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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 3, 2021
or
For the transition period from to
Commission file number 1-4224
Avnet, Inc.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation or organization)
11-1890605
(I.R.S. Employer Identification No.)
2211 South 47th Street,
Phoenix, Arizona
(Address of principal executive offices)
85034
(Zip Code)
Registrant’s telephone number, including area code (480) 643-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common stock, par value $1.00 per share
Trading Symbol
AVT
Name of Each Exchange on Which registered:
Nasdaq Global Select Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Securities registered pursuant to Section 12(g) of the Act:
None
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
☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☑
Accelerated Filer ☐
Non-accelerated Filer ☐
Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The aggregate market value (approximate) of the registrant’s common equity held by non-affiliates based on the closing price of a share of the registrant’s common stock
for Nasdaq Global Select Market composite transactions on December 31, 2020 (the last business day of the registrant’s most recently completed second fiscal quarter) was
$3,444,758,630.
As of July 30, 2021, the total number of shares outstanding of the registrant’s Common Stock was 99,503,643 shares, net of treasury shares.
Portions of the registrant’s definitive proxy statement (to be filed pursuant to Reg. 14A) relating to the Annual Meeting of Shareholders anticipated to be held on November 18,
2021, are incorporated herein by reference in Part III of this Report.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
PART I
Page
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6. Selected Financial Data
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
PART III
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Signature Page
PART IV
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Item 1. Business
PART I
Avnet, Inc. and its consolidated subsidiaries (collectively, the “Company” or “Avnet”), is a global technology
distributor and solutions company that supports customers at every stage of the product lifecycle, from idea to design and
from prototype to production. Avnet’s unique position at the center of the technology value chain enables the company to
accelerate the design and supply stages of product development so customers can realize revenue faster. Founded in 1921,
the Company works with suppliers in every major technology segment to serve 2.1 million customers in more than 140
countries.
For a century, Avnet has helped its customers and suppliers realize the transformative possibilities of technology
while continually expanding the breadth and depth of its capabilities. Avnet can support every stage of the electronic
product lifecycle and serves a wide range of customers: from startups and mid-sized businesses to enterprise-level original
equipment manufacturers (“OEMs”), electronic manufacturing services (“EMS”) providers, and original design
manufacturers (“ODMs”).
Organizational Structure
Avnet has two primary operating groups — Electronic Components (“EC”) and Farnell. Both operating groups have
operations in each of the three major economic regions of the world: (i) the Americas, (ii) Europe, Middle East, and Africa
(“EMEA”) and (iii) Asia/Pacific (“Asia”). Each operating group has its own management team, who manage various
functions within each operating group. Each operating group also has distinct financial reporting to the executive level,
which informs operating decisions and strategic planning and resource allocation for the Company as a whole. Divisions
(“business units”) within each operating group serve primarily as sales and marketing units to streamline sales efforts and
enhance each operating group’s ability to work with its customers and suppliers, generally along more specific geographies
or product lines. However, each business unit relies heavily on support services from the operating groups, as well as
centralized support at the corporate level.
A description of each operating group is presented below. Further financial information by operating group is
provided in Note 17 “Segment information” to the consolidated financial statements appearing in Item 8 of this Annual
Report on Form 10-K.
Electronic Components
Avnet’s EC operating group primarily supports high-volume customers. It markets, sells, and distributes electronic
components from the world’s leading electronic component manufacturers, including semiconductors, IP&E components
(interconnect, passive and electromechanical components), and other integrated and embedded components.
EC serves a variety of markets ranging from automotive to medical to defense and aerospace. It offers an array of
customer support options throughout the entire product lifecycle, including both turnkey and customized design, supply
chain, new product introduction, programming, logistics and post-sales services.
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Design Chain Solutions
EC offers design chain support that provides engineers with a host of technical design solutions, which helps EC
support a broad range of customers seeking complex products and technologies. With access to a suite of design tools and
engineering support, customers can get product specifications along with evaluation kits and reference designs that enable
a broad range of applications from any point in the design cycle. EC also offers engineering and technical resources
deployed globally to support product design, bill of materials development, and technical education and training. By
utilizing EC’s design chain support, customers can optimize their component selection and accelerate their time to market.
EC’s extensive product line card provides customers access to a diverse range of products from a complete spectrum of
electronic component manufacturers.
Supply Chain Solutions
EC’s supply chain solutions provide support and logistical services to OEMs, EMS providers, and electronic
component manufacturers, enabling them to optimize supply chains on a local, regional or global basis. EC’s internal
competencies in global warehousing and logistics, information technology, and asset management, combined with its
global footprint and extensive partner relationships, allow EC to develop supply chain solutions that provide for a deeper
level of engagement with its customers. These customers can manage their supply chains to meet the demands of a
competitive global environment without a commensurate investment in physical assets, systems, and personnel. With
supply chain planning tools and a variety of inventory management solutions, EC provides solutions that meet a customer’s
requirements and minimize risk in a variety of scenarios, including lean manufacturing, demand flow, and outsourcing.
Embedded and Integrated Solutions
EC provides embedded solutions including technical design, integration and assembly of embedded products,
systems, and solutions primarily for industrial applications. EC also provides integrated solutions for intelligent and
innovative embedded display solutions, including touch and passive displays. In addition, EC develops and produces
standard board and industrial subsystems and application-specific devices that enable it to produce specialized systems
tailored to specific customer requirements. EC serves OEMs that require embedded systems and solutions, including
engineering, product prototyping, integration, and other value-added services in the medical, telecommunications,
industrial, and digital editing markets.
EC also provides integrated solutions and services for software companies that bring their intellectual property to
market via hardware solutions, including custom-built embedded servers.
Farnell
Avnet’s Farnell operating group primarily supports lower-volume customers that need electronic components quickly
to develop, prototype, and test their products. It distributes a comprehensive portfolio of kits, tools, electronic components,
industrial automation components, and test and measurement products to both engineers and entrepreneurs, primarily
through an e-commerce channel. Farnell brings the latest products, services, and development trends all together in
element14, an industry-leading online community where engineers collaborate to solve one another’s design challenges. In
element14, members get consolidated information on new technologies, as well as access to experts and product
specifications. Members can see what other engineers are working on, learn from online training, and get the help they
need to optimize their own designs.
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Major Products
One of Avnet’s competitive strengths is the breadth and quality of the suppliers whose products it distributes.
Products from no single supplier exceeded 10% of consolidated sales during fiscal year 2021. Listed in the table below are
the major product categories and the Company’s approximate sales of each during the past three fiscal years. “Other”
consists primarily of test and measurement products, as well as maintenance, repair and operations (MRO) products.
Semiconductors
Interconnect, passive & electromechanical (IP&E)
Computers
Other
Sales
Competition & Markets
Years Ended
July 3,
2021
$ 14,722.8
3,649.0
640.6
522.3
$ 19,534.7
June 27,
2020
(Millions)
$ 13,440.3
3,146.0
572.0
476.0
$ 17,634.3
June 29,
2019
$ 14,973.3
3,516.0
533.1
496.2
$ 19,518.6
The electronic components industry continues to be extremely competitive. The Company’s major competitors
include: Arrow Electronics, Inc., Future Electronics, World Peace Group, Mouser Electronics and Digi-Key Electronics.
There are also certain smaller, specialized competitors who generally focus on particular sectors or on narrower geographic
locations, markets, or products. As a result of these factors, Avnet’s pricing and product availability must remain
competitive.
A key competitive factor in the electronic component distribution industry is the need to carry a sufficient amount
and selection of inventory to meet customers’ demand and rapid delivery requirements. To minimize its exposure related to
inventory on hand, the Company purchases a majority of its products pursuant to franchised distribution agreements, which
typically provide certain protections for product obsolescence and price erosion. These agreements are generally cancelable
upon 30 to 180 days’ notice and, in most cases, provide for or require inventory return privileges upon cancellation. In
addition, the Company enhances its competitive position by offering a variety of value-added services, which are tailored
to individual customer specifications and business needs, such as point of use replenishment, testing, assembly,
programming, supply chain management, and materials management.
A competitive advantage is the breadth of the Company’s supplier product line card. Because of the number of
Avnet’s suppliers, many customers can simplify their procurement process and make all of their required purchases from
Avnet, rather than purchasing from several different parties.
Seasonality
Historically, Avnet’s business has not been materially impacted by seasonality, with the exception of an impact on
consolidated results from shifts in regional sales trends from Asia in the first half of a fiscal year to the Americas and
EMEA regions in the second half of a fiscal year.
Number of Employees
As of July 3, 2021, Avnet had approximately 14,500 employees, compared to 14,600 employees on June 27, 2020,
and 15,500 employees on June 29, 2019.
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Human Capital Resources
The Company fosters a diverse and inclusive workplace that attracts and retains exceptional talent. Through ongoing
employee development, comprehensive compensation and benefits, and a focus on employee health, safety, and wellbeing,
the Company strives to help its employees in all aspects of their lives so they can do their best work.
Diversity, Equity and Inclusion
The Company has a demonstrated and long-standing commitment to diversity. The Company’s Board of Directors is
36% diverse, and 27% of directors are women. Diverse employee backgrounds and perspectives lead to better decisions.
Accordingly, the Company fosters a supportive, respectful culture where inclusive behaviors are valued as the workplace
norm. For example, the Company regularly engages employees in listen and learn sessions on a variety of diversity topics.
These group conversations are open to the entire Company, and are regularly attended by senior leaders, including our
CEO. The Company’s total workforce is 45% female.
Pay Equity and Total Rewards
The Company strives to pay its employees fairly, without regard to gender, race, or other personal characteristics. To
deliver on that commitment, the Company sets pay ranges based on market data and considers factors such as an
employee’s role, experience, job location, and job performance. The Company reviews its compensation practices, both in
terms of its overall workforce and individual employees, to help ensure that pay is fair and equitable.
The Company is committed to providing total rewards that are market-competitive and performance-based. The
Company’s compensation programs reflect its commitment to reward short- and long-term performance that drives
shareholder value. Compensation is generally positioned within a competitive range of the market median, with
differentiation based on tenure, skills, proficiency, and performance, all designed to attract and retain key talent.
Employee Engagement
The Company regularly collects feedback to better understand its employees’ experiences and identify opportunities
to strengthen its culture. In 2021, the Company updated its approach for measuring employee engagement, along with other
enhancements to its employee listening strategy.
Training and Development
Human capital development underpins the Company’s efforts to execute its strategy. The Company invests in its
employees’ career growth and provides employees with a range of development opportunities, including face-to-face,
virtual, social, and self-directed learning, as well as mentoring, coaching, and external development.
Health, Safety and Wellness
Employee health and well-being is vital to the Company’s success. The Company maintains a global well-being
program to help its employees thrive. The Company promotes the program’s benefits to employees, including through
webinars and newsletters. It also gives employees opportunities to connect through communities and social networks. The
Company’s global Employee Assistance Program (EAP) provides employees and their families with a variety of resources
to help manage and adapt to stress and change. The Company’s logistics facilities focus on employee safety, and quickly
responded to the COVID-19 pandemic to help protect employees. The Company follows recommended COVID-19
precautions and offers benefits to encourage employees to quarantine if they become sick.
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Available Information
The Company files its annual report on Form 10-K, quarterly reports on Form 10-Q, Current Reports on Form 8-K,
proxy statements, and other documents (including registration statements) with the U.S. Securities and Exchange
Commission (“SEC”) under the Securities Exchange Act of 1934 or the Securities Act of 1933, as applicable. The
Company’s SEC filings are available to the public on the SEC’s website at http://www.sec.gov and through The Nasdaq
Global Select Market (“Nasdaq”), 165 Broadway, New York, New York 10006, on which the Company’s common stock is
listed.
A copy of any of the Company’s filings with the SEC, or any of the agreements or other documents that constitute
exhibits to those filings, can be obtained by request directed to the Company at the following address and telephone
number:
Avnet, Inc.
2211 South 47th Street
Phoenix, Arizona 85034
(480) 643-2000
Attention: Corporate Secretary
The Company also makes these filings available, free of charge, through its website (see “Avnet Website” below).
Avnet Website
In addition to the information about the Company contained in this Report, extensive information about the Company
can be found at http://www.avnet.com, including information about its management team, products and services, and
corporate governance practices.
The corporate governance information on the Company’s website includes the Company’s Corporate Governance
Guidelines, the Code of Conduct and the charters for each of the committees of its Board of Directors. In addition,
amendments to these documents and waivers granted to directors and executive officers under the Code of Conduct, if any,
will be posted in this area of the website. These documents can be accessed at ir.avnet.com/documents-charters. Printed
versions can be obtained, free of charge, by writing to the Company at the address listed above in “Available Information.”
In addition, the Company’s filings with the SEC, as well as Section 16 filings made by any of the Company’s
executive officers or directors with respect to the Company’s common stock, are available on the Company’s website
(ir.avnet.com/financial-information/sec-filings) as soon as reasonably practicable after the filing is electronically filed with,
or furnished to, the SEC.
These details about the Company’s website and its content are only for information. The contents of the Company’s
website are not, nor shall they be deemed to be, incorporated by reference in this Report.
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Item 1A. Risk Factors
Forward-Looking Statements and Risk Factors
This Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
with respect to the financial condition, results of operations, and business of Avnet. These statements are generally
identified by words like “believes,” “plans,” “projects,” “expects,” “anticipates,” “should,” “will,” “may,” “estimates,” or
similar expressions. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, and actual
results and other outcomes could differ materially from those expressed or implied in the forward-looking statements. Any
forward-looking statement speaks only as of the date on which that statement is made. Except as required by law, the
Company does not undertake any obligation to update any forward-looking statements to reflect events or circumstances
that occur after the date on which the statement is made.
Risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking
statements include the risk factors discussed below, but may also include risks and uncertainties not presently known to the
Company or that management does not currently consider material. Such factors make the Company’s operating results for
future periods difficult to predict and, therefore, prior results do not necessarily indicate results in future periods except as
disclosed. Some of the risks disclosed below may have already occurred, but not to a degree that management considers
material. Any of the below factors, or any other factors discussed elsewhere in this Report, may have an adverse effect on
the Company’s financial condition, operating results, prospects, and liquidity. Similarly, the price of the Company’s
common stock is subject to volatility due to fluctuations in general market conditions; actual financial results that do not
meet the Company’s or the investment community’s expectations; changes in the Company’s or the investment
community’s expectations for the Company’s future results, dividends or share repurchases; and other factors, many of
which are beyond the Company’s control.
Business and Operations Risks
Changes in customer needs and consumption models
Changes in customer product demands and consumption models may cause a decline in the Company’s billings,
which would have a negative impact on the Company’s financial results. While the Company attempts to identify changes
in market conditions as soon as possible, the dynamics of the industries in which it operates make it difficult to predict and
timely react to such changes, including those relating to product capacity and lead times. Also, future downturns or supply
chain challenges in the semiconductor and embedded solutions industries could adversely affect the Company’s
relationships with its customers, operating results, and profitability. In addition, the semiconductor industry experiences
periodic fluctuations in product supply and demand (often associated with changes in economic conditions, technology,
and manufacturing capacity) and suppliers may not adequately predict or meet customer demand. During fiscal 2021, 2020,
and 2019, sales of semiconductors represented approximately 75%, 76%, and 77% of the Company’s consolidated sales,
respectively, and the Company’s sales closely follow the strength or weakness of the semiconductor industry. These
conditions make it more difficult to manage the Company’s business and predict future performance.
Due to the Company’s increased online sales, system interruptions and delays that make its websites and services
unavailable or slow to respond may reduce the attractiveness of its products and services to its customers. If the Company
is unable to continually improve the efficiency of its systems, it could cause systems interruptions or delays and adversely
affect the Company’s operating results.
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Disruptions to key supplier and customer relationships
One of the Company’s competitive strengths is the breadth and quality of the suppliers whose products the Company
distributes. For fiscal 2021, there were no Company suppliers that accounted for 10% or more of the Company’s
consolidated billings. The Company’s contracts with its suppliers vary in duration and are generally terminable by either
party at will upon notice. The Company’s suppliers may terminate or significantly reduce their volume of business with the
Company, because of a product shortage, an unwillingness to do business with the Company, changes in strategy, or
otherwise.
Shortages of products or loss of a supplier may negatively affect the Company’s business and relationships with its
customers could be negatively affected, as customers depend on the Company’s timely delivery of technology hardware
and software from the industry’s leading suppliers. In addition, shifts in suppliers’ strategies, or performance and delivery
issues, may negatively affect the Company’s financial results. These conditions make it more difficult to manage the
Company’s business and predict future performance.
The termination of the Company’s distribution contract with Texas Instruments (“TI”) (which had been one of the
Company’s largest suppliers) was completed in December 2020. Sales from TI products represented approximately 9% and
10% of total sales in fiscal 2020 and 2019 respectively. The Company may experience lower sales and gross profits in the
future if the impact of this termination is not offset over time by sales growth, gross margin improvements, and operating
cost reductions.
The competitive landscape has also experienced a consolidation among suppliers and capacity constraints, which
could negatively impact the Company’s profitability and customer base. Further, if key suppliers modify the terms of their
contracts (including, without limitation, terms regarding price protection, rights of return, delivery commitments, rebates,
or other terms that protect or enhance the Company’s gross margins), it could negatively affect the Company’s results of
operations, financial condition, or liquidity.
Risks related to international operations
During fiscal 2021, 2020, and 2019 approximately 78%, 75% and 75%, respectively, of the Company’s sales came
from its operations outside the United States. The Company’s operations are subject to a variety of risks that are specific to
international operations, including, but not limited to, the following:
● potential restrictions on the Company’s ability to repatriate funds from its foreign subsidiaries;
● foreign currency and interest rate fluctuations;
● non-compliance with foreign and domestic data privacy regulations, business licensing requirements,
environmental regulations, and anti-corruption laws, the failure of which could result in severe penalties
including monetary fines and criminal proceedings;
● non-compliance with foreign and domestic import and export regulations and adoption or expansion of trade
restrictions, including technology transfer restrictions, additional license, permit or authorization requirements
for shipments, specific company sanctions, new and higher duties, tariffs or surcharges, or other import/export
controls;
● complex and changing tax laws and regulations;
● regulatory requirements and prohibitions that differ between jurisdictions;
● economic and political instability, terrorism, and potential military conflicts or civilian unrest;
● fluctuations in freight costs, limitations on shipping and receiving capacity, and other disruptions in the
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transportation and shipping infrastructure;
● natural disasters, pandemics, and other public health crises;
● differing employment practices and labor issues; and
● non-compliance with local laws.
In addition to the cost of compliance, the potential criminal penalties for violations of import or export regulations and
anti-corruption laws, by the Company or its third-party agents, create heightened risks for the Company’s international
operations. If a regulatory body determines that the Company has violated such laws, the Company could be fined significant
sums, incur sizable legal defense costs, have its import or export capabilities restricted or denied, or have its inventories
seized, which could have a material and adverse effect on the Company’s business. Additionally, allegations that the Company
has violated any such regulations may negatively impact the Company’s reputation, which may result in customers or
suppliers being unwilling to do business with the Company. While the Company has adopted measures and controls designed
to ensure compliance with these laws, the Company cannot be assured that such measures will be adequate or that its business
will not be materially and adversely impacted in the event of an alleged violation.
Tariffs and trade restrictions resulting from international trade disputes or changes in trade policies may adversely affect
the Company’s sales and profitability. For example, the U.S. government-imposed trade restrictions and new or higher tariffs
on certain imported products. Additionally, several trade policies, rules, and restrictions applicable to China are now
applicable to Hong Kong. In kind, the Chinese government has imposed trade restrictions, sanctions, and new or higher tariffs
on U.S. imports into China. These actions have resulted in increased costs, including increased costs of procuring certain
products the Company purchases from its suppliers, and other related expenses, which may impact the Company’s sales and
customer demand for certain products. In addition, increased operational expenses incurred in minimizing the number of
products subject to the tariffs could adversely affect the Company’s operating profits. Neither U.S. tariffs nor any retaliatory
tariffs imposed by other countries on U.S. goods have yet had a material impact, but any future actions or escalations that
affect trade relations could materially affect the Company’s sales and results of operations.
The Company transacts sales, pays expenses, owns assets, and incurs liabilities in countries using currencies other than
the U.S. Dollar. Because the Company’s consolidated financial statements are presented in U.S. Dollars, the Company must
translate such activities and amounts into U.S. Dollars at exchange rates in effect during each reporting period. Therefore,
increases or decreases in the exchange rates between the U.S. Dollar and other currencies affect the Company’s reported
amounts of sales, operating income, and assets and liabilities denominated in foreign currencies. In addition, unexpected and
dramatic changes in foreign currency exchange rates may negatively affect the Company’s earnings from those markets.
While the Company may use derivative financial instruments to reduce its net exposure, foreign currency exchange rate
fluctuations may materially affect the Company’s financial results. Further, foreign currency instability and disruptions in the
credit and capital markets may increase credit risks for some of the Company’s customers and may impair its customers’
ability to repay existing obligations.
Internal information systems failures
The Company depends on its information systems to facilitate its day-to-day operations and to produce timely, accurate,
and reliable information on financial and operational results. Currently, the Company’s global operations are tracked with
multiple information systems, some of which are subject to ongoing IT projects designed to streamline or optimize the
Company’s systems. These IT projects are extremely complex, in part because of wide ranging processes, multiple legacy
systems used, and the Company’s business operations. The Company may not always succeed at these efforts. Implementation
or integration difficulties may adversely affect the Company’s ability to complete business transactions and ensure accurate
recording and reporting of financial data. In addition, IT projects may not achieve the
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expected efficiencies and cost savings, which could negatively impact the Company’s financial results. A failure of any of
these information systems in a way described above, or material difficulties in upgrading these information systems, could
have an adverse effect on the Company’s business, internal controls, and reporting obligations under federal securities laws.
Logistics disruptions
The Company’s global logistics services are operated through specialized and centralized distribution centers around
the globe, some of which are outsourced. The Company also depends almost entirely on third-party transportation service
providers to deliver products to its customers. A major interruption or disruption in service at one or more of its
distribution centers for any reason (such as information technology upgrades and operating issues, warehouse
modernization and relocation efforts, natural disasters, pandemics, or significant disruptions of services from the
Company’s third-party transportation providers) could cause an increase in expenses or a delay in expected cost savings. In
addition, as the Company continues to increase capacity at its distribution center in Leeds, England, it may experience
operational challenges, increases costs, decreased efficiency, and customer delivery delays and failures. Such operational
challenges could have an adverse impact on the Company’s business partners, and on the Company’s business, operations,
financial performance, and reputation.
Data security and privacy threats
Threats to the Company’s data and information technology systems (including phishing, cyber-attacks, and
ransomware) are becoming more frequent and sophisticated. Threat actors have successfully breached the Company’s
systems in various ways, and such security breaches expose the Company to significant potential liability and reputational
harm. Security breaches have not yet materially impacted the Company’s operations, financial condition, or data security
and privacy, but future security breaches could have a material impact. Threat actors seek unauthorized access to
intellectual property, or confidential or proprietary information regarding the Company, its customers, or its business
partners. They deploy malicious software programs that exploit security vulnerabilities, including ransomware designed to
encrypt the Company’s files so an attacker may demand a ransom for restored access. They also seek to misdirect money,
sabotage data and systems, and induce employees or other system users to disclose sensitive information, including login
credentials. Further, the Company’s business partners and service providers, such as hosted solution providers, pose a
security risk because their own security systems or infrastructure may be compromised.
The Company incurs significant costs to prevent and detect these risks, as well as to respond to security breaches as
they occur. However, the Company’s efforts are not fully successful. Threat actors frequently change their techniques and,
consequently, the Company does not always promptly detect the existence or scope of a security breach. As these types of
threats grow and evolve, the Company may make further investments to protect its data and information technology
infrastructure, which may impact the Company’s profitability. The Company’s insurance coverage for protecting against
cyber-attacks may not be sufficient to cover all possible claims, and the Company may suffer losses that could have a
material adverse effect on its business. As a global enterprise, the Company may be negatively impacted by existing and
proposed laws and regulations, as well as government policies and practices, related to cybersecurity, data privacy, data
localization, and data protection.
Financial Risks
Inventory value decline
The electronic components and integrated products industries are subject to rapid technological change, new and
enhanced products, changes in customer needs, and changes in industry standards and regulatory requirements, which can
cause the Company’s inventory to decline in value or become obsolete. Regardless of the general economic environment,
prices may decline due to a decrease in demand or an oversupply of products, which may increase the risk
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of declines in inventory value. Many of the Company’s suppliers offer certain protections from the loss in value of
inventory (such as price protection and limited rights of return), but such policies may not fully compensate for the loss.
Also, suppliers may not honor such agreements, some of which are subject to the supplier discretion. In addition, most
Company sales are made pursuant to individual purchase orders, rather than through long-term sales contracts. Where there
are contracts, such contracts are generally terminable at will upon notice. Unforeseen customer cancellations may
adversely affect the Company’s business, results of operations, financial condition, or liquidity.
Accounts receivable defaults
Accounts receivable are a significant portion of the Company’s working capital. If entities responsible for a
significant amount of accounts receivable cease doing business, direct their business elsewhere, fail to pay, or delay
payment, the Company’s business, results of operations, financial condition, or liquidity could be adversely affected. An
economic or industry downturn could adversely affect the Company’s ability to collect receivables, which could result in
longer payment cycles, increased collection costs, and defaults exceeding management’s expectations. A significant
deterioration in the Company’s ability to collect accounts receivable in the United States could impact the cost or
availability of financing under its accounts receivable securitization program.
Liquidity and capital resources constraints
The Company’s ability to satisfy its cash needs and implement its capital allocation strategy depends on its ability to
generate cash from operations and to access the financial markets, both of which are subject to general economic, financial,
competitive, legislative, regulatory, and other factors that are beyond the Company’s control. The Company may need to
satisfy its cash needs through external financing. However, various factors affect external financing, including general
market conditions and the Company’s debt ratings and operating results, and may not be available on acceptable terms or at
all. An increase in the Company’s debt or deterioration of its operating results may cause a reduction in its debt ratings.
Any such reduction could negatively impact the Company’s ability to obtain additional financing or renew existing
financing, and could result in reduced credit limits, increased financing expenses, and additional restrictions and covenants.
A reduction in its current debt rating may also negatively impact the Company’s working capital and impair its relationship
with its customers and suppliers.
As of July 3, 2021, Avnet had debt outstanding with financial institutions under various notes, secured borrowings,
and committed and uncommitted lines of credit. The Company needs cash to pay debt principal and interest, and for
general corporate purposes, such as funding its ongoing working capital and capital expenditure needs. Under certain of its
credit facilities, the applicable interest rate and costs are based in part on the Company’s current debt rating. If its debt
rating is reduced, higher interest rates and increased costs would result. In addition, some of its debt utilizes the LIBOR
rate, which the U.K.’s Financial Conduct Authority intends to phase out by the end of 2021. At this time, it is uncertain
how markets will respond to the discontinuation of LIBOR or to the proposed alternative rates, which may result in
increased costs and higher interest rates. Any material increase in the Company’s financing costs or loss of access to cost-
effective financing could have an adverse effect on its profitability, results of operations, and cash flows.
Under some of its credit facilities, the Company is required to maintain certain specified financial ratios and pass
certain financial tests. If the Company increases its level of debt or its operating results deteriorate, it may fail to meet these
financial ratios or pass these tests, which may result in an event of default. In such an event, lenders may accelerate
payment and the Company may be unable to continue to utilize these facilities. If the Company is unable to utilize these
facilities or is required to repay debt earlier than management expected, it may not have sufficient cash available to make
interest payments, to repay indebtedness, or for general corporate needs.
12
Table of Contents
General economic or business conditions, both domestic and foreign, may be less favorable than management
expects and could adversely impact the Company’s sales or its ability to collect receivables from its customers, which may
impact access to the Company’s accounts receivable securitization program.
Financing covenants and restrictions may limit management discretion
The agreements governing the Company’s financing, including its credit facility, accounts receivable securitization
program, and the indentures governing the Company’s outstanding notes, contain various covenants and restrictions that, in
certain circumstances, limit the Company’s ability, and the ability of certain subsidiaries, to:
● grant liens on assets;
● make restricted payments (including, under certain circumstances, paying dividends on common stock, or
redeeming or repurchasing common stock);
● make certain investments;
● merge, consolidate, or transfer all, or substantially all, of the Company’s assets;
● incur additional debt; or
● engage in certain transactions with affiliates.
As a result of these covenants and restrictions, the Company may be limited in the future in how it conducts its
business and may be unable to raise additional debt, repurchase common stock, pay a dividend, compete effectively, or
make further investments.
Tax law changes and compliance
As a multinational corporation, the Company is subject to the tax laws and regulations of the United States and many
foreign jurisdictions. From time to time, governments enact new tax laws or regulations that could adversely affect the
Company’s tax positions. Also, changes to current tax laws or regulations, including changes in the interpretation of such
laws, may adversely affect the Company’s cash flow and effective tax rate.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in
response to the COVID-19 pandemic. Among other things, the CARES Act permits net operating loss carryovers and
carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows
net operating losses incurred in fiscal 2019, 2020, and 2021 to be carried back to each of the five preceding taxable fiscal
years to generate a refund of previously paid income taxes. The CARES Act is subject to interpretation and implementation
guidance by both federal and state tax authorities, as well as amendments and technical corrections. Any or all of these
could impact the Company unfavorably.
Many countries are adopting provisions to align their international tax rules with the Base Erosion and Profit Shifting
Project, led by the Organisation for Economic Co-operation and Development and supported by the United States. The
project aims to standardize and modernize global corporate tax policy, including with regard to tax rate increases and
adopting a global minimum tax. These provisions, individually or as a whole, may negatively impact taxation of
international business.
The tax laws and regulations of the various countries where the Company has operations are extremely complex and
subject to varying interpretations. Although the Company believes that its historical tax positions are sound and consistent
with applicable law, taxing authorities may challenge these tax positions and the Company may not be successful in
defending against any such challenges.
13
The Company’s future income tax expense could be favorably or adversely affected by changes in the mix of
earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets, and liabilities and
changes to its operating structure.
Constraints on internal financial controls
Effective internal controls are necessary for the Company to provide reliable financial reports, safeguard its assets,
and prevent and detect fraud. If the Company cannot do so, its brand and operating results could be harmed. Internal
controls over financial reporting are intended to prevent and detect material misstatements in its financial reporting and
material fraudulent activity. Internal controls are limited, including limits related to human error, circumventing or
overriding controls, and fraud. As a result, the Company may not identify all material activity or all immaterial activity that
could aggregate into a material misstatement. Therefore, even effective internal controls cannot guarantee that financial
statements are wholly accurate or prevent all fraud and loss of assets. Management continually evaluates the effectiveness
of the design and operation of the Company’s internal controls. However, if the Company fails to maintain the adequacy of
its internal controls, including any failure to implement required new or improved internal controls, or if the Company
experiences difficulties in their implementation, the Company’s business and operating results could be harmed.
Additionally, the Company may be subject to sanctions or investigations by regulatory authorities, or the Company could
fail to meet its reporting obligations, all of which could have an adverse effect on its business or the market price of the
Company’s securities.
Acquisition expected benefits shortfall
Avnet has made, and expects to continue to make, strategic acquisitions or investments globally to further its strategic
objectives and support key business initiatives. Acquisitions and investments involve risks and uncertainties, some of
which may differ from those associated with Avnet’s historical operations. Such risks include, but are not limited to, risks
relating to expanding into emerging markets and business areas, adding additional product lines and services, impacting
existing customer and supplier relationships, incurring costs or liabilities associated with the companies acquired, incurring
potential impairment charges on acquired goodwill and other intangible assets, and diverting management’s attention from
existing business operations. As a result, the Company’s profitability may be negatively impacted. In addition, the
Company may not successfully integrate the acquired businesses, or the integration may be more difficult, costly, or time-
consuming than anticipated. Further, any litigation relating to a potential acquisition will increase expenses associated with
the acquisition or cause a delay in completing the acquisition, which may impact the Company’s profitability. The
Company may experience disruptions that could, depending on the size of the acquisition, have an adverse effect on its
business, especially where an acquisition target may have pre-existing compliance issues or deficiencies, or material
weaknesses in internal controls over financial reporting. Furthermore, the Company may not realize all of the anticipated
benefits from its acquisitions, which could adversely affect the Company’s financial performance.
Legal and Regulatory Risks
Legal proceedings
From time to time, the Company may become involved in legal proceedings, including government investigations,
that arise out of the ordinary conduct of the Company’s business, including matters involving intellectual property rights,
commercial matters, merger-related matters, product liability, and other actions. Legal proceedings could result in
substantial costs and diversion of management’s efforts and other resources, and could have an adverse effect on the
Company’s operations and business reputation. The Company may be obligated to indemnify and defend its customers if
the products or services that the Company sells are alleged to infringe any third party’s intellectual property rights. The
14
Table of Contents
Company may not be able to obtain supplier indemnification for itself and its customers against such claims, or such
indemnification may not fully protect the Company and its customers against such claims. Also, the Company is exposed
to potential liability for technology and products that it develops for which it has no indemnification protections. If an
infringement claim against the Company is successful, the Company may be required to pay damages or seek royalty or
license arrangements, which may not be available on commercially reasonable terms. The Company may have to stop
selling certain products or services, which could affect its ability to compete effectively. In addition, the Company’s
expanding business activities may include the assembly or manufacture of electronic component products and systems.
Product defects, whether caused by a design, assembly, manufacture or component failure or error, or manufacturing
processes not in compliance with applicable statutory and regulatory requirements, may result in product liability claims,
product recalls, fines, and penalties. Product liability risks could be particularly significant with respect to aerospace,
automotive, and medical applications because of the risk of serious harm to users of such products.
Environmental regulations
The Company is subject to various federal, state, local, and foreign laws and regulations addressing environmental
and other impacts from industrial processes, waste disposal, carbon emissions, use of hazardous materials in products and
operations, recycling products, and other related matters. While the Company strives to fully comply with all applicable
regulations, certain of these regulations impose liability without fault. Additionally, the Company may be held responsible
for the prior activities of an entity it acquired. Failure to comply with these regulations could result in substantial costs,
fines, and civil or criminal sanctions, as well as third-party claims for property damage or personal injury. Further,
environmental laws may become more stringent over time, imposing greater compliance costs, and increasing risks and
penalties associated with violations.
General Risk Factors
COVID-19 impacts on economy, operations, and financial results
The COVID-19 pandemic has negatively impacted the global economy, increased demand uncertainty, created supply
chain and forecasting challenges, and disrupted logistics and distribution systems. As a result, this pandemic has negatively
impacted the operations of the Company and its customers and suppliers, and resulted in or heightened the risks of
customer bankruptcies, customer delayed or defaulted payments, product supply constraints, delays in product deliveries,
restrictions on access to financial markets, and other risk factors described in the Company’s Annual Report. While the
Company has not yet experienced any material disruption to its upstream supply chain and many of its distribution centers
remain operational under business continuity plans, it has experienced increased logistics costs, product demand
fluctuations, product pricing challenges, longer lead times, reduction in global distribution center utilization, and shipping
delays. As the scope and duration of the COVID-19 outbreak is unknown and the extent of its economic impact continues
to evolve globally, there is significant uncertainty related to the ultimate impact that it will have on the Company’s
business, its employees, product supply and demand, results of operations, and financial condition, and to what extent the
Company’s actions to mitigate such impacts will be successful and sufficient.
Economic and geopolitical uncertainty
The Company’s financial results, operations, and prospects depend significantly on worldwide economic and
geopolitical conditions, the demand for its products and services, and the financial condition of its customers and suppliers.
Economic weakness and geopolitical uncertainty (including the uncertainty caused by the COVID-19 pandemic and
international trade disputes) have resulted, and may result in the future, in decreased sales, margins, and earnings.
Economic weakness and geopolitical uncertainty may also lead the Company to impair assets (including goodwill,
intangible assets, and other long-lived assets) and increase restructuring expenses to reduce expenses in
15
response to decreased sales or margins.
The Company may not be able to adequately adjust its cost structure in a timely fashion, which may adversely impact
its profitability. Uncertainty about economic conditions may increase foreign currency volatility, which may negatively
impact the Company’s results. Economic weakness and geopolitical uncertainty also make it more difficult for the
Company to manage inventory levels and collect customer receivables, which may result in provisions to create reserves,
write-offs, reduced access to liquidity, and higher financing costs.
Further, an increase in inflation rates could affect the Company’s profitability and cash flows, due to higher wages,
higher operating costs, higher financing costs, and/or higher supplier prices. Inflation may also adversely affect foreign
exchange rates. The Company may be unable to pass along such higher costs to its customers. In addition, Inflation may
adversely affect customers’ financing costs, cash flows, and profitability, which could adversely impact their operations
and the Company’s ability to offer credit and collect receivables.
The Company is monitoring the implementation and effects of Brexit and developing contingency plans, including
changes to its logistics operations and shipment routes, and preparing for changes in trade facilitation regulations. While
the extent of the impact of Brexit is not yet fully known, Brexit has led to instability and uncertainty in the United
Kingdom and the European Union, could contribute to logistical and regulatory delays at borders, and volatility in the
foreign exchange markets, and may have an adverse effect on the Company’s trade operations and financial results.
Competition
The market for the Company’s products and services is very competitive and subject to rapid technological advances,
new competitors, non-traditional competitors, changes in industry standards, and changes in customer product demands
and consumption models. The Company competes with other global and regional distributors, as well as some of the
Company’s own suppliers that maintain direct sales efforts. In addition, as the Company expands its offerings and
geographies, the Company may encounter increased competition from current or new competitors. The Company’s failure
to maintain and enhance its competitive position could adversely affect its business and prospects. Furthermore, the
Company’s efforts to compete in the marketplace could cause deterioration of gross profit margins and, thus, overall
profitability.
The size of the Company’s competitors varies across market sectors, as do the resources the Company has allocated
to the sectors and geographic areas in which it does business. Therefore, some competitors may have greater resources or a
more extensive customer or supplier base in some market sectors and geographic areas. As a result, the Company may not
be able to effectively compete in certain markets, which could impact the Company’s profitability and prospects.
Employee retention and hiring constraints
Identifying, hiring, training, developing, and retaining qualified employees is critical to the Company’s success, and
competition for experienced employees in the Company’s industry can be intense. Restrictions on immigration or changes
in immigration laws, including visa restrictions, may limit the Company’s acquisition of key talent. Changing
demographics and labor work force trends may result in a loss of knowledge and skills as experienced workers leave the
Company. In addition, as global opportunities and industry demands shift, and as the Company expands its offerings, the
Company may not adequately realign, train, and hire skilled personnel. The Company periodically eliminates positions due
to organizational restructurings or other reasons, which may damage the Company’s reputation as an employer and
negatively impact the Company’s ability to hire and retain qualified personnel. Also, position eliminations may negatively
impact the morale of employees who are not terminated, which could result in work stoppages or slowdowns, particularly
where employees are represented by unions or works councils. If these circumstances occur, the Company’s
16
Table of Contents
business, financial condition, and results of operations could be seriously harmed.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Properties
The Company owns and leases approximately 2.1 million and 4.4 million square feet of space, respectively, of which
approximately 26% is in the United States. The following table summarizes certain of the Company’s key facilities:
Location
Chandler, Arizona
Tongeren, Belgium
Leeds, United Kingdom
Poing, Germany
Gaffney, South Carolina
Hong Kong, China
Phoenix, Arizona
Chandler, Arizona
Approximate Leased
Square
Footage
or
Owned
Primary Use
Leased
Farnell warehousing and value-added operations
400,000 Owned EC warehousing and value-added operations
390,000 Owned EC warehousing and value-added operations
360,000
300,000 Owned EC warehousing and value-added operations
220,000 Owned
Farnell warehousing
210,000
180,000
150,000
Leased EC warehousing
Leased Corporate and EC Americas headquarters
Leased EC warehousing, integration and value-added operations
See Note 6, “Property, plant and equipment, net” and Note 12, “Leases” to the Company’s consolidated financial
statements included in Item 8 of this Annual Report on Form 10-K for additional information on property, plant and
equipment, and operating leases.
Item 3. Legal Proceedings
Pursuant to SEC regulations, including but not limited to Item 103 of Regulation S-K, the Company regularly
assesses the status of and developments in pending environmental and other legal proceedings to determine whether any
such proceedings should be identified specifically in this discussion of legal proceedings, and has concluded that no
particular pending legal proceeding requires public disclosure. Based on the information known to date, management
believes that the Company has appropriately accrued in its consolidated financial statements for its share of the estimable
costs of environmental and other legal proceedings.
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. 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 single reporting period.
Item 4. Mine Safety Disclosures
Not applicable.
17
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
The Company’s common stock is listed on the Nasdaq Global Select Market under the symbol AVT.
Dividends
The declaration and payment of future dividends will be at the discretion of the Board of Directors and will be
dependent upon the Company’s financial condition, results of operations, capital requirements, and other factors the Board
of Directors considers relevant. In addition, certain of the Company’s debt facilities may restrict the declaration and
payment of dividends, depending upon the Company’s then current compliance with certain covenants.
Record Holders
As of July 30, 2021, there were 1,547 registered holders of record of Avnet’s common stock.
Stock Performance Graphs and Cumulative Total Returns
The graph below matches the cumulative 5-year total return of holders of Avnet’s common stock with (i) the
cumulative total returns of the Nasdaq Composite Index and (ii) a customized peer group of five companies (Agilysys Inc.,
Arrow Electronics Inc., Insight Enterprises Inc., Scansource Inc., and Synnex Corp). The graph assumes that the value of
the investment in Avnet’s common stock, in each index, and in the peer group (including reinvestment of dividends) was
$100 on 7/2/2016 and tracks it through 7/3/2021.
18
Table of Contents
19
Avnet, Inc.
Nasdaq Composite
Peer Group
$
7/2/2016 7/1/2017 6/30/2018 6/29/2019 6/27/2020 7/3/2021
$ 110.11
315.10
259.50
$ 69.87
216.96
119.17
$ 118.55
170.91
121.78
$ 98.17
128.30
127.74
$ 110.29
158.57
121.27
100
100
100
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
Issuer Purchases of Equity Securities
In August 2019, the Company’s Board of Directors amended the Company’s existing share repurchase program,
increasing the cumulative total of authorized share repurchases to $2.95 billion of common stock. During the fourth quarter
of fiscal 2021, the Company did not repurchase any shares under the share repurchase program, which is part of a publicly
announced plan. As of July 3, 2021, the Company had $469.0 million remaining under its share repurchase authorization.
Item 6. [Reserved]
Item 7. 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 Avnet and the significant
factors that influenced the Company’s performance during the past three fiscal years, the following discussion should be
read in conjunction with the description of the business appearing in Item 1 of this Report and the consolidated financial
statements, including the related notes and schedule, and other information appearing in Item 8 of this Report. The
Company operates on a “52/53 week” fiscal year. Fiscal 2021 contains 53 weeks compared to 52 weeks in fiscal 2020. The
extra week, which occurred in the first quarter of fiscal 2021, impacts the year-over-year analysis in this MD&A.
The discussion of the Company’s results of operations includes references to the impact of foreign currency
translation. When the U.S. Dollar strengthens and the stronger exchange rates of the current year are used to translate the
results of operations of Avnet’s subsidiaries denominated in foreign currencies, the resulting impact is a decrease in U.S.
Dollars of reported results. Conversely, when the U.S. Dollar weakens and the weaker exchange rates of the current year
are used to translate the results of operations of Avnet’s subsidiaries denominated in foreign currencies, the resulting
impact is an increase in U.S. Dollars of reported results. In the discussion that follows, results excluding this impact,
primarily for subsidiaries in EMEA and Asia, are referred to as “constant currency.”
In addition to disclosing financial results that are determined in accordance with generally accepted accounting
principles in the U.S. (“GAAP”), the Company also discloses certain non-GAAP financial information, including:
● Sales adjusted for certain items that impact the year-over-year analysis, which includes the impact of certain
acquisitions by adjusting Avnet’s prior periods to include the sales of acquired businesses, as if the acquisitions
had occurred at the beginning of the earliest period presented. In addition, fiscal 2021 sales are adjusted for the
estimated impact of the extra week of sales in the first quarter of fiscal 2021, as discussed above. Sales taking
into account these adjustments are referred to as “organic sales.” Additionally, the Company has adjusted sales
for the impact of the termination of the TI distribution agreement between fiscal years.
● Operating income excluding (i) restructuring, integration and other expenses (see Restructuring, Integration and
Other Expenses in this MD&A), (ii) goodwill and long-lived asset impairment expense, and (iii) amortization of
acquired intangible assets and other. Operating income excluding such amounts is referred to as “adjusted
operating income.”
20
Table of Contents
The reconciliation of operating income (loss) to adjusted operating income is presented in the following table:
Operating income (loss)
Restructuring, integration and other expenses
Goodwill and intangible asset impairment expense
Amortization of acquired intangible assets and other
Adjusted operating income
July 3,
2021
$ 281,408
84,391
—
41,245
$ 407,044
Years Ended
June 27,
2020
(Thousands)
(4,628)
81,870
144,092
81,555
302,889
$
$
June 29,
2019
$
$
365,911
108,144
137,396
84,257
695,708
Management believes that providing this additional information is useful to readers to better assess and understand
operating performance, especially when comparing results with prior periods or forecasting performance for future periods,
primarily because management typically monitors the business both including and excluding these adjustments to GAAP
results. Management also uses these non-GAAP measures to establish operational goals and, in many cases, for measuring
performance for compensation purposes. However, any analysis of results on a non-GAAP basis should be used as a
complement to, and in conjunction with, results presented in accordance with GAAP.
Results of Operations
Significant Risks and Uncertainties
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, constrained
work force participation, disrupted logistics and distribution systems, and created significant volatility and disruption of
financial markets. As the scope and duration of the COVID-19 pandemic is unknown and the extent of its economic impact
continues to evolve globally, there is uncertainty related to the ultimate impact it will have on the Company’s business, its
employees, results of operations and financial condition, and to what extent the Company’s actions to mitigate such
impacts will be successful and sufficient.
Executive Summary
Sales for fiscal 2021 were $19.53 billion, an increase of 10.8% from fiscal 2020 sales of $17.63 billion. Organic sales
in constant currency increased 6.3% as compared to sales in the prior year. This increase in organic sales was
predominately driven by organic sales growth in Asia as a result from strong demand as the electronic components industry
recovered from declines in demand during fiscal 2020.
Gross profit margin of 11.5% decreased 23 basis points compared to 11.7% in fiscal 2020. This decline was primarily
due to geographical market mix and, to a lesser extent, from unfavorable changes in product and customer mix.
Operating income was $281.4 million in fiscal 2021, representing an increase compared with fiscal 2020 operating
loss of $4.6 million. Operating income margin was 1.4% in fiscal 2021 as compared to an operating loss in fiscal 2020
driven primarily by goodwill and long-lived asset impairment expense. Adjusted operating income margin was 2.1% in
fiscal 2021 as compared to 1.7% in fiscal 2020, an increase of 36 basis points. This increase in adjusted operating income
margin is primarily due to the increase in sales, partially offset by an increase in selling, general and administrative
expenses and decrease in gross profit margin.
21
Sales
Three-Year Analysis of Sales: By Operating Group and Geography
The table below provides a year-over-year summary of sales for the Company and its operating groups.
Years Ended
Percent Change
July 3,
2021
% of June 27,
% of June 29,
Total
2020
Total
2019
(Dollars in millions)
% of 2021 to 2020 to
2020
Total
2019
Sales by Operating Group:
EC
Farnell
Sales by Geographic Region:
Americas
EMEA
Asia/Pacific
Total Avnet
$ 18,030.5
1,504.2
$ 19,534.7
92.3 % $ 16,340.1
1,294.2
7.7
$ 17,634.3
92.7 % $ 18,060.3
1,458.3
7.3
$ 19,518.6
92.5 %
7.5
10.3 %
16.2
(9.5)%
(11.3)
$ 4,662.5
6,149.9
8,722.3
$ 19,534.7
23.9 % $ 4,755.3 27.0 % $ 5,135.8 26.3 %
31.5
44.6
5,753.4 32.6
7,125.6 40.4
6,762.9 34.6
7,619.9 39.0
(2.0)%
6.9
22.4
(7.4)%
(14.9)
(6.5)
$ 17,634.3
$ 19,518.6
The table below provides the reconciliation of reported sales to organic sales for fiscal 2021 by region and by
operating group. Reported sales were the same as organic sales in fiscal 2020.
Sales
as Reported
Fiscal
2021
Estimated
Extra
Week(1)
Organic
Sales
Fiscal
2021
TI Sales
Fiscal
2021(2)
Organic
Sales
Adj for TI
Fiscal
2021(2)
Avnet
Avnet by region
Americas
EMEA
Asia
Avnet by segment
EC
Farnell
$
$
$
19,534.7
4,662.5
6,149.9
8,722.3
18,030.5
1,504.2
$
$
$
306.0
77.0
97.0
132.0
284.0
22.0
(Dollars in millions)
$
19,228.7
$
$
$
4,585.5
6,052.9
8,590.3
17,746.5
1,482.2
$
$
292.2
82.9
124.2
85.1
292.2
—
$
$
$
18,936.5
4,502.6
5,928.7
8,505.2
17,454.3
1,482.2
(1)
(2)
The impact of the additional week of sales in the first quarter of fiscal 2021 is estimated.
Sales adjusted for the impact of the termination of the TI distribution contract, which was completed in December 2020. Sales
of TI products was $292 million and $1.57 billion for fiscal 2021 and fiscal 2020, respectively.
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Table of Contents
The table below provides reported and organic sales growth rates for fiscal 2021 as compared to fiscal 2020 by
region and by operating group.
Sales As
Reported
Year-Year
% Change
Sales As
Reported
Year-Year %
Change in
Constant
Currency
Organic
Sales
Year-Year
% Change
Organic
Sales
Year-Year %
Change in
Constant
Currency
10.8 %
8.0 %
9.0 %
6.3 %
Organic
Sales
Adj for TI
Year-Year %
Change in
Constant
Currency(1)
14.8 %
(2.0)%
6.9
22.4
10.3 %
16.2
(2.0)%
(0.4)
21.7
7.8 %
11.2
(3.6)%
5.2
20.6
8.6 %
14.5
(3.6)%
(2.1)
19.8
6.0 %
9.5
2.8 %
5.4
30.8
15.3 %
9.5
Avnet
Avnet by region
Americas
EMEA
Asia
Avnet by segment
EC
Farnell
(1)
Sales growth rates excluding the impact of the termination of the TI distribution agreement, which was completed in December
2020.
Avnet’s sales for fiscal 2021 were $19.53 billion, an increase of $1.90 billion, or 10.8%, from fiscal 2020 sales of
$17.63 billion. Organic sales in constant currency increased 6.3% as compared to sales in the prior year. The year-over-year
increase in organic sales was primarily due to growth in Asia where demand for electronic components improved compared
to fiscal 2020, partially offset by declines in the Americas and EMEA primarily due to the loss of the TI product line.
Organic sales in constant currency excluding TI sales increased 14.8% year over year in fiscal 2021 with all regions
contributing to the growth.
EC sales in fiscal 2021 were $18.03 billion, representing a 10.3% increase over fiscal 2020 sales. EC organic sales in
constant currency increased 6.0% year over year driven by the Asia region. EC organic sales in constant currency
excluding TI sales increased 15.3% year over year. The increase in sales in the Company’s EC operating group is primarily
due to improvements in overall market demand as fiscal 2020 was a year where demand had declined due to an overall
industry economic downturn.
Farnell sales in fiscal 2021 were $1.50 billion, an increase of $0.2 million or 16.2% over fiscal 2020 sales. Organic
sales in constant currency increased 9.5% year-over-year. These increases were primarily a result of improved market
demand in all three regions.
Gross Profit and Gross Profit Margin
Gross profit in fiscal 2021 was $2.24 billion, an increase of $177.2 million, or 8.6%, compared to fiscal 2020. Gross
profit margin of 11.5% in fiscal 2021 decreased 23 basis points from fiscal 2020 driven primarily by a higher percentage of
sales coming from the Asia region and, to a lesser extent, from unfavorable changes in product and customer mix. Sales in
the higher margin western regions represented approximately 55% of sales in fiscal 2021 as compared to 60% during fiscal
2020.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A expenses”) in fiscal 2021 were $1.87 billion, an increase of
23
$32.7 million, or 1.8%, compared to fiscal 2020. The year-over-year increase in SG&A expenses was primarily due to the
impact of the extra week in the first quarter of fiscal 2021, the impact of foreign currency due to the weakening U.S. Dollar
and from increases due to the growth in sales, partially offset by the cost savings from restructuring activities and lower
amortization expense.
Metrics that management monitors with respect to its operating expenses are SG&A expenses as a percentage of
sales and as a percentage of gross profit. In fiscal 2021, SG&A expenses as a percentage of sales were 9.6% and as a
percentage of gross profit were 83.7%, as compared with 10.4% and 89.3%, respectively, in fiscal 2020. The decrease in
SG&A expenses as a percentage of gross profit was primarily due to the operating leverage created from higher sales, cost
savings from restructuring activities, and lower amortization expense, partially offset by foreign currency due to the
weakening U.S. Dollar and from the decrease in gross profit margin.
Goodwill and Intangible Asset Impairment Expenses
The Company incurred $144.1 million of goodwill and intangible asset impairment expenses during fiscal 2020. See
Note 7, “Goodwill, intangible assets and impairments” to the Company’s consolidated financial statements included in
Item 8 of this Annual Report on Form 10-K for additional information related to goodwill impairment and intangible asset
impairment expenses.
Restructuring, Integration and Other Expenses
As a result of management’s focus on improving operating efficiencies and reducing operating costs, the Company
has incurred certain restructuring, integration, and other costs. Restructuring costs primarily relate to the restructuring of
the Company’s information technology, distribution center footprint, and business operations. Integration costs relate to the
integration of certain regional and global businesses, including incremental costs incurred as part of the consolidation,
relocation, sale and closure of distribution centers and office facilities. Other costs consist primarily of any other
miscellaneous costs that relate to restructuring, integration, and other expenses, including acquisition related costs and
specific and incremental costs incurred associated with the impacts of the COVID-19 pandemic.
The Company recorded $59.4 million for restructuring costs in fiscal 2021 and expects to realize approximately
$50.0 million in incremental annualized operating costs savings as a result of such restructuring actions. Restructuring
expenses consisted of $54.6 million for severance and $4.8 million for facility exit costs. The Company also incurred
integration costs of $35.8 million, which was offset by a gain on legal settlement of $8.2 million and a reversal of $2.6
million for changes in estimates for costs associated with prior year restructuring actions. The after-tax impact of
restructuring, integration, and other expenses were $66.9 million and $0.67 per share on a diluted basis.
See Note 18, “Restructuring expenses” to the Company’s consolidated financial statements included in Item 8 of this
Annual Report on Form 10-K for additional information related to restructuring expenses.
Operating Income (Loss)
Operating income for fiscal 2021 was $281.4 million, an increase of $286.0 million as compared with fiscal 2020
operating loss of $4.6 million, which included goodwill and long-lived asset impairment expense of $144.1 million.
Operating income margin was 1.4% in fiscal 2021 compared to an operating loss in fiscal 2020. Adjusted operating income
for fiscal 2021 was $407.0 million, an increase of $104.2 million or 34.4%, from fiscal 2020. The year-over-year increase
in adjusted operating income was primarily driven by the increase in sales, partially offset by a lower gross profit margin
and increases to SG&A expenses.
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Table of Contents
Interest and Other Financing Expenses, Net and Other (Expense) Income, Net
Interest and other financing expenses for fiscal 2021 was $89.5 million, a decrease of $33.3 million, or 27.1%,
compared with interest and other financing expenses of $122.7 million in fiscal 2020. The decrease in interest and other
financing expenses in fiscal 2021 compared to fiscal 2020 was primarily related to lower outstanding borrowings during
fiscal 2021 as compared to fiscal 2020.
In fiscal 2021, the Company had $19.0 million of other expense as compared with $2.2 million of other expense in
fiscal 2020. In fiscal 2021, other expense included equity investment impairment expense, debt extinguishment costs, and
foreign currency losses of $12.9 million offset by other insignificant miscellaneous other income items compared to equity
investment impairment expense substantially all offset by foreign currency gains in fiscal 2020.
Income Tax Expense
Avnet’s effective tax rate on its income before income taxes was a benefit of 11.7% in fiscal 2021. The effective tax
rate for fiscal 2021 was favorably impacted primarily by (i) a tax benefit arising from the reduction in fair value of certain
businesses, resulting in losses that can be carried back under U.S. tax law and, (ii) the mix of income in lower tax
jurisdictions, partially offset by (iii) increases to unrecognized tax benefit reserves.
See Note 10, “Income taxes” to the Company’s consolidated financial statements included in Item 8 of this Annual
Report on Form 10-K for further discussion on the effective tax rate.
Net Income (Loss)
As a result of the factors described in the preceding sections of this MD&A, the Company’s net income in fiscal 2021
was $193.1 million, or $1.93 earnings per share on a diluted basis, compared with net loss of $31.1 million, or $0.31 of net
loss per share on a diluted basis, in fiscal 2020.
Fiscal 2020 Comparison to Fiscal 2019
For comparison of the Company’s results of operations between fiscal 2020 and fiscal 2019, see “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual
Report on Form 10-K for the fiscal year ended June 27, 2020 filed with the SEC on August 14, 2020.
Liquidity and Capital Resources
Cash Flows
Cash Flows from Operating Activities
The Company generated $90.9 million of cash from its operating activities in fiscal 2021 as compared to $730.2
million in fiscal 2020. These operating cash flows are comprised of: (i) cash flows generated from net income (loss),
adjusted for the impact of non-cash and other items, which includes depreciation and amortization expense, deferred
income taxes, stock-based compensation expense, amortization of operating lease assets and other non-cash items , and (ii)
cash flows used for, or generated from, working capital and other, excluding cash and cash equivalents. Cash used for
working capital and other to support sales growth was $372.5 million during fiscal 2021, including increases in accounts
receivable of $615.4 million and inventories of $409.1 million, offset by increases in accounts payable of $621.0 million
and accrued expenses and other of $30.9 million. Comparatively, cash generated from working capital and other was
$335.1 million during fiscal 2020, including decreases in accounts receivable of $221.5 million and
25
inventories of $266.8 million, partially offset by decreases in accounts payable of $107.0 million and accrued expenses and
other of $46.2 million.
Cash Flows from Financing Activities
During fiscal 2021, the Company received net proceeds of $297.7 million as a result of the issuance of $300.0
million of 3.00% Notes due May 2031 and $22.9 million under the Securitization Program. During fiscal 2021, the
Company repaid $305.1 million of notes and $231.7 million under the Credit Facility, and paid dividends on common stock
of $84.3 million.
During fiscal 2020, the Company repaid $302.0 million of notes and $227.3 million under the Securitization Program
and received net proceeds of $223.1 million under the Credit Facility. During fiscal 2020, the Company paid dividends on
common stock of $84.0 million and repurchased $237.8 million of common stock.
Cash Flows from Investing Activities
During fiscal 2021, the Company used $50.4 million for capital expenditures primarily related to warehouse and
facilities, and information technology hardware and software costs compared to $73.5 million in fiscal 2020. During fiscal
2021, the Company used $18.4 million of cash for acquisitions, which is net of the cash acquired, compared to $51.5
million of cash for acquisitions, which is net of the cash acquired, in fiscal 2020. In addition, the Company paid $12.8
million for other investing activities during fiscal 2020.
Financing Transactions
The Company uses a variety of financing arrangements, both short-term and long-term, to fund its operations in
addition to cash generated from operating activities. The Company also uses several funding sources to avoid becoming
overly dependent on one financing source, and to lower funding costs. These financing arrangements include public debt,
short-term and long-term bank loans, a revolving credit facility (the “Credit Facility”), and an accounts receivable
securitization program (the “Securitization Program”).
The Company has various lines of credit, financing arrangements and other forms of bank debt in the U.S. and
various foreign locations to fund the short-term working capital, foreign exchange, overdraft, and letter of credit needs of
its wholly owned subsidiaries. Outstanding borrowings under such forms of debt at the end of fiscal 2021 was $1.4 million.
As an alternative form of financing outside of the United States, the Company sells certain of its trade accounts
receivable on a non-recourse basis to third-party financial institutions pursuant to factoring agreements. The Company
accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in
the consolidated statements of cash flows. Factoring fees for the sales of trade accounts receivables are recorded within
“Interest and other financing expenses, net” and are not material.
See Note 8, “Debt” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on
Form 10-K for additional information on financing transactions including the Credit Facility, the Securitization Program
and the outstanding Notes as of July 3, 2021.
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Table of Contents
Covenants and Conditions
The Company’s Credit Facility contains certain covenants with various limitations on debt incurrence, share
repurchases, dividends, investments and capital expenditures, and also includes financial covenants requiring the Company
to maintain minimum interest coverage and leverage ratios. The Company was in compliance with all such covenants as of
July 3, 2021.
The Company’s Securitization Program contains certain covenants relating to the quality of the receivables sold. If
these conditions are not met, the Company may not be able to borrow any additional funds and the financial institutions
may consider this an amortization event, as defined in the Securitization Program agreements, which would permit the
financial institutions to liquidate the accounts receivables sold to cover any outstanding borrowings. Circumstances that
could affect the Company’s ability to meet the required covenants and conditions of the Securitization Program include the
Company’s ongoing profitability and various other economic, market, and industry factors. The Company was in
compliance with all such covenants as of July 3, 2021.
Management does not believe that the covenants under the Credit Facility or Securitization Program limit the
Company’s ability to pursue its intended business strategy or its future financing needs.
See Liquidity below for further discussion of the Company’s availability under these various facilities.
Liquidity
The Company had cash and cash equivalents of $199.7 million as of July 3, 2021, of which $150.5 million was held
outside the United States. As of June 27, 2020, the Company had cash and cash equivalents of $477.0 million, of which
$411.2 million was held outside of the United States.
As of July 3, 2021, there were no borrowings outstanding under the Credit Facility, with $1.3 million in letters of
credit issued and $22.9 million outstanding under the Securitization Program. During fiscal 2021, the Company had an
average daily balance outstanding under the Credit Facility of approximately $167.8 million and $173.6 million under the
Securitization Program. As of July 3, 2021, the combined availability under the Credit Facility and the Securitization
Program was $1.64 billion. Availability under the Securitization Program is subject to the Company having sufficient
eligible trade accounts receivable in the United States to support desired borrowings.
In July 2021, the Company extended the maturity of the Securitization Program to August 31, 2021. The Company
expects to renew the Securitization Program for two years on similar terms in the first quarter of fiscal 2022.
During periods of weakening demand in the electronic components industry, the Company typically generates cash
from operating activities. Conversely, the Company is more likely to use operating cash flows for working capital
requirements during periods of higher growth. The Company generated $90.9 million in cash flows from operating
activities during the fiscal year ended July 3, 2021.
Liquidity is subject to many factors, such as normal business operations and general economic, financial,
competitive, legislative, and regulatory factors that are beyond the Company’s control. To the extent the cash balances held
in foreign locations cannot be remitted back to the U.S. in a tax efficient manner, those cash balances are generally used for
ongoing working capital, capital expenditures and other foreign business needs. In addition, local government regulations
may restrict the Company’s ability to move funds among various locations under certain circumstances. Management does
not believe such restrictions would limit the Company’s ability to pursue its intended business strategy.
27
The Company continually monitors and reviews its liquidity position and funding needs. Management believes that
the Company’s ability to generate operating cash flows in the future and available borrowing capacity, including capacity
for the non-recourse sale of trade accounts receivable, will be sufficient to meet its future liquidity needs. The Company
may also renew or replace expiring debt arrangements in the future and management believes the Company will have
adequate access to capital markets, if needed. The Company has historically generated operating cash flows and believes it
will have the ability to do so in the future.
As a result of the evolving impacts of the COVID-19 pandemic and the related uncertain future business conditions,
the Company in unlikely to make near-term strategic investments through acquisitions.
As of July 3, 2021, the Company may repurchase up to an aggregate of $469.0 million of the Company’s common
stock through a $2.95 billion share repurchase program approved by the Board of Directors. The Company may repurchase
stock from time to time at the discretion of management, subject to strategic considerations, market conditions, amended
Credit Facility restrictions and other factors. The Company may terminate or limit the share repurchase program at any
time without prior notice. As a result of the impacts of the COVID-19 pandemic and the corresponding need to manage
liquidity and leverage, the Company has suspended share repurchases.
The Company has historically paid quarterly cash dividends on shares of its common stock, and future dividends are
subject to approval by the Board of Directors. During the fourth quarter of fiscal 2021, the Board of Directors approved a
dividend of $0.22 per share, which resulted in $21.9 million of dividend payments during the quarter.
Long-Term Contractual Obligations
The Company has the following contractual obligations outstanding as of July 3, 2021 (in millions):
Contractual Obligations
Long-term debt obligations(1)
Interest expense on long-term debt obligations(2)
Operating lease obligations(3)
Total
$ 1,224.3
235.3
359.8
Less than
1 year
23.1
51.8
66.6
$
Payments due by period
$
1-3 years
350.8
76.0
97.6
$
3-5 years
550.4
63.6
61.1
More than
5 years
300.0
43.9
134.5
$
(1) Excludes unamortized discount and issuance costs on debt.
(2) Represents interest expense due on debt by using fixed interest rates for fixed rate debt and assuming the same interest
rate at the end of fiscal 2021 for variable rate debt.
(3) Excludes imputed interest on operating lease liabilities.
At July 3, 2021, the Company had an estimated liability for income tax contingencies of $145.1 million, which is not
included in the above table. Cash payments associated with the settlement of these liabilities that are expected to be paid
within the next 12 months is $2.4 million. The settlement period for the remaining amount of the unrecognized tax benefits,
including related accrued interest and penalties, cannot be determined, and therefore was not included in the table.
The Company does not currently have any material long-term commitments for purchases of inventories from
suppliers or for capital expenditures.
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Table of Contents
Critical Accounting Policies
The Company’s consolidated financial statements have been prepared in accordance with GAAP. The preparation of
these consolidated financial statements requires the Company to make estimates and assumptions that affect the reported
amounts of assets, liabilities, sales and expenses. These estimates and assumptions are based upon the Company’s
continual evaluation of available information, including historical results and anticipated future events. Actual results may
differ materially from these estimates.
The Securities and Exchange Commission defines critical accounting policies as those that are, in management’s
view, most important to the portrayal of the Company’s financial condition and results of operations and that require
significant judgments and estimates. Management believes the Company’s most critical accounting policies at the end of
fiscal 2021 relate to:
Valuation of Inventories
Inventories are recorded at the lower of cost or estimated net realizable value. Inventory cost includes the purchase
price of finished goods and any freight cost incurred to receive the inventory into the Company’s distribution centers. The
Company’s inventories include electronic components sold into changing, cyclical, and competitive markets, so inventories
may decline in market value or become obsolete.
The Company regularly evaluates inventories for expected customer demand, obsolescence, current market prices,
and other factors that may render inventories less marketable. Write-downs are recorded so that inventories reflect the
estimated net realizable value and take into account the Company’s contractual provisions with its suppliers, which may
provide certain protections to the Company for product obsolescence and price erosion in the form of rights of return, stock
rotation rights, obsolescence allowances, and price protections. Because of the large number of products and suppliers and
the complexity of managing the process around price protections and stock rotations, estimates are made regarding the net
realizable value of inventories. Additionally, assumptions about future demand and market conditions, as well as decisions
to discontinue certain product lines, impact the evaluation of whether to write-down inventories. If future demand change
or actual market conditions are less favorable than assumed, then management evaluates whether additional write-downs of
inventories are required. In any case, actual net realizable values could be different from those currently estimated.
Accounting for Income Taxes
Management’s judgment is required in determining income tax expenses and unrecognized tax benefits, in measuring
deferred tax assets and liabilities, and valuing allowances recorded against net deferred tax assets. Recovering net deferred
tax assets depends on the Company’s ability to generate sufficient future taxable income in certain jurisdictions. In
addition, when assessing the need for valuation allowances, the Company considers historic levels and types of income,
expectations and risk associated with estimates of future taxable income, and ongoing prudent and feasible tax planning
strategies. If the Company determines that it cannot realize all or part of its deferred tax assets in the future, it may record
additional valuation allowances against the deferred tax assets with a corresponding increase to income tax expense in the
period such determination is made. Similarly, if the Company determines that it can realize all or part of its deferred tax
assets that have an associated valuation allowance established, the Company may release a valuation allowance with a
corresponding benefit to income tax expense in the period such determination is made.
The Company establishes contingent liabilities for potentially unfavorable outcomes of positions taken on certain tax
matters. These liabilities are based on management’s assessment of whether a tax benefit is more likely than not to be
sustained upon examination by tax authorities. The anticipated and actual outcomes of these matters may differ, which
29
may result in changes in estimates to such liabilities. To the extent such changes in estimates are necessary, the Company’s
effective tax rate may fluctuate. In accordance with the Company’s accounting policy, accrued interest and penalties related
to unrecognized tax benefits are recorded as a component of income tax expense.
In determining the Company’s income tax expense, management considers current tax regulations in the numerous
jurisdictions in which it operates, including the impact of tax law and regulation changes in the jurisdictions the Company
operates in. The Company exercises judgment for interpretation and application of such current tax regulations. Changes to
such tax regulations or disagreements with the Company’s interpretation or application by tax authorities in any of the
Company’s major jurisdictions may have a significant impact on the Company’s income tax expense.
See Note 10 to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form
10-K for further discussion on income tax expense, valuation allowances and unrecognized tax benefits.
Recently Issued Accounting Pronouncements
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of
Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”), which provides optional guidance to ease the
potential burden in accounting for reference rate reform on financial reporting. The new guidance provides optional
expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate
reform if certain criteria are met. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848):
Scope (“ASU No. 2021-01”), to clarify certain optional expedients and exceptions in Topic 848 for contract modifications
and hedge accounting to apply to derivatives that are affected by the discounting transition. Both ASU No. 2020-04 and
ASU No. 2021-01 are effective upon issuance through December 31, 2022. The Company is currently evaluating the
effects of adopting the provisions of ASU No. 2020-04 and ASU No. 2021-01, but does not currently expect a material
impact on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740)
(“ASU No. 2019-12”), which removes certain exceptions to the general principles in Topic 740 and also clarifies and
amends existing guidance to improve consistent application. ASU No. 2019-12 will be effective for the Company in the
first quarter of fiscal 2022, and early adoption is permitted. Depending on the amendment, adoption may be applied on a
retrospective, modified retrospective, or prospective basis. The Company is currently evaluating the potential effects of
adopting the provisions of ASU No. 2019-12.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company seeks to reduce earnings and cash flow volatility associated with changes in interest rates and foreign
currency exchange rates by entering into financial arrangements, from time to time, which are intended to provide an
economic hedge against all or a portion of the risks associated with such volatility. The Company continues to have
exposure to such risks to the extent they are not economically hedged.
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Table of Contents
The following table sets forth the scheduled maturities of the Company’s debt outstanding at July 3, 2021 (dollars in
millions):
Liabilities:
Fixed rate debt(1)
Floating rate debt
2022 2023 2024 2025 2026 Thereafter Total
Fiscal Year
$ — $
$
$ 23.1
350.4
$ 0.4
$
— $ — $ — $
$ 0.2
550.2
$
— $
300.0
$ 1,201.2
23.1
— $
(1) Excludes unamortized discounts and issuance costs.
The following table sets forth the carrying value and fair value of the Company’s debt and the average interest rates
at July 3, 2021, and June 27, 2020 (dollars in millions):
Liabilities:
Fixed rate debt(1)
Average interest rate
Floating rate debt
Average interest rate
Carrying Value
at July 3, 2021
Fair Value at
Carrying Value
at July 3, 2021 at June 27, 2020
Fair Value at
June 27, 2020
$
$
1,201.2
4.3 %
23.1
1.2 %
$
$
1,291.4
23.1
$
$
1,201.4
4.5 %
230.1
1.3 %
$
$
1,297.4
230.1
(1) Excludes unamortized discounts and issuance costs. Fair value was estimated primarily based upon quoted market
prices for the Company’s public long-term notes.
Many of the Company’s subsidiaries purchase and sell products in currencies other than their functional currencies,
which subjects the Company to the risks associated with fluctuations in currency exchange rates. The Company uses
economic hedges to reduce this risk, utilizing natural hedging (i.e., offsetting receivables and payables in the same foreign
currency) and creating offsetting positions through derivative financial instruments (primarily forward foreign currency
exchange contracts typically with maturities of less than sixty days, but not greater than one year). The Company continues
to be exposed to foreign currency risks to the extent they are not hedged. The Company adjusts any economic hedges to
fair value through the consolidated statements of operations, primarily within “other (expense) income, net.” Therefore, the
changes in valuation of the underlying items being economically hedged are offset by the changes in fair value of the
forward foreign exchange contracts. A hypothetical 10% change in foreign currency exchange rates under the forward
foreign currency exchange contracts outstanding at July 3, 2021, would result in an increase or decrease of approximately
$170.0 million to the fair value of the forward foreign exchange contracts, which would generally be offset by an opposite
effect on the underlying exposure being economically hedged. See Note 3 to the Company’s consolidated financial
statements included in Item 8 of this Annual Report on Form 10-K for further discussion on derivative financial
instruments.
31
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
1. Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm
Avnet, Inc. and Subsidiaries Consolidated Financial Statements:
Consolidated Balance Sheets at July 3, 2021, and June 27, 2020
Consolidated Statements of Operations for the fiscal years ended July 3, 2021, June 27, 2020, and June
29, 2019
Consolidated Statements of Comprehensive Income for the fiscal years ended July 3, 2021, June 27,
2020, and June 29, 2019
Consolidated Statements of Shareholders’ Equity for the fiscal years ended July 3, 2021, June 27, 2020,
and June 29, 2019
Consolidated Statements of Cash Flows for the fiscal years ended July 3, 2021, June 27, 2020, and June
29, 2019
Notes to Consolidated Financial Statements
2. Financial Statement Schedule:
Schedule II (Valuation and Qualifying Accounts) for the fiscal years ended July 3, 2021, June 27, 2020,
and June 29, 2019
Schedules other than that above have been omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto
Page
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36
37
38
39
40
41
77
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Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Avnet, Inc.:
Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting
We have audited the accompanying consolidated balance sheets of Avnet, Inc. and subsidiaries (the Company) as of July 3,
2021 and June 27, 2020, the related consolidated statements of operations, comprehensive income, shareholders’ equity,
and cash flows for each of the years in the three-year period ended July 3, 2021, and the related notes and financial
statement schedule II (collectively, the consolidated financial statements). We also have audited the Company’s internal
control over financial reporting as of July 3, 2021, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of July 3, 2021 and June 27, 2020, and the results of its operations and its cash flows for each
of the years in the three-year period ended July 3, 2021, in conformity with U.S. generally accepted accounting principles.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as
of July 3, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission.
Change in Accounting Principle
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for
leases as of June 30, 2019 due to the adoption of Financial Accounting Standards Board’s Accounting Standards
Codification (ASC) Topic 842, Leases.
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for
revenue as of July 1, 2018 due to the adoption of Financial Accounting Standards Board’s ASC Topic 606, Revenue from
Contracts with Customers.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to
express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control
over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained
in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated
33
financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts
or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of accounting for income taxes
As discussed in Notes 1 and 10 to the consolidated financial statements, the Company recognized $109.4 million of
deferred tax assets, net and income tax benefit of $20.2 million as of and for the year ended July 3, 2021.
Additionally, as discussed in Note 10, the Company recognized income taxes receivable of $241.3 million as of July 3,
2021. The Company conducts business globally and consequently is subject to U.S. federal, state, and local income
taxes as well as foreign income taxes in many of the jurisdictions in which it operates. The Company exercises
judgment for the interpretation and application of such current tax regulations.
We identified the evaluation of accounting for income taxes as a critical audit matter. Evaluating the Company’s
application of current tax regulations in various foreign jurisdictions and the impact of those regulations on foreign,
U.S. federal, state and local income tax provisions required complex auditor judgment and the use of tax professionals
with specialized skills.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s income tax process,
34
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including controls related to the application of current tax regulations in the various tax jurisdictions and impact on the
Company’s tax provisions. We involved tax professionals with specialized skills and knowledge in various tax
jurisdictions, who assisted in evaluating the Company’s analyses over the application of current tax regulations and the
Company’s interpretation of tax laws and regulations in those jurisdictions.
We have served as the Company’s auditor since 2002.
Phoenix, Arizona
August 13, 2021
/s/ KPMG LLP
35
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
Current assets:
Cash and cash equivalents
Receivables
Inventories
Prepaid and other current assets
Total current assets
Property, plant and equipment, net
Goodwill
Intangible assets, net
Operating lease assets
Other assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Short-term debt
Accounts payable
Accrued expenses and other
Short-term operating lease liabilities
Total current liabilities
Long-term debt
Long-term operating lease liabilities
Other liabilities
Total liabilities
Commitments and contingencies (Note 14)
Shareholders’ equity:
July 3,
2021
June 27,
2020
(Thousands, except share
amounts)
$
199,691
3,576,130
3,236,837
150,763
7,163,421
368,452
838,105
28,539
265,988
260,917
$ 8,925,422
$
477,038
2,928,386
2,731,988
191,394
6,328,806
404,607
773,734
65,437
275,917
256,696
$ 8,105,197
$
23,078
2,401,357
572,457
58,346
3,055,238
1,191,329
239,838
354,833
4,841,238
$
51
1,754,078
472,924
53,313
2,280,366
1,424,791
253,719
419,923
4,378,799
Common stock $1.00 par; authorized 300,000,000 shares; issued 99,601,393 shares
and 98,792,542 shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
99,601
1,622,160
2,516,170
(153,747)
4,084,184
$ 8,925,422
98,793
1,594,140
2,421,845
(388,380)
3,726,398
$ 8,105,197
See notes to consolidated financial statements.
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AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
July 3,
2021
Years Ended
June 27,
2020
(Thousands, except per share amounts)
June 29,
2019
Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Goodwill and long-lived asset impairment expense
Restructuring, integration and other expenses
Operating income (loss)
Other (expense) income, net
Interest and other financing expenses, net
Income (loss) before taxes
Income tax (benefit) expense
Net income (loss)
Earnings (loss) per share:
Basic
Diluted
Shares used to compute earnings per share:
Basic
Diluted
Cash dividends paid per common share
$
$
$
$
$
19,534,679
17,294,049
2,240,630
1,874,831
—
84,391
281,408
(19,006)
(89,473)
172,929
(20,185)
193,114
1.95
1.93
99,258
100,168
0.85
$
$
$
$
$
17,634,333
15,570,877
2,063,456
1,842,122
144,092
81,870
(4,628)
(2,215)
(122,742)
(129,585)
(98,504)
(31,081)
(0.31)
(0.31)
100,474
100,474
0.84
$
$
$
$
$
19,518,592
17,032,490
2,486,102
1,874,651
137,396
108,144
365,911
5,559
(134,874)
236,596
60,259
176,337
1.61
1.59
109,820
110,798
0.80
See notes to consolidated financial statements.
37
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income (loss)
Other comprehensive income (loss), net of tax:
Foreign currency translation and other
Pension adjustments, net
Total comprehensive income (loss)
July 3,
2021
$ 193,114
Years Ended
June 27,
2020
(Thousands)
$ (31,081)
June 29,
2019
$ 176,337
152,678
81,955
$ 427,747
(56,682)
(27,659)
$ (115,422)
(63,621)
(45,067)
$ 67,649
See notes to consolidated financial statements.
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AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years Ended July 3, 2021, June 27, 2020 and June 29, 2019
Common Common
Stock-
Shares
Stock-
Amount
Additional
Paid-In
Capital
115,825
115,825
$ 1,528,713
Accumulated
Other
Comprehensive
(Loss) Income
Total
Shareholders’
Equity
$
(195,351)
—
(63,621)
$ 4,685,081
176,337
(63,621)
Retained
Earnings
(Thousands)
$ 3,235,894
176,337
—
—
—
Balance, June 30, 2018
Net income
Translation adjustments and other
Pension liability adjustments, net of tax of
$14,988
Cash dividends ($0.80 per share)
Repurchases of common stock
Effects of new accounting principles
Stock-based compensation
Balance, June 29, 2019
Net loss
Translation adjustments and other
Pension liability adjustments, net of tax of
$362
Cash dividends ($0.84 per share)
Repurchases of common stock
Stock-based compensation
Balance, June 27, 2020
Net income
Translation adjustments and other
Pension liability adjustments, net of tax of
$2,483
Cash dividends ($0.85 per share)
Effects of new accounting principles
Stock-based compensation
Balance, July 3, 2021
—
—
—
—
—
—
—
—
(12,919)
—
1,132
104,038
(12,919)
—
1,132
104,038
—
—
—
—
—
—
—
—
—
—
—
—
44,292
1,573,005
—
—
—
—
—
—
(87,158)
(553,772)
(3,832)
—
2,767,469
(31,081)
—
—
(83,975)
(230,568)
—
2,421,845
193,114
—
(5,870)
625
98,793
(5,870)
625
98,793
21,135
1,594,140
—
—
—
—
—
—
—
—
—
808
99,601
—
—
—
808
$ 99,601
—
—
—
28,020
$ 1,622,160
—
(84,309)
(14,480)
—
$ 2,516,170
See notes to consolidated financial statements.
39
(45,067)
—
—
—
—
(304,039)
—
(56,682)
(27,659)
—
—
—
(388,380)
—
152,678
(45,067)
(87,158)
(566,691)
(3,832)
45,424
4,140,473
(31,081)
(56,682)
(27,659)
(83,975)
(236,438)
21,760
3,726,398
193,114
152,678
81,955
—
—
—
(153,747) $
81,955
(84,309)
(14,480)
28,828
4,084,184
$
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Net income (loss)
Non-cash and other reconciling items:
Depreciation
Amortization
Amortization of operating lease assets
Deferred income taxes
Stock-based compensation
Goodwill, long-lived asset and other impairments
Other, net
Changes in (net of effects from businesses acquired and divested):
Receivables
Inventories
Accounts payable
Accrued expenses and other, net
Net cash flows provided by operating activities
Cash flows from financing activities:
Issuance of notes, net of discounts
Repayments of public notes
Borrowings (repayments) under accounts receivable securitization, net
Borrowings (repayments) under senior unsecured credit facility, net
Repayments under bank credit facilities and other debt, net
Repurchases of common stock
Dividends paid on common stock
Other, net
Net cash flows used for financing activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Acquisitions of assets and businesses
Proceeds from sale of business
Other, net
Net cash flows used for investing activities
Years Ended
July 3,
2021
June 27,
June 29,
2020
2019
(Thousands)
$
193,114
$
(31,081)
$
176,337
90,884
41,033
56,782
14,650
29,339
15,166
22,512
(615,353)
(409,075)
620,973
30,924
90,949
101,100
81,139
60,656
(34,264)
26,832
159,346
31,343
221,486
266,791
(106,990)
(46,176)
730,182
97,160
83,682
—
33,801
30,098
192,083
(17,491)
464,981
81,929
(377,855)
(229,955)
534,770
—
297,660
(305,077)
22,900
(231,680)
(2,789)
(84,309)
(10,718)
(314,013)
(302,038)
(227,300)
223,058
(2,123)
— (237,842)
(83,975)
(14,330)
(644,550)
—
—
122,300
505
(61,738)
(568,712)
(87,158)
12,127
(582,676)
(50,363)
(18,381)
—
(73,516)
(51,509)
(122,690)
(56,417)
— 123,473
30,422
(25,212)
7,548
(61,196)
(9,992)
(135,017)
Effect of currency exchange rate changes on cash and cash equivalents
6,913
(19,682)
(1,902)
Cash and cash equivalents:
— decrease
— at beginning of period
— at end of period
Additional cash flow information (Note 16)
(277,347)
477,038
199,691
(69,067)
546,105
477,038
$
(75,020)
621,125
546,105
$
$
See notes to consolidated financial statements.
40
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of significant accounting policies
Basis of presentation — The accompanying consolidated financial statements include the accounts of Avnet, Inc. and
all of its majority-owned and controlled subsidiaries (the “Company” or “Avnet”). All intercompany and intracompany
accounts and transactions have been eliminated.
Reclassifications — Certain prior period amounts have been reclassified or combined to conform to the current
period presentation including the adoption of new accounting pronouncements.
Fiscal year — The Company operates on a “52/53 week” fiscal year, which ends on the Saturday closest to
June 30th. Fiscal 2021 contains 53 weeks compared to 52 weeks in fiscal 2020 and 2019. Unless otherwise noted, all
references to “fiscal” or “year” shall mean the Company’s fiscal year.
Management estimates — The preparation of financial statements in conformity with generally accepted accounting
principles in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect
certain reported amounts of assets and liabilities, reported amounts of sales and expenses and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements. Actual results could differ materially from those
estimates.
Cash and cash equivalents — The Company considers all highly liquid investments with an original maturity of
three months or less including money market funds to be cash equivalents.
Receivables – On June 28, 2020, the Company adopted ASC 326, which revises the methodology for measuring
credit losses on financial instruments including trade accounts receivable and the timing of when such losses are recorded.
The Company adopted ASC 326 using a modified retrospective approach with a cumulative effect adjustment to the
opening balance of retained earnings, which increased the allowance for credit losses by $17.2 million ($14.5 million, net
of tax of $2.7 million). Increases in the allowance for credit losses relate to the required change from an incurred loss
model to an expected loss model, and the related change in timing of loss recognition where an allowance for credit losses
is now applied at the time the asset, or pool of assets, is recognized.
Receivables, predominately comprised of trade accounts and notes receivable, are reported at amortized cost, net of
the allowance for credit losses in the consolidated balance sheets. The allowance for credit losses is a valuation account
that is deducted from the receivables’ amortized cost basis to present the net amount expected to be collected. The
Company estimates the allowance for credit losses using relevant available information about expected credit losses,
including information about historical credit losses, past events, current conditions, and other factors which may affect the
collectability of receivables. Adjustments to historical loss information are made for differences in current receivable-
specific risk characteristics, such as changes in customer behavior, economic and industry changes, or other relevant
factors. Expected credit losses are estimated on a pooled basis when similar risk characteristics exist.
Inventories — Inventories, comprised principally of finished goods, are stated at the lower of cost or net realizable
value. Inventory cost includes the purchase price of finished goods and any freight cost incurred to receive the inventory
into the Company’s distribution centers. The Company regularly reviews the cost of inventory against its estimated net
realizable value, considering historical experience and any contractual rights of return, stock rotations, excess, and
obsolescence allowances, or price protections provided by the Company’s suppliers. It records the lower of cost or net
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
realizable value write-down if any inventories have a cost in excess of such inventories’ estimated net realizable value. The
Company does not incorporate any non-contractual protections when estimating the net realizable value of its inventories.
Depreciation, amortization and useful lives — The Company reports property, plant, and equipment at cost, less
accumulated depreciation. Cost includes the price paid to acquire or construct the assets, required installation costs, interest
capitalized during the construction period, and any expenditure that substantially adds to the value or substantially extends
the useful life of an existing asset. Additionally, the Company capitalizes qualified costs related to software obtained or
developed for internal use as a component of property, plant, and equipment. Software obtained for internal use has
generally been enterprise-level business operations, logistics, and finance software that is customized to meet the
Company’s specific operational requirements. The Company begins depreciation and amortization (“depreciation”) for
property, plant, and equipment when an asset is both in the location and condition for its intended use.
Property, plant, and equipment is depreciated using the straight-line method over its estimated useful lives. The
estimated useful lives for property, plant, and equipment are typically as follows: buildings (30 years); machinery, fixtures
and equipment (2-10 years); information technology hardware and software (2-10 years); and leasehold improvements
(over the applicable lease term or economic useful life, if shorter).
The Company amortizes intangible assets acquired in business combinations or asset combinations using the straight-
line method over the estimated economic useful lives of the intangible assets from the date of acquisition, which is
generally between 5-10 years.
Long-lived asset impairment — Long-lived assets, including property, plant, equipment, intangible assets and
operating lease assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset group may not be recoverable. For purposes of recognition and measurement of an impairment loss,
long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are
largely independent of the cash flows of other assets and liabilities (“asset group”). An impairment is recognized when the
estimated undiscounted cash flows expected to result from the use of the asset group and its eventual disposition is less
than its carrying amount. An impairment is measured as the amount by which an asset group’s carrying value exceeds its
estimated fair value. The Company considers a long-lived asset to be abandoned when it has ceased use of such abandoned
asset and if the Company has no intent to use or repurpose the asset in the future. The Company continually evaluates the
carrying value and the remaining economic useful life of long-lived assets and adjusts the carrying value and remaining
useful life when appropriate.
Leases — On June 30, 2019, the Company adopted ASC 842 using the modified transition approach without
restating the comparative period consolidated financial statements. ASC 842 requires lessees to recognize a right-of-use
asset and a short-term and long-term lease liability for all leases. 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.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 lease term of up to 17 years. The Company’s
equipment leases are primarily for automobiles and distribution center and office 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 based upon an estimate of the Company’s secured borrowing rate. The estimated
secured borrowing rates used at the date of adoption for each lease vary in accordance with the 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.
Goodwill — Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value
assigned to the individual assets acquired and liabilities assumed. The Company does not amortize goodwill, but instead
tests goodwill for impairment at least annually in the fourth quarter. If necessary, the Company records any impairment
resulting from such goodwill impairment testing as a component of operating expenses included within goodwill and
intangible asset impairment expenses in the consolidated statements of operations. Impairment testing is performed at the
reporting unit level, which is defined as the same, or one level below, an operating segment. The Company will perform an
interim impairment test between required annual tests if facts and circumstances indicate that it is more-likely-than-not that
the fair value of a reporting unit that has goodwill is less than its carrying value.
In performing goodwill impairment testing, the Company may first make a qualitative assessment of whether it is
more-likely-than-not that a reporting unit’s fair value is less than its carrying value. If the qualitative assessment indicates it
is more-likely-than-not that a reporting unit’s fair value is not greater than its carrying value, the Company must perform a
quantitative impairment test. The Company defines the fair value of a reporting unit as the price that would be received to
sell the reporting unit as a whole in an orderly transaction between market participants as of the impairment test date. To
determine the fair value of a reporting unit, the Company uses the income methodology of valuation, which includes the
discounted cash flow method, and the market methodology of valuation, which considers values of comparable businesses
to estimate the fair value of the Company’s reporting units.
Significant management judgment is required when estimating the fair value of the Company’s reporting units from a
market participant perspective (including forecasting of future operating results and the discount rates used in the
discounted cash flow method of valuation) and in the selection of comparable businesses and related market multiples that
are used in the market method of valuation. If the estimated fair value of a reporting unit exceeds the carrying value
assigned to that reporting unit, goodwill is not impaired. If the reverse is true, then the Company measures a goodwill
impairment loss based on such difference.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Foreign currency translation — The assets and liabilities of foreign operations are translated into U.S. Dollars at the
exchange rates in effect at each balance sheet date, with the related translation adjustments reported as a separate
component of shareholders’ equity and comprehensive income (loss). Results of operations are translated using the average
exchange rates prevailing throughout the reporting period. Transactions denominated in currencies other than the functional
currency of the Avnet subsidiaries that are party to the transactions are remeasured at exchange rates in effect at each
balance sheet date or upon settlement of the transaction. Gains and losses from such remeasurements are recorded in the
consolidated statements of operations as a component of “Other (expense) income, net.”
Income taxes — The Company follows the asset and liability method of accounting for income taxes. Deferred
income tax assets and liabilities are recognized for the estimated future tax impact of differences between the consolidated
financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred income tax assets and
liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to
be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized within
income tax expense in the period in which the new rate is enacted. Based upon historical and estimated levels of future
taxable income and analysis of other key factors, the Company may increase or decrease a valuation allowance against its
deferred tax assets, as deemed necessary, to adjust such assets to their estimated net realizable value.
The Company establishes contingent liabilities for potentially unfavorable outcomes of positions taken on certain tax
matters. These liabilities are based on management’s assessment of whether a tax benefit is more-likely-than-not to be
sustained upon examination by the relevant tax authorities. Differences between the estimated and actual outcomes of these
matters may result in future changes in estimates to such unrecognized tax benefits. Any such changes in estimates may
impact the Company’s effective tax rate. In accordance with the Company’s accounting policies, accrued interest and
penalties related to unrecognized tax benefits are recorded as a component of income tax expense.
Revenue recognition — On July 1, 2018, the Company adopted ASC 606 using the modified retrospective transition
method applied to those contracts which were not completed as of July 1, 2018. ASC 606 supersedes previous revenue
recognition guidance and requires the Company to recognize revenue to depict the transfer of promised goods or services
to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for such
goods or services. The adoption of ASC 606 did not have a material impact on the Company’s consolidated financial
statements as of the adoption date and as of and for fiscal 2019.
Revenue is recognized at the point at which control of the underlying products are transferred to the customer, which
includes determining whether products are distinct and separate performance obligations. For electronic component and
related product sales, transfer of control to the customer generally occurs upon product shipment, but it may occur at a later
date depending on the agreed upon sales terms (such as delivery at the customer's designated location, or when products
that are consigned at customer locations are consumed). In limited instances, where products are not in stock and delivery
times are critical, product is purchased from the supplier and drop-shipped to the customer. The Company typically takes
control of the products when shipped by the manufacturer and then recognizes revenue when control of the product
transfers to the customer. The Company does not have material product warranty obligations, because the assurance type
product warranties provided by the component manufacturers are passed through to the Company’s customers.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
For contracts related to the specialized manufacture of products for customers with no alternative use and for which
the Company has an enforceable right to payment, including a reasonable profit margin, the Company recognizes revenue
over time as control of the products transfer through the manufacturing process. The contract assets associated with such
specialized manufacturing products are not material.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring
products. The Company estimates different forms of variable consideration at the time of sale based on historical
experience, current conditions, and contractual obligations. Revenue is recorded net of customer discounts and rebates.
When the Company offers the right or has a history of accepting returns of product, historical experience is utilized to
establish a liability for the estimate of expected returns and an asset for the right to recover the product expected to be
returned. These adjustments are made in the same period as the underlying sales transactions.
The Company considers the following indicators amongst others when determining whether it is acting as a principal
in the contract where revenue would be recorded on a gross basis: (i) the Company is primarily responsible for fulfilling
the promise to provide the specified products or services; (ii) the Company has inventory risk before the specified products
have been transferred to a customer or after transfer of control to the customer; and (iii) the Company has discretion in
establishing the price for the specified products or services. If a transaction does not meet the Company’s indicators of
being a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues
are recognized on a net basis.
Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from
revenue. The Company has elected to treat shipping and handling of product as a fulfillment activity. The practical
expedient not to disclose information about remaining performance obligations has also been elected as these contracts
have an original duration of one year or less. The Company does not have any payment terms that exceed one year from
the point it has satisfied the related performance obligations.
Vendor allowances and consideration — Consideration received from suppliers for price protection, product rebates,
marketing/promotional activities, or any other programs are recorded when earned (under the terms and conditions of such
supplier programs) as adjustments to product costs or selling, general and administrative expenses, depending upon the
nature and contractual requirements related to the consideration received. Some of these supplier programs require
management to make estimates and may extend over more than one reporting periods.
Comprehensive income (loss) — Comprehensive income (loss) represents net income for the year adjusted for certain
changes in shareholders’ equity. Accumulated comprehensive income (loss) items impacting comprehensive income (loss)
includes foreign currency translation and the impact of the Company’s pension liability adjustments, net of tax.
Stock-based compensation — The Company measures stock-based payments at fair value and generally recognizes
the associated operating expense in the consolidated statements of operations over the requisite service period (see Note
13). A stock-based payment is considered vested for accounting expense attribution purposes when the employee’s
retention of the award is no longer contingent on providing continued service. Accordingly, the Company recognizes all
stock-based compensation expense for awards granted to retirement eligible employees over the period from the grant date
to the date retirement eligibility is achieved, if less than the stated requisite service period. The expense attribution
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
approach for retirement eligible employees does not affect the overall amount of compensation expense recognized, but
instead accelerates the recognition of such expense.
Restructuring and exit activities — The determination of when the Company accrues for involuntary termination
benefits under restructuring plans depends on whether the termination benefits are provided under an on-going benefit
arrangement or under a one-time benefit arrangement. The Company accounts for on-going benefit arrangements in
accordance with Accounting Standards Codification 712 (“ASC 712”) Nonretirement Postemployment Benefits and
accounts for one-time benefit arrangements in accordance with ASC 420 Exit or Disposal Cost Obligations. If applicable,
the Company records such costs into operating expense over the terminated employee’s future service period beyond any
minimum retention period. Other costs associated with restructuring or exit activities may include contract termination
costs and impairments of long-lived assets, which are expensed in accordance with ASC 420 Exit or Disposal Cost
Obligations and ASC 360 Property, Plant and Equipment, respectively.
Business combinations — The Company accounts for business acquisitions using the acquisition method of
accounting and records any identifiable definite-lived intangible assets separate from goodwill. Intangible assets are
recorded at their fair value, based on estimates as of the acquisition date. Goodwill is recorded as the residual amount of
the purchase price consideration less the fair value assigned to the individual identifiable assets acquired and liabilities
assumed as of the acquisition date. Contingent consideration (which represents an obligation of the Company to make
additional payments or equity interests to the former owner as part of the purchase price if specified future events occur or
conditions are met) is accounted for at the fair value as of the acquisition date, either as a liability or as equity depending
on the terms of the acquisition agreement.
Concentration of credit risk — Financial instruments that potentially subject the Company to a concentration of
credit risk principally consist of cash and cash equivalents, marketable securities, and trade accounts receivable. The
Company invests its excess cash primarily in overnight time deposits and institutional money market funds with highly
rated financial institutions. To reduce credit risk, management performs ongoing credit evaluations of its customers’
financial condition and, in some instances, has obtained credit insurance coverage to reduce such risk. The Company
maintains reserves for potential credit losses from customers, but has not historically experienced material losses related to
individual customers or groups of customers in any particular end market or geographic area.
Fair value — The Company measures financial assets and liabilities at fair value based upon an exit price,
representing the amount that would be received from the sale of an asset, or paid to transfer a liability, in an orderly
transaction between market participants. ASC 820, Fair Value Measurements, requires inputs used in valuation techniques
for measuring fair value on a recurring or non-recurring basis be assigned to a hierarchical level as follows: Level 1 are
observable inputs that reflect quoted prices for identical assets or liabilities in active markets; Level 2 are observable
market-based inputs or unobservable inputs that are corroborated by market data; and, Level 3 are unobservable inputs that
are not corroborated by market data. During fiscal 2021, 2020, and 2019, there were no transfers of assets measured at fair
value between the three levels of the fair value hierarchy. The carrying amounts of the Company’s financial instruments,
including cash equivalents, receivables, and accounts payable approximate their fair values at July 3, 2021, due to the
short-term nature of these assets and liabilities. At July 3, 2021, and June 27, 2020, the Company had $3.8 million and
$20.9 million, respectively, of cash equivalents that were measured at fair value based upon Level 1 criteria. See Note 3 for
discussion of the fair value of the Company’s derivative financial instruments, Note 8 for discussion of the fair value of the
Company’s long-term debt, and Note 11 for a discussion of the fair value of the Company’s pension plan assets.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Derivative financial instruments — See Note 3 for discussion of the Company’s accounting policies related to
derivative financial instruments.
Investments — Equity investments in businesses or start-up companies (“ventures”) are accounted for using the
equity method if the investment provides the Company the ability to exercise significant influence, but not control, over the
ventures. All other equity investments, which consist of investments for which the Company does not possess the ability to
exercise significant influence over the ventures, are measured at fair value, using quoted market prices, or at cost minus
impairment, if any, plus or minus changes resulting from observable price changes when fair value is not readily
determinable. Investments in ventures are included in “Other assets” in the Company’s consolidated balance sheets.
Changes in fair value, including impairments for investments in ventures, if any, are recorded in “Other (expense) income,
net” in the Company’s consolidated statements of operations. As of July 3, 2021, the Company’s investments in ventures
was not material to the consolidated balance sheets or consolidated statements of operations.
Accounts receivable securitization — The Company has an accounts receivable securitization program whereby the
Company sells certain receivables and retains a subordinated interest and servicing rights to those receivables. The
securitization program does not qualify for off-balance sheet sales accounting and is accounted for as a secured financing
as discussed further in Note 8.
Recently adopted accounting pronouncements — In August 2018, the FASB issued ASU No. 2018-14,
Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to
the Disclosure Requirements for Defined Benefit Plans (“ASU No. 2018-14”). The new guidance modifies the disclosure
requirements for employers that sponsor defined benefit pension or other postretirement plans, including removing certain
previous disclosure requirements, adding certain new disclosure requirements, and clarifying certain other disclosure
requirements. The adoption of ASU No. 2018-14 in the fourth quarter of fiscal 2021 did not have a material impact on the
Company’s consolidated financial statement disclosures.
In August 2018, the FASB issued ASU 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) (“ASU No. 2018-15”). ASU No. 2018-15 aligns
the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the
requirements for capitalizing implementation costs incurred to develop internal-use software. The adoption of ASU No.
2018-15 in the first quarter of fiscal 2021 did not have a material impact on the Company’s consolidated financial
statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement
of Credit Losses on Financial Instruments (“ASU No. 2016-13”) and also issued subsequent amendments to the initial
guidance: ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, and ASU No. 2019-11 (collectively, Topic 326). Topic
326 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are
recorded. On June 28, 2020, the Company adopted Topic 326 using a modified retrospective approach with a cumulative
effect adjustment to the opening balance of retained earnings, which increased the allowance for credit losses by $17.2
million ($14.5 million, net of tax of $2.7 million). Increases in the allowance for credit losses relate to the required change
from an incurred loss model to an expected loss model, and the related change in timing of loss recognition where an
allowance for credit losses is now applied at the time the asset, or pool of assets, is recognized.
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2. Acquisitions
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In the first quarter of fiscal 2021, the Company completed an asset acquisition. The impact of this asset acquisition
was not material to the Company’s consolidated balance sheets or statements of operations.
3. Derivative financial instruments
Many of the Company’s subsidiaries purchase and sell products in currencies, other than their functional currencies,
which subjects the Company to the risks associated with fluctuations in currency exchange rates. The Company uses
economic hedges to reduce this risk, utilizing natural hedging (i.e., offsetting receivables and payables in the same foreign
currency) and creating offsetting positions through the use of derivative financial instruments (primarily forward foreign
exchange contracts typically with maturities of less than 60 days, 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 (expense) income,
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 July 3, 2021 and June 27, 2020. 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
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 EMEA and Asian foreign currencies.
The fair values of forward foreign exchange contracts not receiving hedge accounting treatment recorded in the
Company’s consolidated balance sheets are as follows:
Prepaid and other current assets
Accrued expenses and other
July 3,
2021
June 27,
2020
$
(Thousands)
15,722
23,994
$
18,989
15,605
The amount recorded to other (expense) income, net related to derivative financial instruments for economic hedges
are as follows:
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Net derivative financial instrument (loss) gain
$
(21,605)
$
July 3,
2021
Years Ended
June 27,
2020
(Thousands)
12,739
June 29,
2019
$
84
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 remeasurement of the underlying
assets or liabilities being economically hedged.
4. Shareholders’ equity
Accumulated comprehensive loss
The following table includes the balances within accumulated other comprehensive loss:
Accumulated translation adjustments and other
Accumulated pension liability adjustments, net of income taxes
Total accumulated other comprehensive loss
July 3,
2021
$ (46,473)
(107,274)
$ (153,747)
June 27,
June 29,
2020
(Thousands)
$ (199,151)
(189,229)
$ (388,380)
2019
$ (142,469)
(161,570)
$ (304,039)
Substantially all amounts reclassified out of accumulated comprehensive loss, net of tax, to operating expenses
during fiscal 2021, 2020, and 2019 related to net periodic pension costs as discussed further in Note 11.
Share repurchase program
In August 2019, the Company’s Board of Directors amended 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, expected liquidity, expected compliance with financial debt convents, corporate and regulatory
requirements, and prevailing market conditions. During fiscal 2021, the Company did not repurchase any shares under this
program. As of July 3, 2021, the Company had $469.0 million remaining under its share repurchase authorization.
Common stock dividend
During fiscal 2021, the Company paid dividends of $0.85 per common share and $84.3 million in total.
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5. Receivable
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company’s receivables and allowance for credit losses were as follows:
Receivables
Allowance for Credit Losses
July 3,
2021
June 27,
2020
(Thousands)
$
3,664,290
(88,160)
$
2,993,404
(65,018)
The Company had the following activity in the allowance for credit losses during fiscal 2021:
Balance at June 27, 2020
Effect of adoption of new credit loss accounting standard (Note 1)
Credit Loss Provisions
Credit Loss Recoveries
Receivables Write offs
Foreign Currency Effect and Other
Balance at July 3, 2021
6. Property, plant and equipment, net
July 3,
2021
(Thousands)
65,018
17,205
18,429
(2,587)
(6,240)
(3,665)
88,160
$
$
Property, plant and equipment are recorded at cost, less accumulated depreciation, and consist of the following:
Buildings
Machinery, fixtures and equipment
Information technology hardware and software
Leasehold improvements
Depreciable property, plant and equipment, gross
Accumulated depreciation
Depreciable property, plant and equipment, net
Land
Construction in progress
Property, plant and equipment, net
July 3, 2021 June 27, 2020
(Thousands)
$
$
121,662
260,342
835,374
123,808
1,341,186
(999,885)
341,301
22,778
4,373
368,452
$
$
124,007
242,347
809,182
117,036
1,292,572
(938,002)
354,570
23,618
26,419
404,607
Depreciation expense, including accelerated depreciation related to property, plant, and equipment, was $90.9
million, $101.1 million and $97.2 million in fiscal 2021, 2020, and 2019, respectively. Interest expense capitalized during
fiscal 2021, 2020, and 2019 was not material.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
7. Goodwill, intangible assets, and impairments
The following table presents the change in goodwill balances by reportable segment for fiscal year 2021.
Carrying value at June 27, 2020 (1)
Foreign currency translation
Carrying value at July 3, 2021 (1)
Electronic
Components
$
$
297,836 $
12,746
310,582 $
Farnell
(Thousands)
475,898
51,625
527,523
$
$
Total
773,734
64,371
838,105
(1)
Includes accumulated impairment of $1,045,110 from fiscal 2009, $181,440 from fiscal 2018, $137,396 from fiscal 2019, and
$118,731 from fiscal 2020.
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 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.
The following table presents the Company’s acquired identifiable intangible assets:
Customer related
Trade name
Technology and other
July 3, 2021
Acquired Accumulated Net Book Acquired
June 27, 2020
Accumulated
Net Book
Amount Amortization Value Amount(1) Amortization Value
(Thousands)
$ 324,416
57,184
57,809
$ 439,409
$
$
(312,392)
(45,019)
(53,459)
(410,870)
$ 12,024
12,165
4,350
$ 28,539
$ 300,937
51,698
53,641
$ 406,276
$
$
(266,759)
(32,493)
(41,587)
(340,839)
$
$
34,178
19,205
12,054
65,437
(1) Acquired amount reduced by impairment of $17,473 from fiscal 2020.
Intangible asset amortization expense was $41.0 million, $81.1 million, and $83.7 million for fiscal 2021, 2020, and
2019, respectively. Intangible assets have a weighted average remaining useful life of less than 3 years as of July 3, 2021.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table presents the estimated future amortization expense for the next five fiscal years and thereafter (in
thousands):
Fiscal Year
2022
2023
2024
2025
2026
Thereafter
Total
15,417
6,611
3,199
1,472
1,472
368
28,539
$
In fiscal 2021, the Company recorded $15.2 million of equity investment impairment expense classified within other
(expense) income, net in the consolidated statements of operations.
8. Debt
Short-term debt consists of the following (in thousands):
Accounts receivable securitization program and other
Short-term debt
June 27,
2020
July 3,
2021
Interest Rate
1.24 % 5.69 % $
$
June 27,
July 3,
2021
2020
Carrying Balance
23,078
23,078
$
$
51
51
Bank credit facilities and other consist of various committed and uncommitted lines of credit and other forms of bank
debt with financial institutions, which are utilized primarily to support the Company’s working capital requirements,
including its foreign operations.
In July 2020, the Company amended, and extended for one year, its trade accounts receivable securitization program
(the “Securitization Program”) in the United States with a group of financial institutions. The Securitization Program
allows 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 $450.0 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 $717.4
million and $703.8 million at July 3, 2021, and June 27, 2020, respectively. The Securitization Program contains certain
covenants relating to the quality of the receivables sold. There was $22.9 million and no borrowings outstanding under the
Securitization Program as of July 3, 2021, and as of June 27, 2020, respectively. Interest on borrowings is calculated using
a one-month LIBOR rate plus a spread of 1.05%. The facility fee on the unused balance of the facility is up to 0.40%.
In July 2021, the Company extended the maturity of the Securitization Program from July 30, 2021 to August 31,
2021.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
During the fourth quarter of fiscal 2021, the Company redeemed the $300.0 million of outstanding 3.75% Notes due
in December 2021 at a make-whole redemption price of $305.0 million and the Company issued $300.0 million of 3.00%
Notes due in May 2031.
Long-term debt consists of the following (in thousands):
Revolving credit facilities:
Credit Facility (due June 2023)
Public notes due:
December 2021
December 2022
April 2026
May 2031
Other long-term debt
Long-term debt before discount and debt issuance costs
Discount and debt issuance costs – unamortized
Long-term debt
July 3,
2021 2020
June 27,
Interest Rate
June 27,
July 3,
2021
2020
Carrying Balance
—
1.28 % $
— $
230,000
—
4.88 %
4.63 %
3.00 %
1.22 %
300,000
350,000
550,000
3.75 %
4.88 %
4.63 %
—
1.19 %
—
350,000
550,000
300,000
1,185
1,201,185
(9,856)
1,491
1,431,491
(6,700)
$ 1,191,329 $ 1,424,791
The Company has a five-year $1.25 billion Credit Facility with a syndicate of banks, which expires in June 2023. It
consists of revolving credit facilities and up to $200.0 million in letters of credit and up to $300.0 million of loans in
certain approved currencies. 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 July 3, 2021.
At July 3, 2021, and June 27, 2020, there were $1.3 million and $1.6 million, respectively, in letters of credit issued under
the Credit Facility.
Aggregate debt maturities for the next five fiscal years and thereafter are as follows (in thousands):
2022
2023
2024
2025
2026
Thereafter
Subtotal
Discount and debt issuance costs – unamortized
Total debt
$
23,078
350,409
377
183
550,216
300,000
1,224,263
(9,856)
$ 1,214,407
At July 3, 2021, the carrying value and fair value of the Company’s total debt was $1.21 billion and $1.30 billion,
respectively. At June 27, 2020, the carrying value and fair value of the Company’s total debt was $1.42 billion and $1.52
billion, respectively. Fair value for the public notes was estimated based upon quoted market prices and for other forms
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
of debt fair value approximates carrying value due to the market based variable nature of the interest rates on those debt
facilities.
9. Accrued expenses and other
Accrued expenses and other consist of the following:
Accrued salaries and benefits
Accrued operating costs
Accrued interest and banking costs
Accrued restructuring costs
Accrued income taxes
Accrued property, plant and equipment
Accrued other
Total accrued expenses and other
10. Income taxes
July 3, 2021 June 27, 2020
(Thousands)
$
$
253,586
179,213
32,985
39,962
—
7,131
59,580
572,457
$
$
200,987
121,701
24,068
16,942
34,588
9,009
65,629
472,924
The components of income tax (benefit) expense (“tax provision”) are included in the table below. The tax provision
for deferred income taxes results from temporary differences arising primarily from net operating losses, inventories
valuation, receivables valuation, suspended interest deductions, certain accrued amounts, and depreciation and
amortization, net of any changes to valuation allowances.
Current:
Federal
State and local
Foreign
Total current taxes
Deferred:
Federal
State and local
Foreign
Total deferred taxes
Income tax (benefit) expense
Years Ended
July 3, 2021 June 27, 2020 June 29, 2019
(Thousands)
$
$
(62,445)
(4,723)
21,530
(45,638)
21,590
259
3,604
25,453
(20,185)
$
$
(127,250)
17,990
22,816
(86,444)
14,845
4,450
(31,355)
(12,060)
(98,504)
$
$
(20,250)
8,248
79,004
67,002
17,725
580
(25,048)
(6,743)
60,259
The tax provision is computed based upon income (loss) before income taxes from both U.S. and foreign operations.
U.S. income (loss) before income taxes was $(89.4) million, $(254.8) million and, $54.9 million, in fiscal 2021, 2020, and
2019, respectively, and foreign income before income taxes was $262.3 million, $125.2 million, and $181.7 million in
fiscal 2021, 2020, and 2019, respectively.
On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (the “CARES
Act”). The CARES Act is an approximately $2 trillion emergency economic stimulus package in response to the COVID-
19 pandemic, which among other things contains numerous income tax provisions. The CARES Act allows net operating
losses incurred in fiscal years 2019, 2020, and 2021 to be carried back to each of the five preceding taxable
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
years to generate a refund of previously paid income taxes. The Company expects to utilize this carryback provision, which
is generating a tax benefit in fiscal 2021. An income tax refund receivable of $241.3 million, associated with the fiscal
2021 and fiscal 2020 income tax benefit, is classified within Receivables on the consolidated balance sheets.
The Company asserts that all of its unremitted foreign earnings are permanently reinvested and any unrecorded
liabilities related to this assertion are not material.
Reconciliations of the federal statutory tax rate to the effective tax rates are as follows:
U.S. federal statutory rate
State and local income taxes, net of federal benefit
Tax on foreign income, net of valuation allowances
Establishment/release of valuation allowances, net of U.S. tax
expense
Change in unrecognized tax benefit reserves
Tax audit settlements
Impact of the Tax Cuts and Jobs Act (the Act) - transition tax
Impact of the Act - deferred tax effects
Impact of the CARES Act
Impairment of investments, including goodwill
Other, net
Effective tax rate
Years Ended
July 3, 2021 June 27, 2020 June 29, 2019
21.0 %
0.3
(0.5)
21.0 %
(2.2)
(10.7)
21.0 %
4.6
5.0
2.1
14.3
0.4
—
—
(8.4)
(22.4)
(5.8)
(11.7)%
(28.5)
20.1
(5.6)
—
—
10.2
56.5
(7.3)
76.0 %
(3.3)
18.3
1.0
7.3
(5.8)
—
(8.2)
(4.6)
25.5 %
Tax rates on foreign income represents the impact of the difference between foreign rates and the U.S. federal
statutory rate applied to foreign income or loss, foreign income taxed in the U.S. at rates other than its statutory rate, and
the impact of valuation allowances previously established against the Company’s otherwise realizable foreign deferred tax
assets, which are primarily net operating loss carry-forwards.
Avnet’s effective tax rate on income before income taxes was 11.7% of benefit in fiscal 2021 as compared with an
effective tax rate of 76.0% of benefit on fiscal 2020 loss before income taxes. Included in the fiscal 2021 effective tax rate
is a tax benefit arising from the reduction in fair value of certain businesses, resulting in losses that can be carried back
under U.S. tax law, partially offset by the net increase to unrecognized tax benefit reserves.
The Company applies the guidance in ASC 740 Income Taxes, which requires management to use its judgment to the
appropriate weighting of all available evidence when assessing the need for the establishment or the release of valuation
allowances. As part of this analysis, the Company examines all available evidence on a jurisdiction-by-jurisdiction basis
and weighs the positive and negative evidence when determining the need for full or partial valuation allowances. The
evidence considered for each jurisdiction includes, among other items: (i) the historic levels and types of income or losses
over a range of time periods, which may extend beyond the most recent three fiscal years depending upon the historical
volatility of income in an individual jurisdiction; (ii) expectations and risks associated with underlying estimates of future
taxable income, including considering the historical trend of down-cycles in the Company’s served industries; (iii)
jurisdictional specific limitations on the utilization of deferred tax assets, including when such assets expire; and (iv)
prudent and feasible tax planning strategies.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The significant components of deferred tax assets and liabilities, included in “other assets” on the consolidated
balance sheets, are as follows:
Deferred tax assets:
Federal, state and foreign net operating loss carry-forwards
Depreciation and amortization
Inventories valuation
Operating lease liabilities
Receivables valuation
Various accrued liabilities and other
Less — valuation allowances
Deferred tax liabilities:
Operating lease assets
Net deferred tax assets
July 3,
2021
June 27,
2020
(Thousands)
$ 282,882
17,333
25,336
69,759
13,757
62,082
471,149
(293,569)
177,580
$ 237,200
16,585
35,509
67,814
11,868
102,298
471,274
(283,721)
187,553
(68,135)
$ 109,445
(66,316)
$ 121,237
The increase in valuation allowances in fiscal 2021 from fiscal 2020 was primarily related to the $25.2 million
increase resulting from a tax rate change in the United Kingdom, a $10.0 million increase resulting from changing foreign
exchange rates, partially offset by a $27.6 million decrease relating to the current year activity in the United States.
As of July 3, 2021, the Company had net operating and capital loss carry-forwards of approximately $1.45 billion, of
which $35.2 million will expire during fiscal 2022 and fiscal 2023, substantially all of which have full valuation
allowances, $301.9 million have expiration dates ranging from fiscal 2024 to fiscal 2040, and the remaining $1.12 billion
have no expiration date. A significant portion of these losses are not expected to be realized in the foreseeable future and
have valuation allowances against them. The carrying value of the Company’s net operating and capital loss carry-forwards
depends on the Company’s ability to generate sufficient future taxable income in certain tax jurisdictions. In addition, the
Company considers historic levels and types of income or losses, expectations and risk associated with estimates of future
taxable income, and ongoing prudent and feasible tax planning strategies in assessing the need for valuation allowances as
discussed further above.
Estimated liabilities for unrecognized tax benefits are included in “Accrued expenses and other” and “Other
liabilities” on the consolidated balance sheets. These contingent liabilities relate to various tax matters that result from
uncertainties in the application of complex income tax regulations in the numerous jurisdictions in which the Company
operates. As of July 3, 2021, unrecognized tax benefits were $145.1 million. The estimated liability for unrecognized tax
benefits included accrued interest expense and penalties of $26.4 million and $20.2 million, net of applicable state tax
benefits, as of the end of fiscal 2021 and 2020, respectively.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Reconciliations of the beginning and ending liability balances for unrecognized tax benefits, excluding interest and
penalties, are as follows:
Balance at beginning of year
Additions for tax positions taken in prior periods
Reductions for tax positions taken in prior periods
Reductions related to tax rate change
Additions for tax positions taken in current period
Reductions related to settlements with taxing authorities
Reductions related to the lapse of applicable statutes of limitations
Adjustments related to foreign currency translation
Balance at end of year
July 3, 2021 June 27, 2020
(Thousands)
$
$
96,292
36,452
(4,880)
(200)
4,030
(711)
(15,713)
3,390
118,660
$
$
123,765
10,456
(33,880)
—
23,611
(5,480)
(21,339)
(841)
96,292
The evaluation of uncertain income tax positions requires management to estimate the ability of the Company to
sustain its position with applicable tax authorities and estimate the final benefit to the Company. If the actual outcomes
differ from the Company’s estimates, there could be an impact on the consolidated financial statements in the period in
which the position is settled, the applicable statutes of limitations expire, or new information becomes available, as the
impact of these events are recognized in the period in which they occur. It is difficult to estimate the period in which the
amount of a tax position will change as settlement may include administrative and legal proceedings beyond the
Company’s control. The effects of settling tax positions with tax authorities and statute expirations may significantly
impact the estimate for unrecognized tax benefits. Within the next twelve months, the Company estimates that
approximately $11.3 million of these liabilities for unrecognized tax benefits will be settled by the expiration of the statutes
of limitations or through agreement with the tax authorities for tax positions related to valuation matters and positions
related to acquired entities. The expected cash payment related to the settlement of these contingencies is approximately
$2.4 million.
The Company conducts business globally and consequently files income tax returns in numerous jurisdictions,
including those listed in the following table. It is also routinely subject to audit in these and other countries. The Company
is no longer subject to audit in its major jurisdictions for periods prior to fiscal 2010. The years remaining subject to audit,
by major jurisdiction, are as follows:
Jurisdiction
United States (Federal and state)
Taiwan
Hong Kong
Germany
Singapore
Belgium
United Kingdom
Canada
Fiscal Year
2016 - 2021
2016 - 2021
2015 - 2021
2010 - 2021
2017 - 2021
2019 - 2021
2019 - 2021
2011 - 2021
In connection with the sale of the TS business during fiscal 2017, several legal entities were sold to the Buyer and
post-closing tax obligations are the responsibility of the Buyer. Under the terms of the sale agreement, the Company still
maintains responsibility for certain pre-closing taxes including any amounts that arise from audits or other judgments
received from tax authorities. The Company believes that its current estimates related to tax reserves related to the TS
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
business are reasonable, but future changes in facts and circumstances could result in significant changes in estimates that
impact tax expense in the period of change.
11. Pension and retirement plans
Pension Plan
The Company has a noncontributory defined benefit pension plan that covers substantially all current or former U.S.
Employees (the “Plan”).
The Plan meets the definition of a defined benefit plan and, as a result, the Company applies ASC 715 pension
accounting to the Plan. The Plan is a cash balance plan that is similar in nature to a defined contribution plan in that a
participant’s benefit is defined in terms of stated account balances. The Plan allows the Company to apply any earnings on
the Plan’s investments, beyond the fixed return provided to participants, toward the Company’s future cash funding
obligations. Employees are eligible to participate in the Plan following the first year of service during which they worked at
least 1,000 hours.
The Plan provides defined benefits pursuant to a cash balance feature whereby a participant accumulates a benefit
based upon a percentage of current salary, which varies with age, and interest credits. The Company uses its fiscal year end
as the measurement date for determining pension expense and benefit obligations for each fiscal year.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following table outlines changes in benefit obligations, plan assets, and the funded status of the Plan as of the
end of fiscal 2021 and 2020:
Changes in benefit obligations:
Benefit obligations at beginning of year
Service cost
Interest cost
Actuarial (gain) loss
Benefits paid
Benefit obligations at end of year
Changes in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Benefits paid
Contributions
Fair value of plan assets at end of year
Funded status of the plan recognized as a non-current asset (non-current liability)
Amounts recognized in accumulated other comprehensive loss:
Unrecognized net actuarial losses
Unamortized prior service cost
Other changes in plan assets and benefit obligations recognized in other comprehensive
income:
Net actuarial (gain) loss
Amortization of net actuarial losses
Amortization of prior service costs
July 3,
2021
June 27,
2020
(Thousands)
$ 790,179
15,751
15,904
(12,397)
(46,729)
$ 762,708
$ 731,695
15,145
22,552
72,144
(51,357)
$ 790,179
$ 707,800
95,208
(46,729)
16,000
$ 772,279
9,571
$
$ 664,063
87,094
(51,357)
8,000
$ 707,800
$ (82,379)
$ 177,949
31
$ 177,980
$ 256,477
332
$ 256,809
$ (57,924)
(20,604)
(301)
$ (78,829)
$
$
35,721
(14,629)
(2,137)
18,955
Included in accumulated other comprehensive loss at July 3, 2021, is an expense of $177.9 million of net actuarial
losses that have not yet been recognized in net periodic pension cost, of which $16.3 million is expected to be recognized
as a component of net periodic pension cost during fiscal 2022.
Assumptions used to calculate actuarial present values of benefit obligations are as follows:
Discount rate
2021 2020
2.8 % 2.7 %
The discount rate selected by the Company for the Plan reflects the current rate at which the underlying liability
could be settled at the measurement date as of July 3, 2021. The estimated discount rate in fiscal 2021 and fiscal 2020 was
based on the spot yield curve approach, which applies the individual spot rates from a highly rated bond yield curve to each
future year’s estimated cash flows.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The weighted-average assumptions used to determine net benefit costs are as follows:
Discount rate
Expected return on plan assets
Rate of compensation increase
Interest crediting rate
2021 2020
2.4 % 3.3 %
7.4 % 7.7 %
3.5 % 3.5 %
4.0 % 4.0 %
Components of net periodic pension cost for the Plan during the last three fiscal years are as follows:
Service cost
$
15,751
$
July 3,
2021
Years Ended
June 27,
2020
(Thousands)
15,145
$
Total net periodic pension cost within selling, general and
administrative expenses
Interest cost
Expected return on plan assets
Amortization of prior service cost (credits)
Recognized net actuarial loss
15,751
15,904
(49,681)
301
20,604
15,145
22,552
(50,671)
2,137
14,629
Total net periodic pension benefit within other (expense)
income, net
(12,872)
(11,353)
June 29,
2019
14,631
14,631
26,354
(53,518)
(1,571)
9,251
(19,484)
Net periodic pension cost (benefit)
$
2,879
$
3,792
$
(4,853)
The Company made $16.0 million and $8.0 million of contributions in fiscal 2021 and fiscal 2020, respectively, and
expects to make approximately $16.0 million of contributions in fiscal 2022.
Benefit payments are expected to be paid to Plan participants as follows for the next five fiscal years and the
aggregate for the five years thereafter (in thousands):
2022
2023
2024
2025
2026
2027 through 2031
$ 53,511
42,750
45,728
47,737
47,987
253,355
The Plan’s assets are held in trust and were allocated as follows as of the measurement date at the end of fiscal 2021
and 2020:
Equity securities
Fixed income debt securities
Cash and cash equivalents
2021 2020
69 % 62 %
29 % 36 %
2 %
2 %
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The general investment objectives of the Plan are to maximize returns through a diversified investment portfolio to
earn annualized returns that exceed the long-term cost of funding the Plan’s pension obligations while maintaining
reasonable and prudent levels of risk. The expected return on the Plan’s assets in fiscal 2022 is currently 7.0%, which is the
average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the benefit
obligation based upon the targeted investment allocations. In making this assumption, the Company evaluated expectations
regarding future rates of return for the investment portfolio, along with the historical and expected distribution of
investments by asset class and the historical rates of return for each of those asset classes. The mix of return seeking and
fixed income investments is typically diversified. The Plan’s assets do not include any investments in Avnet common stock.
As of July 3, 2021, the Company’s target allocation for the Plan’s investment portfolio is for return seeking investments to
represent approximately 65% of the investment portfolio. The majority of the remaining investment portfolio is invested in
fixed income investments, which typically have lower risks, but also lower returns.
The following table sets forth the fair value of the Plan’s investments as of July 3, 2021:
Cash and cash equivalents
Return Seeking Investments:
Common stocks
Real estate
High yield credit and bonds
Fixed Income Investments:
U.S. government
Corporate
Total
Level 1 Level 2 Level 3 Net Asset Value Total
$
16,655
$
(Thousands)
— $
— $
—
—
—
—
—
$
16,655
$
—
—
—
—
—
— $
—
—
—
—
—
— $
— $
16,655
290,347
124,363
117,722
186,279
36,913
755,624
290,347
124,363
117,722
186,279
36,913
$ 772,279
Certain investments included in the table above are measured at fair value using the net asset value per share (or its
equivalent) practical expedient and are not included in the three levels of the fair value hierarchy.
The following table sets forth the fair value of the Plan’s investments as of June 27, 2020:
Cash and cash equivalents
Return Seeking Investments:
Common stocks
Real estate
High yield credit and bonds
Fixed Income Investments:
U.S. government
Corporate
Total
Level 1 Level 2 Level 3 Net Asset Value Total
$
13,243
$
(Thousands)
— $
— $
—
—
—
—
—
$
13,243
$
—
—
—
—
—
— $
—
—
—
—
—
— $
— $
13,243
254,917
81,817
103,925
218,573
35,325
694,557
254,917
81,817
103,925
218,573
35,325
$ 707,800
Each of these investments may be redeemed without restrictions in the normal course of business and there were no
material unfunded commitments as of July 3, 2021.
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12. Leases
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The components of lease cost related to the Company’s operating leases were as follows (in thousands):
Operating lease cost
Variable lease cost
Total lease cost
Years Ended
July 3,
2021
June 27,
2020
$
$
74,003 $
21,305
95,308 $
75,748
20,804
96,552
Future minimum operating lease payments as of July 3, 2021, are as follows (in thousands):
Fiscal Year
2022
2023
2024
2025
2026
Thereafter
Total future operating lease payments
Total imputed interest on operating lease liabilities
Total operating lease liabilities
Other information pertaining to operating leases consists of the following:
Operating Lease Term and Discount Rate
Weighted-average remaining lease term in years
Weighted-average discount rate
$
$
66,562
57,185
40,380
32,788
28,328
134,526
359,769
(61,585)
298,184
Years Ended
July 3,
2021
June 27,
2020
9.1
3.8 %
9.9
3.9 %
Supplemental cash flow information related to the Company’s operating leases was as follows (in thousands):
Supplemental Cash Flow Information:
Cash paid for operating lease liabilities
Operating lease assets obtained from new operating lease liabilities
$
59,587 $
41,010
60,957
51,747
Years Ended
July 3,
2021
June 27,
2020
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. Stock-based compensation
The Company measures all stock-based payments at fair value and recognizes related expense within selling, general
and administrative expenses in the consolidated statements of operations over the requisite service period (generally the
vesting period). During fiscal 2021, 2020, and 2019, the Company recorded stock-based compensation expense of $29.3
million, $26.8 million, and $30.1 million, respectively, for all forms of stock-based compensation awards.
Stock plan
At July 3, 2021, the Company had 6.7 million shares of common stock reserved for stock-based payments, which
consisted of 1.1 million shares for unvested or unexercised stock options, 4.1 million shares available for stock-based
awards under plans approved by shareholders, and 1.5 million shares for restricted stock units and performance share units
granted but not yet vested.
Stock options
Service based stock option grants have a contractual life of ten years, vest in 25% increments on each anniversary of
the grant date, commencing with the first anniversary, and require an exercise price of 100% of the fair market value of
common stock at the date of grant. Stock-based compensation expense associated with all stock options during fiscal 2021,
2020, and 2019, was $0.4 million, $2.9 million and $2.2 million, respectively.
The fair value of stock options is estimated as of the date of grant using the Black-Scholes model based on the
assumptions in the following table. The assumption for the expected term is based on evaluations of historical and expected
future employee exercise behavior. The risk-free interest rate is based on U.S. Treasury rates as of the date of grant, with
maturity dates approximately equal to the expected term at the grant date. The historical volatility of Avnet’s common
stock is used as the basis for the volatility assumption. The Company estimates dividend yield based upon expectations of
future dividends compared to the market value of the Company’s stock as of the grant date.
Expected term (years)
Risk-free interest rate
Weighted average volatility
Dividend yield
July 3,
2021
Years Ended
June 27,
June 29,
2020
2019
6.0
0.5 %
31.5 %
2.8 %
6.0
1.6 %
23.7 %
2.3 %
6.0
2.8 %
23.1 %
1.8 %
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following is a summary of the changes in outstanding options for fiscal 2021:
Weighted Weighted Average
Average
Remaining
Outstanding at June 27, 2020
Granted
Exercised
Forfeited or expired
Outstanding at July 3, 2021
Exercisable at July 3, 2021
Shares
1,537,669
407,448
(145,668)
(674,018)
1,125,431
476,322
$
$
Exercise Price Contractual Life
$
40.94
29.63
33.73
42.00
37.15
41.14
75 Months
113 Months
23 Months
80 Months
78 Months
47 Months
The weighted-average grant-date fair values of stock options granted during fiscal 2021, 2020, and 2019, were $6.37,
$7.41, and $10.74, respectively.
At July 3, 2021, the aggregate intrinsic value of all outstanding stock option awards was $4.8 million and all
exercisable stock option awards was $0.5 million.
The following is a summary of the changes in non-vested stock options for the fiscal year 2021:
Non-vested stock options at June 27, 2020
Granted
Vested
Forfeited
Non-vested stock options at July 3, 2021
Shares
781,099
407,448
(168,660)
(370,778)
649,109
Weighted
Average
Grant-Date
Fair Value
8.73
6.37
8.91
8.80
7.17
$
$
As of July 3, 2021, there was $1.6 million of total unrecognized compensation cost related to stock options, which is
expected to be recognized over a weighted-average period of 2.7 years. The total fair value of stock options vested, as of
the vesting dates, during fiscal 2021, 2020, and 2019, were $4.8 million, $7.9 million, and $5.7 million, respectively.
Cash received from stock option exercises during fiscal 2021, 2020, and 2019 totaled $4.9 million, $0.9 million, and
$20.2 million, respectively. The impact of these cash receipts is included in “Other, net” within financing activities in the
accompanying consolidated statements of cash flows.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Restricted stock units
Delivery of restricted stock units, and the associated compensation expense, is recognized over the vesting period and
is generally subject to the employee’s continued service to the Company, except for employees who are retirement eligible
under the terms of the restricted stock units. As of July 3, 2021, 1.3 million shares previously awarded have not yet vested.
Stock-based compensation expense associated with restricted stock units was $27.5 million, $26.1 million, and $23.7
million for fiscal years 2021, 2020, and 2019, respectively.
The following is a summary of the changes in non-vested restricted stock units during fiscal 2021:
Non-vested restricted stock units at June 27, 2020
Granted
Vested
Forfeited
Non-vested restricted stock units at July 3, 2021
Weighted
Average
Grant-Date
Fair Value
$
$
40.06
28.93
35.20
36.10
32.80
Shares
1,015,822
1,268,292
(733,745)
(212,334)
1,338,035
As of July 3, 2021, there was $21.4 million of total unrecognized compensation expense related to non-vested restricted
stock units, which is expected to be recognized over a weighted-average period of 2.1 years. The total fair value of restricted
stock units vested during fiscal 2021, 2020, and 2019, was $25.8 million, $24.8 million, and $25.7 million, respectively.
Performance share units
Certain eligible employees, including Avnet’s executive officers, may receive a portion of their long-term stock-
based compensation through the performance share program, which allows for the vesting of shares based upon
achievement of certain performance-based criteria (“Performance Share Program”). The Performance Share Program
provides for the vesting to each grantee of a number of shares of Avnet’s common stock at the end of a three-year
performance period, based on the Company achieving certain performance goals that the Compensation Committee of the
Board of Directors establishes for each three-year performance period. The performance goals are a combination of
measures, including cumulative earnings per share and total shareholder return.
During fiscal 2021, the Company granted no performance share units, because the performance goals for future grants are
being reviewed. During each of fiscal 2020 and 2019, the Company granted 0.2 million performance share units. The actual
amount of performance share units vested at the end of each three-year period is measured by the level of achievement of
performance goals, and can range from 0% to 200% of the award grant. During fiscal 2021, 2020, and 2019, the Company
recognized stock-based compensation expense associated with the Performance Share Program of ($0.2) million, $(3.8) million,
and $2.8 million, respectively. The expense recognized in fiscal 2021 was related to prior fiscal years’ grants.
65
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
14. 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. 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, particularly regarding matters in early stages. 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 single reporting period.
As of July 3, 2021, and June 27, 2020, the Company had aggregate estimated liabilities of $14.7 million and $18.8
million, respectively, classified within accrued expenses and other for such compliance-related matters that were
reasonably estimable as of such dates.
15. Earnings per share
Numerator:
Net income (loss)
Denominator:
Weighted average common shares for basic earnings per share
Net effect of dilutive stock-based compensation awards
Weighted average common shares for diluted earnings per share
Basic earnings (loss) per share
Diluted earnings (loss) per share
Stock options excluded from earnings per share calculation due to anti-
dilutive effect
Years Ended
June 27,
July 3,
2021
2019
2020
(Thousands, except per share data)
June 29,
$
193,114
$ (31,081)
$
176,337
99,258
910
100,168
1.95
1.93
100,474
—
100,474
(0.31)
$
(0.31)
$
$
$
109,820
978
110,798
1.61
1.59
$
$
700
1,431
410
For the fiscal years ended June 27, 2020, the diluted net loss per share is the same as the basic net loss per share as
the effect of all potential common shares would be anti-dilutive.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
16. Additional cash flow information
The “Other, net” component of non-cash and other reconciling items within operating activities in the consolidated
statements of cash flows consisted of the following during the last three fiscal years:
Provision for credit losses
Periodic pension cost (benefit)
Other, net
Total
July 3,
2021
$
$
15,842
5,392
1,278
22,512
June 27, June 29,
2020
(Thousands)
$ 12,111
4,246
14,986
$ 31,343
2019
$ 10,360
(4,256)
(23,595)
$ (17,491)
Non-cash investing and financing activities and supplemental cash flow information were as follows:
Non-cash Investing Activities:
Capital expenditures incurred but not paid
Non-cash Financing Activities:
Unsettled share repurchases
Supplemental Cash Flow Information:
Interest
Income tax net payments
July 3,
2021
Years Ended
June 27,
June 29,
2020
(Thousands)
2019
$
$
7,131
$
9,009
$ 12,957
— $
— $
1,404
$ 98,509
83,387
$ 137,995
25,116
$ 144,822
172,834
The Company includes book overdrafts as part of accounts payable on its consolidated balance sheets and reflects
changes in such balances as part of cash flows from operating activities in its consolidated statements of cash flows.
17. Segment information
Electronic Components (“EC”) and 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 including e-commerce and marketing resources.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Sales:
Electronic Components
Farnell
Operating income:
Electronic Components
Farnell
Corporate
Restructuring, integration and other expenses
Goodwill and long-lived asset impairment expense
Amortization of acquired intangible assets and other
Assets:
Electronic Components
Farnell
Corporate
Capital expenditures:
Electronic Components
Farnell
Corporate
Depreciation & amortization expense:
Electronic Components
Farnell
Corporate
Sales, by geographic area:
Americas(1)
EMEA(2)
Asia/Pacific(3)
Property, plant and equipment, net, by geographic area:
Americas(4)
EMEA(5)
Asia/Pacific
July 3,
2021
18,030.5
1,504.2
19,534.7
454.8
86.9
541.7
(134.7)
(84.4)
—
(41.2)
281.4
6,950.0
1,468.3
507.1
8,925.4
21.8
26.1
2.5
50.4
73.4
53.9
4.6
131.9
4,662.5
6,149.9
8,722.3
19,534.7
146.0
185.8
36.7
368.5
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Years Ended
June 27,
2020
(Millions)
June 29,
2019
$
$
$
$
$
$
$
$
$
$
$
$
$
$
16,340.1
1,294.2
17,634.3
349.1
75.5
424.6
(121.6)
(81.9)
(144.1)
(81.6)
(4.6)
6,096.7
1,472.1
536.4
8,105.2
46.3
19.6
7.6
73.5
88.4
88.5
5.3
182.2
4,755.3
5,753.4
7,125.6
17,634.3
183.9
183.4
37.3
404.6
$
$
$
$
$
$
$
$
$
$
$
$
$
$
18,060.3
1,458.3
19,518.6
614.9
159.3
774.2
(78.5)
(108.1)
(137.4)
(84.3)
365.9
6,795.0
1,580.3
189.3
8,564.6
80.1
34.0
8.6
122.7
86.6
88.5
5.7
180.8
5,135.8
6,762.9
7,619.9
19,518.6
213.8
200.4
38.0
452.2
(1) Includes sales in the United States of $4.35 billion, $4.46 billion, and $4.80 billion for fiscal 2021, 2020 and 2019,
respectively.
68
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(2) Includes sales in Germany and Belgium of $2.42 billion and $1.12 billion, respectively, for fiscal 2021. Includes sales
in Germany and Belgium of $2.20 billion and $1.09 billion, respectively, for fiscal 2020. Includes sales in Germany
and Belgium of $2.66 billion and $1.16 billion, respectively, for fiscal 2019.
(3) Includes sales of $3.93 billion, $2.79 billion, and $1.04 billion in Taiwan, China (including Hong Kong), and
Singapore, respectively, for fiscal 2021. Includes sales of $3.07 billion, $2.33 billion, and $955.4 million in Taiwan,
China (including Hong Kong), and Singapore, respectively, for fiscal 2020. Includes sales of $3.20 billion, $2.52
billion, and $1.02 billion in Taiwan, China (including Hong Kong), and Singapore, respectively, for fiscal 2019.
(4) Includes property, plant and equipment, net, of $142.7 million, $179.4 million, and $209.9 million in the United States
for fiscal 2021, 2020, and 2019, respectively.
(5) Includes property, plant and equipment, net, of $77.9 million, $83.5 million, and $20.9 million in Germany, the UK,
and Belgium, respectively, for fiscal 2021. Fiscal 2020 includes property, plant and equipment, net, of $84.9 million,
$72.7 million, and $22.4 million in Germany, the UK, and Belgium, respectively. Fiscal 2019 includes property, plant
and equipment, net, of $95.2 million, $70.5 million, and $25.2 million in Germany, the UK, and Belgium, respectively.
Listed in the table below are the Company’s major product categories and the related sales for each of the past three
fiscal years:
Semiconductors
Interconnect, passive & electromechanical (IP&E)
Computers
Other
69
July 3,
2021
$ 14,722.8
3,649.0
640.6
522.3
$ 19,534.7
Years Ended
June 27,
June 29,
2020
(Millions)
$ 13,440.3
3,146.0
572.0
476.0
$ 17,634.3
2019
$ 14,973.3
3,516.0
533.1
496.2
$ 19,518.6
Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
18. Restructuring expenses
Fiscal 2021
During fiscal 2021, the Company undertook restructuring actions to improve operating efficiencies and reduce
operating expenses. 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 associated with restructuring
activities established during fiscal 2021 is presented in the following table:
Fiscal 2021 restructuring expenses
Cash payments
Non-cash amounts
Other, principally foreign currency translation
Balance at July 3, 2021
Severance
$
$
54,581
(24,171)
—
426
30,836
$
$
Facility
and Contract
Exit Costs
(Thousands)
4,856
(1,851)
(56)
4
2,953
$
$
Total
59,437
(26,022)
(56)
430
33,789
Severance expense recorded in fiscal 2021 related to the reduction, or planned reduction, of over 600 employees,
primarily in executive management, operations, information technology, warehouse, and business support functions. Of the
$59.4 million in restructuring expenses recorded during fiscal 2021, $39.0 million related to EC, $9.1 million related to
Farnell, and $11.3 million related to Corporate. The Company expects most of the remaining amounts to be paid by the end
of fiscal 2022.
Fiscal 2020 and prior
During fiscal 2020 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 fiscal 2021 related to the restructuring liabilities established during fiscal 2020 and prior:
Balance at June 27, 2020
Cash payments
Changes in estimates, net
Other, principally foreign currency translation
Balance at July 3, 2021
Severance
$
$
13,574
(6,711)
(3,231)
631
4,263
$
$
Facility
and Contract
Exit Costs
(Thousands)
3,368
(1,467)
(207)
216
1,910
$
$
Total
16,942
(8,178)
(3,438)
847
6,173
The Company expects the majority of the remaining amounts to be paid by the end of fiscal 2022.
70
Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
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-15(e) and 15d-
15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the reporting period covered by
this report on Form 10-K. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that, as of the end of the period covered by this report on Form 10-K, the Company’s disclosure controls and
procedures are effective such that material information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified by
the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management,
including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions
regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, is responsible for
establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and
15(d)-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes, in accordance with generally accepted accounting principles in the United States of America. Because of inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, controls may become
inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate.
Management conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of
July 3, 2021. In making this assessment, management used the 2013 framework established in Internal Control —
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and concluded
that the Company maintained effective internal control over financial reporting as of July 3, 2021.
The Company’s independent registered public accounting firm, KPMG LLP, has audited the effectiveness of the
Company’s internal controls over financial reporting as of July 3, 2021, as stated in its audit report which is included
herein.
Changes in Internal Control Over Financial Reporting
During the fourth quarter of fiscal 2021, there were no changes to the Company’s internal control over financial
reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) of the Exchange Act) that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information called for by Item 10 is incorporated in this Report by reference to the Company’s definitive proxy
statement relating to the Annual Meeting of Stockholders scheduled to be held on November 18, 2021.
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Table of Contents
Item 11. Executive Compensation
The information called for by Item 11 is incorporated in this Report by reference to the Company’s definitive proxy
statement relating to the Annual Meeting of Stockholders scheduled to be held on November 18, 2021.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information called for by Item 12 is incorporated in this Report by reference to the Company’s definitive proxy
statement relating to the Annual Meeting of Stockholders scheduled to be held on November 18, 2021.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information called for by Item 13 is incorporated in this Report by reference to the Company’s definitive proxy
statement relating to the Annual Meeting of Shareholders scheduled to be held on November 18, 2021.
Item 14. Principal Accounting Fees and Services
The information called for by Item 14 is incorporated in this Report by reference to the Company’s definitive proxy
statement relating to the Annual Meeting of Stockholders scheduled to be held on November 18, 2021.
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Item 15. Exhibits and Financial Statement Schedules
PART IV
The financial statements and supplementary data are listed in the index included under Item 8 of this Report.
The exhibits listed below are filed as part of this report.
INDEX TO EXHIBITS
Exhibit
Number
Exhibit
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
10.1
10.2
10.3
10.4
Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3(i) to the
Company’s Current Report on Form 8-K filed on February 12, 2001).
By-laws of the Company, effective May 9, 2014 (incorporated herein by reference to Exhibit 3.1 to the Company’s
Current Report on Form 8-K filed on May 12, 2014).
Description of Registrant’s Securities (incorporated herein by reference to Exhibit 4.1 to the Company’s Annual Report
on Form 10-K filed on August 15, 2019).
Indenture dated as of June 22, 2010, between the Company and Wells Fargo Bank, National Association, as Trustee,
providing for the issuance of Debt Securities in one or more series (incorporated herein by reference to Exhibit 4.1 to
the Company’s Current Report on Form 8-K filed on June 22, 2010).
Form of Officers’ Certificate establishing the terms of the 4.875% Notes due 2022 (incorporated herein by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 21, 2012).
Form of Officers’ Certificate establishing the terms of the 4.625% Notes due 2026 (incorporated herein by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 22, 2016).
Form of Officers’ Certificate setting forth the terms of the 3.750% Notes due 2021 (incorporated herein by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 1, 2016).
Form of Officer’s Certificate setting forth the terms of the 3.00% Notes due 2031 (incorporated herein by reference to
Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 5, 2021).
Note: The total amount of securities authorized under any other instrument that defines the rights of holders of the
Company’s long-term debt does not exceed 10% of the total assets of the Company and its subsidiaries on a
consolidated basis. Therefore, these instruments are not required to be filed as exhibits to this Report. The Company
agrees to furnish copies of such instruments to the Commission upon request.
Executive Compensation Plans and Arrangements
Letter Agreement between the Company and Philip R. Gallagher as Chief Executive Officer dated November 17, 2020
(incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on January
29, 2021).
Letter Agreement between the Company and Thomas Liguori dated December 25, 2017 (incorporated herein by
reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 28, 2017).
Letter Agreement between the Company and William Amelio dated September 1, 2016 (incorporated herein by
reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 7, 2016).
Form of Letter Agreement between the Company and Ken Arnold, Peter Bartolotta and Michael McCoy (incorporated
herein by reference to Exhibit 10.2 to the Company’s Annual Report on Form 10-K filed on August 17, 2017).
73
Table of Contents
10.5
10.6
Form of Employment Agreement between the Company and MaryAnn Miller (incorporated herein by reference to
Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed on August 9, 2013).
Form of Change of Control Agreement between the Company and Philip Gallagher, Thomas Liguori, Ken Arnold,
Michael McCoy, William Amelio, Peter Bartolotta and MaryAnn Miller (incorporated herein by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed on February 15, 2011).
10.7
*
Form of Change of Control Agreement between the Company and Leng Jin Chan, Dayna Badhorn and
Elizabeth McMullen.
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
Form of Indemnity Agreement between the Company and its directors and officers (incorporated herein by reference to
Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2006).
Avnet Executive Severance Plan (Effective as of August 10, 2017) (incorporated herein by reference to Exhibit 10.1 to
the Company’s Quarterly Report on Form 10-Q filed on October 30, 2017).
Avnet Supplemental Executive Officers’ Retirement Plan (2013 Restatement) (incorporated herein by reference to
Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed on August 9, 2013).
Avnet Restoration Plan (2013 Restatement) (incorporated herein by reference to Exhibit 10.14 to the Company’s
Annual Report on Form 10-K filed on August 9, 2013).
Avnet, Inc. 2010 Stock Compensation Plan (Amended and Restated Effective as of May 8, 2018). (incorporated herein
by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K filing on August 17, 2018).
Avnet, Inc. 2010 Stock Compensation Plan:
(a) Form of non-qualified stock option term sheet
(b) Form of incentive stock option term sheet
(c) Form of performance stock unit term sheet
(d) Form of restricted stock unit term sheet
(incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 10,
2012).
Avnet, Inc. 2013 Stock Compensation and Incentive Plan (Amended and Restated Effective as of May 8, 2018).
(incorporated herein by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K filing on August 17,
2018).
Avnet, Inc. 2013 Stock Compensation and Incentive Plan:
(a) Form of restricted stock unit term sheet
(b) Form of nonqualified stock option term sheet
(c) Form of performance-based stock option term sheet
(d) Form of performance stock unit term sheet
(incorporated herein by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K filed on August 17,
2017).
Avnet, Inc. 2016 Stock Compensation and Incentive Plan (Amended and Restated Effective as of May 8, 2018).
(incorporated herein by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K filing on August 17,
2018). Refer to Exhibit 10.15, above, for the form of awards under the 2016 Stock Compensation and Incentive Plan.
(a) Avnet Deferred Compensation Plan (Amended and Restated Effective as of May 8, 2018). (incorporated herein by
reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K filing on August 17, 2018).
(b) First Amendment to the May 8, 2018 Amended and Restated Avnet Deferred Compensation Plan, dated February 6,
2020 (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May
1, 2020).
74
Table of Contents
(c) Second Amendment to and Termination of the May 8, 2018 Amended and Restated Avnet Deferred Compensation
Plan, dated November 17, 2020 (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q filed on January 29, 2021).
10.18
Avnet, Inc. Deferred Compensation Plan for Outside Directors (Amended and Restated Effective as of May 8, 2018)
(incorporated herein by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K filing on August 17,
2018).
Bank Agreements
10.19
Securitization Program
(a) Receivables Sale Agreement: (1) Second Amended and Restated Receivables Sale Agreement, dated August 16,
2018, between Avnet, Inc. and Avnet Receivables Corporation (incorporated herein by reference to Exhibit 10.2 to the
Company’s Current Report on Form 8-K filed on August 17, 2018).
(2) Amendment No. 1 to the Second Amended and Restated Receivables Sale Agreement, dated July 31, 2020, among
Avnet, Inc. and Avnet Receivables Corporation (incorporated herein by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K filed on August 6, 2020).
(b) Receivables Purchase Agreement: (1) Fourth Amended and Restated Receivables Purchase Agreement, dated
August 16, 2018, among Avnet, Inc., Avnet Receivables Corporation, the companies and financial institutions party
thereto and Wells Fargo Bank, N.A., as agent (incorporated herein by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed on August 17, 2018).
(2) Amendment No. 1 to Fourth Amended and Restated Receivables Purchase Agreement, dated February 28, 2020,
among Avnet, Inc., Avnet Receivables Corporation, the companies and financial institutions party thereto and Wells
Fargo Bank, N.A., as agent (incorporated herein by reference to Exhibit 10.1 to the Company’s Annual Report on Form
10-Q filed on May 1, 2020).
(3) Amendment No. 2 to the Fourth Amended and Restated Receivables Purchase Agreement, dated July 31, 2020,
among Avnet, Inc., Avnet Receivables Corporation, Wells Fargo Bank, N.A., as agent, and the companies and financial
institutions party thereto (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form
8-K filed on August 6, 2020).
10.20
(a) Amended and Restated Credit Agreement dated as of June 28, 2018, among Avnet, Inc., each subsidiary of the
Company party thereto, Bank of America, N.A., as administrative agent, and each lender party thereto (incorporated
herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 2, 2018).
(b) Amendment No. 1 to the Amended and Restated Credit Agreement, dated August 4, 2020, among Avnet, Inc,
Avnet Holding Europe BVBA, Bank of America, N.A., as administrative agent, and the lenders party thereto
(incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on August 6,
2020).
21.1
*
List of subsidiaries of the Company as of July 3, 2021.
23.1
* Consent of KPMG LLP.
24.1
*
Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K).
31.1
* Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
* Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
** Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
** Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *
Inline XBRL Instance Document.
75
Table of Contents
101.SCH *
Inline XBRL Taxonomy Extension Schema Document.
101.CAL *
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB *
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF *
Inline XBRL Taxonomy Extension Definition Linkbase Document.
104
* Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information
contained in Exhibits 101).
*
Filed herewith.
** Furnished herewith.
76
Table of Contents
Account Description
SCHEDULE II
AVNET, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended July 3, 2021, June 27, 2020, and June 29, 2019
Fiscal 2021
Allowance for credit losses
Valuation allowance on tax loss carry-
forwards
Fiscal 2020
Allowance for credit losses
Valuation allowance on tax loss carry-
forwards
Fiscal 2019
Allowance for credit losses
Valuation allowance on tax loss carry-
forwards
Balance at
Beginning of
Period
Charged to
Expense
(Income)
Charged to
Other
Accounts
(Thousands)
Deductions
Balance at
End of
Period
$
65,018 (a) $
15,842
$
17,205 (b) $
(9,905)(c) $
88,160
283,721
21,357 (d)
(11,509)(e)
—
293,569
53,499
$
12,111
—
(6,592)(c)
59,018
231,463
50,018 (f)
2,240 (e)
—
283,721
48,959
$
10,360
—
(5,820)(c)
53,499
239,483
(5,274)(g)
(2,746)(h)
—
231,463
(a) Beginning balance includes $59,018 of allowance for credit losses associated with trade accounts receivable and
$6,000 of allowance for credit losses associated with notes receivable prior to the adoption of a new accounting
standard discussed further in (b) below.
(b) See Note 1, “Summary of significant accounting policies, Recently adopted accounting pronouncements” of the Notes
to Consolidated Financial Statements of this Form 10-K regarding the adoption of ASU 2016-13, “Financial
Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments”. The Company
adopted the new standard on June 28, 2020, with a cumulative effect adjustment to the opening balance of retained
earnings as of the beginning of fiscal 2021.
(c) Primarily represents uncollectible receivables written off and the impact of changes in foreign currency rates during
the fiscal year.
(d) Primarily represents impact of current year activities.
(e) Primarily related to impact of pension-related other comprehensive income and foreign currency exchange on
valuation allowances.
(f) Primarily represents establishment of valuation allowance and impact of current year activities.
(g) Primarily represents a reduction due to the release of a valuation allowance.
(h) Primarily related to impact of prior year activities and foreign currency exchange on valuation allowances previously
established in various foreign jurisdictions.
77
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
Date: August 13, 2021
AVNET, INC.
By:
/s/ PHILIP R. GALLAGHER
Philip R. Gallagher
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby authorizes and
appoints each of Phil R. Gallagher and Thomas Liguori his or her attorneys-in-fact, for him or her in any and all capacities,
to sign any amendments to this Report, and to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or
their substitute, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated on August 13, 2021.
Signature
/s/ PHILIP R. GALLAGHER
Philip R. Gallagher
/s/ RODNEY C. ADKINS
Rodney C. Adkins
/s/ CARLO BOZOTTI
Carlo Bozotti
/s/ MICHAEL A. BRADLEY
Michael A. Bradley
/s/ BRENDA L. FREEMAN
Brenda L. Freeman
/s/ JO ANN JENKINS
Jo Ann Jenkins
/s/ OLEG KHAYKIN
Oleg Khaykin
/s/ JAMES A. LAWRENCE
James A. Lawrence
/s/ AVID MODJTABAI
Avid Modjtabai
/s/ ADALIO T. SANCHEZ
Adalio T. Sanchez
/s/ WILLIAM H. SCHUMANN, III
William H. Schumann, III
/s/ THOMAS LIGUORI
Thomas Liguori
/s/ KENNETH A. JACOBSON
Kenneth A. Jacobson
Title
Chief Executive Officer
(Principal Executive Officer)
Chair of the Board and Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chief Financial Officer
(Principal Financial Officer)
Controller
(Principal Accounting Officer)
78
Table of Contents
79
Exhibit 10.7
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement (the “Agreement”) is made by and between Avnet,
Inc., a New York corporation, with its principal place of business at 2211 South 47th Street,
Phoenix, Arizona 85034 (“Avnet” or the “Company”) and __________________ (the “Officer”),
effective as of __________ (the “Effective Date”). Avnet and the Officer are collectively referred
to in this Agreement as the “Parties”.
WHEREAS, the Officer holds the position of ________________________ of the
Company, which may be pursuant to a letter agreement (the most current letter agreement, if any, if
referred to herein as “Letter Agreement”); and
WHEREAS, the Parties wish to provide for certain payments to the Officer in the event of
a Change of Control of the Company and the subsequent termination of the Officer’s employment
without Cause or the Constructive Termination of the Officer’s employment, as those capitalized
terms are defined below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained
in this Agreement, the Parties agree as follows:
1.
Definitions.
(a)
“Cause” shall mean, but is not limited to, Officer’s gross misconduct,
willful breach, habitual neglect or wanton disregard of Officer’s duties, or conviction of any
criminal act.
(b)
following events:
“Change of Control” means the date of the earliest to occur of the
(i)
the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or more of either: (A) the then outstanding shares of common stock of Avnet or
(B) the combined voting power of the then outstanding voting securities of Avnet entitled
to vote generally in the election of members of the Board of Directors of Avnet (the
“Board”); provided, however, that the following transactions shall not constitute a Change
of Control under this subsection (i): (x) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege), (y) any
acquisition by the Company, or (z) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled by the Company;
or
(ii)
the individuals who, as of the Effective Date, constitute the Board
(the “Incumbent Board”) are replaced during any twelve- (12-) month period by new
Board members whose appointment or nomination was not endorsed by a majority of the
Incumbent Board; provided, however, that any individual becoming a director subsequent
to the Effective Date whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such individual was a member of the
Incumbent Board, but excluding for this purpose any such individual whose appointment or
nomination to the Board occurs as a result of an actual or threatened election contest with
respect to the election or removal of any member of the Board, or other actual or threatened
solicitation of proxies or consents, by or on behalf of a Person other than a majority of the
then Incumbent Board; or
(iii)
a complete liquidation or dissolution of the Company, or the sale or
other disposition of all or substantially all of the assets of the Company (in one or more
transactions).
(c)
“Constructive Termination” means the happening of any of the following
events (each an “Adverse Action”) without the written consent of the Officer:
(i)
a material diminution of the Officer’s authorities, duties or
responsibilities, including, without limitation, title and reporting relationship;
(ii)
a material change in the geographic location at which the Officer is
primarily required to perform services for the Company;
(iii)
a material reduction in the Officer’s base compensation; or
(iv)
any other action or inaction that constitutes a material breach by the
Company under its Letter Agreement with the Officer;
provided, however, that the Officer shall not be deemed to have terminated employment on
account of a Constructive Termination unless:
(x)
within ninety (90) days after the Adverse Action, the Officer notifies
the Company in writing of his desire to terminate employment on account of such
Constructive Termination;
(y)
to remedy the Adverse Action; and
following its receipt of such notice, the Company has thirty (30) days
(z)
the Company fails to remedy such event by the end of such thirty
(30) day period and the Officer’s termination of employment occurs no later than two (2)
years after the Adverse Action.
(d)
The “Exchange Act” shall mean the 1934 Securities Exchange Act, as
amended.
2.
Constructive Termination or Termination after Change of Control. If, within
twenty-four (24) months after a Change of Control, the Company terminates the Officer’s
employment without Cause or the Officer’s employment terminates on account of a Constructive
Termination, the following provisions shall apply:
(a)
The Company shall pay to the Officer, in lieu of any other payment rights
under the Letter Agreement (except as provided in paragraph (c), below), an amount equal to 1.5
- 2 -
times the sum of: (i) the Officer’s annual salary for the year in which such termination occurs
(disregarding any reduction in such salary that gives rise to a termination of employment on
account of a Constructive Termination), and (ii) the Officer’s target incentive compensation for the
fiscal year of the Company in which such termination occurs. Subject to the Six-Month Delay
Rule described in Section 3(d), below, such amount shall be paid within five (5) days after the
Officer’s termination of employment.
(b)
All of the Officer’s unvested stock options, stock appreciation rights,
restricted stock, restricted stock units, performance shares, performance share units, and other
equity compensation rights and awards shall accelerate and vest, so as to be immediately
deliverable to, and where applicable exercisable by, the Officer. To the extent that the number of
shares or amount of cash deliverable is contingent on achieving performance objectives, such
number of shares or amount of cash shall be the target number or amount prescribed by the
applicable award agreement.
(c)
The Company shall pay to the Officer the following compensation for
services performed through his termination date: (i) all accrued and unpaid salary, and (ii) a pro-
rated annual incentive payment. The accrued and unpaid salary shall be paid on the Officer’s last
day of employment. The pro-rated annual incentive payment shall be paid after the performance
period, at the time prescribed by the applicable incentive plan, based on (and subject to) actual
achievement of the applicable performance goals (as modified to the extent required by the Letter
Agreement).
(d)
The Officer shall continue to be eligible for the medical, dental, life
insurance, disability insurance and automobile benefits for which the Officer is eligible
immediately before his termination of employment for a period of two years after such
termination; provided, however, that—
(i)
the Officer’s participation in each such benefit shall be conditioned
on the Officer paying for any portion of the premiums or costs that are charged to similarly
situated active employees;
(ii)
payment of the automobile benefits and any other benefits that are
treated as “nonqualified deferred compensation” under Section 409A of the Code shall be
subject to the Six-Month Delay Rule described in Section 3(d), below; and
(iii)
unless the Company determines that it can provide continued
medical and dental benefits under a group health plan without violating any applicable
nondiscrimination or similar rules, in lieu of subsidized medical and dental benefits under a
Company plan, the Company shall pay to the Officer an amount for each month during
such two-year period. The amount for each month shall be 167 percent of the excess of
(A) the COBRA premium for the applicable coverage under the Company’s plan for such
month, over (B) the premium that an active senior executive of the Company would be
required to pay for such coverage under the Company’s plan for such month. Subject to the
Six-Month Delay Rule described in Section 3(d), below, such amount shall be paid monthly
in arrears.
- 3 -
3.
Section 409A.
(a)
Intent to Comply With Section 409A. This Agreement shall be interpreted
consistent with the intent to comply with the requirements of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), such that there are no adverse tax consequences, interest
or penalties as a result of any amount paid or payable under this Agreement. Any ambiguity or
inconsistency in the provisions of this Agreement shall be resolved consistent with such intent. In
addition, to the extent permitted by law, the parties agree to make a good faith effort to modify this
Agreement to the extent that either party determines is necessary to comply with Section 409A.
(b)
Separation From Service. Except as otherwise expressly provided,
references in this Agreement to the Officer’s termination of employment, termination date and
similar terms related to Officer’s termination of employment or separation from service shall refer
to the date of Officer’s “separation from service” within the meaning of Section 409A(a)(2)(A)(i)
of the Code, as determined by the Company.
(c)
Section 409A Substitution Rule. To the extent that an amount payable under
this Agreement is provided in lieu of, or as a substitution for, an amount otherwise due under the
Letter Agreement, such amount shall be paid at the time prescribed by the Letter Agreement (i.e.,
without regard to the acceleration that would otherwise occur by reason of this Agreement) unless
the Officer’s termination of employment occurs and payment is due within 24 months after a
change in the ownership or effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company, within the meaning of the Treasury Regulations
issued under Section 409A(a)(2)(A)(v) of the Code.
(d)
Six-Month Delay Rule. If, as of his termination date, the Officer is a
“specified employee” (as determined by the Company in accordance with Treas. Reg. § 1.409A-
1(i)), any amount payable to the Officer upon or by reason of his termination of employment
(including expense reimbursements and in-kind benefits that are includible in income) shall be
subject to the six (6) month delay required by Section 409A(a)(2)(B)(i) of the Code; provided,
however, that such six (6) month delay shall not be required with respect to any payment that the
Company determines is not subject to Section 409A by reason of the “short-term deferral” rule
described in Treas. Reg. § 1.409A-1(b)(4), the “two-year, two-time” rule described in Treas. Reg.
§ 1.409A-1(b)(9)(iii), or any other exemption. If payment of any amount is delayed by reason of
this six (6) month delay, such amount shall be paid with interest within five (5) business days after
the first day of the seventh (7th) month that starts after the Officer’s termination date (or, if earlier,
within 90 days after the Officer’s death). Except as otherwise provided in a governing document
for an applicable benefit plan, program, or other arrangement, interest shall be calculated using the
prime rate of interest in effect at Bank of America, N.A. (or another bank designated by the
Company that is one of its principal banks) on the Officer’s termination date.
(e)
Installments Treated as Separate Payments. For purposes of Section 409A
of the Code, except as otherwise expressly provided, each installment of payments and benefits
due under this Agreement shall be treated as a separate payment.
- 4 -
(f)
Acceleration or Deferral of Payments. Neither the Company nor the Officer
shall have the right to accelerate or defer the delivery of any payment or benefit due under this
Agreement, except to the extent expressly permitted or required by Section 409A.
(g)
Payment Date. To the extent that any payment under this Agreement may
be made during a payment window, the date of payment shall be determined by the Company, in
its sole discretion, and not by the Officer or any other individual entitled to receive the payment.
(h)
Expense Reimbursements and In-Kind Benefits. To the extent that any
expense reimbursement or in-kind benefit is subject to Section 409A (e.g., the expense
reimbursement is includible in income and is not required to be paid by the end of the “applicable
2½-month period” described in Treas. Reg. § 1.409A-1(b)(4)(i)(A)), such reimbursement or
benefit shall be subject to the conditions set forth in Treas. Reg. § 1.409A-3(i)(1)(iv).
Accordingly:
(i)
The amount of such expenses eligible for reimbursement, or in-kind
benefits provided, during a taxable year of the Officer shall not affect the expenses eligible
for reimbursement, or in-kind benefits to be provided, in any other taxable year;
(ii)
The reimbursement of each such expense shall be paid no later than
the last day of the Officer’s taxable year next following the taxable year in which the
expense was incurred; and
(iii)
The right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit.
4.
Governing Law. This Agreement shall be construed, interpreted and governed by
the law of the State of Arizona, without giving effect to Arizona principles regarding conflict of
laws. Reference to any provision of the Code or other law shall include all regulations and other
guidance of general applicability issued thereunder, and shall be deemed to include any successor
provision.
5.
Miscellaneous.
(a)
Tax Withholding. All amounts payable under this Agreement are subject to
withholding for all federal, state and local taxes, and all other amounts relating to tax or other
payroll deductions, as the Company may reasonably determine should be withheld. Regardless of
the amount withheld, the Officer shall be solely responsible for paying all required taxes (other
than the employer’s share of employment taxes) on all payments and other compensation
(including imputed compensation) and benefits provided under this Agreement.
(b)
Succession. This Agreement shall extend to and be binding upon the
Officer, his legal representatives, heirs and distributees, and upon the Company, its successors and
assigns. Without limiting the foregoing sentence, Avnet shall require any successor (whether direct
or indirect, by merger, consolidation, sale of stock or assets or otherwise) to the business or assets
of Avnet expressly, absolutely and unconditionally to assume and to agree to perform under this
Agreement in the same manner and to the same extent as Avnet would have been required to
perform if no such succession had taken place. As used in this Agreement, “Avnet” and the
- 5 -
“Company” shall mean Avnet and the Company as heretofore defined and any successor to its
business or assets that becomes bound by this Agreement either pursuant to this Agreement or by
operation of law.
(c)
Severance Plan.
Entire Agreement, Coordination with Letter Agreement and Executive
(i)
Except with respect to the Letter Agreement and the Avnet, Inc.
Executive Severance Plan (the “Executive Severance Plan”), this Agreement is the entire
agreement of the parties with respect to its subject matter and no waiver, modification or
amendment of any of its provisions shall be valid unless in writing and signed by both
parties.
(ii)
This Agreement modifies the Letter Agreement and the Executive
Severance Plan only with respect to such terms and conditions that are specifically
addressed in this Agreement. All other provisions of the Letter Agreement and the
Executive Severance Plan shall remain in full force and effect.
(d) Waiver of Breach. The waiver of breach of any term or condition of this
Agreement shall not be deemed to constitute a waiver of any other term or condition of this
Agreement.
(e)
Forfeiture of Certain Parachute Payments.
(i)
Notwithstanding any other provision of this Agreement, if paragraph
(ii), below, applies, the Officer shall forfeit amounts payable to the Officer under this
Agreement to the extent that a certified public accounting firm selected and paid by the
Company (the “Accounting Firm”) determines is necessary to ensure that the Officer is
not reasonably likely to receive a “parachute payment” within the meaning of Section
280G(b)(2) of the Code. The Accounting Firm’s determination shall be conclusive and
binding upon the Company and the Officer.
(ii)
This paragraph (ii) shall apply if (and only if) (A) any payment to be
made under this Agreement is reasonably likely to result in the Officer receiving a
“parachute payment” (as defined in Section 280G(b)(2) of the Code), and (B) the Officer’s
forfeiture of payments due under this Agreement would result in the aggregate after-tax
amount that the Officer would receive being greater than the aggregate after-tax amount
that the Officer would receive if there were no such forfeiture.
(iii)
Neither the Company nor the Officer shall have any discretion to
determine which payments are forfeited. The forfeiture shall apply in reverse chronological
order—e.g., the last payment in any series of payments shall be forfeited before any part of
an earlier payment is forfeited.
(f)
Headings. The headings of the sections and subsections are inserted for
convenience only and shall not be deemed to constitute a part hereof or to affect the meaning
thereof.
- 6 -
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day
and year first above written.
OFFICER
AVNET, INC.
_______________________________
By _______________________________
- 7 -
Avnet, Inc.
Foreign and Domestic Subsidiaries
Exhibit 21.1
Company Name
Alpha 3 Manufacturing Ltd
AVID Technologies, Inc.
Avnet (Asia Pacific Holdings) Limited
Avnet (Holdings) Ltd
Avnet (NZ)
Avnet (Shanghai) Limited
Avnet Abacus Limited
Avnet Asia Pte Ltd
Avnet ASIC Israel Ltd
Avnet B.V.
Avnet Bidco Limited
Avnet Business Services GmbH
Avnet Components Israel Limited
Avnet de Mexico, S.A. de C.V.
Avnet Delaware Holdings, Inc.
Avnet Delaware LLC
Avnet do Brasil Ltda.
Avnet Electronics Marketing (Australia) Pty Ltd
Avnet Electronics Technology (China) Limited
Avnet Electronics Technology (Shenzhen) Limited
Avnet Electronics Turkey İthalat İhracat Sanayi ve Ticaret Limited Şirketi
Avnet EM
Avnet EM Holdings (Japan) Kabushiki Kaisha
Avnet EM Sp. z.o.o.
Avnet EMG Elektronische Bauelemente GmbH
Avnet EMG France
Avnet EMG GmbH
Avnet EMG GmbH
Avnet EMG Italy S.r.l.
Avnet EMG Ltd
Avnet Europe BV
Avnet Europe Executive BV
Avnet Finance International S.à r.l.
Avnet Financial Services Asia Limited
Avnet France S.A.S.
Avnet Group Holdings Limited
Avnet Holding Europe BV
Avnet Holding South Africa (Pty) Limited
Avnet Holdings UK Limited
Avnet Holdings, LLC
Avnet Iberia S.L.U.
Avnet India Private Limited
Avnet International (Canada) Ltd.
Country
United Kingdom
United States
Hong Kong
United Kingdom
New Zealand
China
Hong Kong
Singapore
Israel
Netherlands
United Kingdom
Germany
Israel
Mexico
United States
United States
Brazil
Australia
China
China
Turkey
Russian Federation
Japan
Poland
Austria
France
Germany
Switzerland
Italy
United Kingdom
Belgium
Belgium
Luxembourg
Hong Kong
France
United Kingdom
Belgium
South Africa
United Kingdom
United States
Spain
India
Canada
Avnet International Holdings 1 BV
Avnet International Holdings 2 BV
Avnet International Holdings UK Limited
Avnet International, LLC
Avnet Kabushiki Kaisha
Avnet Korea, Inc.
Avnet Limited
Avnet Logistics BV
Avnet Logistics GmbH
Avnet Logistics Limited
Avnet Malaysia Sdn Bhd
Avnet Mexicana S. de R.L. de C.V.
Avnet Nortec AB
Avnet Nortec ApS
Avnet Nortec AS
Avnet Nortec Oy
Avnet Philippines Pty Ltd., Inc.
Avnet Receivables Corporation
Avnet SellCo B.V.
Avnet Services S. de R.L. de C.V.
Avnet South Africa (Pty) Limited
Avnet Sunrise Limited
Avnet Technology (Thailand) Ltd.
Avnet Technology Electronics Marketing (Taiwan) Co., Ltd.
Avnet Technology Hong Kong Limited
Avnet Technology Solutions (China) Ltd
Avnet Technology Solutions (Tianjin) Ltd
Avnet, Inc.
AVT Holdings LLC
Beijing Vanda Yunda IT Services Co., Ltd
Bell Microproducts Brazil Holdings, LLC
Bell Microproducts Mexico Shareholder, LLC
CELDIS LIMITED
CM Satellite Systems, Inc.
COMBINED PRECISION COMPONENTS LIMITED
Dragon Innovation (HK) Limited
EBV Beteiligungs-Verwaltungs GmbH
EBV Elektronik ApS
EBV Elektronik d.o.o.
EBV Elektronik EOOD
EBV Elektronik GmbH & Co. KG
EBV Elektronik International GmbH
EBV Elektronik Israel (2008) Ltd
EBV Elektronik Kft
EBV Elektronik Limited
EBV Elektronik M
EBV Elektronik OÜ
EBV Elektronik S.r.l.
EBV Elektronik S.R.L.
EBV Elektronik s.r.o.
EBV Elektronik SAS
EBV Elektronik sp. z o.o.
Belgium
Belgium
United Kingdom
United States
Japan
Korea, Republic of
Ireland
Belgium
Germany
United Kingdom
Malaysia
Mexico
Sweden
Denmark
Norway
Finland
Philippines
United States
Netherlands
Mexico
South Africa
Hong Kong
Thailand
Taiwan
Hong Kong
China
China
United States
United States
China
United States
United States
United Kingdom
United States
United Kingdom
Hong Kong
Germany
Denmark
Serbia
Bulgaria
Germany
Germany
Israel
Hungary
Hong Kong
Russian Federation
Estonia
Italy
Romania
Slovakia
France
Poland
EBV Elektronik Spain S.L.
EBV Elektronik spol. s r.o.
EBV Elektronik Ticaret Limited Sirketi
EBV Elektronik TOV
EBV Elektronik, Druzba Za Posredovanje D.O.O.
EBV Elektronik, Unipessoal Lda,
EBV Erste Holding GmbH & Co. KG
EBV Management GmbH
EBV Zweite Holding GmbH & Co. KG
EBV-Elektronik GmbH
Electrolink (PTY) Ltd
Electron House (Overseas) Limited
element 14 Limited
element 14 sp. zoo
element14 Asia Pte. Ltd.
Element14 de Mexico, S. de R.L de C.V
element14 Electronics Limited
Element14 Finance UK Limited
element14 Holding BV
element14 India Pvt Limited
element14 Limited
element14 Ltd.
element14 Pte. Ltd.
element14 Pty Ltd
element14 SDN. BHD.
Element14 US Holdings Inc.
Element14 US Holdings LLC
Element14. S. de R.L. de C.V
eluomeng Electronics (China) Co. Ltd
ELUOMENG LIMITED
ELUOMENG LIMITED COMPANY
Embest HK Limited
Erste TENVA Property GmbH Gruber Straße
FARNELL (BELGIUM) SA
FARNELL (FRANCE) SAS
FARNELL (NETHERLANDS) B.V.
FARNELL AG
FARNELL COMPONENTS (IRELAND) LIMITED
FARNELL COMPONENTS (ISRAEL) LTD
FARNELL COMPONENTS AB
FARNELL COMPONENTS SL
FARNELL DANMARK A/S
FARNELL ELECTRONIC COMPONENTS LIMITED
FARNELL GMBH
FARNELL HOLDING LIMITED
FARNELL ITALIA SRL
FARNELL OVERSEAS
Import Holdings LLC
INONE HOLDINGS LIMITED
Kent One Corporation
Memec Group Holdings Limited
Memec Group Limited
Spain
Czech Republic
Turkey
Ukraine
Slovenia
Portugal
Germany
Germany
Germany
Austria
South Africa
United Kingdom
United Kingdom
Poland
Singapore
Mexico
Ireland
United Kingdom
Netherlands
India
New Zealand
Korea, Republic of
Singapore
Australia
Malaysia
United States
United States
Mexico
China
Hong Kong
Taiwan
Hong Kong
Germany
Belgium
France
Netherlands
Switzerland
Ireland
Israel
Sweden
Spain
Denmark
United Kingdom
Germany
United Kingdom
Italy
United Kingdom
United States
United Kingdom
United States
United Kingdom
United Kingdom
Memec Pty Limited
Mexico Holdings LLC
MSC (Malta) Limited
MSC Technologies GmbH
MSC Technologies Systems GmbH
Newark Corporation
Newark Electronics Corporation
OY FARNELL (FINLAND) AB
Phoenics Electronics Corporation
PREMIER FARNELL (SCOTLAND) LIMITED
Premier Farnell Canada Limited
Premier Farnell Corp.
PREMIER FARNELL LIMITED
PREMIER FARNELL PENSION FUNDING SCOTTISH LIMITED
PARTNERSHIP
PREMIER FARNELL PENSION TRUSTEES LIMITED
Premier Farnell Properties Inc.
PREMIER FARNELL UK LIMITED
PREMIER INDUSTRIAL HOLLAND B.V.
Priya Softweb Solutions Pvt. Ltd.
RTI Holdings Limited
SEC International Holding Company II, L.L.C.
Shanghai FR International Trading Co., Ltd.
SHENZHEN EMBEST TECHNOLOGY CO., LTD.
Société Civile Immobilière du 22 rue de Dames
Softweb Solutions Inc.
Source Electronics (HK) Limited
Source Electronics Asia Limited
Tekdata Interconnections Limited
Telmil Electronics, Inc.
Tenva Belgium Comm. VA
Tenva Financial Management BV
TENVA GmbH
TENVA INVESTMENTS BV
Tenva sp. z o.o.
UAB "EBV Elektronik"
Vanda Computer System Integration (Shanghai) Company Limited
Venezuelan Partner B.V.
Witekio Corporation
Witekio France SAS
Witekio GmbH
Witekio Holding
Witekio UK Limited
YEL Electronics (China) Limited
YEL Electronics (Shanghai) Limited
YEL Electronics (Shenzhen) Ltd
YEL Electronics Hong Kong Limited
ZWEITE TENVA Property GmbH Im Technologiepark
Australia
United States
Malta
Germany
Germany
United States
United States
Finland
United States
United Kingdom
Canada
United States
United Kingdom
United Kingdom
United Kingdom
United States
United Kingdom
Netherlands
India
Hong Kong
United States
China
China
France
United States
Hong Kong
Hong Kong
United Kingdom
United States
Belgium
Belgium
Germany
Belgium
Poland
Lithuania
China
Netherlands
United States
France
Germany
France
United Kingdom
Hong Kong
China
China
Hong Kong
Germany
Consent of Independent Registered Public Accounting Firm
Exhibit 23.1
The Board of Directors
Avnet, Inc.:
We consent to the incorporation by reference in the registration statements (No. 333-45267, 333-112062, 333-140903, 333-
171291, 333-177787, 333-192289, 333-214887, 333-220133 and 333-228875) on Form S-8 and registration statements
(No. 333-208009 and 333-227100) on Form S-3 of our report dated August 13, 2021, with respect to the consolidated
balance sheets as of July 3, 2021 and June 27, 2020, the related consolidated statements of operations, comprehensive
income, shareholders’ equity, and cash flows for each of the years in the three-year period ended July 3, 2021, and the
related notes and financial statement schedule II of Avnet, Inc, and the effectiveness of internal control over financial
reporting.
Our report refers to a change in the method of accounting for leases as of June 30, 2019 due to the adoption of Financial
Accounting Standards Board’s Accounting Standards Codification (ASC) Topic 842, Leases.
Our report refers to a change in the method of accounting for revenue as of July 1, 2018 due to the adoption of Financial
Accounting Standards Board’s ASC Topic 606, Revenue from Contracts with Customers.
Phoenix, Arizona
August 13, 2021
/s/ KPMG LLP
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Philip R. Gallagher, certify that:
1.
I have reviewed this annual report on Form 10-K of Avnet, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant's internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing equivalent functions):
a.
b.
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.
Date: August 13, 2021
/s/ PHILIP R. GALLAGHER
Philip R. Gallagher
Chief Executive Officer
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Thomas Liguori, certify that:
1.
I have reviewed this annual report on Form 10-K of Avnet, Inc.;
Exhibit 31.2
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
b.
c.
d.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing equivalent functions):
a.
b.
all significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal control over financial reporting.
Date: August 13, 2021
/s/ THOMAS LIGUORI
Thomas Liguori
Chief Financial Officer
Exhibit 32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Annual Report on Form 10-K for the year ended July 3, 2021 (the “Report”), I, Philip R. Gallagher,
Chief Executive Officer of Avnet, Inc. (the “Company”) hereby certify that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Date: August 13, 2021
/s/ PHILIP R. GALLAGHER
Philip R. Gallagher
Chief Executive Officer
Exhibit 32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the Annual Report on Form 10-K for the year ended July 3, 2021 (the “Report”), I, Thomas Liguori,
Chief Financial Officer of Avnet, Inc. (the “Company”) hereby certify that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities
Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
Date: August 13, 2021
/s/ THOMAS LIGUORI
Thomas Liguori
Chief Financial Officer