Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Sep. 28, 2019 | Oct. 17, 2019 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 28, 2019 | |
Document Transition Report | false | |
Entity File Number | 1-4224 | |
Entity Registrant Name | AVNET, INC. | |
Entity Incorporation, State or Country Code | NY | |
Entity Tax Identification Number | 11-1890605 | |
Entity Address, Address Line One | 2211 South 47th Street | |
Entity Address, City or Town | Phoenix | |
Entity Address, State or Province | AZ | |
Entity Address, Postal Zip Code | 85034 | |
City Area Code | 480 | |
Local Phone Number | 643-2000 | |
Title of 12(b) Security | Common stock, par value $1.00 per share | |
Trading Symbol | AVT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 100,962,258 | |
Entity Central Index Key | 0000008858 | |
Current Fiscal Year End Date | --06-27 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 28, 2019 | Jun. 29, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 664,108 | $ 546,105 |
Receivables, less allowances of $50,541 and $53,499, respectively | 3,129,387 | 3,168,369 |
Inventories | 3,025,980 | 3,008,424 |
Prepaid and other current assets | 169,471 | 153,438 |
Total current assets | 6,988,946 | 6,876,336 |
Property, plant and equipment, net | 437,467 | 452,171 |
Goodwill | 858,656 | 876,728 |
Intangible assets, net | 120,139 | 143,520 |
Operating lease assets (Note 5) | 278,570 | |
Other assets | 229,559 | 215,801 |
Total assets | 8,913,337 | 8,564,556 |
Current liabilities: | ||
Short-term debt | 638,402 | 300,538 |
Accounts payable | 2,025,518 | 1,864,342 |
Accrued expenses and other | 418,230 | 413,696 |
Short-term operating lease liabilities (Note 5) | 55,149 | |
Total current liabilities | 3,137,299 | 2,578,576 |
Long-term debt | 1,191,975 | 1,419,922 |
Long-term operating lease liabilities (Note 5) | 245,406 | |
Other liabilities | 380,586 | 425,585 |
Total liabilities | 4,955,266 | 4,424,083 |
Commitments and contingencies (Note 7) | ||
Shareholders' equity: | ||
Common stock $1.00 par; authorized 300,000,000 shares; issued 101,470,636 shares and 104,037,769 shares, respectively | 101,471 | 104,038 |
Additional paid-in capital | 1,580,706 | 1,573,005 |
Retained earnings | 2,678,266 | 2,767,469 |
Accumulated other comprehensive loss | (402,372) | (304,039) |
Total shareholders' equity | 3,958,071 | 4,140,473 |
Total liabilities and shareholders' equity | $ 8,913,337 | $ 8,564,556 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 28, 2019 | Jun. 29, 2019 |
Current assets: | ||
Allowance for doubtful accounts receivable, current (in dollars) | $ 50,541 | $ 53,499 |
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 | 101,470,636 | 104,037,769 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Income Statement [Abstract] | ||
Sales | $ 4,630,009 | $ 5,089,879 |
Revenue, Product and Service [Extensible List] | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember |
Cost of sales | $ 4,086,170 | $ 4,453,129 |
Cost, Product and Service [Extensible List] | us-gaap:TechnologyServiceMember | us-gaap:TechnologyServiceMember |
Gross profit | $ 543,839 | $ 636,750 |
Selling, general and administrative expenses | 456,503 | 475,146 |
Restructuring, integration and other expenses | 24,598 | 14,788 |
Operating income | 62,738 | 146,816 |
Other income (expense), net | 4,931 | (1,892) |
Interest and other financing expenses, net | (33,631) | (30,093) |
Income from continuing operations before taxes | 34,038 | 114,831 |
Income tax (benefit) expense | (7,714) | 31,302 |
Income from continuing operations, net of tax | 41,752 | 83,529 |
Income from discontinued operations, net of tax | 195 | |
Net income | $ 41,752 | $ 83,724 |
Earnings per share: | ||
Basic earnings per share-continuing operations | $ 0.40 | $ 0.73 |
Basic earnings per share | 0.40 | 0.73 |
Diluted earnings per share-continuing operations | 0.40 | 0.72 |
Diluted earnings per share | $ 0.40 | $ 0.72 |
Shares used to compute earnings per share: | ||
Basic | 103,130 | 115,260 |
Diluted | 104,377 | 116,471 |
Cash dividends paid per common share | $ 0.21 | $ 0.20 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 41,752 | $ 83,724 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation and other | (102,146) | 8,801 |
Pension adjustments, net | 3,813 | 756 |
Total comprehensive (loss) income | $ (56,581) | $ 93,281 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total |
Stockholders' Equity Attributable to Parent, Beginning Balance at Jun. 30, 2018 | $ 115,825 | $ 1,528,713 | $ 3,235,894 | $ (195,351) | $ 4,685,081 |
Shares issued Beginning Balance at Jun. 30, 2018 | 115,825,000 | ||||
Net income | 83,724 | 83,724 | |||
Other comprehensive income (loss) | 9,557 | 9,557 | |||
Cash dividends | (22,932) | (22,932) | |||
Repurchases of common stock | $ (3,315) | (153,582) | (156,897) | ||
Repurchase of common stock (in shares) | (3,315,000) | ||||
Stock-based compensation | $ 521 | 25,851 | 26,372 | ||
Stock-based compensation (in shares) | 521,000 | ||||
Shares issued Ending Balance at Sep. 29, 2018 | 113,031,000 | ||||
Stockholders' Equity Attributable to Parent, Ending Balance at Sep. 29, 2018 | $ 113,031 | 1,554,564 | 3,139,272 | (185,794) | 4,621,073 |
Effects of new accounting principles | (3,832) | (3,832) | |||
Stockholders' Equity Attributable to Parent, Beginning Balance at Jun. 29, 2019 | $ 104,038 | 1,573,005 | 2,767,469 | (304,039) | $ 4,140,473 |
Shares issued Beginning Balance at Jun. 29, 2019 | 104,038,000 | 104,037,769 | |||
Net income | 41,752 | $ 41,752 | |||
Other comprehensive income (loss) | (98,333) | (98,333) | |||
Cash dividends | (21,451) | (21,451) | |||
Repurchases of common stock | $ (2,631) | (109,504) | (112,135) | ||
Repurchase of common stock (in shares) | (2,631,000) | ||||
Stock-based compensation | $ 64 | 7,701 | $ 7,765 | ||
Stock-based compensation (in shares) | 64,000 | ||||
Shares issued Ending Balance at Sep. 28, 2019 | 101,471,000 | 101,470,636 | |||
Stockholders' Equity Attributable to Parent, Ending Balance at Sep. 28, 2019 | $ 101,471 | $ 1,580,706 | $ 2,678,266 | $ (402,372) | $ 3,958,071 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Cash flows from operating activities: | ||
Net income | $ 41,752 | $ 83,724 |
Less: Income from discontinued operations, net of tax | 195 | |
Income from continuing operations, net of tax | 41,752 | 83,529 |
Non-cash and other reconciling items: | ||
Depreciation | 24,669 | 25,389 |
Amortization | 19,911 | 20,810 |
Amortization of Operating Lease Asset | 15,839 | |
Deferred income taxes | (3,970) | 36,830 |
Stock-based compensation | 7,218 | 9,044 |
Other, net | 8,034 | 14,994 |
Changes in (net of effects from businesses acquired and divested): | ||
Receivables | (6,703) | (19,292) |
Inventories | (64,194) | (269,649) |
Accounts payable | 189,746 | 95,119 |
Accrued expenses and other, net | (36,660) | (81,753) |
Net cash flows provided (used) for operating activities - continuing operations | 195,642 | (84,979) |
Net cash flows provided (used) for operating activities | 195,642 | (84,979) |
Cash flows from financing activities: | ||
Borrowings (repayments) under accounts receivable securitization, net | 110,800 | (40,000) |
Repayments under senior unsecured credit facility, net | (1,100) | (1,217) |
Repayments under bank credit facilities and other debt, net | (745) | (50,330) |
Repurchases of common stock | (110,805) | (149,094) |
Dividends paid on common stock | (21,451) | (22,932) |
Other, net | 548 | 17,328 |
Net cash flows used for financing activities - continuing operations | (22,753) | (246,245) |
Net cash flows used for financing activities | (22,753) | (246,245) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (29,864) | (41,007) |
Other, net | (12,515) | 65 |
Net cash flows used for investing activities - continuing operations | (42,379) | (40,942) |
Net cash flows provided by investing activities - discontinued operations | 120,000 | |
Net cash flows (used) provided by investing activities | (42,379) | 79,058 |
Effect on currency exchange rate changes on cash and cash equivalents | (12,507) | (3,107) |
Cash and cash equivalents: | ||
Increase (decrease) | 118,003 | (255,273) |
Cash and cash equivalents at beginning of year | 546,105 | 621,125 |
Cash and cash equivalents at end of year | $ 664,108 | $ 365,852 |
Basis of presentation and new a
Basis of presentation and new accounting pronouncements | 3 Months Ended |
Sep. 28, 2019 | |
Basis of presentation and new accounting pronouncements | |
Basis of presentation and new accounting pronouncements | 1. Basis of presentation and new accounting pronouncements In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all adjustments necessary to present fairly Avnet, Inc. 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 29, 2019. Certain reclassifications have been made in prior periods to conform to the current period presentation. Recently adopted accounting pronouncements The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842),” The adoption of ASC 842 did not have a material impact on the Company’s consolidated statements of operations or retained earnings. The Company elected the package of practical expedients permitted under the transition guidance that allowed, among other things, the historical lease classification to be carried forward without reassessment and the hindsight practical expedient. The Company elected to not separate lease and non-lease components for its real estate leases. Refer to Note 5 for additional disclosures related to leases. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities” Recently issued accounting pronouncements 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) In August 2018, the FASB issued Accounting Standards Update No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans |
Discontinued operations
Discontinued operations | 3 Months Ended |
Sep. 28, 2019 | |
Discontinued Operations and Disposal Groups | |
Discontinued operations | 2. 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 intangible assets
Goodwill and intangible assets | 3 Months Ended |
Sep. 28, 2019 | |
Goodwill and intangible assets | |
Goodwill and intangible assets | 3. Goodwill and intangible assets Goodwill The following table presents the change in goodwill by reportable segment for the three months ended September 28, 2019. Electronic Components Farnell Total (Thousands) Carrying value at June 29, 2019 (1) $ 390,896 $ 485,832 $ 876,728 Additions from acquisitions — — — Foreign currency translation (5,108) (12,964) (18,072) Carrying value at September 28, 2019 (1) $ 385,788 $ 472,868 $ 858,656 (1) Includes accumulated impairment of $1,045,110 from fiscal 2009, $181,440 from fiscal 2018 and $137,396 from fiscal 2019 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 first quarter of fiscal 2020, the Company concluded that an interim goodwill impairment test was not required. Intangible Assets The following table presents the Company’s acquired intangible assets at September 28, 2019, and June 29, 2019, respectively. September 28, 2019 June 29, 2019 Acquired Accumulated Net Book Acquired Accumulated Net Book Amount Amortization Value Amount Amortization Value (Thousands) Customer related $ 284,993 $ (218,402) $ 66,591 $ 292,266 $ (208,329) $ 83,937 Trade name 51,323 (26,107) 25,216 52,760 (24,752) 28,008 Technology and other 62,255 (33,923) 28,332 63,753 (32,178) 31,575 $ 398,571 $ (278,432) $ 120,139 $ 408,779 $ (265,259) $ 143,520 Intangible asset amortization expense from continuing operations was $19.9 million and $20.8 million for the first quarters of fiscal 2020 and 2019, respectively. Intangible assets have a weighted average remaining useful life of approximately two years. The following table presents the estimated future amortization expense for the remainder of fiscal 2020 and the next five fiscal years (in thousands): Fiscal Year Remainder of fiscal 2020 $ 59,212 2021 39,439 2022 14,132 2023 5,864 2024 1,492 2025 — Total $ 120,139 |
Debt
Debt | 3 Months Ended |
Sep. 28, 2019 | |
Debt | |
Debt | 4. Debt Short-term debt consists of the following (in thousands): September 28, June 29, September 28, June 29, 2019 2019 2019 2019 Interest Rate Carrying Balance Bank credit facilities and other 1.08 % 1.02 % $ 302 $ 538 Accounts receivable securitization program 2.80 % — 338,100 — Public notes due June 2020 5.88 % 5.88 % 300,000 300,000 Short-term debt $ 638,402 $ 300,538 Bank credit facilities and other consists primarily of various committed and uncommitted lines of credit and other forms of bank debt with financial institutions utilized primarily to support the working capital requirements of the Company including its foreign operations. The Company has an accounts receivable securitization program (the “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 $839.6 million and $857.3 million at September 28, 2019, and June 29, 2019, 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 September 28, 2019, and June 29, 2019. The Securitization Program expires in August 2020 and as a result the Company has classified outstanding balances as short-term debt as of September 28, 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%. Long-term debt consists of the following (in thousands): September 28, June 29, September 28, June 29, 2019 2019 2019 2019 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program — 3.15 % $ — $ 227,300 Credit Facility — 5.68 % — 1,100 Public notes due: 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 1.12 % 1.00 % 348 403 Long-term debt before discount and debt issuance costs 1,200,348 1,428,803 Discount and debt issuance costs – unamortized (8,373) (8,881) Long-term debt $ 1,191,975 $ 1,419,922 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 September 28, 2019 and June 29, 2019. As of September 28, 2019, and June 29, 2019, there were $4.2 million and $4.0 million, respectively, in letters of credit issued under the Credit Facility. As of September 28, 2019, the carrying value and fair value of the Company’s total debt was $1.83 billion and $1.91 billion, respectively. At June 29, 2019, the carrying value and fair value of the Company’s total debt was $1.72 billion and $1.78 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. |
Operating leases
Operating leases | 3 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Leases | 5. Leases Substantially all the Company’s leases are classified as operating leases and are predominately related to real property for distribution centers, office space and integration facilities with a remaining lease term of up to 19 years. The Company’s equipment leases are primarily for automobiles and equipment and are not material to the consolidated financial statements. The Company determines if an arrangement contains a lease at inception based on whether it conveys the right to control the use of an identified asset in exchange for consideration. Lease right-of-use assets (“operating lease assets”) and associated liabilities (“operating lease liabilities”) are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Certain lease agreements may include one or more options to extend or terminate a lease. Lease terms are inclusive of these options if it is reasonably certain that the Company will exercise such options. The Company’s leases generally do not provide a readily determinable implicit borrowing rate, as such, the discount rate used to calculate present value is the Company’s incremental secured borrowing rate. The incremental secured borrowing rates used at the date of adoption for each lease varies in accordance with the remaining lease term and the currency of the lease payments. Lease cost is recognized on a straight-line basis over the lease term and is included as a component of “Selling, general, and administrative expenses” in the consolidated statements of operations. Lease payments are primarily fixed; however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the measurement of operating lease assets and liabilities. The components of lease cost related to the Company’s operating leases were as follows (in thousands): First Quarter Ended September 28, 2019 Operating lease cost $ 18,802 Variable lease cost 5,268 Total lease cost $ 24,070 Future minimum operating lease payments as of September 28, 2019 are as follows (in thousands): Fiscal Year Remainder of fiscal 2020 $ 49,441 2021 53,034 2022 42,442 2023 36,932 2024 29,215 Thereafter 158,895 Total future operating lease payments 369,959 Total imputed interest on operating lease liabilities (69,404) Total operating lease liabilities $ 300,555 Prior to the Company’s adoption of ASC 842, future minimum operating lease payments as of June 29, 2019, were as follows (in thousands) on an undiscounted basis and excluding non-lease components: Fiscal Year 2020 $ 68,710 2021 52,225 2022 42,069 2023 32,245 2024 23,305 Thereafter 85,196 Total lease payments $ 303,750 Other information pertaining to operating leases consists of the following: Operating Lease Term and Discount Rate Weighted-average remaining lease term in years 9.6 Weighted-average discount rate 3.8 % Supplemental cash flow information related to the Company’s operating leases for the three months ended September 28, 2019 was as follows (in thousands): Supplemental Cash Flow Information: Cash paid for operating lease liabilities $ 15,322 Operating lease assets obtained from new operating lease liabilities 6,404 |
Derivative financial instrument
Derivative financial instruments | 3 Months Ended |
Sep. 28, 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 (expense), net.” The fair value of forward foreign exchange contracts, which are based upon Level 2 criteria under the ASC 820 fair value hierarchy, are classified in the captions “Prepaid and other current assets” or “Accrued expenses and other,” as applicable, in the accompanying consolidated balance sheets as of September 28, 2019 and June 29, 2019. 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 forward foreign currency exchange contracts not receiving hedge accounting treatment recorded in the Company’s consolidated balance sheets are as follows: September 28, June 29, 2019 2019 (Thousands) Prepaid and other current assets $ 4,058 $ 5,511 Accrued expenses and other 5,705 6,154 The amounts recorded to other income (expense), net, related to derivative financial instruments for economic hedges are as follows: First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Net derivative financial instrument gain $ 9,500 $ 2,792 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 as the underlying assets or liabilities being economically hedged. |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Sep. 28, 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 September 28, 2019, and June 29, 2019, the Company had aggregate estimated liabilities of $14.7 million classified within accrued expenses and other for such compliance-related matters that were reasonably estimable as of such dates. |
Income taxes
Income taxes | 3 Months Ended |
Sep. 28, 2019 | |
Income taxes | |
Income taxes | 8. Income taxes The Company’s effective tax rate on its income from continuing operations before taxes was (22.7)% in the first quarter of fiscal 2020 as compared with 27.3% in the first quarter of fiscal 2019. During the first quarter of fiscal 2020, the Company’s effective tax rate was favorably impacted primarily by (i) the release of unrecognized tax benefit reserves and (ii) the mix of income in lower tax jurisdictions. During the first quarter of fiscal 2019, the Company’s effective tax rate was unfavorably impacted primarily by (i) an adjustment to the provisional estimate for the one-time mandatory deemed repatriation tax liability recorded under the requirements of recent tax law changes in the United States (the “Act”) and (ii) increases in unrecognized tax benefits, partially offset by (iii) an adjustment to the provisional deferred tax impacts of the Act and (iv) the mix of income in lower tax jurisdictions. The Company’s effective tax rates in fiscal years 2019 and 2020 are 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 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. |
Pension and retirement plan
Pension and retirement plan | 3 Months Ended |
Sep. 28, 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 current or former U.S. employees (the “Plan”). Components of net periodic pension cost for the Plan were as follows: First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Service cost $ 3,786 $ 3,734 Total net periodic pension cost within selling, general and administrative expenses 3,786 3,734 Interest cost 5,638 6,614 Expected return on plan assets (12,668) (13,301) Amortization of prior service cost (credit) 534 (393) Recognized net actuarial loss 3,637 2,535 Total net periodic pension benefit within other income (expense), net (2,859) (4,545) Net periodic pension cost (benefit) $ 927 $ (811) The Company expects to make contributions to the Plan of $8.0 million during fiscal 2020. There were no contributions made during the first quarter of fiscal 2020. Amounts reclassified out of accumulated other comprehensive income, net of tax, to other income (expense), net during the first quarters of fiscal 2020 and fiscal 2019 were not material and substantially all related to net periodic pension costs including recognition of actuarial losses and amortization of prior service costs and credits. |
Shareholders' equity
Shareholders' equity | 3 Months Ended |
Sep. 28, 2019 | |
Shareholders' equity | |
Shareholders' equity | 10. Shareholders’ equity Share repurchase program In August 2019, the Company’s Board of Directors authorized a $500 million increase in the Company’s existing share repurchase program, increasing the cumulative total of authorized share repurchases to $2.95 billion of common stock in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased will depend on a variety of factors such as share price, corporate and regulatory requirements, and prevailing market conditions. During the three months ended September 28, 2019, the Company repurchased 2.6 million shares under this program for a total cost of $112.1 million. As of September 28, 2019, the Company had $593.3 million remaining under its share repurchase authorization. Common stock dividend In August 2019, the Company’s Board of Directors approved a dividend of $0.21 per common share and dividend payments of $21.5 million were made in September 2019. |
Earnings per share
Earnings per share | 3 Months Ended |
Sep. 28, 2019 | |
Earnings per share | |
Earnings per share | 11. Earnings per share First Quarters Ended September 28, September 29, 2019 2018 (Thousands, except per share data) Numerator: Income from continuing operations $ 41,752 $ 83,529 Income from discontinued operations — 195 Net income $ 41,752 $ 83,724 Denominator: Weighted average common shares for basic earnings per share 103,130 115,260 Net effect of dilutive stock based compensation awards 1,247 1,211 Weighted average common shares for diluted earnings per share 104,377 116,471 Basic earnings per share - continuing operations $ 0.40 $ 0.73 Basic earnings per share - discontinued operations — — Basic earnings per share $ 0.40 $ 0.73 Diluted earnings per share - continuing operations $ 0.40 $ 0.72 Diluted earnings per share - discontinued operations — — Diluted earnings per share $ 0.40 $ 0.72 Stock options excluded from earnings per share calculation due to anti-dilutive effect 388 1,113 |
Additional cash flow informatio
Additional cash flow information | 3 Months Ended |
Sep. 28, 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: First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Non-cash Investing Activities: Capital expenditures incurred but not paid $ 7,500 $ 9,690 Non-cash Financing Activities: Unsettled share repurchases $ 2,734 $ 11,228 Supplemental Cash Flow Information: Interest $ 19,214 $ 13,826 Income tax (refunds) payments - continuing and discontinued operations (5,192) 54,519 Included in cash and cash equivalents as of September 28, 2019 and June 29, 2019 was $16.1 million and $9.4 million, respectively, of cash equivalents, which was primarily comprised of investment grade money market funds and overnight time deposits. |
Segment information
Segment information | 3 Months Ended |
Sep. 28, 2019 | |
Segment information | |
Segment information | 13. Segment information Electronic Components (“EC”) and 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. First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Sales: Electronic Components $ 4,294,187 $ 4,710,825 Farnell 335,822 379,054 4,630,009 5,089,879 Operating income: Electronic Components $ 112,286 $ 161,913 Farnell 21,805 40,793 134,091 202,706 Corporate (1) (26,677) (20,175) Restructuring, integration and other expenses (24,598) (14,788) Amortization of acquired intangible assets and other (20,078) (20,927) Operating income $ 62,738 $ 146,816 Sales, by geographic area: Americas (2) $ 1,215,757 $ 1,271,793 EMEA (3) 1,470,924 1,714,917 Asia/Pacific (4) 1,943,328 2,103,169 Sales $ 4,630,009 $ 5,089,879 (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 $1.14 billion and $1.18 billion for the first quarters ended September 28, 2019 and September 29, 2018, respectively. (3) Includes sales from Germany and Belgium of $580.3 million and $277.8 million, respectively, for the first quarter ended September 28, 2019. Includes sales from Germany and Belgium of $685.7 million and $280.1 million, respectively, for the first quarter ended September 29, 2018. (4) Includes sales from China (including Hong Kong), Taiwan and Singapore of $623.5 million, $870.4 million and $239.6 million, respectively, for the first quarter ended September 28, 2019. Includes sales from China (including Hong Kong), Taiwan and Singapore of $693.1 million, $888.7 million and $280.4 million, respectively, for the first quarter ended September 29, 2018. September 28, June 29, 2019 2019 (Thousands) Property, plant, and equipment, net, by geographic area: Americas (1) $ 208,925 $ 213,802 EMEA (2) 192,338 200,379 Asia/Pacific 36,204 37,990 Property, plant, and equipment, net $ 437,467 $ 452,171 (1) Includes property, plant and equipment, net, of $205.4 million and $209.9 million as of September 28, 2019, and June 29, 2019, respectively, in the United States. (2) Includes property, plant and equipment, net, of $87.3 million, $72.0 million and $23.5 million in Germany, the UK and Belgium, respectively, as of September 28, 2019; and $95.2 million, $70.5 million and $25.2 million in Germany, the UK and Belgium, respectively, as of June 29, 2019. |
Restructuring expenses
Restructuring expenses | 3 Months Ended |
Sep. 28, 2019 | |
Restructuring expenses | |
Restructuring expenses | 14. Restructuring expenses Fiscal 2020 During fiscal 2020, the Company undertook restructuring actions in order to improve operating efficiencies and further integrate the acquisition of Farnell. 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 2020 is presented in the following table: Asset Severance Impairments Total (Thousands) Fiscal 2020 restructuring expenses $ 11,576 $ 6,711 $ 18,287 Cash payments (5,730) — (5,730) Non-cash amounts — (6,711) (6,711) Other, principally foreign currency translation (115) — (115) Balance at September 28, 2019 $ 5,731 $ — $ 5,731 Severance expense recorded in the first quarter of fiscal 2020 related to the reduction, or planned reduction, of over 200 employees, primarily in executive management, operations, information technology, warehouse, sales and business support functions. Asset impairments relate primarily 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 $18.3 million in restructuring expenses recorded during the first quarter of fiscal 2020, $15.1 million related to EC and $3.2 million related to Farnell. The Company expects the majority of the remaining severance amounts to be paid by the end of fiscal 2020. Fiscal 2019 and prior During fiscal 2019 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 quarter of fiscal 2020 related to the remaining restructuring liabilities from continuing operations established during fiscal 2019 and prior: Facility and Contract Severance Exit Costs Total (Thousands) Balance at June 29, 2019 $ 21,537 $ 5,381 $ 26,918 Cash payments (7,231) (2,055) (9,286) Changes in estimates, net (1,455) 618 (837) Other, principally foreign currency translation (63) (124) (187) Balance at September 28, 2019 $ 12,788 $ 3,820 $ 16,608 The Company expects the majority of the remaining amounts to be paid by the end of fiscal 2020. |
Basis of presentation and new_2
Basis of presentation and new accounting pronouncements (Policies) | 3 Months Ended |
Sep. 28, 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. 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 29, 2019. Certain reclassifications have been made in prior periods to conform to the current period presentation. |
New accounting pronouncements | Recently adopted accounting pronouncements The Company adopted Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842),” The adoption of ASC 842 did not have a material impact on the Company’s consolidated statements of operations or retained earnings. The Company elected the package of practical expedients permitted under the transition guidance that allowed, among other things, the historical lease classification to be carried forward without reassessment and the hindsight practical expedient. The Company elected to not separate lease and non-lease components for its real estate leases. Refer to Note 5 for additional disclosures related to leases. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging Activities” Recently issued accounting pronouncements 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) In August 2018, the FASB issued Accounting Standards Update No. 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans |
Goodwill and intangible assets
Goodwill and intangible assets (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Goodwill and intangible assets | |
Change in goodwill balances by reportable segment | Electronic Components Farnell Total (Thousands) Carrying value at June 29, 2019 (1) $ 390,896 $ 485,832 $ 876,728 Additions from acquisitions — — — Foreign currency translation (5,108) (12,964) (18,072) Carrying value at September 28, 2019 (1) $ 385,788 $ 472,868 $ 858,656 (1) Includes accumulated impairment of $1,045,110 from fiscal 2009, $181,440 from fiscal 2018 and $137,396 from fiscal 2019 |
Company's identifiable acquired intangible assets | September 28, 2019 June 29, 2019 Acquired Accumulated Net Book Acquired Accumulated Net Book Amount Amortization Value Amount Amortization Value (Thousands) Customer related $ 284,993 $ (218,402) $ 66,591 $ 292,266 $ (208,329) $ 83,937 Trade name 51,323 (26,107) 25,216 52,760 (24,752) 28,008 Technology and other 62,255 (33,923) 28,332 63,753 (32,178) 31,575 $ 398,571 $ (278,432) $ 120,139 $ 408,779 $ (265,259) $ 143,520 |
Estimated future amortization expense | The following table presents the estimated future amortization expense for the remainder of fiscal 2020 and the next five fiscal years (in thousands): Fiscal Year Remainder of fiscal 2020 $ 59,212 2021 39,439 2022 14,132 2023 5,864 2024 1,492 2025 — Total $ 120,139 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Debt | |
Short-term debt | Short-term debt consists of the following (in thousands): September 28, June 29, September 28, June 29, 2019 2019 2019 2019 Interest Rate Carrying Balance Bank credit facilities and other 1.08 % 1.02 % $ 302 $ 538 Accounts receivable securitization program 2.80 % — 338,100 — Public notes due June 2020 5.88 % 5.88 % 300,000 300,000 Short-term debt $ 638,402 $ 300,538 |
Long-term debt | Long-term debt consists of the following (in thousands): September 28, June 29, September 28, June 29, 2019 2019 2019 2019 Interest Rate Carrying Balance Revolving credit facilities: Accounts receivable securitization program — 3.15 % $ — $ 227,300 Credit Facility — 5.68 % — 1,100 Public notes due: 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 1.12 % 1.00 % 348 403 Long-term debt before discount and debt issuance costs 1,200,348 1,428,803 Discount and debt issuance costs – unamortized (8,373) (8,881) Long-term debt $ 1,191,975 $ 1,419,922 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Leases [Abstract] | |
Schedule of lease cost | The components of lease cost related to the Company’s operating leases were as follows (in thousands): First Quarter Ended September 28, 2019 Operating lease cost $ 18,802 Variable lease cost 5,268 Total lease cost $ 24,070 |
Schedule of future minimum operating lease payments | Future minimum operating lease payments as of September 28, 2019 are as follows (in thousands): Fiscal Year Remainder of fiscal 2020 $ 49,441 2021 53,034 2022 42,442 2023 36,932 2024 29,215 Thereafter 158,895 Total future operating lease payments 369,959 Total imputed interest on operating lease liabilities (69,404) Total operating lease liabilities $ 300,555 |
Minimum operating lease commitments principally for buildings | Prior to the Company’s adoption of ASC 842, future minimum operating lease payments as of June 29, 2019, were as follows (in thousands) on an undiscounted basis and excluding non-lease components: Fiscal Year 2020 $ 68,710 2021 52,225 2022 42,069 2023 32,245 2024 23,305 Thereafter 85,196 Total lease payments $ 303,750 |
Schedule of other information pertaining to operating leases | Operating Lease Term and Discount Rate Weighted-average remaining lease term in years 9.6 Weighted-average discount rate 3.8 % |
Schedule of supplemental cash flow information | Supplemental cash flow information related to the Company’s operating leases for the three months ended September 28, 2019 was as follows (in thousands): Supplemental Cash Flow Information: Cash paid for operating lease liabilities $ 15,322 Operating lease assets obtained from new operating lease liabilities 6,404 |
Derivative financial instrume_2
Derivative financial instruments (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Derivative financial instruments | |
Schedule of derivative instruments in the balance sheet | September 28, June 29, 2019 2019 (Thousands) Prepaid and other current assets $ 4,058 $ 5,511 Accrued expenses and other 5,705 6,154 |
Schedule of gain (loss) on derivatives | First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Net derivative financial instrument gain $ 9,500 $ 2,792 |
Pension and retirement plans (T
Pension and retirement plans (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] | |
Components of net periodic pension costs | First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Service cost $ 3,786 $ 3,734 Total net periodic pension cost within selling, general and administrative expenses 3,786 3,734 Interest cost 5,638 6,614 Expected return on plan assets (12,668) (13,301) Amortization of prior service cost (credit) 534 (393) Recognized net actuarial loss 3,637 2,535 Total net periodic pension benefit within other income (expense), net (2,859) (4,545) Net periodic pension cost (benefit) $ 927 $ (811) |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Earnings per share | |
Basic and diluted earnings per share calculation | First Quarters Ended September 28, September 29, 2019 2018 (Thousands, except per share data) Numerator: Income from continuing operations $ 41,752 $ 83,529 Income from discontinued operations — 195 Net income $ 41,752 $ 83,724 Denominator: Weighted average common shares for basic earnings per share 103,130 115,260 Net effect of dilutive stock based compensation awards 1,247 1,211 Weighted average common shares for diluted earnings per share 104,377 116,471 Basic earnings per share - continuing operations $ 0.40 $ 0.73 Basic earnings per share - discontinued operations — — Basic earnings per share $ 0.40 $ 0.73 Diluted earnings per share - continuing operations $ 0.40 $ 0.72 Diluted earnings per share - discontinued operations — — Diluted earnings per share $ 0.40 $ 0.72 Stock options excluded from earnings per share calculation due to anti-dilutive effect 388 1,113 |
Additional cash flow informat_2
Additional cash flow information (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Additional cash flow information | |
Interest and income taxes paid | First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Non-cash Investing Activities: Capital expenditures incurred but not paid $ 7,500 $ 9,690 Non-cash Financing Activities: Unsettled share repurchases $ 2,734 $ 11,228 Supplemental Cash Flow Information: Interest $ 19,214 $ 13,826 Income tax (refunds) payments - continuing and discontinued operations (5,192) 54,519 |
Segment information (Tables)
Segment information (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Segment information | |
Table of the Company's segments and the related financial information for each | First Quarters Ended September 28, September 29, 2019 2018 (Thousands) Sales: Electronic Components $ 4,294,187 $ 4,710,825 Farnell 335,822 379,054 4,630,009 5,089,879 Operating income: Electronic Components $ 112,286 $ 161,913 Farnell 21,805 40,793 134,091 202,706 Corporate (1) (26,677) (20,175) Restructuring, integration and other expenses (24,598) (14,788) Amortization of acquired intangible assets and other (20,078) (20,927) Operating income $ 62,738 $ 146,816 Sales, by geographic area: Americas (2) $ 1,215,757 $ 1,271,793 EMEA (3) 1,470,924 1,714,917 Asia/Pacific (4) 1,943,328 2,103,169 Sales $ 4,630,009 $ 5,089,879 (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 $1.14 billion and $1.18 billion for the first quarters ended September 28, 2019 and September 29, 2018, respectively. (3) Includes sales from Germany and Belgium of $580.3 million and $277.8 million, respectively, for the first quarter ended September 28, 2019. Includes sales from Germany and Belgium of $685.7 million and $280.1 million, respectively, for the first quarter ended September 29, 2018. (4) Includes sales from China (including Hong Kong), Taiwan and Singapore of $623.5 million, $870.4 million and $239.6 million, respectively, for the first quarter ended September 28, 2019. Includes sales from China (including Hong Kong), Taiwan and Singapore of $693.1 million, $888.7 million and $280.4 million, respectively, for the first quarter ended September 29, 2018. |
Table of Assets by reportable segment and long-lived assets by geographic area | September 28, June 29, 2019 2019 (Thousands) Property, plant, and equipment, net, by geographic area: Americas (1) $ 208,925 $ 213,802 EMEA (2) 192,338 200,379 Asia/Pacific 36,204 37,990 Property, plant, and equipment, net $ 437,467 $ 452,171 (1) Includes property, plant and equipment, net, of $205.4 million and $209.9 million as of September 28, 2019, and June 29, 2019, respectively, in the United States. (2) Includes property, plant and equipment, net, of $87.3 million, $72.0 million and $23.5 million in Germany, the UK and Belgium, respectively, as of September 28, 2019; and $95.2 million, $70.5 million and $25.2 million in Germany, the UK and Belgium, respectively, as of June 29, 2019. |
Restructuring expenses (Tables)
Restructuring expenses (Tables) | 3 Months Ended |
Sep. 28, 2019 | |
Fiscal Year 2020 Restructuring Liabilities | |
Restructuring Cost and Reserve [Line Items] | |
Activity related to the restructuring reserves | Asset Severance Impairments Total (Thousands) Fiscal 2020 restructuring expenses $ 11,576 $ 6,711 $ 18,287 Cash payments (5,730) — (5,730) Non-cash amounts — (6,711) (6,711) Other, principally foreign currency translation (115) — (115) Balance at September 28, 2019 $ 5,731 $ — $ 5,731 |
Fiscal Year 2019 And Prior Restructuring Liabilities | |
Restructuring Cost and Reserve [Line Items] | |
Activity related to the restructuring reserves | Facility and Contract Severance Exit Costs Total (Thousands) Balance at June 29, 2019 $ 21,537 $ 5,381 $ 26,918 Cash payments (7,231) (2,055) (9,286) Changes in estimates, net (1,455) 618 (837) Other, principally foreign currency translation (63) (124) (187) Balance at September 28, 2019 $ 12,788 $ 3,820 $ 16,608 |
Basis of presentation and new_3
Basis of presentation and new accounting pronouncements (Details) | 3 Months Ended |
Sep. 28, 2019 | |
Basis of presentation and new accounting pronouncements | |
Lease, Practical Expedients, Package [true false] | true |
Lease, Practical Expedient, Use of Hindsight [true false] | true |
Discontinued Operations (Detail
Discontinued Operations (Details) $ in Millions | Sep. 28, 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 intangible asset_2
Goodwill and intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Sep. 28, 2019 | Jun. 29, 2019 | Jun. 30, 2018 | Jul. 04, 2009 | |
Carrying amount of goodwill, by reportable segment | ||||
Carrying value | $ 876,728 | |||
Foreign currency translation | (18,072) | |||
Carrying value | 858,656 | |||
Accumulated Impairment | $ 137,396 | $ 181,440 | $ 1,045,110 | |
Electronic Components | ||||
Carrying amount of goodwill, by reportable segment | ||||
Carrying value | 390,896 | |||
Foreign currency translation | (5,108) | |||
Carrying value | 385,788 | |||
Farnell | ||||
Carrying amount of goodwill, by reportable segment | ||||
Carrying value | 485,832 | |||
Foreign currency translation | (12,964) | |||
Carrying value | $ 472,868 |
Goodwill and intangible asset_3
Goodwill and intangible assets Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Jun. 29, 2019 |
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | $ 398,571 | $ 408,779 |
Accumulated Amortization | (278,432) | (265,259) |
Net Book Value | 120,139 | 143,520 |
Customer related | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 284,993 | 292,266 |
Accumulated Amortization | (218,402) | (208,329) |
Net Book Value | 66,591 | 83,937 |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 51,323 | 52,760 |
Accumulated Amortization | (26,107) | (24,752) |
Net Book Value | 25,216 | 28,008 |
Technology and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Acquired amount | 62,255 | 63,753 |
Accumulated Amortization | (33,923) | (32,178) |
Net Book Value | $ 28,332 | $ 31,575 |
Goodwill and intangible asset_4
Goodwill and intangible assets Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Goodwill and intangible assets | ||
Weighted average life of intangible assets | 2 years | |
Intangible asset amortization expense | $ 19,911 | $ 20,810 |
Goodwill and intangible asset_5
Goodwill and intangible assets (Estimated Future Amortization Expense) (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Jun. 29, 2019 |
Fiscal Year: | ||
Remainder of fiscal 2020 | $ 59,212 | |
2021 | 39,439 | |
2022 | 14,132 | |
2023 | 5,864 | |
2024 | 1,492 | |
Net Book Value | $ 120,139 | $ 143,520 |
Debt - short-term debt (Details
Debt - short-term debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Sep. 28, 2019 | Jun. 29, 2019 | |
Components of short-term debt | ||
Short-term debt | $ 638,402 | $ 300,538 |
Bank credit facilities and other | ||
Components of short-term debt | ||
Short-term Debt, Weighted Average Interest Rate | 1.08% | 1.02% |
Short-term debt | $ 302 | $ 538 |
Accounts receivable securitization program | ||
Components of short-term debt | ||
Short-term Debt, Weighted Average Interest Rate | 2.80% | |
Short-term debt | $ 338,100 | |
Notes Due June 2020 | ||
Components of short-term debt | ||
Short-term Debt, Weighted Average Interest Rate | 5.88% | 5.88% |
Short-term debt | $ 300,000 | $ 300,000 |
Debt - long-term debt (Details)
Debt - long-term debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Sep. 28, 2019 | Jun. 29, 2019 | |
Debt Instrument [Line Items] | ||
Long-term debt before discount and debt issuance costs | $ 1,200,348 | $ 1,428,803 |
Discount and debt issuance costs - unamortized | (8,373) | (8,881) |
Long-term debt | $ 1,191,975 | $ 1,419,922 |
Revolving credit facilities | Accounts receivable securitization program | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate | 3.15% | |
Long-term debt before discount and debt issuance costs | $ 227,300 | |
Revolving credit facilities | Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt, stated interest rate | 5.68% | |
Long-term debt before discount and debt issuance costs | $ 1,100 | |
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 | 1.12% | 1.00% |
Long-term debt before discount and debt issuance costs | $ 348 | $ 403 |
Debt (Textuals) (Details)
Debt (Textuals) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 28, 2019 | Jun. 29, 2019 | |
Company's total debt | ||
Debt, Long-term and Short-term, Combined Amount | $ 1,830 | $ 1,720 |
Total fair value | 1,910 | 1,780 |
Revolving credit facilities | Accounts receivable securitization program | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | 500 | |
Accounts Receivable from Securitization | $ 839.6 | 857.3 |
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 | Credit Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | 200 | |
Letters of credit outstanding, amount | 4.2 | $ 4 |
Notes Payable In Certain Approved Currencies | Credit Facility | ||
Debt Instrument [Line Items] | ||
Maximum borrowing amount | $ 300 |
Leases (Details)
Leases (Details) $ in Thousands | 3 Months Ended |
Sep. 28, 2019USD ($) | |
Lease Cost | |
Operating lease cost | $ 18,802 |
Variable lease cost | 5,268 |
Total lease cost | $ 24,070 |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Lease term | 19 years |
Leases (Operating Lease Commitm
Leases (Operating Lease Commitments) (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Jun. 29, 2019 |
Leases [Abstract] | ||
Remainder of fiscal 2020 | $ 49,441 | |
2021 | 53,034 | |
2022 | 42,442 | |
2023 | 36,932 | |
2024 | 29,215 | |
Thereafter | 158,895 | |
Total future operating lease payments | 369,959 | |
Total imputed interest on operating lease liabilities | (69,404) | |
Total operating lease liabilities | $ 300,555 | |
2020 | $ 68,710 | |
2021 | 52,225 | |
2022 | 42,069 | |
2023 | 32,245 | |
2024 | 23,305 | |
Thereafter | 85,196 | |
Total | $ 303,750 |
Leases (Other Lease Information
Leases (Other Lease Information) (Details) $ in Thousands | 3 Months Ended |
Sep. 28, 2019USD ($) | |
Leases [Abstract] | |
Operating lease weighted-average remaining lease term | 9 years 7 months 6 days |
Operating lease weighted-average discount rate | 3.80% |
Cash paid for operating lease liabilities | $ 15,322 |
Operating lease assets obtained from new operating lease liabilities | $ 6,404 |
Derivative financial instrume_3
Derivative financial instruments Textuals (Details) - USD ($) | 3 Months Ended | |
Sep. 28, 2019 | Jun. 29, 2019 | |
Derivative fair value | ||
Derivative assets fair value | $ 4,058,000 | $ 5,511,000 |
Derivative liabilities fair value | $ 5,705,000 | $ 6,154,000 |
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 | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Derivative financial instruments | ||
Net derivative financial instrument gain | $ 9,500 | $ 2,792 |
Commitments and contingencies (
Commitments and contingencies (Textuals) (Details) - USD ($) $ in Millions | Sep. 28, 2019 | Jun. 29, 2019 |
Loss Contingency, Estimate [Abstract] | ||
Estimate of possible loss | $ 14.7 | $ 14.7 |
Income taxes (Details)
Income taxes (Details) | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Income taxes | ||
Effective tax rate | (22.70%) | 27.30% |
Pension and retirement plans (P
Pension and retirement plans (Periodic Pension Cost) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Components of net periodic pension costs | ||
Service cost | $ 3,786 | $ 3,734 |
Interest cost | 5,638 | 6,614 |
Expected return on plan assets | (12,668) | (13,301) |
Amortization of prior service cost (credit) | 534 | (393) |
Recognized net actuarial loss | 3,637 | 2,535 |
Net periodic pension cost (benefit) | 927 | (811) |
Contributions | 0 | |
Selling, General and Administrative Expenses | ||
Components of net periodic pension costs | ||
Net periodic pension cost (benefit) | 3,786 | 3,734 |
Other Income, net | ||
Components of net periodic pension costs | ||
Net periodic pension cost (benefit) | (2,859) | $ (4,545) |
Plan | ||
Components of net periodic pension costs | ||
Estimated future employer pension plan contributions | $ 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 | |
Aug. 24, 2019 | Sep. 28, 2019 | Sep. 29, 2018 | |
Shareholders' equity | |||
Authorized repurchase of common stock under Share Repurchase Program | $ 500,000 | $ 2,950,000 | |
Shares repurchased during period (in shares) | 2.6 | ||
Cost of repurchase | $ 112,100 | ||
Remaining authorized repurchase amount | $ 593,300 | ||
Cash dividends paid per common share | $ 0.21 | $ 0.21 | $ 0.20 |
Dividends paid on common stock | $ 21,451 | $ 22,932 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Numerator: | ||
Income from continuing operations | $ 41,752 | $ 83,529 |
Income from discontinued operations | 195 | |
Net income | $ 41,752 | $ 83,724 |
Denominator: | ||
Weighted average common shares for basic earnings per share | 103,130 | 115,260 |
Net effect of dilutive stock based compensation awards | 1,247 | 1,211 |
Weighted average common shares for diluted earnings per share | 104,377 | 116,471 |
Basic earnings per share - continuing operations | $ 0.40 | $ 0.73 |
Basic earnings per share | 0.40 | 0.73 |
Diluted earnings per share - continuing operations | 0.40 | 0.72 |
Diluted earnings per share | $ 0.40 | $ 0.72 |
Stock Options | ||
Denominator: | ||
antidilutive Securities | 388 | 1,113 |
Additional cash flow informat_3
Additional cash flow information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 28, 2019 | Sep. 29, 2018 | Jun. 29, 2019 | |
Interest and income taxes paid | |||
Capital expenditures incurred but not paid | $ 7,500 | $ 9,690 | |
Unsettled share repurchases | 2,734 | 11,228 | |
Interest | 19,214 | 13,826 | |
Income tax (refunds) payments - continuing and discontinued operations | (5,192) | $ 54,519 | |
Cash equivalents | $ 16,100 | $ 9,400 |
Segment information (Details)
Segment information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Sales, by segment | ||
Sales | $ 4,630,009 | $ 5,089,879 |
Operating income (expense): | ||
Restructuring, integration and other expenses | (24,598) | (14,788) |
Amortization of acquired intangible assets and other | (20,078) | (20,927) |
Operating income | 62,738 | 146,816 |
Segment | ||
Operating income (expense): | ||
Operating income | 134,091 | 202,706 |
Corporate | ||
Operating income (expense): | ||
Corporate | (26,677) | (20,175) |
Electronic Components | Segment | ||
Sales, by segment | ||
Sales | 4,294,187 | 4,710,825 |
Operating income (expense): | ||
Operating income | 112,286 | 161,913 |
Farnell | Segment | ||
Sales, by segment | ||
Sales | 335,822 | 379,054 |
Operating income (expense): | ||
Operating income | $ 21,805 | $ 40,793 |
Segment information (Sales, by
Segment information (Sales, by geographic area) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 28, 2019 | Sep. 29, 2018 | |
Sales, by geographic area: | ||
Sales | $ 4,630,009 | $ 5,089,879 |
Americas | ||
Sales, by geographic area: | ||
Sales | 1,215,757 | 1,271,793 |
United States | ||
Sales, by geographic area: | ||
Sales | 1,140,000 | 1,180,000 |
EMEA | ||
Sales, by geographic area: | ||
Sales | 1,470,924 | 1,714,917 |
Germany | ||
Sales, by geographic area: | ||
Sales | 580,300 | 685,700 |
Belgium | ||
Sales, by geographic area: | ||
Sales | 277,800 | 280,100 |
Asia Pacific | ||
Sales, by geographic area: | ||
Sales | 1,943,328 | 2,103,169 |
Taiwan | ||
Sales, by geographic area: | ||
Sales | 870,400 | 888,700 |
China (including Hong Kong) | ||
Sales, by geographic area: | ||
Sales | 623,500 | 693,100 |
SINGAPORE | ||
Sales, by geographic area: | ||
Sales | $ 239,600 | $ 280,400 |
Segment information (Property,
Segment information (Property, plant and equipment, net, by geographic area) (Details) - USD ($) $ in Thousands | Sep. 28, 2019 | Jun. 29, 2019 |
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | $ 437,467 | $ 452,171 |
Americas | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 208,925 | 213,802 |
United States | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 205,400 | 209,900 |
EMEA | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 192,338 | 200,379 |
Germany | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 87,300 | 95,200 |
United Kingdom | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 72,000 | 70,500 |
Belgium | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | 23,500 | 25,200 |
Asia Pacific | ||
Property, plant and equipment, net, by geographic area | ||
Property, plant and equipment, net | $ 36,204 | $ 37,990 |
Restructuring expenses (Details
Restructuring expenses (Details) $ in Thousands | 3 Months Ended |
Sep. 28, 2019USD ($) | |
Fiscal Year 2020 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | $ 18,287 |
Cash payments | (5,730) |
Non-cash amounts | (6,711) |
Other, principally foreign currency translation | (115) |
Ending Balance | 5,731 |
Fiscal Year 2019 And Prior Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Beginning Balance | 26,918 |
Cash payments | (9,286) |
Changes in estimates, net | (837) |
Other, principally foreign currency translation | (187) |
Ending Balance | 16,608 |
Employee Severance | Fiscal Year 2020 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | 11,576 |
Cash payments | (5,730) |
Other, principally foreign currency translation | (115) |
Ending Balance | 5,731 |
Employee Severance | Fiscal Year 2019 And Prior Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Beginning Balance | 21,537 |
Cash payments | (7,231) |
Changes in estimates, net | (1,455) |
Other, principally foreign currency translation | (63) |
Ending Balance | 12,788 |
Facility Closing | Fiscal Year 2019 And Prior Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Beginning Balance | 5,381 |
Cash payments | (2,055) |
Changes in estimates, net | 618 |
Other, principally foreign currency translation | (124) |
Ending Balance | 3,820 |
Asset Impairments | Fiscal Year 2020 Restructuring Liabilities | |
Activity related to the restructuring reserves | |
Restructuring expenses | 6,711 |
Non-cash amounts | $ (6,711) |
Restructuring expenses (Textual
Restructuring expenses (Textuals) (Details) $ in Thousands | 3 Months Ended | |
Sep. 28, 2019USD ($)employee | Jun. 29, 2019USD ($) | |
Minimum | ||
Restructuring Cost and Reserve [Line Items] | ||
Number of employee reductions under Severance charges | employee | 200 | |
Fiscal Year 2020 Restructuring Liabilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | $ 18,287 | |
Restructuring Reserve | 5,731 | |
Fiscal Year 2020 Restructuring Liabilities | Electronic Components | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 15,100 | |
Fiscal Year 2020 Restructuring Liabilities | Farnell | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring expenses | 3,200 | |
Fiscal Year 2019 And Prior Restructuring Liabilities | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring Reserve | $ 16,608 | $ 26,918 |