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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 2, 2022
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
Securities registered pursuant to Section 12(g) of the Act:
None
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 ☑
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, 2021 (the last business day of the registrant’s most recently completed second fiscal quarter) was
$4,024,669,419.
As of July 29, 2022, the total number of shares outstanding of the registrant’s Common Stock was 94,667,636 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 17,
2022, 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
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
PART II
Item 6. [Reserved]
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 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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
Item 16. Form 10-K Summary
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 leading global technology
distributor and solutions provider that has served customers’ evolving needs for more than a century. Avnet supports
customers at each stage of a product’s lifecycle, from idea to design and from prototype to production. Avnet’s position at
the center of the technology value chain enables it 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 customers in more than 140 countries.
Avnet 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 (“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 16 “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.
Within the EC operating group for 2022, net sales of approximately 80% consist of semiconductor products,
approximately 17% consist of interconnect, passive, and electromechanical components, approximately 2% consist of
computers, and approximately 1% consist of other products and 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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Within the Farnell operating group for 2022, net sales of approximately 21% consist of semiconductor products,
approximately 51% consist of interconnect, passive, and electromechanical components, approximately 7% consist of
computers, and approximately 21% consist of other products and services.
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 years 2022, 2021 and 2020. 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 2,
2022
$ 18,380.2
4,639.1
663.2
628.2
$ 24,310.7
July 3,
2021
(Millions)
$ 14,722.8
3,649.0
640.6
522.3
$ 19,534.7
June 27,
2020
$ 13,440.3
3,146.0
572.0
476.0
$ 17,634.3
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 geographic 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, which impact gross profit and operating income margins as a result of
such seasonal geographic sales mix changes.
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Human Capital
The Company highly values its employees, and recognizes their significant contributions to the success of the
Company. The Company invests in its global workforce to drive diversity and inclusion; provide fair and market-
competitive pay and benefits; foster employee development for future opportunities within the company; promote
employees health and safety; and obtain employees’ feedback to better understand employees’ experiences and identify
opportunities. Its core values of integrity, customer focus, ownership, teamwork and inclusiveness establish the foundation
on which its culture is built and are key expectations of its employees. The Company believes that its culture and
commitment to its employees are vital in its ability to attract, motivate and retain exceptional talent.
Additional information regarding the Company’s Human Capital programs, initiatives, and metrics can be found on
its website as well as in its Sustainability Reports accessible on its website. The Sustainability Reports and other
information contained on the Company’s website are neither part of nor incorporated by reference into this Annual Report.
Number of Employees
As of July 2, 2022, the Company’s global workforce totaled approximately 15,300 employees across 48 countries.
Broken down by geographic region, approximately 4,500 employees are in the Americas, 6,600 employees in EMEA, and
4,200 employees in the Asia as of July 2, 2022.
Diversity, Equity and Inclusion (“DEI”)
The Company’s DEI Vision is to have (i) an employee population that reflects the diverse communities in which they
live, work, and do business, and (ii) an organizational culture which seeks out varying perspectives that allow the best ideas
to come to light and help the Company achieve and maximize business success. The Company recognizes that everyone
deserves respect and equal treatment, regardless of gender, race, ethnicity, age, disability, sexual orientation, gender
identity, veteran status, cultural background, or religious beliefs. The Company’s commitment to diversity is evidenced by
the makeup of its Board of Directors and its employees. As of July 2, 2022, the Board was 45% racially and ethnically
diverse, and 27% women, and its global employees were over 45% women.
To oversee inclusion efforts, the Company created the Global DEI Council, which is made up of 20 individuals who
represent various business units and corporate functions. The council meets regularly and engages with colleagues across
the Company to connect DEI initiatives to the Company’s broader business strategy. In addition, for fiscal 2022 and 2021,
executive’s annual incentive compensation included an ESG non-financial performance goal to demonstrate the Company’s
ESG commitment.
In furtherance of DEI goals, the Company conducts listen-and-learn sessions on a variety of DEI topics, which
promote meaningful discussions and allow employees to better understand and support each other. These group
conversations are open to the entire Company, and are regularly attended by senior leaders, including the CEO. During
fiscal 2022, five sessions were conducted covering Black History Month, Allyship and Gender Partnership in the
Workplace, Autism, Women and Bias, and Gender Inclusivity. The Company also supports employee-led Employee
Resource Groups (ERGs) that are open to all employees and provide a forum to communicate and exchange ideas, build a
network of relationships across the Company, and support each other in personal and career development. There are two
ERGs for Black and women employees, and a third ERG for Hispanic and Latino employees is being formed. Additionally,
the Company maintains an official culture and diversity calendar and publishes articles on its intranet to celebrate events
and holidays around the world. In fiscal 2022, the Company’s employees celebrated International Women’s Day by holding
a global event with external speakers discussing gender bias. Since 2020, Juneteenth, which
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commemorates the official end of slavery in the United States and the emancipation of Black slaves, has been an official
company-paid holiday for employees in the United States, a year before the federal government recognized it officially.
The Company provided unconscious bias training to its top 500 leaders, and is developing a suitable training for all
employees. DEI education topics are regularly presented at the company-wide quarterly town hall, team and leadership
meetings, and through internal webinars and podcasts open to all employees.
The Company employs diversity initiatives to ensure women and minorities are considered for its internship program
and leadership roles, and attempts to utilize inclusive recruitment practices to attract and source diverse talent and mitigate
potential bias. It has formed partnerships with ABILITYJobs, an employment website for people with disabilities, and
Diversity Jobs, a recruiting and employment website with a network of niche sites for Black, Latinx, Asians, Native
Americans, women, veterans, people with disabilities, people over age fifty, and LGBTQIA+ community. The Company
has built new relationships with college career services departments and diversity-based student organizations such as
YearUp, and attends multiple diversity, veteran, disability, and college job fairs.
The Company further undertakes DEI initiatives to improve its supplier and vendor diversity and support businesses
with a Minority, Women or Veteran Business Enterprise (MWVBE) designation. For example, it provides opportunities
regarding underwriting and other active roles in the Company’s capital-raising activities and short-term investments. In the
area of procurement, the Company is exploring the possibility of dual sourcing as a strategy to give entry to MWVBE
suppliers and vendors. For fiscal 2022, the Company began capturing its procurement diversity spend in the United States.
The Company continues to support women in the electronics industry, and has been a member of the Arizona
Technology and Diversity Council since 2021. In addition, the Company’s CEO and another Company leader serve on the
advisory board of Women in Electronics. It has participated in McKinsey’s “Women in the Workplace” study for the last
six years, and has conducted for the past two years an industry-wide Women in Engineering Survey with results published
annually on Farnell’s website.
Pay Equity, Benefits and Wellness
The Company strives to pay all its employees fairly, without regard to gender, race, or other personal characteristics,
and competitively to attract, retain and incentivize talent. The Company sets pay ranges based on market data and considers
factors such as an employee’s role, experience, tenure, job location, and job performance. Depending on the position, the
Company uses a combination of fixed and variable pay including base salary, incentive awards, commissions, and merit
increases. In addition, as part of its long-term incentive plan for certain employees, the Company provides share-based
compensation to align employee’s interests with shareholders. The Company reviews its compensation practices, both in
terms of its overall workforce and individual employees, to help ensure that pay remains fair and equitable.
The Company also offers a wide array of benefits that support employees’ physical, financial, and emotional well-
being. Benefits include health benefits for eligible full-time and part-time U.S. employees and dependents, such as medical,
behavioral, dental, vision, pharmacy, fertility and transgender coverage as well as disability and life insurance coverage.
The Company offers time-off benefits, including paid family care leave for both hourly and salaried employees; a pension
plan benefit for U.S. employees after one year of service; a 401(k) plan for employees to contribute towards their
retirement goals; and an employee stock purchase plan that allows employees to purchase Company shares at a discount. In
Canada and the United States, the Company provides education financial assistance for employees who wish to pursue
undergraduate or graduate education to further their career development, and a
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scholarship program for their dependents.
The Company offers all employees resources for living well through its THRIVE program, which offers resources,
information, benefits and assistance to support overall well-being covering the following topics: (1) Mind & Body:
physical and mental health, fitness and well-being; (2) Career: professional growth, skills, and development; (3) Money:
total rewards, retirement planning and money management; and (4) Connection: community, networks, and social interests.
An online wellness platform offers an interactive way to accomplish personal and financial goals and rewards employees
for completing well-being activities. Further, the Company’s Employee Assistance Program (EAP) offers all employees
free professional and confidential counseling for personal and work-related issues, life coaching, and mindfulness
coaching, and runs webinars on a variety of mental health and well-being topics.
The Company also looks for creative benefits that provide needed support to employees. For example, in the United
States, the Company covers six months rental of a SNOO Smart Sleeper Bassinet to new parents to help them rest and keep
babies safe. In response to the COVID-19 pandemic, the Company added a short-term employee loan program to assist
employees during the difficult time. Further, as employees return to work, the Company expanded its flexible, hybrid work
model to allow employees in certain functions or roles to work remotely during part of the week.
Development and Training
The Company provides development opportunities and training to empower employees to grow and reach their
career potential. The performance management process provides ongoing performance and development goals and
discussions between employees and their leaders. Through the HR Now portal, the Company provides career development
training and tools so employees can create a development plan. In addition, the Company offers a range of learning
resources including face-to-face, virtual, and online training, as well as mentoring and coaching programs. Training
programs for all employees include LinkedIn Learning and Business Book Summaries which cover a variety of technical,
business, interpersonal, and leadership topics. Lead2Achieve and InsideOut Coaching are available for leaders to develop
skills in effective goal-setting, coaching, feedback, and development. The Company’s annual compliance training includes
business ethics and anti-corruption, and the Company offers training on various other topics including life skills, health and
safety, environmental awareness, discrimination, and diversity.
Health and Safety
The Company strives to create workspaces and practices that foster a safe and secure work environment. As such, it
provides comprehensive health and safety training to employees relevant to their specific work functions. The training is
part of a continual improvement process and focuses on identified risks. In fiscal 2022, the Company created the position
of Global Director of Environment, Health and Safety, to improve alignment and consistency of policies and procedures
globally and increase ISO certifications at operational facilities. During fiscal 2022, the total injuries requiring medical
treatment continued to decline as noted below:
FY2022
FY2021
FY2020
FY2019
Total Injuries requiring medical treatment (1)
43 total injuries
63 total injuries
72 total injuries
84 total injuries
0 fatalities
0 fatalities
0 fatalities
0 fatalities
(1)
Injuries reported meeting OSHA/local industrial injuring reporting requirements at major Avnet and Farnell global
facilities.
In response to the COVID-19 pandemic, the Company formed a COVID-19 emergency response team with senior
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management level representation from each region. The team leads and coordinates the Company’s overall response and
communications with its global workforce. The Company implemented various measures that it determined were in the
best interest of its employees’ health and safety, and in alignment with government legislation and guidance from key
health authorities. These measures included work-from-home arrangements and additional safety measures for essential
employees who continued to work on site, such as body temperature checks, face masks requirements, sanitization
measures, social distancing where possible, split work-shifts on a rotated basis, enhanced facility cleanings, and expanded
health and safety training. The Company regularly issued e-newsletters titled “COVID-19: What you need to know” that
included regional updates, health and safety information, related business strategy changes, and useful resources for all
employees. It also communicated guidance for employees returning to the office. Further, during fiscal 2021 and 2022, the
Company increased paid sick leave allowances to mitigate earning gaps for hourly employees who contracted COVID-19
or needed to isolate after possible exposure to prevent the spread among its employees.
Employee Engagement
The Company engages with its employees and encourages open and direct feedback through employee engagement
surveys. Through such surveys, the Company regularly collects feedback to better understand its employees’ experiences
and identify opportunities to improve the work environment, increase employee satisfaction, and strengthen its culture. In
fiscal 2022, the Company conducted one global employee engagement survey and achieved completion by 56% of its
employees. Based on feedback received, the Company has included more explanations around leadership decisions during
its quarterly town hall and senior management meetings and broadened the application of incentive pay structures for
director-level employees.
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.
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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.
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 unless otherwise noted. 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
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downturns or supply chain challenges, including in the semiconductor and embedded solutions industries, could adversely
affect the Company’s relationships with its customers, operating results, and profitability.
Specifically, 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. The Russia-Ukraine conflict and the COVID-19 pandemic have led, and may
continue to lead, to shortages, extended lead times, and unpredictability in the supply of certain semiconductors and other
electronic components. In reaction, customers may over order to ensure sufficient inventory, which, when the shortage
lessens, may result in order cancellations and decreases. In cases where customers have entered into non-cancellable/ non-
returnable orders, customers may not be able or willing to carry out the terms of the orders. The Company’s prices to
customers depend on many factors, including product availability, supplier costs, and competitive pressures. In fiscal 2022,
pricing to customers increased due to higher costs from suppliers, as well as higher freight and other costs. However, the
Company may not be able to maintain higher prices to customers in the future. As product becomes more available,
customer and competitive pressures may lower prices to customers, which could reduce the Company’s margins. In
addition, the Company may be unable to increase prices to customers to offset higher internal costs, which could also
reduce margins. During fiscal 2022, 2021, and 2020, sales of semiconductors represented approximately 76%, 75%, and
76% 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.
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 2022, 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, 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 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, order cancellation rights, 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. Due to recent global shortages of semiconductors, some suppliers have increased the amount of non-cancellable/
non-returnable orders, which may limit the Company’s ability to adjust down its inventory levels in the event of market
downturns. The Company may attempt to limit associated risks by passing such terms on to its customers, but this may not
be possible.
11
Risks related to international operations
During fiscal 2022, 2021, and 2020 approximately 77%, 78% 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, military conflicts (including the Russia-Ukraine conflict), or
civilian unrest;
● fluctuations in freight costs (both inbound and outbound), limitations on shipping and receiving capacity, and
other disruptions in the transportation and shipping infrastructure;
● natural disasters (including as a result of climate change), 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, trade restrictions, and sanctions resulting from international trade disputes, changes in trade policies, or military
conflicts may adversely affect the Company’s sales and profitability. For example, the U.S. government imposed several trade
policies, rules, and restrictions applicable to China and Hong Kong. In addition, in response to the Russian-Ukraine conflict,
the United States, the European Union, the United Kingdom, and numerous other countries initiated a variety of sanctions,
export restrictions, currency controls and other restrictions against Russia. The Chinese and Russian governments have
responded in kind with restrictions, sanctions, and other measures. These actions have resulted in losses; increased costs,
including increased costs of procuring certain products the Company purchases from its suppliers; shortages of materials and
electronic components; increased expenses such as energy, fuel, and freight costs, which may not
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be possible to pass on to customers; increased cyber security attacks; credit market disruptions; and inflation, which may
impact the Company’s sales, customer demand for certain products, access to certain markets, and profits. 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, including systems from acquired businesses, 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, use of on-premise and cloud environments, 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 expected efficiencies and cost savings, which could negatively impact the Company’s financial results. A failure
of any of these information systems (including due to power losses, computer and telecommunications failures, cyber security
incidents, or manmade or natural disasters), 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 and other public health crises, geopolitical instability,
military conflicts or terrorist attacks) or significant disruptions of services from the Company’s third-party transportation
providers (such as transportation constraints due to labor shortages, disruptions to ports and other shipping infrastructures,
border closures, other travel or health-related restrictions, and increased transportation costs related to gas price increases
and shortages) could cause a delay in expected cost savings or an increase in expenses, which may not be possible to pass
on to customers. In addition, as the Company continues to increase capacity at various distribution centers, it may
experience operational challenges, increased 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.
13
Data security and privacy threats
Threats to the Company’s data and information technology systems (including cyber security attacks such as phishing
and ransomware) are becoming more frequent and sophisticated. Threat actors have successfully breached the Company’s
systems and processes in various ways, and such cyber security breaches expose the Company to significant potential
liability and reputational harm. Cyber security attacks have not yet materially impacted the Company’s data (including data
about customers, suppliers, and employees) or the Company’s operations, financial condition, or data security, but future
attacks could have a material impact. Threat actors seek unauthorized access to intellectual property, or confidential or
proprietary information regarding the Company, its customers, its business partners, or its employees. 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, takeover internal processes, and induce employees or other system users to disclose sensitive information,
including login credentials. In addition, some Company employees continue to work from home on a full-time or hybrid
basis, which increases the Company’s vulnerability to cyber and other information technology risks. Further, the
Company’s business partners and service providers, such as suppliers, customers, and hosted solution providers, pose a
security risk because their own security systems or infrastructure may become compromised.
The Company seeks to protect and secure its systems and information, prevent and detect evolving threats, and
respond to threats as they occur. Measures taken include implementing and enhancing information security controls such as
enterprise-wide firewalls, intrusion detection, endpoint protection, email security, disaster recovery, vulnerability
management, and cyber security training for employees to enhance awareness of general security best practices, financial
fraud, and phishing. Despite these efforts, the Company may not always be successful. Threat actors frequently change
their techniques and, consequently, the Company may 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. Failure to comply with such requirements could have an adverse effect on
the Company’s reputation, business, financial condition, and results of operations, as well as subject the Company to
significant fines, litigation losses, third-party damages, and other liabilities.
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 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 product developments, inventory value declines, or
customer cancellations may adversely affect the Company’s business, results of operations, financial condition, or liquidity.
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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 2, 2022, the Company 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. 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.
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;
15
● make restricted payments (including, under certain circumstances, paying dividends on, 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 or revise tax laws or regulations, including changes in the
interpretation of such laws, that may adversely affect the Company’s cash flow and effective tax rate.
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 (“OECD”) 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. In October 2021, a substantial majority of the OECD’s participating
countries and jurisdictions agreed to introduce a 15% global minimum corporate tax rate that would apply to companies
with revenue over a set threshold. Furthermore, many countries are independently evaluating their corporate tax policy,
which could result in tax legislation and enforcement that adversely impacts the Company’s tax provision and value of
deferred assets and liabilities. These provisions, if enacted, 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.
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 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, but are limited by 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
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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
The Company 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 the Company’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 costs and damages
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
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.
17
Environmental regulations non-compliance
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. Future
environmental laws and regulations may become more stringent over time, imposing greater compliance costs, and
increasing risks, penalties and reputational harm associated with violations.
General Risk Factors
Negative impacts of a pandemic or other health crisis on economy, operations, and financial results
A pandemic, epidemic or other health related crisis could negatively impact the global economy, disrupt global
supply chains, increase demand uncertainty, constrain workforce participation, disrupt logistics and distribution systems,
and create significant volatility and disruption of financial markets, which could negatively impact the operations of the
Company and its customers and suppliers. Such crises could also result in or heighten the risks of customer bankruptcies,
customer delayed or defaulted payments, delays in product deliveries, restrictions on access to financial markets, and other
risk factors described in the Company’s Annual Report. Due to the COVID-19 pandemic, even though 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 military conflicts; pandemics,
epidemics, and other health related crises; 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), implement restructuring actions, and
reduce expenses in 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 (including when customers decrease orders, cancel existing orders, or are unable to
fulfill their obligations under non-cancelable/ non-return orders) and collect customer receivables, which may result in
provisions to create reserves, write-offs, reduced access to liquidity, higher financing costs and increased pressure on cash
flows.
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Further, an increase in or prolonged period of inflation could affect the Company’s profitability and cash flows, due
to higher wages, higher operating expenses, 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,
which may result in lower gross profit margins. 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 and engaged 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, including
talent with diverse experience, background, ability, and perspectives. 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 encounter
challenges in realigning, training, and hiring skilled personnel. Through organizational design activities, the Company
periodically eliminates positions due to restructurings or other reasons, which may risk the Company’s brand reputation as
an employer of choice 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 business, financial condition, and results of operations could be seriously harmed.
Item 1B. Unresolved Staff Comments
Not applicable.
19
Item 2. Properties
The Company owns and leases approximately 1.8 million and 4.0 million square feet of space, respectively, of which
approximately 28% 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 5, “Property, plant and equipment, net” and Note 11, “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 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 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. 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.
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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 29, 2022, there were 1,464 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 TD Synnex Corporation). 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 7/1/2017 and tracks it through 7/2/2022.
21
Avnet, Inc.
Nasdaq Composite
Peer Group
$
7/1/2017 6/30/2018 6/29/2019 6/27/2020 7/3/2021 7/2/2022
$ 121.36
188.07
165.98
$ 112.17
245.60
186.62
$ 112.35
123.60
98.48
$ 120.76
133.22
98.60
$ 71.17
169.11
91.26
100
100
100
The stock price performance included in this graph is not necessarily indicative of future stock price performance.
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Issuer Purchases of Equity Securities
In May 2022, the Company’s Board of Directors approved a new share repurchase plan with an authorization to
repurchase up to an aggregate of $600 million of common stock. The authorization amount includes the amount remaining
under the previous share repurchase plan approved in August 2011, as last amended in August 2019. The new plan was
publicly announced on June 6, 2022. The following table includes the Company’s monthly purchases of the Company’s
common stock during the fourth quarter of fiscal 2022, under the share repurchase program, which is part of publicly
announced plans.
Average
Price
Paid per
Total
Number
of Shares
Purchased Share
472,600 $ 38.63
421,198
1,485,475
$ 46.75
$ 43.36
Period
April 3 – April 30
May 1 – May 28
May 29 – July 2
Item 6. [Reserved]
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
Approximate Dollar
Value of Shares That
May Yet Be
Purchased under the
472,600 $
$
421,198
$
1,485,475
Plans or Programs
359,757,000
595,698,000
531,286,000
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 2022 contains 52 weeks compared to 53 weeks in fiscal 2021 and
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 are used to translate the results of operations
of Avnet’s subsidiaries denominated in foreign currencies, the result is a decrease in U.S. Dollars of reported results.
Conversely, when the U.S. Dollar weakens, the weaker exchange rates result in 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 fiscal 2021 due to it being a 53-week year, as discussed above.
Additionally, the Company has adjusted sales for the impact of the termination of the TI distribution agreement
between fiscal years. Sales taking into account these adjustments are referred to as “organic sales.”
● Operating income excluding (i) restructuring, integration and other expenses (see Restructuring, Integration
23
and Other Expenses in this MD&A), (ii) goodwill and long-lived asset impairment expense, (iii) Russian-
Ukraine conflict related expenses (see Russian-Ukraine conflict related expenses in this MD&A), and (vi)
amortization of acquired intangible assets is referred to as “adjusted operating income.”
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
Russian-Ukraine conflict related expenses
Amortization of acquired intangible assets and other
Adjusted operating income
July 2,
2022
$ 939,011
5,272
—
26,261
15,038
$ 985,582
Years Ended
July 3,
2021
(Thousands)
281,408
84,391
—
—
41,245
407,044
$
$
$
$
June 27,
2020
(4,628)
81,870
144,092
—
81,555
302,889
Management believes that providing this additional information is useful to financial statement users 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
Recent Global Events and Uncertainties
In February 2022, Russian forces invaded Ukraine (“Russian-Ukraine conflict”), and in response, the member
countries of NATO initiated a variety of sanctions and export controls targeting Russia and associated entities. The
sanctions currently in place limit the Company’s ability to provide goods to Russian customers and banking sanctions
significantly negate our ability to collect outstanding receivables; as such, the Company has recorded an allowance for
credit losses against those receivables that are not covered by customer credit insurance as of July 2, 2022. Historically, the
Company’s sales and gross profit generated from sales to Russian customers is less than 1% of consolidated sales and
consolidated gross profit. See further discussion of the impacts of the Russian-Ukraine conflict on the Company’s results of
operations in fiscal 2022 below.
Executive Summary
Sales for fiscal 2022 were $24.31 billion, an increase of 24.5% from fiscal 2021 sales of $19.53 billion. Excluding
the impact of changes in foreign currency, sales increased 27.2% as compared to sales in the prior year. This increase in
sales was predominately driven by sales growth in both operating groups across all regions driven by strong demand and
pricing globally for electronic components.
Gross profit margin of 12.2% increased 73 basis points compared to 11.5% in fiscal 2021. This increase is primarily
due to strong overall demand for electronic components and improvements in pricing, product, customer mix, and
geographic sales mix.
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Operating income of $939.0 million was $657.6 million higher than fiscal 2021. Operating income margin was 3.9%
in fiscal 2022, as compared to 1.4% in fiscal 2021. The increase in operating income margin is the result of increases in
sales and in gross profit margin, partially offset by an increase in selling, general and administrative expenses to support
sales growth. Adjusted operating income margin was 4.1% in fiscal 2022 as compared to 2.1% in fiscal 2021, an increase
of 197 basis points. This increase in adjusted operating income margin is primarily due to the increases in sales and gross
profit margin, partially offset by increases in selling, general and administrative expenses to support sales growth.
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.
Sales by Operating Group:
EC
Farnell
Sales by Geographic Region:
Americas
EMEA
Asia
Total Avnet
July 2,
2022
% of
Total
Years Ended
July 3,
2021
% of
Total
June 27,
2020
(Dollars in millions)
Percent Change
% of
Total
2022 to
2021 to
2021 2020
$ 22,503.3
1,807.4
$ 24,310.7
92.6 %
7.4
$ 18,030.5
1,504.2
$ 19,534.7
92.3 %
7.7
$ 16,340.1
1,294.2
$ 17,634.3
92.7 %
7.3
24.8 %
20.2
10.3 %
16.2
$ 5,896.0
7,838.1
10,576.6
$ 24,310.7
24.3 %
32.2
43.5
$ 4,662.5 23.9 %
6,149.9 31.5
8,722.3 44.6
$ 19,534.7
$ 4,755.3
5,753.4
7,125.6
$ 17,634.3
27.0 %
32.6
40.4
26.5 %
27.5
21.3
(2.0)%
6.9
22.4
Reported sales were the same as organic sales in fiscal 2022. The table below provides the reconciliation of reported
sales to organic sales for fiscal 2021 by region and operating group.
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 operating group
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 agreement.
25
The table below provides reported and organic sales growth rates for fiscal 2022 as compared to fiscal 2021 by
region and 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
24.5 %
27.2 %
26.4 %
29.2 %
Organic
Sales
Adj for TI
Year-Year %
Change in
Constant
Currency(1)
31.2 %
26.5 %
27.5
21.3
24.8 %
20.2
26.5 %
34.6
22.4
27.6 %
22.2
28.6 %
29.5
23.1
26.8 %
21.9
28.6 %
36.8
24.3
29.6 %
24.0
31.0 %
39.6
25.5
31.8 %
24.0
Avnet
Avnet by region
Americas
EMEA
Asia
Avnet by operating group
EC
Farnell
(1)
Sales growth rates excluding the impact of the termination of the TI distribution agreement.
Avnet’s sales for fiscal 2022 were $24.31 billion, an increase of $4.78 billion, or 24.5%, from fiscal 2021 sales of
$19.53 billion. Organic sales in constant currency increased 29.2% year over year, reflecting sales growth in both operating
groups across all regions driven by strong demand and pricing globally for electronic components.
EC sales in fiscal 2022 were $22.50 billion, representing a 24.8% increase over fiscal 2021 sales. EC organic sales in
constant currency increased 29.6% year over year reflecting sales growth in all three regions. The increase in sales in the
Company’s EC operating group is primarily due to overall stronger market demand and pricing for electronic components,
especially in the transportation and industrial sectors.
Farnell sales in fiscal 2022 were $1.81 billion, an increase of $303.2 million or 20.2% from fiscal 2021 sales of $1.50
billion. Sales in constant currency increased 22.2% year over year. These increases were primarily a result of increased
market demand and pricing for the products that Farnell sells.
As a result of the termination of the Company’s distribution agreement between Maxim Integrated Products, Inc.
(“Maxim”) and the Electronic Components operating group, the Company may experience lower sales and gross profit in
the future if the impact of the termination is not offset by sales growth, gross margin improvements or operating cost
reductions. Sales from Maxim products represented less than 3% of total sales in fiscal 2022.
Gross Profit and Gross Profit Margin
Gross profit in fiscal 2022 was $2.97 billion, an increase of $724.8 million, or 32.4%, from fiscal 2021 gross profit of
$2.24 billion. Gross profit margin increased to 12.2% in fiscal 2022 or 73 basis points from fiscal 2021 gross profit margin
of 11.5%, driven by increases in gross profit margin in both operating groups. Sales in the higher margin western regions
represented approximately 56% of sales in fiscal 2022 as compared to 55% during fiscal 2021.
Selling, General and Administrative Expenses
Selling, general and administrative expenses (“SG&A expenses”) in fiscal 2022 were $1.99 billion, an increase of
$120.0 million, or 6.4%, from fiscal 2021. The year-over-year increase in SG&A expenses was primarily due to
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increases in costs to support sales growth and to a lesser extent increased costs related to inflation, partially offset by lower
expenses due to foreign currency translation from the strengthening of the U.S. Dollar.
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 2022, SG&A expenses as a percentage of sales were 8.2% and as a
percentage of gross profit were 67.3%, as compared with 9.6% and 83.7%, respectively, in fiscal 2021. The decrease in
SG&A expenses as a percentage of gross profit is primarily due to the operating leverage created from higher sales,
increases in gross profit margin, and lower amortization expense, partially offset by increases in SG&A expenses primarily
to support sales volumes.
Russian-Ukraine Conflict Related Expenses
The Company incurred $26.3 million of costs associated with the Russian-Ukraine conflict in the third quarter of
fiscal 2022, primarily comprised of $17.2 million of expense for credit loss reserves for trade accounts receivable from
Russian customers that are no longer considered collectible. The remaining expense is primarily related to product write-
downs for Russia based customers and other Russian business operation wind-down costs.
Restructuring, Integration and Other Expenses
During fiscal 2022, the Company recorded restructuring, integration and other expenses of $5.3 million, substantially
all of which was related to integration costs.
During fiscal 2021, the Company recorded restructuring, integration and other expenses of $84.4 million consisted of
restructuring cost of $59.4 million, integration costs of $35.8 million, 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.
See Note 17, “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
Operating income for fiscal 2022 was $939.0 million, an increase of $657.6 million, from fiscal 2021 operating
income of $281.4 million. Operating income margin was 3.9% in fiscal 2022 compared to 1.4% in fiscal 2021. Adjusted
operating income for fiscal 2022 was $985.6 million, an increase of $578.5 million or 142.1%, from fiscal 2021. Adjusted
operating income margin was 4.1% in fiscal 2022 compared to 2.1% in fiscal 2021. The year-over-year increase in adjusted
operating income and adjusted operating income margin was primarily driven by the increase in sales and in gross profit
margin and lower amortization expense.
Interest and Other Financing Expenses, Net and Other Expense, Net
Interest and other financing expenses for fiscal 2022 was $100.4 million, an increase of $10.9 million, or 12.2%,
compared with interest and other financing expenses of $89.5 million in fiscal 2021. The increase in interest and other
financing expenses in fiscal 2022 compared to fiscal 2021 was primarily a result of higher outstanding borrowings during
fiscal 2022 as compared to fiscal 2021.
In fiscal 2022, the Company had $5.3 million of other expense as compared with $19.0 million of other expense in
fiscal 2021. The year-over-year differences in other expense was primarily due to an equity investment impairment expense
included in the other expense in the first quarter of fiscal 2021, and differences in foreign currency exchange rates between
fiscal 2022 and fiscal 2021.
27
Income Tax Expense
Avnet’s effective tax rate on its income before income taxes was 16.9% in fiscal 2022. The effective tax rate for fiscal
2022 was favorably impacted primarily by decreases to valuation allowances against deferred tax assets.
For fiscal 2021, the Company’s effective tax rate on its income before income taxes was a benefit of 11.7%. 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 9, “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
As a result of the factors described in the preceding sections of this MD&A, the Company’s net income in fiscal 2022
was $692.4 million, or earnings per share on a diluted basis of $6.94, compared with fiscal 2021 net income of $193.1
million, or earnings per share on a diluted basis of $1.93.
Fiscal 2021 Comparison to Fiscal 2020
For comparison of the Company’s results of operations between fiscal 2021 and fiscal 2020, 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 July 3, 2021 filed with the SEC on August 13, 2021.
Liquidity and Capital Resources
Cash Flows
Cash Flows from Operating Activities
The Company used $219.3 million of cash from its operating activities in fiscal 2022 as compared to $90.9 million of
cash generated in fiscal 2021. These operating cash flows are comprised of: (i) cash flows generated from net income,
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 $1.09 billion during fiscal 2022, including increases in accounts
receivable of $1.13 billion and inventories of $1.22 billion, offset by increases in accounts payable of $1.13 billion and
accrued expenses and other of $134.4 million. Comparatively, cash used for working capital and other 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.
Cash Flows from Financing Activities
During fiscal 2022, the Company received net proceeds of $300.0 million as a result of the issuance of $300.0
million of 5.50% Notes due May 2032, $274.9 million under the Securitization Program, and $235.0 million from
borrowings of various bank credit facilities. During fiscal 2022, the Company repaid $354.3 million of notes, paid
dividends on common stock of $98.5 million, and repurchased $184.4 million of common stock.
During fiscal 2021, the Company received net proceeds of $297.7 million as a result of the issuance of $300.0
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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.
Cash Flows from Investing Activities
During fiscal 2022, the Company used $48.9 million for capital expenditures primarily related to warehouse and
facilities, and information technology hardware and software costs compared to $50.4 million in fiscal 2021. During fiscal
2022, the Company received $90.4 million from investing activities related to the liquidation of Company owned life
insurance policies. During fiscal 2021, the Company used $18.4 million of cash for acquisitions, which is net of the cash
acquired.
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 working capital including purchases of inventories, 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 2022
was $174.6 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 7, “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 2, 2022.
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 2, 2022.
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
29
compliance with all such covenants as of July 2, 2022.
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 $153.7 million as of July 2, 2022, of which $60.4 million was held
outside the United States. As of July 3, 2021, the Company had cash and cash equivalents of $199.7 million, of which
$150.5 million was held outside of the United States.
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 used $219.3 million in cash flows for operating activities
during the fiscal year ended July 2, 2022, to support the fiscal 2022 sales growth.
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, including the need to purchase inventories, 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.
As of July 2, 2022, there were no borrowings outstanding under the Credit Facility, with $1.2 million in letters of
credit issued and $297.8 million outstanding under the Securitization Program. During fiscal 2022, the Company had an
average daily balance outstanding under the Credit Facility of approximately $541.4 million and $241.4 million under the
Securitization Program. As of July 2, 2022, the combined availability under the Credit Facility and the Securitization
Program was $1.40 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 August 2022, subsequent to the
end of fiscal 2022, the Company amended and extended the Credit Facility to expire in August 2027.
The Company has the following contractual obligations outstanding as of July 2, 2022 (in millions):
Contractual Obligations
Long-term debt obligations(1)
Interest expense on long-term debt obligations(2)
Operating lease obligations(3)
Total
$ 1,622.4
364.3
304.2
Less than
1 year
$ 174.4
67.5
61.0
Payments due by period
$
1-3 years
298.0
109.4
82.3
$
3-5 years
550.0
71.1
48.9
More than
5 years
600.0
116.3
112.0
$
(1)
Includes amounts due within one year and 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 2022 for variable rate debt.
(3) Excludes imputed interest on operating lease liabilities.
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The Company acquires inventories in the normal course of business throughout the year through the issuance of
purchase orders to suppliers. During fiscal 2022, the Company’s cost of sales, substantially all of which related to the
underlying purchase of inventories was $21.3 billion and the Company had $4.2 billion of inventories as of July 2, 2022.
The Company expects to continue to purchase sufficient inventory to meet its customers’ demands in fiscal year 2023,
much of which relates to outstanding purchase orders at the end of fiscal 2022. Outstanding purchase orders with suppliers
may be non-cancellable/non-returnable at the point such orders are issued, or may become non-cancellable at some point in
the future, typically within 30 days to 90 days from the requested delivery date of inventories. The majority of the purchase
orders related to inventories expected to be received during the first quarter of fiscal 2023, are subject to such non-
cancellable terms and conditions.
At July 2, 2022, the Company had an estimated liability for income tax contingencies of $134.6 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 $1.1 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.
As of July 2, 2022, the Company may repurchase up to an aggregate of $531.3 million of shares of the Company’s
common stock through the 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 and other
factors. The Company may terminate or limit the share repurchase program at any time without prior notice. During fiscal
2022, the Company repurchased $193.3 million of common stock.
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 2022, the Board of Directors approved a
dividend of $0.26 per share, which resulted in $25.2 million of dividend payments during the quarter.
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.
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 2022 relate to:
31
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 changes
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 valuation 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 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.
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See Note 9 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 GAAP 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 plans to adopt ASU 2020-04 and ASU 2021-01 when LIBOR is
discontinued and does not currently expect a material impact on the Company’s consolidated financial statements as the
Company’s debt agreements already contemplate the discontinuation of LIBOR.
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.
The following table sets forth the scheduled maturities of the Company’s debt outstanding at July 2, 2022 (dollars in
millions):
Liabilities:
Fixed rate debt(1)
Floating rate debt
2023 2024 2025 2026 2027 Thereafter Total
Fiscal Year
$
174.4
$
0.2
$ — $
550.0
$ — $
600.0
$ 1,324.6
$
— $
297.8
$ — $
— $ — $
— $ 297.8
(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 2, 2022, and July 3, 2021 (dollars in millions):
Carrying Value Fair Value at
at July 2, 2022
at July 2, 2022 at July 3, 2021
Carrying Value Fair Value at
July 3, 2021
Liabilities:
Fixed rate debt(1)
Average interest rate
Floating rate debt
Average interest rate
$ 1,324.6
4.1 %
$
297.8
2.6 %
$
$
1,265.8
$ 1,201.2
4.3 %
297.8
$
23.1
$
$
1,291.4
23.1
1.2 %
(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,
33
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, 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 2, 2022, would result in an increase or decrease of approximately $50.0
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 2 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.
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Item 8. Financial Statements and Supplementary Data
Index to Financial Statements
1. Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (KPMG LLP, Phoenix, AZ, Auditor Firm ID:
185)
Avnet, Inc. and Subsidiaries Consolidated Financial Statements:
Consolidated Balance Sheets at July 2, 2022, and July 3, 2021
Consolidated Statements of Operations for the fiscal years ended July 2, 2022, July 3, 2021, and June
27, 2020
Consolidated Statements of Comprehensive Income for the fiscal years ended July 2, 2022, July 3, 2021,
and June 27, 2020
Consolidated Statements of Shareholders’ Equity for the fiscal years ended July 2, 2022, July 3, 2021,
and June 27, 2020
Consolidated Statements of Cash Flows for the fiscal years ended July 2, 2022, July 3, 2021, and June
27, 2020
Notes to Consolidated Financial Statements
2. Financial Statement Schedule:
Schedule II (Valuation and Qualifying Accounts) for the fiscal years ended July 2, 2022, July 3, 2021,
and June 27, 2020
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
36
38
39
40
41
42
43
80
35
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 2,
2022 and July 3, 2021, 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 2, 2022, 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 2, 2022, 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 2, 2022 and July 3, 2021, and the results of its operations and its cash flows for each of
the years in the three-year period ended July 2, 2022, 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 2, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission.
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 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
36
Table of Contents
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 9 to the consolidated financial statements, the Company recognized $156.5 million of
deferred tax assets, net and income tax expense of $141.0 million as of and for the year ended July 2, 2022.
Additionally, as discussed in Note 9, the Company recognized income taxes receivable of $56.1 million as of July 2,
2022. 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,
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 12, 2022
/s/ KPMG LLP
37
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 13)
Shareholders’ equity:
July 2,
2022
July 3,
2021
(Thousands, except share
amounts)
$
153,693
4,301,002
4,244,148
177,783
8,876,626
315,204
758,833
12,651
227,138
198,080
$ 10,388,532
$
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
$
174,422
3,431,683
591,020
54,529
4,251,654
1,437,400
199,418
307,300
6,195,772
$
23,078
2,401,357
572,457
58,346
3,055,238
1,191,329
239,838
354,833
4,841,238
Common stock $1.00 par; authorized 300,000,000 shares; issued 95,701,630 shares
and 99,601,393 shares, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
95,702
1,656,907
2,921,399
(481,248)
4,192,760
$ 10,388,532
99,601
1,622,160
2,516,170
(153,747)
4,084,184
$ 8,925,422
See notes to consolidated financial statements.
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Table of Contents
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
July 2,
2022
Years Ended
July 3,
2021
(Thousands, except per share amounts)
June 27,
2020
Sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Goodwill and long-lived asset impairment expense
Russian-Ukraine conflict related expenses
Restructuring, integration and other expenses
Operating income (loss)
Other expense, net
Interest and other financing expenses, net
Income (loss) before taxes
Income tax expense (benefit)
Net income (loss)
Earnings (loss) per share:
Basic
Diluted
Shares used to compute earnings per share:
Basic
Diluted
Cash dividends paid per common share
$
$
$
$
$
24,310,708
21,345,317
2,965,391
1,994,847
—
26,261
5,272
939,011
(5,302)
(100,375)
833,334
140,955
692,379
7.02
6.94
98,662
99,819
1.00
$
$
$
$
$
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
See notes to consolidated financial statements.
39
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 2,
2022
$ 692,379
Years Ended
July 3,
2021
(Thousands)
$ 193,114
June 27,
2020
$ (31,081)
(324,139)
(3,362)
$ 364,878
152,678
81,955
$ 427,747
(56,682)
(27,659)
$ (115,422)
See notes to consolidated financial statements.
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Table of Contents
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Years Ended July 2, 2022, July 3, 2021 and June 27, 2020
Common Common
Stock-
Shares
Stock-
Amount
Additional
Paid-In
Capital
104,038
$ 104,038
$ 1,573,005
—
—
—
—
—
—
—
—
(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
Retained
Earnings
(Thousands)
$ 2,767,469
(31,081)
—
—
—
—
—
—
—
(83,975)
(230,568)
—
2,421,845
193,114
—
—
(84,309)
(14,480)
—
2,516,170
692,379
—
—
—
—
—
—
—
—
—
—
—
(4,676)
777
95,702
(4,676)
777
$ 95,702
—
—
—
34,747
$ 1,656,907
—
(98,490)
(188,660)
—
$ 2,921,399
Accumulated
Other
Comprehensive
(Loss) Income
Total
Shareholders’
Equity
$
(304,039) $
—
(56,682)
4,140,473
(31,081)
(56,682)
(27,659)
—
—
—
(388,380)
—
152,678
81,955
—
—
—
(153,747)
—
(324,139)
(27,659)
(83,975)
(236,438)
21,760
3,726,398
193,114
152,678
81,955
(84,309)
(14,480)
28,828
4,084,184
692,379
(324,139)
(3,362)
—
—
—
(481,248) $
(3,362)
(98,490)
(193,336)
35,524
4,192,760
$
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
Net income
Translation adjustments and other
Pension liability adjustments, net of tax of
$582
Cash dividends ($1.00 per share)
Repurchases of common stock
Stock-based compensation
Balance, July 2, 2022
See notes to consolidated financial statements.
41
AVNET, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
July 2,
2022
Years Ended
July 3,
2021
(Thousands)
June 27,
2020
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
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 (used) 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
Borrowings (repayments) under bank credit facilities and other debt, net
Repurchases of common stock
Dividends paid on common stock
Other, net
Net cash flows provided (used) for financing activities
Cash flows from investing activities:
Purchases of property, plant and equipment
Acquisitions of assets and businesses
Proceeds from liquidation of Company owned life insurance policies
Other, net
Net cash flows provided (used) for investing activities
$
692,379
$ 193,114
$ (31,081)
87,367
14,959
52,881
(52,513)
36,738
—
34,116
90,884
41,033
56,782
14,650
29,339
15,166
22,512
(1,132,039)
(1,218,871)
1,131,225
134,448
(219,310)
(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
299,973
(354,336)
274,900
—
235,047
(184,382)
(98,490)
(16,653)
156,059
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)
(48,900)
—
(50,363)
(18,381)
90,384
9,815
51,299
—
7,548
(61,196)
(73,516)
(51,509)
—
(9,992)
(135,017)
Effect of currency exchange rate changes on cash and cash equivalents
(34,046)
6,913
(19,682)
Cash and cash equivalents:
— decrease
— at beginning of period
— at end of period
Additional cash flow information (Note 15)
(45,998)
199,691
153,693
(277,347)
477,038
$ 199,691
(69,067)
546,105
$ 477,038
$
See notes to consolidated financial statements.
42
Table of Contents
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.
Fiscal year — The Company operates on a “52/53 week” fiscal year, which ends on the Saturday closest to
June 30th. Fiscal 2022 and 2020 contains 52 weeks compared to 53 weeks in fiscal 2021. 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 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
43
Table of Contents
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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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 16 years. The Company’s
equipment leases are primarily for automobiles, distribution center equipment and office equipment, which 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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.
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, 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 tax 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 — 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 supplier 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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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.
The company has contracts with certain customers where the company's performance obligation is to arrange for the
products or services to be provided by another party. In these arrangements, as the company assumes an agency
relationship in the transaction, revenue is recognized in the amount of the net fee associated with serving as an agent. These
arrangements primarily relate to the sale of supplier software services and supply chain services for the coordination,
holding and delivery of inventory for which the company does not assume the risks and rewards of ownership.
Sales tax and other tax amounts collected from customers for remittance to governmental authorities are excluded
from revenue. The Company accounts for shipping and handling of product as a fulfillment activity. The Company does
not have any payment terms that exceed one year from the point it has satisfied the related performance obligations. Tariffs
are included in sales as the company has enforceable rights to additional consideration to cover the cost of tariffs. Other
taxes imposed by governmental authorities on the company's revenue producing activities with customers, such as sales
taxes and value added taxes, are excluded from net sales.
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 multiple periods.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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
12). 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
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.
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 2022, 2021, and 2020, 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 2, 2022, due to the
short-term nature of these assets and liabilities. At July 2, 2022, and July 3, 2021, the Company had $5.4 million and $3.8
million, respectively, of cash equivalents that were measured at fair value based upon Level 1 criteria.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Derivative financial instruments — See Note 2 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, net” in the
Company’s consolidated statements of operations. As of July 2, 2022, the Company’s investments in ventures was not
material to the consolidated balance sheets or consolidated statements of operations.
Recently adopted accounting pronouncements — In December 2019, the FASB issued ASU No. 2019-12,
Simplifying the Accounting for Income Taxes (Topic 740) (“ASU No. 2019-12”), which simplifies income tax accounting,
eliminates certain exceptions within ASC Topic 740, Income Taxes, and clarifies certain aspects of the current guidance to
promote consistency among reporting entities. Most amendments within ASU No. 2019-12 are required to be applied on a
prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The
Company’s adoption of ASU No. 2019-12 beginning the first quarter of fiscal 2022 did not have a material impact on the
Company’s consolidated financial statements.
2. 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, 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 2, 2022, and July 3, 2021. 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,
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 2,
2022
July 3,
2021
$
(Thousands)
24,907
29,663
$
15,722
23,994
The amount recorded to other expense, net related to derivative financial instruments for economic hedges are as
follows:
Net derivative financial instrument (loss) gain
$
(37,336)
$
July 2,
2022
Years Ended
July 3,
2021
(Thousands)
(21,605)
June 27,
2020
$
12,739
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.
3. 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 2,
2022
$ (370,612)
(110,636)
$ (481,248)
July 3,
2021
(Thousands)
$ (46,473)
(107,274)
$ (153,747)
June 27,
2020
$ (199,151)
(189,229)
$ (388,380)
Substantially all amounts reclassified out of accumulated comprehensive loss, net of tax, to operating expenses
during fiscal 2022, 2021, and 2020 related to net periodic pension costs as discussed further in Note 10.
Share repurchase program
In May 2022, the Company’s Board of Directors approved a new share repurchase plan with an authorization to
repurchase up to an aggregate of $600 million of common stock in the open market or through privately negotiated
transactions. The authorization amount includes the amount remaining under the previous share repurchase plan approved
in August 2011, as last amended in August 2019. The timing and actual number of shares repurchased will
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 2022, the Company repurchased 4.7
million shares under these programs for a total cost of $193.3 million. As of July 2, 2022, the Company had $531.3 million
remaining under its new share repurchase authorization.
Common stock dividend
During fiscal 2022, the Company paid dividends of $1.00 per common share and $98.5 million in total.
4. Receivables and Russian-Ukraine conflict related expenses
The Company’s receivables and allowance for credit losses were as follows:
Receivables
Allowance for Credit Losses
July 2,
2022
July 3,
2021
(Thousands)
$
4,414,904
(113,902)
$
3,664,290
(88,160)
The Company had the following activity in the allowance for credit losses during fiscal 2022:
Balance at beginning of the period
Effect of adopting credit loss accounting standard
Credit Loss Provisions
Russian-Ukraine conflict Credit Loss Provisions
Credit Loss Recoveries
Receivables Write offs
Foreign Currency Effect and Other
Balance at end of the period
July 2,
2022
July 3,
2021
(Thousands)
$
$
88,160
—
31,489
17,202
(702)
(15,233)
(7,014)
113,902
$
$
65,018
17,205
18,429
—
(2,587)
(6,240)
(3,665)
88,160
During fiscal 2022, as a direct and incremental impact associated with the Russian invasion of Ukraine, the Company
incurred $26.3 million of expense, primarily related to $17.2 million of credit loss provisions associated with accounts
receivable from Russian customers that are no longer considered collectible. The remaining $9.1 million of expenses were
related to product write downs and other costs associated with the wind-down of the Company’s business operations in
Russia and Ukraine.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
5. Property, plant and equipment, net
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 2, 2022 July 3, 2021
(Thousands)
$
$
114,622
249,053
842,759
119,917
1,326,351
(1,038,335)
288,016
21,408
5,780
315,204
$
$
121,662
260,342
835,374
123,808
1,341,186
(999,885)
341,301
22,778
4,373
368,452
Depreciation expense related to property, plant, and equipment, was $87.4 million, $90.9 million and $101.1 million
in fiscal 2022, 2021, and 2020, respectively. Interest expense capitalized during fiscal 2022, 2021, and 2020 was not
material.
6. Goodwill, intangible assets, and impairments
Goodwill
The following table presents the change in goodwill balances by reportable segment for fiscal year 2022.
Electronic
Components
$
$
310,582 $
(19,056)
291,526 $
Farnell
(Thousands)
527,523
(60,216)
467,307
$
$
Total
838,105
(79,272)
758,833
Carrying value at July 3, 2021 (1)
Foreign currency translation
Carrying value at July 2, 2022 (1)
(1)
Includes accumulated impairment of $1,482,677 from prior fiscal years.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Intangible Assets
The following table presents the Company’s acquired identifiable intangible assets:
Customer related
Trade name
Technology and other
July 2, 2022
Acquired Accumulated Net Book Acquired
July 3, 2021
Accumulated
Net Book
Amount Amortization Value Amount(1) Amortization Value
(Thousands)
$ 292,163
50,655
51,634
$ 394,452
$
$
(283,006)
(47,961)
(50,834)
(381,801)
$ 9,157
2,694
800
$ 12,651
$ 324,416
57,184
57,809
$ 439,409
$
$
(312,392)
(45,019)
(53,459)
(410,870)
$
$
12,024
12,165
4,350
28,539
(1) Acquired amount reduced by impairment of $17,473 from prior fiscal years.
Intangible asset amortization expense was $15.0 million, $41.0 million, and $81.1 million for fiscal 2022, 2021, and
2020, respectively.
The following table presents the estimated future amortization expense for the next five fiscal years (in thousands):
Fiscal Year
2023
2024
2025
2026
2027
Total
6,181
3,159
1,472
1,471
368
12,651
$
In fiscal 2021, the Company recorded $15.2 million of equity investment impairment expense classified within other
expense, net in the consolidated statements of operations.
7. Debt
Short-term debt consists of the following (in thousands):
Revolving credit facilities:
Credit Facility (due June 2023)
Other short-term debt and accounts receivable securitization
program
Short-term debt
July 2,
2022
Interest Rate
July 3,
2021
July 3,
July 2,
2022
2021
Carrying Balance
—
— $
— $
—
2.09 % 1.24 %
174,422
174,422
23,078
$ 23,078
$
Other short-term debt consists 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.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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 the issuance of up to $200.0 million of 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 2, 2022. At July 2, 2022, and July 3, 2021, there were $1.2 million and $1.3 million, respectively, in letters
of credit issued under the Credit Facility.
In August 2022, subsequent to the end of fiscal 2022, the Company amended and extended the Credit Facility to
expire in August 2027. The required compliance with the minimum interest coverage ratio financial covenant was removed
as part of the amendment.
During the fourth quarter of fiscal 2022, the Company redeemed the $350.0 million of outstanding 4.88% Notes due
in December 2022 at a make-whole redemption price of $354.3 million and the Company issued $300.0 million of 5.50%
Notes due in June 2032.
Long-term debt consists of the following (in thousands):
Revolving credit facilities:
Accounts receivable securitization program
Public notes due:
December 2022
April 2026
May 2031
June 2032
Other long-term debt
Long-term debt before discount and debt issuance costs
Discount and debt issuance costs – unamortized
Long-term debt
July 2,
2022 2021
July 3,
Interest Rate
July 3,
July 2,
2022
2021
Carrying Balance
2.55 %
— $
297,800 $
—
—
4.63 %
3.00 %
5.50 %
0.00 %
4.88 %
4.63 %
3.00 %
—
1.22 %
—
550,000
300,000
300,000
148
1,447,948
(10,548)
350,000
550,000
300,000
—
1,185
1,201,185
(9,856)
$ 1,437,400 $ 1,191,329
In August 2021, the Company amended and extended for two years 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 of 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 $1.12 billion and $717.4 million at July 2, 2022, and July 3, 2021, respectively. The Securitization Program
contains certain covenants relating to the quality of the receivables sold. There were $297.8
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
million and $22.9 million borrowings outstanding under the Securitization Program as of July 2, 2022, and as of July 3,
2021, respectively.
Aggregate debt maturities for the next five fiscal years and thereafter are as follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Subtotal
Discount and debt issuance costs – unamortized
Total debt
$
174,422
297,948
—
550,000
—
600,000
1,622,370
(10,548)
$ 1,611,822
At July 2, 2022, the carrying value and fair value of the Company’s total debt was $1.61 billion and $1.55 billion,
respectively. 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. Fair value for the public notes was estimated based upon quoted market prices and, for other forms of
debt, fair value approximates carrying value due to the market based variable nature of the interest rates on those debt
facilities.
8. 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
55
July 2, 2022 July 3, 2021
(Thousands)
$
$
242,898
202,885
38,394
9,185
24,831
20,275
52,552
591,020
$
$
253,586
179,213
32,985
39,962
—
7,131
59,580
572,457
Table of Contents
9. Income taxes
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The components of income tax expense (benefit) (“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 expense (benefit)
Years Ended
July 2, 2022 July 3, 2021 June 27, 2020
(Thousands)
$
$
58,512
8,871
126,522
193,905
(32,424)
(22,320)
1,794
(52,950)
140,955
$
$
(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)
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 $197.1 million, $(89.4) million and, $(254.8) million, in fiscal 2022, 2021, and
2020, respectively, and foreign income before income taxes was $636.3 million, $262.3 million, and $125.2 million, in
fiscal 2022, 2021, and 2020, 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 years to
generate a refund of previously paid income taxes. The Company has utilized this carryback provision. An income tax
refund receivable of $56.1 million, associated with the fiscal 2021 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.
56
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Reconciliations of the federal statutory tax rate to the effective tax rates are as follows:
Years Ended
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 surrender of Company owned life insurance policies
Impact of the CARES Act
Impairments of investments, goodwill and long-lived assets
Other, net
Effective tax rate
July 2, 2022 July 3, 2021 June 27, 2020
21.0 %
4.6
5.0
(28.5)
20.1
(5.6)
—
10.2
56.5
(7.3)
76.0 %
21.0 %
(2.2)
(10.7)
2.1
14.3
0.4
—
(8.4)
(22.4)
(5.8)
(11.7)%
21.0 %
1.1
(1.7)
(5.8)
(0.6)
0.2
1.4
—
—
1.3
16.9 %
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 16.9% in fiscal 2022 as compared with an effective tax
rate of 11.7% of benefit on fiscal 2021 income before income taxes. Included in the fiscal 2022 effective tax rate is a tax
benefit arising from the decreases to valuation allowance against deferred tax assets.
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.
57
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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
Interest deductions
Various accrued liabilities and other
Less — valuation allowances
Deferred tax liabilities:
Operating lease assets
Net deferred tax assets
July 2,
2022
July 3,
2021
(Thousands)
$ 226,072
11,525
29,798
56,256
18,321
29,358
47,717
419,047
(207,889)
211,158
$ 282,882
17,333
25,336
69,759
13,757
35,516
26,566
471,149
(293,569)
177,580
(54,632)
$ 156,526
(68,135)
$ 109,445
The decrease in valuation allowances in fiscal 2022 from fiscal 2021 was related to a $65.2 million net release of
valuation allowance primarily as a result of changes to management’s expectation of its ability to realize certain deferred
tax assets, and a $20.5 million decrease resulting from changing foreign exchange rates.
As of July 2, 2022, the Company had net operating and capital loss carry-forwards of approximately $1.18 billion, of
which $11.0 million will expire during fiscal 2023 and fiscal 2024, substantially all of which have full valuation
allowances, $281.9 million have expiration dates ranging from fiscal 2025 to fiscal 2041, and the remaining $888.6 million
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.
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 2, 2022, unrecognized tax benefits were $134.6 million. The estimated liability for unrecognized tax
benefits included accrued interest expense and penalties of $25.3 million and $26.4 million, net of applicable state tax
benefits, as of the end of fiscal 2022 and 2021, respectively.
58
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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 2, 2022 July 3, 2021
(Thousands)
$
$
118,660
3,569
(4,075)
—
1,269
(1,660)
(3,883)
(4,595)
109,285
$
$
96,292
36,452
(4,880)
(200)
4,030
(711)
(15,713)
3,390
118,660
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 $14.5 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
$1.1 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 2016. 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
59
Fiscal Year
2016 - 2022
2017 - 2022
2016 - 2022
2016 - 2022
2018 - 2022
2020 - 2022
2020 - 2022
2016 - 2022
Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
10. 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.
60
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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 2022 and 2021:
Changes in benefit obligations:
Benefit obligations at beginning of year
Service cost
Interest cost
Actuarial gain
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
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 loss (gain)
Amortization of net actuarial losses
Amortization of prior service costs
July 2,
2022
July 3,
2021
(Thousands)
$ 762,708
15,007
15,787
(138,899)
(40,244)
$ 614,359
$ 790,179
15,751
15,904
(12,397)
(46,729)
$ 762,708
$ 772,279
(107,141)
(40,244)
14,000
$ 638,894
24,535
$
$ 707,800
95,208
(46,729)
16,000
$ 772,279
9,571
$
$ 178,984
27
$ 179,011
$ 177,949
31
$ 177,980
$
$
17,378
(16,343)
(4)
1,031
$ (57,924)
(20,604)
(301)
$ (78,829)
Included in accumulated other comprehensive loss at July 2, 2022, is an expense of $179.0 million of net actuarial
losses that have not yet been recognized in net periodic pension cost, of which $2.8 million is expected to be recognized as
a component of net periodic pension cost during fiscal 2023.
Assumptions used to calculate actuarial present values of benefit obligations are as follows:
Discount rate
2022
4.8 %
2021
2.8 %
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 2, 2022. The estimated discount rate in fiscal 2022 and fiscal 2021 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.
61
Table of Contents
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
2022
2.5 %
7.0 %
3.5 %
4.0 %
2021
2.4 %
7.4 %
3.5 %
4.0 %
Components of net periodic pension cost for the Plan during the last three fiscal years are as follows:
Service cost
$
15,007
$
July 2,
2022
Years Ended
July 3,
2021
(Thousands)
15,751
$
Total net periodic pension cost within selling, general and
administrative expenses
Interest cost
Expected return on plan assets
Amortization of prior service cost
Recognized net actuarial loss
Total net periodic pension benefit within other expense,
net
15,007
15,787
(49,135)
4
16,343
(17,001)
15,751
15,904
(49,681)
301
20,604
(12,872)
June 27,
2020
15,145
15,145
22,552
(50,671)
2,137
14,629
(11,353)
Net periodic pension cost
$
(1,994)
$
2,879
$
3,792
The Company made $14.0 million and $16.0 million of contributions in fiscal 2022 and fiscal 2021, respectively, and
expects to make approximately $8.0 million of contributions in fiscal 2023.
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):
2023
2024
2025
2026
2027
2028 through 2032
$ 60,539
44,626
47,037
47,643
50,275
250,819
The Plan’s assets are held in trust and were allocated as follows as of the measurement date at the end of fiscal 2022
and 2021:
Equity securities
Fixed income debt securities
Cash and cash equivalents
2022
75 %
24 %
1 %
2021
69 %
29 %
2 %
62
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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 2023 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 2, 2022, 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 2, 2022:
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
$
5,283
$
— $
(Thousands)
— $
—
—
—
—
—
$
5,283
$
—
—
—
—
—
— $
—
—
—
—
—
— $
— $
5,283
219,407
149,975
109,253
122,912
32,064
633,611
219,407
149,975
109,253
122,912
32,064
$ 638,894
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 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
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 2, 2022.
63
Table of Contents
11. 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 2,
2022
July 3,
2021
$
$
68,664 $
25,737
94,401 $
74,003
21,305
95,308
Future minimum operating lease payments as of July 2, 2022, are as follows (in thousands):
Fiscal Year
2023
2024
2025
2026
2027
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
$
$
60,986
46,452
35,821
29,433
19,445
112,046
304,183
(50,236)
253,947
Years Ended
July 2,
2022
July 3,
2021
8.8
3.8 %
9.1
3.8 %
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
$
57,016 $
28,014
59,587
41,010
Years Ended
July 2,
2022
July 3,
2021
64
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
12. 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 2022, 2021, and 2020, the Company recorded stock-based compensation expense of $36.7
million, $29.3 million, and $26.8 million, respectively, for all forms of stock-based compensation awards.
Stock plan
At July 2, 2022, the Company had 8.2 million shares of common stock reserved for stock-based payments, which
consisted of 1.3 million shares for unvested or unexercised stock options, 5.5 million shares available for stock-based
awards under plans approved by shareholders, and 1.4 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 2022,
2021, and 2020, was $3.6 million, $0.4 million, and $2.9 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
65
Years Ended
July 3,
2021
6.0
0.5 %
31.5 %
2.8 %
July 2,
2022
6.0
0.9 %
32.1 %
2.4 %
June 27,
2020
6.0
1.6 %
23.7 %
2.3 %
Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The following is a summary of the changes in outstanding options for fiscal 2022:
Weighted Weighted Average
Average
Remaining
Outstanding at July 3, 2021
Granted
Exercised
Forfeited or expired
Outstanding at July 2, 2022
Exercisable at July 2, 2022
Shares
1,125,431
361,308
(142,498)
(39,105)
1,305,136
516,939
$
$
Exercise Price Contractual Life
$
37.15
39.62
39.78
42.81
37.38
39.28
78 Months
110 Months
8 Months
37 Months
85 Months
62 Months
The weighted-average grant-date fair values of stock options granted during fiscal 2022, 2021, and 2020, were $9.45,
$6.37, and $7.41, respectively.
At July 2, 2022, the aggregate intrinsic value of all outstanding stock option awards was $7.2 million and all
exercisable stock option awards was $2.2 million.
The following is a summary of the changes in non-vested stock options for fiscal 2022:
Non-vested stock options at July 3, 2021
Granted
Vested
Forfeited
Non-vested stock options at July 2, 2022
Shares
649,109
361,308
(215,132)
(7,088)
788,197
Weighted
Average
Grant-Date
Fair Value
7.17
9.45
7.61
8.25
8.09
$
$
As of July 2, 2022, there was $1.4 million of total unrecognized compensation cost related to stock options, which is
expected to be recognized over a weighted-average period of 2.5 years. The total fair value of stock options vested, as of
the vesting dates, during fiscal 2022, 2021, and 2020, were $4.6 million, $4.8 million, and $7.9 million, respectively.
Cash received from stock option exercises during fiscal 2022, 2021, and 2020 totaled $5.7 million, $4.9 million, and
$0.9 million, respectively. The impact of these cash receipts is included in “Other, net” within financing activities in the
accompanying consolidated statements of cash flows.
66
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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 2, 2022, 1.3 million shares previously awarded have not yet vested.
Stock-based compensation expense associated with restricted stock units was $29.5 million, $27.5 million, and $26.1
million for fiscal years 2022, 2021, and 2020, respectively.
The following is a summary of the changes in non-vested restricted stock units during fiscal 2022:
Non-vested restricted stock units at July 3, 2021
Granted
Vested
Forfeited
Non-vested restricted stock units at July 2, 2022
Weighted
Average
Grant-Date
Fair Value
$
$
32.80
37.68
34.91
32.18
32.92
Shares
1,338,035
822,936
(761,407)
(86,382)
1,313,182
As of July 2, 2022, there was $20.1 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 2022, 2021, and 2020, was $26.6 million, $25.8 million, and $24.8 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.
During fiscal 2022 and 2021, the Company granted no performance share units. During fiscal 2020, 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
2022, 2021, and 2020, the Company recognized stock-based compensation expense (benefit) associated with the Performance
Share Program of $2.0 million, $(0.2) million, and $(3.8) million, respectively.
67
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13. 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 to 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 2, 2022, and July 3, 2021, the Company had aggregate estimated liabilities of $14.7 million, classified
within accrued expenses and other for such compliance-related matters that were reasonably estimable as of such dates.
14. 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
July 3,
July 2,
2022
2020
2021
(Thousands, except per share data)
June 27,
$
692,379
$ 193,114
$
(31,081)
98,662
1,157
99,819
7.02
6.94
99,258
910
100,168
1.95
$
1.93
$
100,474
—
100,474
(0.31)
(0.31)
$
$
$
$
230
700
1,431
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.
68
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
15. 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 (benefit) cost
Other, net
Total
July 2,
2022
$
$
30,788
(3,449)
6,777
34,116
July 3,
2021
(Thousands)
$ 15,842
5,392
1,278
$ 22,512
June 27,
2020
$ 12,111
4,246
14,986
$ 31,343
Non-cash investing and financing activities and supplemental cash flow information were as follows:
July 2,
2022
Years Ended
July 3,
2021
(Thousands)
June 27,
2020
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
$ 20,275
$ 7,131
$
9,009
$
8,955
$
— $
—
$ 112,327
6,892
$ 98,509
83,387
$ 137,995
25,116
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.
16. 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
Russian-Ukraine conflict related expenses
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(3)
Property, plant and equipment, net, by geographic area:
Americas(4)
EMEA(5)
Asia
July 2,
2022
Years Ended
July 3,
2021
(Millions)
June 27,
2020
$
$
$
$
$
$
$
$
$
$
$
$
$
$
22,503.3
1,807.4
24,310.7
872.0
242.5
1,114.5
(128.9)
(5.3)
—
(26.3)
(15.0)
939.0
8,863.4
1,371.1
154.0
10,388.5
25.7
23.1
0.1
48.9
67.7
31.3
3.3
102.3
5,896.0
7,838.1
10,576.6
24,310.7
115.4
170.1
29.7
315.2
$
$
$
$
$
$
$
$
$
$
$
$
$
$
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
$
$
$
$
$
$
$
$
$
$
$
$
$
$
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
(1) Includes sales in the United States of $5.48 billion, $4.35 billion, and $4.46 billion for fiscal 2022, 2021, and 2020,
respectively.
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AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(2) Includes sales in Germany and Belgium of $3.16 billion and $1.37 billion, respectively, for fiscal 2022. 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.
(3) Includes sales of $4.64 billion, $3.38 billion, and $1.32 billion in Taiwan, China (including Hong Kong), and
Singapore, respectively, for fiscal 2022. 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.
(4) Includes property, plant and equipment, net, of $112.4 million, $142.7 million, and $179.4 million in the United States
for fiscal 2022, 2021, and 2020, respectively.
(5) Includes property, plant and equipment, net, of $67.6 million, $79.8 million, and $16.7 million in Germany, the UK,
and Belgium, respectively, for fiscal 2022. Fiscal 2021 includes property, plant and equipment, net, of $77.9 million,
$83.5 million, and $20.9 million in Germany, the UK, and Belgium, respectively. 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.
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
July 2,
2022
$ 18,380.2
4,639.1
663.2
628.2
$ 24,310.7
71
Years Ended
July 3,
2021
(Millions)
$ 14,722.8
3,649.0
640.6
522.3
$ 19,534.7
June 27,
2020
$ 13,440.3
3,146.0
572.0
476.0
$ 17,634.3
Table of Contents
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
17. Restructuring expenses
During fiscal 2021 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 2022 related to the remaining restructuring liabilities established during fiscal 2021
and prior:
Balance at July 3, 2021
Cash payments
Changes in estimates, net
Other, principally foreign currency translation
Balance at July 2, 2022
Severance
$
$
35,099
(23,848)
(4,142)
(870)
6,239
$
$
Facility
and Contract
Exit Costs
(Thousands)
4,863
(2,531)
816
(202)
2,946
$
$
Total
39,962
(26,379)
(3,326)
(1,072)
9,185
The Company expects the majority of the remaining amounts to be paid by the first half of fiscal 2023.
72
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 2, 2022. 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 2, 2022.
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 2, 2022, as stated in its audit report which is included
herein.
Changes in Internal Control Over Financial Reporting
During the fourth quarter of fiscal 2022, 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.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
73
Table of Contents
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 17, 2022.
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 17, 2022.
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 17, 2022.
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 17, 2022.
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 17, 2022.
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Table of Contents
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
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 Computershare Trust Company, National
Association as successor to 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 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).
Form of Officer’s Certificate setting forth the terms of the 5.50% Notes due 2032 (incorporated herein by
reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 16, 2022).
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
10.1
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).
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10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
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).
Form of Letter Agreement between the Company and Ken Arnold, Max Chan, Michael McCoy and
Elizabeth McMullen (incorporated herein by reference to Exhibit 10.2 to the Company’s Annual Report on
Form 10-K filed on August 17, 2017).
Form of Change of Control Agreement between the Company and Philip Gallagher, Thomas Liguori, Ken
Arnold, Max Chan, Michael McCoy, and Elizabeth McMullen (incorporated herein by reference to Exhibit
10.3 to the Company’s Current Report on Form 8-K filed on February 15, 2011).
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 filed 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
filed 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
filed on August 17, 2018). Refer to Exhibit 10.12, above, for the form of awards under the 2016 Stock
Compensation and Incentive Plan.
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Table of Contents
10.14
10.15
Avnet, Inc. 2021 Stock Compensation and Incentive Plan (incorporated herein by reference to Exhibit 10.2
to the Company’s Quarterly Report on Form 10-Q filed on April 29, 2022).
Avnet, Inc. 2021 Stock Compensation and Incentive Plan:
(a) Form of Award Letter for Restricted Stock Unit Award
(b) Form of Award Letter for Performance Stock Unit Award
(c) Form of Award Letter for Nonqualified Stock Option Award
(incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed
on April 29, 2022).
10.16
(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 filed 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).
(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).
10.17
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
filed on August 17, 2018).
Bank Agreements
10.18
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).
77
Table of Contents
*
(4) Amendment No. 3 to the Fourth Amended and Restated Receivables Purchase Agreement, dated July
30, 2021, among Avnet, Inc., Avnet Receivables Corporation, Wells Fargo Bank, N.A., as agent, and the
companies and financial institutions party thereto.
(5) Amendment No. 4 to the Fourth Amended and Restated Receivables Purchase Agreement, dated
August 16, 2021, 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 18, 2021).
(6) Amendment No. 5 to the Fourth Amended and Restated Receivables Purchase Agreement, dated
January 10, 2022, 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 Quarterly Report on Form 10-Q filed on April 29, 2022).
10.19
(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).
(c) Amendment No. 2 to the Amended and Restated Credit Agreement, dated December 21, 2021, among
Avnet, Inc., Avnet Holdings Europe BVBA and Bank of America, N.A., as administrative agent
(incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed
on January 28, 2022).
(d) Second Amended and Restated Credit Agreement dated as of August 2, 2022, among Avnet, Inc., each
subsidiary of the Company party thereto, Bank of America, N.A. as the 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 August 3, 2022).
21.1
* List of subsidiaries of the Company as of July 2, 2022.
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.
101.SCH *
Inline XBRL Taxonomy Extension Schema Document.
101.CAL *
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
78
Table of Contents
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.
Item 16. Form 10-K Summary
Not applicable.
79
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SCHEDULE II
AVNET, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
Years Ended July 2, 2022, July 3, 2021, and June 27, 2020
Account Description
Fiscal 2022
Allowance for credit losses
Valuation allowance on tax loss carry-
forwards
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
Balance at
Beginning of
Period
Charged to
Expense
(Income)
Charged to
Other
Accounts
(Thousands)
Balance at
End of
Period
Deductions
$
88,160
$
47,990 (a) $
—
$ (22,248)(b) $ 113,902
293,569
(65,208)(c)
(20,472)(d)
—
207,889
65,018 (e)
15,842
17,205 (f)
(9,905)(b)
88,160
283,721
21,357 (g)
(11,509)(h)
—
293,569
53,499
12,111
—
(6,592)(b)
59,018
231,463
50,018 (i)
2,240 (h)
—
283,721
(a) Amount includes $17,202 of credit loss provisions associated with accounts receivable from Russian customers that
are no longer considered collectible. See Note 4, “Receivables and Russian-Ukraine conflict related expenses” of the
Notes to Consolidated Financial Statements of this Form 10-K.
(b) Primarily represents uncollectible receivables written off and the impact of changes in foreign currency rates during
the fiscal year.
(c) Primarily represents net release of valuation allowance and impact of current year activities.
(d) Primarily related to impact of pension-related other comprehensive income and foreign currency exchange on
valuation allowances.
(e) 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 (f) below.
(f) 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.
(g) Primarily represents impact of current year activities.
(h) Primarily related to impact of pension-related other comprehensive income and foreign currency exchange on valuation
allowances.
(i) Primarily represents establishment of valuation allowance and impact of current year activities.
80
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 12, 2022
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 12, 2022.
Signature
/s/ PHILIP R. GALLAGHER
Philip R. Gallagher
/s/ RODNEY C. ADKINS
Rodney C. Adkins
/s/ CARLO BOZOTTI
Carlo Bozotti
/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/ ERNEST MADDOCK
Ernest Maddock
/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 and Director
(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)
81
Table of Contents
82
Exhibit 10.18(b)(4)
AMENDMENT NO. 3 TO
FOURTH AMENDED AND RESTATED RECEIVABLES PURCHASE AGREEMENT
This Amendment No. 3 to the Fourth Amended and Restated Receivables Purchase
Agreement (this “Amendment”) is dated as of July 30, 2021, among Avnet Receivables Corporation, a
Delaware corporation (“Seller”), Avnet, Inc., a New York corporation (“Avnet”), as initial Servicer (the
Servicer together with Seller, the “Seller Parties” and each a “Seller Party”), each of the entities party
hereto identified as a “Financial Institution” (together with any of their respective successors and assigns
hereunder, the “Financial Institutions”), each of the entities party hereto identified as a “Company”
(together with any of their respective successors and assigns hereunder, the “Companies”) and Wells
Fargo Bank, N.A., as agent for the Purchasers or any successor agent hereunder (together with its
successors and assigns hereunder, the “Agent”), amending the Fourth Amended and Restated Receivables
Purchase Agreement, dated as of August 16, 2018 (as amended by Amendment No. 1 thereto, dated
February 28, 2020, and Amendment No. 2 thereto, dated as of July 31, 2020, the “Existing Agreement,”
and as further amended, modified or supplemented from time to time, including through the date hereof,
the “Receivables Purchase Agreement”).
RECITALS
The parties hereto are the current parties to the Existing Agreement and they now desire to
amend the Existing Agreement, subject to the terms and conditions hereof, as more particularly described
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
Section 1. Definitions Used Herein. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth for such terms in, or incorporated by reference into,
the Existing Agreement.
Section 2. Amendment of Existing Agreement. Subject to the terms and conditions set forth
herein, the Existing Agreement is hereby amended as follows:
(a)
The definition of “Liquidity Termination Date” in Exhibit I of the Existing
Agreement is hereby deleted in its entirety and replaced with the following:
“Liquidity Termination Date” means August 31, 2021.
Section 3.
Conditions to Effectiveness of Amendment. This Amendment shall become
effective as of the date hereof, upon the satisfaction of the conditions precedent that:
(a)
Amendment. The Agent and each Seller Party shall have received, on or before the
date hereof, executed counterparts of this Amendment, duly executed by each of the parties hereto.
(b)
Representations and Warranties. As of the date hereof, both before and after giving
effect to this Amendment, all of the representations and warranties of each Seller Party contained
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
in the Receivables Purchase Agreement and in each other Transaction Document shall be true and correct
in all material respects as though made on the date hereof (and by its execution hereof, each Seller Party
shall be deemed to have represented and warranted such).
(c)
No Amortization Event or Potential Amortization Event. As of the date hereof,
both before and after giving effect to this Amendment, no Amortization Event or Potential Amortization
Event shall have occurred and be continuing (and by its execution hereof, each Seller Party shall be
deemed to have represented and warranted such).
Section 4. Miscellaneous.
(a)
Effect; Ratification. This Amendment is effective solely for the purposes set forth
herein and shall be limited precisely as written, and shall not be deemed (i) to be a consent to, or an
acknowledgment of, any amendment, waiver or modification of any other term or condition of the
Existing Agreement or of any other instrument or agreement referred to therein or (ii) to prejudice any
right or remedy which the Agent, any Company or Financial Institution (or any of their respective assigns)
may now have or may have in the future under or in connection with the Receivables Purchase
Agreement or any other instrument or agreement referred to therein. Each reference in the Receivables
Purchase Agreement to “this Agreement,” “herein,” “hereof” and words of like import and each reference
in the other Transaction Documents to the Existing Agreement or to the “Receivables Purchase
Agreement” shall mean the Existing Agreement as amended hereby. This Amendment shall be construed
in connection with and as part of the Receivables Purchase Agreement and all terms, conditions,
representations, warranties, covenants and agreements set forth in the Receivables Purchase Agreement
and each other instrument or agreement referred to therein, except as herein amended, are hereby ratified
and confirmed and shall remain in full force and effect.
(b)
Transaction Documents. This Amendment is a Transaction Document executed
pursuant to the Receivables Purchase Agreement and shall be construed, administered and applied in
accordance with the terms and provisions thereof.
(c)
Costs, Fees and Expenses. Seller agrees to reimburse the Agent and each Purchaser
and its assigns upon demand for all reasonable and documented out-of-pocket costs, fees and expenses in
connection with the preparation, execution and delivery of this Amendment (including the reasonable fees
and expenses of counsel to the Agent).
(d)
Counterparts. This Amendment may be executed in any number of counterparts,
each such counterpart constituting an original and all of which when taken together shall constitute one
and the same instrument.
(e)
Severability. Any provision contained in this Amendment which is held to be
inoperative, unenforceable or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable or invalid without affecting the remaining provisions of this Amendment in that
jurisdiction or the operation, enforceability or validity of such provision in any other jurisdiction.
(f)
GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
(g) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AMENDMENT, ANY DOCUMENT EXECUTED BY ORIGINATOR PURSUANT TO THIS
AMENDMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the date first written above.
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
AVNET RECEIVABLES CORPORATION,
as Seller
By:
Name:
Title:
/s/ Darrel Jackson
Darrel Jackson
Director
AVNET, INC., as Servicer
By:
Name:
Title:
/s/ Joseph L. Burke
Joseph L. Burke
Vice President and Treasurer
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
WELLS FARGO BANK, N.A.,
as a Company and as a Financial Institution
By:
Name:
Title:
/s/ Jonathan Davis
Jonathan Davis
Vice President
WELLS FARGO BANK, N.A.,
as Agent
By:
Name:
Title:
/s/ Jonathan Davis
Jonathan Davis
Vice President
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
TRUST BANK,
as a Company and as a Financial Institution
By:
Name:
Title:
/s/ Emily Shields
Emily Shields
SVP
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
PNC BANK, NATIONAL ASSOCIATION, as a
Company and as a Financial Institution
By:
Name:
Title:
/s/ Nina Austin
Nina Austin
Senior Vice President
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
LIBERTY STREET FUNDING LLC,
as a Company
By:
Name:
Title:
/s/ Kevin J. Corrigan
Kevin J. Corrigan
Vice President
THE BANK OF NOVA SCOTIA,
as a Financial Institution
By:
Name:
Title:
/s/ Doug Noe
Doug Noe
Managing Director
AMENDMENT NO. 3 TO
AVNET RECEIVABLES PURCHASE AGREEMENT
BANK OF AMERICA, N.A.,
as a Company and as a Financial Institution
By:
Name:
Title:
/s/ Christopher Haynes
Christopher Haynes
Senior Vice President
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 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 DOO
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 Embedded (Freiburg) GmbH
Avnet Embedded (Malta) Limited
Avnet Embedded GmbH
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
Country
United Kingdom
United States
Hong Kong
United Kingdom
New Zealand
China
Singapore
Israel
Netherlands
United Kingdom
Germany
Israel
Mexico
United States
United States
Brazil
Serbia
Australia
China
China
Turkey
Russian Federation
Japan
Poland
Germany
Malta
Germany
Austria
France
Germany
Switzerland
Italy
United Kingdom
Belgium
Belgium
Luxembourg
Hong Kong
France
United Kingdom
Belgium
South Africa
United Kingdom
United States
Spain
India
Avnet International (Canada) Ltd.
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 Bernburg GmbH & Co. KG
Avnet Logistics BV
Avnet Logistics GmbH
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
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 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.
EBV Elektronik Spain S.L.
Canada
Belgium
Belgium
United Kingdom
United States
Japan
Korea, Republic of
Ireland
Germany
Belgium
Germany
Malaysia
Mexico
Sweden
Denmark
Norway
Finland
Philippines
United States
Netherlands
Mexico
South Africa
Hong Kong
Thailand
Taiwan
Hong Kong
China
China
United States
China
United States
United States
United Kingdom
United States
United Kingdom
Hong Kong
Germany
Denmark
Bulgaria
Germany
Germany
Israel
Hungary
Hong Kong
Russian Federation
Estonia
Italy
Romania
Slovakia
France
Poland
Spain
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
Memec Pty Limited
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
Australia
Mexico Holdings LLC
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.
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.
Tekdata Interconnections Limited
Telmil Electronics, Inc.
Tenva Belgium Comm. VA
Tenva Financial Management BV
TENVA GmbH
TENVA INVESTMENTS BV
Tenva Management GmbH
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 Hong Kong Limited
ZWEITE TENVA Property GmbH Im Technologiepark
United States
United States
United States
Finland
United States
United Kingdom
Canada
United States
United Kingdom
United Kingdom
United Kingdom
United States
United Kingdom
Netherlands
India
United States
China
China
France
United States
United Kingdom
United States
Belgium
Belgium
Germany
Belgium
Germany
Lithuania
China
Netherlands
United States
France
Germany
France
United Kingdom
Hong Kong
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, 333-228875 and 333-262380) on Form S-8 and registration
statements (No. 333-208009, 333-227100 and 333-262379) on Form S-3 of our report dated August 12, 2022, with respect
to the consolidated financial statements and financial statement schedule II of Avnet, Inc, and the effectiveness of internal
control over financial reporting.
Phoenix, Arizona
August 12, 2022
/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 12, 2022
/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 12, 2022
/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 2, 2022 (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 12, 2022
/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 2, 2022 (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 12, 2022
/s/ THOMAS LIGUORI
Thomas Liguori
Chief Financial Officer