Document and Entity Information
Document and Entity Information Document - shares | 9 Months Ended | |
Mar. 31, 2018 | Apr. 19, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AVNET INC | |
Entity Central Index Key | 8,858 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Current Fiscal Year End Date | --06-30 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 117,981,593 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2018 | Jul. 01, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 430,065 | $ 836,384 |
Marketable securities | 75,051 | 281,326 |
Receivables, less allowances of $50,821 and $47,272, respectively | 3,552,531 | 3,337,624 |
Inventories | 3,261,897 | 2,824,709 |
Prepaid and other current assets | 305,067 | 253,765 |
Total current assets | 7,624,611 | 7,533,808 |
Property, plant and equipment, net | 520,922 | 519,575 |
Goodwill | 1,026,542 | 1,148,347 |
Intangible assets, net | 258,267 | 277,291 |
Other assets | 281,588 | 220,568 |
Total assets | 9,711,930 | 9,699,589 |
Current liabilities: | ||
Short-term debt | 101,979 | 50,113 |
Accounts payable | 2,091,082 | 1,861,635 |
Accrued expenses and other | 576,385 | 542,023 |
Total current liabilities | 2,769,446 | 2,453,771 |
Long-term debt | 1,488,706 | 1,729,212 |
Other liabilities | 498,957 | 334,538 |
Total liabilities | 4,757,109 | 4,517,521 |
Commitments and contingencies (Note 7) | ||
Shareholders' equity: | ||
Common stock $1.00 par; authorized 300,000,000 shares; issued 118,630,784 shares and 123,080,952 shares, respectively | 118,631 | 123,081 |
Additional paid-in capital | 1,519,975 | 1,503,490 |
Retained earnings | 3,313,914 | 3,799,363 |
Accumulated other comprehensive income (loss) | 2,301 | (243,866) |
Total shareholders' equity | 4,954,821 | 5,182,068 |
Total liabilities and shareholders' equity | $ 9,711,930 | $ 9,699,589 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Jul. 01, 2017 |
Current assets: | ||
Allowance for doubtful accounts receivable, current (in dollars) | $ 50,821 | $ 47,272 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 1 | $ 1 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares, issued | 118,630,784 | 123,080,952 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Income Statement [Abstract] | ||||
Sales | $ 4,795,093 | $ 4,441,896 | $ 13,977,672 | $ 12,833,559 |
Cost of sales | 4,141,556 | 3,811,910 | 12,109,120 | 11,094,733 |
Gross profit | 653,537 | 629,986 | 1,868,552 | 1,738,826 |
Selling, general and administrative expenses | 501,378 | 480,190 | 1,476,263 | 1,275,417 |
Goodwill impairment expense (Note 4) | 181,440 | 181,440 | ||
Restructuring, integration and other expenses | 25,120 | 35,513 | 108,277 | 95,382 |
Operating (loss) income | (54,401) | 114,283 | 102,572 | 368,027 |
Other income (expense), net | 8,384 | 19,439 | 24,725 | (30,809) |
Interest expense | (26,046) | (27,534) | (75,746) | (81,518) |
Income (loss) from continuing operations before taxes | (72,063) | 106,188 | 51,551 | 255,700 |
Income tax expense | 243,541 | 16,268 | 252,179 | 65,627 |
Income (loss) from continuing operations, net of tax | (315,604) | 89,920 | (200,628) | 190,073 |
Income (loss) from discontinued operations, net of tax | (4,462) | 181,851 | (14,411) | 253,759 |
Net (loss) income | $ (320,066) | $ 271,771 | $ (215,039) | $ 443,832 |
Earnings (Loss) per share: | ||||
Basic earnings (loss) per share-continuing operations | $ (2.64) | $ 0.70 | $ (1.66) | $ 1.48 |
Basic earnings (loss) per share-discontinued operations | (0.04) | 1.42 | (0.12) | 1.98 |
Basic earnings (loss) per share | (2.68) | 2.12 | (1.78) | 3.46 |
Diluted earnings (loss) per share-continuing operations | (2.64) | 0.69 | (1.66) | 1.46 |
Diluted earnings (loss) per share-discontinued operations | (0.04) | 1.41 | (0.12) | 1.95 |
Diluted earnings (loss) per share | $ (2.68) | $ 2.10 | $ (1.78) | $ 3.41 |
Shares used to compute earnings per share: | ||||
Basic | 119,601 | 128,487 | 120,895 | 127,973 |
Diluted | 119,601 | 129,432 | 120,895 | 129,847 |
Cash dividends paid per common share | $ 0.19 | $ 0.18 | $ 0.55 | $ 0.52 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (320,066) | $ 271,771 | $ (215,039) | $ 443,832 |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation and other | 114,073 | 92,702 | 230,857 | (58,300) |
Impact of TS business divestiture (Note 3) | 181,465 | 181,465 | ||
Pension adjustments, net | 5,121 | 2,102 | 15,310 | 5,904 |
Total comprehensive (loss) income | $ (200,872) | $ 548,040 | $ 31,128 | $ 572,901 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2018 | Apr. 01, 2017 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (215,039) | $ 443,832 |
Less: Income (loss) from discontinued operations, net of tax | (14,411) | 253,759 |
Income (loss) from continuing operations | (200,628) | 190,073 |
Non-cash and other reconciling items: | ||
Depreciation | 114,111 | 63,800 |
Amortization | 69,860 | 34,185 |
Deferred income taxes | (74,126) | (15,562) |
Stock-based compensation | 18,427 | 41,778 |
Goodwill impairment expense | 181,440 | |
Other, net | 30,305 | 10,563 |
Changes in (net of effects from businesses acquired): | ||
Receivables | (98,147) | (335,617) |
Inventories | (337,939) | 86,103 |
Accounts payable | 180,732 | 86,120 |
Accrued expenses and other, net | 133,837 | (20,977) |
Net cash flows provided by operating activities - continuing operations | 17,872 | 140,466 |
Net cash flows used by operating activities - discontinued operations | (325,096) | |
Net cash flows provided (used) by operating activities | 17,872 | (184,630) |
Cash flows from financing activities: | ||
Issuance of notes, net of issuance costs | 296,374 | |
Repayment of notes | (530,800) | |
Repayments under accounts receivable securitization, net | (47,000) | (492,000) |
Repayments under senior unsecured credit facility, net | (99,971) | (150,000) |
Repayments under bank credit facilities and other debt, net | (44,293) | (18,386) |
Borrowings of term loans | 530,756 | |
Repayments of term loans | (511,358) | |
Repurchases of common stock | (209,466) | (124,598) |
Dividends paid on common stock | (66,198) | (66,477) |
Other, net | (2,738) | 15,838 |
Net cash flows used for financing activities - continuing operations | (469,666) | (1,050,651) |
Net cash flows provided by financing activities - discontinued operations | 3,447 | |
Net cash flows used for financing activities | (469,666) | (1,047,204) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (112,217) | (107,960) |
Acquisitions of businesses, net of cash acquired (Note 2) | (18,621) | (801,164) |
Other, net | 7,020 | 18,404 |
Net cash flows used for investing activities - continuing operations | (123,818) | (890,720) |
Net cash flows provided by investing activities - discontinued operations | 153,933 | 2,235,384 |
Net cash flows provided by investing activities | 30,115 | 1,344,664 |
Effect of currency exchange rate changes on cash and cash equivalents | 15,360 | (15,075) |
Cash and cash equivalents: | ||
Net change in cash and cash equivalents | (406,319) | 97,755 |
Cash and cash equivalents at beginning of period | 836,384 | 1,031,478 |
Cash and cash equivalents at end of period | $ 430,065 | $ 1,129,233 |
Basis of presentation and new a
Basis of presentation and new accounting pronouncements | 9 Months Ended |
Mar. 31, 2018 | |
Basis of presentation and new accounting pronouncements | |
Basis of presentation and new accounting pronouncements | 1. Basis of presentation and new In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments necessary to present fairly Avnet, Inc.’s and its consolidated subsidiaries’ (collectively, the “Company” or “Avnet”) financial position, results of operations, comprehensive income (loss) and cash flows. All such adjustments are of a normal recurring nature. The preparation of financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results may differ from these estimates. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017. Certain reclassifications have been made in prior periods and the fiscal year to date current periods to conform to the current period presentation. New accounting pronouncements In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which allows entities to reclassify accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Act”). This update is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the income tax rate change resulting from the Act is recognized. The Company is currently evaluating the impact of the adoption of ASU 2018-02 on its consolidated financial statements. In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance related to the Act. The Act changes existing United States tax law and includes numerous provisions that will affect the accounting for U.S. income taxes under ASC 740. SAB 118 allows registrants to record provisional amounts during a one year “measurement period”. The measurement period ends on the earlier of finalization of accounting or one year from the date of the enactment. During the measurement period, impacts of the Act are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed. SAB 118 summarizes three stages of applying the impact of the Act to be applied at each reporting period, to account for and qualitatively disclose the accounting impacts of the Act: (i) the effects of the Act for which accounting is complete; (ii) provisional amounts (or adjustments to provisional amounts) for the effects of the Act where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Act. See Note 8, “Income Taxes” for further discussion of the application of SAB 118 as of March 31, 2018. Additionally, as a result of the Act, the Company must make an accounting policy election as to whether to record the deferred impacts of the Global Intangible Low Taxed Income (“GILTI”) provision, or to treat it entirely as a period cost. The Company is still evaluating this GILTI accounting policy election. In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and makes certain targeted improvements to simplify the qualification and application of the hedge accounting compared to current GAAP. This update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2017-12 on its consolidated financial statements. In March 2017, the FASB issued Accounting Standards Update 2017-07, Compensation–Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period, and allows only the service cost component to be eligible for capitalization in assets. Other components of the net periodic benefit cost are to be presented separately from the line item that includes the service cost and outside of any subtotal of operating income, and the line item must be appropriately described. If a separate line item is not used, the line item used in the income statement to present the other components of net benefit cost must be disclosed. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within that annual period, with early adoption permitted. The amendment is to be applied retrospectively. The new guidance primarily impacts the income statement presentation of net periodic benefit cost and the Company does not believe adoption of this standard will have a material impact on its consolidated financial statements including income before income taxes, but the reported amount of operating income will decrease compared to historical measurements of operating income. Refer to Note 9, “Pension Plan,” for further information on the components of net periodic benefit cost. In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). The update amends accounting guidance for intra-entity transfers of assets other than inventory to require the recognition of income tax consequences when the transfer occurs. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. A modified retrospective approach should be applied. The Company is currently evaluating the impact of the adoption of ASU 2016-16 on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The update requires a lessee to recognize assets and liabilities on the consolidated balance sheets for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The update will be effective for the Company in the first quarter of fiscal 2020, using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, as amended (“ASU 2014-09”), to supersede nearly all existing revenue recognition guidance under GAAP. The core principles of ASU 2014-09 are to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Application of the guidance in ASU 2014-09 is expected to require more judgment and estimates within the revenue recognition process compared to existing GAAP. ASU 2014-09 is required to be adopted by the Company in the first quarter of fiscal 2019. The Company expects to adopt the requirements of ASU 2014-09 using retrospective adoption to each prior reporting period presented. The company has established an implementation team inclusive of external advisors engaged to assist in evaluating potential differences compared to existing GAAP. The Company has identified its revenue streams and is currently assessing each stream for potential impacts from the adoption of ASU 2014-09. For the revenue streams assessed, the Company does not anticipate a material impact in the timing or amount of revenue recognized. The Company’s analysis and evaluation of the new standard will continue through its effective date and a substantial amount of work remains to be completed due to the complexity of the new standard, the application of judgment and the requirement for the use of estimates in applying the new standard, as well as the significant number of customers and the related terms and conditions of our contracts that must be reviewed. The Company does not currently expect significant changes in revenue recognition practices for continuing operations compared to existing GAAP. |
Acquisitions
Acquisitions | 9 Months Ended |
Mar. 31, 2018 | |
Acquisitions | |
Acquisitions | 2. Acquisitions Dragon Innovation In August 2017, the Company acquired Dragon Innovation, Inc. (“Dragon”), a provider of manufacturing logistics services. The impact of this acquisition was not material to the Company’s consolidated balance sheets or statements of operations. |
Discontinued operations and gai
Discontinued operations and gain on sale | 9 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups | |
Discontinued operations | 3. Discontinued operations and gain on sale In February 2017, the Company completed the sale of its Technology Solutions (“TS”) business to Tech Data Corporation (the “Buyer”). Included in the gain on sale recorded upon completion of the sale were estimates for certain income taxes due on the gain and additional cash consideration expected from the Buyer related to a closing date net working capital sales price adjustment (the “closing date adjustment”). The Company is finalizing the closing date adjustment with the Buyer as provided for in the sales agreement and has included an estimate of this amount as primary component of the $305.1 million of prepaid and other current assets as of March 31, 2018. The final closing date adjustment, as determined through the established process outlined in the sales agreement, may be materially different from the Company’s estimate. The impact of any probable changes in the closing date adjustment will be recorded as an adjustment to the gain on sale from discontinued operations in the period such change occurs. During the third quarter of fiscal 2018, the Company made certain adjustments to the closing date estimates, which were not material and have been included as an adjustment to the gain on sale of discontinued operations classified within “Income (loss) from discontinued operations, net of tax” on the Consolidated Statements of Operations. The income taxes associated with the gain will be impacted by the final geographic allocation of the sales price, which must be agreed to with the Buyer after determination of the closing date adjustment, as required in the sales agreement, and may be materially different from the Company’s estimates. The impact of any changes in estimated income taxes on the gain will be recorded as an adjustment to the gain on sale from discontinued operations in the period such change in estimate occurs. The Company currently expects the closing date adjustment to be finalized by the first half of fiscal 2019 and the income tax on the gain to be finalized by the end of fiscal 2019. The Company received 2.8 million shares of the Buyer’s common stock at closing (the “Shares”), which has been recorded within “Marketable securities” on the Company’s Consolidated Balance Sheets. As of March 31, 2018, the Company had 0.9 million shares remaining, which had market value of $75.1 million. Unrealized and realized gains or losses due to changes in fair value based upon Level 1 quoted active market prices of the Shares are recorded in “Other income (expense), net” on the Consolidated Statements of Operations. The sales agreement includes time based contractual restrictions related to the Company’s sale of the Shares and as such, the Company entered into economic hedges to reduce the Company’s exposure to price fluctuations of the Shares during the restricted period, which fixes the net amount that the Company will realize upon the sale of the Shares. The Company records changes in fair value related to the economic share price hedges within “Other income (expense), net”, offsetting the changes in fair value of the underlying Shares. During the nine months ended March 31, 2018, the Company sold 1.9 million Shares, the net proceeds of which have been included in “Cash flows from investing activities – discontinued operations.” In connection with the sale of the TS business, the Company entered into a Transition Services Agreement (“TSA”), pursuant to which the Buyer will pay the Company to provide certain information technology, distribution, facilities, finance and human resources related services for various periods of time depending upon the services not to exceed approximately two years from the closing date. Expenses incurred by the Company to provide such services under the TSA are classified within selling, general and administrative expenses and amounts billed to the Buyer to provide such services are classified as a reduction of such expenses. As of March 31, 2018, the Buyer has formally terminated substantially all TSA services outside of certain minor information technology services and all remaining TSA services are expected to be terminated by the first half of fiscal 2019. Financial results of the TS business for the third quarter and nine months ended April 1, 2017 are presented as “Income (loss) from discontinued operations, net of tax” on the Consolidated Statements of Operations and are summarized as follows: Third Quarter Ended Nine Months Ended April 1, 2017 (Thousands) Sales $ 1,056,676 $ 5,432,140 Cost of sales 955,781 4,883,945 Gross profit 100,895 548,195 Selling, general and administrative expenses 105,622 430,003 Restructuring, integration and other expenses (260) 7,280 Operating (loss) income (4,467) 110,912 Interest and other expense, net (13,662) (24,292) (Loss) income from discontinued operations before income taxes (18,129) 86,620 Income tax expense 17,108 49,949 (Loss) income from discontinued operations, net of taxes (35,237) 36,671 Gain on sales of discontinued operations, net of tax 217,088 217,088 Net income from discontinued operations, net of taxes $ 181,851 $ 253,759 Included within selling, general and administrative expenses of discontinued operations was $8.3 million and $34.9 million of estimated corporate expenses, excluding general overhead, specific to or benefiting the TS business for the third quarter and nine months ended April 1, 2017, respectively. The loss from discontinued operations, net of tax, in the third quarter and first nine months of fiscal 2018 substantially all relates to settlement losses associated with the Company’s pension plan due to former TS business employees requesting and receiving distributions from the Company’s pension plan during fiscal 2018 and the closing date adjustments discussed above. Refer to Note 9, “Pension plan,” for further information on the pension settlement losses. |
Goodwill and long-lived assets
Goodwill and long-lived assets | 9 Months Ended |
Mar. 31, 2018 | |
Goodwill and long-lived assets | |
Goodwill and long-lived assets | 4. Goodwill and long-lived assets Goodwill The following table presents the change in goodwill by reportable segment for the nine months ended March 31, 2018. Electronic Premier Components Farnell Total (Thousands) Carrying value at July 1, 2017 (1) $ 635,048 $ 513,299 $ 1,148,347 Additions from acquisitions 19,725 — 19,725 Impairment of goodwill (181,440) — (181,440) Foreign currency translation 12,532 40,176 52,708 Measurement period adjustments 2,530 (15,328) (12,798) Carrying value at March 31, 2018 (2) $ 488,395 $ 538,147 $ 1,026,542 (1) Includes accumulated impairment of $1,045,110 from fiscal 2009 (2) Includes accumulated impairment of $1,045,110 from fiscal 2009 and $181,440 from fiscal 2018 As of December 30, 2017, the $181.4 million of goodwill related to the Electronic Components Americas core reporting unit (the “Americas”) primarily represented goodwill allocated from the acquisitions of Bell Micro, G2 and Round 2, all of which occurred prior to fiscal 2011. The allocation of goodwill to the Americas represented the expected synergies the Americas would realize from these historical acquisitions. Once goodwill has been assigned to a reporting unit, for accounting purposes, the goodwill is no longer directly associated with the underlying acquisitions that the goodwill originated from, but rather the reporting unit to which it has been allocated. In accordance with ASC 350, the Company has been monitoring the Americas each quarter for the potential need to perform an interim goodwill impairment test. In the third quarter of fiscal 2018, in conjunction with the commencement of the Company’s annual long-term planning process, it became apparent that lower cash flows are expected from the Americas over such planning horizon compared to prior year long-term cash flow expectations. As a result of the lower expected cash flows as well as certain other factors, the Company concluded that an interim quantitative goodwill impairment test for the Americas was necessary in the third quarter of fiscal 2018. In assessing the Americas goodwill for impairment in the third quarter of fiscal 2018, the Company was required to make significant judgments related to the fair value of the Americas. The Company used a combination of an income approach, specifically a discounted cash flow methodology, and a market approach to estimate the fair value of the Americas. The discounted cash flow methodology includes market participant assumptions for, among other factors, forecasted sales, gross profit margins, operating expenses, cash flows, perpetual growth rates and long-term discount rates, all of which required judgments and estimates by management which are inherently uncertain. The market approach methodology required significant assumptions related to comparable transactions, market multiples, capital structure and control premiums. As a result of the impairment testing and related fair value estimate of the Americas in the third quarter of fiscal 2018, the Company impaired all of the goodwill in the Americas and recorded $181.4 million of goodwill impairment expense, which is classified within goodwill impairment expense in the Consolidated Statements of Operations. Intangible Assets The following table presents the Company’s acquired intangible assets at March 31, 2018, and July 1, 2017, respectively. March 31, 2018 July 1, 2017 Acquired Accumulated Net Book Acquired Accumulated Net Book Amount Amortization Value Amount Amortization Value (Thousands) Customer related $ 319,744 $ (139,888) $ 179,856 $ 277,865 $ (79,578) $ 198,287 Trade name 58,382 (15,470) 42,912 46,915 (6,720) 40,195 Technology and other 56,489 (20,990) 35,499 50,369 (11,560) 38,809 $ 434,615 $ (176,348) $ 258,267 $ 375,149 $ (97,858) $ 277,291 Intangible asset amortization expense from continuing operations was $22.6 million and $22.4 million for the third quarters of fiscal 2018 and 2017, respectively, and $69.9 million and $34.2 million for the first nine months of fiscal 2018 and 2017, respectively. Intangible assets have a weighted average remaining useful life of approximately 3 years. The following table presents the estimated future amortization expense for the remainder of fiscal 2018, the next five fiscal years and thereafter (in thousands): Fiscal Year Remainder of fiscal 2018 $ 22,711 2019 89,330 2020 87,010 2021 41,902 2022 13,212 2023 3,854 Thereafter 248 Total $ 258,267 |
Debt
Debt | 9 Months Ended |
Mar. 31, 2018 | |
Debt | |
Debt | 5. Debt Short-term debt consists of the following (in thousands): March 31, 2018 July 1, 2017 March 31, 2018 July 1, 2017 Interest Rate Carrying Balance Bank credit facilities and other 1.86 % 2.27 % $ 6,979 $ 50,113 Accounts receivable securitization program 2.35 % — 95,000 — Short-term debt $ 101,979 $ 50,113 Bank credit facilities and other consists primarily of various committed and uncommitted lines of credit and other forms of bank debt with financial institutions utilized primarily to support the working capital requirements of the Company including its foreign operations. The Company has an accounts receivable securitization program (the “Program”) in the United States with a group of financial institutions to allow the Company to transfer, on an ongoing revolving basis, an undivided interest in a designated pool of trade accounts receivable, to provide security or collateral for borrowings up to a maximum of $400 million. The Program does not qualify for off balance sheet accounting treatment and any borrowings under the Program are recorded as debt in the consolidated balance sheets. Under the Program, the Company legally sells and isolates certain U.S. trade accounts receivable, into a wholly owned and consolidated bankruptcy remote special purpose entity. Such receivables, which are recorded within “Receivables” in the consolidated balance sheets, totaled $774.8 million and $807.5 million at March 31, 2018, and July 1, 2017, respectively. The Program contains certain covenants relating to the quality of the receivables sold. The Program also requires the Company to maintain certain minimum interest coverage and leverage ratios, which the Company was in compliance with as of March 31, 2018, and July 1, 2017. The Program expires in August 2018 and as a result the Company has classified outstanding balances as short-term debt as of August 2017. Interest on borrowings is calculated using a base rate or a commercial paper rate plus a spread of 0.40% with a facility fee of 0.40%. Long-term debt consists of the following (in thousands): March 31, 2018 July 1, 2017 March 31, 2018 July 1, 2017 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program — 1.53 % $ — $ 142,000 Credit Facility — 2.77 % — 99,970 Public notes due: June 2020 5.88 % 5.88 % 300,000 300,000 December 2021 3.75 % 3.75 % 300,000 300,000 December 2022 4.88 % 4.88 % 350,000 350,000 April 2026 4.63 % 4.63 % 550,000 550,000 Other long-term debt 1.36 % 1.36 % 483 642 Long-term debt before discount and debt issuance costs 1,500,483 1,742,612 Discount and debt issuance costs - unamortized (11,777) (13,400) Long-term debt $ 1,488,706 $ 1,729,212 The Company has a five-year $1.25 billion senior unsecured revolving credit facility (the “Credit Facility”) with a syndicate of banks, consisting of revolving credit facilities and the issuance of up to $150.0 million of letters of credit, which expires in July 2019. Subject to certain conditions, the Credit Facility may be increased up to $1.50 billion. Under the Credit Facility, the Company may select from various interest rate options, currencies and maturities. The Credit Facility contains certain covenants including various limitations on debt incurrence, share repurchases, dividends, investments and capital expenditures. The Credit Facility also includes financial covenants requiring the Company to maintain minimum interest coverage and leverage ratios, which the Company was in compliance with as of March 31, 2018, and July 1, 2017. As of March 31, 2018, and July 1, 2017, there were $2.0 million and $3.1 million, respectively, in letters of credit issued under the Credit Facility. As of March 31, 2018, the carrying value and fair value of the Company’s total debt was $1.59 billion and $1.63 billion, respectively. At July 1, 2017, the carrying value and fair value of the Company’s total debt was $1.78 billion and $1.85 billion, respectively. Fair value for the public notes was estimated based upon quoted market prices and for other forms of debt fair value approximates carrying value due to the market based variable nature of the interest rates on those debt facilities. |
Derivative financial instrument
Derivative financial instruments | 9 Months Ended |
Mar. 31, 2018 | |
Derivative financial instruments | |
Derivative financial instruments | 6. Derivative financial instruments Many of the Company’s subsidiaries purchase and sell products in currencies other than their functional currencies. This subjects the Company to the risks associated with fluctuations in foreign currency exchange rates. The Company reduces this risk by utilizing natural hedging (e.g., offsetting receivables and payables in the same foreign currency) as well as by creating offsetting positions through the use of derivative financial instruments, primarily forward foreign exchange contracts typically with maturities of less than 60 days (“economic hedges”), but no longer than one year. The Company continues to have exposure to foreign currency risks to the extent they are not economically hedged. The Company adjusts any economic hedges to fair value through the consolidated statements of operations primarily within “other income (expense), net.” The fair value of forward foreign exchange contracts, which are based upon Level 2 criteria under the ASC 820 fair value hierarchy, are classified in the captions “other current assets” or “accrued expenses and other,” as applicable, in the accompanying consolidated balance sheets as of March 31, 2018, and July 1, 2017. The Company’s master netting and other similar arrangements with various financial institutions related to derivative financial instruments allow for the right of offset. The Company’s policy is to present derivative financial instruments with the same counterparty as either a net asset or liability when the right of offset exists. The Company generally does not hedge its investments in its foreign operations. The Company does not enter into derivative financial instruments for trading or speculative purposes and monitors the financial stability and credit standing of its counterparties. The Company’s foreign currency exposure relates primarily to international transactions where the currency collected from customers can be different from the currency used to purchase from suppliers. The Company’s foreign operations transactions are denominated primarily in the following currencies: U.S. Dollar, Euro, British Pound, Canadian Dollar, Japanese Yen, Chinese Yuan, Taiwan Dollar and Mexican Peso. The Company also, to a lesser extent, has foreign operations transactions in other European and Asia/Pacific foreign currencies. The fair values of derivative financial instruments in the Company’s consolidated balance sheets are as follows: March 31, July 1, 2018 2017 (Thousands) Forward foreign currency exchange contracts not receiving hedge accounting treatment recorded in: Other current assets $ 849 $ 7,297 Accrued expenses 3,015 4,142 In addition to amounts included in the above table, there was approximately $3.2 million of other current assets and $34.0 million of accrued expenses as of March 31, 2018 and July 1, 2017, respectively, related to derivative financial instruments used to economically hedge the fair value changes in marketable securities discussed further in Note 3. The amounts recorded to other income (expense), net, related to derivative financial instruments for economic hedges are as follows: Third Quarter Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 2018 2017 (Thousands) Net derivative financial instrument (loss) gain $ 3,354 $ 26 $ 5,070 $ (8,711) The above table excludes approximately $35.0 million of loss for the first nine months of fiscal 2017, of derivative financial instrument losses in other income (expenses), net, associated with foreign currency derivative financial instruments purchased to economically hedge the British Pound purchase price of the PF acquisition. Under the Company’s economic hedging policies, gains and losses on the derivative financial instruments are classified within the same line item in the consolidated statements of operations and as the underlying assets or liabilities being economically hedged. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Mar. 31, 2018 | |
Commitments and contingencies | |
Commitments and contingencies | 7. Commitments and contingencies From time to time, the Company may become a party to, or be otherwise involved in various lawsuits, claims, investigations and other legal proceedings arising in the ordinary course of conducting its business. While litigation is subject to inherent uncertainties, management does not anticipate that any such matters will have a material adverse effect on the Company’s financial condition, liquidity or results of operations. The Company is also currently subject to various pending and potential legal matters and investigations relating to compliance with governmental laws and regulations, including import/export and environmental matters. For certain of these matters it is not possible to determine the ultimate outcome, and the Company cannot reasonably estimate the maximum potential exposure or the range of possible loss for such matters due primarily to being in the early stages of the related proceedings and investigations. The Company currently believes that the resolution of such matters will not have a material adverse effect on the Company’s financial position or liquidity, but could possibly be material to its results of operations in any one reporting period. As of March 31, 2018 and July 1, 2017, the Company had aggregate estimated liabilities of $14.2 million, classified within accrued expenses and other for such compliance-related matters that were reasonably estimable as of such dates. |
Income taxes
Income taxes | 9 Months Ended |
Mar. 31, 2018 | |
Income taxes | |
Income taxes | 8. Income taxes During the third quarter of fiscal year 2018, the Company recorded a provisional amount for the one-time mandatory deemed repatriation tax liability (the “transition tax”) of $230.0 million of which $22.0 million is classified as a current income tax liability. The calculation of the transition tax is provisional and was based upon preliminary estimates of post-1986 earnings and profits and related foreign tax credits. The Act allows the transition tax to be payable over an eight year period without interest. The Company expects to elect to pay over an eight year period. The Company continues to evaluate the impact of the Act including the Company’s historical assertion related to ASC 740 unremitted earnings being permanently reinvested. The Company has not changed its historical assertion with respect to ASC 740 unremitted earnings and considers its unremitted earnings to be permanently reinvested as of March 31, 2018. During the second quarter of fiscal year 2018, the Company recorded a provisional expense to account for the deferred tax impacts of the Act, which remained unchanged as of March 31, 2018. The estimates related to the transition tax and deferred taxes are provisional and may change as the Company continues to analyze the impacts of the Act. The Company’s effective tax rate on its loss before income taxes from continuing operations was (338.0)% in the third quarter of fiscal 2018. During the third quarter of fiscal 2018, the Company’s effective tax rate was unfavorably impacted primarily by (i) the provisional transition tax expense estimate recorded under the requirements of the Act and (ii) the goodwill impairment discussed in Note 4, which was not tax deductible, partially offset primarily by (i) the mix of income in lower tax jurisdictions and (ii) the release of reserves due to the expiration of the statute of limitations in various jurisdictions. During the third quarter of fiscal 2017, the Company’s effective tax rate of 15.3% was favorably impacted primarily by (i) the mix of income in lower tax jurisdictions and (ii) the release of reserves and other discrete tax benefits. For the first nine months of fiscal 2018 the Company’s effective tax rate on its income before income taxes from continuing operations was 489.2%. The effective tax rate for the first nine months of fiscal 2018 was unfavorably impacted primarily by (i) the provisional transition tax expense recorded under the requirements of the Act, (ii) the goodwill impairment, which was not tax deductible, and (iii) the tax expense created from remeasuring net deferred tax assets as a result of applying the requirements of the Act, partially offset primarily by (i) the mix of income in lower tax jurisdictions and (ii) the release of reserves. During the first nine months of fiscal 2017, the Company’s effective tax rate of 25.7% was favorably impacted primarily by (i) the mix of income in lower tax jurisdictions, partially offset by (ii) net increases to valuation allowances against deferred tax assets that were deemed unrealizable and (iii) the impact of non-deductible acquisition related expenses. |
Pension and retirement plan
Pension and retirement plan | 9 Months Ended |
Mar. 31, 2018 | |
Pension and retirement plan | |
Pension and retirement plans | 9. Pension plan The Company has a noncontributory defined benefit pension plan (the “Plan”) that covers substantially all U.S. employees as of January 1, 2018, and an acquired closed noncontributory defined benefit pension plan in the U.S. covering certain PF employees (collectively, the “Plans”). Components of net period pension cost for the Plans were as follows: Third Quarters Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 (1) 2018 2017 (1) (Thousands) Service cost $ 4,305 $ 7,406 $ 12,040 $ 22,217 Interest cost 4,529 3,952 16,095 11,856 Expected return on plan assets (10,862) (10,840) (38,376) (32,520) Amortization of prior service credits (393) (394) (1,179) (1,180) Recognized net actuarial loss 3,456 3,610 10,948 10,830 Pension settlement charge 4,875 — 18,859 — Net periodic pension cost $ 5,910 $ 3,734 $ 18,387 $ 11,203 (1) Includes discontinued operations The Company contributed $12.0 million to the Plans during the first nine months of fiscal 2018 and expects to make an additional contribution to the Plans of $4.0 million in the fourth quarter of fiscal 2018. The Plans meet the definition of defined benefit plans and as a result, the Company applies ASC 715 pension accounting to the Plans. The Plans, however, are cash balance plans that are similar in nature to defined contribution plans in that a participant’s benefit is defined in terms of stated account balances. The cash balance plans provide the Company with the benefit of applying any earnings on the Plans’ investments beyond the fixed return provided to participants, toward the Company’s future cash funding obligations. Amounts reclassified out of accumulated other comprehensive income (loss), net of tax, to operating expenses during the third quarters and the first nine months of fiscal 2018 and fiscal 2017 were substantially all related to net periodic pension costs including recognition of actuarial losses and amortization of prior service credits. In connection with the sale of the TS business, a significant number of former employees became terminated vested employees under the Plan. During the first nine months of fiscal 2018, the aggregate amount of former employee withdrawals from the Plan exceeded the pension accounting settlement threshold for fiscal 2018, which required a settlement expense under ASC 715 pension accounting. As a result, the Company recognized a $4.9 million and $18.9 million of pension settlement expenses before taxes in the third quarter and first nine months of fiscal 2018, respectively, classified within income (loss) from discontinued operations. |
Shareholders' equity
Shareholders' equity | 9 Months Ended |
Mar. 31, 2018 | |
Shareholders' equity | |
Shareholders' equity | 10. Shareholders’ equity Share repurchase program In November 2017, the Company’s Board of Directors amended the Company’s existing share repurchase program to authorize the repurchase up of to $1.95 billion of common stock in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased will depend on a variety of factors such as share price, corporate and regulatory requirements, and prevailing market conditions. During the third quarter and nine months ended March 31, 2018, the Company repurchased 1.7 million and 5.3 million shares, respectively, under this program for a total cost of $70.0 million and $209.5 million, respectively. As of March 31, 2018, the Company had $389.6 million remaining under its share repurchase authorization. Common stock dividend In February 2018, the Company’s Board of Directors approved a dividend of $0.19 per common share and dividend payments of $22.6 million were made in March 2018. During the nine months ended March 31, 2018, the Company paid dividends of $0.55 per common share and $66.2 million in total. |
Earnings per share
Earnings per share | 9 Months Ended |
Mar. 31, 2018 | |
Earnings per share | |
Earnings per share | 11. Earnings per share Third Quarters Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 2018 2017 (Thousands, except per share data) Numerator: Income (loss) from continuing operations $ (315,604) $ 89,920 $ (200,628) $ 190,073 Income (loss) from discontinued operations (4,462) 181,851 (14,411) 253,759 Net (loss) income $ (320,066) $ 271,771 $ (215,039) $ 443,832 Denominator: Weighted average common shares for basic earnings per share 119,601 128,487 120,895 127,973 Net effect of dilutive stock based compensation awards — 945 — 1,874 Weighted average common shares for diluted earnings per share 119,601 129,432 120,895 129,847 Basic earnings (loss) per share - continuing operations $ (2.64) $ 0.70 $ (1.66) $ 1.48 Basic earnings (loss) per share - discontinued operations (0.04) 1.42 (0.12) 1.98 Basic earnings (loss) per share $ (2.68) $ 2.12 $ (1.78) $ 3.46 Diluted earnings (loss) per share - continuing operations $ (2.64) $ 0.69 $ (1.66) $ 1.46 Diluted earnings (loss) per share - discontinued operations (0.04) 1.41 (0.12) 1.95 Diluted earnings (loss) per share $ (2.68) $ 2.10 $ (1.78) $ 3.41 Stock options excluded from earnings per share calculation due to anti-dilutive effect 1,591 92 1,591 98 See Note 3 for additional information on income (loss) from discontinued operations. For the three and nine months ended March 31, 2018, the diluted net loss per share is the same as basic net loss per share as the effects of 939,722 and 1,195,935 potential common shares, respectively, would be anti-dilutive. |
Additional cash flow informatio
Additional cash flow information | 9 Months Ended |
Mar. 31, 2018 | |
Additional cash flow information | |
Additional cash flow information | 12. Additional cash flow information Non-cash investing and financing activities and supplemental cash flow information were as follows: Nine Months Ended March 31, April 1, 2018 2017 (Thousands) Non-cash Investing Activities: Capital expenditures incurred but not paid $ 21,282 $ 16,780 Unsettled sale of marketable securities 4,121 — Non-cash Financing Activities: Unsettled share repurchases — $ 15,697 Supplemental Cash Flow Information: Interest $ 55,924 $ 74,165 Income taxes 94,773 106,659 Included in cash and cash equivalents as of March 31, 2018, and July 1, 2017, was $6.2 million and $208.3 million, respectively, of cash equivalents, which was primarily comprised of investment grade money market funds and overnight time deposits. |
Segment information
Segment information | 9 Months Ended |
Mar. 31, 2018 | |
Segment information | |
Segment information | 13. Segment information Electronic Components (“EC”) and Premier Farnell (“PF”) are the Company’s reportable segments (“operating groups”). EC markets and sells semiconductors and interconnect, passive and electromechanical devices and integrated components to a diverse customer base serving many end-markets. PF was acquired during the second quarter of fiscal 2017 and distributes electronic components and related products to the electronic system design community utilizing multi-channel sales and marketing resources. Third Quarters Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 2018 2017 (Thousands) Sales: Electronic Components $ 4,404,115 $ 4,090,943 $ 12,874,885 $ 12,213,389 Premier Farnell 390,978 350,953 1,102,787 620,170 4,795,093 4,441,896 13,977,672 12,833,559 Operating income (loss): Electronic Components $ 157,713 $ 156,831 $ 427,162 $ 508,587 Premier Farnell 44,391 40,318 114,816 64,292 202,104 197,149 541,978 572,879 Corporate (1) (27,220) (24,856) (79,502) (74,766) Restructuring, integration and other expenses (25,120) (35,513) (108,277) (95,382) Goodwill impairment expense (181,440) — (181,440) — Amortization of acquired intangible assets and other (22,725) (22,497) (70,187) (34,704) Operating (loss) income $ (54,401) $ 114,283 $ 102,572 $ 368,027 Sales, by geographic area: Americas (2) $ 1,276,426 $ 1,328,592 $ 3,672,160 $ 3,831,706 EMEA (3) 1,812,334 1,615,903 5,011,336 4,261,891 Asia/Pacific (4) 1,706,333 1,497,401 5,294,176 4,739,962 Sales $ 4,795,093 $ 4,441,896 $ 13,977,672 $ 12,833,559 (1) Corporate is not a reportable segment and represents certain centrally incurred overhead expenses and assets that are not included in the EC and PF measures of profitability or assets. Corporate amounts represent a reconciling item between segment measures of profitability or assets and total Avnet amounts reported in the consolidated financial statements. (2) Includes sales from the United States of $1.18 billion and $1.23 billion for the third quarters ended March 31, 2018, and April 1, 2017, respectively. Includes sales from the United States of $3.40 billion and $3.56 billion for the first nine months of fiscal 2018 and 2017, respectively. (3) Includes sales from Germany and Belgium of $710.6 million and $281.1 million, respectively, for the third quarter ended March 31, 2018, and $1.96 billion and $786.0 million, respectively, for the first nine months of fiscal 2018. Includes sales from Germany and Belgium of $616.3 million and $248.3 million, respectively, for the third quarter ended April 1, 2017, and $1.66 billion and $678.5 million, respectively, for the first nine months of fiscal 2017. (4) Includes sales from China (including Hong Kong), Taiwan and Singapore of $645.3 million, $616.7 million and $231.6 million, respectively, for the third quarter ended March 31, 2018, and $1.94 billion, $1.99 billion and $677.8 million, respectively, for the first nine months of fiscal 2018. Includes sales from China (including Hong Kong), Taiwan and Singapore of $562.9 million, $486.9 million and $237.1 million, respectively, for the third quarter ended April 1, 2017, and $1.80 billion, $1.67 billion and $690.1 million, respectively, for the first nine months of fiscal 2017. March 31, July 1, 2018 2017 (Thousands) Property, plant, and equipment, net, by geographic area: Americas (1) $ 270,972 $ 296,038 EMEA (2) 210,419 186,127 Asia/Pacific 39,531 37,410 Property, plant, and equipment, net $ 520,922 $ 519,575 (1) Includes property, plant and equipment, net, of $265.6 million and $289.1 million as of March 31, 2018, and July 1, 2017, respectively, in the United States. (2) Includes property, plant and equipment, net, of $105.4 million, $50.6 million and $44.2 million in Germany, UK and Belgium, respectively, as of March 31, 2018, and $85.6 million, $52.1 million and $39.8 million in Germany, UK and Belgium, respectively, as of July 1, 2017. |
Restructuring expenses
Restructuring expenses | 9 Months Ended |
Mar. 31, 2018 | |
Restructuring expenses | |
Restructuring expenses | 14. Restructuring expenses Fiscal 2018 During fiscal 2018, the Company executed certain restructuring actions in an effort to integrate acquisitions and reduce future operating expenses. Restructuring expenses are included as a component of restructuring, integration and other expenses in the Consolidated Statements of Operations. The activity related to the restructuring liabilities established during fiscal 2018 is presented in the following table: Facility Asset Severance Exit Costs Impairments Other Total (Thousands) Fiscal 2018 restructuring expenses $ 38,705 $ 270 $ 943 $ 164 $ 40,082 Cash payments (31,302) (26) — (165) (31,493) Non-cash amounts — — (943) — (943) Other, principally foreign currency translation 176 4 — 1 181 Balance at March 31, 2018 $ 7,579 $ 248 $ — $ — $ 7,827 Severance expense recorded in the first nine months of fiscal 2018 related to the reduction, or planned reduction of approximately 700 employees, primarily in executive management, operations, warehouse, sales and business support functions. Facility exit costs primarily consist of liabilities for remaining lease obligations for exited facilities. Asset impairments relate to the impairment of property, plant and equipment as a result of the underlying restructuring activities. Other restructuring costs related primarily to other miscellaneous restructuring and exit costs. Of the $40.1 million in restructuring expenses recorded during the first nine months of fiscal 2018, $33.5 million related to EC, $4.8 million related to PF and $1.8 million related to corporate executive and business support functions. The Company expects the majority of the remaining amounts to be paid by the end of fiscal 2018. Fiscal 2017 During fiscal 2017, the Company incurred restructuring expenses related to various restructuring actions intended to achieve planned synergies from acquired businesses and to reduce future operating expenses. The following table presents the activity during the first nine months of fiscal 2018 related to the remaining restructuring liabilities from continuing operations established during fiscal 2017: Facility Severance Exit Costs Total (Thousands) Balance at July 1, 2017 $ 12,186 $ 76 $ 12,262 Cash payments (10,670) (77) (10,747) Changes in estimates, net (606) — (606) Non-cash amounts — — — Other, principally foreign currency translation 250 1 251 Balance at March 31, 2018 $ 1,160 $ — $ 1,160 The Company expects the majority of the remaining amounts to be paid by the end of fiscal 2018. |
Basis of presentation and new21
Basis of presentation and new accounting pronouncements (Policies) | 9 Months Ended |
Mar. 31, 2018 | |
Basis of presentation and new accounting pronouncements | |
Basis of presentation | In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments necessary to present fairly Avnet, Inc.’s and its consolidated subsidiaries’ (collectively, the “Company” or “Avnet”) financial position, results of operations, comprehensive income (loss) and cash flows. All such adjustments are of a normal recurring nature. The preparation of financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results may differ from these estimates. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2017. Certain reclassifications have been made in prior periods and the fiscal year to date current periods to conform to the current period presentation. |
New accounting pronouncements | New accounting pronouncements In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2018-02, Income Statement–Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (“ASU 2018-02”), which allows entities to reclassify accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (the “Act”). This update is effective for interim and annual reporting periods beginning after December 15, 2018, with early adoption permitted. The update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the income tax rate change resulting from the Act is recognized. The Company is currently evaluating the impact of the adoption of ASU 2018-02 on its consolidated financial statements. In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance related to the Act. The Act changes existing United States tax law and includes numerous provisions that will affect the accounting for U.S. income taxes under ASC 740. SAB 118 allows registrants to record provisional amounts during a one year “measurement period”. The measurement period ends on the earlier of finalization of accounting or one year from the date of the enactment. During the measurement period, impacts of the Act are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared or analyzed. SAB 118 summarizes three stages of applying the impact of the Act to be applied at each reporting period, to account for and qualitatively disclose the accounting impacts of the Act: (i) the effects of the Act for which accounting is complete; (ii) provisional amounts (or adjustments to provisional amounts) for the effects of the Act where accounting is not complete, but that a reasonable estimate has been determined; and (3) a reasonable estimate cannot yet be made and therefore taxes are reflected in accordance with law prior to the enactment of the Act. See Note 8, “Income Taxes” for further discussion of the application of SAB 118 as of March 31, 2018. Additionally, as a result of the Act, the Company must make an accounting policy election as to whether to record the deferred impacts of the Global Intangible Low Taxed Income (“GILTI”) provision, or to treat it entirely as a period cost. The Company is still evaluating this GILTI accounting policy election. In August 2017, the FASB issued Accounting Standards Update 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”), which improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and makes certain targeted improvements to simplify the qualification and application of the hedge accounting compared to current GAAP. This update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2017-12 on its consolidated financial statements. In March 2017, the FASB issued Accounting Standards Update 2017-07, Compensation–Retirement Benefits (Topic 715) - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line item as other employee compensation costs arising from services rendered during the period, and allows only the service cost component to be eligible for capitalization in assets. Other components of the net periodic benefit cost are to be presented separately from the line item that includes the service cost and outside of any subtotal of operating income, and the line item must be appropriately described. If a separate line item is not used, the line item used in the income statement to present the other components of net benefit cost must be disclosed. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within that annual period, with early adoption permitted. The amendment is to be applied retrospectively. The new guidance primarily impacts the income statement presentation of net periodic benefit cost and the Company does not believe adoption of this standard will have a material impact on its consolidated financial statements including income before income taxes, but the reported amount of operating income will decrease compared to historical measurements of operating income. Refer to Note 9, “Pension Plan,” for further information on the components of net periodic benefit cost. In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). The update amends accounting guidance for intra-entity transfers of assets other than inventory to require the recognition of income tax consequences when the transfer occurs. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. A modified retrospective approach should be applied. The Company is currently evaluating the impact of the adoption of ASU 2016-16 on its consolidated financial statements. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The update requires a lessee to recognize assets and liabilities on the consolidated balance sheets for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The update will be effective for the Company in the first quarter of fiscal 2020, using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, as amended (“ASU 2014-09”), to supersede nearly all existing revenue recognition guidance under GAAP. The core principles of ASU 2014-09 are to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. Application of the guidance in ASU 2014-09 is expected to require more judgment and estimates within the revenue recognition process compared to existing GAAP. ASU 2014-09 is required to be adopted by the Company in the first quarter of fiscal 2019. The Company expects to adopt the requirements of ASU 2014-09 using retrospective adoption to each prior reporting period presented. The company has established an implementation team inclusive of external advisors engaged to assist in evaluating potential differences compared to existing GAAP. The Company has identified its revenue streams and is currently assessing each stream for potential impacts from the adoption of ASU 2014-09. For the revenue streams assessed, the Company does not anticipate a material impact in the timing or amount of revenue recognized. The Company’s analysis and evaluation of the new standard will continue through its effective date and a substantial amount of work remains to be completed due to the complexity of the new standard, the application of judgment and the requirement for the use of estimates in applying the new standard, as well as the significant number of customers and the related terms and conditions of our contracts that must be reviewed. The Company does not currently expect significant changes in revenue recognition practices for continuing operations compared to existing GAAP. |
Discontinued Operations and g22
Discontinued Operations and gain on sale (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Discontinued Operations and Disposal Groups | |
Schedule of summarized results of discontinued operations | Third Quarter Ended Nine Months Ended April 1, 2017 (Thousands) Sales $ 1,056,676 $ 5,432,140 Cost of sales 955,781 4,883,945 Gross profit 100,895 548,195 Selling, general and administrative expenses 105,622 430,003 Restructuring, integration and other expenses (260) 7,280 Operating (loss) income (4,467) 110,912 Interest and other expense, net (13,662) (24,292) (Loss) income from discontinued operations before income taxes (18,129) 86,620 Income tax expense 17,108 49,949 (Loss) income from discontinued operations, net of taxes (35,237) 36,671 Gain on sales of discontinued operations, net of tax 217,088 217,088 Net income from discontinued operations, net of taxes $ 181,851 $ 253,759 |
Goodwill and long-lived assets
Goodwill and long-lived assets (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Goodwill and long-lived assets | |
Change in goodwill balances by reportable segment | Electronic Premier Components Farnell Total (Thousands) Carrying value at July 1, 2017 (1) $ 635,048 $ 513,299 $ 1,148,347 Additions from acquisitions 19,725 — 19,725 Impairment of goodwill (181,440) — (181,440) Foreign currency translation 12,532 40,176 52,708 Measurement period adjustments 2,530 (15,328) (12,798) Carrying value at March 31, 2018 (2) $ 488,395 $ 538,147 $ 1,026,542 (1) Includes accumulated impairment of $1,045,110 from fiscal 2009 (2) Includes accumulated impairment of $1,045,110 from fiscal 2009 and $181,440 from fiscal 2018 |
Company's identifiable acquired intangible assets | March 31, 2018 July 1, 2017 Acquired Accumulated Net Book Acquired Accumulated Net Book Amount Amortization Value Amount Amortization Value (Thousands) Customer related $ 319,744 $ (139,888) $ 179,856 $ 277,865 $ (79,578) $ 198,287 Trade name 58,382 (15,470) 42,912 46,915 (6,720) 40,195 Technology and other 56,489 (20,990) 35,499 50,369 (11,560) 38,809 $ 434,615 $ (176,348) $ 258,267 $ 375,149 $ (97,858) $ 277,291 |
Estimated future amortization expense | The following table presents the estimated future amortization expense for the remainder of fiscal 2018, the next five fiscal years and thereafter (in thousands): Fiscal Year Remainder of fiscal 2018 $ 22,711 2019 89,330 2020 87,010 2021 41,902 2022 13,212 2023 3,854 Thereafter 248 Total $ 258,267 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Debt | |
Short-term debt | Short-term debt consists of the following (in thousands): March 31, 2018 July 1, 2017 March 31, 2018 July 1, 2017 Interest Rate Carrying Balance Bank credit facilities and other 1.86 % 2.27 % $ 6,979 $ 50,113 Accounts receivable securitization program 2.35 % — 95,000 — Short-term debt $ 101,979 $ 50,113 |
Long-term debt | Long-term debt consists of the following (in thousands): March 31, 2018 July 1, 2017 March 31, 2018 July 1, 2017 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program — 1.53 % $ — $ 142,000 Credit Facility — 2.77 % — 99,970 Public notes due: June 2020 5.88 % 5.88 % 300,000 300,000 December 2021 3.75 % 3.75 % 300,000 300,000 December 2022 4.88 % 4.88 % 350,000 350,000 April 2026 4.63 % 4.63 % 550,000 550,000 Other long-term debt 1.36 % 1.36 % 483 642 Long-term debt before discount and debt issuance costs 1,500,483 1,742,612 Discount and debt issuance costs - unamortized (11,777) (13,400) Long-term debt $ 1,488,706 $ 1,729,212 |
Derivative financial instrume25
Derivative financial instruments (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Derivative financial instruments | |
Schedule of derivative instruments in the balance sheet | March 31, July 1, 2018 2017 (Thousands) Forward foreign currency exchange contracts not receiving hedge accounting treatment recorded in: Other current assets $ 849 $ 7,297 Accrued expenses 3,015 4,142 |
Schedule of gain (loss) on derivatives | Third Quarter Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 2018 2017 (Thousands) Net derivative financial instrument (loss) gain $ 3,354 $ 26 $ 5,070 $ (8,711) |
Pension and retirement plans (T
Pension and retirement plans (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Components of net periodic pension costs | Third Quarters Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 (1) 2018 2017 (1) (Thousands) Service cost $ 4,305 $ 7,406 $ 12,040 $ 22,217 Interest cost 4,529 3,952 16,095 11,856 Expected return on plan assets (10,862) (10,840) (38,376) (32,520) Amortization of prior service credits (393) (394) (1,179) (1,180) Recognized net actuarial loss 3,456 3,610 10,948 10,830 Pension settlement charge 4,875 — 18,859 — Net periodic pension cost $ 5,910 $ 3,734 $ 18,387 $ 11,203 (1) Includes discontinued operations |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Earnings per share | |
Basic and diluted earnings per share calculation | Third Quarters Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 2018 2017 (Thousands, except per share data) Numerator: Income (loss) from continuing operations $ (315,604) $ 89,920 $ (200,628) $ 190,073 Income (loss) from discontinued operations (4,462) 181,851 (14,411) 253,759 Net (loss) income $ (320,066) $ 271,771 $ (215,039) $ 443,832 Denominator: Weighted average common shares for basic earnings per share 119,601 128,487 120,895 127,973 Net effect of dilutive stock based compensation awards — 945 — 1,874 Weighted average common shares for diluted earnings per share 119,601 129,432 120,895 129,847 Basic earnings (loss) per share - continuing operations $ (2.64) $ 0.70 $ (1.66) $ 1.48 Basic earnings (loss) per share - discontinued operations (0.04) 1.42 (0.12) 1.98 Basic earnings (loss) per share $ (2.68) $ 2.12 $ (1.78) $ 3.46 Diluted earnings (loss) per share - continuing operations $ (2.64) $ 0.69 $ (1.66) $ 1.46 Diluted earnings (loss) per share - discontinued operations (0.04) 1.41 (0.12) 1.95 Diluted earnings (loss) per share $ (2.68) $ 2.10 $ (1.78) $ 3.41 Stock options excluded from earnings per share calculation due to anti-dilutive effect 1,591 92 1,591 98 |
Additional cash flow informat28
Additional cash flow information (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Additional cash flow information | |
Interest and income taxes paid | Nine Months Ended March 31, April 1, 2018 2017 (Thousands) Non-cash Investing Activities: Capital expenditures incurred but not paid $ 21,282 $ 16,780 Unsettled sale of marketable securities 4,121 — Non-cash Financing Activities: Unsettled share repurchases — $ 15,697 Supplemental Cash Flow Information: Interest $ 55,924 $ 74,165 Income taxes 94,773 106,659 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Segment information | |
Table of the Company's segments and the related financial information for each | Third Quarters Ended Nine Months Ended March 31, April 1, March 31, April 1, 2018 2017 2018 2017 (Thousands) Sales: Electronic Components $ 4,404,115 $ 4,090,943 $ 12,874,885 $ 12,213,389 Premier Farnell 390,978 350,953 1,102,787 620,170 4,795,093 4,441,896 13,977,672 12,833,559 Operating income (loss): Electronic Components $ 157,713 $ 156,831 $ 427,162 $ 508,587 Premier Farnell 44,391 40,318 114,816 64,292 202,104 197,149 541,978 572,879 Corporate (1) (27,220) (24,856) (79,502) (74,766) Restructuring, integration and other expenses (25,120) (35,513) (108,277) (95,382) Goodwill impairment expense (181,440) — (181,440) — Amortization of acquired intangible assets and other (22,725) (22,497) (70,187) (34,704) Operating (loss) income $ (54,401) $ 114,283 $ 102,572 $ 368,027 Sales, by geographic area: Americas (2) $ 1,276,426 $ 1,328,592 $ 3,672,160 $ 3,831,706 EMEA (3) 1,812,334 1,615,903 5,011,336 4,261,891 Asia/Pacific (4) 1,706,333 1,497,401 5,294,176 4,739,962 Sales $ 4,795,093 $ 4,441,896 $ 13,977,672 $ 12,833,559 (1) Corporate is not a reportable segment and represents certain centrally incurred overhead expenses and assets that are not included in the EC and PF measures of profitability or assets. Corporate amounts represent a reconciling item between segment measures of profitability or assets and total Avnet amounts reported in the consolidated financial statements. (2) Includes sales from the United States of $1.18 billion and $1.23 billion for the third quarters ended March 31, 2018, and April 1, 2017, respectively. Includes sales from the United States of $3.40 billion and $3.56 billion for the first nine months of fiscal 2018 and 2017, respectively. (3) Includes sales from Germany and Belgium of $710.6 million and $281.1 million, respectively, for the third quarter ended March 31, 2018, and $1.96 billion and $786.0 million, respectively, for the first nine months of fiscal 2018. Includes sales from Germany and Belgium of $616.3 million and $248.3 million, respectively, for the third quarter ended April 1, 2017, and $1.66 billion and $678.5 million, respectively, for the first nine months of fiscal 2017. (4) Includes sales from China (including Hong Kong), Taiwan and Singapore of $645.3 million, $616.7 million and $231.6 million, respectively, for the third quarter ended March 31, 2018, and $1.94 billion, $1.99 billion and $677.8 million, respectively, for the first nine months of fiscal 2018. Includes sales from China (including Hong Kong), Taiwan and Singapore of $562.9 million, $486.9 million and $237.1 million, respectively, for the third quarter ended April 1, 2017, and $1.80 billion, $1.67 billion and $690.1 million, respectively, for the first nine months of fiscal 2017. |
Table of Assets by reportable segment and long-lived assets by geographic area | March 31, July 1, 2018 2017 (Thousands) Property, plant, and equipment, net, by geographic area: Americas (1) $ 270,972 $ 296,038 EMEA (2) 210,419 186,127 Asia/Pacific 39,531 37,410 Property, plant, and equipment, net $ 520,922 $ 519,575 (1) Includes property, plant and equipment, net, of $265.6 million and $289.1 million as of March 31, 2018, and July 1, 2017, respectively, in the United States. (2) Includes property, plant and equipment, net, of $105.4 million, $50.6 million and $44.2 million in Germany, UK and Belgium, respectively, as of March 31, 2018, and $85.6 million, $52.1 million and $39.8 million in Germany, UK and Belgium, respectively, as of July 1, 2017. |
Restructuring expenses (Tables)
Restructuring expenses (Tables) | 9 Months Ended |
Mar. 31, 2018 | |
Fiscal Year 2018 Restructuring Liabilities | |
Restructuring Cost and Reserve [Line Items] | |
Activity related to the restructuring reserves | Facility Asset Severance Exit Costs Impairments Other Total (Thousands) Fiscal 2018 restructuring expenses $ 38,705 $ 270 $ 943 $ 164 $ 40,082 Cash payments (31,302) (26) — (165) (31,493) Non-cash amounts — — (943) — (943) Other, principally foreign currency translation 176 4 — 1 181 Balance at March 31, 2018 $ 7,579 $ 248 $ — $ — $ 7,827 |
Fiscal Year 2017 Restructuring Liabilities | |
Restructuring Cost and Reserve [Line Items] | |
Activity related to the restructuring reserves | Facility Severance Exit Costs Total (Thousands) Balance at July 1, 2017 $ 12,186 $ 76 $ 12,262 Cash payments (10,670) (77) (10,747) Changes in estimates, net (606) — (606) Non-cash amounts — — — Other, principally foreign currency translation 250 1 251 Balance at March 31, 2018 $ 1,160 $ — $ 1,160 |
Discontinued Operations and g31
Discontinued Operations and gain on sale - Consideration (Details) - USD ($) $ in Thousands, shares in Millions | 9 Months Ended | ||
Mar. 31, 2018 | Jul. 01, 2017 | Feb. 25, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Prepaid and other current assets | $ 305,067 | $ 253,765 | |
Trading Securities, Equity | $ 75,051 | $ 281,326 | |
Disposal Group, Held-for-sale, Not Discontinued Operations | TS Business | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Shares consideration in sale of business | 2.8 | ||
Securities sold | 1.9 | ||
Trading equity secuities, shares held | 0.9 |
Discontinued Operations and g32
Discontinued Operations and gain on sale - Economic Hedge (Details) | 1 Months Ended |
Feb. 25, 2017 | |
Maximum | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Business sale length of contract for certain services | 2 years |
Discontinued Operations and g33
Discontinued Operations and gain on sale - Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net income from discontinued operations, net of tax | $ (4,462) | $ 181,851 | $ (14,411) | $ 253,759 |
Disposal Group, Held-for-sale, Not Discontinued Operations | TS Business | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues discontinued operations | 1,056,676 | 5,432,140 | ||
Cost of sales | 955,781 | 4,883,945 | ||
Gross profit | 100,895 | 548,195 | ||
Selling, general and administrative expenses | 105,622 | 430,003 | ||
Restructuring, integration and other expenses | (260) | 7,280 | ||
Operating (loss) income | (4,467) | 110,912 | ||
Interest and other expense, net | (13,662) | (24,292) | ||
(Loss) income from discontinued operations before income taxes | (18,129) | 86,620 | ||
Income tax expense | 17,108 | 49,949 | ||
(Loss) income from discontinued operations, net of tax | (35,237) | 36,671 | ||
Gain on sale of discontinued operations, net of tax | 217,088 | 217,088 | ||
Net income from discontinued operations, net of tax | 181,851 | 253,759 | ||
Disposal Group, Held-for-sale, Not Discontinued Operations | TS Business | Selling, General and Administrative Expenses | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Corporate expenses | $ 8,300 | $ 34,900 |
Goodwill and long-lived asset34
Goodwill and long-lived assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Jul. 04, 2009 | |
Carrying amount of goodwill, by reportable segment | ||||
Carrying value | $ 1,148,347,000 | |||
Additions from acquisitions | 19,725,000 | |||
Impairment of goodwill | $ (181,440,000) | (181,440,000) | ||
Foreign currency translation | 52,708,000 | |||
Measurement period adjustments | (12,798,000) | |||
Carrying value | 1,026,542,000 | 1,026,542,000 | ||
Accumulated Impairment | $ 181,440 | $ 1,045,110 | ||
Electronic Components | ||||
Carrying amount of goodwill, by reportable segment | ||||
Carrying value | 635,048,000 | |||
Additions from acquisitions | 19,725,000 | |||
Impairment of goodwill | (181,440,000) | |||
Foreign currency translation | 12,532,000 | |||
Measurement period adjustments | 2,530,000 | |||
Carrying value | 488,395,000 | 488,395,000 | ||
Premier Farnell | ||||
Carrying amount of goodwill, by reportable segment | ||||
Carrying value | 513,299,000 | |||
Foreign currency translation | 40,176,000 | |||
Measurement period adjustments | (15,328,000) | |||
Carrying value | $ 538,147,000 | $ 538,147,000 |
Goodwill and long-lived asset35
Goodwill and long-lived assets Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jul. 01, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | $ 434,615 | $ 375,149 |
Accumulated Amortization | (176,348) | (97,858) |
Net Book Value | 258,267 | 277,291 |
Customer related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 319,744 | 277,865 |
Accumulated Amortization | (139,888) | (79,578) |
Net Book Value | 179,856 | 198,287 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 58,382 | 46,915 |
Accumulated Amortization | (15,470) | (6,720) |
Net Book Value | 42,912 | 40,195 |
Technology and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 56,489 | 50,369 |
Accumulated Amortization | (20,990) | (11,560) |
Net Book Value | $ 35,499 | $ 38,809 |
Goodwill and long-lived asset36
Goodwill and long-lived assets Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Goodwill and long-lived assets | ||||
Goodwill impairment expense | $ 181,440 | $ 181,440 | ||
Weighted average life of intangible assets | 3 years | |||
Intangible asset amortization expense | $ 22,600 | $ 22,400 | $ 69,860 | $ 34,185 |
Goodwill and long-lived asset37
Goodwill and long-lived assets (Estimated Future Amortization Expense) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jul. 01, 2017 |
Fiscal Year: | ||
Remainder of fiscal 2018 | $ 22,711 | |
2,019 | 89,330 | |
2,020 | 87,010 | |
2,021 | 41,902 | |
2,022 | 13,212 | |
2,023 | 3,854 | |
Thereafter | 248 | |
Net Book Value | $ 258,267 | $ 277,291 |
Debt - short-term debt (Details
Debt - short-term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Jul. 01, 2017 | |
Components of short-term debt | ||
Debt, Current, Total | $ 101,979 | $ 50,113 |
Bank credit facilities and other | ||
Components of short-term debt | ||
Short-term Debt, Weighted Average Interest Rate | 1.86% | 2.27% |
Bank credit facilities and other | $ 6,979 | $ 50,113 |
Accounts receivable securitization program | ||
Components of short-term debt | ||
Short-term Debt, Weighted Average Interest Rate | 2.35% | |
Short-term debt | $ 95,000 |
Debt - long-term debt (Details)
Debt - long-term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Jul. 01, 2017 | |
Debt Instrument [Line Items] | ||
Long-term debt before discount and debt issuance costs | $ 1,500,483 | $ 1,742,612 |
Discount and debt issuance costs - unamortized | (11,777) | (13,400) |
Long-term debt | $ 1,488,706 | $ 1,729,212 |
Revolving credit facilities | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate | 2.77% | |
Long-term debt before discount and debt issuance costs | $ 99,970 | |
Revolving credit facilities | Accounts receivable securitization program | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate | 1.53% | |
Long-term debt before discount and debt issuance costs | $ 142,000 | |
Notes due | Notes Due June 2020 | ||
Debt Instrument [Line Items] | ||
Long-term debt, stated interest rate | 5.88% | 5.88% |
Long-term debt before discount and debt issuance costs | $ 300,000 | $ 300,000 |
Notes due | Notes Due December 2021 | ||
Debt Instrument [Line Items] | ||
Long-term debt, stated interest rate | 3.75% | 3.75% |
Long-term debt before discount and debt issuance costs | $ 300,000 | $ 300,000 |
Notes due | Notes Due December 2022 | ||
Debt Instrument [Line Items] | ||
Long-term debt, stated interest rate | 4.88% | 4.88% |
Long-term debt before discount and debt issuance costs | $ 350,000 | $ 350,000 |
Notes due | Notes Due April 2026 | ||
Debt Instrument [Line Items] | ||
Long-term debt, stated interest rate | 4.63% | 4.63% |
Long-term debt before discount and debt issuance costs | $ 550,000 | $ 550,000 |
Other long-term debt | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate | 1.36% | 1.36% |
Long-term debt before discount and debt issuance costs | $ 483 | $ 642 |
Debt (Textuals) (Details)
Debt (Textuals) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Mar. 31, 2018 | Jul. 01, 2017 | |
Company's total debt | ||
Debt, Long-term and Short-term, Combined Amount | $ 1,590 | $ 1,780 |
Total fair value | 1,630 | 1,850 |
Revolving credit facilities | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | $ 1,250 | |
Term | 5 years | |
Line of credit facility contingent increase to maximum borrowing capacity | $ 1,500 | |
Revolving credit facilities | Accounts receivable securitization program | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | 400 | |
Accounts Receivable from Securitization | $ 774.8 | 807.5 |
Line of Credit Facility, Commitment Fee Percentage | 0.40% | |
Revolving credit facilities | Accounts receivable securitization program | Base Rate Or Commercial Paper | ||
Debt Instrument [Line Items] | ||
Spread over base rate | 0.40% | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | $ 150 | |
Letters of credit outstanding, amount | $ 2 | $ 3.1 |
Derivative financial instrume41
Derivative financial instruments Textuals (Details) - USD ($) | 9 Months Ended | |
Mar. 31, 2018 | Jul. 01, 2017 | |
Derivative fair value | ||
Derivative assets fair value | $ 849,000 | $ 7,297,000 |
Derivative liabilities fair value | $ 3,015,000 | 4,142,000 |
Minimum | Foreign Exchange Forward | ||
Derivatives, Fair Value [Line Items] | ||
Maximum maturity of foreign exchange contracts (less than one year) | 60 days | |
Maximum | Foreign Exchange Forward | ||
Derivatives, Fair Value [Line Items] | ||
Maximum maturity of foreign exchange contracts (less than one year) | 1 year | |
Not Designated as Hedging Instrument | Equity securities | Foreign Exchange Forward | Other Current Assets | ||
Derivative fair value | ||
Derivative assets fair value | $ 3,200,000 | |
Not Designated as Hedging Instrument | Equity securities | Foreign Exchange Forward | Accrued Expenses | ||
Derivative fair value | ||
Derivative liabilities fair value | $ 34,000,000 |
Derivative financial instrume42
Derivative financial instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Net derivative financial instrument (loss) gain | $ 3,354 | $ 26 | $ 5,070 | $ (8,711) |
Other expenses, net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Derivative financial loss | $ 35,000 |
Commitments and contingencies (
Commitments and contingencies (Textuals) (Details) $ in Millions | Mar. 31, 2018USD ($) |
Loss Contingency, Estimate [Abstract] | |
Estimate of possible loss | $ 14.2 |
Income taxes textuals (Details)
Income taxes textuals (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Income taxes | ||||
Changes in deferred tax assets due to changes in U.S. corporate tax rates | $ 230 | $ 230 | ||
Transition tax current | $ 22 | $ 22 | ||
Transition tax period | 8 years | |||
Effective tax rate | (338.00%) | 15.30% | 489.20% | 25.70% |
Pension and retirement plans (P
Pension and retirement plans (Periodic Pension Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Components of net periodic pension costs | ||||
Service cost | $ 4,305 | $ 7,406 | $ 12,040 | $ 22,217 |
Interest cost | 4,529 | 3,952 | 16,095 | 11,856 |
Expected return on plan assets | (10,862) | (10,840) | (38,376) | (32,520) |
Amortization of prior service credits | (393) | (394) | (1,179) | (1,180) |
Recognized net actuarial loss | 3,456 | 3,610 | 10,948 | 10,830 |
Pension settlement charge | 4,875 | 18,859 | ||
Net periodic pension cost | 5,910 | $ 3,734 | 18,387 | $ 11,203 |
Plan | ||||
Components of net periodic pension costs | ||||
Contributions | 12,000 | |||
Defined benefit plans, estimated future employer contributions each remaining quarter of current fiscal year | $ 4,000 | $ 4,000 |
Shareholders' equity (Share rep
Shareholders' equity (Share repurchase program textuals) (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2018 | Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Shareholders' equity | |||||
Authorized repurchase of common stock under Share Repurchase Program | $ 1,950,000 | $ 1,950,000 | |||
Shares repurchased during period (in shares) | 1.7 | 5.3 | |||
Cost of repurchase | $ 70,000 | $ 209,500 | |||
Remaining authorized repurchase amount | $ 389,600 | $ 389,600 | |||
Cash dividends paid per common share | $ 0.19 | $ 0.19 | $ 0.18 | $ 0.55 | $ 0.52 |
Dividends paid on common stock | $ 22,600 | $ 66,198 | $ 66,477 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Numerator: | ||||
Income (loss) from continuing operations | $ (315,604) | $ 89,920 | $ (200,628) | $ 190,073 |
Income (loss) from discontinued operations | (4,462) | 181,851 | (14,411) | 253,759 |
Net (loss) income | $ (320,066) | $ 271,771 | $ (215,039) | $ 443,832 |
Denominator: | ||||
Weighted average common shares for basic earnings per share | 119,601,000 | 128,487,000 | 120,895,000 | 127,973,000 |
Net effect of dilutive stock based compensation awards | 945,000 | 1,874,000 | ||
Weighted average common shares for diluted earnings per share | 119,601,000 | 129,432,000 | 120,895,000 | 129,847,000 |
Basic earnings (loss) per share-continuing operations | $ (2.64) | $ 0.70 | $ (1.66) | $ 1.48 |
Basic earnings (loss) per share-discontinued operations | (0.04) | 1.42 | (0.12) | 1.98 |
Basic earnings (loss) per share | (2.68) | 2.12 | (1.78) | 3.46 |
Diluted earnings (loss) per share-continuing operations | (2.64) | 0.69 | (1.66) | 1.46 |
Diluted earnings (loss) per share-discontinued operations | (0.04) | 1.41 | (0.12) | 1.95 |
Diluted earnings (loss) per share | $ (2.68) | $ 2.10 | $ (1.78) | $ 3.41 |
antidilutive Securities | 939,722 | 1,195,935 | ||
Stock Options | ||||
Denominator: | ||||
antidilutive Securities | 1,591,000 | 92,000 | 1,591,000 | 98,000 |
Additional cash flow informat48
Additional cash flow information (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Jul. 01, 2017 | |
Interest and income taxes paid | |||
Capital expenditures incurred but not paid | $ 21,282 | $ 16,780 | |
Unsettled sale of marketable securities | 4,121 | ||
Unsettled repurchases of common stock | 15,697 | ||
Interest | 55,924 | 74,165 | |
Income taxes | 94,773 | $ 106,659 | |
Cash equivalents | $ 6,200 | $ 208,300 |
Segment information (Details)
Segment information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Sales, by segment | ||||
Sales | $ 4,795,093 | $ 4,441,896 | $ 13,977,672 | $ 12,833,559 |
Operating income (expense): | ||||
Restructuring, integration and other expenses (Note 14) | (25,120) | (35,513) | (108,277) | (95,382) |
Impairment of goodwill | (181,440) | (181,440) | ||
Amortization of acquired intangible assets and other | (22,725) | (22,497) | (70,187) | (34,704) |
Operating income | (54,401) | 114,283 | 102,572 | 368,027 |
Segment | ||||
Operating income (expense): | ||||
Operating income | 202,104 | 197,149 | 541,978 | 572,879 |
Electronic Components | ||||
Operating income (expense): | ||||
Impairment of goodwill | (181,440) | |||
Operating income | 157,713 | 156,831 | 427,162 | 508,587 |
Electronic Components | Segment | ||||
Sales, by segment | ||||
Sales | 4,404,115 | 4,090,943 | 12,874,885 | 12,213,389 |
Premier Farnell | ||||
Operating income (expense): | ||||
Operating income | 44,391 | 40,318 | 114,816 | 64,292 |
Premier Farnell | Segment | ||||
Sales, by segment | ||||
Sales | 390,978 | 350,953 | 1,102,787 | 620,170 |
Business Support | Corporate | ||||
Operating income (expense): | ||||
Corporate | $ (27,220) | $ (24,856) | $ (79,502) | $ (74,766) |
Segment information (Sales, by
Segment information (Sales, by geographic area) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2018 | Apr. 01, 2017 | Mar. 31, 2018 | Apr. 01, 2017 | |
Sales, by geographic area: | ||||
Sales | $ 4,795,093 | $ 4,441,896 | $ 13,977,672 | $ 12,833,559 |
Americas | ||||
Sales, by geographic area: | ||||
Sales | 1,276,426 | 1,328,592 | 3,672,160 | 3,831,706 |
United States | ||||
Sales, by geographic area: | ||||
Sales | 1,180,000 | 1,230,000 | 3,400,000 | 3,560,000 |
EMEA | ||||
Sales, by geographic area: | ||||
Sales | 1,812,334 | 1,615,903 | 5,011,336 | 4,261,891 |
Germany | ||||
Sales, by geographic area: | ||||
Sales | 710,600 | 616,300 | 1,960,000 | 1,660,000 |
Belgium | ||||
Sales, by geographic area: | ||||
Sales | 281,100 | 248,300 | 786,000 | 678,500 |
Asia Pacific | ||||
Sales, by geographic area: | ||||
Sales | 1,706,333 | 1,497,401 | 5,294,176 | 4,739,962 |
Taiwan | ||||
Sales, by geographic area: | ||||
Sales | 616,700 | 486,900 | 1,990,000 | 1,670,000 |
China (including Hong Kong) | ||||
Sales, by geographic area: | ||||
Sales | 645,300 | 562,900 | 1,940,000 | 1,800,000 |
SINGAPORE | ||||
Sales, by geographic area: | ||||
Sales | $ 231,600 | $ 237,100 | $ 677,800 | $ 690,100 |
Segment information (Property,
Segment information (Property, plant and equipment, net, by geographic area) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jul. 01, 2017 |
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | $ 520,922 | $ 519,575 |
Americas | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 270,972 | 296,038 |
United States | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 265,600 | 289,100 |
EMEA | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 210,419 | 186,127 |
Germany | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 105,400 | 85,600 |
United Kingdom | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 50,600 | 52,100 |
Belgium | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 44,200 | 39,800 |
Asia Pacific | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | $ 39,531 | $ 37,410 |
Restructuring expenses (Details
Restructuring expenses (Details) $ in Thousands | 9 Months Ended |
Mar. 31, 2018USD ($) | |
Fiscal Year 2018 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | $ 40,082 |
Cash payments | (31,493) |
Non-cash amounts | (943) |
Other, principally foreign currency translation | 181 |
Ending Balance | 7,827 |
Fiscal Year 2017 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Beginning Balance | 12,262 |
Cash payments | (10,747) |
Changes in estimates, net | (606) |
Other, principally foreign currency translation | 251 |
Ending Balance | 1,160 |
Employee Severance | Fiscal Year 2018 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | 38,705 |
Cash payments | (31,302) |
Other, principally foreign currency translation | 176 |
Ending Balance | 7,579 |
Employee Severance | Fiscal Year 2017 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Beginning Balance | 12,186 |
Cash payments | (10,670) |
Changes in estimates, net | (606) |
Other, principally foreign currency translation | 250 |
Ending Balance | 1,160 |
Facility Closing | Fiscal Year 2018 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | 270 |
Cash payments | (26) |
Other, principally foreign currency translation | 4 |
Ending Balance | 248 |
Facility Closing | Fiscal Year 2017 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Beginning Balance | 76 |
Cash payments | (77) |
Other, principally foreign currency translation | 1 |
Asset Impairments | Fiscal Year 2018 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | 943 |
Non-cash amounts | (943) |
Other Restructuring | Fiscal Year 2018 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | 164 |
Cash payments | (165) |
Other, principally foreign currency translation | $ 1 |
Restructuring expenses (Textual
Restructuring expenses (Textuals) (Details) $ in Thousands | 9 Months Ended | |
Mar. 31, 2018USD ($)employee | Jul. 01, 2017USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||
Number of employee reductions under Severance charges | employee | 700 | |
Fiscal Year 2018 Restructuring Liabilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | $ 40,082 | |
Restructuring Reserve | 7,827 | |
Fiscal Year 2018 Restructuring Liabilities | Electronic Components | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 33,500 | |
Fiscal Year 2018 Restructuring Liabilities | Premier Farnell | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 4,800 | |
Fiscal Year 2018 Restructuring Liabilities | Business Support | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 1,800 | |
Fiscal Year 2017 Restructuring Liabilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | $ 1,160 | $ 12,262 |