Part I [Business](index=3&type=section&id=Item%201.%20Business) Avnet is a global technology distributor with two segments, Electronic Components and Farnell, serving 2.1 million customers across 140 countries with design to production support - Avnet operates through **Electronic Components (EC)** for high-volume and **Farnell** for lower-volume, e-commerce customers[16](index=16&type=chunk)[18](index=18&type=chunk)[22](index=22&type=chunk) Sales by Major Product Category (Fiscal Years 2019-2021) | Product Category | FY 2021 Sales (Millions) | FY 2020 Sales (Millions) | FY 2019 Sales (Millions) | | :--- | :--- | :--- | :--- | | Semiconductors | $14,722.8 | $13,440.3 | $14,973.3 | | Interconnect, passive & electromechanical (IP&E) | $3,649.0 | $3,146.0 | $3,516.0 | | Computers | $640.6 | $572.0 | $533.1 | | Other | $522.3 | $476.0 | $496.2 | | **Total Sales** | **$19,534.7** | **$17,634.3** | **$19,518.6** | - Main competitors include **Arrow Electronics**, **Future Electronics**, **World Peace Group**, **Mouser Electronics**, and **Digi-Key Electronics**[26](index=26&type=chunk) - As of July 3, 2021, Avnet employed approximately **14,500 people**, a slight decrease from the prior year[30](index=30&type=chunk) - The Board of Directors is **36% diverse**, and the total workforce is **45% female**, reflecting an emphasis on human capital[33](index=33&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including customer demand shifts, supplier disruptions like the TI contract termination, international operational complexities, financial liquidity, and IT security threats - Sales of semiconductors represented approximately **75%** of consolidated sales in fiscal 2021, tying performance closely to the semiconductor industry's fluctuations[42](index=42&type=chunk) - The distribution contract with Texas Instruments (TI), accounting for **9%** of total sales in fiscal 2020, was terminated in December 2020, potentially leading to lower sales and gross profits[46](index=46&type=chunk) - International operations, comprising approximately **78%** of sales in fiscal 2021, expose the company to risks like currency fluctuations, trade restrictions, and complex tax laws[48](index=48&type=chunk) - The COVID-19 pandemic has negatively impacted the global economy and Avnet's operations, increasing logistics costs, fluctuating demand, and extending lead times[80](index=80&type=chunk) - The company faces liquidity and capital resource constraints, with cash needs dependent on operations and financial markets, and the LIBOR phase-out potentially increasing financing costs[64](index=64&type=chunk)[65](index=65&type=chunk) [Unresolved Staff Comments](index=17&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This item is not applicable as the company has no unresolved staff comments - Not applicable[90](index=90&type=chunk) [Properties](index=17&type=section&id=Item%202.%20Properties) Avnet owns 2.1 million and leases 4.4 million square feet globally for operations, with key facilities in Arizona, Belgium, Germany, and the UK Summary of Key Facilities | Location | Footage (sq. ft.) | Owned/Leased | Primary Use | | :--- | :--- | :--- | :--- | | Chandler, Arizona | 400,000 | Owned | EC warehousing and value-added operations | | Tongeren, Belgium | 390,000 | Owned | EC warehousing and value-added operations | | Leeds, United Kingdom | 360,000 | Leased | Farnell warehousing and value-added operations | | Poing, Germany | 300,000 | Owned | EC warehousing and value-added operations | | Phoenix, Arizona | 180,000 | Leased | Corporate and EC Americas headquarters | [Legal Proceedings](index=17&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal matters, but management believes no specific disclosure is required and expects no material adverse effect on financial position or liquidity - The company has concluded that no particular pending legal proceeding requires specific public disclosure under SEC regulations[93](index=93&type=chunk) - Management believes the resolution of current legal matters will not have a material adverse effect on the company's financial position or liquidity[94](index=94&type=chunk) [Mine Safety Disclosures](index=17&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[95](index=95&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Avnet's common stock trades on Nasdaq (AVT), with **$469.0 million** remaining for share repurchases, and its 5-year return underperformed the Nasdaq Composite - The Company's common stock is listed on the **Nasdaq Global Select Market** under the symbol AVT[97](index=97&type=chunk) - As of July 3, 2021, the Company had **$469.0 million** remaining under its share repurchase authorization, with no shares repurchased in the fourth quarter of fiscal 2021[105](index=105&type=chunk) 5-Year Cumulative Total Return Comparison | | 7/2/2016 | 7/1/2017 | 6/30/2018 | 6/29/2019 | 6/27/2020 | 7/3/2021 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Avnet, Inc. | $100.00 | $98.17 | $110.29 | $118.55 | $69.87 | $110.11 | | Nasdaq Composite | $100.00 | $128.30 | $158.57 | $170.91 | $216.96 | $315.10 | | Peer Group | $100.00 | $127.74 | $121.27 | $121.78 | $119.17 | $259.50 | [Reserved](index=26&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - Item 6 is noted as [Reserved][106](index=106&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2021 sales grew **10.8% to $19.53 billion**, with operating income at **$281.4 million** (up from a loss), though operating cash flow decreased to **$90.9 million** due to working capital needs Fiscal 2021 vs. Fiscal 2020 Key Metrics | Metric | Fiscal 2021 | Fiscal 2020 | Change | | :--- | :--- | :--- | :--- | | Sales | $19.53B | $17.63B | +10.8% | | Gross Profit Margin | 11.5% | 11.7% | -23 bps | | Operating Income (Loss) | $281.4M | ($4.6M) | +$286.0M | | Adjusted Operating Income | $407.0M | $302.9M | +34.4% | - Organic sales in constant currency, excluding the impact of the terminated TI distribution contract, increased **14.8%** year-over-year in fiscal 2021[121](index=121&type=chunk) - Cash flow from operating activities was **$90.9 million** in fiscal 2021, a decrease from **$730.2 million** in fiscal 2020, primarily due to cash used for working capital to support sales growth[135](index=135&type=chunk) - As of July 3, 2021, the company had combined availability of **$1.64 billion** under its Credit Facility and Securitization Program[145](index=145&type=chunk) - The company has suspended share repurchases due to the impacts of the COVID-19 pandemic and the need to manage liquidity and leverage[150](index=150&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Avnet faces market risks from interest rates and foreign currency, mitigating currency risk with hedges; a 10% currency change could impact contracts by **$170.0 million** Debt Profile as of July 3, 2021 (in millions) | Debt Type | Carrying Value | Fair Value | Average Interest Rate | | :--- | :--- | :--- | :--- | | Fixed rate debt | $1,201.2 | $1,291.4 | 4.3% | | Floating rate debt | $23.1 | $23.1 | 1.2% | - The company uses derivative financial instruments, primarily forward foreign currency exchange contracts, to reduce risk from transactions in non-functional currencies, serving as economic hedges, not for speculation[171](index=171&type=chunk) - A hypothetical **10%** change in foreign currency exchange rates on contracts outstanding at July 3, 2021, would result in an approximate **$170.0 million** impact to the fair value of the contracts, generally offset by the underlying exposure[171](index=171&type=chunk) [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Avnet's audited consolidated financial statements for the three fiscal years ended July 3, 2021, with an unqualified opinion from KPMG LLP on both financials and internal controls Consolidated Statements of Operations Highlights (in thousands, except per share data) | | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Sales | $19,534,679 | $17,634,333 | $19,518,592 | | Gross Profit | $2,240,630 | $2,063,456 | $2,486,102 | | Operating Income (Loss) | $281,408 | $(4,628) | $365,911 | | Net Income (Loss) | $193,114 | $(31,081) | $176,337 | | Diluted EPS (Loss) | $1.93 | $(0.31) | $1.59 | Consolidated Balance Sheets Highlights (in thousands) | | July 3, 2021 | June 27, 2020 | | :--- | :--- | :--- | | Total Current Assets | $7,163,421 | $6,328,806 | | Total Assets | $8,925,422 | $8,105,197 | | Total Current Liabilities | $3,055,238 | $2,280,366 | | Total Liabilities | $4,841,238 | $4,378,799 | | Total Shareholders' Equity | $4,084,184 | $3,726,398 | Consolidated Statements of Cash Flows Highlights (in thousands) | | FY 2021 | FY 2020 | FY 2019 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $90,949 | $730,182 | $534,770 | | Net cash used for investing activities | $(61,196) | $(135,017) | $(25,212) | | Net cash used for financing activities | $(314,013) | $(644,550) | $(582,676) | Segment Sales and Operating Income (in millions) | Segment | FY 2021 Sales | FY 2021 Operating Income | | :--- | :--- | :--- | | Electronic Components | $18,030.5 | $454.8 | | Farnell | $1,504.2 | $86.9 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=92&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure during the period - None[358](index=358&type=chunk) [Controls and Procedures](index=92&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including CEO and CFO, concluded disclosure controls and internal control over financial reporting were effective as of July 3, 2021, with no material changes reported - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective as of the end of the reporting period[358](index=358&type=chunk) - Management concluded that the Company maintained effective internal control over financial reporting as of July 3, 2021, based on the 2013 COSO framework[359](index=359&type=chunk) - There were no changes to the Company's internal control over financial reporting during the fourth quarter of fiscal 2021 that have materially affected, or are reasonably likely to materially affect, the controls[361](index=361&type=chunk) [Other Information](index=92&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[361](index=361&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=92&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The information required for this item is incorporated by reference from the company's definitive proxy statement for the Annual Meeting of Stockholders scheduled for November 18, 2021 - Information is incorporated by reference to the Company's definitive proxy statement[362](index=362&type=chunk) [Executive Compensation](index=94&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item is incorporated by reference from the company's definitive proxy statement for the Annual Meeting of Stockholders scheduled for November 18, 2021 - Information is incorporated by reference to the Company's definitive proxy statement[364](index=364&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=94&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item is incorporated by reference from the company's definitive proxy statement for the Annual Meeting of Stockholders scheduled for November 18, 2021 - Information is incorporated by reference to the Company's definitive proxy statement[366](index=366&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=94&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item is incorporated by reference from the company's definitive proxy statement for the Annual Meeting of Stockholders scheduled for November 18, 2021 - Information is incorporated by reference to the Company's definitive proxy statement[367](index=367&type=chunk) [Principal Accounting Fees and Services](index=94&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item is incorporated by reference from the company's definitive proxy statement for the Annual Meeting of Stockholders scheduled for November 18, 2021 - Information is incorporated by reference to the Company's definitive proxy statement[368](index=368&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=95&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements from Item 8 and provides an index of exhibits, including governance documents, debt agreements, and SOX certifications by CEO and CFO - The financial statements and supplementary data are listed in the index under Item 8[379](index=379&type=chunk) - An index of exhibits is provided, including governance documents, debt agreements (such as the Securitization Program and Credit Agreement), and executive compensation plans[380](index=380&type=chunk)[382](index=382&type=chunk)[385](index=385&type=chunk) - Includes Schedule II - Valuation and Qualifying Accounts, which details changes in the allowance for credit losses and valuation allowances on tax loss carry-forwards[392](index=392&type=chunk)[393](index=393&type=chunk) - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed as exhibits[388](index=388&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2021, the company achieved sales of $5.2 billion, representing a 25.7% year-over-year increase and exceeding prior guidance [12][16][17] - Adjusted EPS for the fourth quarter was $1.12, up from $0.64 in the prior year's quarter [16][17] - For the fiscal year, total sales reached $19.5 billion, a 10.8% increase from the previous year [17] Business Line Data and Key Metrics Changes - The Electronic Components segment generated revenues of $4.8 billion, a 23.7% increase year-over-year [19] - Farnell achieved record sales of $441 million, with an operating margin of 8.3%, progressing towards a target of 10% [14][21] Market Data and Key Metrics Changes - Strong performance was noted in EMEA and Asia, with continued improvements in the Americas [13][19] - Demand Creation accounted for approximately 30% of Electronic Components revenue, highlighting its importance for long-term growth [13] Company Strategy and Development Direction - The company is focused on enhancing its digital capabilities and expanding its product offerings, including IoT solutions [14][24] - There is an emphasis on managing supply chain risks and improving customer relationships to navigate the current market dynamics [11][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strong demand and the ability to manage supply constraints effectively [22][24] - The company anticipates sustainable operating margins in the range of 3% to 3.5% by the latter half of fiscal year 2022 [22][23] Other Important Information - The company increased its dividend by 4.8% in the quarter, returning $22 million to shareholders [22] - Inventory increased by $475 million to meet customer demand, with working capital days improved to 70 [21][22] Q&A Session Summary Question: Inventory build and its implications - Management is comfortable with the inventory build, noting that it was strategically planned and is of good quality [28][50] Question: Sustainability of order growth - Order growth is expected to be sustainable, driven by both pricing increases and a favorable mix of products [29][30] Question: Plans for SKU expansion in Farnell - The company plans to add approximately 160,000 SKUs in Farnell by leveraging existing supplier relationships and expanding current lines [34][36] Question: Fiscal 2022 outlook - Management is optimistic about fiscal 2022, expecting to outperform consensus estimates due to strong demand and improved operational efficiencies [42][44] Question: Balance between supply and demand - The book-to-bill ratio remains strong, indicating healthy demand, while lead times are still extended but showing signs of modest improvement [58][59]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Avnet, Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, comprehensive income, shareholders' equity, cash flows, and detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets detail Avnet, Inc.'s financial position at April 3, 2021, and June 27, 2020 | Metric | April 3, 2021 (Millions) | June 27, 2020 (Millions) | | :---------------------------------- | :------------------------ | :------------------------ | | **ASSETS** | | | | Total current assets | $6,604.6 | $6,328.8 | | Property, plant and equipment, net | $381.1 | $404.6 | | Goodwill | $838.5 | $773.7 | | Intangible assets, net | $33.8 | $65.4 | | Total assets | $8,365.9 | $8,105.2 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Total current liabilities | $2,885.9 | $2,280.4 | | Long-term debt | $895.9 | $1,424.8 | | Total liabilities | $4,428.0 | $4,378.8 | | Total shareholders' equity | $3,937.9 | $3,726.4 | | Total liabilities and shareholders' equity | $8,365.9 | $8,105.2 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations detail financial performance for Q3 and nine months ended April 3, 2021, and March 28, 2020 | Metric | Q3 Ended April 3, 2021 (Millions) | Q3 Ended March 28, 2020 (Millions) | 9 Months Ended April 3, 2021 (Millions) | 9 Months Ended March 28, 2020 (Millions) | | :----------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Sales | $4,916.7 | $4,309.8 | $14,307.9 | $13,474.6 | | Gross profit | $568.4 | $518.9 | $1,595.7 | $1,588.4 | | Operating income (loss) | $87.7 | $(115.8) | $163.4 | $(6.5) | | Income (loss) before taxes | $70.1 | $(158.1) | $81.2 | $(113.4) | | Net income (loss) | $107.5 | $(128.7) | $107.8 | $(83.2) | | Basic EPS | $1.08 | $(1.29) | $1.09 | $(0.82) | | Diluted EPS | $1.07 | $(1.29) | $1.08 | $(0.82) | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The consolidated statements of comprehensive income detail net income (loss) and other comprehensive income components for Q3 and nine months | Metric | Q3 Ended April 3, 2021 (Millions) | Q3 Ended March 28, 2020 (Millions) | 9 Months Ended April 3, 2021 (Millions) | 9 Months Ended March 28, 2020 (Millions) | | :----------------------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Net income (loss) | $107.5 | $(128.7) | $107.8 | $(83.2) | | Foreign currency translation and other | $(65.0) | $(96.4) | $145.4 | $(105.3) | | Pension adjustments, net | $4.0 | $3.2 | $17.6 | $10.1 | | Total comprehensive income (loss) | $46.4 | $(221.8) | $270.7 | $(178.4) | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders%20Equity) The consolidated statements of shareholders' equity detail changes in common stock, paid-in capital, retained earnings, and comprehensive loss | Metric | Balance, June 27, 2020 (Millions) | Balance, April 3, 2021 (Millions) | | :----------------------------------- | :--------------------------------- | :--------------------------------- | | Common Stock - Shares | 98,793 | 99,489 | | Common Stock - Amount | $98.8 | $99.5 | | Additional Paid-In Capital | $1,594.1 | $1,611.1 | | Retained Earnings | $2,421.8 | $2,452.7 | | Accumulated Other Comprehensive (Loss) Income | $(388.4) | $(225.4) | | Total Shareholders' Equity | $3,726.4 | $3,937.9 | - Net income contributed **$107.5 million** to retained earnings in the quarter ended April 3, 2021, while cash dividends of **$20.9 million** were paid[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows present cash generated from operating, investing, and financing activities for the nine months | Metric | 9 Months Ended April 3, 2021 (Millions) | 9 Months Ended March 28, 2020 (Millions) | | :------------------------------------------ | :--------------------------------------- | :--------------------------------------- | | Net cash flows provided by operating activities | $197.5 | $442.6 | | Net cash flows used for financing activities | $(308.4) | $(444.4) | | Net cash flows used for investing activities | $(51.2) | $(125.2) | | Effect of currency exchange rate changes | $7.8 | $(16.4) | | Cash and cash equivalents at end of period | $322.7 | $402.7 | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide additional information on financial statements, including accounting policies, acquisitions, receivables, debt, leases, and segment data [1. Basis of presentation and new accounting pronouncements](index=10&type=section&id=1.%20Basis%20of%20presentation%20and%20new%20accounting%20pronouncements) This note outlines the basis for interim financial statements and discusses recently adopted and issued accounting pronouncements - The Company adopted ASU No. 2018-15 in Q1 fiscal 2021, which did not materially impact financial statements[23](index=23&type=chunk) - Topic 326 (Credit Losses) was adopted on June 28, 2020, increasing the allowance for credit losses by **$17.2 million** (**$14.5 million** net of tax) due to a shift from an incurred loss to an expected loss model[24](index=24&type=chunk) - The Company is evaluating ASU No. 2020-04 and ASU No. 2021-01 (Reference Rate Reform) but does not expect a material impact, and ASU No. 2019-12 (Income Taxes) and ASU No. 2018-14 (Defined Benefit Plans) are pending adoption in fiscal 2022[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) [2. Summary of significant accounting policies](index=12&type=section&id=2.%20Summary%20of%20significant%20accounting%20policies) This note details the company's significant accounting policies, highlighting the updated methodology for receivables - Receivables are reported at amortized cost, net of an allowance for credit losses, estimated using historical data, past events, current conditions, and other relevant factors[29](index=29&type=chunk) [3. Acquisitions](index=12&type=section&id=3.%20Acquisitions) In the first quarter of fiscal 2021, the Company completed an asset acquisition, which was not material to its consolidated financial statements - An asset acquisition in the first quarter of fiscal 2021 had no material impact on the Company's consolidated financial statements[30](index=30&type=chunk) [4. Receivables](index=14&type=section&id=4.%20Receivables) The Company's receivables increased from **$2,993.4 million** at June 27, 2020, to **$3,451.5 million** at April 3, 2021 | Metric | April 3, 2021 (Millions) | June 27, 2020 (Millions) | | :------------------------ | :------------------------ | :------------------------ | | Receivables | $3,451.5 | $2,993.4 | | Allowance for Credit Losses | $(85.8) | $(65.0) | | Allowance for Credit Losses Activity | April 3, 2021 (Millions) | | :----------------------------------- | :------------------------ | | Balance at June 27, 2020 | $65.0 | | Effect of adoption of new credit loss accounting standard | $17.2 | | Credit Loss Provisions | $7.4 | | Receivables Write offs | $(5.7) | | Balance at April 3, 2021 | $85.8 | [5. Goodwill and intangible assets](index=14&type=section&id=5.%20Goodwill%20and%20intangible%20assets) Goodwill increased to **$838.5 million** at April 3, 2021, while intangible assets, net, decreased to **$33.8 million** | Metric | Electronic Components (Millions) | Farnell (Millions) | Total (Millions) | | :----------------------------- | :------------------------------ | :------------------ | :---------------- | | Carrying value at June 27, 2020 | $297.8 | $475.9 | $773.7 | | Foreign currency translation | $12.1 | $52.6 | $64.7 | | Carrying value at April 3, 2021 | $310.0 | $528.5 | $838.5 | | Intangible Asset Type | April 3, 2021 Net Value (Millions) | June 27, 2020 Net Book Value (Millions) | | :-------------------- | :---------------------------------- | :--------------------------------------- | | Customer related | $12.7 | $34.2 | | Trade name | $14.5 | $19.2 | | Technology and other | $6.6 | $12.1 | | Total | $33.8 | $65.4 | - Intangible asset amortization expense was **$5.3 million** for Q3 fiscal 2021 (down from **$21.0 million** in Q3 fiscal 2020) and **$35.7 million** for the first nine months of fiscal 2021 (down from **$62.2 million** in the prior year)[41](index=41&type=chunk) [6. Debt](index=15&type=section&id=6.%20Debt) Short-term debt significantly increased to **$300.0 million** at April 3, 2021, while long-term debt decreased to **$895.9 million** | Short-term Debt Type | April 3, 2021 Carrying Balance (Millions) | June 27, 2020 Carrying Balance (Millions) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | | Bank credit facilities and other | $0.0 | $0.1 | | Public notes due December 2021 | $300.0 | — | | Total Short-term debt | $300.0 | $0.1 | | Long-term Debt Type | April 3, 2021 Carrying Balance (Millions) | June 27, 2020 Carrying Balance (Millions) | | :--------------------------------- | :----------------------------------------- | :----------------------------------------- | | Credit Facility (due June 2023) | — | $230.0 | | Public notes due December 2021 | — | $300.0 | | Public notes due December 2022 | $350.0 | $350.0 | | Public notes due April 2026 | $550.0 | $550.0 | | Other long-term debt | $1.3 | $1.5 | | Total Long-term debt | $895.9 | $1,424.8 | - The Company committed to an early redemption of **$300 million** of its 3.75% Public notes due December 2021, expecting a **$5 million** loss on debt extinguishment[46](index=46&type=chunk) - The Company's total debt carrying value was **$1.20 billion** at April 3, 2021, down from **$1.42 billion** at June 27, 2020[48](index=48&type=chunk) [7. Leases](index=18&type=section&id=7.%20Leases) Total lease cost was **$24.2 million** for Q3 fiscal 2021, with future minimum operating lease payments totaling **$371.4 million** | Lease Cost Component | Q3 Ended April 3, 2021 (Millions) | Q3 Ended March 28, 2020 (Millions) | 9 Months Ended April 3, 2021 (Millions) | 9 Months Ended March 28, 2020 (Millions) | | :------------------- | :--------------------------------- | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | | Operating lease cost | $18.6 | $19.3 | $55.1 | $57.6 | | Variable lease cost | $5.6 | $5.5 | $17.3 | $15.6 | | Total lease cost | $24.2 | $24.8 | $72.4 | $73.2 | | Fiscal Year | Future Minimum Operating Lease Payments (Millions) | | :----------------------------- | :------------------------------------------------ | | Remainder of fiscal 2021 | $18.6 | | 2022 | $63.9 | | 2023 | $54.5 | | 2024 | $39.4 | | 2025 | $32.5 | | Thereafter | $162.4 | | Total future operating lease payments | $371.4 | | Total operating lease liabilities | $307.3 | [8. Derivative financial instruments](index=19&type=section&id=8.%20Derivative%20financial%20instruments) The Company uses derivative financial instruments, primarily forward foreign exchange contracts, to hedge foreign currency risks - The Company uses forward foreign exchange contracts, typically with maturities of less than 60 days, to reduce foreign currency exchange rate risks[56](index=56&type=chunk) | Derivative Financial Instrument | April 3, 2021 Fair Value (Millions) | June 27, 2020 Fair Value (Millions) | | :---------------------------------------- | :----------------------------------- | :----------------------------------- | | Prepaid and other current assets | $14.8 | $19.0 | | Accrued expenses and other | $24.2 | $15.6 | | Net Derivative Financial Instrument (Loss) Gain | Q3 Ended April 3, 2021 (Millions) | 9 Months Ended April 3, 2021 (Millions) | | :---------------------------------------------- | :--------------------------------- | :--------------------------------------- | | Net derivative financial instrument (loss) gain | $(2.6) | $(13.2) | [9. Commitments and contingencies](index=21&type=section&id=9.%20Commitments%20and%20contingencies) Management does not anticipate a material adverse effect on financial condition or liquidity from legal proceedings - Management believes current legal matters will not materially affect financial condition or liquidity, but could be material to results of operations in a single reporting period[61](index=61&type=chunk)[62](index=62&type=chunk) - Aggregate estimated liabilities for compliance-related matters were **$14.7 million** as of April 3, 2021[62](index=62&type=chunk) - A gain on legal settlement of **$8.2 million** was recorded during the first nine months of fiscal 2021[63](index=63&type=chunk) [10. Income taxes](index=21&type=section&id=10.%20Income%20taxes) The Company reported an effective tax benefit rate of 53.3% for Q3 fiscal 2021 and 32.7% for the first nine months - Effective tax rate on income before taxes was a benefit of **53.3%** in Q3 fiscal 2021, favorably impacted by tax benefits from business value reduction and decreases to valuation allowances[64](index=64&type=chunk) - For the first nine months of fiscal 2021, the effective tax rate was a benefit of **32.7%**, driven by similar factors including the mix of income in lower tax jurisdictions[65](index=65&type=chunk) [11. Pension plan](index=22&type=section&id=11.%20Pension%20plan) The Company's noncontributory defined benefit pension plan reported a net periodic pension cost of **$0.7 million** for Q3 fiscal 2021 | Pension Cost Component | Q3 Ended April 3, 2021 (Millions) | 9 Months Ended April 3, 2021 (Millions) | | :----------------------------------- | :--------------------------------- | :--------------------------------------- | | Service cost | $3.9 | $11.8 | | Interest cost | $4.0 | $11.9 | | Expected return on plan assets | $(12.4) | $(37.3) | | Net periodic pension cost | $0.7 | $2.2 | - The Company contributed **$12.0 million** to the Plan during the first nine months of fiscal 2021 and anticipates an additional **$4.0 million** contribution for the remainder of fiscal 2021[69](index=69&type=chunk) [12. Shareholders' equity](index=22&type=section&id=12.%20Shareholders%20equity) The Company has a **$2.95 billion** share repurchase program, with **$469.0 million** remaining as of April 3, 2021 - As of April 3, 2021, **$469.0 million** remained under the Company's **$2.95 billion** share repurchase authorization, with no repurchases made in Q3 fiscal 2021[70](index=70&type=chunk) - A dividend of **$0.21** per common share was approved and paid in March 2021, amounting to **$20.9 million**[71](index=71&type=chunk) [13. Earnings per share](index=23&type=section&id=13.%20Earnings%20per%20share) Basic earnings per share for Q3 fiscal 2021 was **$1.08**, and diluted EPS was **$1.07** | Metric | Q3 Ended April 3, 2021 | 9 Months Ended April 3, 2021 | | :-------------------------------------------------- | :--------------------- | :----------------------------- | | Net income (loss) (Millions) | $107.5 | $107.8 | | Weighted average common shares for basic EPS (Thousands) | 99,542 | 99,125 | | Weighted average common shares for diluted EPS (Thousands) | 100,247 | 100,013 | | Basic earnings (loss) per share | $1.08 | $1.09 | | Diluted earnings (loss) per share | $1.07 | $1.08 | [14. Additional cash flow information](index=23&type=section&id=14.%20Additional%20cash%20flow%20information) Non-cash investing activities included **$5.2 million** in capital expenditures incurred but not paid for the first nine months of fiscal 2021 | Metric | 9 Months Ended April 3, 2021 (Millions) | 9 Months Ended March 28, 2020 (Millions) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Capital expenditures incurred but not paid | $5.2 | $5.4 | | Interest paid | $61.1 | $88.5 | | Income tax net payments | $56.1 | $14.7 | - Cash and cash equivalents included **$43.2 million** in investment grade money market funds and overnight time deposits as of April 3, 2021[75](index=75&type=chunk) [15. Segment information](index=24&type=section&id=15.%20Segment%20information) Avnet operates through two reportable segments: Electronic Components (EC) and Farnell, with Asia/Pacific as the largest geographic region by sales - Avnet's two reportable segments are Electronic Components (EC) and Farnell, both operating in the Americas, EMEA, and Asia[77](index=77&type=chunk)[99](index=99&type=chunk) | Segment | Q3 Ended April 3, 2021 Sales (Millions) | Q3 Ended March 28, 2020 Sales (Millions) | 9 Months Ended April 3, 2021 Sales (Millions) | 9 Months Ended March 28, 2020 Sales (Millions) | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Electronic Components | $4,520.6 | $3,974.7 | $13,245.1 | $12,472.5 | | Farnell | $396.1 | $335.1 | $1,062.8 | $1,002.1 | | Total Sales | $4,916.7 | $4,309.8 | $14,307.9 | $13,474.6 | | Geographic Area | Q3 Ended April 3, 2021 Sales (Millions) | Q3 Ended March 28, 2020 Sales (Millions) | 9 Months Ended April 3, 2021 Sales (Millions) | 9 Months Ended March 28, 2020 Sales (Millions) | | :---------------- | :--------------------------------------- | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Americas | $1,161.0 | $1,203.6 | $3,468.1 | $3,605.9 | | EMEA | $1,585.6 | $1,512.5 | $4,412.7 | $4,409.3 | | Asia/Pacific | $2,170.1 | $1,593.7 | $6,427.2 | $5,459.4 | | Total Sales | $4,916.7 | $4,309.8 | $14,307.9 | $13,474.6 | [16. Restructuring expenses](index=26&type=section&id=16.%20Restructuring%20expenses) The Company incurred **$39.9 million** in restructuring expenses during the first nine months of fiscal 2021, primarily for severance | Restructuring Expense Category | Fiscal 2021 Restructuring Expenses (Millions) | Cash Payments (Millions) | Balance at April 3, 2021 (Millions) | | :----------------------------- | :--------------------------------------------- | :------------------------ | :----------------------------------- | | Severance | $37.0 | $(21.1) | $16.5 | | Facility Contract Costs | $2.9 | $(1.5) | $1.4 | | Total | $39.9 | $(22.6) | $17.8 | - Restructuring expenses in fiscal 2021 related to the reduction of over 300 employees across various functions, with **$22.5 million** for EC, **$9.4 million** for Farnell, and **$8.0 million** for Corporate[84](index=84&type=chunk) - Remaining restructuring liabilities from fiscal 2020 and prior totaled **$8.2 million** at April 3, 2021, with most expected to be paid by the end of fiscal 2021[87](index=87&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Avnet's financial condition and results of operations for Q3 and nine months of fiscal 2021 [Overview](index=31&type=section&id=Overview) Avnet is a global technology solutions company operating through two primary groups, Electronic Components and Farnell, across three major economic regions - Avnet is a global technology solutions company founded in 1921, serving **2.1 million** customers in over 140 countries with over 1,400 technology suppliers[98](index=98&type=chunk) - The Company operates two primary groups: Electronic Components (EC) and Farnell, with operations in the Americas, EMEA, and Asia[99](index=99&type=chunk) - The Company did not experience any meaningful financial impact from the COVID-19 pandemic during the third quarter of fiscal 2021[101](index=101&type=chunk) [Executive Summary](index=31&type=section&id=Executive%20Summary) Avnet reported a **14.1%** increase in sales to **$4.92 billion** in Q3 fiscal 2021, with operating income significantly improving | Metric | Q3 Fiscal 2021 | Q3 Fiscal 2020 | Change (YoY) | | :-------------------------- | :------------- | :------------- | :----------- | | Sales | $4.92 billion | $4.31 billion | +14.1% | | Sales (constant currency) | | | +10.7% | | Gross profit margin | 11.6% | 12.0% | -48 bps | | Operating income | $87.7 million | $(115.8) million | +175.7% | | Operating income margin | 1.8% | -2.7% | +450 bps | | Adjusted operating income margin | 2.3% | 1.6% | +62 bps | - The increase in adjusted operating income margin is primarily due to increased sales and reductions in selling, general and administrative expenses, partially offset by a decrease in gross profit margin[103](index=103&type=chunk) [Sales](index=33&type=section&id=Sales) Avnet's sales increased by **14.1%** to **$4.92 billion** in Q3 fiscal 2021, driven by growth in EC Asia and Farnell | Metric | Q3 Fiscal 2021 Sales (Millions) | 9 Months Fiscal 2021 Sales (Millions) | | :----------------------------------- | :------------------------------- | :------------------------------------- | | Avnet Sales As Reported | $4,916.7 | $14,307.9 | | Avnet Organic Sales Adj for TI | $4,915.1 | $13,709.7 | | EC Sales | $4,520.6 | $13,245.1 | | Farnell Sales | $396.1 | $1,062.8 | | Sales Growth Rate (YoY) | Q3 As Reported % Change | Q3 Organic Adj for TI (Constant Currency) % Change | 9 Months As Reported % Change | 9 Months Organic Adj for TI (Constant Currency) % Change | | :------------------------ | :---------------------- | :------------------------------------------------- | :---------------------------- | :------------------------------------------------------- | | Avnet | 14.1% | 22.0% | 6.2% | 9.5% | | Americas | (3.5)% | 4.9% | (3.8)% | (0.2)% | | EMEA | 4.8% | 6.5% | 0.1% | (1.8)% | | Asia | 36.2% | 50.3% | 17.7% | 25.4% | | EC | 13.7% | 22.9% | 6.2% | 10.4% | | Farnell | 18.2% | 12.3% | 6.1% | 0.2% | - The increase in sales was primarily driven by increased sales in the EC Asia region and sales growth at Farnell, despite lower sales of TI products[108](index=108&type=chunk)[109](index=109&type=chunk) [Gross Profit](index=35&type=section&id=Gross%20Profit) Gross profit for Q3 fiscal 2021 increased by **9.5%** to **$568.4 million**, but the gross profit margin decreased by 48 basis points to **11.6%** | Metric | Q3 Fiscal 2021 (Millions) | Q3 Fiscal 2020 (Millions) | 9 Months Fiscal 2021 (Millions) | 9 Months Fiscal 2020 (Millions) | | :----------------- | :------------------------- | :------------------------- | :------------------------------- | :------------------------------- | | Gross profit | $568.4 | $518.9 | $1,600.0 | $1,590.0 | | Gross profit margin | 11.6% | 12.0% | 11.2% | 11.8% | - The decrease in gross profit margin was primarily due to geographical market mix and, to a lesser extent, unfavorable product and customer mix[111](index=111&type=chunk)[112](index=112&type=chunk) - Sales in higher gross profit margin western regions decreased from **63%** in Q3 fiscal 2020 to **56%** in Q3 fiscal 2021[111](index=111&type=chunk)[112](index=112&type=chunk) [Selling, General and Administrative Expenses](index=35&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) Selling, general and administrative (SG&A) expenses decreased by **1.4%** to **$463.1 million** in Q3 fiscal 2021 | Metric | Q3 Fiscal 2021 (Millions) | Q3 Fiscal 2020 (Millions) | 9 Months Fiscal 2021 (Millions) | 9 Months Fiscal 2020 (Millions) | | :----------------------------------- | :------------------------- | :------------------------- | :------------------------------- | :------------------------------- | | SG&A expenses | $463.1 | $469.6 | $1,380.0 | $1,390.0 | | SG&A as % of sales | 9.4% | 10.9% | 9.6% | 10.3% | | SG&A as % of gross profit | 81.5% | 90.5% | 86.3% | 87.6% | - The decrease in SG&A expenses was primarily due to cost savings from restructuring activities and lower amortization expense, partially offset by the impact of foreign currency due to a weakening U.S. Dollar[113](index=113&type=chunk)[116](index=116&type=chunk) [Restructuring, Integration, and Other Expenses](index=37&type=section&id=Restructuring,%20Integration,%20and%20Other%20Expenses) The Company recorded **$17.6 million** in restructuring, integration, and other expenses in Q3 fiscal 2021 - Restructuring, integration, and other expenses totaled **$17.6 million** in Q3 fiscal 2021, with **$5.4 million** in restructuring costs expected to generate over **$7.0 million** in annual operating expense savings[118](index=118&type=chunk) - For the first nine months of fiscal 2021, these expenses amounted to **$55.9 million**, including **$39.9 million** in restructuring costs and **$26.5 million** in integration costs, offset by an **$8.2 million** gain on legal settlement[119](index=119&type=chunk) - The after-tax impact of these expenses was **$13.5 million** (**$0.13** per diluted share) for Q3 and **$44.6 million** (**$0.44** per diluted share) for the first nine months of fiscal 2021[118](index=118&type=chunk)[119](index=119&type=chunk) [Operating Income (Loss)](index=37&type=section&id=Operating%20Income%20%28Loss%29) Operating income for Q3 fiscal 2021 significantly increased to **$87.7 million** from a **$115.8 million** loss in the prior year | Metric | Q3 Fiscal 2021 (Millions) | Q3 Fiscal 2020 (Millions) | 9 Months Fiscal 2021 (Millions) | 9 Months Fiscal 2020 (Millions) | | :-------------------------- | :------------------------- | :------------------------- | :------------------------------- | :------------------------------- | | Operating income (loss) | $87.7 | $(115.8) | $163.4 | $(6.5) | | Adjusted operating income | $110.5 | $70.4 | $255.2 | $260.0 | - The **175.7%** increase in operating income for Q3 fiscal 2021 was largely due to the **$145.8 million** goodwill and long-lived asset impairment expense in the prior year[120](index=120&type=chunk) - EC operating income margin increased by **49 basis points** to **2.6%**, while Farnell operating income margin decreased by **95 basis points** to **6.0%** year-over-year[120](index=120&type=chunk) [Interest and Other Financing Expenses, Net and Other Income (Expense), Net](index=38&type=section&id=Interest%20and%20Other%20Financing%20Expenses,%20Net%20and%20Other%20Income%20%28Expense%29,%20Net) Interest and other financing expenses decreased by **24.8%** to **$22.3 million** in Q3 fiscal 2021 | Metric | Q3 Fiscal 2021 (Millions) | Q3 Fiscal 2020 (Millions) | 9 Months Fiscal 2021 (Millions) | 9 Months Fiscal 2020 (Millions) | | :----------------------------------- | :------------------------- | :------------------------- | :------------------------------- | :------------------------------- | | Interest and other financing expenses, net | $(22.3) | $(29.7) | $(66.1) | $(97.3) | | Other income (expense), net | $4.8 | $(12.6) | $(16.1) | $(9.6) | - The decrease in interest and other financing expenses was primarily related to lower outstanding borrowings during fiscal 2021[122](index=122&type=chunk) - Differences in other income (expense) were primarily due to a **$15.2 million** equity investment impairment expense in the first nine months of fiscal 2021 and foreign currency exchange rate differences[123](index=123&type=chunk) [Income Tax Benefit](index=38&type=section&id=Income%20Tax%20Benefit) The Company's effective tax rate was a benefit of **53.3%** in Q3 fiscal 2021 and **32.7%** for the first nine months - The effective tax rate was a benefit of **53.3%** in Q3 fiscal 2021 and **32.7%** for the first nine months of fiscal 2021[124](index=124&type=chunk) - Favorable impacts included tax benefits from business value reductions, decreases to valuation allowances, and the mix of income in lower tax jurisdictions[124](index=124&type=chunk) [Net Income (Loss)](index=38&type=section&id=Net%20Income%20%28Loss%29) Avnet reported net income of **$107.5 million** (**$1.07** diluted EPS) for Q3 fiscal 2021, a significant improvement from a prior-year loss | Metric | Q3 Fiscal 2021 (Millions) | Q3 Fiscal 2020 (Millions) | 9 Months Fiscal 2021 (Millions) | 9 Months Fiscal 2020 (Millions) | | :------------------- | :------------------------- | :------------------------- | :------------------------------- | :------------------------------- | | Net income (loss) | $107.5 | $(128.7) | $107.8 | $(83.2) | | Diluted EPS | $1.07 | $(1.29) | $1.08 | $(0.82) | [LIQUIDITY AND CAPITAL RESOURCES](index=38&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Avnet's liquidity and capital resources are managed through operating cash flows, credit facilities, and other financing arrangements [Cash Flow](index=38&type=section&id=Cash%20Flow) Operating cash flow for the first nine months of fiscal 2021 was **$197.5 million**, a decrease from **$442.6 million** in the prior year | Cash Flow Activity | 9 Months Fiscal 2021 (Millions) | 9 Months Fiscal 2020 (Millions) | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net cash flows provided by operating activities | $197.5 | $442.6 | | Net cash flows used for financing activities | $(308.4) | $(444.4) | | Net cash flows used for investing activities | $(51.2) | $(125.2) | - Cash used for working capital and other was **$112.0 million** in the first nine months of fiscal 2021, including a **$405.7 million** increase in receivables, offset by a **$63.0 million** decrease in inventories and a **$224.2 million** increase in accounts payable[126](index=126&type=chunk) - Financing activities included a net repayment of **$232.3 million** under the Credit Facility and **$62.4 million** in common stock dividends paid[128](index=128&type=chunk) [Contractual Obligations](index=40&type=section&id=Contractual%20Obligations) There are no material changes to the Company's long-term debt and lease commitments outside of normal course activities - No material changes to long-term debt and lease commitments outside of normal borrowings and repayments[130](index=130&type=chunk) - No material non-cancellable commitments for capital expenditures or inventory purchases outside the normal course of business[130](index=130&type=chunk) [Financing Transactions](index=40&type=section&id=Financing%20Transactions) Avnet was in compliance with all covenants under its **$1.25 billion** Credit Facility and Securitization Program as of April 3, 2021 - The Company was in compliance with all covenants under its Credit Facility and Securitization Program as of April 3, 2021[131](index=131&type=chunk) - Outstanding borrowings under bank credit facilities and other debt were **$1.4 million** at the end of Q3 fiscal 2021[131](index=131&type=chunk) - The Company sells certain trade accounts receivable on a non-recourse basis to third-party financial institutions as an alternative financing method outside the U.S[132](index=132&type=chunk) [Liquidity](index=40&type=section&id=Liquidity) Avnet held **$322.7 million** in cash and cash equivalents as of April 3, 2021, with **$243.1 million** held outside the U.S | Metric | April 3, 2021 (Millions) | June 27, 2020 (Millions) | | :-------------------------- | :------------------------ | :------------------------ | | Cash and cash equivalents | $322.7 | $477.0 | | Cash held outside the United States | $243.1 | $411.2 | - Total borrowing capacity under the Credit Facility and Securitization Program was **$1.70 billion**, with **$1.61 billion** available as of April 3, 2021[135](index=135&type=chunk) - The Company has temporarily suspended share repurchases due to the impacts of the COVID-19 pandemic and the need to manage liquidity and leverage[140](index=140&type=chunk) [Recently Issued Accounting Pronouncements](index=44&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to Note 1 of the consolidated financial statements for a description of recently issued accounting pronouncements - Refer to Note 1, 'Basis of presentation and new accounting pronouncements,' for details on recently issued accounting pronouncements[142](index=142&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Avnet manages market risks, primarily foreign currency exchange rates and interest rates, through economic hedges and a mix of fixed and variable rate debt - The Company uses financial arrangements, primarily economic hedges, to reduce earnings and cash flow volatility from foreign currency exchange rate fluctuations[143](index=143&type=chunk)[144](index=144&type=chunk) - Approximately **100%** of the Company's debt bears interest at a fixed rate, making it largely insensitive to hypothetical **1.0%** increases in interest rates[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Avnet's management concluded that the Company's disclosure controls and procedures were effective as of April 3, 2021 - The Company's disclosure controls and procedures were evaluated and deemed effective as of April 3, 2021[146](index=146&type=chunk) - No material changes to internal control over financial reporting occurred during the third quarter of fiscal 2021[147](index=147&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The Company regularly assesses legal proceedings and believes no particular pending matter requires specific public disclosure - No particular pending legal proceeding requires specific public disclosure[148](index=148&type=chunk) - Resolution of current legal and compliance matters is not expected to materially affect financial position or liquidity, but could be material to results of operations in any one reporting period[149](index=149&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) As of April 3, 2021, there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K - No material changes to risk factors as of April 3, 2021, beyond those revised in previous 10-Q filings[150](index=150&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company's Board of Directors authorized a **$2.95 billion** share repurchase program in August 2019 - The Company has a **$2.95 billion** share repurchase program, with **$469.0 million** remaining as of April 3, 2021[151](index=151&type=chunk) - No shares were repurchased under the program during the third quarter of fiscal 2021[151](index=151&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO and XBRL-related documents - Includes CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL documents (101.INS, 101.SCH, 101.DEF, 101.CAL, 101.LAB, 101.PRE)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) [Signature Page](index=47&type=section&id=Signature%20Page) The report is duly signed on behalf of Avnet, Inc. by Thomas Liguori, Chief Financial Officer, on April 30, 2021 - The report was signed by Thomas Liguori, Chief Financial Officer of Avnet, Inc., on April 30, 2021[163](index=163&type=chunk)

Avnet, Inc. (NASDAQ:AVT) Q3 2021 Earnings Conference Call April 28, 2021 4:30 PM ET Company Participants Joe Burke - IR Phil Gallagher - CEO Tom Liguori - CFO Conference Call Participants Adam Tindle - Raymond James Nik Todorov - Longbow Research Jim Suva - Citigroup Investment Research Matt Sheerin - Stifel Ruplu Bhattacharya - Bank of America Steven Fox - Fox Advisors David Williams - Loop Capital Joe Quatrochi - Wells Fargo Operator Greetings, and welcome to the Avnet Third Quarter Fiscal Year 2021 Earni ...

Avnet, Inc. (NASDAQ:AVT) Q2 2021 Earnings Conference Call January 27, 2021 4:30 PM ET Company Participants Joe Burke - Vice President, Treasurer and Investor Relations Phil Gallagher - Chief Executive Officer Tom Liguori - Chief Financial Officer Conference Call Participants Adam Tindle - Raymond James Tim Yang - Citibank Matt Sheerin - Stifel Steven Fox - Fox Advisors Nick Todorov - Longbow Research Ruplu Bhattacharya - Bank of America David Williams - Loop Capital William Stein - Truist Securities Operato ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q1 FY2021, reporting a net loss of $18.9 million compared to a $41.8 million net income in the prior-year period [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets (in millions) | Balance Sheet Items | Oct 3, 2020 | June 27, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$8,381.4** | **$8,105.2** | | Total current assets | $6,602.2 | $6,328.8 | | **Total Liabilities** | **$4,603.9** | **$4,378.8** | | Total current liabilities | $2,766.4 | $2,280.4 | | Long-term debt | $1,195.2 | $1,424.8 | | **Total Shareholders' Equity** | **$3,777.5** | **$3,726.4** | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations (in millions, except per share) | Income Statement | Q1 FY2021 (ended Oct 3, 2020) | Q1 FY2020 (ended Sep 28, 2019) | | :--- | :--- | :--- | | Sales | $4,723.1 | $4,630.0 | | Gross Profit | $516.1 | $543.8 | | Operating Income | $18.5 | $62.7 | | Net (Loss) Income | $(18.9) | $41.8 | | Diluted (Loss) Earnings Per Share | $(0.19) | $0.40 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | Q1 FY2021 (ended Oct 3, 2020) | Q1 FY2020 (ended Sep 28, 2019) | | :--- | :--- | :--- | | Net cash provided by operating activities | $122.4 | $195.6 | | Net cash used for investing activities | $(37.9) | $(42.4) | | Net cash used for financing activities | $(88.3) | $(22.8) | | **Cash and cash equivalents at end of period** | **$483.1** | **$664.1** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The first quarter of fiscal 2021 contained 14 weeks, compared to 13 weeks in the first quarter of fiscal 2020, which impacts year-over-year comparisons[19](index=19&type=chunk) - The company adopted Topic 326 (Credit Losses), resulting in a cumulative effect adjustment that increased the allowance for credit losses by **$17.2 million** (**$14.5 million**, net of tax)[21](index=21&type=chunk) Segment Sales (in millions) | Segment Sales | Q1 FY2021 | Q1 FY2020 | | :--- | :--- | :--- | | Electronic Components | $4,382.1 | $4,294.2 | | Farnell | $340.9 | $335.8 | | **Total Sales** | **$4,723.1** | **$4,630.0** | - During Q1 FY2021, the company initiated restructuring actions, recording **$26.9 million** in expenses related to severance and facility exit costs, primarily impacting over 150 employees[69](index=69&type=chunk)[70](index=70&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes Q1 FY2021 financial results, noting a 2.0% reported sales increase to $4.72 billion, but a 6.0% organic sales decrease, with operating income falling 70.5% to $18.5 million Key Financial Metrics | Metric | Q1 FY2021 | Q1 FY2020 | | :--- | :--- | :--- | | Sales | $4.72B | $4.63B | | YoY Sales Growth (Reported) | 2.0% | - | | YoY Sales Growth (Organic, Constant Currency) | (6.0%) | - | | Gross Profit Margin | 10.9% | 11.7% | | Operating Income | $18.5M | $62.7M | | Adjusted Operating Income | $65.1M | $107.4M | - The decrease in organic sales was attributed to the negative impacts of the COVID-19 pandemic across all segments and regions, and lower sales from the Texas Instruments (TI) distribution agreement, which is set to terminate[84](index=84&type=chunk) - The company recorded restructuring, integration, and other expenses of **$26.4 million** in Q1 FY2021, which included a gain on a legal settlement of **$8.2 million**[99](index=99&type=chunk) - As of October 3, 2020, the company had a strong liquidity position with **$483.1 million** in cash and cash equivalents and approximately **$1.48 billion** of total availability under its credit facilities[116](index=116&type=chunk)[117](index=117&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Reports no material changes in market risk exposure since FY2020, with 88% of debt at a fixed rate as of October 3, 2020 - The company's exposure to market risks associated with foreign currency exchange rates and interest rates has not changed materially since June 27, 2020[128](index=128&type=chunk) - As of October 3, 2020, **88%** of the company's debt bears interest at a fixed rate, while **12%** is at variable rates, with a hypothetical 1.0% interest rate increase resulting in a **$0.4 million** decrease in pre-tax income for the quarter[129](index=129&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of October 3, 2020, with no material changes to internal control over financial reporting - The Interim CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[130](index=130&type=chunk) - No material changes were made to the company's internal control over financial reporting during the first quarter of fiscal 2021[131](index=131&type=chunk) [PART II. OTHER INFORMATION](index=42&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, not expected to materially impact financial position or liquidity - The company does not anticipate that any pending lawsuits, claims, or investigations will have a material adverse effect on its financial condition, liquidity, or results of operations[51](index=51&type=chunk)[132](index=132&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors from the 10-K, except for revised risks concerning the COVID-19 pandemic and logistics disruptions - The COVID-19 pandemic has negatively impacted the global economy and the company's operations, with its ultimate impact remaining uncertain until a vaccine is widely available[135](index=135&type=chunk)[136](index=136&type=chunk) - Major disruptions to the company's global logistics capabilities, from IT issues, natural disasters, pandemics, or reliance on third-party transportation, could adversely impact operations and profitability[137](index=137&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 FY2021, Avnet did not repurchase any shares of its common stock, with $469.0 million remaining available under the program - The company did not repurchase any shares during the first quarter of fiscal 2021[138](index=138&type=chunk) - As of October 3, 2020, **$469.0 million** remained available under the company's share repurchase authorization[58](index=58&type=chunk)[138](index=138&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906 - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[140](index=140&type=chunk) [Signature Page](index=46&type=section&id=Signature%20Page) Confirms the official signing of the Form 10-Q report by the Chief Financial Officer on October 30, 2020 - The Form 10-Q report was duly signed on October 30, 2020, by Thomas Liguori, the Chief Financial Officer of Avnet, Inc[143](index=143&type=chunk)[144](index=144&type=chunk)

Financial Data and Key Metrics Changes - Revenues for Q1 2021 were $4.7 billion, representing a sequential growth of 13.5% and an increase year-over-year [10][18] - Adjusted diluted earnings per share (EPS) was $0.36, significantly above prior guidance [10][19] - Operating expenses as a percentage of revenues decreased from 10.4% to 9.6% [18][19] - Cash flow from operations totaled $122 million, marking the eighth consecutive quarter of positive cash flow [19] Business Line Data and Key Metrics Changes - Electronic components revenue was $4.4 billion, up 13.3% sequentially, with strong growth in Asia [20][21] - Farnell revenues totaled $341 million, up 16.7% sequentially, with an operating margin of 3.5% [21][22] - The company added 28,000 SKUs to Farnell's inventory, aiming to reach a total of 250,000 SKUs by fiscal year 2022 [14][61] Market Data and Key Metrics Changes - The Asia region saw a 22% sequential revenue increase on a constant currency basis, driven by demand in various verticals, particularly automotive [11][20] - The Americas and EMEA regions showed positive trends, with EMEA slightly below parity but improving [12][20] Company Strategy and Development Direction - The company is focusing on its primary components distribution operations while strategically investing in Farnell to enhance digital capabilities [14][17] - A flatter organizational structure is being implemented to improve responsiveness to customer and supplier needs [15][17] - The company aims to improve revenue growth and increase market share in key target markets [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about operational improvements and financial results, despite ongoing uncertainty related to the pandemic [10][11] - The company is committed to enhancing profitability and return on capital metrics while maintaining a healthy balance sheet [23][27] - Future guidance for Q2 2021 includes revenues in the range of $4.0 to $4.4 billion and adjusted EPS between $0.33 and $0.43 [26] Other Important Information - The company is focused on cash liquidity and intends to support dividends, with share buybacks on pause due to COVID-19 uncertainties [44] - The company has a strong liquidity position, ending the quarter with $483 million in cash and equivalents [22] Q&A Session Summary Question: Will the company see year-over-year revenue growth in fiscal '21? - Management confirmed that excluding TI, they expect to see year-over-year revenue growth [30] Question: Why isn't incremental revenue leading to better margins in Farnell? - Management indicated that operational improvements and the ramp-up of the Farnell lead distribution center are expected to enhance margins over time [31][32] Question: What are the capital allocation priorities? - The company is prioritizing cash liquidity and intends to support dividends, with no active M&A plans currently [43][44] Question: How are customer inventory levels being managed? - Management noted that they do not see significant inventory buildup among customers and are closely monitoring demand forecasts [66] Question: What is the status of the TI transition? - The company is in the final quarter of the TI transition and is tracking progress closely [53][54] Question: How is the company addressing working capital targets? - The company aims to reduce working capital to the mid-70-day range by the end of calendar year 2021, focusing on receivables, payables, and inventory [75]