Document and Entity Information
Document and Entity Information Document - shares | 9 Months Ended | |
Mar. 30, 2019 | Apr. 18, 2019 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AVNET INC | |
Entity Central Index Key | 0000008858 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 30, 2019 | |
Current Fiscal Year End Date | --06-29 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 106,296,252 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 30, 2019 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 725,252 | $ 621,125 |
Receivables, less allowances of $51,830 and $48,959, respectively | 3,188,863 | 3,641,139 |
Inventories | 3,211,979 | 3,141,822 |
Prepaid and other current assets | 129,316 | 206,513 |
Total current assets | 7,255,410 | 7,610,599 |
Property, plant and equipment, net | 455,484 | 522,909 |
Goodwill | 1,027,432 | 980,872 |
Intangible assets, net | 168,375 | 219,913 |
Other assets | 192,979 | 262,552 |
Total assets | 9,099,680 | 9,596,845 |
Current liabilities: | ||
Short-term debt | 50,401 | 165,380 |
Accounts payable | 1,836,543 | 2,269,478 |
Accrued expenses and other | 446,320 | 534,603 |
Total current liabilities | 2,333,264 | 2,969,461 |
Long-term debt | 2,023,628 | 1,489,219 |
Other liabilities | 380,316 | 453,084 |
Total liabilities | 4,737,208 | 4,911,764 |
Commitments and contingencies (Note 7) | ||
Shareholders' equity: | ||
Common stock $1.00 par; authorized 300,000,000 shares; issued 106,653,956 shares and 115,825,062 shares, respectively | 106,654 | 115,825 |
Additional paid-in capital | 1,565,083 | 1,528,713 |
Retained earnings | 2,935,077 | 3,235,894 |
Accumulated other comprehensive loss | (244,342) | (195,351) |
Total shareholders' equity | 4,362,472 | 4,685,081 |
Total liabilities and shareholders' equity | $ 9,099,680 | $ 9,596,845 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 30, 2019 | Jun. 30, 2018 |
Current assets: | ||
Allowance for doubtful accounts receivable, current (in dollars) | $ 51,830 | $ 48,959 |
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 | 106,653,956 | 115,825,062 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||||
Sales | $ 4,698,824 | $ 4,795,093 | $ 14,837,683 | $ 13,977,672 |
Type of Revenue [Extensible List] | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember |
Cost of sales | $ 4,074,629 | $ 4,141,556 | $ 12,946,706 | $ 12,109,120 |
Type of Cost, Good or Service [Extensible List] | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember |
Gross profit | $ 624,195 | $ 653,537 | $ 1,890,977 | $ 1,868,552 |
Selling, general and administrative expenses | 468,171 | 505,471 | 1,415,040 | 1,491,144 |
Goodwill impairment expense (Note 4) | 181,440 | 181,440 | ||
Restructuring, integration and other expenses | 2,939 | 25,120 | 79,986 | 108,277 |
Operating income (loss) | 153,085 | (58,494) | 395,951 | 87,691 |
Other income, net | 8,731 | 9,862 | 9,424 | 32,132 |
Interest and other financing expenses, net | (36,253) | (23,431) | (100,064) | (68,272) |
Income (loss) from continuing operations before taxes | 125,563 | (72,063) | 305,311 | 51,551 |
Income tax expense | 30,628 | 243,541 | 90,072 | 252,179 |
Income (loss) from continuing operations, net of tax | 94,935 | (315,604) | 215,239 | (200,628) |
Loss from discontinued operations, net of tax | (6,887) | (4,462) | (7,066) | (14,411) |
Net income (loss) | $ 88,048 | $ (320,066) | $ 208,173 | $ (215,039) |
Earnings (loss) per share: | ||||
Basic earnings per share-continuing operations | $ 0.87 | $ (2.64) | $ 1.93 | $ (1.66) |
Basic loss per share-discontinued operations | (0.06) | (0.04) | (0.06) | (0.12) |
Basic earnings (loss) per share | 0.81 | (2.68) | 1.87 | (1.78) |
Diluted earnings per share-continuing operations | 0.87 | (2.64) | 1.91 | (1.66) |
Diluted loss per share-discontinued operations | (0.06) | (0.04) | (0.06) | (0.12) |
Diluted earnings (loss) per share | $ 0.81 | $ (2.68) | $ 1.85 | $ (1.78) |
Shares used to compute earnings per share: | ||||
Basic | 108,074 | 119,601 | 111,222 | 120,895 |
Diluted | 108,822 | 119,601 | 112,252 | 120,895 |
Cash dividends paid per common share | $ 0.20 | $ 0.19 | $ 0.60 | $ 0.55 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 88,048 | $ (320,066) | $ 208,173 | $ (215,039) |
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation and other | 1,193 | 114,073 | (55,203) | 230,857 |
Pension adjustments, net | 1,249 | 5,121 | 6,212 | 15,310 |
Total comprehensive income (loss) | $ 90,490 | $ (200,872) | $ 159,182 | $ 31,128 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 30, 2019 | Mar. 31, 2018 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 208,173 | $ (215,039) |
Less: Loss from discontinued operations, net of tax | (7,066) | (14,411) |
Income (loss) from continuing operations | 215,239 | (200,628) |
Non-cash and other reconciling items: | ||
Depreciation | 72,692 | 114,111 |
Amortization | 63,123 | 69,860 |
Deferred income taxes | 45,286 | (74,126) |
Stock-based compensation | 24,204 | 18,427 |
Goodwill impairment expense | 181,440 | |
Other, net | 42,786 | 30,305 |
Changes in (net of effects from businesses acquired and divested): | ||
Receivables | 436,382 | (98,147) |
Inventories | (125,410) | (337,939) |
Accounts payable | (399,526) | 180,732 |
Accrued expenses and other, net | (118,347) | 133,837 |
Net cash flows provided by operating activities - continuing operations | 256,429 | 17,872 |
Net cash flows used for operating activities - discontinued operations | (56,284) | |
Net cash flows provided by for operating activities | 200,145 | 17,872 |
Cash flows from financing activities: | ||
Borrowings (repayments) under accounts receivable securitization, net | 342,000 | (47,000) |
Repayments under senior unsecured credit facility, net | (11,386) | (99,971) |
Borrowings (repayments) under bank credit facilities and other debt, net | 85,005 | (44,293) |
Repurchases of common stock | (447,901) | (209,466) |
Dividends paid on common stock | (66,188) | (66,198) |
Other, net | 10,042 | (2,738) |
Net cash flows used for financing activities - continuing operations | (88,428) | (469,666) |
Net cash flows used for financing activities | (88,428) | (469,666) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (101,383) | (112,217) |
Acquisitions of businesses, net of cash acquired | (66,458) | (18,621) |
Other, net | 42,069 | 7,020 |
Net cash flows used for investing activities - continuing operations | (125,772) | (123,818) |
Net cash flows provided by investing activities - discontinued operations | 123,473 | 153,933 |
Net cash flows (used) provided by investing activities | (2,299) | 30,115 |
Effect on currency exchange rate changes on cash and cash equivalents | (5,291) | 15,360 |
Cash and cash equivalents: | ||
Increase (decrease) | 104,127 | (406,319) |
Cash and cash equivalents at beginning of year | 621,125 | 836,384 |
Cash and cash equivalents at end of year | $ 725,252 | $ 430,065 |
Basis of presentation and new a
Basis of presentation and new accounting pronouncements | 9 Months Ended |
Mar. 30, 2019 | |
Basis of presentation and new accounting pronouncements | |
Basis of presentation and new accounting pronouncements | 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 and cash flows. All such adjustments are of a normal recurring nature. The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results may differ from these estimates. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018. Certain reclassifications have been made in prior periods to conform to the current period presentation including reclassifications as a result of recently adopted accounting pronouncements. Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”, and collectively with its related subsequent amendments, “Topic 606”). Topic 606 supersedes previous revenue recognition guidance and requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for such goods or services. The Company adopted Topic 606 on July 1, 2018 using the modified retrospective transition method applied to those contracts which were not completed as of July 1, 2018. Under this transition method, the Company’s results in the consolidated statements of operations for the third quarter and nine months ended March 30, 2019 are presented under Topic 606, while the comparative results for the third quarter and nine months ended March 31, 2018 were not retrospectively adjusted, as such results were recognized in accordance with the revenue recognition policy discussed under Summary of Significant Accounting Policies in Note 1 of the Company’s Fiscal 2018 Annual Report on Form 10-K. The adoption of Topic 606 did not have a material impact on the Company’s consolidated financial statements as of the adoption date and as of and for the nine months ended March 30, 2019. Substantially all of the Company’s sales continue to be recognized when products are shipped from the Company’s facilities or delivered to customers, depending on the underlying contractual terms. For a nominal portion of the Company’s contracts where the accounting did change, the adoption of Topic 606 resulted in an increase to the opening balance of retained earnings of $2.0 million as of July 1, 2018. This impact was primarily due to the acceleration of recognition of net sales and associated gross profit related to certain uncompleted contracts for the manufacture of goods with no alternative use and for which the Company has an enforceable right to payment, including a reasonable profit margin, from the customer for performance completed to date. For these contracts, the Company recognizes revenue over time as control of the goods transfers through the manufacturing process, rather than when the goods are delivered, title has transferred, and the risks and rewards of ownership are passed to the customer, as under previous revenue recognition guidance. Refer to Note 2 herein for further discussion regarding revenue recognition and related accounting policies. In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Compensation - Retirement Benefits (Topic 715)- Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost ("ASU No. 2017-07"). ASU No. 2017-07 requires that the service cost component of net periodic pension costs be included in the same line item as other compensation costs arising from services rendered by employees during the period, with the other components of the net periodic pension costs reported separately from the service cost component and below operating income. The Company adopted this standard effective the first quarter of fiscal year 2019, which required changes to the classification of net periodic pension costs in the consolidated statements of operations for all periods presented. The service cost component of the net periodic pension cost is now included in “Selling, general and administrative expenses” with all other components of net periodic pension costs within “Other income, net” in the consolidated statements of operations. The adoption of ASU No. 2017-07 did not have any impact on the Company’s reported amount of income from continuing operations before taxes. During the first quarter of fiscal 2019, the Company adopted ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This update addresses the recognition of current and deferred income taxes resulting from an intra-entity transfer of any asset other than inventory. This update has been applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings. The adoption of this update resulted in a cumulative reduction to the opening balance of retained earnings of $5.8 million and a reduction to other assets of $5.8 million. In February 2018, the 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 provides entities the option to reclassify accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the tax legislation enacted by the U.S. federal governments on December 22, 2017 (the “Act”). The update also requires certain new disclosures regardless of the election. 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 has early adopted ASU 2018-02 during the third quarter of fiscal 2019 and has elected not to reclassify any stranded tax effects from the Act to retained earnings. As a result, there was no impact to the consolidated financial statements as a result of the adoption of ASU 2018-02. Recently issued accounting pronouncements In October 2018, the FASB issued Accounting Standards Update No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes , which permits use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815. This update is effective for the Company in the first quarter of fiscal 2020. The Company intends to adopt this update concurrently with ASU 2017-12. The Company does not expect any impact from the adoption of ASU 2018-16 on its consolidated financial statements as the Company does not currently have any interest rate related derivative financial instruments. In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) ("ASU No. 2018-15"). ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop internal-use software. ASU No. 2018-15 is effective for the Company in the first quarter of fiscal 2021, with early adoption permitted, and is to be applied either retrospectively or prospectively. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2018-15. 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 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 February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”) and issued subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 requires companies to generally recognize operating and financing lease liabilities on the consolidated balance sheet and corresponding right-of-use assets created by those leases with lease terms of more than 12 months. The Company will adopt Topic 842 when it becomes effective in the first quarter of fiscal 2020 using the retrospective cumulative effect adjustment transition method and record a cumulative effect adjustment as of the adoption date. The Company is currently evaluating the impact of its pending adoption of Topic 842 on its consolidated financial statements, including assessing certain available practical expedients, and expects that most operating lease commitments related to the Company’s real estate, vehicle and equipment leases will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption, which will materially increase total assets and total liabilities relative to such amounts prior to adoption. The Company does not expect the adoption to have a material impact on the consolidated statements of operations or consolidated statements of cash flows. The Company has established an implementation team inclusive of external advisors and is in the process of gathering information specific to its current operating lease portfolio. The Company’s information gathering, analysis and evaluation of the new standard will continue through the adoption date of Topic 842 in the first quarter of fiscal 2020. |
Revenue recognition
Revenue recognition | 9 Months Ended |
Mar. 30, 2019 | |
Revenue recognition | |
Revenue recognition | 2. Revenue recognition Prior to the adoption of Topic 606, the Company’s revenue recognition policy was in accordance with ASC Topic 605, Revenue Recognition . Effective July 1, 2018, the Company adopted Topic 606 using the modified retrospective transition method, resulting in accounting policy changes surrounding revenue recognition which replace revenue recognition policies discussed in the Summary of Significant Accounting Policies in Note 1 of the Company’s Fiscal 2018 Annual Report on Form 10-K. The adoption of Topic 606 did not have a material impact on the Company’s consolidated financial statements. The Company’s revenues are generated from the distribution and sale of electronic components including semiconductors, interconnect, passive and electromechanical (“IP&E”) devices and other integrated electronic components from the world’s leading electronic component manufacturers. The Company’s expertise in design, supply chain and logistics enable it to sell to customers of all sizes from startups and mid-sized businesses to enterprise-level original equipment manufacturers (“OEMs”), electronic manufacturing services (“EMS”) providers and original design manufacturers (“ODMs”). The Company sells to a variety of markets ranging from automotive to medical to defense and aerospace. The Company also sells integrated solutions including the assembly or manufacture of embedded electronic component products and systems, touch and passive displays, and standard or specialized boards. The Company’s revenue arrangements primarily consist of performance obligations related to the transfer of promised products. The Company considers customer purchase orders, which in some cases are governed by master agreements, to be the contracts with a customer. All revenue is generated from contracts with customers. Revenue is recognized at the point at which control of the underlying products are transferred to the customer, which includes determining whether products are distinct and separate performance obligations. For electronic component and related product sales, this generally occurs upon shipment of the products, however, this may occur at a later date depending on the agreed upon sales terms, such as delivery at the customer's designated location, or when products that are consigned at customer locations are consumed. In limited instances, where products are not in stock and delivery times are critical, product is purchased from the supplier and drop-shipped to the customer. The Company typically takes control of the products when shipped by the manufacturer and then recognizes revenue when control of the product transfers to the customer. The Company does not have material product warranty obligations as the assurance type product warranties provided by the component manufacturers are passed through to the Company’s customers. For contracts related to the specialized manufacture of products for customers with no alternative use and for which the Company has an enforceable right to payment, including a reasonable profit margin, the Company recognizes revenue over time as control of the products transfer through the manufacturing process. The contract assets associated with such specialized manufacturing products are not material as these contracts represent less than 2% of the Company’s total sales. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. The Company estimates different forms of variable consideration at the time of sale based on historical experience, current conditions and contractual obligations. Revenue is recorded net of customer discounts and rebates. When the Company offers the right or has a history of accepting returns of product, historical experience is utilized to establish a liability for the estimate of expected returns and an asset for the right to recover the product expected to be returned. These adjustments are made in the same period as the underlying sales transactions. The Company considers the following indicators amongst others when determining whether it is acting as a principal in the contract where revenue would be recorded on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified products or services, (ii) the Company has inventory risk before the specified products have been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified products or services. If a transaction does not meet the Company's indicators of being a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue. The Company has elected to treat shipping and handling of product as a fulfillment activity. The practical expedient not to disclose information about remaining performance obligations has also been elected as these contracts have an original duration of one year or less. The Company does not have any payment terms that exceed one year from the point it has satisfied the related performance obligations. |
Acquisitions and Discontinued o
Acquisitions and Discontinued operations | 9 Months Ended |
Mar. 30, 2019 | |
Discontinued Operations and Disposal Groups | |
Acquisitions and Discontinued operations | 3. Acquisitions and Discontinued operations Acquisition of Softweb Solutions At the end of December 2018, the Company acquired Softweb Solutions (“Softweb”) a privately held software and artificial intelligence company that delivers software solutions for Internet of Things (IoT) applications and systems designed to increase efficiency, speed time to market, and help businesses transform. The impact of this acquisition was not material to the Company’s consolidated balance sheets or statements of operations and as a result, the Company has not disclosed the preliminary allocation of purchase price or the pro-forma impact of the acquisition. Discontinued Operations In February 2017, the Company completed the sale of its Technology Solutions business (“TS business”) to Tech Data Corporation (the “Buyer”). The TS business and the financial impacts of the divestiture are classified as discontinued operations in all periods presented. In August 2018, the Company executed a settlement agreement with the Buyer resulting in a final adjustment of $120.0 million and a final geographic allocation of the TS business sales price for tax reporting purposes. This incremental consideration received from the sale of the TS business as well as cash settlements from the resolution of indemnification claims and other cash reimbursements have been classified as cash flow from discontinued operations investing activities. Income tax payments related to the gain on sale of the TS business have been classified as cash flow from discontinued operations operating activities. Under the contractual terms of the sale of the TS business, the Company has indemnified the Buyer for certain liabilities including tax related matters, which may result in future indemnification expenses and indemnification payments to the Buyer depending upon the outcome of those matters subject to indemnification. |
Goodwill and long-lived assets
Goodwill and long-lived assets | 9 Months Ended |
Mar. 30, 2019 | |
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 30, 2019. Electronic Premier Components Farnell Total (Thousands) Carrying value at June 30, 2018 (1) $ 479,699 $ 501,173 $ 980,872 Additions from acquisitions 49,405 — 49,405 Foreign currency translation (2,309) (536) (2,845) Carrying value at March 30, 2019 (1) $ 526,795 $ 500,637 $ 1,027,432 (1) Includes accumulated impairment of $1,045,110 from fiscal 2009 and $181,440 from fiscal 2018 The Company evaluates each quarter if facts and circumstances indicate that it is more likely than not that the fair value of its reporting units is less than their carrying value, which would require the Company to perform an interim goodwill impairment test. Indicators the Company evaluates to determine whether an interim goodwill impairment test is necessary include, but are not limited to, (i) a sustained decrease in share price or market capitalization as of any fiscal quarter end, (ii) changes in the macroeconomic or industry environments, (iii) the results of and the amount of time passed since the last goodwill impairment test and (iv) the long-term expected financial performance of its reporting units. During the third quarter of fiscal 2019, the Company concluded that an interim goodwill impairment test was not required. During the third quarter of fiscal 2018, the Company impaired all of the goodwill in the Americas reporting unit 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 30, 2019, and June 30, 2018, respectively. March 30, 2019 June 30, 2018 Acquired Accumulated Net Book Acquired Accumulated Net Book Amount Amortization Value Amount Amortization Value (Thousands) Customer related $ 299,155 $ (196,551) $ 102,604 $ 300,126 $ (148,416) $ 151,710 Trade name 54,267 (23,212) 31,055 54,391 (16,711) 37,680 Technology and other 64,740 (30,024) 34,716 52,793 (22,270) 30,523 $ 418,162 $ (249,787) $ 168,375 $ 407,310 $ (187,397) $ 219,913 Intangible asset amortization expense from continuing operations was $21.9 million and $22.6 million for the third quarters of fiscal 2019 and 2018, respectively, and $63.1 million and $69.9 million for the first nine months of fiscal 2019 and 2018, respectively. Intangible assets have a weighted average remaining useful life of approximately 2 years. The following table presents the estimated future amortization expense for the remainder of fiscal 2019 and the next five fiscal years (in thousands): Fiscal Year Remainder of fiscal 2019 $ 21,179 2020 83,522 2021 41,493 2022 14,774 2023 6,043 2024 1,364 Total $ 168,375 |
Debt
Debt | 9 Months Ended |
Mar. 30, 2019 | |
Debt | |
Debt | 5. Debt Short-term debt consists of the following (in thousands): March 30, 2019 June 30, 2018 March 30, 2019 June 30, 2018 Interest Rate Carrying Balance Bank credit facilities and other 3.41 % 2.91 % $ 50,401 $ 60,380 Accounts receivable securitization program — 2.63 % — 105,000 Short-term debt $ 50,401 $ 165,380 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. Long-term debt consists of the following (in thousands): March 30, 2019 June 30, 2018 March 30, 2019 June 30, 2018 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program 3.25 % — $ 447,000 $ — Credit Facility 5.68 — 85,600 — 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 1.11 % 1.26 % 449 383 Long-term debt before discount and debt issuance costs 2,033,049 1,500,383 Discount and debt issuance costs – unamortized (9,421) (11,164) Long-term debt $ 2,023,628 $ 1,489,219 The Company has an accounts receivable securitization program (the “Securitization 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 $500 million. The Securitization Program does not qualify for off balance sheet accounting treatment and any borrowings under the Securitization Program are recorded as debt in the consolidated balance sheets. Under the Securitization 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 $820.9 million and $790.5 million at March 30, 2019, and June 30, 2018, respectively. The Securitization Program contains certain covenants relating to the quality of the receivables sold. The Securitization Program also requires the Company to maintain certain minimum interest coverage and leverage ratios, which the Company was in compliance with as of March 30, 2019, and June 30, 2018. The Securitization Program expires in August 2020 and as a result the Company has classified outstanding balances as long-term debt as of March 30, 2019. Interest on borrowings is calculated using a one-month LIBOR rate plus a spread of 0.75%. The facility fee on the unused balance of the facility is up to 0.35%. 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 $200.0 million of letters of credit and up to $300.0 million of loans in certain approved currencies, which expires in June 2023. 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 30, 2019 and June 30, 2018. As of March 30, 2019 and June 30, 2018, there were $3.0 million and $2.0 million, respectively, in letters of credit issued under the Credit Facility. As of March 30, 2019, the carrying value and fair value of the Company’s total debt was $2.07 billion and $2.12 billion, respectively. At June 30, 2018, the carrying value and fair value of the Company’s total debt was $1.65 billion and $1.67 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. 30, 2019 | |
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, 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 “Prepaid and other current assets” or “Accrued expenses and other,” as applicable, in the accompanying consolidated balance sheets as of March 30, 2019 and June 30, 2018. 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, Japanese Yen, Chinese Yuan, Taiwan Dollar, Canadian 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 30, June 30, 2019 2018 (Thousands) Forward foreign currency exchange contracts not receiving hedge accounting treatment recorded in: Prepaid and other current assets $ 2,636 $ 2,259 Accrued expenses and other 3,262 7,083 The amounts recorded to other income, net, related to derivative financial instruments for economic hedges are as follows: Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands) Net derivative financial instrument (loss) gain $ (398) $ 3,354 $ (17) $ 5,070 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. 30, 2019 | |
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 30, 2019 and June 30, 2018, the Company had aggregate estimated liabilities of $14.7 million and $14.2 million, respectively, 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. 30, 2019 | |
Income taxes | |
Income taxes | 8. Income taxes The Company’s effective tax rate on its income from continuing operations before taxes was 24.4% in the third quarter of fiscal 2019. During the third quarter of fiscal 2019, the Company’s effective tax rate was unfavorably impacted primarily by (i) an increase due to the impact from recently issued U.S. income tax regulations, partially offset by (ii) decreases in unrecognized tax benefits due to the expiration of the statute of limitations in various jurisdictions. During the third quarter of fiscal 2018, the Company’s effective tax rate on its loss from continuing operations before taxes of 338.0% was unfavorably impacted primarily by (i) the one-time mandatory deemed repatriation tax liability expense (“the transition tax”) estimate recorded under the requirements of U.S. federal government enacted tax legislation (the “Act”) and (ii) the goodwill impairment discussed in Note 4, which was not tax deductible, partially offset primarily by (iii) the mix of income in lower tax jurisdictions and (iv) the release of reserves due to the expiration of the statute of limitations in various jurisdictions. For the first nine months of fiscal 2019, the Company’s effective tax rate on its income from continuing operations before taxes was 29.5%. The effective tax rate for the first nine months of fiscal 2019 was unfavorably impacted primarily by (i) an adjustment to the transition tax recorded under the requirements of the Act, (ii) net increases in unrecognized tax benefits, and (iii) an increase due to the impact from recently issued U.S. income tax regulations, partially offset by (iv) an adjustment to the deferred tax impacts of the Act, (v) the mix of income in lower tax jurisdictions, and (vi) the release of valuation allowances against deferred tax assets that were deemed to be realizable. During the first nine months of fiscal 2018, the Company’s effective tax rate on its income from continuing operations before taxes of 489.2% was unfavorably impacted primarily by (i) the 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 (iv) the mix of income in lower tax jurisdictions and (v) the release of reserves due to the expiration of the statute of limitations in various jurisdictions. The Company’s effective tax rate in fiscal 2019 is based on the Company’s interpretation of tax regulations under the Act including the computation of Global Intangible Low Taxed Income (“GILTI”). The Company has made a policy election to account for any impacts of the GILTI tax as a period expense. The Company’s fiscal 2019 effective tax rate may change in future periods due to changes in U.S. tax regulations and the issuance of additional guidance related to the Act. During the second quarter of fiscal 2019, which corresponds to the end of the measurement period allowed for under Staff Accounting Bulletin 118 (“SAB 118”), the Company finalized its estimate of the transition tax, resulting in an increase to the tax liability of $10.8 million due to additional analysis performed on foreign tax pools and earnings and profits computations. The total transition tax recorded as a result of the Act is estimated to be $257.5 million. The transition tax may change in the future due to changes in U.S. tax regulations, new guidance from federal and state regulators and related interpretations of the Act. The Company continues to evaluate the impact of the Act including the Company’s historical assertion related to ASC 740 unremitted earnings. The Company has not changed its historical assertion as of March 30, 2019 that its ASC 740 unremitted earnings are permanently reinvested. |
Pension and retirement plan
Pension and retirement plan | 9 Months Ended |
Mar. 30, 2019 | |
Pension and retirement plan | |
Pension and retirement plans | 9. Pension plan The Company has a noncontributory defined benefit pension plan that covers substantially all U.S. employees and includes an acquired closed noncontributory defined benefit pension plan covering certain current or former Premier Farnell U.S. employees (the “Plan”). Components of net periodic pension cost from continuing operations for the Plan were as follows, which reflect the adoption of ASU 2017-07 as discussed further in Note 1: Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands) Service cost $ 3,582 $ 4,305 $ 11,050 $ 12,040 Total net periodic pension cost within selling, general and administrative expenses 3,582 4,305 11,050 12,040 Interest cost 8,010 4,529 21,238 16,095 Expected return on plan assets (16,003) (10,862) (42,605) (38,376) Amortization of prior service credits (392) (393) (1,178) (1,179) Recognized net actuarial loss 2,091 3,456 7,161 10,948 Total net periodic pension benefit within other income, net (6,294) (3,270) (15,384) (12,512) Net periodic pension (benefit) cost $ (2,712) $ 1,035 $ (4,334) $ (472) In connection with the adoption of ASU No. 2017-07, the Company now classifies service cost as a component of selling, general and administrative expenses and other components of net periodic pension costs within other income, net. The Company contributed $8.0 million to the Plan during the first nine months of fiscal 2019 and expects to make an additional contribution to the Plan of $8.0 million in the remainder of fiscal 2019. Amounts reclassified out of accumulated other comprehensive income, net of tax, to other income, net during the third quarters and first nine months of fiscal 2019 and fiscal 2018 were not material and 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 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 recorded a pension settlement expense of $4.9 million and $18.9 million in the third quarter and first nine months of fiscal 2018, respectively, which was classified as a component of loss from discontinued operations. |
Shareholders' equity
Shareholders' equity | 9 Months Ended |
Mar. 30, 2019 | |
Shareholders' equity | |
Shareholders' equity | 10. Shareholders’ equity Share repurchase program In August 2018, the Company’s Board of Directors amended the Company’s existing share repurchase program to authorize the repurchase of up to $2.45 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 30, 2019, the Company repurchased 2.8 million and 10.2 million shares, respectively, under this program for a total cost of $117.2 million and $449.2 million, respectively. As of March 30, 2019, the Company had $322.9 million remaining under its share repurchase authorization. Common stock dividend In February 2019, the Company’s Board of Directors approved a dividend of $0.20 per common share and dividend payments of $21.5 million were made in March 2019. During the nine months ended March 30, 2019, the Company paid dividends of $0.60 per common share and $66.2 million in total. |
Earnings per share
Earnings per share | 9 Months Ended |
Mar. 30, 2019 | |
Earnings per share | |
Earnings per share | 11. Earnings per share Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands, except per share data) Numerator: Income (loss) from continuing operations $ 94,935 $ (315,604) $ 215,239 $ (200,628) Loss from discontinued operations (6,887) (4,462) (7,066) (14,411) Net income (loss) $ 88,048 $ (320,066) $ 208,173 $ (215,039) Denominator: Weighted average common shares for basic earnings per share 108,074 119,601 111,222 120,895 Net effect of dilutive stock based compensation awards 748 — 1,030 — Weighted average common shares for diluted earnings per share 108,822 119,601 112,252 120,895 Basic earnings (loss) per share - continuing operations $ 0.87 $ (2.64) $ 1.93 $ (1.66) Basic loss per share - discontinued operations (0.06) (0.04) (0.06) (0.12) Basic earnings (loss) per share $ 0.81 $ (2.68) $ 1.87 $ (1.78) Diluted earnings (loss) per share - continuing operations $ 0.87 $ (2.64) $ 1.91 $ (1.66) Diluted loss per share - discontinued operations (0.06) (0.04) (0.06) (0.12) Diluted earnings (loss) per share $ 0.81 $ (2.68) $ 1.85 $ (1.78) Stock options excluded from earnings per share calculation due to anti-dilutive effect 528 1,591 410 1,591 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 all potential common shares would be anti-dilutive as the Company had net losses. |
Additional cash flow informatio
Additional cash flow information | 9 Months Ended |
Mar. 30, 2019 | |
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 30, March 31, 2019 2018 (Thousands) Non-cash Investing Activities: Capital expenditures incurred but not paid $ 10,310 $ 21,282 Unsettled sale of marketable securities — 4,121 Non-cash Financing Activities: Unsettled share repurchases $ 4,740 $ — Supplemental Cash Flow Information: Interest $ 87,845 $ 55,924 Income taxes - continuing and discontinued operations 150,765 94,773 Included in cash and cash equivalents as of March 30, 2019 and June 30, 2018 was $6.5 million and $6.1 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. 30, 2019 | |
Segment information | |
Segment information | 13. Segment information Electronic Components (“EC”) and Premier Farnell (“Farnell”) are the Company’s reportable segments (“operating groups”). EC markets and sells semiconductors and interconnect, passive and electromechanical devices and integrated components to a diverse customer base serving many end-markets. Farnell distributes electronic components and related products to the electronic system design community utilizing multi-channel sales and marketing resources. Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands) Sales: Electronic Components $ 4,331,351 $ 4,404,115 $ 13,722,890 $ 12,874,885 Farnell 367,473 390,978 1,114,793 1,102,787 4,698,824 4,795,093 14,837,683 13,977,672 Operating income: Electronic Components $ 153,319 $ 157,713 $ 473,783 $ 427,162 Farnell 45,651 42,162 126,088 108,245 198,970 199,875 599,871 535,407 Corporate (1) (20,866) (29,084) (60,414) (87,812) Restructuring, integration and other expenses (2,939) (25,120) (79,986) (108,277) Goodwill impairment expense — (181,440) — (181,440) Amortization of acquired intangible assets and other (22,080) (22,725) (63,520) (70,187) Operating income (loss) $ 153,085 $ (58,494) $ 395,951 $ 87,691 Sales, by geographic area: Americas (2) $ 1,297,220 $ 1,276,426 $ 3,869,435 $ 3,672,160 EMEA (3) 1,740,916 1,812,334 5,124,409 5,011,336 Asia/Pacific (4) 1,660,688 1,706,333 5,843,839 5,294,176 Sales $ 4,698,824 $ 4,795,093 $ 14,837,683 $ 13,977,672 (1) Corporate is not a reportable segment and represents certain centrally incurred overhead expenses and assets that are not included in the EC and Farnell 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 $1.22 billion and $1.18 billion for the third quarters ended March 30, 2019 and March 31, 2018, respectively. Includes sales from the United States of $3.61 billion and $3.40 billion for the first nine months of fiscal 2019 and 2018, respectively. (3) Includes sales from Germany and Belgium of $666.2 million and $311.9 million, respectively, for the third quarter ended March 30, 2019, and $2.00 billion and $868.2 million, respectively, for the first nine months of fiscal 2019. Includes sales from Germany and Belgium of $717.8 million and $281.1 million, respectively, for the third quarter ended March 31, 2018, and $1.98 billion and $786.0 million, respectively, for the first nine months of fiscal 2018. (4) Includes sales from China (including Hong Kong), Taiwan and Singapore of $565.5 million, $659.7 million and $237.2 million, respectively, for the third quarter ended March 30, 2019, and $1.93 billion, $2.47 billion and $779.5 million, respectively, for the first nine months of fiscal 2019. Includes sales from China (including Hong Kong), Taiwan and Singapore of $638.1 million, $616.7 million and $231.6 million, respectively, for the third quarter ended March 31, 2018, and $1.92 billion, $1.99 billion and $677.8 million, respectively, for the first nine months of fiscal 2018. March 30, June 30, 2019 2018 (Thousands) Property, plant, and equipment, net, by geographic area: Americas (1) $ 219,283 $ 276,156 EMEA (2) 197,090 204,797 Asia/Pacific 39,111 41,956 Property, plant, and equipment, net $ 455,484 $ 522,909 (1) Includes property, plant and equipment, net, of $215.0 million and $271.4 million as of March 30, 2019, and June 30, 2018, respectively, in the United States. (2) Includes property, plant and equipment, net, of $94.8 million, $65.3 million and $27.2 million in Germany, the UK and Belgium, respectively, as of March 30, 2019; and $99.4 million, $52.5 million and $43.4 million in Germany, the UK and Belgium, respectively, as of June 30, 2018. |
Restructuring expenses
Restructuring expenses | 9 Months Ended |
Mar. 30, 2019 | |
Restructuring expenses | |
Restructuring expenses | 14. Restructuring expenses Fiscal 2019 During fiscal 2019, the Company undertook restructuring actions in order to improve operating efficiencies and further integrate the acquisition of Farnell. These restructuring actions included certain costs associated with the continued transformation of the Company’s information technology, distribution center footprint and business operations including the re-prioritization of its information technology initiatives and resources. 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 and assets established during fiscal 2019 is presented in the following table: Facility and Contract Asset Severance Exit Costs Impairments Total (Thousands) Fiscal 2019 restructuring expenses $ 23,640 $ 553 $ 52,344 $ 76,537 Cash payments (12,782) (200) — (12,982) Non-cash amounts — — (52,344) (52,344) Other, principally foreign currency translation (118) (5) — (123) Balance at March 30, 2019 $ 10,740 $ 348 $ — $ 11,088 Severance expense recorded in the first nine months of fiscal 2019 related to the reduction, or planned reduction, of over 300 employees, primarily in executive management, operations, information technology, warehouse, sales and business support functions. Facility and contract exit costs primarily consist of liabilities for remaining lease obligations for exited facilities and for contractual termination costs. Asset impairments represents an asset impairment expense of $52.3 million that relates to software assets that were impaired as a result of the restructuring of information technology operations including the re-prioritization of information technology initiatives and resources. Of the $76.5 million in restructuring expenses recorded during the first nine months of fiscal 2019, $75.1 million related to EC, $1.1 million related to Farnell and $0.3 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 2019. Fiscal 2018 and prior During fiscal 2018 and prior, 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 2019 related to the remaining restructuring liabilities from continuing operations established during fiscal 2018 and prior: Facility and Contract Asset Severance Exit Costs Impairments Total (Thousands) Balance at June 30, 2018 $ 25,918 $ 2,890 $ 416 $ 29,224 Cash payments (21,328) (969) — (22,297) Changes in estimates, net (877) (155) — (1,032) Non-cash amounts — 218 (416) (198) Other, principally foreign currency translation (432) 39 — (393) Balance at March 30, 2019 $ 3,281 $ 2,023 $ — $ 5,304 The Company expects the majority of the remaining amounts to be paid by the end of fiscal 2019. |
Basis of presentation and new_2
Basis of presentation and new accounting pronouncements (Policies) | 9 Months Ended |
Mar. 30, 2019 | |
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 and cash flows. All such adjustments are of a normal recurring nature. The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements. Actual results may differ from these estimates. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year. The information included in this Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2018. Certain reclassifications have been made in prior periods to conform to the current period presentation including reclassifications as a result of recently adopted accounting pronouncements. |
New accounting pronouncements | Recently adopted accounting pronouncements In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”, and collectively with its related subsequent amendments, “Topic 606”). Topic 606 supersedes previous revenue recognition guidance and requires the Company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for such goods or services. The Company adopted Topic 606 on July 1, 2018 using the modified retrospective transition method applied to those contracts which were not completed as of July 1, 2018. Under this transition method, the Company’s results in the consolidated statements of operations for the third quarter and nine months ended March 30, 2019 are presented under Topic 606, while the comparative results for the third quarter and nine months ended March 31, 2018 were not retrospectively adjusted, as such results were recognized in accordance with the revenue recognition policy discussed under Summary of Significant Accounting Policies in Note 1 of the Company’s Fiscal 2018 Annual Report on Form 10-K. The adoption of Topic 606 did not have a material impact on the Company’s consolidated financial statements as of the adoption date and as of and for the nine months ended March 30, 2019. Substantially all of the Company’s sales continue to be recognized when products are shipped from the Company’s facilities or delivered to customers, depending on the underlying contractual terms. For a nominal portion of the Company’s contracts where the accounting did change, the adoption of Topic 606 resulted in an increase to the opening balance of retained earnings of $2.0 million as of July 1, 2018. This impact was primarily due to the acceleration of recognition of net sales and associated gross profit related to certain uncompleted contracts for the manufacture of goods with no alternative use and for which the Company has an enforceable right to payment, including a reasonable profit margin, from the customer for performance completed to date. For these contracts, the Company recognizes revenue over time as control of the goods transfers through the manufacturing process, rather than when the goods are delivered, title has transferred, and the risks and rewards of ownership are passed to the customer, as under previous revenue recognition guidance. Refer to Note 2 herein for further discussion regarding revenue recognition and related accounting policies. In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Compensation - Retirement Benefits (Topic 715)- Improving the Presentation of Net Periodic Cost and Net Periodic Postretirement Benefit Cost ("ASU No. 2017-07"). ASU No. 2017-07 requires that the service cost component of net periodic pension costs be included in the same line item as other compensation costs arising from services rendered by employees during the period, with the other components of the net periodic pension costs reported separately from the service cost component and below operating income. The Company adopted this standard effective the first quarter of fiscal year 2019, which required changes to the classification of net periodic pension costs in the consolidated statements of operations for all periods presented. The service cost component of the net periodic pension cost is now included in “Selling, general and administrative expenses” with all other components of net periodic pension costs within “Other income, net” in the consolidated statements of operations. The adoption of ASU No. 2017-07 did not have any impact on the Company’s reported amount of income from continuing operations before taxes. During the first quarter of fiscal 2019, the Company adopted ASU 2016-16 - Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This update addresses the recognition of current and deferred income taxes resulting from an intra-entity transfer of any asset other than inventory. This update has been applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings. The adoption of this update resulted in a cumulative reduction to the opening balance of retained earnings of $5.8 million and a reduction to other assets of $5.8 million. In February 2018, the 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 provides entities the option to reclassify accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the tax legislation enacted by the U.S. federal governments on December 22, 2017 (the “Act”). The update also requires certain new disclosures regardless of the election. 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 has early adopted ASU 2018-02 during the third quarter of fiscal 2019 and has elected not to reclassify any stranded tax effects from the Act to retained earnings. As a result, there was no impact to the consolidated financial statements as a result of the adoption of ASU 2018-02. Recently issued accounting pronouncements In October 2018, the FASB issued Accounting Standards Update No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes , which permits use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815. This update is effective for the Company in the first quarter of fiscal 2020. The Company intends to adopt this update concurrently with ASU 2017-12. The Company does not expect any impact from the adoption of ASU 2018-16 on its consolidated financial statements as the Company does not currently have any interest rate related derivative financial instruments. In August 2018, the FASB issued Accounting Standards Update No. 2018-15, Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force) ("ASU No. 2018-15"). ASU No. 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop internal-use software. ASU No. 2018-15 is effective for the Company in the first quarter of fiscal 2021, with early adoption permitted, and is to be applied either retrospectively or prospectively. The Company is currently evaluating the potential effects of adopting the provisions of ASU No. 2018-15. 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 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 February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”) and issued subsequent amendments to the initial guidance: ASU 2017-13, ASU 2018-10, ASU 2018-11, ASU 2018-20 and ASU 2019-01 (collectively, Topic 842). Topic 842 requires companies to generally recognize operating and financing lease liabilities on the consolidated balance sheet and corresponding right-of-use assets created by those leases with lease terms of more than 12 months. The Company will adopt Topic 842 when it becomes effective in the first quarter of fiscal 2020 using the retrospective cumulative effect adjustment transition method and record a cumulative effect adjustment as of the adoption date. The Company is currently evaluating the impact of its pending adoption of Topic 842 on its consolidated financial statements, including assessing certain available practical expedients, and expects that most operating lease commitments related to the Company’s real estate, vehicle and equipment leases will be subject to the new standard and recognized as operating lease liabilities and right-of-use assets upon adoption, which will materially increase total assets and total liabilities relative to such amounts prior to adoption. The Company does not expect the adoption to have a material impact on the consolidated statements of operations or consolidated statements of cash flows. The Company has established an implementation team inclusive of external advisors and is in the process of gathering information specific to its current operating lease portfolio. The Company’s information gathering, analysis and evaluation of the new standard will continue through the adoption date of Topic 842 in the first quarter of fiscal 2020. |
Goodwill and long-lived assets
Goodwill and long-lived assets (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Goodwill and long-lived assets | |
Change in goodwill balances by reportable segment | Electronic Premier Components Farnell Total (Thousands) Carrying value at June 30, 2018 (1) $ 479,699 $ 501,173 $ 980,872 Additions from acquisitions 49,405 — 49,405 Foreign currency translation (2,309) (536) (2,845) Carrying value at March 30, 2019 (1) $ 526,795 $ 500,637 $ 1,027,432 (1) Includes accumulated impairment of $1,045,110 from fiscal 2009 and $181,440 from fiscal 2018 |
Company's identifiable acquired intangible assets | March 30, 2019 June 30, 2018 Acquired Accumulated Net Book Acquired Accumulated Net Book Amount Amortization Value Amount Amortization Value (Thousands) Customer related $ 299,155 $ (196,551) $ 102,604 $ 300,126 $ (148,416) $ 151,710 Trade name 54,267 (23,212) 31,055 54,391 (16,711) 37,680 Technology and other 64,740 (30,024) 34,716 52,793 (22,270) 30,523 $ 418,162 $ (249,787) $ 168,375 $ 407,310 $ (187,397) $ 219,913 |
Estimated future amortization expense | The following table presents the estimated future amortization expense for the remainder of fiscal 2019 and the next five fiscal years (in thousands): Fiscal Year Remainder of fiscal 2019 $ 21,179 2020 83,522 2021 41,493 2022 14,774 2023 6,043 2024 1,364 Total $ 168,375 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Debt | |
Short-term debt | Short-term debt consists of the following (in thousands): March 30, 2019 June 30, 2018 March 30, 2019 June 30, 2018 Interest Rate Carrying Balance Bank credit facilities and other 3.41 % 2.91 % $ 50,401 $ 60,380 Accounts receivable securitization program — 2.63 % — 105,000 Short-term debt $ 50,401 $ 165,380 |
Long-term debt | Long-term debt consists of the following (in thousands): March 30, 2019 June 30, 2018 March 30, 2019 June 30, 2018 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program 3.25 % — $ 447,000 $ — Credit Facility 5.68 — 85,600 — 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 1.11 % 1.26 % 449 383 Long-term debt before discount and debt issuance costs 2,033,049 1,500,383 Discount and debt issuance costs – unamortized (9,421) (11,164) Long-term debt $ 2,023,628 $ 1,489,219 |
Derivative financial instrume_2
Derivative financial instruments (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Derivative financial instruments | |
Schedule of derivative instruments in the balance sheet | March 30, June 30, 2019 2018 (Thousands) Forward foreign currency exchange contracts not receiving hedge accounting treatment recorded in: Prepaid and other current assets $ 2,636 $ 2,259 Accrued expenses and other 3,262 7,083 |
Schedule of gain (loss) on derivatives | Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands) Net derivative financial instrument (loss) gain $ (398) $ 3,354 $ (17) $ 5,070 |
Pension and retirement plans (T
Pension and retirement plans (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Components of net periodic pension costs | Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands) Service cost $ 3,582 $ 4,305 $ 11,050 $ 12,040 Total net periodic pension cost within selling, general and administrative expenses 3,582 4,305 11,050 12,040 Interest cost 8,010 4,529 21,238 16,095 Expected return on plan assets (16,003) (10,862) (42,605) (38,376) Amortization of prior service credits (392) (393) (1,178) (1,179) Recognized net actuarial loss 2,091 3,456 7,161 10,948 Total net periodic pension benefit within other income, net (6,294) (3,270) (15,384) (12,512) Net periodic pension (benefit) cost $ (2,712) $ 1,035 $ (4,334) $ (472) |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Earnings per share | |
Basic and diluted earnings per share calculation | Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands, except per share data) Numerator: Income (loss) from continuing operations $ 94,935 $ (315,604) $ 215,239 $ (200,628) Loss from discontinued operations (6,887) (4,462) (7,066) (14,411) Net income (loss) $ 88,048 $ (320,066) $ 208,173 $ (215,039) Denominator: Weighted average common shares for basic earnings per share 108,074 119,601 111,222 120,895 Net effect of dilutive stock based compensation awards 748 — 1,030 — Weighted average common shares for diluted earnings per share 108,822 119,601 112,252 120,895 Basic earnings (loss) per share - continuing operations $ 0.87 $ (2.64) $ 1.93 $ (1.66) Basic loss per share - discontinued operations (0.06) (0.04) (0.06) (0.12) Basic earnings (loss) per share $ 0.81 $ (2.68) $ 1.87 $ (1.78) Diluted earnings (loss) per share - continuing operations $ 0.87 $ (2.64) $ 1.91 $ (1.66) Diluted loss per share - discontinued operations (0.06) (0.04) (0.06) (0.12) Diluted earnings (loss) per share $ 0.81 $ (2.68) $ 1.85 $ (1.78) Stock options excluded from earnings per share calculation due to anti-dilutive effect 528 1,591 410 1,591 |
Additional cash flow informat_2
Additional cash flow information (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Additional cash flow information | |
Interest and income taxes paid | Nine Months Ended March 30, March 31, 2019 2018 (Thousands) Non-cash Investing Activities: Capital expenditures incurred but not paid $ 10,310 $ 21,282 Unsettled sale of marketable securities — 4,121 Non-cash Financing Activities: Unsettled share repurchases $ 4,740 $ — Supplemental Cash Flow Information: Interest $ 87,845 $ 55,924 Income taxes - continuing and discontinued operations 150,765 94,773 |
Segment information (Tables)
Segment information (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Segment information | |
Table of the Company's segments and the related financial information for each | Third Quarters Ended Nine Months Ended March 30, March 31, March 30, March 31, 2019 2018 2019 2018 (Thousands) Sales: Electronic Components $ 4,331,351 $ 4,404,115 $ 13,722,890 $ 12,874,885 Farnell 367,473 390,978 1,114,793 1,102,787 4,698,824 4,795,093 14,837,683 13,977,672 Operating income: Electronic Components $ 153,319 $ 157,713 $ 473,783 $ 427,162 Farnell 45,651 42,162 126,088 108,245 198,970 199,875 599,871 535,407 Corporate (1) (20,866) (29,084) (60,414) (87,812) Restructuring, integration and other expenses (2,939) (25,120) (79,986) (108,277) Goodwill impairment expense — (181,440) — (181,440) Amortization of acquired intangible assets and other (22,080) (22,725) (63,520) (70,187) Operating income (loss) $ 153,085 $ (58,494) $ 395,951 $ 87,691 Sales, by geographic area: Americas (2) $ 1,297,220 $ 1,276,426 $ 3,869,435 $ 3,672,160 EMEA (3) 1,740,916 1,812,334 5,124,409 5,011,336 Asia/Pacific (4) 1,660,688 1,706,333 5,843,839 5,294,176 Sales $ 4,698,824 $ 4,795,093 $ 14,837,683 $ 13,977,672 (1) Corporate is not a reportable segment and represents certain centrally incurred overhead expenses and assets that are not included in the EC and Farnell 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 $1.22 billion and $1.18 billion for the third quarters ended March 30, 2019 and March 31, 2018, respectively. Includes sales from the United States of $3.61 billion and $3.40 billion for the first nine months of fiscal 2019 and 2018, respectively. (3) Includes sales from Germany and Belgium of $666.2 million and $311.9 million, respectively, for the third quarter ended March 30, 2019, and $2.00 billion and $868.2 million, respectively, for the first nine months of fiscal 2019. Includes sales from Germany and Belgium of $717.8 million and $281.1 million, respectively, for the third quarter ended March 31, 2018, and $1.98 billion and $786.0 million, respectively, for the first nine months of fiscal 2018. (4) Includes sales from China (including Hong Kong), Taiwan and Singapore of $565.5 million, $659.7 million and $237.2 million, respectively, for the third quarter ended March 30, 2019, and $1.93 billion, $2.47 billion and $779.5 million, respectively, for the first nine months of fiscal 2019. Includes sales from China (including Hong Kong), Taiwan and Singapore of $638.1 million, $616.7 million and $231.6 million, respectively, for the third quarter ended March 31, 2018, and $1.92 billion, $1.99 billion and $677.8 million, respectively, for the first nine months of fiscal 2018. |
Table of Assets by reportable segment and long-lived assets by geographic area | March 30, June 30, 2019 2018 (Thousands) Property, plant, and equipment, net, by geographic area: Americas (1) $ 219,283 $ 276,156 EMEA (2) 197,090 204,797 Asia/Pacific 39,111 41,956 Property, plant, and equipment, net $ 455,484 $ 522,909 (1) Includes property, plant and equipment, net, of $215.0 million and $271.4 million as of March 30, 2019, and June 30, 2018, respectively, in the United States. (2) Includes property, plant and equipment, net, of $94.8 million, $65.3 million and $27.2 million in Germany, the UK and Belgium, respectively, as of March 30, 2019; and $99.4 million, $52.5 million and $43.4 million in Germany, the UK and Belgium, respectively, as of June 30, 2018. |
Restructuring expenses (Tables)
Restructuring expenses (Tables) | 9 Months Ended |
Mar. 30, 2019 | |
Fiscal Year 2019 Restructuring Liabilities Member | |
Restructuring Cost and Reserve [Line Items] | |
Activity related to the restructuring reserves | Facility and Contract Asset Severance Exit Costs Impairments Total (Thousands) Fiscal 2019 restructuring expenses $ 23,640 $ 553 $ 52,344 $ 76,537 Cash payments (12,782) (200) — (12,982) Non-cash amounts — — (52,344) (52,344) Other, principally foreign currency translation (118) (5) — (123) Balance at March 30, 2019 $ 10,740 $ 348 $ — $ 11,088 |
Fiscal Year 2018 And Prior Restructuring Liabilities Member | |
Restructuring Cost and Reserve [Line Items] | |
Activity related to the restructuring reserves | Facility and Contract Asset Severance Exit Costs Impairments Total (Thousands) Balance at June 30, 2018 $ 25,918 $ 2,890 $ 416 $ 29,224 Cash payments (21,328) (969) — (22,297) Changes in estimates, net (877) (155) — (1,032) Non-cash amounts — 218 (416) (198) Other, principally foreign currency translation (432) 39 — (393) Balance at March 30, 2019 $ 3,281 $ 2,023 $ — $ 5,304 |
Basis of presentation and new_3
Basis of presentation and new accounting pronouncements (Details) - USD ($) $ in Thousands | Jul. 01, 2018 | Mar. 30, 2019 | Sep. 29, 2018 | Jun. 30, 2018 |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Retained earnings | $ 2,935,077 | $ 3,235,894 | ||
Other assets | $ 192,979 | $ 262,552 | ||
ASU 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Cumulative effect on retained earnings | $ 2,000 | |||
ASU 2016-16 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Retained earnings | $ (5,800) | |||
Other assets | $ (5,800) |
Revenue recognition (Details)
Revenue recognition (Details) | 3 Months Ended | 9 Months Ended |
Sep. 29, 2018 | Mar. 30, 2019 | |
Revenue recognition | ||
Maximum percentage of sales recognized over time | 2.00% | |
Revenue, Remaining Performance Obligation, Optional Exemption, Performance Obligation [true false] | true | |
Maximum payment terms | 1 year |
Acquisitions and Discontinued_2
Acquisitions and Discontinued Operations (Details) $ in Millions | Mar. 30, 2019USD ($) |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | TS Business | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Final closing adjustment | $ 120 |
Goodwill and long-lived asset_2
Goodwill and long-lived assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | Jun. 30, 2018 | Jul. 04, 2009 | |
Carrying amount of goodwill, by reportable segment | |||||
Carrying value | $ 980,872 | ||||
Additions from acquisitions | 49,405 | ||||
Impairment of goodwill | $ (181,440) | $ (181,440) | |||
Foreign currency translation | (2,845) | ||||
Carrying value | 1,027,432 | ||||
Accumulated Impairment | $ 181,440 | $ 1,045,110 | |||
Electronic Components | |||||
Carrying amount of goodwill, by reportable segment | |||||
Carrying value | 479,699 | ||||
Additions from acquisitions | 49,405 | ||||
Foreign currency translation | (2,309) | ||||
Carrying value | 526,795 | ||||
Premier Farnell | |||||
Carrying amount of goodwill, by reportable segment | |||||
Carrying value | 501,173 | ||||
Foreign currency translation | (536) | ||||
Carrying value | $ 500,637 |
Goodwill and long-lived asset_3
Goodwill and long-lived assets Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 30, 2019 | Jun. 30, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | $ 418,162 | $ 407,310 |
Accumulated Amortization | (249,787) | (187,397) |
Net Book Value | 168,375 | 219,913 |
Customer related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 299,155 | 300,126 |
Accumulated Amortization | (196,551) | (148,416) |
Net Book Value | 102,604 | 151,710 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 54,267 | 54,391 |
Accumulated Amortization | (23,212) | (16,711) |
Net Book Value | 31,055 | 37,680 |
Technology and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 64,740 | 52,793 |
Accumulated Amortization | (30,024) | (22,270) |
Net Book Value | $ 34,716 | $ 30,523 |
Goodwill and long-lived asset_4
Goodwill and long-lived assets Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Goodwill and long-lived assets | ||||
Goodwill impairment expense | $ 181,440 | $ 181,440 | ||
Weighted average life of intangible assets | 2 years | |||
Intangible asset amortization expense | $ 21,900 | $ 22,600 | $ 63,123 | $ 69,860 |
Goodwill and long-lived asset_5
Goodwill and long-lived assets (Estimated Future Amortization Expense) (Details) - USD ($) $ in Thousands | Mar. 30, 2019 | Jun. 30, 2018 |
Fiscal Year: | ||
Remainder of fiscal 2019 | $ 21,179 | |
2020 | 83,522 | |
2021 | 41,493 | |
2022 | 14,774 | |
2023 | 6,043 | |
2024 | 1,364 | |
Net Book Value | $ 168,375 | $ 219,913 |
Debt - short-term debt (Details
Debt - short-term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Mar. 30, 2019 | Jun. 30, 2018 | |
Components of short-term debt | ||
Debt, Current, Total | $ 50,401 | $ 165,380 |
Bank credit facilities and other | ||
Components of short-term debt | ||
Short-term Debt, Weighted Average Interest Rate | 3.41% | 2.91% |
Bank credit facilities and other | $ 50,401 | $ 60,380 |
Accounts receivable securitization program | ||
Components of short-term debt | ||
Short-term Debt, Weighted Average Interest Rate | 2.63% | |
Short-term debt | $ 105,000 |
Debt - long-term debt (Details)
Debt - long-term debt (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Mar. 30, 2019 | Jun. 30, 2018 | |
Debt Instrument [Line Items] | ||
Long-term debt before discount and debt issuance costs | $ 2,033,049 | $ 1,500,383 |
Discount and debt issuance costs - unamortized | (9,421) | (11,164) |
Long-term debt | $ 2,023,628 | $ 1,489,219 |
Revolving credit facilities | Accounts receivable securitization program | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate | 3.25% | |
Long-term debt before discount and debt issuance costs | $ 447,000 | |
Revolving credit facilities | Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate | 5.68% | |
Long-term debt before discount and debt issuance costs | $ 85,600 | |
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 |
Notes due | Other long-term debt | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate | 1.11% | 1.26% |
Long-term debt before discount and debt issuance costs | $ 449 | $ 383 |
Debt (Textuals) (Details)
Debt (Textuals) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Mar. 30, 2019 | Jun. 30, 2018 | |
Company's total debt | ||
Debt, Long-term and Short-term, Combined Amount | $ 2,070 | $ 1,650 |
Total fair value | 2,120 | 1,670 |
Revolving credit facilities | Accounts receivable securitization program | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | 500 | |
Accounts Receivable from Securitization | $ 820.9 | 790.5 |
Line of Credit Facility, Commitment Fee Percentage | 0.35% | |
Revolving credit facilities | Accounts receivable securitization program | one-month LIBOR | ||
Debt Instrument [Line Items] | ||
Spread over base rate | 0.75% | |
Revolving credit facilities | Credit Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | $ 1,250 | |
Term | 5 years | |
Line of credit facility contingent increase to maximum borrowing capacity | $ 1,500 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | 200 | |
Letters of credit outstanding, amount | 3 | $ 2 |
Notes Payable In Certain Approved Currencies | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | $ 300 |
Derivative financial instrume_3
Derivative financial instruments Textuals (Details) - USD ($) | 9 Months Ended | |
Mar. 30, 2019 | Jun. 30, 2018 | |
Derivative fair value | ||
Derivative assets fair value | $ 2,636,000 | $ 2,259,000 |
Derivative liabilities fair value | $ 3,262,000 | $ 7,083,000 |
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 |
Derivative financial instrume_4
Derivative financial instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Derivative financial instruments | ||||
Net derivative financial instrument (loss) gain | $ (398) | $ 3,354 | $ (17) | $ 5,070 |
Commitments and contingencies (
Commitments and contingencies (Textuals) (Details) - USD ($) $ in Millions | Mar. 30, 2019 | Jun. 30, 2018 |
Loss Contingency, Estimate [Abstract] | ||
Estimate of possible loss | $ 14.7 | $ 14.2 |
Income taxes (Tax Cuts and Jobs
Income taxes (Tax Cuts and Jobs Act of 2017) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 30, 2019 | Dec. 29, 2018 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Income taxes | |||||
Transition tax | $ 257.5 | $ 257.5 | |||
Transition tax increase to provisional estimate | $ 10.8 | ||||
Effective tax rate | 24.40% | 338.00% | 29.50% | 489.20% |
Pension and retirement plans (P
Pension and retirement plans (Periodic Pension Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Components of net periodic pension costs | ||||
Service cost | $ 3,582 | $ 4,305 | $ 11,050 | $ 12,040 |
Interest cost | 8,010 | 4,529 | 21,238 | 16,095 |
Expected return on plan assets | (16,003) | (10,862) | (42,605) | (38,376) |
Amortization of prior service credits | (392) | (393) | (1,178) | (1,179) |
Recognized net actuarial loss | 2,091 | 3,456 | 7,161 | 10,948 |
Net periodic pension (benefit) cost | (2,712) | 1,035 | (4,334) | (472) |
Selling, General and Administrative Expenses | ||||
Components of net periodic pension costs | ||||
Net periodic pension (benefit) cost | 3,582 | 4,305 | 11,050 | 12,040 |
Other Income, net | ||||
Components of net periodic pension costs | ||||
Net periodic pension (benefit) cost | (6,294) | (3,270) | (15,384) | (12,512) |
Plan | ||||
Components of net periodic pension costs | ||||
Pension settlement charge | $ 4,900 | $ 18,900 | ||
Contributions | 8,000 | |||
Estimated future employer pension plan contributions | $ 8,000 | $ 8,000 |
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. 23, 2019 | Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Shareholders' equity | |||||
Authorized repurchase of common stock under Share Repurchase Program | $ 2,450,000 | $ 2,450,000 | |||
Shares repurchased during period (in shares) | 2.8 | 10.2 | |||
Cost of repurchase | $ 117,200 | $ 449,200 | |||
Remaining authorized repurchase amount | $ 322,900 | $ 322,900 | |||
Cash dividends paid per common share | $ 0.20 | $ 0.20 | $ 0.19 | $ 0.60 | $ 0.55 |
Dividends paid on common stock | $ 21,500 | $ 66,188 | $ 66,198 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Numerator: | ||||
Income (loss) from continuing operations | $ 94,935 | $ (315,604) | $ 215,239 | $ (200,628) |
Loss from discontinued operations | (6,887) | (4,462) | (7,066) | (14,411) |
Net income (loss) | $ 88,048 | $ (320,066) | $ 208,173 | $ (215,039) |
Denominator: | ||||
Weighted average common shares for basic earnings per share | 108,074 | 119,601 | 111,222 | 120,895 |
Net effect of dilutive stock based compensation awards | 748 | 1,030 | ||
Weighted average common shares for diluted earnings per share | 108,822 | 119,601 | 112,252 | 120,895 |
Basic earnings (loss) per share - continuing operations | $ 0.87 | $ (2.64) | $ 1.93 | $ (1.66) |
Basic loss per share-discontinued operations | (0.06) | (0.04) | (0.06) | (0.12) |
Basic earnings (loss) per share | 0.81 | (2.68) | 1.87 | (1.78) |
Diluted earnings (loss) per share - continuing operations | 0.87 | (2.64) | 1.91 | (1.66) |
Diluted loss per share-discontinued operations | (0.06) | (0.04) | (0.06) | (0.12) |
Diluted earnings (loss) per share | $ 0.81 | $ (2.68) | $ 1.85 | $ (1.78) |
Stock Options | ||||
Denominator: | ||||
antidilutive Securities | 528 | 1,591 | 410 | 1,591 |
Additional cash flow informat_3
Additional cash flow information (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Jun. 30, 2018 | |
Interest and income taxes paid | |||
Capital expenditures incurred but not paid | $ 10,310 | $ 21,282 | |
Unsettled sale of marketable securities | 4,121 | ||
Unsettled repurchases of common stock | 4,740 | ||
Interest | 87,845 | 55,924 | |
Income taxes - continuing and discontinued operations | 150,765 | $ 94,773 | |
Cash equivalents | $ 6,500 | $ 6,100 |
Segment information (Details)
Segment information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Sales, by segment | ||||
Sales | $ 4,698,824 | $ 4,795,093 | $ 14,837,683 | $ 13,977,672 |
Operating income (expense): | ||||
Restructuring, integration and other expenses | (2,939) | (25,120) | (79,986) | (108,277) |
Impairment of goodwill | (181,440) | (181,440) | ||
Amortization of acquired intangible assets and other | (22,080) | (22,725) | (63,520) | (70,187) |
Operating income (loss) | 153,085 | (58,494) | 395,951 | 87,691 |
Segment | ||||
Operating income (expense): | ||||
Operating income (loss) | 198,970 | 199,875 | 599,871 | 535,407 |
Electronic Components | Segment | ||||
Sales, by segment | ||||
Sales | 4,331,351 | 4,404,115 | 13,722,890 | 12,874,885 |
Operating income (expense): | ||||
Operating income (loss) | 153,319 | 157,713 | 473,783 | 427,162 |
Premier Farnell | Segment | ||||
Sales, by segment | ||||
Sales | 367,473 | 390,978 | 1,114,793 | 1,102,787 |
Operating income (expense): | ||||
Operating income (loss) | 45,651 | 42,162 | 126,088 | 108,245 |
Business Support | Corporate | ||||
Operating income (expense): | ||||
Corporate | $ (20,866) | $ (29,084) | $ (60,414) | $ (87,812) |
Segment information (Sales, by
Segment information (Sales, by geographic area) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Mar. 30, 2019 | Mar. 31, 2018 | Mar. 30, 2019 | Mar. 31, 2018 | |
Sales, by geographic area: | ||||
Sales | $ 4,698,824 | $ 4,795,093 | $ 14,837,683 | $ 13,977,672 |
Americas | ||||
Sales, by geographic area: | ||||
Sales | 1,297,220 | 1,276,426 | 3,869,435 | 3,672,160 |
United States | ||||
Sales, by geographic area: | ||||
Sales | 1,220,000 | 1,180,000 | 3,610,000 | 3,400,000 |
EMEA | ||||
Sales, by geographic area: | ||||
Sales | 1,740,916 | 1,812,334 | 5,124,409 | 5,011,336 |
Germany | ||||
Sales, by geographic area: | ||||
Sales | 666,200 | 717,800 | 2,000,000 | 1,980,000 |
Belgium | ||||
Sales, by geographic area: | ||||
Sales | 311,900 | 281,100 | 868,200 | 786,000 |
Asia Pacific | ||||
Sales, by geographic area: | ||||
Sales | 1,660,688 | 1,706,333 | 5,843,839 | 5,294,176 |
Taiwan | ||||
Sales, by geographic area: | ||||
Sales | 659,700 | 616,700 | 2,470,000 | 1,990,000 |
China (including Hong Kong) | ||||
Sales, by geographic area: | ||||
Sales | 565,500 | 638,100 | 1,930,000 | 1,920,000 |
SINGAPORE | ||||
Sales, by geographic area: | ||||
Sales | $ 237,200 | $ 231,600 | $ 779,500 | $ 677,800 |
Segment information (Property,
Segment information (Property, plant and equipment, net, by geographic area) (Details) - USD ($) $ in Thousands | Mar. 30, 2019 | Jun. 30, 2018 |
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | $ 455,484 | $ 522,909 |
Americas | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 219,283 | 276,156 |
United States | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 215,000 | 271,400 |
EMEA | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 197,090 | 204,797 |
Germany | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 94,800 | 99,400 |
United Kingdom | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 65,300 | 52,500 |
Belgium | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 27,200 | 43,400 |
Asia Pacific | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | $ 39,111 | $ 41,956 |
Restructuring expenses (Details
Restructuring expenses (Details) $ in Thousands | 9 Months Ended |
Mar. 30, 2019USD ($) | |
Fiscal Year 2019 Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Restructuring expenses | $ 76,537 |
Cash payments | (12,982) |
Non-cash amounts | (52,344) |
Other, principally foreign currency translation | (123) |
Ending Balance | 11,088 |
Fiscal Year 2018 And Prior Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Beginning Balance | 29,224 |
Cash payments | (22,297) |
Changes in estimates, net | (1,032) |
Non-cash amounts | (198) |
Other, principally foreign currency translation | (393) |
Ending Balance | 5,304 |
Employee Severance | Fiscal Year 2019 Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Restructuring expenses | 23,640 |
Cash payments | (12,782) |
Other, principally foreign currency translation | (118) |
Ending Balance | 10,740 |
Employee Severance | Fiscal Year 2018 And Prior Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Beginning Balance | 25,918 |
Cash payments | (21,328) |
Changes in estimates, net | (877) |
Other, principally foreign currency translation | (432) |
Ending Balance | 3,281 |
Facility Closing | Fiscal Year 2019 Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Restructuring expenses | 553 |
Cash payments | (200) |
Other, principally foreign currency translation | (5) |
Ending Balance | 348 |
Facility Closing | Fiscal Year 2018 And Prior Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Beginning Balance | 2,890 |
Cash payments | (969) |
Changes in estimates, net | (155) |
Non-cash amounts | 218 |
Other, principally foreign currency translation | 39 |
Ending Balance | 2,023 |
Asset Impairments | Fiscal Year 2019 Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Restructuring expenses | 52,344 |
Non-cash amounts | (52,344) |
Asset Impairments | Fiscal Year 2018 And Prior Restructuring Liabilities Member | |
Activity related to the restructuring reserves | |
Beginning Balance | 416 |
Non-cash amounts | $ (416) |
Restructuring expenses (Textual
Restructuring expenses (Textuals) (Details) $ in Thousands | 9 Months Ended | |
Mar. 30, 2019USD ($)employee | Jun. 30, 2018USD ($) | |
Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employee reductions under Severance charges | employee | 300 | |
Fiscal Year 2019 Restructuring Liabilities Member | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | $ 76,537 | |
Restructuring Reserve | 11,088 | |
Fiscal Year 2019 Restructuring Liabilities Member | Electronic Components | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 75,100 | |
Fiscal Year 2019 Restructuring Liabilities Member | Premier Farnell | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 1,100 | |
Fiscal Year 2019 Restructuring Liabilities Member | Corporate | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 300 | |
Fiscal Year 2018 And Prior Restructuring Liabilities Member | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | $ 5,304 | $ 29,224 |