Avnet Reports Third Quarter Results

PHOENIX (ots-PRNewswire) - Avnet, Inc. (NYSE: AVT) todayreported results for its third quarter and first nine monthsended April 2, 1999. Net income for the third quarter of fiscal1999 was $25.7 million, or $0.73 per share on a diluted basis, ascompared with last year's net income of $40.7 million, or $1.03per share on a diluted basis. Sales for the third quarter offiscal 1999 were $1.60 billion as compared with $1.51 billion inthe third quarter of last year. For the first nine months of fiscal 1999, Avnet reported netincome, before special charges, of $83.7 million, or $2.32 pershare on a diluted basis, as compared with net income, beforespecial items, of $126.1 million, or $3.11 per share, on adiluted basis, in last year's first nine months. Sales for thefirst nine months of the current fiscal year were $4.71 billionas compared with $4.37 billion in the same period last year. The first nine months of fiscal 1999 results mentioned abovedo 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 thereorganization of the Company's Electronics Marketing GroupEuropean operations as more fully described in the footnotes tothe attached financial statements. Including these charges, thefirst nine months of fiscal 1999 net income and diluted earningsper share were $67.9 million and $1.88, respectively. In addition, the nine month fiscal 1998 results discussedabove do not include the gain on the sale of the Company's formerChannel Master business and special charges as described in thefootnotes to the attached financial statements. The net effect ofthese items was to increase pre-tax income, net income, anddiluted earnings per share by approximately $20.5 million, $8.7million, and $0.21 per share, respectively. Accordingly, lastyear's nine months net income and diluted earnings per shareincluding special items were $134.9 million and $3.32,respectively. Sales for the Electronics Marketing Group (EMG) of $1.20billion in the third quarter of fiscal 1999 and $3.58 billion inthe first nine months of fiscal 1999 were up approximately 5% and8%, respectively, as compared with sales of $1.14 billion and$3.31 billion, respectively, in the prior year periods. EMG'sthird quarter fiscal 1999 core sales per day were sequentiallyhigher for the second consecutive quarter. EMG's operating incomewas $50.9 million for the third quarter and $157.7 million,excluding special charges, for the first nine months of fiscal1999, down 23% and 21%, respectively, as compared with $66.1million and $201.7 million, respectively, in the prior yearperiods. The Computer Marketing Group's (CMG) sales of $403million for the third quarter of fiscal 1999 and $1.13 billionfor 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'soperating income of $7.3 million for the third quarter of fiscal1999 and $26.3 million for the first nine months of fiscal 1999were down 50% and 31%, respectively, as compared with $14.6million and $38.3 million, respectively, in the prior yearperiods. The prior year first nine month consolidated incomestatement includes the results for Channel Master, which was soldduring the second quarter of fiscal 1998. Mr. Vallee, Chairman and CEO, noted that the third quarterresults reflect the continuation of weak market conditions inboth the electronic component distribution industry and thecomputer product distribution industry in which CMG doesbusiness. He also indicated, however, that gross profit marginsstabilized at both EMG and CMG with EMG posting the secondconsecutive quarter of slightly positive gross profit marginimprovement. Mr. Vallee further reported that the increase inquarterly sales on both a year-on-year and sequential basis wasbenefited by the increase in shipping days and from sales ofnewly acquired businesses. Operating expenses were also impactedby the increase in business days and by costs associated with theCompany's Year 2000 remediation program, which Mr. Vallee statedwas on schedule, as well as by normal operating expenses incurredby newly acquired businesses. Mr. Vallee also noted that thepercentage decrease in earnings per share as compared with theprior year third quarter was substantially less than thepercentage decrease in net income due to the positive impact ofthe Company's stock repurchase program. Headquartered in Phoenix, Arizona, Avnet, Inc. is a Fortune500 company with annual sales exceeding $5.9 billion. With salesin 58 countries, Avnet markets, inventories and adds value to theproducts of the most prestigious electronic components andcomputer 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 theimpact of incremental special charges (recorded in the firstquarter) associated with the reorganization of the Company'sElectronics 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 thenet 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 thesale of Channel Master, offset by costs related to thedivestiture of Avnet Industrial, the closure of the Company'sCorporate Headquarters in Great Neck, NY and the anticipated losson 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 includethe impact of incremental special charges (recorded in the firstquarter) associated with the reorganization of the Company'sElectronics 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 inoperating expenses and $7.9 million is included in cost of sales.

(2) Fiscal year 1998 nine month results shown above includethe gain on the sale of Channel Master amounting to $33.8 millionpre-tax, offset somewhat in operating expenses by costs relatingto the divestiture of Avnet Industrial, the closure of theCompany's Corporate Headquarters in Great Neck, NY and theanticipated loss on the sale of Company-owned real estate,amounting to $13.3 million in the aggregate. The effect of theseitems is to increase income before income taxes, net income anddiluted earnings per share by approximately $20.5 million, $8.7million 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 otsOriginal Text Service: Avnet, Inc. Internet:http://www.newsaktuell.de Contact: John Cole, Controller,john.cole@avnet.com, or Raymond Sadowski, SVP & CFO, both ofAvnet, Inc., 602-643-7291, Fax: 602-643-7363 Web site:http://www.avnet.com

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