Avnet Reports Third Quarter Results

PHOENIX (ots-PRNewswire) - Avnet, Inc. (NYSE: AVT) today reported results for its third quarter and first nine months ended April 2, 1999. Net income for the third quarter of fiscal 1999 was $25.7 million, or $0.73 per share on a diluted basis, as compared with last year's net income of $40.7 million, or $1.03 per share on a diluted basis. Sales for the third quarter of fiscal 1999 were $1.60 billion as compared with $1.51 billion in the third quarter of last year. For the first nine months of fiscal 1999, Avnet reported net income, before special charges, of $83.7 million, or $2.32 per share on a diluted basis, as compared with net income, before special items, of $126.1 million, or $3.11 per share, on a diluted basis, in last year's first nine months. Sales for the first nine months of the current fiscal year were $4.71 billion as compared with $4.37 billion in the same period last year. The first nine months of fiscal 1999 results mentioned above do not include $26.5 million pre-tax, $15.7 million after-tax and $0.43 per share on a diluted basis of incremental special charges (recorded in the first quarter) associated principally with the reorganization of the Company's Electronics Marketing Group European operations as more fully described in the footnotes to the attached financial statements. Including these charges, the first nine months of fiscal 1999 net income and diluted earnings per share were $67.9 million and $1.88, respectively. In addition, the nine month fiscal 1998 results discussed above do not include the gain on the sale of the Company's former Channel Master business and special charges as described in the footnotes to the attached financial statements. The net effect of these items was to increase pre-tax income, net income, and diluted earnings per share by approximately $20.5 million, $8.7 million, and $0.21 per share, respectively. Accordingly, last year's nine months net income and diluted earnings per share including special items were $134.9 million and $3.32, respectively. Sales for the Electronics Marketing Group (EMG) of $1.20 billion in the third quarter of fiscal 1999 and $3.58 billion in the first nine months of fiscal 1999 were up approximately 5% and 8%, respectively, as compared with sales of $1.14 billion and $3.31 billion, respectively, in the prior year periods. EMG's third quarter fiscal 1999 core sales per day were sequentially higher for the second consecutive quarter. EMG's operating income was $50.9 million for the third quarter and $157.7 million, excluding special charges, for the first nine months of fiscal 1999, down 23% and 21%, respectively, as compared with $66.1 million and $201.7 million, respectively, in the prior year periods. The Computer Marketing Group's (CMG) sales of $403 million for the third quarter of fiscal 1999 and $1.13 billion for the first nine months of fiscal 1999 were up approximately 9% and 10%, respectively, as compared with sales of $371 million and $1.02 billion, respectively, in the prior year periods. CMG's operating income of $7.3 million for the third quarter of fiscal 1999 and $26.3 million for the first nine months of fiscal 1999 were down 50% and 31%, respectively, as compared with $14.6 million and $38.3 million, respectively, in the prior year periods. The prior year first nine month consolidated income statement includes the results for Channel Master, which was sold during the second quarter of fiscal 1998. Mr. Vallee, Chairman and CEO, noted that the third quarter results reflect the continuation of weak market conditions in both the electronic component distribution industry and the computer product distribution industry in which CMG does business. He also indicated, however, that gross profit margins stabilized at both EMG and CMG with EMG posting the second consecutive quarter of slightly positive gross profit margin improvement. Mr. Vallee further reported that the increase in quarterly sales on both a year-on-year and sequential basis was benefited by the increase in shipping days and from sales of newly acquired businesses. Operating expenses were also impacted by the increase in business days and by costs associated with the Company's Year 2000 remediation program, which Mr. Vallee stated was on schedule, as well as by normal operating expenses incurred by newly acquired businesses. Mr. Vallee also noted that the percentage decrease in earnings per share as compared with the prior year third quarter was substantially less than the percentage decrease in net income due to the positive impact of the Company's stock repurchase program. Headquartered in Phoenix, Arizona, Avnet, Inc. is a Fortune 500 company with annual sales exceeding $5.9 billion. With sales in 58 countries, Avnet markets, inventories and adds value to the products of the most prestigious electronic components and computer equipment manufacturers for customers worldwide. AVNET, INC. INCOME STATEMENT HIGHLIGHTS (MILLIONS EXCEPT PER SHARE DATA) THIRD QUARTERS ENDED APRIL 2, MARCH 27, 1999 1998 % CHANGE Sales $1,599.2 $1,512.1 + 6% Operating income 58.2 80.7 - 28% Net income 25.7 40.7 - 37% Earnings per share: Basic $0.73 $1.04 - 30% Diluted $0.73 $1.03 - 29% AVNET, INC. INCOME STATEMENT HIGHLIGHTS (MILLIONS EXCEPT PER SHARE DATA) INCLUDING SPECIAL ITEMS (1)(2) NINE MONTHS ENDED APRIL 2, MARCH 27, 1999(1) 1998(2) % CHANGE Sales $4,707.7 $4,371.7 + 8% Operating income 157.5 229.5 - 31% Net income 67.9 134.9 - 50% Earnings per share: Basic $1.90 $3.36 - 43% Diluted $1.88 $3.32 - 43% EXCLUDING SPECIAL ITEMS (1)(2) NINE MONTHS ENDED APRIL 2, MARCH 27, 1999(1) 1998(2) % CHANGE Sales $4,707.7 $4,371.7 + 8% Operating income 184.0 242.8 - 24% Net income 83.7 126.1 - 34% Earnings per share: Basic $2.34 $3.15 - 26% Diluted $2.32 $3.11 - 25% (1) Fiscal year 1999 nine month special items consist of the impact of incremental special charges (recorded in the first quarter) associated with the reorganization of the Company's Electronics Marketing Group amounting to $26.5 million pre-tax, $15.7 million after-tax and $0.43 per share on a diluted basis. (2) Fiscal year 1998 nine month special items consist of the net positive impact of $20.5 million pre-tax, $8.7 million after- tax and $0.21 per share on a diluted basis on the gain on the sale of Channel Master, offset by costs related to the divestiture of Avnet Industrial, the closure of the Company's Corporate Headquarters in Great Neck, NY and the anticipated loss on the sale of Company-owned real estate. AVNET, INC. CONSOLIDATED STATEMENTS OF INCOME (THOUSANDS EXCEPT PER SHARE DATA) THIRD QUARTERS ENDED APRIL 2, MARCH 27, 1999 1998 Sales $1,599,226 $1,512,121 Cost of sales 1,355,438 1,259,878 Gross profit 243,788 252,243 Operating expenses 185,610 171,573 Operating income 58,178 80,670 Other income, net 212 757 Interest expense (13,299) (10,620) Income before income taxes 45,091 70,807 Income taxes 19,355 30,132 Net Income $25,736 $40,675 Earnings per share: Basic $0.73 $1.04 Diluted $0.73 $1.03 Shares used to compute earnings per share: Basic 35,149 39,141 Diluted 35,320 39,598 AVNET, INC. CONSOLIDATED STATEMENTS OF INCOME (THOUSANDS EXCEPT PER SHARE DATA) NINE MONTHS ENDED APRIL 2, MARCH 27, 1999(1) 1998(2) Sales $4,707,731 $4,371,691 Cost of sales 4,003,243 3,631,578 Gross profit 704,488 740,113 Operating expenses 547,008 510,631 Operating income 157,480 229,482 Other income, net 1,658 1,439 Interest expense (39,468) (27,182) Gain on sale of Channel Master 0 33,795 Income before income taxes 119,670 237,534 Income taxes 51,742 102,674 Net Income $67,928 $134,860 Earnings per share: Basic $1.90 $3.36 Diluted $1.88 $3.32 Shares used to compute earnings per share: Basic 35,736 40,119 Diluted 36,093 40,619 (1) Fiscal year 1999 nine months results shown above include the impact of incremental special charges (recorded in the first quarter) associated with the reorganization of the Company's Electronics Marketing Group amounting to $26.5 million pre-tax, $15.7 million after-tax and $0.43 per share on a diluted basis. Approximately $18.6 million of the pre-tax charge is included in operating expenses and $7.9 million is included in cost of sales. (2) Fiscal year 1998 nine month results shown above include the gain on the sale of Channel Master amounting to $33.8 million pre-tax, offset somewhat in operating expenses by costs relating to the divestiture of Avnet Industrial, the closure of the Company's Corporate Headquarters in Great Neck, NY and the anticipated loss on the sale of Company-owned real estate, amounting to $13.3 million in the aggregate. The effect of these items is to increase income before income taxes, net income and diluted earnings per share by approximately $20.5 million, $8.7 million and $0.21 per share, respectively. AVNET, INC. CONSOLIDATED BALANCE SHEETS (THOUSANDS) APRIL 2, JUNE 26, 1999 1998 (unaudited) (audited) Assets: Current assets: Cash and cash equivalents $73,110 $82,607 Receivables 909,320 894,289 Inventories 1,044,841 1,061,739 Other 43,815 29,722 Total current assets 2,071,086 2,068,357 Property, plant & equipment 175,727 155,491 Goodwill 484,488 460,882 Other assets 64,009 48,967 Total assets 2,795,310 2,733,697 Less liabilities: Current liabilities: Borrowings due within one year 270 243 Accounts payable 438,245 451,441 Accrued expenses and other 136,232 155,423 Total current liabilities 574,747 607,107 Long-term debt, less due within one year 920,048 810,695 Total liabilities 1,494,795 1,417,802 Shareholders' equity $1,300,515 $1,315,895 ots Original Text Service: Avnet, Inc. Internet: http://www.newsaktuell.de Contact: John Cole, Controller, john.cole@avnet.com, or Raymond Sadowski, SVP & CFO, both of Avnet, Inc., 602-643-7291, Fax: 602-643-7363 Web site: http://www.avnet.com Subscribers please note that material bearing the slug "PROTEXT" is not part of CTK's news service and is not to be published under the "CTK" slug. Protext is a commercial service providing distribution of press releases from clients, who are identified in the text of Protext reports and who bear full responsibility for their contents. PROTEXT