Avnet 2000 Annual Report Download - page 32

61
60
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
14. Non-recurring items (continued):
These charges include severance, real property lease termination costs, inventory reserves required related to supplier terminations and other items.
Approximately $18,613,000 of the pre-tax charge, which required an outflow of cash, is included in operating expenses and $7,906,000, which represented
a non-cash write-down, is included in cost of sales. Substantially all of the cash associated with this item had been expended at July 2, 1999.
During the fourth quarter of 1998, the Company recorded $35,400,000 pre-tax and $21,200,000 after-tax ($0.27 per share on a diluted basis) of incremen-
tal special charges associated principally with the reorganization of its EM Americas operation. Approximately $25,700,000 of the pre-tax charge is included
in operating expenses and $9,700,000 is included in cost of sales. These charges include severance, real property lease termination costs, inventory reserves
required related to supplier terminations, the write-down of goodwill and other items. The write-down of goodwill relates to a small underperforming operat-
ing unit. Of the special charges of $35,400,000 pre-tax, approximately $17,100,000 did not require an outflow of cash and $18,300,000 required the use of
cash, all of which had been expended at July 2, 1999.
Dispositions and other:
In the fourth quarter of 1999, the Company recorded a gain on the sale of its Allied Electronics business in the amount of $252,279,000 pre-tax, offset some-
what by charges taken in connection with the intended disposition of the Avnet Setron catalog operation in Germany amounting to $42,732,000.
Approximately $37,492,000 of the pre-tax charge, consisting principally of the write-off of goodwill, is included in operating expenses and $5,240,000 is
included in cost of sales, while the pre-tax gain on Allied Electronics is shown separately on the income statement. The net effect of these items is to increase
income before taxes, net income and diluted earnings per share by approximately $209,547,000, $79,709,000 and $1.13 per share for the fourth quarter,
respectively.
In the second quarter of 1998, the Company recorded a gain on the sale of Channel Master amounting to $33,795,000 pre-tax, offset somewhat in operat-
ing expenses by costs relating to the divestiture of Avnet Industrial, the closure of the Company’s corporate headquarters in Great Neck, New York, and the
anticipated loss on the sale of Company-owned real estate, amounting to $13,300,000 in the aggregate. The effect of these items is to increase income
before income taxes, net income and diluted earnings per share by approximately $20,495,000, $8,700,000 and $0.11 per share for the second quarter,
respectively.
In total, the non-recurring items recorded in 1999 as discussed above positively impacted income before taxes, net income and diluted earnings per share by
$183,028,000, $63,969,000 and $0.89 per share, respectively. The net positive impact of the non-recurring items on diluted earnings per share for 1999
($0.89) was $0.03 less than the sum of the applicable amounts for the fourth quarter and first quarter ($1.13 per share less $0.21 per share) due to the
effect of the Company’s stock repurchase program on the weighted average number of shares outstanding and the amount of the non-recurring items.
In total, the non-recurring items recorded in 1998 as discussed above negatively impacted income before income taxes, net income and diluted earnings per
share by $14,905,000, $12,500,000 and $0.16 per share, respectively.
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. Summary of quarterly results (unaudited):
(Millions, except per share data) First Second Third Fourth
Quarter Quarter Quarter Quarter Year
2000
Sales $ 1,654.3 $ 2,102.8 $ 2,686.2 $ 2,728.9 $ 9,172.2
Gross Profit 230.8 (a) 282.7 (b) 380.9 (c) 394.1 1,288.5 (a)(b)(c)
Pre-tax income 39.4 (a) 28.4 (b) 71.9 (c) 114.8 254.5 (a)(b)(c)
Net income 22.1 (a) 15.1 (b) 41.3 (c) 66.6 145.1 (a)(b)(c)
Diluted earnings per share 0.31 (a) 0.18 (b) 0.46 (c) 0.74 1.75 (a)(b)(c)(f)
1999
Sales $ 1,581.6 $ 1,526.9 $ 1,599.2 $ 1,642.3 $ 6,350.0
Gross Profit 231.9 (d) 228.8 243.8 244.1 (e) 948.6 (d)(e)
Pre-tax income 28.7 (d) 45.9 45.1 255.6 (e) 375.3 (d)(e)
Net income 15.7 (d) 26.5 25.7 106.6 (e) 174.5 (d)(e)
Diluted earnings per share 0.21 (d) 0.37 0.36 1.51 (e) 2.43 (d)(e)(f)
(a) Includes the impact of incremental special charges associated with the reorganization of the Electronic Marketing European operations amounting to $6.1
million pre-tax, $4.0 million after-tax and $0.06 per share on a diluted basis.
(b) Includes the impact of incremental special charges associated with the integration of Marshal Industries, the reorganization of the Company’s Asian oper-
ations, costs related to the consolidation of the Company’s Electronics Marketing European warehousing operations and costs incurred in connection
with its lawsuit against Wyle Laboratories, Inc. amounting to $28.0 million pre-tax, $17.6 million after-tax and $0.21 per share on a diluted basis.
(c) Includes the impact of incremental special charges associated with the integration of Eurotronics B.V. (SEI), the integration of the SEI Macro Group, the
integration of JBA Computer Solutions and costs related to the consolidation of EM’s European warehousing operations amounting to $14.8 million pre-
tax, $8.9 million after-tax and $0.10 per share on a diluted basis.
(d) Includes the impact of incremental special charges associated with the reorganization of the Company’s Electronics Marketing Group amounting to $26.5
million pre-tax, $15.7 million after-tax and $0.21 per share on a diluted basis.
(e) Includes the net gain on exiting the printed catalog business consisting of the July 2, 1999 sale of Allied Electronics, offset somewhat by charges record-
ed in connection with the disposition of the Avnet Setron catalog operations in Germany. The net positive effect on fourth quarter 1999 pre-tax income,
net income and diluted earnings per share was $209.5 million, $79.7million and $1.13, respectively.
(f) Diluted earnings per share for fiscal 2000 is greater by $0.06 and in fiscal 1999 is less by $0.02 than the sum of the applicable amounts for each of the
quarters due to the impact on the weighted average number of shares outstanding of the issuance of shares in connection with the acquisition of Marshall
Industries and Electronics B.V. (SEI) in 2000 and the effect of the stock repurchase program in 1999.