	September 28, 2013			September 29, 2012
Sales:
Electronics Marketing	$	3,938.1		$	3,653.2
Technology Solutions		2,407.4			2,216.9

Consolidated	$	6,345.5		$	5,870.1

Operating Income:
Electronics Marketing	$	175.8		$	149.1
Technology Solutions		62.6			38.7
Corporate		(38.9	)		(43.3	)

		199.5			144.5
Restructuring, integration and other charges		(12.1	)		(37.4	)
Amortization of intangible assets		(8.4	)		(7.1	)

Consolidated Operating Income	$	179.0		$	100.0

AVNET, INC.

NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS

FIRST QUARTER OF FISCAL 2014

(1) The results for the first quarter of fiscal 2014 included restructuring, integration and other charges of $12,099,000 pre-tax, $8,851,000 after tax and $0.06 per share on a diluted basis. Restructuring charges included therein were $5,716,000 pre-tax consisting of $4,202,000 for severance, $1,180,000 for facility exit costs and fixed asset write downs, and $334,000 for other restructuring charges. Integration costs and other costs including acquisition costs were $4,157,000 pre-tax and $3,053,000 pre-tax, respectively. The Company recorded a benefit of $827,000 pre-tax primarily to adjust reserves related to prior year restructuring activity.

The results for the first quarter of fiscal 2013 included restructuring, integration and other charges which totaled $37,408,000 pre-tax, $27,101,000 after tax and $0.19 per share on a diluted basis. Restructuring charges included therein were $30,210,000 pre-tax consisting of $25,900,000 for severance, $3,967,000 for facility exit costs and fixed asset write downs, and $343,000 for other restructuring charges. Integration costs and other costs including acquisition costs were $5,049,000 pre-tax and $2,780,000 pre-tax, respectively. The Company recorded a benefit of $631,000 pre-tax primarily to adjust reserves related to prior year restructuring activity.

(2) During the first quarter of fiscal 2014, the Company received an award payment from the settlement of a class action proceeding against certain manufacturers of LCD flat panel displays resulting in a gain of $19.1 million before tax, $11.7 million after tax and $0.08 per share on a diluted basis.

During the first quarter of fiscal 2013, the Company recognized a gain on bargain purchase of $31,291,000 before and after tax and $0.22 per share on a diluted basis. In August 2012, the Company acquired Internix, Inc., a company publicly traded on the Tokyo Stock Exchange, through a tender offer. After assessing the assets acquired and liabilities assumed, the consideration paid was below the fair value of the acquired net assets and, as a result, the Company recognized the gain.

EX-99.2

Exhibit 99.2

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

CFO Review of Fiscal 2014 First Quarter Results


	1Q’ FY13			4Q’ FY13			1Q’ FY14			Y/Y Chg			Seq. Chg
Sales	$	5,870.1		$	6,590.7		$	6,345.5		$	475.4		$	(245.2	)
Gross Profit	$	684.4		$	770.9		$	735.2		$	50.8		$	(35.8	)
GP Margin		11.7	%		11.7	%		11.6	%		(7	) bps		(11	) bps
SG&A Expenses	$	547.0		$	548.3		$	544.1		$	(2.9	)	$	(4.2	)
SG&A as % of Sales		9.3	%		8.3	%		8.6	%		(75	) bps		25 bps
SG&A as % of GP		79.9	%		71.1	%		74.0	%		(592	) bps		289 bps
GAAP Operating Income	$	100.0		$	162.8		$	179.0		$	79.0		$	16.2
Adjusted Operating Income (1)	$	144.5		$	231.2		$	199.5		$	55.0		$	(31.7	)
Adjusted Operating Income Margin (1)		2.5	%		3.5	%		3.1	%		68 bps			(37	) bps
GAAP Net Income	$	100.3		$	126.1		$	120.6		$	20.3		$	(5.5	)
Adjusted Net Income (1)	$	88.9		$	141.8		$	126.0		$	37.1		$	(15.8	)
GAAP Diluted EPS	$	0.70		$	0.91		$	0.86			22.9	%		(5.5	)%
Adjusted EPS (1)	$	0.62		$	1.02		$	0.90			45.2	%		(11.8	)%
Return on Working Capital (ROWC) (1)		15.3	%		23.9	%		19.8	%		458 bps			(401	) bps
Return on Capital Employed (ROCE) (1)		8.2	%		12.5	%		10.5	%		229 bps			(203	) bps
Working Capital Velocity (1)		6.2			6.8			6.3			0.11			(0.49	)

⁽¹⁾	A reconciliation of non-GAAP financial measures is presented in the Non-GAAP Financial Information section at the end of this document.

K e y H i g h l i g h t s

•

Sales for the first quarter of fiscal 2014 increased 8.1% year over year to $6.3 billion; organic revenue (defined later in this document) grew 3.7% year over year and 3.5% excluding the translation impact of changes in foreign currency exchange rates (also referred to as “constant dollars” or “constant currency” and referenced as “CC” in the graphs that follow).

•

Adjusted operating income increased 38.1% year over year primarily due to a combination of higher revenue and cost reduction initiatives implemented in fiscal 2013. All regions at both operating groups contributed towards the year-over-year improvement.

•

Adjusted diluted earnings per share of $0.90 increased 45.2% year over year due to the significant improvement in operating income at both operating groups, most notably in the Americas region.

•

Enterprise ROWC improved 458 basis points and ROCE increased 229 basis points year over year, primarily due to the increase in operating income at both operating groups.

•

Cash used for operations was $126.2 million in the September 2013 quarter as working capital increased approximately 8% sequentially primarily due to an increase in inventory and a reduction in accounts payable. Cash flow from operations for the trailing twelve months was $489.0 million and net days remained consistent with the year ago quarter.

•

During the quarter, the Company initiated and paid a quarterly cash dividend of $0.15 per share or $20.6 million in total.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

R e v e n u e


											Year-over-Year Growth Rates
	1Q’ FY13		2Q’ FY13		3Q’ FY13		4Q’ FY13		1Q’ FY14		Reported			Organic⁽²⁾
Avnet, Inc.	$	5,870.1	$	6,699.5	$	6,298.7	$	6,590.7	$	6,345.5		8.10	%		3.68	%
Excluding FX ⁽¹⁾												7.91	%		3.50	%
Electronics Marketing (EM) Total	$	3,653.2	$	3,673.5	$	3,797.2	$	3,970.6	$	3,938.1		7.80	%		8.46	%
Excluding FX ⁽¹⁾												7.32	%		7.98	%
Americas	$	1,287.8	$	1,264.9	$	1,320.1	$	1,391.0	$	1,199.7		(6.84	)%		1.22	%
EMEA	$	958.5	$	914.3	$	1,100.1	$	1,123.2	$	1,097.9		14.54	%		13.37	%
Excluding FX ⁽¹⁾												8.81	%		7.70	%
Asia	$	1,406.9	$	1,494.3	$	1,377.0	$	1,456.4	$	1,640.5		16.61	%		11.05	%
Technology Solutions (TS) Total	$	2,216.9	$	3,026.0	$	2,501.5	$	2,620.1	$	2,407.4		8.59	%		(3.29	)%
Excluding FX ⁽¹⁾												8.88	%		(3.03	)%
Americas	$	1,164.6	$	1,598.3	$	1,300.1	$	1,389.8	$	1,288.9		10.67	%		(0.78	)%
EMEA	$	635.5	$	963.8	$	783.0	$	799.6	$	694.3		9.25	%		(10.48	)%
Excluding FX ⁽¹⁾												6.09	%		(13.06	)%
Asia	$	416.8	$	463.9	$	418.4	$	430.7	$	424.2		1.76	%		2.28	%

⁽¹⁾	Year-over-year revenue growth rate excluding the impact of changes in foreign currency exchange rates.

⁽²⁾	Organic revenues as defined in this document.

LOGO

•

Avnet, Inc. quarterly reported revenue of $6.3 billion increased 8.1% year over year (7.9% in constant dollars) as both operating groups contributed towards this growth.

•

Year-over-year organic sales increased 3.7% (3.5% in constant dollars), as growth in Electronics Marketing (EM) was partially offset by declines in Technology Solutions (TS).

•

On a sequential basis, organic sales declined 3.8% in constant dollars, which is within the normal seasonal range of -4% to 0%.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

LOGO

•

EM’s quarterly reported revenue of $3.9 billion exceeded the mid-point of expectations, driven by better than anticipated growth in Asia. Reported revenue increased 7.8% year over year (7.3% in constant dollars) and organic revenue grew 8.5% (8.0% in constant dollars) led by double digit growth in Asia.

•

EM’s organic revenue increase of 1.2% sequentially in constant dollars was at the high end of normal seasonality of -3% to +1%. This represents the second straight quarter of positive organic year-over-year growth.

•

Americas’ organic revenue increased 1.2% year over year and decreased 7.1% sequentially.

•

EMEA’s organic revenue increased 7.7% year over year in constant dollars and declined 4.1% sequentially.

•

Asia’s organic revenue increased 11.1% year over year and improved 12.6% sequentially. The multi quarter year over year trend of higher growth in Asia has resulted in a geographic mix shift as Asia now represents 41.7% of EM sales as compared with 38.5% in the first quarter of fiscal 2013.

LOGO

•

TS’ reported revenue increased 8.6% year over year (8.9% in constant dollars) to $2.4 billion, with all three regions contributing towards the positive year-over-year growth.

•

TS’ organic revenue declined 11.1% sequentially in constant dollars, which is below the normal seasonal range of -5% to -10%.

•

Americas’ organic revenue declined 0.8% year over year and 13.6% sequentially.

•

EMEA’s organic revenue declined 13.1% year over year in constant dollars and decreased 14.1% sequentially.

•

Asia’s organic revenue increased 2.3% year over year and declined 1.5% sequentially.

•

At a product level, year-over-year growth in services, storage and software was partially offset by a decline in servers.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

G r o s s P r o f i t


	1Q’ FY13			2Q’ FY13			3Q’ FY13			4Q’ FY13			1Q’ FY14			Y/Y Change
Gross Profit	$	684.4		$	768.5		$	756.0		$	770.9		$	735.2		$	50.8
Gross Profit Margin		11.7	%		11.5	%		12.0	%		11.7	%		11.6	%		(7	) bps

LOGO

•

Gross profit was $735.2 million, up 7.4% year over year and down 4.6% sequentially.

•

Gross profit margin of 11.6% was down 7 basis points from a year ago quarter and down 11 basis points sequentially as improvements at TS were offset by declines at EM.

•

EM gross profit margin decreased 38 basis points sequentially primarily due to the geographic mix shift to Asia as the lower gross profit margin Asian region grew from 36.7% to 41.7% of revenue. EM gross profit margin decreased 51 basis points year over year primarily due to a decline in the EMEA region driven by competitive pressures and the previously mentioned geographic mix shift to Asia partially offset by an increase in the Americas region.

•

TS gross profit margin increased 65 basis points year over year and 16 basis points sequentially. The year-over-year improvement is driven by portfolio discipline focused on revenue selection and an increase in higher margin services offerings.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

O p e r a t i n g E x p e n s e s


	1Q’ FY13			2Q’ FY13			3Q’ FY13			4Q’ FY13			1Q’ FY14			Y/Y Change
Selling, General and Administrative Expenses	$	547.0		$	548.0		$	561.1		$	548.3		$	544.1		$	(2.9	)
SG&A Expenses as a % of Gross Profit		79.9	%		71.3	%		74.2	%		71.1	%		74.0	%		(592	)bps

LOGO

•

Even with an increase of approximately $475.4 million in revenue, selling, general and administrative expenses (“SG&A expenses”) decreased approximately 1% year-over-year to $544.1 million.

•

The year-over-year decline consisted primarily of (i) a net decrease of approximately $35 million primarily related to recent cost reduction initiatives and actions, (ii) an increase of approximately $31 million related to operating expenses from acquired businesses, and (iii) an increase of approximately $1 million related to the translation impact of changes in foreign currency exchange rates between the periods.

•

SG&A expenses, excluding amortization of acquired intangibles, as a percentage of gross profit decreased 602 basis points to 72.9% from the year ago quarter.

•

EM SG&A expenses, excluding amortization of acquired intangibles, as a percent of gross profit decreased 427 basis points from the year ago quarter primarily due to an increase in gross profit dollars and reduced operating expenses.

•

TS SG&A expenses, excluding amortization of acquired intangibles, as a percent of gross profit decreased 740 basis points from the year ago quarter primarily due to an increase in gross profit dollars driven by increased sales and gross profit margin between the periods and from cost reduction initiatives implemented in fiscal 2013, partially offset by an increase in operating expenses primarily due to the impact of recent acquisitions as all of the expected cost synergies have not yet been obtained.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

O p e r a t i n g I n c o m e


	1Q’ FY13			2Q’ FY13			3Q’ FY13			4Q’ FY13			1Q’ FY14			Y/Y Chg
Avnet, Inc. GAAP Operating Income	$	100.0		$	195.6		$	167.6		$	162.8		$	179.0		$	79.0
Adjusted Operating Income (1)	$	144.5		$	228.5		$	203.7		$	231.2		$	199.5		$	55.0
Adjusted Operating Margin (1)		2.46	%		3.41	%		3.23	%		3.51	%		3.14	%		68 bps
Electronics Marketing (EM) Total
Operating Income	$	149.1		$	143.0		$	165.0		$	178.5		$	175.8		$	26.7
Operating Income Margin		4.08	%		3.89	%		4.35	%		4.49	%		4.46	%		38 bps
Technology Solutions (TS) Total
Operating Income	$	38.7		$	113.1		$	68.6		$	78.7		$	62.6		$	23.9
Operating Income Margin		1.74	%		3.74	%		2.74	%		3.01	%		2.60	%		86 bps

⁽¹⁾	A reconciliation of GAAP to non-GAAP financial measures is presented in the Non-GAAP Financial Information section at the end of this document.

LOGO

•

Adjusted enterprise operating income of $199.5 million increased 38.1% year over year primarily due to the increase in revenue and strong operating leverage driven by the portfolio actions and expense efficiencies initiated in fiscal 2013. When compared to the year ago quarter, operating income grew approximately five times faster than revenue with both operating groups contributing to this increase.

•

Adjusted operating income margin of 3.1% at the enterprise level increased 68 basis points year over year with both operating groups contributing towards this improvement.

•

EM operating income margin improved 38 basis points from the year ago quarter to 4.5% primarily due to the cost reduction initiatives implemented in fiscal 2013, partially offset by the previously mentioned mix shift to Asia. Operating income margin was relatively flat sequentially, as an improvement in the EMEA and Asia regions was offset by a decline in the Americas region.

•

TS operating income margin improved 86 basis points from the prior year quarter primarily due to positive expense leverage in the Americas region related to cost reductions in fiscal 2013 and an improvement in the Asia region. Operating income margin declined 41 basis points sequentially primarily due to the seasonal decline in sales in the western regions.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

I n t e r e s t E x p e n s e , O t h e r I n c o m e a n d I n c o m e T a x e s


	1Q’ FY13			2Q’ FY13			3Q’ FY13			4Q’ FY13			1Q’ FY14			Y/Y Change
Interest Expense	$	(23.9	)	$	(27.8	)	$	(27.3	)	$	(28.6	)	$	(27.0	)	$	(3.1	)
Other Income (Expense)	$	1.5		$	1.1		$	4.1		$	(6.7	)	$	0.8		$	(0.7	)
GAAP Income Taxes	$	8.6		$	31.4		$	58.2		$	1.0		$	51.3		$	42.8
Adjusted Income Taxes (1)	$	33.2		$	56.2		$	49.0		$	54.0		$	47.3		$	14.1
GAAP Effective Tax Rate		7.86	%		18.60	%		40.30	%		0.82	%		29.85	%		2199 bps
Adjusted Effective Tax Rate (1)		27.17	%		27.84	%		27.15	%		27.59	%		27.30	%		13 bps

⁽¹⁾	A reconciliation of GAAP to non-GAAP financial measures is presented in the Non-GAAP Financial Information section at the end of this document.

•

Interest expense for the September 2013 quarter was $27.0 million, up $3.1 million over the year ago period. This increase was primarily due to the issuance of $350.0 million of 4.875% Notes in November 2012.

•

The GAAP effective tax rate on income before income taxes was 29.9% in the first quarter of fiscal 2014 as compared with 7.9% in the first quarter of fiscal 2013. During the first quarter of fiscal 2014, the Company’s effective tax rate was unfavorably impacted primarily by tax rate changes in certain jurisdictions and increases to valuation allowance and reserves, partially offset by losses related to an investment in a foreign subsidiary. During the first quarter of fiscal 2013, the Company’s effective tax rate was favorably impacted primarily by the settlement of an audit by the Internal Revenue Service and a non-taxable gain on a bargain purchase, partially offset by increases to valuation allowances and reserves. Due to the reduced level of income in the first quarter of fiscal 2013, the net favorable impact of these items on the effective tax rate was significant. The first quarter effective tax rate was also impacted, to a lesser extent, by the mix of income earned in the lower tax rate jurisdictions.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

N e t I n c o m e a n d E P S


	1Q’ FY13		2Q’ FY13		3Q’ FY13		4Q’ FY13		1Q’ FY14		Y/Y Change
GAAP Net Income	$	100.3	$	137.5	$	86.2	$	126.1	$	120.6	$	20.3
Adjusted Net Income (1)	$	88.9	$	145.6	$	131.5	$	141.8	$	126.0	$	37.1
GAAP diluted EPS	$	0.70	$	0.99	$	0.62	$	0.91	$	0.86		22.9	%
Adjusted EPS (1)	$	0.62	$	1.05	$	0.95	$	1.02	$	0.90		45.2	%

⁽¹⁾	A reconciliation of GAAP to non-GAAP financial measures is presented in the Non-GAAP Financial Information section at the end of this document.

LOGO

•

GAAP net income increased by 20.3% year over year to $120.6 million or $0.86 per share on a diluted basis, and declined 4.3% sequentially primarily due to the factors noted above, the impact of a gain on legal settlement in the first quarter of fiscal 2014 and for differences in restructuring integration and other charges and intangibles amortization expense between the year over year and sequential periods.

•

Adjusted net income for the first quarter of fiscal 2014 was $126.0 million, or $0.90 per shares on a diluted basis.

•

On an adjusted basis, net income and diluted earnings per share from a year ago quarter increased 41.7% and 45.2%, respectively, primarily due to the higher profitability in both operating groups.

•

Adjusted diluted earnings per share of $0.90 declined $0.12 or 11.8% sequentially primarily due to the seasonal decline in the western regions partially offset by improvements in Asia for both operating groups.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

W o r k i n g C a p i t a l


	1Q’ FY13			2Q’ FY13			3Q’ FY13			4Q’ FY13			1Q’ FY14			Y/Y Change
Accounts Receivable	$	4,477.9		$	5,161.5		$	4,778.1		$	4,869.0		$	4,820.1		$	342.1
Inventory	$	2,360.5		$	2,223.8		$	2,284.7		$	2,264.3		$	2,510.8		$	150.3
Accounts Payable	$	(2,920.6	)	$	(3,565.4	)	$	(3,175.5	)	$	(3,278.1	)	$	(3,184.1	)	$	(263.4	)

Working Capital	$	3,917.8		$	3,819.9		$	3,887.3		$	3,855.2		$	4,146.8		$	229.0

Working Capital Velocity(1)		6.20			6.72			6.46			6.80			6.31			0.11

⁽¹⁾	A reconciliation of GAAP to non-GAAP financial measures is presented in the Non-GAAP Financial Information section at the end of this document.

LOGO

•

Working capital (accounts receivable plus inventory less accounts payable) increased $229.0 million, or 5.8%, year over year and 4.9% when adjusted for acquisitions and the translation impact of changes in foreign currency exchange rates.

•

On a sequential basis, working capital increased $291.6 million or 7.6%, driven by a $246.4 million increase in inventory and a $94.1 million decrease in accounts payable, partially offset by a $48.9 million decrease in accounts receivable.

•

Working capital velocity improved by 0.11 turns when compared with the year ago quarter primarily due to the growth in revenue and efficient working capital management. Working capital velocity declined 0.49 turns sequentially primarily due to the seasonal decline in revenue in the western regions.

•

EM improved working capital velocity year over year primarily due to a decrease in days of inventory of 4.4 days.

•

Inventory increased $150.3 million, or 6.4% year over year and 4.1% when adjusted for acquisitions and the translation impact of changes in foreign currency exchange rates while days of inventory declined 3 days from the year ago quarter.

•

Inventory increased $219.5 million or 9.7% sequentially after adjusting for acquisitions and the translation impact of changes in foreign currency exchange rates. Approximately 80% of the increase was in EM as all three regions added inventory after a stronger than expected close in the June quarter as well as an inventory build in Asia related to expected high volume supply chain engagements that will be fulfilled in the second fiscal quarter.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

R e t u r n s


	1Q’ FY13			2Q’ FY13			3Q’ FY13			4Q’ FY13			1Q’ FY14			Y/Y Change
Return on Working Capital (ROWC) (1)		15.26	%		22.92	%		20.88	%		23.85	%		19.84	%		458	bps
Return on Capital Employed (ROCE) (1)		8.20	%		12.26	%		10.99	%		12.52	%		10.49	%		229	bps

(1)	A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the Non-GAAP Financial Information section at the end of this document.

LOGO

•

ROWC for the first quarter of fiscal 2014 was 19.84%, an increase of 458 basis points year over year and a decrease of 401 basis points sequentially.

•

The year-over-year increase was primarily due to the increase in the operating income noted above while the sequential decline was primarily due to seasonal decline in the western regions.

•

ROCE of 10.49% was up 229 basis points from the year ago quarter while the sequential decline was 203 basis points.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

C a s h F l o w


	1Q’ FY13			2Q’ FY13		3Q’ FY13			4Q’ FY13		1Q’ FY14			Y/Y Change
Net Income	$	100.3		$	137.5	$	86.2		$	126.1	$	120.6		$	20.3
Non-Cash Items	$	27.9		$	57.6	$	75.0		$	38.1	$	81.4		$	53.5
Working Capital and other	$	(47.2	)	$	131.3	$	(139.2	)	$	102.6	$	(328.2	)	$	(281.0	)

Cash Flow from Operations	$	81.0		$	326.4	$	22.0		$	266.8	$	(126.2	)	$	(207.2	)

TTM CF from Operations	$	813.8		$	690.3	$	688.7		$	696.2	$	489.0		$	(324.8	)

LOGO

•

During the first quarter of fiscal 2014, cash flow used for operations was $126.2 million and over the trailing twelve months cash flow from operations was $489 million driven primarily by the increase in working capital and other as noted above.

•

The Company did not purchase any shares under the $750 million share repurchase program during the quarter. As of the end of the quarter, the Company had approximately $225 million remaining in the program.

•

During the quarter, the Company paid a dividend of $0.15 per share or $20.6 million in total.

•

Cash and cash equivalents at the end of the quarter were $865.6 million, of which $789.8 million was held outside the United States; net debt (total debt less cash and cash equivalents) was approximately $1.2 billion.

Avnet, Inc. Q1 Fiscal Year 2014

$ in millions - except per share data

October 24, 2013

Forward-Looking Statements

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the United States (“GAAP”), the Company also discloses in this document certain non-GAAP financial information including adjusted operating income, adjusted net income and adjusted diluted earnings per share, as well as sales adjusted for the impact of acquisitions and other items (organic revenue). Management believes organic revenue is a useful measure for evaluating current period performance as compared with prior periods and for understanding underlying trends.

Other metrics management monitors in its assessment of business performance include return on working capital (ROWC), return on capital employed (ROCE) and working capital velocity (WC velocity).

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ROWC is defined as annualized adjusted operating income (as defined above) divided by the sum of the monthly average balances of receivables and inventory less accounts payable.

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ROCE is defined as annualized; tax effected adjusted operating income (as defined above) divided by the monthly average balances of interest-bearing debt and equity (including the impact of adjustments to operating income discussed above) less cash and cash equivalents.

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WC velocity is defined as annualized sales divided by the sum of the monthly average balances of receivable and inventory less accounts payable.

Any analysis of results and outlook on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP. A reconciliation of the non-GAAP financial measures to the GAAP financial measures is included in the Company’s press release dated October 24, 2013.