Avnet 2002 Annual Report Download - page 36

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basis points to Ñnish at 1.22% in the fourth quarter. The table below outlines quarterly operating proÑt (loss)
margin performance for the Company and its operating groups:
QUARTERLY OPERATING PROFIT (LOSS) MARGIN ANALYSIS
BY OPERATING UNIT
Q4-02 Q3-02 Q2-02 Q1-02 Q4-01
(Jun-02) (Mar-02) (Dec-01) (Sep-01) (Jun-01) Total 2002
BEFORE SPECIAL CHARGES
Avnet, Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.22% 1.04% 1.01% 0.16% 1.96% 0.86%
EMÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.49 0.94 (0.15) (0.40) 2.67 0.47
CMÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 3.32 1.83 3.27 1.89 2.37 2.62
AC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.61) 3.03 3.51 3.70 4.65 2.55
AFTER SPECIAL CHARGES
Avnet, Inc. ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2.49)% 1.04% 1.01% 0.16% (10.94)% (0.03)%
EMÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.43 0.94 (0.15) (0.40) (3.57) 0.20
CMÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (2.17) 1.83 3.27 1.89 (0.38) 1.32
AC ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.94) 3.03 3.51 3.70 3.28 2.48
Interest Expense
Interest expense was $124.6 million in 2002 as compared with $191.9 million in 2001, declining by 35.1%.
The decrease was due primarily to the reduction of debt as a result of cash generated by reductions in working
capital and, to a lesser extent, as a result of lower interest rates on the Company's variable rate debt. The
Company has reduced its total debt by approximately $1.5 billion since the end of December 2000.
Interest expense for the fourth quarter of 2002 of $26.5 million was down 42.9% in comparison to the
$46.3 million of interest expense in the fourth quarter of 2001. The decrease in interest expense in the fourth
quarter reÖected the Ñfth consecutive quarterly reduction, due principally to the signiÑcant reductions of debt
discussed above.
Interest expense was $94.8 million in 2000. The signiÑcant increase in interest expense from 2000 to 2001
was due primarily to increased borrowings to fund the Company's acquisitions and the additional working
capital requirements to support the growth in business the Company was experiencing in the Ñrst half of 2001.
This included approximately $893.7 million and $1.35 billion, respectively, for working capital and acquisi-
tions, net of cash received from dispositions of businesses, during 2000 and 2001. Interest expense in 2001
compared to 2000 was also impacted by increased interest rates as a result of the Federal Reserve's actions to
increase short-term rates and the Company's decision to issue, in February 2000, $360.0 million of 7
7
/
8
% Notes
due 2005.
See ""Liquidity and Capital Resources'' for further discussion of the Company's capital structure.
Net Income (Loss) from Continuing Operations
As a result of the factors described in the preceding sections of this MD&A related to the current year
results, the consolidated loss from continuing operations before special charges in 2002 was $22.4 million, or
$0.19 per diluted share. Including special items and the cumulative eÅect of change in accounting principle
discussed previously, the Company reported a loss of $664.9 million, or $5.61 per share on a diluted basis. In
2001, the Company reported net income from continuing operations, before special charges, of $236.8 million,
or $1.99 per diluted share. Including special items and income from discontinued operations, the Company
reported net income of $15.4 million, or $0.13 per diluted share in 2001.
In 2000, the Company reported income from continuing operations before special charges of $193.0 mil-
lion, or $1.78 per diluted share, as compared with income from continuing operations of $236.8 million, or
$1.99 per diluted share, in 2001. Including the special charges referred to previously and income from
25