Avnet 2001 Annual Report Download

Download and view the complete annual report

Please find the complete 2001 Avnet annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 64

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64

avnet
2001
annual report

Table of contents

  • Page 1
    avnet 2001 annual report

  • Page 2
    ..., Avnet markets, inventories and adds value to these products and provides world-class supply-chain management and engineering services. Avnet's Web site is located at www.avnet.com. 1 Financial Review 3 Letter to Shareholders 11 Electronics Marketing 19 Computer Marketing 25 Applied Computing 30...

  • Page 3
    ... with: (i) the integration of Marshall Industries, Eurotronics B.V. (SEI) and the SEI Macro Group into EM, (ii) the integration of JBA Computer Solutions into CM North America, (iii) the reorganization of EM Asia, (iv) the reorganization of EM's European operations including costs related to the...

  • Page 4

  • Page 5
    ... of enterprise computing systems, software, storage and services for value-added resellers, and enterprise solutions for end users. APPLIED COMPUTING (AC) AC markets and adds value through engineering assistance, supply-chain management and end product integration to embedded technology subsystems...

  • Page 6
    ...leading scope and scale, Avnet is molding a lean, global company positioned to excel when the market rebounds. AVNET, INC. FY 2001 SALES BY REGION ASIA EMEA AMERICAS % OF $ BILLIONS AVNET'S SALES AMERICAS $8.75 68.3% EMEA $3.51 27.4% ASIA $0.55 4.3% Avnet's aggressive acquisition strategy is aimed...

  • Page 7
    ..., WBC Europe October 2000 RDT Technologies Ltd. Israel February 2001 Sunrise Technology Limited People's Republic of China May 2001 Kent Electronics Corporation North America June 2001 to June, primarily by lowering working capital by $813 million. Consequently, by the end of the fiscal year, Avnet...

  • Page 8
    ... and Fortune 500 departmental solutions with a very select group of industryleading vendors. CM derived the vast majority of its $2.85 billion in FY'01 sales from six of the world's best-known information technology (IT) brands: Cisco, Compaq, EMC, Hewlett-Packard, IBM and Oracle. Applied Computing...

  • Page 9
    ... reduce design time to market by integrating industry-standard subsystems. The showcases were built in conjunction with top suppliers like IBM, Intel, Microsoft and Motorola to demonstrate applications for products and technologies just coming to market. Avnet launched a new, enterprise-wide global...

  • Page 10
    ... CEO Roy Vallee (left), with the assistance of Bob Zierk, vice president, global human resources, discusses Avnet's financial status and highlights at the Town Hall, broadcast quarterly via satellite. Employees Drive Our Success AVNET, INC. FY 2001 SALES BY PRODUCT P&E CONNECTORS COMPUTER PRODUCTS...

  • Page 11
    ...Avnet began FY'02 number one in its industry. From the electronic components that feed the supply chain, to the subsystem building blocks that reduce time to market, to the valueadded mid-range computing products space, we are a market leader. Through focus, specialization and innovation, Team Avnet...

  • Page 12

  • Page 13
    ... and suppliers, EM also enhances those products through value-added services such as marketing, engineering design, and inventory and supply-chain management. "Avnet Electronics Marketing's global organization will continue to focus on improved earnings and return on working capital, executing...

  • Page 14
    Technicians in Electronics Marketing's Device Programming Center in Chandler, Arizona label semiconductors programmed for a customer-specific application. EM SALES GROWTH IN BILLIONS production, improving time to market and reducing costs. For multinational customers, EM's knowledge of local ...

  • Page 15
    ...the acquisition of Europe's VEBA Electronics Group of companies from E.ON AG. Avnet Components Israel Ltd. Avnet Israel, formed from the merger of Avnet-Gallium Co. Ltd. and RDT Technologies Ltd., both of Tel Aviv, makes EM the largest value-added electronic components distributor in Israel. Sunrise...

  • Page 16
    ... of it, the Electronics Marketing Logistics Center in Chandler, Arizona is a world-class ISO 9002 certified facility. EM is core competent in the storage, retrieval, value-add and shipping of electronic components. HELPING CUSTOMERS MANAGE RISK ƒOME COMPANIES IN THE SUPPLY CHAIN MANAGE RISK BETTER...

  • Page 17
    .... In South Africa, Avnet Kopp continued its history of increased revenue performance. IMS Europe, a focused technology and supply-chain management, and already has deep, trusted, collaborative relationships with many key players in the electronics manufacturing supply chain. EM's innovative service...

  • Page 18
    ... and China; Taiwan; and a third region encompassing Southeast Asia, India, Australia, New Zealand and Korea. Harley Feldberg, formerly president of EM's product business groups in North America, is president of Avnet Asia. Each of the regions has its own sales, technical and product management teams...

  • Page 19
    ...Semiconductor gives its CRM Excellence Award to EBV Elektronik for outstanding customer relationship management in the electronics industry. Avnet Asia is named national Semiconductor's Top Performing Distributor in South Asia. Avnet Sunrise is named its Top Performing Distributor in Hong Kong/China...

  • Page 20

  • Page 21
    ...in information technology (IT) value-added distribution by building channels to market for its suppliers, by creating opportunities for its employees and by providing outstanding customer satisfaction. CM goes to market through three focused divisions: Avnet Hall-Mark, Avnet Enterprise Solutions and...

  • Page 22
    ... sales process costs and forging stronger bonds with customers and suppliers. CM SALES GROWTH IN BILLIONS 2.85 Avnet Hall-Mark (North America) For Avnet Hall-Mark, a value-added distributor of enterprise servers, storage solutions, software and services, FY'01 was a record year. The productivity...

  • Page 23
    ... acquisition of Europe's VEBA Electronics Group of companies from E .ON AG. Hewlett-Packard (HP) over its entire distribution channel. As a result, Avnet Hall-Mark was selected by HP as one of only two mid-range channel partners. As part of this groundbreaking initiative, the value-added services...

  • Page 24
    A Computer Marketing technician audits server design for total quality management purposes before shipping to one of CM's global customers. CM INTEGRATION FACILITIES CM's focus on cust omer sat isfact ion drives innovat ion. In FY'01, t he Product Int egrat ion Cent er and val ue-added int egrat ...

  • Page 25
    ... marketing CM ACCOLADES â- CM boasts two winners of the 2001 IBM Beacon Awards, recognizing those who create customized e-business solutions to help organizations operate smarter and more efficiently. The Avnet Enterprise Solutions division is honored for creating the "Best Managing Technology...

  • Page 26

  • Page 27
    ... technology marketing to such products as platforms and servers, boards and modules, mass storage, peripherals, microprocessors, flat panel displays, networking and software products, and embedded operating systems. Its related services include engineering assistance, supply-chain management...

  • Page 28
    ... Computing celebrated its second calendar year of operations by hosting an August 1, 2001 grand opening of its new global headquarters in Phoenix, Arizona. T he 120,000 square foot facility increases AC's manufacturing space and serves as the home of its technology showcase, lab, integration center...

  • Page 29
    ...Europe's VEBA Electronics Group of companies from E.ON AG. Savoir Technology Group, Inc. Savoir's storage products sector boosts AC's market share with the IBM Technology Group, while its integration business broadens AC's customer base and strengthens the bottom line. Avnet FasTrac is a secure Web...

  • Page 30
    ... applications. Another technology showcase opened in Peabody, Massachusetts as FY'02 began, and more are planned for Europe. Originally launched in early FY'01 and then updated in early FY'02, Avnet FasTracâ„¢ is a secure Web portal that provides customers a seamless, integrated flow of information...

  • Page 31
    ... that further positions AC to add value for its customers and suppliers. In FY'01, AC expanded into Europe, and plans to target the tremendous growth opportunities in Asia in FY'02. AC's services strategy will include the expansion of the Avnet FasTrac Web portal to all customers and all markets and...

  • Page 32
    ... board of directors Roy Vallee - 1991 Chairman and CEO, Avnet, Inc. Left to right James A. Lawrence -1999 Executive Vice President and Chief Financial Officer, General Mills, Inc. Gary L. Tooker -2000 Chairman of the Board, Motorola, Inc. (Ret.) J. Veronica Biggins -1997 Senior Partner, Heidrick...

  • Page 33
    ... Kent acquisition being accounted for as a "pooling-of-interests." The Company currently consists of three major operating groups, Electronics Marketing ("EM"), Computer Marketing ("CM") and Avnet Applied Computing ("AAC"). EM focuses on the global distribution of and value-added services associated...

  • Page 34
    ... to the impact of acquisitions and the strengthening of business conditions in the electronics component distribution market. By region, EM Americas' sales in 2000 of $5.161 billion were up 37% as compared with the prior year, while EM EMEA's 2000 sales were up over 37% and EM Asia's sales were up...

  • Page 35
    ...) and the integration of Eurotronics B.V. (SEI) and the SEI Macro Group into EM EMEA ($10.1 million). The charges related to the reorganization of EM Asia are comprised of severance, inventory reserves required related to supplier terminations, real property lease terminations, employee and facility...

  • Page 36
    ... the electronic distribution marketplace as a result of the global industry cyclical downtrend as well as the effect of increased sales of computer products (including microprocessors, DRAMS, disk drives, etc.) which have lower gross profit margins than other products in the Company's product lines...

  • Page 37
    ... interest and servicing rights to those receivables. At June 29, 2001, the Company had sold $350 million of receivables under the program which is reflected as a reduction of receivables in the accompanying balance sheet. The cash received from the sale of receivables was used primarily to pay down...

  • Page 38
    ... for general corporate purposes, including capital expenditures, acquisitions, repurchase of the Company's common stock and working capital needs. The Company also has a five-year facility with a syndicate of banks led by Bank of America which expires in September 2002 and which provides a line of...

  • Page 39
    ... China. Sunrise reported revenues of approximately $230 million for its fiscal year ending March 31, 2001. On October 31, 2000, the Company completed its acquisition of certain European operations of the VEBA Electronics Group consisting of (a) the Germany-headquartered EBV Group, consisting of EBV...

  • Page 40
    ... Coast provided comprehensive end-to-end voice and data network solutions to major corporations from offices in Irvine and Santa Clara, California. On October 14, 1999, the Company acquired 94% of the SEI Macro Group, an electronics components distributor headquartered in the United Kingdom, and...

  • Page 41
    ...Sheets June 29, 2001 (In thousands, except share amounts) Assets: Current assets: Cash and cash equivalents Receivables, less allowances of $65,204 and $44,523, respectively (Note 3) Inventories... 5) Cumulative valuation adjustments (Note 5) Treasury stock at cost, 12,711 shares and 2,396,000 shares...

  • Page 42
    40 Avnet, Inc. and Subsidiaries Consolidated Statements of Income Years Ended (In thousands, except per share amounts) Sales Cost of sales (Note 17) Gross profit Selling, shipping, general and administrative expenses (Note 17) Operating income Other income, net Interest expense Gain on dispositions...

  • Page 43
    ... Two-for-one stock split (Note 1) Other, net, principally stock option and incentive programs Balance, June 30, 2000 Net income Translation adjustments Valuation adjustments (net of tax of $1,562) Comprehensive income Dividends, $0.30 per share Acquisitions of operations Kent's net income for...

  • Page 44
    ...from financing activities: Repurchase of common stock Sale of accounts receivable under asset securitization program (Note 3) Issuance of notes in public offerings, net (Repayment) issuance of commercial paper and bank debt, net Payment of other debt, net Cash dividends (Note 15) Other, net Net cash...

  • Page 45
    ... - Inventories are stated at cost (first-in, first-out) or market, whichever is lower. Revenue Recognition - Revenue from product sales is recognized Depreciation and amortization - Depreciation and amortization is generally provided for by the straight-line method over the estimated useful lives of...

  • Page 46
    44 Avnet, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) throughout North and South America, Europe and the Asia/Pacific region. To reduce credit risk, management performs ongoing credit evaluations of its customers' financial condition. The Company maintains reserves ...

  • Page 47
    ...Companies, Advacom and Sabre-Data were acquired by Kent prior to its acquisition by Avnet). The acquisitions completed in 1999 consisted of a 60% interest in Max India, Ltd., including 100% of Max India's Hong Kong-based subsidiary, a 70% interest in Gallium Electronics, Ltd., the Computer Solutions...

  • Page 48
    ... in Avnet stock options ($6,985,000 net of related tax benefits) and amounts payable at June 30, 2000 of $854,000. In the aggregate, the operations acquired during 2000 had sales totaling approximately $2,852,000,000 during the fiscal year of each such operation immediately preceding its acquisition...

  • Page 49
    ...statements. Corporate and shared general and administrative costs of the Company were not allocated to discontinued operations. The net assets and results of operations of K*TEC were not material in the years presented. (In thousands) Finished goods Work-in-process Raw materials June 29, 2001 $1,827...

  • Page 50
    ... of Kent. In October 1999, the Company entered into a $500,000,000 364-day credit facility with a syndicate of banks led by Bank of America in order to partially finance the cash component of the acquisition of Marshall Industries and to provide additional working capital capacity. The facility was...

  • Page 51
    ... in short-term securities, the net proceeds were used to fund the acquisition of the VEBA Group. In October 2000, the Company entered into a $1.25 billion 364-day credit facility with a syndicate of banks led by Bank of America and Chase Manhattan Bank in order to replace the $500,000,000 364...

  • Page 52
    ... prior service credit (Accrued) prepaid pension cost recognized in the balance sheet June 30, 2000 The significant components of deferred tax assets and liabilities included on the consolidated balance sheets were as follows: June 29, 2001 (In thousands) Deferred tax assets: Inventory valuation...

  • Page 53
    ... Stock option plans The Company has four stock option plans with shares still available for grant: Under the cash balance plan, service costs are based solely on current year salary levels; therefore, projected salary increases are not taken into account. Components of net periodic benefit costs...

  • Page 54
    ... terms of the various Savoir and Marshall plans assumed by Avnet as part of the acquisitions. Of these options, 404,748 options related to Savoir and 26,772 options related to Marshall had not yet been exercised at June 29, 2001. The following information relates to options outstanding at June 29...

  • Page 55
    ... the ESPP) and incentive stock programs. Pro forma information The Company follows Accounting Principles Board Opinion 25 ("APB 25"), "Accounting for Stock Issued to Employees," in accounting for its stock-based compensation plans. In applying APB 25, no expense was recognized for options granted...

  • Page 56
    ... convertible notes are excluded from the computation of earnings per share from continuing operations and earnings per share in 2001 and 2000 as the effects were antidilutive. All share and per share data reflects the two-for-one split of the Company's common stock distributed on September 28, 2000...

  • Page 57
    ..., Europe and Asia prior to those dates are included in EM and CM as the results of the operating groups have not been restated. EM focuses on the global distribution of, and value-added services associated with, electronics components; CM focuses on middle- to high-end, value-added computer products...

  • Page 58
    ... (In millions) Sales: Electronics Marketing Computer Marketing Avnet Applied Computing June 29, 2001 June 30, 2000...Electronics Marketing Computer Marketing Avnet Applied Computing Corporate $ $ $ $ $ $ Sales, by geographic area, are as follows: Americas EMEA (Europe, Middle East and Africa) Asia...

  • Page 59
    ... the cost of sales. The charges related to the integration of Marshall Industries and the reorganization of the Asian operations are comprised of severance, inventory reserves required related to supplier terminations, real property lease terminations, employee and facility relocation costs, special...

  • Page 60
    .... 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 somewhat by charges taken in connection with the intended disposition of the Avnet Setron catalog operation in Germany amounting to $42,732,000...

  • Page 61
    ... special charges associated with the integration of Marshall Industries, the reorganization of the Company's Asian operations, costs related to the consolidation of the Company's EM European warehousing operations and costs incurred in connection with its lawsuit against Wyle Laboratories, Inc...

  • Page 62
    ...meets periodically with the independent accountants, with our internal auditors and with management to review accounting, auditing, internal control structure and financial reporting matters. Roy Vallee Chairman and Chief Executive Officer Raymond Sadowski Senior Vice President and Chief Financial...

  • Page 63
    ... products by suppliers; and (iv) changes in market demand and pricing pressure. Internet Availability Avnet's Annual Report, Quarterly Fact Sheet, upcoming analyst meetings/teleconferences and other investor relations materials are also available on the World Wide Web on the Investor Relations home...

  • Page 64