SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
For the quarterly period ended September 27, 2002
Commission File #1-4224
Avnet, Inc.
Incorporated in New York
IRS Employer Identification No. 11-1890605
2211 South 47th Street, Phoenix, Arizona 85034
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
The total number of shares outstanding of the registrant’s Common Stock (net of treasury shares) as of
TABLE OF CONTENTS
AVNET, INC. AND SUBSIDIARIES
INDEX
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FORWARD-LOOKING STATEMENTS
This Report contains forward-looking statements with respect to the financial condition, results of operations and business of Avnet, Inc. and subsidiaries (“Avnet” or the “Company”). You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “estimates” or similar expressions in this Report or in documents incorporated by reference in this Report.
These forward-looking statements are subject to numerous assumptions, risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by the forward-looking statements include the following:
Because forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by them. Avnet cautions you not to place undue reliance on these statements, which speak only as of the date of this Report.
Avnet does not undertake any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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PART I
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
See Notes to Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF OPERATIONS
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Short-term debt consists of the following:
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10. Additional cash flow information:
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
For a description of the Company’s critical accounting policies and an understanding of the significant factors that influenced the Company’s performance during the quarters ended September 27, 2002 and September 28, 2001, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) should be read in conjunction with the consolidated financial statements, including the related notes, appearing in Item 1 of this Report as well as the Company’s Annual Report on Form 10-K for the year ended June 28, 2002.
OVERVIEW
Organization
Avnet, Inc. and subsidiaries (the “Company” or “Avnet”) is one of the world’s largest industrial distributors of electronic components, enterprise network and computer equipment and embedded subsystems. Additionally, Avnet provides services to both the end user and the reseller channels. The Company currently consists of three operating groups, Electronics Marketing (“EM”), Computer Marketing (“CM”) and Applied Computing (“AC”). A brief summary of each group is provided below:
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RESULTS OF OPERATIONS
Sales
The table below provides period sales for the Company and its operating groups:
Period Sales by Operating Group and Geography
Challenging economic conditions continued to impact the electronic component and computer industries through the first quarter of fiscal 2003 causing consolidated sales to be essentially flat in comparison with the prior year first and fourth quarters. The Company closed the first quarter of fiscal 2003 with consolidated sales of $2.17 billion, down $27.3 million, or 1.2%, in comparison to the prior year first quarter and up $29.1 million, or 1.4%, sequentially from the fourth quarter of fiscal 2002. The slight year-over-year decline is primarily a result of weaker CM sales of $532.2 million in the current quarter, down $39.7 million, or 6.9%, from the prior year first quarter. EM sales of $1.24 billion in the first quarter of fiscal 2003 increased by $4.2 million, or 0.3%, from the prior year first quarter. This increase encompassed stronger sales in Asia substantially offset by slightly weaker sales in the Americas and EMEA. AC sales of $399.9 million were up $8.3 million, or 2.1%, from the prior year first quarter.
The modest sequential improvement in sales noted above is due primarily to increased sales in both the EM and AC businesses. EM’s sequential sales growth of $25.1 million, or 2.1%, is indicative of a stronger Euro during the fiscal 2003 first quarter; meaning, at a constant exchange rate, EM’s sales would have been essentially flat in comparison to the prior year fourth quarter. AC’s sequential sales growth of $42.6 million, or 11.9%, was offset to a substantial degree by normal seasonal weakness in CM, where sales declined sequentially by $38.6 million, or 6.8%.
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EM accounted for 57.1% of consolidated sales in the first quarter of fiscal 2003 and the combined computer businesses of CM and AC accounted for the remaining 42.9%. During the first quarter of fiscal 2003, revenue by region depicts the relative growing importance of the Asia region, which reached 9.7% of consolidated sales, up from 7.3% of consolidated sales as recently as the first quarter of fiscal 2002. The Company expects the Asia region to continue to be a primary growth driver as this region becomes more of a vital link in the technology supply chain. As a result, the trend of growth of the Asia region as a percentage of consolidated sales will likely continue as the Company continues to invest in that region, specifically in the Peoples’ Republic of China, where the Company continues to enhance its already established position. The Company’s EMEA region remained essentially unchanged in its relative proportion at approximately 32% of consolidated sales. The Americas region decreased in its percentage from 61.1% to 58.6% of total sales on a year-over-year basis.
Gross Profit Margins
Enterprise gross profit margins were down in the first quarter of fiscal 2003 by 42 basis points, to 13.69%, from the prior year first quarter and down 50 basis points sequentially, excluding the impact of special charges recorded in the fourth quarter of fiscal 2002. Including these special charges, the current quarter gross profit margin improved by 51 basis points sequentially. First quarter enterprise gross profit margins were also down slightly from the average 13.9% margin over the past five quarters, excluding special charges, which management believes represents the trough of the current industry down-cycle. By contrast, the Company recorded an average gross profit margin, excluding special charges, of 15.1% over the six quarters ending in June 2001, which was the most recent industry up-cycle.
The year-over-year and sequential decline in consolidated gross profit margins excluding the impact of special charges was due primarily to shifts in the business mix between the Company’s computing businesses as well as continued pricing pressures in the technology markets served by the Company. Higher levels of sales in the lower gross profit margin PC-builder segment of AC, coupled with the reduced CM revenues of higher gross profit margin business, was the major contributor to enterprise gross profit margin decline.
This mix-of-business trend is indicative of the cyclical nature of the electronic component and computer industries as, during the time period covering the up-cycle discussed above, EM accounted for approximately 67% of consolidated revenues, as compared with the down-cycle time period where EM accounted for approximately 55% of consolidated revenues. Management expects that margins previously enjoyed during the last up-cycle are achievable again once the current industry down-cycle comes to an end.
Operating Expenses
Operating expense totaled $277.7 million for the first quarter of fiscal 2003, as compared with $306.9 million in the first quarter of fiscal 2002 and $278.1 million, excluding special charges, in the prior sequential quarter. Including special charges recorded in the fourth quarter of fiscal 2002, operating expenses were $336.1 million. Operating expenses as a percentage of sales in the first quarter of fiscal 2003 were 12.8%, down from 13.9% in the prior year first quarter and 13.0%, excluding special charges, from the prior sequential quarter.
The declines in operating expenses as a percentage of sales are a result of all three operating groups executing expense reduction plans in prior quarters. Beginning with the second quarter of fiscal 2001, total quarterly operating expenses were reduced from a pro forma $358.5 million to $277.7 million as of the first quarter of fiscal 2003. This reduction takes into account a pro forma adjustment to increase the actual reported expenses in the second quarter of fiscal 2001 to account for the impact of the operations of the VEBA Electronics Group (consisting of EBV, WBC, Atlas Logistics and RKE Systems, collectively the “VEBA Group”), which were acquired partway through that quarter. Additionally, the pro forma adjustments to operating expenses remove the goodwill amortization expense for periods prior to the beginning of fiscal 2002, the Company’s adoption date for Statement of Financial Accounting Standards No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets” (see Note 4 to the accompanying consolidated financial statements appearing in Item 1 of this Report), in order to be consistent with the current method of accounting under
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Operating leverage created over the past several quarters has come through cost reduction initiatives which have steadily reduced expenses over the past seven consecutive quarters. Reducing expenses has been an important factor in returning the Company to essentially breakeven results. However, in concert with a commitment to grow earnings and create shareholder value, and in reaction to the continued difficult market environment, the Company anticipates further cost reduction efforts during the second quarter of fiscal 2003 aimed at taking approximately $80 million, on an annualized basis, of additional expense out of the business in order to return the Company to reasonable profitability.
These efforts will likely result in special charges during the second quarter of fiscal 2003. These special charges cannot yet be accurately estimated and have not been recorded to date as the reorganization plan has not yet been finalized by management and the liabilities have not yet been incurred. Cost reductions are anticipated to occur in three main areas: census reductions, mainly focused on non customer-facing personnel; consolidation of selected facilities; and curtailment of certain IT-related initiatives. These cost reduction efforts are expected to have their full impact in the third quarter of fiscal 2003.
Operating Income (Loss)
The Company’s consolidated operating income was $20.0 million in the first quarter of fiscal 2003 (0.92% of sales) as compared with $3.6 million in the prior year first quarter (0.16% of sales) and $26.2 million, excluding special charges, in the prior sequential quarter (1.22% of sales). Including special charges recorded in the fourth quarter of fiscal 2002, the Company recorded an operating loss of $53.4 million, or 2.49% of sales. The improved operating income before special charges in the two most recent quarters as compared with the first three quarters of fiscal 2002 is primarily a result of the cost reduction efforts discussed previously. The changes in revenue mix and the mitigating factors related to operating expense reduction efforts discussed above resulted in the slight decline in operating income as a percentage of sales between the first quarter of fiscal 2003 and the fourth quarter of fiscal 2002.
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The following table provides consolidated and group operating income (loss) margins, before and after special charges, for the September 2002 quarter and compares these results to prior sequential and year-over-year quarterly results.
Quarterly Operating Income (Loss) Margin Analysis
Interest Expense
Interest expense of $27.0 million for the first quarter of fiscal 2003 was down significantly from $38.1 million in the prior year first quarter but up slightly from $26.5 million in the prior sequential quarter. Interest expense was down by $11.1 million year-over-year and the Company experienced five consecutive quarterly reductions in interest expense prior to the current quarter’s slight increase. These reductions are attributed specifically to the significant reductions of consolidated debt and, to a lesser extent, lower interest rates. Since the end of December 2000, the Company has reduced total debt by approximately $1.6 billion, including amounts outstanding under the accounts receivable securitization program as debt.
Net Income (Loss) Before Cumulative Effect of Change in Accounting Principle
The table below summarizes the Company’s net income (loss), both before and after special charges and the cumulative effect of change in accounting principle, for the September 2002 quarter in comparison to prior sequential and year-over-year results:
Quarterly Net Income (Loss)
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As a result of the operational performance and other factors described in preceding sections of this MD&A, the consolidated net loss for the first quarter of fiscal 2003 was $0.5 million — essentially breakeven on a per share basis. This compares to a fiscal 2002 first quarter loss before the cumulative effect of change in accounting principle of $19.2 million, or $0.16 per share on a diluted basis. The net loss in the first quarter of fiscal 2002 was $599.7 million, or $5.09 per share on a diluted basis, due to the adoption of SFAS 142 and the resulting charge of $580.5 million to record the Company’s transitional impairment to its goodwill. This charge is recorded as a cumulative effect of change in accounting principle in the consolidated statement of operations for the quarter ended September 28, 2001.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
During the first quarter of fiscal 2003, cash generated from income before depreciation, amortization, deferred taxes and other non-cash items (including provisions for doubtful accounts) totaled $27.5 million. During that period, $116.5 million was generated by reductions in working capital (excluding cash and cash equivalents), resulting in net cash flow from operations of $144.0 million. In addition, the Company used $13.8 million for other normal business operations including purchases of property, plant and equipment ($11.8 million) and net cash used for other items ($2.0 million). This resulted in $130.2 million, net, being generated from normal business operations. Also during the first quarter of fiscal 2003, the Company used $1.0 million for the acquisition of the remaining minority interest in a consolidated subsidiary. This overall net generation of cash of $129.2 million was used to repay $100.0 million under the accounts receivable securitization program and to repay $15.2 million in debt with a resulting net increase in cash and cash equivalents of $14.0 million.
Capital Structure
The following table summarizes the Company’s capital structure as of the end of the first quarter of fiscal 2003 with a comparison to fiscal 2002 year-end, including the accounts receivable securitization as if it were debt:
For a description of the Company’s long-term debt and lease commitments for the next five years and thereafter, see “Long-Term Contractual Obligations” appearing in Item 7 in the Company’s Annual Report on Form 10-K. With the exception of paydowns of debt obligations discussed herein and regularly scheduled lease payments, there are no material changes to this information.
Financing Transactions
At September 27, 2002, the Company had a multi-year credit facility with a syndicate of banks led by Bank of America that provided up to $428.75 million in financing (this borrowing capacity was limited to $300.0 million subsequent to the quarter-end, as described below). This bank financing, entered into in
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On October 10, 2002, the Company amended its multi-year facility. The amended terms reduce the available borrowings under the facility to $300.0 million. Availability under the facility will increase back to the original $428.75 million if the Company completes a qualified debt or equity offering of $325.0 million or more by April 15, 2003. Since the Company no longer needed the short-term source of capital provided under the 364-day facility to fund its current operational needs, such facility was terminated on October 10, 2002.
The amended agreement also modifies the interest coverage ratio, as defined therein, that the Company must maintain through the remaining term of the agreement. The amended agreement did not modify the other financial covenants of the bank credit facilities. The Company was in compliance with all of the covenants at September 27, 2002.
The amended agreement also contains a “springing lien” whereby borrowings under the amended multi-year facility will become collateralized by certain assets of the Company and its subsidiaries in the event of the occurrence of certain triggering events. These triggering events include: (a) the establishment of a debt rating of Ba1 or lower by Moody’s Investor Services (“Moody’s”) or BB+ or lower by Standard and Poor’s (“S&P”); (b) the failure by the Company to consummate a qualified debt or equity offering of $325.0 million or more by December 15, 2002; and (c) the termination of Avnet’s current accounts receivable securitization program (discussed in Note 3 to the consolidated financial statements appearing in Item 1 of this Report) without simultaneously entering into another securitization with similar attributes.
This amended multi-year facility does not prohibit the Company from drawing upon its availability, if needed, to pay down outstanding debt obligations as they come due.
The multi-year, 364-day and term loan facility discussed above replaced, in October 2001, a $1.25 billion 364-day credit facility with a syndicate of banks that expired upon its maturity in that same month. The Company was able to select from various interest rate options and maturities under this facility, although the Company utilized the facility primarily as back-up for its commercial paper program.
In November 2001, the Company issued $400.0 million of 8.0% Notes due November 15, 2006 (the “8% Notes”). The net proceeds received by the Company from the sale of the 8% Notes were approximately $394.3 million after deduction of the underwriting discounts and other expenses associated with the sale. The net proceeds from the 8% Notes were used to repay commercial paper and other short-term indebtedness. The 8% Notes are hedged with two interest rate swaps as discussed in Note 5 to the consolidated financial statements appearing in Item 1 of this Report. The swaps effectively convert the 8% Notes from a fixed rate to a floating rate based upon U.S. LIBOR plus a spread. The Company accounts for the hedges using the shortcut method as defined under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by Statement of Financial Accounting Standards No. 138, “Accounting for Certain Derivative and Hedging Activities.” Due to the effectiveness of the hedges since inception, the market value adjustments for the hedged 8% Notes and for the swaps directly offset one another in interest expense.
In October 2001, Avnet Financial Services CVA, a wholly owned subsidiary incorporated in Belgium, entered into an agreement with a Belgian bank which provides for the issuance of up to Euro 100 million in Treasury Notes. The Treasury Note program is a multi-currency program pursuant to which short-term notes may be issued with maturities from seven days to one year with either fixed or floating rates of interest. This program is intended to partially finance the working capital requirements of the Company’s European operations.
In addition to its primary financing arrangements, the Company has several small lines of credit in various locations to fund the short-term working capital, foreign exchange, overdraft and letter of credit needs of its wholly owned subsidiaries in Europe and Asia. These facilities are generally guaranteed by Avnet. The
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Covenants and Conditions
The multi-year credit agreement described above contains certain covenants with various limitations on total debt, capital expenditures, investments and acquisitions, and require that net worth, interest coverage and other ratios be maintained at specific levels. Similarly, the receivable securitization program contains certain covenants relating to the quality of the receivables sold under the program. If these conditions are not met, the Company may not be able to borrow any additional funds under these facilities and the lenders generally have the right to accelerate any amounts outstanding. Circumstances that could affect the Company’s ability to meet the required financial covenants and conditions in its various financing arrangements include the duration and depth of the current economic downturn and its impact on profitability, perceived financial strength or weakness by credit rating agencies and various other economic, market and industry factors. The Company was in compliance with all covenants for these facilities at September 27, 2002.
The Company is also required to maintain minimum senior unsecured credit ratings in order to continue using the receivable securitization program in its present form. If the Company’s credit rating is reduced below both Baa3 and BBB-by Moody’s and S&P, respectively, the Company may be in default under the securitization program. The Company is in compliance with these minimum unsecured credit ratings currently and as of September 27, 2002. The Company has also reached an agreement in principle with the applicable banks to lower the rating triggers to Ba2 by Moody’s and BB by Standard & Poor’s. Agreement on these amended terms is pending completion of the formalization of legal documentation. Both the syndicated bank facility and the securitization program contain certain standard cross-default provisions, meaning that if there is a default under one facility, such as a covenant breach or a credit ratings trigger, that default can also trigger a default under the other facility. In the case of any default, the Company would either have to negotiate with the lenders to modify the facilities or pay off all amounts outstanding, terminate the facilities and, if necessary, seek alternative financing.
See “Liquidity Analysis” for further discussion of the Company’s availability under these various facilities.
Liquidity Analysis
Under its two primary borrowing facilities (the multi-year credit facility and the accounts receivable securitization program) the Company has total borrowing capacity of $650.0 million against which amounts outstanding at September 27, 2002 total $228.9 million, leaving remaining available capacity of $421.1 million. With an additional $173.2 million of cash and cash equivalents on hand at September 27, 2002, the Company has more than sufficient liquidity to address 2003 debt maturities and operational needs. Furthermore, subsequent to the first quarter of fiscal 2003, the Company received over $150 million in tax refunds which were used to further repay borrowings under these facilities, thus freeing up further capacity under the borrowing facilities. Should markets recover and revenue growth begin to increase, the Company believes cash generation from anticipated profits, as well as the available liquidity discussed above, is more than sufficient to cover any capital required to fund its maturing debt obligations and any other normal operational requirements.
A summary of important information related to the Company’s liquidity position and capital structure is as follows:
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The Company is considering various financing scenarios related to its future capital structure. Management believes that its current available liquidity is sufficient for its normal business operations and to liquidate debt maturing in 2003. However, the Company is reviewing two alternatives with respect to financing. One alternative is to issue new senior debt in a public bond market transaction and use the proceeds to pre-fund all or part of the senior notes maturing in 2003. Alternatively, the Company may pursue a new, larger securitized borrowing facility, and use the proceeds to liquidate the two primary existing bank facilities and pre-fund all or part of the senior notes maturing in 2003. The Company is considering such a facility as part of its long-term capital structure as it may provide a more efficient way to finance a cyclical business like that of the Company. The Company is actively working, in parallel, on each of these alternatives.
The following table highlights the Company’s liquidity ratios as of the end of the first quarter of fiscal 2003 with a comparison to the fiscal 2002 year-end:
Comparative Analysis — Liquidity*
The Company’s quick assets at September 27, 2002 totaled $1.56 billion as compared to $1.53 billion at June 28, 2002. At September 27, 2002, quick assets were greater than the Company’s current liabilities by $195.9 million as compared with $256.4 million at the end of fiscal 2002. Working capital at September 27,
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The Company does not currently have any material commitments for capital expenditures.
Recently Issued Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 143 (“SFAS 143”), “Accounting for Asset Retirement Obligations.” SFAS No. 143 became effective for the Company beginning on June 29, 2002 (the first day of fiscal 2003) and provides new criteria for the measurement of a liability for an asset retirement obligation and the associated asset retirement cost. The adoption of SFAS 143 did not have a material effect on the Company’s consolidated financial statements.
In August 2001, the FASB issued Statement of Financial Accounting Standards No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS 144 became effective for the Company on June 29, 2002. SFAS 144 amends and supersedes Statement of Financial Accounting Standards No. 121 (“SFAS 121”), “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” However, SFAS 144 retains the fundamental provisions of SFAS 121 for (a) recognition and measurement of the impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sale. SFAS 144 also amends and supersedes previous guidance on reporting for discontinued operations. The adoption of SFAS 144 did not have a material effect on the Company’s consolidated financial statements.
In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146 (“SFAS 146”), “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS 146 supersedes former guidance addressing the financial accounting and reporting for costs associated with exit or disposal activities. SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured when the liability is incurred (as opposed to upon the date of an entity’s commitment to a plan as provided for under previous guidance). The provisions of SFAS 146 will be effective for any exit or disposal activities that are initiated by the Company after December 31, 2002.
See Item 7A in the Company’s Annual Report on Form 10-K for the year ended June 28, 2002 and the “Liquidity and Capital Resources” section of the MD&A in Item 2 of this Form 10-Q.
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of a date within 90 days prior to the filing of this quarterly report (the “Evaluation Date”). Based on such evaluation, the Company’s management has concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective for gathering, analyzing and disclosing the information required to be disclosed in the Company’s periodic reports under the Exchange Act. No significant changes were made in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the Evaluation Date.
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PART II
The Company and/or its subsidiaries are parties to various legal proceedings arising in the normal course of business. While litigation is subject to inherent uncertainties, management currently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position, cash flow or overall results of operations.
The Company and the former owners of a Company-owned site in Oxford, North Carolina have entered into a Consent Decree and Court Order with the Environmental Protection Agency (the “EPA”) for the environmental clean-up of the site, the cost of which, according to the EPA’s remedial investigation and feasibility study, was estimated to be approximately $6.3 million, exclusive of $1.5 million in EPA past costs paid by the potentially responsible parties (“PRPs”). Pursuant to a Consent Decree and Court Order entered into between the Company and the former owners of the site, the former owners have agreed to bear at least 70% of the clean-up costs of the site, and the Company will be responsible for not more than 30% of those costs.
On September 26, 2002, the Company’s Sterling Electronics, Inc. subsidiary (“Sterling”) was added as a defendant in an existing lawsuit by property owners and residents in or near the San Gabriel Valley Superfund Site. Sterling once owned 92.46% of the capital stock of Phaostron, Inc., which has been named as a PRP for contamination at the site. The Complaint, which involves claims related to alleged groundwater contamination in the area, does not clearly specify how Sterling is alleged to be responsible for any environmental contamination. Sterling intends to vigorously defend the case and does not anticipate its ultimate liability, if any, in the matter will be material to its financial position, cash flow or results of operations.
In early May 2002, the Company and the current owner of property in Huguenot, New York were named as PRPs by the New York State Department of Environmental Conservation (“NYSDEC”) regarding an environmental clean-up site. The estimated cost of the environmental clean-up of the site, based on NYSDEC’s remedial investigation and feasibility study, is approximately $2.4 million. In its Record of Decision, NYSDEC declined to apportion liability among the Company and the current owner of the property, leaving such determination to be made in a lawsuit brought against the Company in the United States District Court for the Southern District of New York by the current owner of the property seeking contribution for the costs of the clean-up and reimbursement of certain other costs. The Company has also filed a third-party complaint against the former owners of the property seeking contribution for the costs of the environmental clean-up. The apportionment of the costs to clean up this site amongst the PRPs and the former owner are not determined at this time. However, the Company does not anticipate its ultimate liability in the matter will be material to its financial position, cash flow or results of operations.
Based on the information known to date, management believes that the Company has appropriately accrued in its financial statements for its share of the costs associated with these environmental clean-up sites.
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A. Exhibits
B. Reports on Form 8-K:
During the first quarter of fiscal 2003, the Company filed the following Current Reports on Form 8-K: (1) Current Report on Form 8-K bearing cover date of July 15, 2002 in which the Company reported under Item 9 that it issued a press release commenting on its upcoming fourth quarter fiscal year 2002 results; (2) Current Report on Form 8-K bearing cover date of July 30, 2002 in which the Company reported under Item 9 that it issued a press release announcing that its fourth quarter and fiscal 2002 corporate update conference call would be held on August 7, 2002; (3) Current Report on Form 8-K bearing cover date of August 7, 2002 in which the Company reported under Item 9 that it issued a press release announcing its fourth quarter and fiscal year 2002 results; and (4) Current Report on Form 8-K bearing cover date of September 26, 2002 in which the Company filed certain exhibits under Item 7 and reported under Item 9 that the Company’s CEO and CFO filed the requisite sworn statements with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 11, 2002
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CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Roy Vallee, Chief Executive Officer of Avnet, Inc., certify that:
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CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Raymond Sadowski, Chief Financial Officer of Avnet, Inc., certify that:
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EXHIBIT INDEX