Avnet, Inc.

2211 South 47th Street

Phoenix, AZ 85034

PRESS RELEASE

THIRD QUARTERS ENDED

March 28, 2015

March 29, 2014

Change

$ in millions, except per share data

Sales

$

$

%

Constant Currency (1)

%

GAAP Operating Income

%

Adjusted Operating Income (2)

%

GAAP Net Income

%

Adjusted Net Income (2)

%

GAAP Diluted EPS

$

$

%

Adjusted Diluted EPS (2)

$

$

%

(1)

Year-over-year sales growth rate excluding the impact of changes in foreign currency exchange rates.

(2)

A reconciliation of non-GAAP financial measures to GAAP financial measures is presented in the Non-GAAP Financial Information section in this press release.

·

Sales for the quarter ended March 28, 2015 increased 7.0%  organically on a constant currency basis and reported sales increased 0.8% year over year to $6.74 billion

·

Adjusted operating income of $230.4 million increased 3.0% year over year and adjusted operating income margin of 3.4% increased 7 basis points year over year 

·

Adjusted net income of $143.5 million was essentially flat from the year ago quarter and adjusted diluted earnings per share of $1.04 increased 1.0% year over year

·

Excluding the impact of changes in foreign currency exchange rates, adjusted diluted earnings per share would have been $1.15, which represents an increase of approximately 12% from the year ago quarter

Year-over-

Year Growth Rates

Q3 FY15

Reported and

Sales

Organic Sales

(in millions)

EM Total

$

%

Constant Currency (1)

%

Americas

$

%

EMEA

$

%

Constant Currency (1)

%

Asia

$

%

Q3 FY15

Q3 FY14

Change

Operating Income

$

$

%

Operating Income Margin

%  

%  

bps

(1)

Year-over-year sales growth rate excluding the impact of changes in foreign currency exchange rates.

·

Sales increased 8.7% organically on a constant currency basis and reported sales increased 2.1% year over year to $4.2 billion

·

Operating income margin was flat year over year at 4.7%  as strength in the Asia and EMEA regions was offset by weakness due to the translation impact of the strong U.S. Dollar

·

Working capital (defined as receivables plus inventories less accounts payables) was essentially flat from the year ago quarter in reported dollars but increased 9.9% in constant currency primarily in support of the organic sales growth

·

Return on working capital (ROWC) increased 8 basis points year over year and increased 128 basis points sequentially

Year-over-

Year Growth Rates

Q3 FY15 

Reported and

Sales

Organic Sales

(in millions)

TS Total

$

%

Constant Currency (1)

%

Americas

$

%

EMEA

$

%

Constant Currency (1)

%

Asia

$

%

Q3 FY15

Q3 FY14

Change

Operating Income

$

$

%  

Operating Income Margin

%  

%  

bps

·

Sales increased 4.3% organically on a constant currency basis and decreased 1.3% year over year to $2.52 billion 

·

Operating income increased 11.8% to $68.1 million and operating income margin increased 32 basis points year over year to 2.7%

·

ROWC increased 365 basis points year over year primarily due to higher operating income in the Americas region 

·

At a product level, year-over-year growth in software, storage, and networking and security was offset by a decline in computing components

·

Cash generated from operations was approximately $60 million in the March quarter and for the trailing twelve months, cash generated from operations was approximately $318 million

·

Cash and cash equivalents at the end of the quarter was $803.5 million; net debt (total debt less cash and cash equivalents) was approximately $1.3 billion

·

The Company repurchased approximately 925,000 shares during the quarter at an aggregate cost of $38.8 million. Through the first nine months of the fiscal year, the Company repurchased approximately 3.6 million shares at an aggregate cost of $147.6 million. Entering the fourth quarter, the Company had approximately $318.3 million remaining under the current repurchase authorization

·

The Company paid a quarterly dividend of $0.16 per share or $21.7 million and $0.48 per share or $65.6 million for the first nine months of the fiscal year

·

EM sales are expected to be in the range of $4.15 billion to $4.45 billion and TS sales are expected to be in the range of $2.45 billion to $2.75 billion

·

Avnet sales are expected to be in the range of $6.6 billion and $7.2 billion

·

Adjusted diluted earnings per share is expected to be in the range of $1.02 to $1.12 per share

·

The guidance assumes 138 million average diluted shares outstanding and a tax rate of 27% to 31%

·

ROWC is defined as annualized adjusted operating income (as defined above) divided by the sum of the monthly average balances of receivables and inventories less accounts payable.

·

ROCE is defined as annualized, tax effected adjusted operating income (as defined above) divided by the monthly average balances of interest-bearing debt and equity (including the impact of adjustments to operating income discussed above) less cash and cash equivalents.

·

WC velocity is defined as annualized sales divided by the sum of the monthly average balances of receivables and inventories less accounts payable.

Third Quarter Fiscal 2015

Income

Before

Operating

Income

Diluted

Income

Taxes

Net Income

EPS*

$ in thousands, except per share amounts

GAAP results

$

$

$

Restructuring, integration and other expenses

Amortization of intangible assets and other

Income tax adjustments

 —

 —

Total adjustments

Adjusted results

$

$

$

$

·

Restructuring, integration and other expenses of $15.5 million before tax consisted of $3.6 million for severance, $0.7 million for facility exit and asset impairment related costs, $3.8 million for other restructuring costs, $5.3 million for integration-related costs, $2.4 million for other costs, and net reversals of $0.3 million to adjust estimates for prior period restructuring liabilities. Restructuring, integration and other expenses after tax was $12.0 million;

·

Amortization expense and other substantially all of which related to acquired intangible assets of $11.2 million before tax and $7.7 million after tax; and

·

An income tax expense, net of $2.2 million primarily related to certain items impacting the effective income tax rate in the third quarter of fiscal 2015.

Second Quarter Fiscal 2015

Income

Before

Operating

Income

Diluted

Income

Taxes

Net Income

EPS

$ in thousands, except per share amounts

GAAP results

$

$

$

$

Restructuring, integration and other Expenses

Amortization of intangible assets and other

Income tax adjustments

—

—

Total adjustments

Adjusted results

$

$

$

$

·

Restructuring, integration and other expenses of $13.3 million before tax consisted of $1.7 million for severance, $4.1 million for facility exit and asset impairment related costs, $0.8 million for other restructuring costs, $4.0 million for integration-related costs, $2.1 million for other costs, and a net expense of $0.6 million to adjust estimates for prior period restructuring liabilities. Restructuring, integration and other expenses after tax was $10.2 million;

·

Amortization expense and other substantially all of which related to acquired intangible assets of $11.1 million before tax and $7.7 million after tax; and

·

An income tax benefit, net of $5.6 million primarily related to certain items impacting the effective income tax rate in the second quarter of fiscal 2015.

Third Quarter Fiscal 2014

Income

Before

Operating

Income

Diluted

Income

Taxes

Net Income

EPS

$ in thousands, except per share amounts

GAAP results

$

$

$

$

Restructuring, integration and other expenses

Gain on legal settlement

 —

Amortization of intangible assets and other

Income tax adjustments

 —

 —

Total adjustments

Adjusted results

$

$

$

$

·

Restructuring, integration and other expenses of $26.1 million before tax consisted of $15.4 million for severance, $3.9 million for facility exit and asset impairment related costs, $2.3 million for other costs, $3.9 million for integration-related costs, and a net expense of $0.6 million to

adjust estimates for prior period restructuring liabilities. Restructuring, integration and other expenses after tax was $19.3 million;

·

Gain on legal settlement of $3.0 million before tax and $1.8 million after tax related to a settlement payment received during the third quarter of fiscal 2014;

·

Amortization expense and other substantially all of which related to acquired intangible assets of $12.9 million before tax and $9.0 million after tax; and

·

An income tax expense, net of $3.7 million primarily related to certain items impacting the effective income tax rate in the third quarter of fiscal 2014.

Nine Months Ended

As Reported

Acquisitions/

Organic Sales -

Fiscal 2014

Divestitures

Fiscal 2014

(in thousands)

Avnet, Inc.

$

$

$

EM

EMEA

Q3 FY15

Q3 FY14

Q2 FY15

Sales

$

$

$

Sales, annualized

(a)

$

$

$

Adjusted operating income (1)

$

$

$

Adjusted annualized operating income

(b)

$

$

$

Adjusted effective tax rate (2)

%  

%  

%  

Adjusted annualized operating income, after tax

(c)

$

$

$

Average monthly working capital

Accounts receivable

$

$

$

Inventories

$

$

$

Accounts payable

$

$

$

Average working capital

(d)

$

$

$

Average monthly capital employed

(e)

$

$

$

ROWC = (b) / (d)

%  

%  

%  

WC Velocity = (a) / (d)

ROCE = (c) / (e)

%  

%  

%  

(1)

See reconciliation to GAAP amounts in the preceding tables in this Non-GAAP Financial Information section.

(2)

Adjusted effective tax rate for each quarterly period in a fiscal year is based upon the currently anticipated annual effective tax rate, excluding the tax effect of the items described above in the reconciliation to GAAP amounts in this Non-GAAP Financial Information section.

Third Quarters Ended

Nine Months Ended

March 28,

March 29,

March 28,

March 29,

2015

2014

2015

2014

(Thousands, except per share data)

Sales

$

$

$

$

Cost of sales

Gross profit

Selling, general and administrative expenses

Restructuring, integration and other expenses

Operating income

Other (expense) income , net

Interest expense

Gain on legal settlement

 —

 —

Income before income taxes

Income tax expense

Net income

$

$

$

$

Earnings per share:

Basic

$

$

Diluted

$

$

Shares used to compute earnings per share:

Basic

Diluted

Cash dividends paid per common share

$

$

$

$

March 28,

June 28,

2015

2014

(Thousands)

ASSETS

Current assets:

Cash and cash equivalents

$

$

Receivables, net

Inventories

Prepaid and other current assets

Total current assets

Property, plant and equipment, net

Goodwill

Intangible assets, net

Other assets

Total assets

$

$

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term debt

$

$

Accounts payable

Accrued expenses and other

Total current liabilities

Long-term debt

Other liabilities

Total liabilities

Shareholders’ equity

Total liabilities and shareholders’ equity

$

$

Nine Months Ended

March 28,

March 29,

2015

2014

(Thousands)

Cash flows from operating activities:

Net income

$

$

Non-cash and other reconciling items:

Depreciation

Amortization

Deferred income taxes

Stock-based compensation

Other, net

Changes in (net of effects from businesses acquired):

Receivables

Inventories

Accounts payable

Accrued expenses and other, net

Net cash flows provided by operating activities

Cash flows from financing activities:

Repayment of notes

 —

Borrowings under accounts receivable securitization program, net

(Repayments) borrowings of bank and other debt, net

Repurchases of common stock

Dividends paid on common stock

Other, net

Net cash flows used for financing activities

Cash flows from investing activities:

Purchases of property, plant and equipment

Acquisitions of businesses, net of cash acquired

 —

Other, net

Net cash flows used for investing activities

Effect of exchange rate changes on cash and cash equivalents

Cash and cash equivalents:

— decrease

— at beginning of period

— at end of period

$

$

Third Quarters Ended*

Nine Months Ended*

March 28, 2015

March 29, 2014

March 28, 2015

March 29, 2014

(Millions)

Sales:

Electronics Marketing

$

$

$

$

Technology Solutions

Consolidated Sales

$

$

$

$

Operating Income:

Electronics Marketing

$

$

$

$

Technology Solutions

Corporate

Restructuring, integration and other expenses

Amortization of intangible assets and other

Operating Income

$

$

$

$