Avnet(AVT) - 2019 Q4 - Annual Report

PART I Item 1. Business Avnet, Inc. is a global technology solutions provider offering design, product, marketing, and supply chain expertise to 2.1 million customers in over 140 countries through its EC and Farnell groups - Avnet, Inc. is a global technology solutions company, founded in 1921, serving 2.1 million customers in over 140 countries with expertise across the electronic product lifecycle[5] - Strategic acquisitions, including Premier Farnell and Softweb Solutions, have enhanced capabilities in design, supply chain, and IoT solutions[6] - Avnet operates through two primary groups: Electronic Components (EC) for high-volume customers and Farnell for lower-volume prototyping needs[8][11][16] Major Product Sales (Fiscal Years 2017-2019) | Product Category | June 29, 2019 ($ Millions) | June 30, 2018 ($ Millions) | July 1, 2017 ($ Millions) | |:-----------------------------------|:---------------------------|:---------------------------|:--------------------------| | Semiconductors | $14,973.3 | $14,890.9 | $13,537.9 | | Interconnect, passive & electromechanical (IP&E) | 3,516.0 | 3,227.0 | 2,736.1 | | Computers | 533.1 | 461.9 | 504.2 | | Other | 496.2 | 457.1 | 661.8 | | Total Sales | $19,518.6 | $19,036.9 | $17,440.0 | - Texas Instruments products represented approximately 10% of consolidated sales in fiscal 2019, and 11% in fiscal 2018 and 2017[17] - The electronic components industry is highly competitive, with key competitors including Arrow Electronics, Future Electronics, and Digi-Key Electronics[19] - Avnet's business is not materially impacted by seasonality, aside from regional sales shifts from Asia to Americas and EMEA in the second half of the fiscal year[22] - The company employed approximately 15,500 individuals as of June 29, 2019, a slight increase from the prior fiscal year[23] Item 1A. Risk Factors Avnet faces diverse risks including economic and geopolitical uncertainties, intense competition, supply chain dependencies, international operational challenges, and threats to information systems and data security - Economic weakness and geopolitical uncertainty, including Brexit, could negatively impact sales, margins, earnings, and increase foreign currency volatility[31] - The highly competitive market, rapid technological advances, and global distributors pose risks of gross profit margin deterioration[32][33] - Semiconductor sales constituted approximately 77% of consolidated sales in fiscal 2019, making the company highly vulnerable to industry fluctuations[34] - Dependence on key suppliers, with Texas Instruments representing approximately 10% of consolidated billings in fiscal 2019, creates risk from contract termination or modification[35] - International operations, comprising 75% of sales in fiscal 2019, expose Avnet to foreign currency fluctuations, trade restrictions, complex tax laws, and political instability[36][37] - Failures in internal information systems, IT project implementation challenges, or unsuccessful acquisition integration could disrupt operations and negatively impact financial results[38][39][40] - Disruptions to global logistics, including distribution centers and third-party transportation, could cause shipment delays and adverse business impacts[41] - Cyber-attacks, security breaches, or data privacy incidents could lead to sales losses, increased costs, significant liability, and reputational damage[42] - Rapid technological change or unexpected customer order cancellations could lead to inventory value declines, adversely affecting business despite supplier protections[43][44] - Significant customer or supplier defaults on accounts receivable, or the loss of major customers, could negatively impact working capital and financial condition[45] - Inability to attract and retain key employees or the loss of experienced workers could adversely impact results and strategic initiatives[47] - Changes in tax rules, interpretations, or unfavorable tax audits, particularly from the Tax Cuts and Jobs Act, could adversely affect effective tax rates and financial results[51] - Failure to maintain effective internal controls could result in inaccurate financial reporting, fraud, and harm to the company's brand and stock price[52][53] Item 1B. Unresolved Staff Comments The company reports no unresolved comments from the SEC staff regarding its previous filings - The company has no unresolved staff comments[55] Item 2. Properties Avnet owns and leases approximately 7 million square feet of global space, with key warehousing and value-added operations in the US, Belgium, UK, and Germany - Avnet owns approximately 2.1 million square feet and leases 4.9 million square feet of space globally, with about 26% located in the United States[56] Key Facilities Summary | Location | Approximate Footage | 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 | 330,000 | Owned | Current Farnell warehousing and value-added operations | | Leeds, United Kingdom | 360,000 | Leased | Future Farnell warehousing and value-added operations | | Poing, Germany | 300,000 | Owned | EC warehousing and value-added operations | | Chandler, Arizona | 150,000 | Leased | EC warehousing, integration 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 | Item 3. Legal Proceedings Avnet is involved in various legal proceedings and investigations, which management believes will not materially affect financial position or liquidity, but could impact results in a single reporting period - Avnet is subject to various legal proceedings and investigations concerning governmental laws and regulations, including import/export and environmental matters[58] - Management anticipates these matters will not materially affect financial position or liquidity, but could be material to results of operations in a single reporting period[58] Item 4. Mine Safety Disclosures This item is not applicable to Avnet, as the company does not have operations subject to mine safety disclosures - This item is not applicable[59] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Avnet's common stock trades on Nasdaq under AVT, with dividends determined by the Board and an active share repurchase program with $205.4 million remaining as of June 29, 2019 - Avnet's common stock is listed on the Nasdaq Global Select Market under the symbol AVT[60] - As of July 26, 2019, there were 1,738 registered holders of Avnet's common stock[62] - The Board of Directors determines future dividends based on financial condition, operating results, and capital requirements, subject to potential debt facility restrictions[61] - A $2.45 billion share repurchase program was authorized in August 2018, with $205.4 million remaining available as of June 29, 2019[68][147] Issuer Purchases of Equity Securities (Q4 Fiscal 2019) | Period | Total Number of Shares Purchased | Average Price per Share | Approximate Dollar of Shares That May Yet Be Purchased under the Plans or Programs ($) | |:--------------------|:---------------------------------|:------------------------|:---------------------------------------------------------------------------------------| | April 1 – April 26 | 571,322 | $46.16 | $296,530,000 | | April 29 – May 24 | 901,400 | $43.90 | $256,955,000 | | May 27 – June 28 | 1,199,579 | $42.95 | $205,429,000 | Cumulative 5-Year Total Return (June 2014 - June 2019) | Index | 6/28/2014 | 6/27/2015 | 7/2/2016 | 7/1/2017 | 6/30/2018 | 6/29/2019 | |:-------------------|:----------|:----------|:---------|:---------|:----------|:----------| | Avnet, Inc. | $100 | $97.69 | $94.98 | $93.24 | $104.75 | $112.60 | | Nasdaq Composite | 100 | 114.44 | 112.51 | 144.35 | 178.42 | 192.30 | | Peer Group | 100 | 92.18 | 97.84 | 129.12 | 117.09 | 122.06 | Item 6. Selected Financial Data This section presents a five-year summary of Avnet's selected financial data, including statements of operations, balance sheet items, and key ratios, noting fluctuations and significant expenses Consolidated Statements of Operations (Selected Data, FY2015-2019) | Metric | June 29, 2019 ($ Millions) | June 30, 2018 ($ Millions) | July 1, 2017 ($ Millions) | July 2, 2016 ($ Millions) | June 27, 2015 ($ Millions) | |:-------------------------------------|:---------------------------|:---------------------------|:--------------------------|:--------------------------|:---------------------------| | Sales | $19,518.6 | $19,036.9 | $17,440.0 | $16,740.6 | $17,655.3 | | Gross profit | 2,486.1 | 2,527.2 | 2,369.4 | 2,077.9 | 2,210.1 | | Operating income | 365.9 | 209.2 | 443.7 | 565.1 | 646.1 | | Income tax expense | 62.2 | 288.0 | 47.1 | 87.1 | 86.1 | | Income (loss) from continuing operations | 180.1 | (142.9) | 263.4 | 390.9 | 485.4 | | Income (loss) from discontinued operations | (3.8) | (13.5) | 261.9 | 115.6 | 86.5 | | Net income (loss) | 176.3 | (156.4) | 525.3 | 506.5 | 571.9 | | Diluted EPS | $1.59 | $(1.30) | $4.08 | $3.80 | $4.12 | | Cash dividends per share | $0.80 | $0.74 | $0.70 | $0.68 | $0.64 | Consolidated Balance Sheets (Selected Data, FY2015-2019) | Metric | June 29, 2019 ($ Millions) | June 30, 2018 ($ Millions) | July 1, 2017 ($ Millions) | July 2, 2016 ($ Millions) | June 27, 2015 ($ Millions) | |:-----------------------|:---------------------------|:---------------------------|:--------------------------|:--------------------------|:---------------------------| | Working capital | $4,297.8 | $4,641.1 | $5,080.0 | $4,061.5 | $4,312.6 | | Total assets | 8,564.6 | 9,596.8 | 9,699.6 | 11,239.8 | 10,800.0 | | Long-term debt | 1,419.9 | 1,489.2 | 1,729.2 | 1,339.2 | 1,646.5 | | Shareholders' equity | 4,140.5 | 4,685.1 | 5,182.1 | 4,691.3 | 4,685.0 | Key Financial Ratios (FY2015-2019) | Ratio | June 29, 2019 | June 30, 2018 | July 1, 2017 | July 2, 2016 | June 27, 2015 | |:-------------------------------------|:--------------|:--------------|:-------------|:-------------|:--------------| | Operating income as a percentage of sales | 1.9% | 1.1% | 2.5% | 3.4% | 3.7% | | Net income (loss) as a percentage of sales | 0.9% | (0.8)% | 3.0% | 3.0% | 3.2% | | Quick ratio | 1.4:1 | 1.4:1 | 1.8:1 | 0.8:1 | 0.9:1 | | Current ratio | 2.7:1 | 2.6:1 | 3.1:1 | 1.8:1 | 2.0:1 | | Total debt to capital ratio | 29.4% | 26.1% | 25.6% | 34.7% | 29.7% | Summary of Quarterly Results (FY2018-2019) | Metric (Millions) | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Fiscal Year | |:------------------|:--------------|:---------------|:--------------|:---------------|:------------| | 2019 | | | | | | | Sales | $5,089.9 | $5,049.0 | $4,698.8 | $4,680.9 | $19,518.6 | | Gross profit | 636.8 | 630.0 | 624.2 | 595.1 | 2,486.1 | | Net income (loss) | 83.7 | 36.4 | 88.0 | (31.8) | 176.3 | | Diluted EPS | 0.72 | 0.33 | 0.81 | (0.30) | 1.59 | | 2018 | | | | | | | Sales | $4,660.9 | $4,521.6 | $4,795.1 | $5,059.2 | $19,036.9 | | Gross profit | 612.6 | 602.5 | 653.5 | 658.6 | 2,527.2 | | Net income (loss) | 58.3 | 46.7 | (320.1) | 58.6 | (156.4) |\ | Diluted EPS | 0.47 | 0.39 | (2.68) | 0.50 | (1.30) | - Fiscal 2019 included $108.1 million in restructuring, integration, and other expenses, and $137.4 million in goodwill impairment expense[74][76] - Fiscal 2018 included $145.1 million in restructuring, integration, and other expenses, $181.4 million in goodwill impairment expense, and a $230.0 million one-time mandatory deemed repatriation tax expense[74][76] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Avnet's financial performance over three fiscal years, detailing sales, profitability, and liquidity, highlighting a 2.5% sales increase in fiscal 2019, improved operating income, and strong operating cash flows - Sales for fiscal 2019 increased by 2.5% to $19.52 billion from $19.04 billion in fiscal 2018, representing a 4.4% increase in constant currency[84][88] - EC sales in fiscal 2019 increased by 2.9% to $18.06 billion (4.8% in constant currency), while Farnell sales decreased by 2.3% to $1.46 billion due to macroeconomic uncertainties[84][89][90] - Gross profit margin decreased by 54 basis points to 12.7% in fiscal 2019, driven by industry conditions and a higher sales mix from the Asia region in EC[84][94] - Operating income increased by 74.9% to $365.9 million in fiscal 2019 from $209.2 million in fiscal 2018, with adjusted operating income rising to $695.7 million (3.6% of sales) due to cost management[84][108] - Goodwill impairment expense of $137.4 million was recorded in fiscal 2019 for EC reporting units in the Americas and Asia, following a $181.4 million impairment in fiscal 2018[99][266][268] - Restructuring, integration, and other expenses totaled $108.1 million in fiscal 2019, including $95.5 million for restructuring costs, projected to generate $50.0 million in incremental annualized operating cost savings[74][102] - Net income in fiscal 2019 was $176.3 million ($1.59 diluted EPS), a significant improvement from a net loss of $156.4 million ($-1.30 diluted EPS) in fiscal 2018[122] - Cash flows from operating activities increased to $591.1 million in fiscal 2019 from $253.5 million in fiscal 2018, primarily due to decreases in accounts receivable and inventories[123] - As of June 29, 2019, the company held $546.1 million in cash and cash equivalents, with $1.52 billion combined availability under its Credit Facility and Securitization Program[141][142] Long-Term Contractual Obligations (as of June 29, 2019) | Contractual Obligations | Total ($ Millions) | Less than 1 year ($ Millions) | 1-3 years ($ Millions) | 3-5 years ($ Millions) | More than 5 years ($ Millions) | |:---------------------------------|:-------------------|:------------------------------|:-----------------------|:-----------------------|:-------------------------------| | Long-term debt obligations | $1,729.3 | $300.6 | $528.7 | $350.0 | $550.0 | | Interest expense on long-term debt obligations | 289.7 | 78.0 | 108.1 | 58.0 | 45.6 | | Operating lease obligations | 303.8 | 68.7 | 94.3 | 55.6 | 85.2 | - Critical accounting policies encompass inventory valuation (lower of cost or net realizable value) and income tax accounting (deferred tax assets/liabilities, unrecognized tax benefits)[154][155][156][157] Item 7A. Quantitative and Qualitative Disclosures About Market Risk Avnet manages market risks, including interest rate and foreign currency fluctuations, through financial arrangements, natural hedging, and derivative instruments - Avnet utilizes financial arrangements to mitigate earnings and cash flow volatility arising from interest rate and foreign currency exchange rate changes[166] Scheduled Maturities of Debt (as of June 29, 2019) | Liability Type | 2020 ($ Millions) | 2021 ($ Millions) | 2022 ($ Millions) | Fiscal 2023 ($ Millions) | 2024 ($ Millions) | Thereafter ($ Millions) | Total ($ Millions) | |:-------------------|:------------------|:------------------|:------------------|:-------------------------|:------------------|:------------------------|:-------------------| | Fixed rate debt | $300.4 | $0.2 | $300.1 | $350.0 | — | $550.0 | $1,500.7 | | Floating rate debt | $0.2 | $228.4 | — | — | — | — | $228.6 | Carrying and Fair Value of Debt (as of June 29, 2019 and June 30, 2018) | Debt Type | Carrying Value at June 29, 2019 ($ Millions) | Fair Value at June 29, 2019 ($ Millions) | Carrying Value at June 30, 2018 ($ Millions) | Fair Value at June 30, 2018 ($ Millions) | |:-------------------|:---------------------------------------------|:-----------------------------------------|:---------------------------------------------|:-----------------------------------------| | Fixed rate debt | $1,500.7 | $1,565.2 | $1,500.8 | $1,520.4 | | Average interest rate | 4.8% | | 4.8% | | | Floating rate debt | $228.6 | $228.4 | $165.0 | $165.0 | | Average interest rate | 3.2% | | 2.7% | | - Foreign currency exposure from international transactions is managed via natural hedging and derivative financial instruments, primarily forward foreign currency exchange contracts with maturities typically under sixty days[169] Item 8. Financial Statements and Supplementary Data This item refers to the consolidated financial statements and supplementary data, which are detailed under Item 15 of this report - The financial statements and supplementary data are listed under Item 15 of this Report[171] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with accountants regarding accounting and financial disclosure - There are no changes in and disagreements with accountants on accounting and financial disclosure[171] Item 9A. Controls and Procedures Avnet's management, including the CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of June 29, 2019 - Management, including the CEO and CFO, concluded that Avnet's disclosure controls and procedures were effective as of June 29, 2019[172] - Management assessed and concluded that the company maintained effective internal control over financial reporting as of June 29, 2019, based on the 2013 COSO framework[173] - No material changes to the company's internal control over financial reporting occurred during the fourth quarter of fiscal 2019[175] Item 9B. Other Information This item indicates that no other information is required to be reported - This item is not applicable[175] PART III Item 10. Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019 - Information is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019[177] Item 11. Executive Compensation Information for this item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019 - Information is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019[178] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019 - Information is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019[179] Item 13. Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Shareholders anticipated on November 19, 2019 - Information is incorporated by reference from the definitive proxy statement for the Annual Meeting of Shareholders anticipated on November 19, 2019[180] Item 14. Principal Accounting Fees and Services Information for this item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019 - Information is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders anticipated on November 19, 2019[181] PART IV Item 15. Exhibits and Financial Statement Schedules This section lists all documents filed, including consolidated financial statements, financial statement schedules, and a comprehensive list of exhibits, with detailed notes and auditor reports - This section includes the Consolidated Financial Statements, Financial Statement Schedule II (Valuation and Qualifying Accounts), and a list of all exhibits[184] - The Consolidated Financial Statements include the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive Income, Shareholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[184] - KPMG LLP, the company's auditor since 2002, provided opinions on the consolidated financial statements and internal control over financial reporting[189][193] 1. Consolidated Financial Statements This subsection presents Avnet's audited consolidated financial statements for fiscal years 2017-2019, including balance sheets, statements of operations, comprehensive income, shareholders' equity, cash flows, and detailed notes on accounting policies and segment information Consolidated Balance Sheets (as of June 29, 2019 and June 30, 2018) | ASSETS | 2019 (Thousands) | 2018 (Thousands) | |:--------------------------------------------------------------------------------|:-----------------|:-----------------| | Cash and cash equivalents | $546,105 | $621,125 | | Receivables, less allowances | 3,168,369 | 3,641,139 | | Inventories | 3,008,424 | 3,141,822 | | Prepaid and other current assets | 153,438 | 206,513 | | Total current assets | 6,876,336 | 7,610,599 | | Property, plant and equipment, net | 452,171 | 522,909 | | Goodwill | 876,728 | 980,872 | | Intangible assets, net | 143,520 | 219,913 | | Other assets | 215,801 | 262,552 | | Total assets | $8,564,556 | $9,596,845 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Current liabilities: | | | | Short-term debt | $300,538 | $165,380 | | Accounts payable | 1,864,342 | 2,269,478 | | Accrued expenses and other | 413,696 | 534,603 | | Total current liabilities | 2,578,576 | 2,969,461 | | Long-term debt | 1,419,922 | 1,489,219 | | Other liabilities | 425,585 | 453,084 | | Total liabilities | 4,424,083 | 4,911,764 | | Shareholders' equity: | | | | Common stock | 104,038 | 115,825 | | Additional paid-in capital | 1,573,005 | 1,528,713 | | Retained earnings | 2,767,469 | 3,235,894 | | Accumulated other comprehensive loss | (304,039) | (195,351) | | Total shareholders' equity | 4,140,473 | 4,685,081 | | Total liabilities and shareholders' equity | $8,564,556 | $9,596,845 | Consolidated Statements of Operations (Fiscal Years 2017-2019) | Metric | June 29, 2019 (Thousands) | June 30, 2018 (Thousands) | July 1, 2017 (Thousands) | |:---------------------------------------------|:--------------------------|:--------------------------|:-------------------------| | Sales | $19,518,592 | $19,036,892 | $17,439,963 | | Cost of sales | 17,032,490 | 16,509,708 | 15,070,521 | | Gross profit | 2,486,102 | 2,527,184 | 2,369,442 | | Selling, general and administrative expenses | 1,874,651 | 1,991,401 | 1,788,330 | | Goodwill impairment expense | 137,396 | 181,440 | — | | Restructuring, integration and other expenses | 108,144 | 145,125 | 137,415 | | Operating income | 365,911 | 209,218 | 443,697 | | Other income (expense), net | 11,231 | 28,606 | (33,717) | | Interest and other financing expenses, net | (134,874) | (92,747) | (99,576) | | Income from continuing operations before taxes | 242,268 | 145,077 | 310,404 | | Income tax expense | 62,157 | 287,966 | 47,053 | | Income (loss) from continuing operations, net of tax | 180,111 | (142,889) | 263,351 | | Income (loss) from discontinued operations, net of tax | (3,774) | (13,535) | 261,927 | | Net income (loss) | $176,337 | $(156,424) | $525,278 | | Diluted earnings (loss) per share | $1.59 | $(1.30) | $4.08 | Consolidated Statements of Cash Flows (Fiscal Years 2017-2019) | Cash Flow Activity | June 29, 2019 (Thousands) | June 30, 2018 (Thousands) | July 1, 2017 (Thousands) | |:---------------------------------------------------------|:--------------------------|:--------------------------|:-------------------------| | Net cash flows provided by operating activities - continuing operations | $591,054 | $253,485 | $221,047 | | Net cash flows used for operating activities - discontinued operations | (56,284) | — | (589,738) | | Net cash flows provided (used) by operating activities | 534,770 | 253,485 | (368,691) | | Net cash flows used for financing activities - continuing operations | (582,676) | (541,893) | (1,191,591) | | Net cash flows provided by financing activities - discontinued operations | — | — | 3,447 | | Net cash flows used for financing activities | (582,676) | (541,893) | (1,188,144) | | Net cash flows used for investing activities - continuing operations | (148,685) | (164,474) | (904,485) | | Net cash flows provided by investing activities - discontinued operations | 123,473 | 236,205 | 2,242,959 | | Net cash flows (used) provided by investing activities | (25,212) | 71,731 | 1,338,474 | | Effect of currency exchange rate changes on cash and cash equivalents | (1,902) | 1,418 | 23,267 | | Cash and cash equivalents at end of period | $546,105 | $621,125 | $836,384 | - The company adopted Topic 606, Revenue from Contracts with Customers, on July 1, 2018, using the modified retrospective method, with no material impact on consolidated financial statements[190][232][234] - Avnet completed the sale of its Technology Solutions (TS) business in February 2017, with financial impacts classified as discontinued operations across all presented periods[248] - Goodwill impairment expense of $137.4 million was recorded in fiscal 2019, primarily due to lower operating results and reduced future expectations in the EC operating group's Americas and Asia regions[266] - Total debt (short-term and long-term) was $1.72 billion at June 29, 2019, with a fair value of $1.78 billion[278] - The effective tax rate on income from continuing operations before income taxes was 25.7% in fiscal 2019, significantly lower than 198.5% in fiscal 2018, primarily due to reduced transition tax expense and goodwill impairment[115][287] - The company changed its assertion on unremitted foreign earnings, now expecting future repatriation and recording deferred tax liabilities accordingly[286] - Unrecognized tax benefits totaled $147.2 million as of June 29, 2019, with an estimated $38.1 million expected to be settled within the next twelve months[290][291] - Stock-based compensation expense totaled $30.1 million in fiscal 2019, covering stock options, restricted stock units, and performance share units[309] Segment Sales and Operating Income (Fiscal Years 2017-2019) | Metric (Millions) | June 29, 2019 | June 30, 2018 | July 1, 2017 | |:------------------|:--------------|:--------------|:-------------| | Sales: | | | | | Electronic Components | $18,060.3 | $17,543.6 | $16,474.1 | | Farnell | 1,458.3 | 1,493.3 | 965.9 | | Total Sales | $19,518.6 | $19,036.9 | $17,440.0| | Operating income: | | | | | Electronic Components | $614.9 | $587.3 | $661.0 | | Farnell | 159.3 | 151.9 | 99.8 | | Corporate | (78.5) | (111.5) | (125.2) | | Restructuring, integration and other expenses | (108.1) | (145.1) | (137.4) | | Goodwill impairment | (137.4) | (181.4) | — | | Amortization of acquired intangible assets and other | (84.3) | (91.9) | (54.5) | | Total Operating Income | $365.9 | $209.2 | $443.7 | 2. Financial Statement Schedule This section includes Schedule II, detailing Valuation and Qualifying Accounts for fiscal years 2017-2019, with breakdowns of changes in allowance for doubtful accounts and valuation allowance on tax loss carry-forwards Schedule II: Valuation and Qualifying Accounts (Fiscal Years 2017-2019) | Account Description | Period Start ($ Thousands) | Additions (Income) ($ Thousands) | Deductions ($ Thousands) | Period End ($ Thousands) | |:---------------------------------------------------|:---------------------------|:---------------------------------|:-------------------------|:-------------------------| | Fiscal 2019 | | | | | | Allowance for doubtful accounts | $48,959 | $10,360 | $(5,820) | $53,499 | | Valuation allowance on tax loss carry-forwards | 239,483 | (5,274) | (2,746) | 231,463 | | Fiscal 2018 | | | | | | Allowance for doubtful accounts | 47,272 | 6,033 | (4,346) | 48,959 | | Valuation allowance on tax loss carry-forwards | 241,687 | (4,704) | 2,500 | 239,483 | | Fiscal 2017 | | | | | | Allowance for doubtful accounts | 27,448 | 10,741 | 14,361 | 47,272 | | Valuation allowance on tax loss carry-forwards | 63,694 | 4,477 | 173,516 | 241,687 | - The reduction in valuation allowance on tax loss carry-forwards in fiscal 2019 primarily reflects a release due to changes in management's expectation of realizing certain tax assets[342] 3. Exhibits This section provides a comprehensive index of exhibits filed with the Form 10-K, including various agreements, corporate documents, stock compensation plans, and certifications - Exhibits include the Interest Purchase Agreement for the TS business sale, corporate governance documents (Certificate of Incorporation, By-laws), and indentures for debt securities[344] - Executive compensation plans, including letter agreements, employment agreements, change of control agreements, and various stock compensation plans, are filed as exhibits[344][345] - Bank agreements, including the Securitization Program and the Amended and Restated Credit Agreement, outline the company's financing arrangements[346] - Certifications from the CEO and CFO, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are included as exhibits[346]