PART I [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Avnet is a global technology solutions company providing design, product, marketing, and supply chain expertise, serving **2.1 million** customers with **$17.63 billion** in fiscal **2020** sales [Company Overview](index=3&type=section&id=Company%20Overview) Avnet, founded in **1921**, is a global technology solutions provider offering design, product, marketing, and supply chain expertise - Avnet, Inc. is a global technology solutions company, founded in **1921**, providing design, product, marketing, and supply chain expertise to customers worldwide[3](index=3&type=chunk) - The company serves a wide range of customers, from startups to enterprise-level **OEMs**, **EMS** providers, and **ODMs**, supporting every stage of the electronic product lifecycle[5](index=5&type=chunk) [Organizational Structure](index=3&type=section&id=Organizational%20Structure) Avnet operates through **Electronic Components (EC)** and **Farnell** groups, each with distinct management and regional business units - Avnet operates with two primary groups: **Electronic Components (EC)** and **Farnell**, both having operations in the Americas, **EMEA**, and Asia/Pacific regions[6](index=6&type=chunk) - Each operating group has its own management team and distinct financial reporting, with business units focused on sales and marketing along specific geographies or product lines[6](index=6&type=chunk) [Electronic Components (EC)](index=4&type=section&id=Electronic%20Components) The **EC** group supports high-volume customers by distributing electronic components, including semiconductors and **IP&E** components - The **EC** operating group primarily supports high-volume customers by marketing, selling, and distributing electronic components, including semiconductors and **IP&E** components[8](index=8&type=chunk) - **EC** serves diverse markets such as automotive, medical, defense, and aerospace, offering comprehensive customer support throughout the product lifecycle[9](index=9&type=chunk) [Design Chain Solutions](index=4&type=section&id=Design%20Chain%20Solutions) EC provides technical design solutions, tools, and engineering support to optimize component selection and accelerate time to market - **EC** provides design chain support with technical design solutions, access to design tools, engineering support, evaluation kits, and reference designs to help customers optimize component selection and accelerate time to market[10](index=10&type=chunk) [Supply Chain Solutions](index=4&type=section&id=Supply%20Chain%20Solutions) EC offers global supply chain and logistical services, leveraging warehousing and **IT** to optimize operations and minimize risk - **EC** offers supply chain and logistical services to **OEMs**, **EMS** providers, and electronic component manufacturers, leveraging global warehousing, **IT**, and asset management to optimize supply chains and minimize risk[11](index=11&type=chunk) [Avnet Integrated](index=4&type=section&id=Avnet%20Integrated) EC delivers integrated solutions, including design, integration, and assembly of embedded products for industrial and **OEM** markets - **EC** provides integrated solutions, including technical design, integration, and assembly of embedded products, systems, and intelligent display solutions, primarily for industrial applications and **OEMs** in medical, telecom, industrial, and digital editing markets[12](index=12&type=chunk) [Farnell](index=5&type=section&id=Farnell) The **Farnell** group serves lower-volume customers with quick access to electronic components, tools, and an online engineering community - **Farnell** operating group supports lower-volume customers needing quick access to electronic components, kits, tools, and industrial automation products for development, prototyping, and testing[13](index=13&type=chunk) - **Farnell** also hosts element14, an online community for engineers to collaborate, access new technologies, and receive expert support[13](index=13&type=chunk) [Major Products](index=5&type=section&id=Major%20Products) Avnet distributes products from **1,400+** suppliers, with semiconductors being the largest category, and **TI** as a key supplier - Avnet distributes products from **over 1,400** technology suppliers, with no single supplier exceeding **10%** of consolidated sales in fiscal **2020**. **Texas Instruments (TI)** products accounted for approximately **10%** and **11%** of sales in fiscal **2019** and **2018**, respectively[3](index=3&type=chunk)[14](index=14&type=chunk) Sales by Major Product Categories (Fiscal Years 2018-2020) | Product Category | June 27, 2020 (Millions) | June 29, 2019 (Millions) | June 30, 2018 (Millions) | |:-----------------|:-------------------------|:-------------------------|:-------------------------| | Semiconductors | $13,440.3 | $14,973.3 | $14,890.9 | | IP&E | 3,146.0 | 3,516.0 | 3,227.0 | | Computers | 572.0 | 533.1 | 461.9 | | Other | 476.0 | 496.2 | 457.1 | | **Total Sales** | **$17,634.3** | **$19,518.6** | **$19,036.9** | [Competition & Markets](index=5&type=section&id=Competition%20%26%20Markets) The electronic components industry is highly competitive, driven by inventory, pricing, and value-added services - The electronic components industry is highly competitive, with major competitors including Arrow Electronics, Inc., Future Electronics, World Peace Group, Mouser Electronics, and Digi-Key Electronics[15](index=15&type=chunk) - Key competitive factors include maintaining sufficient inventory for rapid delivery, competitive pricing, and offering value-added services like supply chain management and testing[16](index=16&type=chunk) [Seasonality](index=7&type=section&id=Seasonality) Avnet's business is not materially seasonal, except for regional sales shifts between Asia and Americas/EMEA - Avnet's business is not materially impacted by seasonality, except for shifts in regional sales trends from Asia in the first half of a fiscal year to the Americas and **EMEA** regions in the second half[18](index=18&type=chunk) [Number of Employees](index=7&type=section&id=Number%20of%20Employees) This section provides a table detailing Avnet's employee count for fiscal years **2018-2020** Number of Employees (Fiscal Years 2018-2020) | Date | Number of Employees | |:-------------|:--------------------| | June 27, 2020| 14,600 | | June 29, 2019| 15,500 | | June 30, 2018| 15,400 | [Available Information](index=7&type=section&id=Available%20Information) Company reports and information are publicly available through the **SEC** website and Avnet's investor relations site - The Company files its annual, quarterly, and current reports, proxy statements, and other documents with the **U.S. Securities and Exchange Commission (SEC)**, available on the **SEC's** website (http://www.sec.gov) and Nasdaq[20](index=20&type=chunk) [Avnet Website](index=7&type=section&id=Avnet%20Website) Avnet's website and investor relations site offer comprehensive information on management, products, services, and governance - Extensive information about Avnet, including management, products, services, and corporate governance, is available on its website (http://www.avnet.com) and investor relations site (ir.avnet.com)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - Avnet is a global technology solutions company founded in **1921**, serving **over 2.1 million** customers in **more than 140** countries with an extensive ecosystem for product lifecycle support[3](index=3&type=chunk) - The company has enhanced its distribution, design, supply chain, and logistics capabilities through strategic acquisitions like Premier Farnell, Hackster.io, Softweb Solutions, Witekio, and Phoenics Electronics[4](index=4&type=chunk) Sales by Major Product Categories (Fiscal Years 2018-2020) | Product Category | June 27, 2020 (Millions) | June 29, 2019 (Millions) | June 30, 2018 (Millions) | |:-----------------|:-------------------------|:-------------------------|:-------------------------| | Semiconductors | $13,440.3 | $14,973.3 | $14,890.9 | | IP&E | 3,146.0 | 3,516.0 | 3,227.0 | | Computers | 572.0 | 533.1 | 461.9 | | Other | 476.0 | 496.2 | 457.1 | | **Total Sales** | **$17,634.3** | **$19,518.6** | **$19,036.9** | [Item 1A. Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) Avnet faces significant risks from the **COVID-19** pandemic, economic weakness, geopolitical uncertainty, intense competition, and the **TI** distribution agreement termination [Forward-Looking Statements and Risk Factors](index=8&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) The report contains forward-looking statements subject to assumptions, risks, and uncertainties, where actual results may differ materially - The report contains forward-looking statements subject to numerous assumptions, risks, and uncertainties, and actual results may differ materially from those expressed or implied[26](index=26&type=chunk) [COVID-19 Pandemic Impact](index=8&type=section&id=COVID-19%20Pandemic%20Impact) The **COVID-19** pandemic has negatively impacted the global economy, supply chains, and financial markets, affecting Avnet's operations - The **COVID-19** pandemic has negatively impacted the global economy, disrupted supply chains, constrained workforce participation, and created financial market volatility, affecting Avnet's operations and financial results[28](index=28&type=chunk)[29](index=29&type=chunk) - Avnet has experienced increased logistics costs, softer product demand, price constraints, longer lead times, and shipping delays, implementing business continuity plans and cash conservation measures[29](index=29&type=chunk)[30](index=30&type=chunk) [Economic Weakness and Geopolitical Uncertainty](index=10&type=section&id=Economic%20Weakness%20and%20Geopolitical%20Uncertainty) Worldwide economic and geopolitical conditions, including **COVID-19** and **Brexit**, influence Avnet's financial results and operations - Worldwide economic and geopolitical conditions, including the **COVID-19** pandemic and **Brexit**, significantly influence Avnet's financial results, operations, and prospects, potentially leading to decreased sales, margins, and asset impairments[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) [Competitive Pressure](index=10&type=section&id=Competitive%20Pressure) The highly competitive electronic components market, with rapid technological advances, could negatively impact Avnet's profitability - The electronic components market is highly competitive, with rapid technological advances and new entrants, which could negatively impact Avnet's gross profit margins and overall profitability[35](index=35&type=chunk)[36](index=36&type=chunk) [Changes in Customer Needs and Consumption Models](index=10&type=section&id=Changes%20in%20Customer%20Needs%20and%20Consumption%20Models) Evolving customer needs and consumption models in semiconductor and embedded solutions could adversely affect operating results - Changes in customer needs and consumption models, particularly in the semiconductor and embedded solutions industries, could lead to declines in billings and adversely affect operating results[37](index=37&type=chunk)[38](index=38&type=chunk) [Failure to Maintain or Develop New Supplier Relationships](index=12&type=section&id=Failure%20to%20Maintain%20or%20Develop%20New%20Supplier%20Relationships) The termination of the **Texas Instruments** distribution agreement poses a risk to future sales and gross profit - The termination of the distribution agreement with **Texas Instruments (TI)** by December **2020**, which represented approximately **9%** of total sales in fiscal **2020**, poses a risk of lower future sales and gross profit[40](index=40&type=chunk) - Consolidation among suppliers and modifications to contract terms (e.g., price protection, rebates) could negatively impact Avnet's profitability and customer base[40](index=40&type=chunk) [Risks of International Operations](index=12&type=section&id=Risks%20of%20International%20Operations) International operations, comprising **75%** of sales, expose Avnet to foreign currency fluctuations, trade restrictions, and diverse regulations - Approximately **75%** of Avnet's sales in fiscal **2020** came from outside the **U.S.**, exposing the company to risks such as foreign currency fluctuations, restrictions on fund repatriation, and compliance with diverse international regulations (e.g., data privacy, anti-corruption, import/export laws)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk) - New or higher tariffs imposed by the **U.S.** and Chinese governments, along with trade restrictions, could increase costs and impact sales, potentially affecting operating profits[46](index=46&type=chunk)[47](index=47&type=chunk) [Information Systems Failure](index=15&type=section&id=Information%20Systems%20Failure) Failures in internal information systems or integration difficulties could disrupt operations and affect financial reporting accuracy - Failures in internal information systems or difficulties in implementing/integrating upgrades could disrupt business operations, affect financial reporting accuracy, and prevent the realization of expected efficiencies[48](index=48&type=chunk)[49](index=49&type=chunk) [Logistics Capability Disruptions](index=15&type=section&id=Logistics%20Capability%20Disruptions) Major disruptions at global distribution centers or third-party transportation could cause shipment delays and impact financial performance - Major interruptions at global distribution centers or disruptions from third-party transportation providers (due to **IT** issues, natural disasters, pandemics) could cause significant shipment delays and adversely impact business operations and financial performance[50](index=50&type=chunk)[51](index=51&type=chunk) [Cyber-attacks and Data Security Incidents](index=15&type=section&id=Cyber-attacks%20and%20Data%20Security%20Incidents) Cyber-attacks, security breaches, or data incidents could lead to information misappropriation, system disruptions, and reputational harm - Cyber-attacks, security breaches, or data security incidents could lead to misappropriation of sensitive information, system disruptions, significant liability, reputational harm, and increased costs for protection and remediation[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[56](index=56&type=chunk) [Declines in Inventory Value or Order Cancellations](index=17&type=section&id=Declines%20in%20Inventory%20Value%20or%20Order%20Cancellations) Rapid technological change and market fluctuations can lead to inventory value declines or obsolescence, impacting profitability - Rapid technological change and market fluctuations in the electronic components industry can lead to declines in inventory value or obsolescence, which may not be fully compensated by supplier protections[57](index=57&type=chunk)[58](index=58&type=chunk) [Defaults by Customers or Suppliers](index=17&type=section&id=Defaults%20by%20Customers%20or%20Suppliers) Substantial customer defaults on accounts receivable or loss of significant customers could negatively impact Avnet's financial condition - Substantial defaults by customers on accounts receivable or the loss of significant customers could negatively impact Avnet's business, results of operations, financial condition, and liquidity[59](index=59&type=chunk)[60](index=60&type=chunk) [Inadequate Liquidity or Capital Resources](index=19&type=section&id=Inadequate%20Liquidity%20or%20Capital%20Resources) Avnet's ability to meet cash needs depends on operations and financial markets, affecting financing costs and capital access - Avnet's ability to meet cash needs depends on generating cash from operations and accessing financial markets, which can be affected by economic conditions and debt ratings, potentially increasing financing costs or limiting access to capital[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk) [Covenants and Restrictions on Financing Agreements](index=19&type=section&id=Covenants%20and%20Restrictions%20on%20Financing%20Agreements) Financing agreements contain covenants limiting management's discretion, potentially affecting liens, payments, and additional debt - Financing agreements contain covenants and restrictions that limit management's discretion in operating the business, potentially affecting the ability to grant liens, make restricted payments (like dividends or share repurchases), incur additional debt, or engage in certain transactions[66](index=66&type=chunk)[67](index=67&type=chunk)[69](index=69&type=chunk) [Changes in Tax Rules and Regulations](index=21&type=section&id=Changes%20in%20Tax%20Rules%20and%20Regulations) Changes in tax laws and interpretations, including international alignments, could adversely affect Avnet's effective tax rates and financial results - Changes in tax laws (e.g., Tax Cuts and Jobs Act, **CARES** Act) and their interpretations, as well as international tax policy alignments (**BEPS** Project), could adversely affect Avnet's effective tax rates, deferred taxes, and financial results[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) [Failure to Maintain Effective Internal Controls](index=22&type=section&id=Failure%20to%20Maintain%20Effective%20Internal%20Controls) Ineffective internal controls could lead to inaccurate financial reporting, fraud, reputational harm, and regulatory sanctions - Failure to maintain effective internal controls could lead to inaccurate or untimely financial reporting, inability to prevent or detect fraud, harm to brand and operating results, and potential sanctions from regulatory authorities[77](index=77&type=chunk)[78](index=78&type=chunk) [Acquisition Strategy Risks](index=22&type=section&id=Acquisition%20Strategy%20Risks) Strategic acquisitions involve risks like integration difficulties, unexpected costs, and potential impairment charges, impacting profitability - Strategic acquisitions involve risks such as integration difficulties, unexpected costs or liabilities, impact on existing relationships, potential impairment charges, and diversion of management's attention, which may negatively impact profitability[79](index=79&type=chunk)[80](index=80&type=chunk) [Legal Proceedings](index=22&type=section&id=Legal%20Proceedings) Involvement in legal proceedings, including **IP** rights and government investigations, could result in substantial costs and reputational harm - Involvement in legal proceedings, including intellectual property rights, product liability, and government investigations, could result in substantial costs, diversion of management efforts, and adverse effects on operations and reputation[81](index=81&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) [Attracting and Retaining Key Employees](index=24&type=section&id=Attracting%20and%20Retaining%20Key%20Employees) Failure to attract, retain, train, motivate, and develop qualified employees could adversely impact Avnet's results and strategic initiatives - Failure to attract, retain, train, motivate, and develop qualified employees, especially in a competitive industry, could adversely impact Avnet's results and strategic initiatives[85](index=85&type=chunk)[86](index=86&type=chunk) [Environmental Regulations Compliance](index=24&type=section&id=Environmental%20Regulations%20Compliance) Non-compliance with environmental regulations could result in substantial costs, fines, and civil or criminal sanctions - Non-compliance with federal, state, local, and foreign environmental regulations regarding product disposal, hazardous materials, and recycling could result in substantial costs, fines, and civil or criminal sanctions[87](index=87&type=chunk) - The **COVID-19** pandemic has negatively impacted the global economy, disrupted supply chains, increased logistics costs, softened product demand, and created significant financial market volatility, with continued negative impacts expected into fiscal **2021**[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - Economic weakness and geopolitical uncertainty, including **Brexit**, could lead to decreased sales, margins, asset impairments, and increased foreign currency volatility[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - The termination of the distribution agreement with **Texas Instruments (TI)**, which accounted for approximately **9%** of total sales in fiscal **2020**, will result in lower sales and gross profit if not offset by strategic initiatives[40](index=40&type=chunk) - International operations, which generated approximately **75%** of sales in fiscal **2020**, expose the company to risks such as foreign currency fluctuations, repatriation restrictions, compliance with diverse regulations, and geopolitical instability[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - Cyber-attacks, security breaches, and failures in internal information systems or logistics capabilities could lead to loss of sales, increased costs, significant liability, and reputational harm[48](index=48&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) [Item 1B. Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report [Item 2. Properties](index=24&type=section&id=Item%202.%20Properties) Avnet owns **2.1 million** square feet and leases **4.8 million** square feet globally, with **25%** in the **United States**, including key warehousing and corporate facilities - Avnet owns approximately **2.1 million** square feet and leases **4.8 million** square feet of space, with **25%** of its total space located in the **United States**[89](index=89&type=chunk) Key Facilities Summary | Location | Square Footage | Ownership Type | 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 | Future Farnell warehousing and value-added ops | | Leeds, United Kingdom | 330,000 | Owned | Current Farnell warehousing and value-added ops| | Poing, Germany | 300,000 | Owned | EC warehousing and value-added operations | | Gaffney, South Carolina | 220,000 | Owned | Farnell warehousing | | Hong Kong, China | 210,000 | Leased | EC warehousing | | Phoenix, Arizona | 180,000 | Leased | Corporate and EC Americas headquarters | | Chandler, Arizona | 150,000 | Leased | EC warehousing, integration and value-added ops| [Item 3. Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) Avnet is subject to various legal matters, including compliance with governmental regulations, which management believes will not materially affect financial position or liquidity - Avnet is subject to various legal proceedings and investigations related to governmental laws and regulations, including import/export and environmental matters[91](index=91&type=chunk)[92](index=92&type=chunk) - Management believes the resolution of these matters will not materially affect financial position or liquidity, but could be material to results of operations in a single reporting period[92](index=92&type=chunk) [Item 4. Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Avnet, Inc PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&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 is listed on **Nasdaq** under **AVT**, with future dividends at Board discretion, and a **$2.95 billion** share repurchase program temporarily suspended - Avnet's common stock is listed on the **Nasdaq Global Select Market** under the symbol **AVT**[94](index=94&type=chunk) - The declaration and payment of future dividends are at the discretion of the Board of Directors, dependent on financial condition, results of operations, and capital requirements, and may be restricted by debt facilities[94](index=94&type=chunk)[96](index=96&type=chunk) - As of July **25, 2020**, there were **1,623** registered holders of Avnet's common stock[97](index=97&type=chunk) 5-Year Cumulative Total Return (June 2015 - June 2020) | Date | Avnet, Inc. | Nasdaq Composite | Peer Group | |:-------------|:------------|:-----------------|:-----------| | 6/27/2015 | $100 | $100 | $100 | | 7/2/2016 | $97.23 | $98.32 | $108.73 | | 7/1/2017 | $95.44 | $126.14 | $138.90 | | 6/30/2018 | $107.23 | $155.91 | $131.87 | | 6/29/2019 | $115.26 | $168.04 | $132.42 | | 6/27/2020 | $67.93 | $213.32 | $129.58 | - In August **2019**, the Board increased the share repurchase program authorization to **$2.95 billion**. During fiscal **2020**, the company repurchased **$236.4 million** of common stock, but repurchases were temporarily suspended due to economic uncertainty from **COVID-19**[101](index=101&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) [Item 6. Selected Financial Data](index=29&type=section&id=Item%206.%20Selected%20Financial%20Data) Avnet's selected financial data for fiscal **2020** shows a decline in sales to **$17.63 billion** and a **net loss of $31.1 million**, with negative diluted **EPS** Consolidated Statements of Operations (Selected Data, Fiscal Years 2016-2020) | Metric | June 27, 2020 (Millions) | June 29, 2019 (Millions) | June 30, 2018 (Millions) | July 1, 2017 (Millions) | July 2, 2016 (Millions) | |:-------------------------------------|:-------------------------|:-------------------------|:-------------------------|:------------------------|:------------------------| | Sales | $17,634.3 | $19,518.6 | $19,036.9 | $17,440.0 | $16,740.6 | | Gross profit | 2,063.5 | 2,486.1 | 2,527.2 | 2,369.4 | 2,077.9 | | Operating (loss) income | (4.6) | 365.9 | 209.2 | 443.7 | 565.1 | | Income tax (benefit) expense | (98.6) | 62.2 | 288.0 | 47.1 | 87.1 | | Income (loss) from continuing ops | (29.5) | 180.1 | (142.9) | 263.4 | 390.9 | | Net income (loss) | (31.1) | 176.3 | (156.4) | 525.3 | 506.5 | | Diluted EPS (continuing ops) | (0.29) | 1.63 | (1.19) | 2.05 | 2.93 | | Diluted EPS (net) | (0.31) | 1.59 | (1.30) | 4.08 | 3.80 | | Cash dividends per share | 0.84 | 0.80 | 0.74 | 0.70 | 0.68 | Consolidated Balance Sheets (Selected Data, Fiscal Years 2016-2020) | Metric | June 27, 2020 (Millions) | June 29, 2019 (Millions) | June 30, 2018 (Millions) | July 1, 2017 (Millions) | July 2, 2016 (Millions) | |:-----------------------|:-------------------------|:-------------------------|:-------------------------|:------------------------|:------------------------| | Working capital | $4,048.4 | $4,297.8 | $4,641.1 | $5,080.0 | $4,061.5 | | Total assets | 8,105.2 | 8,564.6 | 9,596.8 | 9,699.6 | 11,239.8 | | Long-term debt | 1,424.8 | 1,419.9 | 1,489.2 | 1,729.2 | 1,339.2 | | Shareholders' equity | 3,726.4 | 4,140.5 | 4,685.1 | 5,182.1 | 4,691.3 | Key Financial Ratios (Fiscal Years 2016-2020) | Ratio | June 27, 2020 | June 29, 2019 | June 30, 2018 | July 1, 2017 | July 2, 2016 | |:-------------------------------------|:--------------|:--------------|:--------------|:-------------|:-------------| | Operating (loss) income % of sales | (0.0)% | 1.9% | 1.1% | 2.5% | 3.4% | | Net (loss) income % of sales | (0.2)% | 0.9% | (0.8)% | 3.0% | 3.0% | | Quick ratio | 1.5:1 | 1.4:1 | 1.4:1 | 1.8:1 | 0.8:1 | | Current ratio | 2.8:1 | 2.7:1 | 2.6:1 | 3.1:1 | 1.8:1 | | Total debt to capital ratio | 27.7% | 29.4% | 26.1% | 25.6% | 34.7% | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Avnet's fiscal **2020** results were significantly impacted by global slowdowns and **COVID-19**, leading to a **9.7%** sales decrease, **$4.6 million** operating loss, and **$31.1 million** net loss, despite strong operating cash flow [Significant Risks and Uncertainties](index=34&type=section&id=Significant%20Risks%20and%20Uncertainties) The **COVID-19** pandemic and **Texas Instruments** agreement termination pose significant risks to Avnet's operations and financial performance - The **COVID-19** pandemic has negatively impacted the global economy, supply chains, and financial markets, leading to increased logistics costs, softer product demand, and shipping delays for Avnet[119](index=119&type=chunk)[120](index=120&type=chunk) - The termination of the distribution agreement with **Texas Instruments** by December **2020** is expected to result in lower sales and gross profit if not mitigated by strategic initiatives[122](index=122&type=chunk) [Executive Summary](index=34&type=section&id=Executive%20Summary) Fiscal **2020** sales decreased **9.7%** to **$17.63 billion**, with gross profit margin declining **104 basis points** and an operating loss of **$4.6 million** - Sales for fiscal **2020** were **$17.63 billion**, a **9.7%** decrease from fiscal **2019**, primarily due to a global industry-wide slowdown and **COVID-19** impacts[123](index=123&type=chunk) - Gross profit margin decreased by **104 basis points** to **11.7%** in fiscal **2020**, attributed to product, customer, and geographical market mix changes, and market conditions[124](index=124&type=chunk)[125](index=125&type=chunk) - Operating loss was **$4.6 million** in fiscal **2020**, a **101.3%** decrease from fiscal **2019**, with adjusted operating income margin declining by **184 basis points**[126](index=126&type=chunk) [Sales](index=36&type=section&id=Sales) Fiscal **2020** sales decreased **9.7%** to **$17.63 billion**, with **EC** sales down **9.5%** and **Farnell** sales down **11.3%** due to global slowdowns Sales by Operating Group and Geographic Region (Fiscal Years 2018-2020) | Category | June 27, 2020 (Millions) | % of Total | June 29, 2019 (Millions) | % of Total | June 30, 2018 (Millions) | % of Total | 2020 to 2019 % Change | |:---------------------|:-------------------------|:-----------|:-------------------------|:-----------|:-------------------------|:-----------|:----------------------| | **Operating Group:** | | | | | | | | | EC | $16,340.1 | 92.7% | $18,060.3 | 92.5% | $17,543.6 | 92.2% | (9.5)% | | Farnell | 1,294.2 | 7.3% | 1,458.3 | 7.5% | 1,493.3 | 7.8% | (11.3)% | | **Total Avnet** | **$17,634.3** | | **$19,518.6** | | **$19,036.9** | | | | **Geographic Region:**| | | | | | | | | Americas | $4,755.3 | 27.0% | $5,135.8 | 26.3% | $5,011.4 | 26.3% | (7.4)% | | EMEA | 5,753.4 | 32.6% | 6,762.9 | 34.6% | 6,790.9 | 35.7% | (14.9)% | | Asia/Pacific | 7,125.6 | 40.4% | 7,619.9 | 39.0% | 7,234.6 | 38.0% | (6.5)% | | **Total Avnet** | **$17,634.3** | | **$19,518.6** | | **$19,036.9** | | | - **EC** sales decreased by **9.5%** (**8.7%** in constant currency) and **Farnell** sales decreased by **11.3%** (**9.5%** in constant currency) in fiscal **2020** compared to fiscal **2019**[130](index=130&type=chunk) - Regional sales declines in fiscal **2020** were **7.4%** in the Americas, **12.4%** in **EMEA** (constant currency), and **6.5%** in Asia (constant currency), driven by the global slowdown and **COVID-19**[131](index=131&type=chunk) [Gross Profit and Gross Profit Margin](index=38&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit decreased **17.0%** to **$2.06 billion** in fiscal **2020**, with margin declining **104 basis points** to **11.7%** due to market conditions - Gross profit in fiscal **2020** was **$2.06 billion**, a **17.0%** decrease from fiscal **2019**, primarily due to declining sales[132](index=132&type=chunk) - Gross profit margin decreased by **104 basis points** to **11.7%** in fiscal **2020**, impacted by unfavorable product, customer, and geographical market mix, and current market conditions including **COVID-19**[132](index=132&type=chunk) [Selling, General and Administrative Expenses](index=38&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) **SG&A** expenses decreased **1.7%** to **$1.84 billion** in fiscal **2020**, but increased as a percentage of sales and gross profit - **SG&A** expenses decreased by **1.7%** to **$1.84 billion** in fiscal **2020**, mainly due to sales decreases, cost savings from restructuring, and favorable foreign currency translation, partially offset by **COVID-19** business continuity costs[133](index=133&type=chunk) - **SG&A** expenses as a percentage of sales increased to **10.4%** (from **9.6%** in **FY19**) and as a percentage of gross profit increased to **89.3%** (from **75.4%** in **FY19**), primarily due to the decrease in sales and gross profit margin[134](index=134&type=chunk) [Goodwill and Intangible Asset Impairment Expenses](index=38&type=section&id=Goodwill%20and%20Intangible%20Asset%20Impairment%20Expenses) Avnet incurred **$144.1 million** in goodwill and intangible asset impairment expenses in fiscal **2020**, primarily in the third quarter - Avnet incurred **$144.1 million** in goodwill and intangible asset impairment expenses in fiscal **2020**, primarily during the third quarter[135](index=135&type=chunk) [Restructuring, Integration and Other Expenses](index=38&type=section&id=Restructuring%2C%20Integration%20and%20Other%20Expenses) The company recorded **$45.5 million** in restructuring costs in fiscal **2020**, expecting **$52.0 million** in annualized operating cost savings - The company recorded **$45.5 million** in restructuring costs in fiscal **2020**, expecting **$52.0 million** in incremental annualized operating cost savings[138](index=138&type=chunk) - Restructuring expenses included **$34.7 million** for severance, **$3.7 million** for facility exit costs, and **$7.1 million** for non-cash asset impairments, primarily related to information technology software[138](index=138&type=chunk) - Total restructuring, integration, and other expenses had an after-tax impact of **$63.2 million**, or **$0.63 per diluted share**, in fiscal **2020**[138](index=138&type=chunk) [Operating Income (Loss)](index=40&type=section&id=Operating%20Income%20(Loss)) Operating loss for fiscal **2020** was **$4.6 million**, a **101.3%** decrease from fiscal **2019**, driven by sales and margin declines - Operating loss for fiscal **2020** was **$4.6 million**, a **101.3%** decrease from fiscal **2019** operating income of **$365.9 million**, primarily due to declines in sales, gross profit margin, and increased impairment expenses[140](index=140&type=chunk) - Adjusted operating income, excluding impairment, amortization, and restructuring expenses, was **$302.9 million** (**1.7%** of sales) in fiscal **2020**, down from **$695.7 million** (**3.6%** of sales) in fiscal **2019**[116](index=116&type=chunk)[140](index=140&type=chunk) [Interest and Other Financing Expenses, Net](index=41&type=section&id=Interest%20and%20Other%20Financing%20Expenses%2C%20Net) Interest and other financing expenses decreased **9.0%** to **$122.7 million** in fiscal **2020** due to lower outstanding borrowings - Interest and other financing expenses decreased by **9.0%** to **$122.7 million** in fiscal **2020**, primarily due to lower outstanding borrowings compared to fiscal **2019**[142](index=142&type=chunk) [Other (Expense) Income, net](index=41&type=section&id=Other%20(Expense)%20Income%2C%20net) Avnet reported **$0.7 million** of other expense in fiscal **2020**, a significant change from **$11.2 million** of other income in fiscal **2019** - Avnet reported **$0.7 million** of other expense in fiscal **2020**, a significant change from **$11.2 million** of other income in fiscal **2019**, mainly due to **$15.3 million** in equity investment impairment expense[143](index=143&type=chunk) [Income Tax Expense](index=41&type=section&id=Income%20Tax%20Expense) The effective tax rate on loss from continuing operations was a **76.9%** benefit in fiscal **2020**, compared to a **25.7%** expense in fiscal **2019** - The effective tax rate on loss before income taxes from continuing operations was a benefit of **76.9%** in fiscal **2020**, compared to an expense of **25.7%** in fiscal **2019**[144](index=144&type=chunk) - The fiscal **2020** tax benefit resulted from a reduction in value of certain businesses for tax purposes, partially offset by valuation allowances against deferred tax assets[144](index=144&type=chunk) [Loss from Discontinued Operations](index=41&type=section&id=Loss%20from%20Discontinued%20Operations) Loss from discontinued operations was **$1.5 million** in fiscal **2020**, a decrease from **$3.8 million** in fiscal **2019** - Loss from discontinued operations was **$1.5 million** in fiscal **2020**, a decrease from **$3.8 million** in fiscal **2019**[146](index=146&type=chunk) [Net Income (Loss)](index=41&type=section&id=Net%20Income%20(Loss)) Avnet reported a **net loss of $31.1 million**, or **$0.31 per diluted share**, in fiscal **2020**, compared to **net income of $176.3 million** in fiscal **2019** - Avnet reported a **net loss of $31.1 million**, or **$0.31 per diluted share**, in fiscal **2020**, compared to **net income of $176.3 million**, or **$1.59 per diluted share**, in fiscal **2019**[147](index=147&type=chunk) [Fiscal 2019 Comparison to Fiscal 2018](index=41&type=section&id=Fiscal%202019%20Comparison%20to%20Fiscal%202018) For a comparison of fiscal **2019** and fiscal **2018** results, refer to the Company's Annual Report on Form **10-K** for fiscal **2019** - For a comparison of fiscal **2019** and fiscal **2018** results, refer to the 'Management's Discussion and Analysis of Financial Condition and Results of Operations' in the Company's Annual Report on Form **10-K** for the fiscal year ended June **29, 2019**[148](index=148&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Avnet generated **$730.2 million** in cash from operating activities in fiscal **2020**, with **$1.44 billion** combined availability under credit facilities - Avnet generated **$730.2 million** in cash from operating activities in fiscal **2020**, an increase from **$591.1 million** in fiscal **2019**, driven by decreases in accounts receivable and inventories[149](index=149&type=chunk)[150](index=150&type=chunk) - The company repaid **$302.0 million** of notes and **$227.3 million** under the Securitization Program in fiscal **2020**, while receiving **$223.1 million** under the Credit Facility[151](index=151&type=chunk) - Capital expenditures decreased to **$73.5 million** in fiscal **2020** from **$122.7 million** in fiscal **2019**, primarily for warehouse, facilities, and **IT** hardware/software[152](index=152&type=chunk) - As of June **27, 2020**, Avnet had **$477.0 million** in cash and cash equivalents, with **$1.44 billion** combined availability under the Credit Facility and Securitization Program[163](index=163&type=chunk)[164](index=164&type=chunk) - The company has temporarily suspended share repurchases and expects to use cash for restructuring, integration, and other expenses related to operating cost-saving plans[168](index=168&type=chunk)[169](index=169&type=chunk) [Cash Flows](index=41&type=section&id=Cash%20Flows) Operating cash flows from continuing operations were **$730.2 million** in fiscal **2020**, driven by decreases in accounts receivable and inventories - Operating cash flows from continuing operations were **$730.2 million** in fiscal **2020**, up from **$591.1 million** in fiscal **2019**, driven by decreases in accounts receivable (**$221.5M**) and inventories (**$266.8M**)[149](index=149&type=chunk)[150](index=150&type=chunk) - In fiscal **2020**, the company repaid **$302.0 million** of notes and **$227.3 million** under the Securitization Program, while receiving **$223.1 million** under the Credit Facility[151](index=151&type=chunk) - Cash used for capital expenditures decreased to **$73.5 million** in fiscal **2020** from **$122.7 million** in fiscal **2019**[152](index=152&type=chunk) [Financing Transactions](index=43&type=section&id=Financing%20Transactions) Avnet uses diverse financing arrangements, including public debt, bank loans, and a securitization program, to fund operations - Avnet uses diverse financing arrangements, including public debt, bank loans, a revolving credit facility, and an accounts receivable securitization program, to fund operations and achieve lower funding costs[154](index=154&type=chunk) - The company sells certain trade accounts receivable on a non-recourse basis to third-party financial institutions through factoring agreements, accounted for as sales of receivables[156](index=156&type=chunk) [Covenants and Conditions](index=44&type=section&id=Covenants%20and%20Conditions) Avnet was in compliance with all covenants as of June **27, 2020**, with subsequent amendments to its Securitization Program and Credit Facility - Avnet was in compliance with all covenants of its Securitization Program and Credit Facility as of June **27, 2020**, which require maintaining minimum interest coverage and leverage ratios[158](index=158&type=chunk)[160](index=160&type=chunk) - Subsequent to fiscal year-end, the Securitization Program was amended to extend its term to July **30, 2021**, and eliminate certain financial covenants. The Credit Facility was also amended to temporarily adjust interest coverage and leverage covenants[159](index=159&type=chunk)[161](index=161&type=chunk) [Liquidity](index=44&type=section&id=Liquidity) Cash and cash equivalents were **$477.0 million** as of June **27, 2020**, with **$1.44 billion** combined availability under credit facilities - Cash and cash equivalents were **$477.0 million** as of June **27, 2020**, with **$411.2 million** held outside the **United States**[163](index=163&type=chunk) - Combined availability under the Credit Facility and Securitization Program was **$1.44 billion** as of June **27, 2020**[164](index=164&type=chunk) - The company generated **$730.2 million** in cash flows from operating activities in fiscal **2020**, typically generating cash during periods of weakening demand[165](index=165&type=chunk) - Avnet has temporarily suspended share repurchases and expects to use cash for restructuring and integration expenses related to operating cost-saving plans[168](index=168&type=chunk)[169](index=169&type=chunk) [Long-Term Contractual Obligations](index=47&type=section&id=Long-Term%20Contractual%20Obligations) This section details Avnet's long-term contractual obligations, including debt, interest expense, and operating lease obligations Long-Term Contractual Obligations (as of June 27, 2020, in millions) | Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |:------------------------------------|:-----------|:-----------------|:----------|:----------|:------------------| | Long-term debt obligations | $1,431.5 | $0.1 | $881.1 | $0.3 | $550.0 | | Interest expense on long-term debt | 210.4 | 56.7 | 82.7 | 50.9 | 20.1 | | Operating lease obligations | 375.5 | 61.5 | 97.9 | 63.9 | 152.2 | - The company had an estimated liability for income tax contingencies of **$116.5 million** as of June **27, 2020**, with **$1.7 million** expected to be paid within the next **12 months**[173](index=173&type=chunk) [Critical Accounting Policies](index=47&type=section&id=Critical%20Accounting%20Policies) Avnet's critical accounting policies involve significant judgments and estimates, particularly for inventory valuation and income taxes - Avnet's critical accounting policies involve significant judgments and estimates, particularly for valuation of inventories and accounting for income taxes[175](index=175&type=chunk)[176](index=176&type=chunk) [Valuation of Inventories](index=47&type=section&id=Valuation%20of%20Inventories) Inventories are recorded at the lower of cost or net realizable value, with regular evaluations for demand, obsolescence, and market prices - Inventories are recorded at the lower of cost or estimated net realizable value, with regular evaluations for expected customer demand, obsolescence, and market prices[176](index=176&type=chunk)[179](index=179&type=chunk) - Write-downs consider contractual provisions with suppliers for price protection and return rights, but actual net realizable values could differ from estimates[179](index=179&type=chunk) [Accounting for Income Taxes](index=49&type=section&id=Accounting%20for%20Income%20Taxes) Management judgment is required for determining income tax expense, unrecognized tax benefits, and measuring deferred tax assets and liabilities - Management judgment is required for determining income tax expense, unrecognized tax benefits, and measuring deferred tax assets and liabilities, including valuation allowances based on future taxable income[180](index=180&type=chunk) - Contingent liabilities are established for uncertain tax matters based on the likelihood of sustaining a tax benefit upon examination, with potential fluctuations in the effective tax rate[181](index=181&type=chunk) [Recently Issued Accounting Pronouncements](index=49&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Avnet is evaluating the effects of adopting new **ASU** pronouncements, with no material impact expected from some in fiscal **2021** - Avnet is evaluating the potential effects of adopting **ASU No. 2020-04** (Reference Rate Reform), **ASU No. 2020-01** (Equity Securities, Equity Method, Derivatives), and **ASU No. 2019-12** (Simplifying Income Taxes), all effective in fiscal **2022**[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - The company does not expect a material impact from the adoption of **ASU No. 2018-15** (Internal-Use Software) in fiscal **2021** or **ASU No. 2018-14** (Defined Benefit Plans Disclosure) in fiscal **2022**[188](index=188&type=chunk)[189](index=189&type=chunk) - Avnet is completing its evaluation of Topic **326** (Credit Losses) and does not expect a material impact on retained earnings or receivables upon adoption in fiscal **2021**[190](index=190&type=chunk) - Sales for fiscal **2020** decreased by **9.7%** (**8.7%** in constant currency) due to lower demand from the global industry-wide slowdown and the **COVID-19** pandemic[123](index=123&type=chunk)[129](index=129&type=chunk) - Gross profit margin for fiscal **2020** declined by **104 basis points** to **11.7%**, primarily due to unfavorable product, customer, and geographical market mix, and overall market conditions[124](index=124&type=chunk)[125](index=125&type=chunk)[132](index=132&type=chunk) - Avnet reported an operating loss of **$4.6 million** in fiscal **2020**, a **101.3%** decrease from fiscal **2019** operating income, driven by sales decline, gross profit margin reduction, and increased impairment expenses[126](index=126&type=chunk)[140](index=140&type=chunk) - The company incurred **$144.1 million** in goodwill and intangible asset impairment expenses and **$81.9 million** in restructuring, integration, and other expenses in fiscal **2020**[135](index=135&type=chunk)[106](index=106&type=chunk) - Net loss for fiscal **2020** was **$31.1 million**, or **$0.31 per diluted share**, compared to **net income of $176.3 million**, or **$1.59 per diluted share**, in fiscal **2019**[147](index=147&type=chunk) - Cash flows from operating activities increased to **

Avnet, Inc. (NASDAQ:AVT) Q4 2020 Earnings Conference Call August 6, 2020 4:30 PM ET Company Participants Joe Burke – Vice President, Treasurer and Investor Relations Phil Gallagher – interim Chief Executive Officer Tom Liguori – Chief Financial Officer Conference Call Participants Adam Tindle – Raymond James Matt Sheerin – Stifel Ruplu Bhattacharya – Bank of America Tim Yang – Citi Shawn Harrison – Loop Capital Joe Quatrochi – Wells Fargo William Stein – Truist Securities Nik Todorov – Longbow Research Oper ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 28, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File #1-4224 AVNET, INC. (Exact name of registrant as specified in its charter) New York 11-1890605 (State or other jurisdiction ...

Avnet, Inc. (NASDAQ:AVT) Q3 2020 Earnings Conference Call April 27, 2020 4:30 PM ET Company Participants Joe Burke - SVP, Treasury and IR Bill Amelio - CEO Tom Liguori - CFO Phil Gallagher - President, Electronic Components Conference Call Participants Adam Tindle - Raymond James Ruplu Bhattacharya - Bank of America Merrill Lynch William Stein - SunTrust Robinson Humphrey Matt Sheerin - Stifel Steven Fox - Fox Advisors Sean Harrison - Loop Capital Tim Yang - Citi Nikolay Todorov - Longbow Research Joe Quatr ...

Avnet, Inc. (NASDAQ:AVT) Q2 2020 Earnings Conference Call January 23, 2020 4:30 PM ET Company Participants Joe Burke - SVP, Treasury and IR Bill Amelio - CEO Tom Liguori - CFO Phil Gallagher - President, Electronic Components Conference Call Participants Adam Tindle - Raymond James Shawn Harrison - Longbow Research Ruplu Bhattacharya - Bank of America Merrill Lynch Matt Sheerin - Stifel Tim Yang - Citi Joe Quatrochi - Wells Fargo Steven Fox - Cross Research Mark Delaney - Goldman Sachs William Stein - SunTr ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 28, 2019 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File #1-4224 AVNET, INC. (Exact name of registrant as specified in its charter) New York 11-1890605 (State or other jurisdict ...

Financial Data and Key Metrics Changes - The company reported sales of $4.6 billion and adjusted EPS of $0.60 for Q1 2020, which were in line with guidance, but down 9% year-over-year [6][21] - Gross margin declined by 76 basis points year-over-year to 11.8%, primarily due to lower sales and margins at Farnell [21] - SG&A expenses decreased by $19 million year-over-year, contributing to cash flow generation of $196 million in the quarter [21][26] Business Line Data and Key Metrics Changes - Electronic Components revenue was $4.3 billion, down approximately 1% quarter-over-quarter, with operating margins at 2.6%, compared to 3.4% a year ago [11][22] - Farnell reported revenues of $336 million, an 11% decline year-over-year, with operating margins of 6.5% [12][24] - The Americas region saw revenue of $1.2 billion, down 4% year-over-year and sequentially, while EMEA revenue was $1.5 billion, down 14% year-over-year [23][24] Market Data and Key Metrics Changes - PMI data across the United States, Europe, and China are all below 50, indicating industrial contraction [6] - Asia showed signs of stabilization with a sequential revenue increase of 9% to $1.9 billion, although still 7.6% lower than the prior year [24] - The company noted mid to long-term opportunities in retail and healthcare, with positive trends in defense and aerospace, while industrial and automotive markets remain soft [7][11] Company Strategy and Development Direction - The company is transitioning to a technology solutions provider, focusing on higher-margin segments and expanding digital capabilities [9][10] - A strategic shift in the relationship with Texas Instruments is underway, with plans to replace lost revenue by driving sales from existing suppliers and seeking new suppliers [9][10][28] - The five areas of focus for the company include amplifying Electronics Components distribution, scaling higher-margin segments, expanding digital capabilities, leveraging the ecosystem for growth, and driving continuous improvement [10][12] Management's Comments on Operating Environment and Future Outlook - Management anticipates that the current market correction will continue into 2020, but remains optimistic about long-term growth prospects [8][20] - The company is committed to reducing operating expenses and improving efficiencies, with a target of $50 million in cost reductions [19][26] - Management expects operating margins to improve as macro conditions stabilize, with a target of 2.1% to 2.6% total operating margins by summer 2020 [31] Other Important Information - The company is pursuing an acquisition of Witekio to enhance its IoT solutions and expand its ecosystem [16][18] - The transition with Texas Instruments is expected to be completed by December 31, 2020, with a focus on replacing gross profit dollars through new business [28] Q&A Session Summary Question: Transition with Texas Instruments - Management indicated that the transition will be completed by December 2020, with a linear revenue exit expected throughout the year [35][36] Question: TI Strategy Acceleration - Management clarified that the decision by TI to accelerate their direct sales strategy was not due to performance issues with Avnet [40] Question: Operating Margins Dynamics - Management explained that the decline in operating margins was influenced by a shift towards lower-margin regions and pricing pressures [42] Question: Filling the Revenue Gap Left by TI - Management outlined a threefold strategy to fill the revenue gap, including new designs, switching commodity components, and capturing share from other suppliers [46][47] Question: Working Capital Impact from TI Revenue Exit - Management noted that the exit of TI revenue would result in approximately $300 million in cash flow associated with receivables [55] Question: December Quarter Guidance - Management indicated that the guidance assumes stabilization in Farnell margins and continued pricing pressure in the Americas and EMEA [58]