UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _____ to _____ |
Commission File #
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction |
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| (IRS Employer | |
of incorporation or organization) |
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| Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code.)
N/A
(Former name, former address and former fiscal year, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol |
| Name of Each Exchange on Which registered: |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Accelerated Filer ☐ |
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Non-accelerated Filer ☐ | Smaller Reporting Company | ||
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of October 21, 2020, the total number of shares outstanding of the registrant’s Common Stock was
AVNET, INC. AND SUBSIDIARIES
INDEX
1
PART I
FINANCIAL INFORMATION
Item 1. | Financial Statements |
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| October 3, |
| June 27, |
| |||
2020 | 2020 |
| |||||
(Thousands, except share |
| ||||||
amounts) |
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ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | | $ | | |||
Receivables |
| |
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Inventories |
| |
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Prepaid and other current assets |
| |
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Total current assets |
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Property, plant and equipment, net |
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Goodwill |
| |
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Intangible assets, net |
| |
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Operating lease assets | | | |||||
Other assets |
| |
| | |||
Total assets | $ | | $ | | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Short-term debt | $ | | $ | | |||
Accounts payable |
| |
| | |||
Accrued expenses and other | | | |||||
Short-term operating lease liabilities |
| |
| | |||
Total current liabilities |
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Long-term debt |
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Long-term operating lease liabilities | | | |||||
Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 9) | |||||||
Shareholders’ equity: | |||||||
Common stock $ |
| |
| | |||
Additional paid-in capital |
| |
| | |||
Retained earnings |
| |
| | |||
Accumulated other comprehensive loss |
| ( |
| ( | |||
Total shareholders’ equity |
| |
| | |||
Total liabilities and shareholders’ equity | $ | | $ | |
See notes to consolidated financial statements.
2
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
First Quarters Ended | ||||||
| October 3, |
| September 28, | |||
2020 | 2019 | |||||
(Thousands, except per share amounts) | ||||||
$ | | $ | | |||
| |
| | |||
Gross profit |
| |
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Selling, general and administrative expenses |
| |
| | ||
Restructuring, integration and other expenses |
| |
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Operating income |
| |
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Other (expense) income, net |
| ( |
| | ||
Interest and other financing expenses, net |
| ( |
| ( | ||
Income (loss) before taxes |
| ( |
| | ||
Income tax benefit |
| ( |
| ( | ||
Net (loss) income | $ | ( | $ | | ||
Earnings (loss) per share: | ||||||
Basic | $ | ( | $ | | ||
Diluted | $ | ( | $ | | ||
Shares used to compute earnings per share: | ||||||
Basic |
| |
| | ||
Diluted |
| |
| | ||
Cash dividends paid per common share | $ | | $ | |
See notes to consolidated financial statements.
3
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
First Quarters Ended | |||||||
| October 3, |
| September 28, |
| |||
2020 | 2019 | ||||||
(Thousands) | |||||||
Net (loss) income | $ | ( | $ | | |||
Other comprehensive income (loss), net of tax: | |||||||
Foreign currency translation and other |
| |
| ( | |||
Pension adjustments, net |
| |
| | |||
Total comprehensive income (loss) | $ | | $ | ( |
See notes to consolidated financial statements.
4
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
|
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| Accumulated |
| ||||||||||||
Common | Common | Additional | Other | Total | ||||||||||||||
Stock- | Stock- | Paid-In | Retained | Comprehensive | Shareholders’ | |||||||||||||
Shares | Amount | Capital | Earnings | (Loss) Income | Equity | |||||||||||||
(Thousands) | ||||||||||||||||||
Balance, June 27, 2020 |
| | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net loss |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Translation adjustments and other |
| — |
| — |
| — |
| — |
| |
| | ||||||
Pension liability adjustments, net | — | — | — | — | | | ||||||||||||
Cash dividends |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Effects of new accounting principles, net | — | — | — | ( | — | ( | ||||||||||||
Stock-based compensation |
| | | | — | — | | |||||||||||
Balance, October 3, 2020 |
| | $ | | $ | | $ | | $ | ( | $ | |
|
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| Accumulated |
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Common | Common | Additional | Other | Total | ||||||||||||||
Stock- | Stock- | Paid-In | Retained | Comprehensive | Shareholders’ | |||||||||||||
Shares | Amount | Capital | Earnings | (Loss) Income | Equity | |||||||||||||
(Thousands) | ||||||||||||||||||
Balance, June 29, 2019 |
| | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| |
| — |
| | ||||||
Translation adjustments and other |
| — |
| — |
| — |
| — |
| ( |
| ( | ||||||
Pension liability adjustments, net | — | — | — | — | | | ||||||||||||
Cash dividends |
| — |
| — |
| — |
| ( |
| — |
| ( | ||||||
Repurchases of common stock |
| ( |
| ( | — |
| ( | — |
| ( | ||||||||
Stock-based compensation |
| |
| |
| |
| — |
| — |
| | ||||||
Balance, September 28, 2019 |
| | $ | | $ | | $ | | $ | ( | $ | |
See notes to consolidated financial statements.
5
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
First Quarters Ended | ||||||
| October 3, |
| September 28, | |||
2020 | 2019 | |||||
(Thousands) | ||||||
Cash flows from operating activities: | ||||||
Net (loss) income | $ | ( | $ | | ||
Non-cash and other reconciling items: | ||||||
Depreciation |
| |
| | ||
Amortization |
| |
| | ||
Amortization of operating lease assets | | | ||||
Deferred income taxes |
| |
| ( | ||
Stock-based compensation |
| |
| | ||
Asset impairment expense | | — | ||||
Other, net |
| |
| | ||
Changes in (net of effects from businesses acquired and divested): | ||||||
Receivables |
| ( |
| ( | ||
Inventories |
| ( |
| ( | ||
Accounts payable |
| |
| | ||
Accrued expenses and other, net |
| ( |
| ( | ||
Net cash flows provided by operating activities |
| |
| | ||
Cash flows from financing activities: | ||||||
Borrowings under accounts receivable securitization, net |
| |
| | ||
Repayments under senior unsecured credit facility, net | ( |
| ( | |||
Repayments under bank credit facilities and other debt, net |
| ( |
| ( | ||
Repurchases of common stock |
| — |
| ( | ||
Dividends paid on common stock |
| ( |
| ( | ||
Other, net |
| |
| | ||
Net cash flows used for financing activities |
| ( |
| ( | ||
Cash flows from investing activities: | ||||||
Purchases of property, plant and equipment |
| ( |
| ( | ||
Acquisitions of assets |
| ( |
| — | ||
Other, net |
| |
| ( | ||
Net cash flows used for investing activities |
| ( |
| ( | ||
Effect of currency exchange rate changes on cash and cash equivalents |
| |
| ( | ||
Cash and cash equivalents: | ||||||
— increase | | | ||||
— at beginning of period | | | ||||
— at end of period | $ | | $ | |
See notes to consolidated financial statements.
6
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of presentation and new accounting pronouncements
In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments necessary to present fairly Avnet, Inc. and its consolidated subsidiaries’ (collectively, the “Company” or “Avnet”) financial position, results of operations, comprehensive income and cash flows. All such adjustments are of a normal recurring nature.
The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results may differ from these estimates and assumptions.
Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2020.
Certain reclassifications have been made in prior periods to conform to the current period presentation.
Fiscal year
The Company operates on a “52/53 week” fiscal year, and fiscal 2021 contains 53 weeks compared to fiscal 2020, which contained 52 weeks. As a result, the first quarter of fiscal 2021 ended October 3, 2020 contained 14 weeks compared to the first quarter of fiscal 2020 ended September 28, 2019, which contained 13 weeks.
Recently adopted accounting pronouncements
In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) ("ASU No. 2018-15"). ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop internal-use software. The adoption of ASU No. 2018-15 in the first quarter of fiscal 2021 did not have a material impact on its consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU No. 2016-13") and also issued subsequent amendments to the initial guidance: ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, and ASU No. 2019-11 (collectively, Topic 326). Topic 326 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. On June 28, 2020, the Company adopted Topic 326 using a modified retrospective approach with a cumulative effect adjustment to the opening balance of retained earnings, which increased the allowance for credit losses by $
Recently issued accounting pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”), which provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. The new guidance provides optional
7
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. This guidance is effective upon issuance through December 31, 2022. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2020-04.
In January 2020, the FASB issued ASU No. 2020-01 - Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (“ASU No.2020-01”), which clarifies the interaction of the accounting for certain equity securities, equity method investments, and certain derivatives. ASU No. 2020-01 will be effective for the Company in the first quarter of fiscal 2022, and early adoption is permitted. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2020-01.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740), (“ASU No. 2019-12”) which removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU No. 2019-12 will be effective for the Company in the first quarter of fiscal 2022, and early adoption is permitted. Depending on the amendment, adoption may be applied on a retrospective, modified retrospective or prospective basis. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2019-12.
In August 2018, the FASB issued ASU No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU No. 2018-14”). The new guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans, including removing certain previous disclosure requirements, adding certain new disclosure requirements, and clarifying certain other disclosure requirements. ASU No. 2018-14 will be effective for the Company in the first quarter of fiscal 2022, and early adoption is permitted. The Company’s planned adoption of ASU No. 2018-14 is not expected to have a material impact on the Company’s consolidated financial statements.
2. Summary of significant accounting policies
Except for the changes below, no material changes have been made to the Company’s significant accounting policies as disclosed in Note 1, Summary of Significant Accounting Policies, in its Annual Report on Form 10-K filed on August 14, 2020 for the year ended June 27, 2020.
3. Acquisitions
In the first quarter of fiscal 2021, the Company completed an asset acquisition. The impact of this asset acquisition was not material to the Company’s consolidated balance sheets or statements of operations.
8
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
4. Receivables
The Company’s receivables and allowance for credit losses were as follows:
October 3, | June 27, | |||||
2020 | 2020 | |||||
(In thousands) | ||||||
Receivables | $ | | $ | | ||
Allowance for Credit Losses | ( | ( |
The Company had the following activity in the allowance for credit losses during the first quarter of fiscal 2021:
October 3, | |||
2020 | |||
(In thousands) | |||
Balance at June 27, 2020 | $ | | |
Effect of adoption of ASU No. 2016-12 (Note 1) | | ||
Credit Loss Provision | | ||
Credit Loss Recoveries | ( | ||
Write offs | ( | ||
Foreign Currency Effect and Other | | ||
Balance at October 3, 2020 | $ | |
5. Goodwill and intangible assets
Goodwill
The following table presents the change in goodwill by reportable segment for the three months ended October 3, 2020.
| Electronic |
|
| ||||||
Components | Farnell | Total | |||||||
(Thousands) | |||||||||
Carrying value at June 27, 2020 (1) | $ | | $ | | $ | | |||
Foreign currency translation |
| |
| |
| | |||
Carrying value at October 3, 2020 (1) | $ | | $ | | $ | |
(1) | Includes accumulated impairment of $ |
The Company evaluates each quarter if facts and circumstances indicate that it is more likely than not that the fair value of its reporting units is less than their carrying value, which would require the Company to perform an interim goodwill impairment test. Indicators the Company evaluates to determine whether an interim goodwill impairment test is necessary include, but are not limited to, (i) a sustained decrease in share price or market capitalization as of any fiscal quarter end, (ii) changes in macroeconomic or industry environments, (iii) the results of and the amount of time passed since the last goodwill impairment test and (iv) the long-term expected financial performance of its reporting units. During the first quarter of fiscal 2021, the Company concluded that an interim goodwill impairment test was not required.
9
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Intangible Assets
The following table presents the Company’s acquired intangible assets at October 3, 2020 and June 27, 2020, respectively.
October 3, 2020 | June 27, 2020 |
| |||||||||||||||||
Acquired | Accumulated | Net Book | Acquired | Accumulated | Net Book |
| |||||||||||||
| Amount |
| Amortization |
| Value |
| Amount(1) |
| Amortization |
| Value |
| |||||||
(Thousands) |
| ||||||||||||||||||
Customer related | $ | | $ | ( | $ | | $ | | $ | ( | $ | | |||||||
Trade name |
| |
| ( |
| |
| |
| ( |
| | |||||||
Technology and other |
| |
| ( |
| |
| |
| ( |
| | |||||||
$ | | $ | ( | $ | | $ | | $ | ( | $ | |
(1)Acquired amount reduced by impairment of $
Intangible asset amortization expense was $
Fiscal Year |
| ||
Remainder of fiscal 2021 | $ | | |
2022 | | ||
2023 |
| | |
2024 |
| | |
2025 |
| | |
2026 |
| | |
Thereafter |
| | |
Total | $ | |
6. Debt
Short-term debt consists of the following (carrying balances in thousands):
October 3, | June 27, | October 3, | June 27, | ||||||||||
2020 |
| 2020 |
| 2020 |
| 2020 | |||||||
Interest Rate | Carrying Balance |
| |||||||||||
Bank credit facilities and other | | % | | % | $ | | $ | | |||||
Accounts receivable securitization program | | % | — |
| |
| — | ||||||
Short-term debt | $ | | $ | |
Bank credit facilities and other consists primarily of various committed and uncommitted lines of credit and other forms of bank debt with financial institutions utilized primarily to support the working capital requirements of the Company including its foreign operations.
10
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
In July 2020, the Company amended and extended for
Long-term debt consists of the following (carrying balances in thousands):
October 3, | June 27, | October 3, | June 27, | ||||||||||
2020 |
| 2020 |
| 2020 |
| 2020 | |||||||
Interest Rate | Carrying Balance |
| |||||||||||
Revolving credit facilities: | |||||||||||||
Credit Facility (due June 2023) | — | | % | $ | — | $ | | ||||||
Public notes due: | |||||||||||||
December 2021 | | % | | % | | | |||||||
December 2022 | | % | | % |
| |
| | |||||
April 2026 | | % | | % | | | |||||||
Other long-term debt | | % | | % |
| |
| | |||||
Long-term debt before discount and debt issuance costs |
| |
| | |||||||||
Discount and debt issuance costs – unamortized |
| ( |
| ( | |||||||||
Long-term debt | $ | | $ | |
The Company has a
As of October 3, 2020 and June 27, 2020, there were $
As of October 3, 2020, the carrying value and fair value of the Company’s total debt was $
11
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7. Leases
Substantially all the Company’s leases are classified as operating leases and are predominately related to real property for distribution centers, office space and integration facilities with a lease term of up to
The components of lease cost related to the Company’s operating leases were as follows (in thousands):
First Quarters Ended | ||||||
October 3, 2020 |
| September 28, 2019 | ||||
Operating lease cost | $ | | $ | | ||
Variable lease cost | | | ||||
Total lease cost | $ | | $ | |
Future minimum operating lease payments as of October 3, 2020 are as follows (in thousands):
Fiscal Year | ||||
Remainder of fiscal 2021 | $ | | ||
2022 |
| | ||
2023 |
| | ||
2024 |
| | ||
2025 |
| | ||
Thereafter |
| | ||
Total future operating lease payments | | |||
Total imputed interest on operating lease liabilities | ( | |||
Total operating lease liabilities | $ | |
Other information pertaining to operating leases consists of the following:
First Quarters Ended | ||||||
October 3, 2020 |
| September 28, 2019 | ||||
Operating Lease Term and Discount Rate | ||||||
Weighted-average remaining lease term in years | ||||||
Weighted-average discount rate | | % | | % |
Supplemental cash flow information related to the Company’s operating leases for the first quarters ended October 3, 2020 and September 28, 2019, respectively, was as follows (in thousands):
First Quarters Ended | ||||||
October 3, 2020 |
| September 28, 2019 | ||||
Supplemental Cash Flow Information: | ||||||
Cash paid for operating lease liabilities | $ | | $ | | ||
Operating lease assets obtained from new operating lease liabilities | | |
12
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
8. Derivative financial instruments
Many of the Company’s subsidiaries purchase and sell products in currencies other than their functional currencies. This subjects the Company to the risks associated with fluctuations in foreign currency exchange rates. The Company reduces this risk by utilizing natural hedging (e.g., offsetting receivables and payables in the same foreign currency) as well as by creating offsetting positions through the use of derivative financial instruments, primarily forward foreign exchange contracts typically with maturities of less than
The Company generally does not hedge its investments in its foreign operations. The Company does not enter into derivative financial instruments for trading or speculative purposes and monitors the financial stability and credit standing of its counterparties.
The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase from suppliers. The Company’s foreign operations transactions are denominated primarily in the following currencies: U.S. Dollar, Euro, British Pound, Japanese Yen, Chinese Yuan, Taiwan Dollar, Canadian Dollar and Mexican Peso. The Company also, to a lesser extent, has foreign operations transactions in other EMEA and Asia foreign currencies.
The fair values of forward foreign currency exchange contracts not receiving hedge accounting treatment recorded in the Company’s consolidated balance sheets are as follows:
October 3, |
| June 27, |
| ||||
2020 | 2020 | ||||||
(Thousands) | |||||||
Prepaid and other current assets | $ | | $ | | |||
Accrued expenses and other | | |
The amounts recorded to other (expense) income, net, related to derivative financial instruments for economic hedges are as follows:
First Quarters Ended | |||||||
October 3, |
| September 28, |
| ||||
2020 | 2019 | ||||||
(Thousands) | |||||||
Net derivative financial instrument (loss) gain | $ | ( | $ | |
Under the Company’s economic hedging policies, gains and losses on the derivative financial instruments are classified within the same line item in the consolidated statements of operations as the remeasurement of the underlying assets or liabilities being economically hedged.
13
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
9. Commitments and contingencies
From time to time, the Company may become a party to, or be otherwise involved in various lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of conducting its business. While litigation is subject to inherent uncertainties, management does not anticipate that any such matters will have a material adverse effect on the Company’s financial condition, liquidity or results of operations.
The Company is also currently subject to various pending and potential legal matters and investigations relating to compliance with governmental laws and regulations, including import/export and environmental matters. For certain of these matters it is not possible to determine the ultimate outcome, and the Company cannot reasonably estimate the maximum potential exposure or the range of possible loss for such matters due primarily to being in the early stages of the related proceedings and investigations. The Company currently believes that the resolution of such matters will not have a material adverse effect on the Company’s financial position or liquidity but could possibly be material to its results of operations in any one reporting period.
As of October 3, 2020 and June 27, 2020, the Company had aggregate estimated liabilities of $
During the first quarter of fiscal 2021, the Company recorded a gain on legal settlement of $
10. Income taxes
The Company’s effective tax rate on its loss before taxes was a benefit of
During the first quarter of fiscal 2020, the Company’s effective tax rate on its income before taxes was a benefit of
The Company’s effective tax rate may change in future periods due to changes in tax laws and issuance of additional guidance and regulations of tax laws.
14
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
11. Pension plan
The Company has a noncontributory defined benefit pension plan that covers substantially all current or former U.S. employees (the “Plan”). Components of net periodic pension cost for the Plan was as follows:
First Quarters Ended | |||||||
| October 3, |
| September 28, | ||||
2020 |
| 2019 | |||||
(Thousands) | |||||||
Service cost | $ | | $ | | |||
Total net periodic pension cost within selling, general and administrative expenses | | | |||||
Interest cost |
| |
| | |||
Expected return on plan assets |
| ( |
| ( | |||
Amortization of prior service cost |
| |
| | |||
Recognized net actuarial loss |
| |
| | |||
Total net periodic pension benefit within other (expense) income, net | ( | ( | |||||
Net periodic pension cost | $ | | $ | |
The Company made $
12. Shareholders’ equity
Share repurchase program
In August 2019, the Company’s Board of Directors amended the Company’s existing share repurchase program, increasing the cumulative total of authorized share repurchases to $
Common stock dividend
In August 2020, the Company’s Board of Directors approved a dividend of $
15
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
13. Earnings per share
First Quarters Ended | ||||||
| October 3, | September 28, | ||||
2020 |
| 2019 | ||||
(Thousands, except per share data) | ||||||
Numerator: |
| |||||
Net (loss) income | $ | ( | $ | | ||
Denominator: | ||||||
Weighted average common shares for basic earnings per share |
| |
| | ||
Net effect of dilutive stock based compensation awards |
| — |
| | ||
Weighted average common shares for diluted earnings per share |
| |
| | ||
Basic (loss) earnings per share | $ | ( | $ | | ||
Diluted (loss) earnings per share | $ | ( | $ | | ||
Stock options excluded from earnings per share calculation due to anti-dilutive effect | | |
A
For the first quarter of fiscal 2021, the diluted net loss per share is the same as the basic net loss per share as the effect of all potential common shares would be anti-dilutive.
14. Additional cash flow information
Non-cash investing and financing activities and supplemental cash flow information were as follows:
First Quarters Ended | |||||||
| October 3, |
| September 28, | ||||
2020 | 2019 | ||||||
(Thousands) | |||||||
Non-cash Investing Activities: | |||||||
Capital expenditures incurred but not paid | $ | | $ | | |||
Non-cash Financing Activities: | |||||||
Unsettled share repurchases | — | $ | | ||||
Supplemental Cash Flow Information: | |||||||
Interest | $ | | $ | | |||
Income tax net payments (refunds) | | ( |
Included in cash and cash equivalents as of October 3, 2020 and June 27, 2020 was $
16
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
15. Segment information
Electronic Components (“EC”) and Farnell (“Farnell”) are the Company’s reportable segments (“operating groups”). EC markets and sells semiconductors and interconnect, passive and electromechanical devices and integrated components to a diverse customer base serving many end-markets. Farnell distributes electronic components and related products to the electronic system design community utilizing multi-channel sales and marketing resources.
First Quarters Ended | ||||||
October 3, | September 28, | |||||
2020 |
| 2019 | ||||
| (Thousands) | |||||
Sales: |
|
|
|
| ||
Electronic Components | $ | | $ | | ||
Farnell | | | ||||
| | |||||
Operating income: | ||||||
Electronic Components | $ | | $ | | ||
Farnell | | | ||||
| | |||||
Corporate | ( | ( | ||||
Restructuring, integration and other expenses |
| ( |
| ( | ||
Amortization of acquired intangible assets and other | ( | ( | ||||
Operating income | $ | | $ | | ||
Sales, by geographic area: | ||||||
Americas (1) | $ | | $ | | ||
EMEA (2) |
| |
| | ||
Asia/Pacific (3) |
| |
| | ||
Sales | $ | | $ | |
(1) | Includes sales from the United States of $ |
(2) | Includes sales from Germany and Belgium of $ |
(3) | Includes sales from China (including Hong Kong), Taiwan and Singapore of $ |