Market Overview

Avnet Reports Fiscal Fourth Quarter and 2018 Financial Results

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Fourth quarter sales rose 10 percent year over year

Transformation delivered cash flow from operations of $236
million, the highest in five years

Avnet, Inc. (Nasdaq: AVT)
today announced results for the fourth quarter and fiscal year ended
June 30, 2018.

Fourth Quarter Key Financial Highlights

  • Sales of $5.06 billion increased 9.8% year over year
    • Sales grew 6.7% year over year in constant currency
  • GAAP operating income margin of 2.5%
    • Non-GAAP adjusted operating income margin improved year over year
      to 3.7%
  • GAAP diluted EPS from continuing operations of $0.49
    • Non-GAAP diluted EPS of $0.99 increased 18% year over year
  • Delivered the strongest adjusted operating income dollars and margin
    performance in five quarters
  • Net working capital days improved sequentially by 7 days, from 93 to
    86, and improved 14 days from the second quarter
  • Cash flow from operations reached $236 million

CEO Commentary

"We closed fiscal 2018 with great momentum in revenue growth, earnings
and cash flow generation," said Bill Amelio, Chief Executive Officer,
Avnet. "Avnet's unique ecosystem gives our customers access to an
unparalleled suite of capabilities. We can now guide our enterprise and
startup customers alike from idea to product and product to market. We
do this by reducing complexity and delivering solutions that get
products to market quickly and cost effectively. Our ecosystem is
foundational, and when coupled with our ongoing transformation
initiatives, we see a very exciting road ahead."

Key Financial Metrics
($
in millions, except per share data)

 
Fourth Quarter Results (GAAP)
  Jun – 18   Jun – 17   Change Y/Y   Mar – 18   Change Q/Q
Sales $ 5,059.2 $ 4,606.4 9.8 % $ 4,795.1 5.5 %
Operating Income (Loss) 127.9 93.4 37.0 % (54.4 ) 335.2 %
Operating Income (Loss) Margin 2.5 % 2.0 % 50 bps (1.1 ) % 366 bps
Diluted Earnings (Loss) Per Share $ 0.49 $ 0.59 (16.9 ) % $ (2.64 ) 118.6 %
Fourth Quarter Results (Non-GAAP)(1)
Jun – 18 Jun – 17 Change Y/Y Mar – 18 Change Q/Q
Sales $ 5,059.2 $ 4,606.4 9.8 % $ 4,795.1 5.5 %
Adjusted Operating Income 186.5 155.2 20.2 % 174.9 6.7 %
Adjusted Operating Income Margin 3.7 % 3.4 % 32 bps 3.7 % 4 bps
Adjusted Diluted Earnings Per Share $ 0.99 $ 0.84 17.9 % $ 1.02 (2.9 ) %
Segment and Geographical Mix
Jun – 18 Jun – 17 Change Y/Y Mar – 18 Change Q/Q
Electronic Components (EC) Sales $ 4,668.7 $ 4,260.7 9.6 % $ 4,404.1 6.0 %
EC Operating Income Margin 3.4 % 3.6 % (15 ) bps 3.6 % (15 ) bps
Premier Farnell (PF) Sales $ 390.5 $ 345.7 13.0 % $ 391.0 (0.1 ) %
PF Operating Income Margin 11.8 % 10.3 % 149 bps 11.4 % 42 bps
Americas Sales $ 1,339.2 $ 1,332.2 0.5 % $ 1,276.4 4.9 %
EMEA Sales 1,779.6 1,651.0 7.8 % 1,812.3 (1.8 ) %
Asia Sales 1,940.4 1,623.2 19.6 % 1,706.3 13.7 %

(1)

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

CFO Commentary

"Our transformation efforts are contributing meaningfully toward our
goals of growing Avnet's higher margin businesses, reducing our expenses
and optimizing working capital. This progress culminated in $236 million
of cash flow from operations in the fourth quarter, Avnet's best
operating cash flow performance in five years," stated Tom Liguori,
Chief Financial Officer, Avnet. "Our focus on optimizing operating
expenses resulted in an additional $37 million of savings being
implemented at the end of the fourth quarter to further streamline
expenses as we enter fiscal year 2019."

Additional Fourth Quarter Highlights

  • Named a global distribution partner for Microsemi Corp., a wholly
    owned subsidiary of Microchip Technology. This expands Avnet's
    multi-year relationship with Microchip, and gives Avnet customers
    access to Microsemi's complete portfolio of semiconductor and system
    solutions for aerospace and defense, communications, data center and
    industrial markets.
  • Added three new suppliers to the Electronic Components business and
    four new suppliers to Premier Farnell
  • Surpassed one million members in Avnet's online communities of
    element14 and Hackster.io, more than double the members from one year
    ago
  • Earned a ranking in the top 10 on the 2018 Gartner Supply Chain Top
    25
    list
  • Expanded the Company's industry expertise by adding semiconductor
    veteran Oleg Khaykin to Avnet's board of directors, where he serves on
    the audit and the corporate governance committees
  • Strengthened the Electronic Components business unit by adding Tony
    Roybal, who joined Avnet as regional president, Americas Electronic
    Components, reporting to Phil Gallagher
  • Continued to maintain a strong book-to-bill ratio above 1.0 across all
    regions
  • Delivered the strongest sales quarter of the year for the Electronic
    Components business with 6% sales growth sequentially
  • Doubled online sales year-over-year
  • Repurchased 2.9 million Avnet shares for $117 million
  • Paid $0.19 per share dividend for a total of $22.1 million
  • Reported end of quarter cash and cash equivalents of $621.1 million;
    debt was $1.7 billion with a leverage ratio of approximately 2.2

Outlook for the First Quarter of Fiscal 2019
Ending on September 29, 2018

    Guidance Range     Midpoint
Sales $4.8B - $5.2B $5.0B
Non-GAAP Diluted EPS(1) $0.95 - $1.05 $1.00
Estimated Tax Rate 20% - 24% 22%

(1)

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

The above guidance excludes any additional acquisitions, any results of
discontinued operations, amortization of intangibles, accelerated
depreciation, any potential restructuring, integration, and other
expenses and certain income tax adjustments including certain impacts of
the recent tax law changes in the U.S. The above guidance assumes 117
million average diluted shares outstanding and the average U.S. Dollar
to Euro currency exchange rate for the first quarter of fiscal 2019 is
$1.16 to €1.00. This compares with an average exchange rate of $1.17 to
the Euro in the first quarter of fiscal 2018.

Today's Conference Call and Webcast Details:

Avnet will host a quarterly teleconference and webcast today at 1:30
p.m. PDT. The live webcast can be accessed from the following link Avnet
Earnings Call Webcast and Slides
and will be available for 90 days.

To participate in the live call, dial 877-407-8112 or 201-689-8840. To
access the slides follow the webcast link above, or the slides can be
accessed via Avnet's Investor Relations web page at: www.ir.avnet.com.

Forward-Looking Statements

This document contains certain "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
statements are based on management's current expectations and are
subject to uncertainty and changes in facts and circumstances. The
forward-looking statements herein include statements addressing future
financial and operating results of Avnet and may include words such as
"will," "anticipate," "intend," "estimate," "forecast," "expect,"
"feel," "believe," "should," and other words and terms of similar
meaning in connection with any discussions of future operating or
financial performance, business prospects or market conditions. Actual
results may differ materially from the expectations contained in the
forward-looking statements.

The following factors, among others, could cause actual results to
differ materially from those described in the forward-looking
statements: Avnet's ability to retain and grow market share and to
generate additional cash flow, risks associated with any acquisition
activities and the successful integration of acquired companies,
implementing and maintaining ERP systems, supplier losses and changes to
supplier programs, an industry down-cycle in semiconductors, declines in
sales, changes in business conditions and the economy in general,
changes in market demand and pricing pressures, any material changes in
the allocation of product or price discounts by suppliers, and other
competitive and/or regulatory factors affecting the businesses of Avnet
generally.

More detailed information about these and other factors is set forth in
Avnet's filings with the Securities and Exchange Commission, including
Avnet's reports on Form 10-K, Form 10-Q and Form 8-K. Except as required
by law, Avnet is under no obligation to update any forward-looking
statements, whether as a result of new information, future events or
otherwise.

About Avnet

From idea to design and from prototype to production, Avnet supports
customers at each stage of a product's lifecycle. A comprehensive
portfolio of design and supply chain services makes Avnet the go-to
guide for innovators who set the pace for technological change. For
nearly a century, Avnet has helped its customers and suppliers around
the world realize the transformative possibilities of technology. Learn
more about Avnet at www.avnet.com.
Visit the Avnet Investor Relations website at www.ir.avnet.com
or contact us at investorrelations@avnet.com.
(AVT_IR)

AVNET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

           
Fourth Quarters Ended Years Ended
June 30, July 1, June 30, July 1,
2018 2017 2018 2017
(Thousands, except per share data)
Sales $ 5,059,220 $ 4,606,404 $ 19,036,892 $ 17,439,963
Cost of sales   4,400,588     3,975,788     16,509,708     15,070,521  
Gross profit 658,632 630,616 2,527,184 2,369,442
Selling, general and administrative expenses 493,840 495,210 1,970,103 1,770,627
Goodwill Impairment expense 181,440
Restructuring, integration and other expenses   36,848     42,033     145,125     137,415  
Operating income 127,944 93,373 230,516 461,400
Other (expense) income, net (7,639 ) (13,495 ) 17,086 (44,305 )
Interest expense   (26,779 )   (25,173 )   (102,525 )   (106,691 )
Income from continuing operations before taxes 93,526 54,705 145,077 310,404
Income tax expense (benefit)   35,787     (18,574 )   287,966     47,053  
Income (loss) from continuing operations, net of tax 57,739 73,279 (142,889 ) 263,351
Income (loss) from discontinued operations, net of tax   876     8,167     (13,535 )   261,927  
Net income (loss) $ 58,615   $ 81,446   $ (156,424 ) $ 525,278  
 
Earnings (loss) per share - basic:
Continuing operations $ 0.49 $ 0.59 $ (1.19 ) $ 2.07
Discontinued operations   0.01     0.07     (0.11 )   2.06  
Net income (loss) per share basic $ 0.50   $ 0.66   $ (1.30 ) $ 4.13  
 
Earnings (loss) per share - diluted:
Continuing operations $ 0.49 $ 0.59 $ (1.19 ) $ 2.05
Discontinued operations   0.01     0.07     (0.11 )   2.03  
Net income (loss) per share diluted $ 0.50   $ 0.65   $ (1.30 ) $ 4.08  
 
Shares used to compute earnings per share:
Basic   116,948     124,209     119,909     127,032  
Diluted   117,863     125,062     119,909     128,651  
Cash dividends paid per common share $ 0.19   $ 0.18   $ 0.74   $ 0.70  
 
 

AVNET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

     
June 30, July 1,
2018 2017
(Thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 621,125 $ 836,384
Marketable securities 281,326
Receivables, net 3,641,139 3,337,624
Inventories 3,141,822 2,824,709
Prepaid and other current assets   206,513   253,765
Total current assets 7,610,599 7,533,808
Property, plant and equipment, net 522,909 519,575
Goodwill 980,872 1,148,347
Intangible assets, net 219,913 277,291
Other assets   262,552   220,568
Total assets $ 9,596,845 $ 9,699,589
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 165,380 $ 50,113
Accounts payable 2,269,478 1,861,635
Accrued expenses and other   534,603   542,023
Total current liabilities 2,969,461 2,453,771
Long-term debt 1,489,219 1,729,212
Other liabilities   453,084   334,538
Total liabilities 4,911,764 4,517,521
Shareholders' equity   4,685,081   5,182,068
Total liabilities and shareholders' equity $ 9,596,845 $ 9,699,589
 
 

AVNET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

     
Years Ended
June 30, 2018 July 1, 2017
(Thousands)
Cash flows from operating activities:
Net (loss) income $ (156,424 ) $ 525,278
Less: (Loss) income from discontinued operations, net of tax   (13,535 )   261,927  
Loss (income) from continuing operations (142,889 ) 263,351
 
Non-cash and other reconciling items:
Depreciation 143,397 101,407
Amortization 91,475 53,953
Deferred income taxes (87,141 ) (17,705 )
Stock-based compensation 23,990 47,686
Goodwill impairment expense 181,440
Other, net 49,383 29,104
Changes in (net of effects from businesses acquired and divested):
Receivables (296,175 ) (371,820 )
Inventories (308,663 ) 84,408
Accounts payable 409,608 163,604
Accrued expenses and other, net   189,060     (132,941 )
Net cash flows provided by operating activities - continuing
operations
  253,485     221,047  
Net cash flows used by operating activities - discontinued operations       (589,738 )
Net cash flows provided (used) by operating activities   253,485     (368,691 )
 
Cash flows from financing activities:
Issuance of notes, net of issuance costs 296,374
Repayment of notes (530,800 )
Repayments under accounts receivable securitization, net (37,000 ) (588,000 )
Borrowings (repayments) under senior unsecured credit facility, net 8,850 (50,029 )
(Repayments) borrowings under bank credit facilities and other debt,
net
(97,954 ) 27,877
Borrowings of term loans 530,756
Repayments of term loans (511,358 )
Repurchases of common stock (323,516 ) (275,884 )
Dividends paid on common stock (88,255 ) (88,657 )
Other, net   (4,018 )   (1,870 )
Net cash flows used by financing activities - continuing operations   (541,893 )   (1,191,591 )
Net cash flows provided by financing activities - discontinued
operations
      3,447  
Net cash flows used by financing activities   (541,893 )   (1,188,144 )
 
Cash flows from investing activities:
Purchases of property, plant and equipment (155,873 ) (120,397 )
Acquisitions of businesses, net of cash acquired (15,254 ) (802,744 )
Other, net   6,653     18,656  
Net cash flows used for investing activities - continuing operations   (164,474 )   (904,485 )
Net cash flows provided by investing activities - discontinued
operations
  236,205     2,242,959  
Net cash flows provided by investing activities   71,731     1,338,474  
Effect of currency exchange rate changes on cash and cash equivalents 1,418 23,267
Cash and cash equivalents:
— (decrease) increase (215,259 ) (195,094 )
— at beginning of period   836,384     1,031,478  
— at end of period $ 621,125   $ 836,384  
 
 

Non-GAAP Financial Information

In addition to disclosing financial results that are determined in
accordance with generally accepted accounting principles in the United
States ("GAAP"), the Company also discloses certain non-GAAP financial
information including (i) adjusted operating income, (ii) adjusted other
income (expense), (iii) adjusted income tax expense, (iv) adjusted
income from continuing operations, (v) adjusted diluted earnings per
share, and (vi) sales adjusted for the impact of acquisitions and other
items (as defined in the Organic Sales section of this document).

There are also references to the impact of foreign currency in the
discussion of the Company's results of operations. When the U.S. Dollar
strengthens and the stronger exchange rates of the current year are used
to translate the results of operations of Avnet's subsidiaries
denominated in foreign currencies, the resulting impact is a decrease in
U.S. Dollars of reported results. Conversely, when the U.S. Dollar
weakens and the weaker exchange rates of the current year are used to
translate the results of operations of Avnet's subsidiaries denominated
in foreign currencies, the resulting impact is an increase in U.S.
Dollars of reported results. In the discussion of the Company's results
of operations, results excluding this impact are referred to as
"excluding the impact of changes in foreign currency exchange rates" or
"constant currency." Management believes organic sales and sales in
constant currency are useful measures for evaluating current period
performance as compared with prior periods and for understanding
underlying trends. In order to determine the translation impact of
changes in foreign currency exchange rates on sales, income or expense
items for subsidiaries reporting in currencies other than the U.S.
Dollar, the Company adjusts the average exchange rates used in current
periods to be consistent with the average exchange rates in effect
during the comparative period.

Management believes that operating income adjusted for restructuring,
integration and other expenses, goodwill impairment expense and
amortization of acquired intangible assets and other, are useful
measures to help investors better assess and understand the Company's
operating performance. This is especially the case when comparing
results with previous periods or forecasting performance for future
periods, primarily because management views the excluded items to be
outside of Avnet's normal operating results or non-cash in nature.
Management analyzes operating income without the impact of these items
as well as other income (expense) excluding certain amounts as an
indicator of ongoing margin performance and underlying trends in the
business. Management also uses these non-GAAP measures to establish
operational goals and, in many cases, for measuring performance for
compensation purposes. Management measures operating income for our
reportable segments excluding restructuring, integration and other
expenses, goodwill impairment expense and amortization of acquired
intangible assets and other.

Additional non-GAAP metrics management uses is adjusted operating income
margin, which is defined as adjusted operating income (as defined above)
divided by sales.

Management also believes income tax expense, income from continuing
operations and diluted earnings per share from continuing operations
adjusted for the impact of the items described above and certain items
impacting other expense and income tax expense are useful to investors
because they provide a measure of the Company's net profitability on a
more comparable basis to historical periods and provide a more
meaningful basis for forecasting future performance. Additionally,
because of management's focus on generating shareholder value, of which
net profitability is a primary driver, management believes income from
continuing operations and diluted earnings per share from continuing
operations excluding the impact of these items provides an important
measure of the Company's net profitability for the investing public.

Any analysis of results and outlook on a non-GAAP basis should be used
as a complement to, and in conjunction with, results presented in
accordance with GAAP.

    Fiscal   Quarters Ended
Year to Date June 30,   March 31,   December 30,   September 30,
2018* 2018* 2018* 2017* 2017*
($ in thousands, except per share amounts)
GAAP operating income (loss) - continuing operations $ 230,516 $ 127,944 $ (54,401 ) $ 87,018 $ 69,955
Restructuring, integration and other expenses - continuing operations 145,125 36,848 25,120 36,762 46,394
Goodwill impairment expense - continuing operations 181,440 - 181,440 - -
Amortization of intangible assets and other - continuing operations   91,923     21,736     22,725     21,877     25,585  
Adjusted operating income (loss) - continuing operations 649,004 186,529 174,884 145,657 141,934
 
GAAP other income (expense), net - continuing operations $ 17,086 $ (7,639 ) $ 8,384 $ 762 $ 15,579
Foreign currency (gain) loss and other expenses- continuing
operations
  (9,762 )   (559 )   137     546     (9,886 )
Adjusted other income (expense), net - continuing operations 7,324 (8,198 ) 8,521 1,308 5,693
 
GAAP income (loss) before income taxes- continuing operations $ 145,077 $ 93,526 $ (72,063 ) $ 62,140 $ 61,474
Restructuring, integration and other expenses - continuing operations 145,125 36,848 25,120 36,762 46,394
Goodwill impairment expense - continuing operations 181,440 - 181,440 - -
Amortization of intangible assets and other - continuing operations 91,923 21,736 22,725 21,877 25,585
Foreign currency (gain) loss and other expenses- continuing
operations
  (9,762 )   (559 )   137     546     (9,886 )
Adjusted income (loss) before income taxes - continuing operations 553,803 151,551 157,359 121,325 123,567
 
GAAP income tax expense (benefit) - continuing operations $ 287,966 $ 35,787 $ 243,541 $ 5,346 $ 3,292
Restructuring, integration and other expenses - continuing operations 41,460 9,921 5,757 9,004 16,778
Amortization of intangible assets and other - continuing operations 18,556 4,376 4,575 4,405 5,200
Foreign currency (gain) loss and other expenses- continuing
operations
(3,494 ) (180 ) 33 84 (3,431 )
Discrete income tax (expense) benefit items, net - continuing
operations
  (218,444 )   (14,549 )   (218,810 )   8,017     6,898  
Adjusted income tax expense - continuing operations 126,044 35,355 35,096 26,856 28,737
 
GAAP income (loss) - continuing operations $ (142,889 ) $ 57,739 $ (315,604 ) $ 56,794 $ 58,182
Restructuring, integration and other expenses (net of tax) -
continuing operations
103,665 26,927 19,363 27,758 29,616
Goodwill impairment expense (net of tax) - continuing operations 181,440 - 181,440 - -
Amortization of intangible assets and other (net of tax) -
continuing operations
73,367 17,360 18,150 17,472 20,385
Foreign currency (gain) loss and other expenses (net of tax) -
continuing operations
(6,268 ) (379 ) 104 462 (6,455 )
Discrete income tax expense (benefit) items, net - continuing
operations
  218,444     14,549     218,810     (8,017 )   (6,898 )
Adjusted income (loss) - continuing operations 427,759 116,196 122,263 94,469 94,829
 
GAAP diluted earnings (loss) per share - continuing operations $ (1.19 ) $ 0.49 $ (2.64 ) $ 0.47 $ 0.47
Restructuring, integration and other expenses (net of tax) -
continuing operations
0.86 0.23 0.16 0.23 0.24
Goodwill impairment expense (net of tax) - continuing operations 1.52 - 1.52 - -
Amortization of intangible assets and other (net of tax) -
continuing operations
0.61 0.15 0.15 0.14 0.16
Foreign currency (gain) loss and other expenses (net of tax) -
continuing operations
(0.05 ) - - - (0.05 )
Discrete income tax expense (benefit) items, net - continuing
operations
  1.82     0.12     1.83     (0.07 )   (0.06 )
Adjusted diluted EPS - continuing operations 3.57 0.99 1.02 0.78 0.76

*

  May not foot/crossfoot due to rounding
 
 
    Fiscal Year 2017
Quarters Ended
Fiscal July 1,   April 1,   December 31,   October 1,
2017* 2017* 2017* 2016* 2016*
($ in thousands, except per share amounts)
GAAP selling, general and administrative expenses - continuing
operations
$ 1,770,627 $ 495,210 $ 480,190 $ 431,555 $ 363,672
Amortization of intangible assets and other - continuing operations   (54,526 )   (19,822 )   (22,497 )   (9,829 )   (2,378 )
Adjusted operating expenses - continuing operations 1,716,101 475,388 457,693 421,726 361,294
 
GAAP operating income - continuing operations $ 461,400 $ 93,373 $ 114,283 $ 124,230 $ 129,514
Restructuring, integration and other expenses - continuing operations 137,415 42,033 35,513 30,400 29,469
Amortization of intangible assets and other - continuing operations   54,526     19,822     22,497     9,829     2,378  
Adjusted operating income - continuing operations 653,341 155,228 172,293 164,459 161,361
 
GAAP other (expense) income, net - continuing operations $ (44,305 ) $ (13,495 ) $ 19,439 $ (36,514 ) $ (13,734 )
Unrealized (gain) loss on marketable securities and other -
continuing operations
765 14,624 (13,859 ) - -
Acquisition related FX hedging and financing costs - continuing
operations
  43,707     -   -   32,700   11,007  
Adjusted other (expense) income, net - continuing operations 167 1,129 5,580 (3,814 ) (2,727 )
 
GAAP income before income taxes- continuing operations $ 310,404 $ 54,705 $ 106,188 $ 60,968 $ 88,544
Restructuring, integration and other expenses - continuing operations 137,415 42,033 35,513 30,400 29,469
Amortization of intangible assets and other - continuing operations 54,526 19,822 22,497 9,829 2,378
Unrealized (gain) loss on marketable securities and other -
continuing operations
765 14,624 (13,859 ) - -
Acquisition related FX hedging and financing costs - continuing
operations
  43,707     -     -     32,700     11,007  
Adjusted income before income taxes - continuing operations 546,817 131,184 150,339 133,897 131,398
 
GAAP income tax expense (benefit) - continuing operations $ 47,053 $ (18,574 ) $ 16,268 $ 28,503 $ 20,856
Restructuring, integration and other expenses - continuing operations 45,403 16,324 12,455 7,378 9,246
Amortization of intangible assets and other - continuing operations 14,670 6,654 5,077 2,342 597
Unrealized (gain) loss on marketable securities and other -
continuing operations
1,381 6,812 (5,431 ) - -
Acquisition related FX hedging and financing costs - continuing
operations
6,968 - - 4,230 2,738
Discrete income tax benefit (expense) items, net - continuing
operations
  14,695     14,987     7,712     (9,369 )   1,365  
Adjusted income tax expense - continuing operations 130,170 26,203 36,081 33,084 34,802
 
GAAP income - continuing operations $ 263,351 $ 73,279 $ 89,920 $ 32,465 $ 67,688
Restructuring, integration and other expenses (net of tax) -
continuing operations
92,012 25,709 23,058 23,022 20,223
Amortization of intangible assets and other (net of tax) -
continuing operations
39,856 13,168 17,420 7,487 1,781
Unrealized (gain) loss on marketable securities and other (net of
tax) - continuing operations
(616 ) 7,812 (8,428 ) - -
Acquisition related FX hedging and financing costs (net of tax) -
continuing operations
36,739 - - 28,470 8,269
Discrete income tax expense (benefit) items, net - continuing
operations
  (14,695 )   (14,987 )   (7,712 )   9,369     (1,365 )
Adjusted income - continuing operations 416,647 104,981 114,258 100,813 96,596
 
GAAP diluted EPS - continuing operations $ 2.05 $ 0.59 $ 0.69 $ 0.25 $ 0.52
Restructuring, integration and other expenses (net of tax) -
continuing operations
0.73 0.21 0.18 0.18 0.16
Amortization of intangible assets and other (net of tax) -
continuing operations
0.32 0.11 0.14 0.06 0.01
Unrealized (gain) loss on marketable securities and other (net of
tax) - continuing operations
(0.01 ) 0.06 (0.07 ) - -
Acquisition related FX hedging and financing costs (net of tax) -
continuing operations
0.28 - - 0.22 0.06
Discrete income tax expense (benefit) items, net - continuing
operations
  (0.13 )   (0.13 )   (0.06 )   0.07     (0.01 )
Adjusted diluted EPS - continuing operations 3.24 0.84 0.88 0.77 0.74
*   May not foot/crossfoot due to rounding
 
 

Organic Sales

Organic sales is defined as sales adjusted for the impact of significant
acquisitions, divestitures and other items by adjusting Avnet's prior
and current (if necessary) periods to include the sales of acquired
businesses and exclude the sales of divested businesses as if the
acquisitions and divestitures had occurred at the beginning of the
earliest period presented. Organic sales is measured on a sales from
continuing operations basis. Organic sales in constant currency is
defined as organic sales (as defined above) excluding the impact of
changes in foreign currency exchange rates.

The following table presents reported and organic sales growth rates for
the fourth quarter and full year of fiscal 2018 compared to fiscal 2017.

    Fourth Quarter Ended     Year Ended
    Organic     Organic
Year-Year % Year-Year %
As Reported Organic Change in As Reported Organic Change in
and Organic Year-Year Constant and Organic Year-Year Constant
Fiscal 2018 % Change Currency Fiscal 2018 % Change Currency
(Dollars in millions)
Avnet $ 5,059.2 9.8 % 6.7 % $ 19,036.9 6.8 % 3.6 %
Avnet by region
Americas $ 1,339.2 0.5 % 0.5 % $ 5,011.4 (5.8 ) % (5.8 ) %
EMEA 1,779.6 7.8 0.0 6,790.9 11.5 2.5
Asia 1,940.4 19.6 18.8 7,234.6 12.9 12.7
Avnet by segment
EC $ 4,668.7 9.6 % 6.5 % $ 17,543.6 6.5 % 3.4 %
PF 390.5 13.0 8.6 1,493.3 11.1 6.5
 
 

The following table presents the reconciliation of reported sales to
organic sales for the fourth quarter and full year of fiscal 2017.

    Fourth Quarter        
Ended Year Ended
As Reported Sales as Organic
and Organic Reported Sales from Sales
Fiscal 2017 Fiscal 2017 Acquisitions (1) Fiscal 2017
(in millions)
Avnet $ 4,606.4 $ 17,440.0 $ 378.3 $ 17,818.3
Avnet by region
Americas $ 1,332.2 $ 5,163.9 $ 154.4 $ 5,318.3
EMEA 1,651.0 5,912.9 178.9 6,091.8
Asia 1,623.2 6,363.2 45.0 6,408.2
Avnet by segment
EC $ 4,260.7 $ 16,474.1 $ $ 16,474.1
PF 345.7 965.9 378.3 1,344.2

(1)

  Includes Premier Farnell acquired on October 17, 2016, which has
operations in each Avnet region.
 
 

Sales from suppliers lost as a result of supplier channel changes were
$2.3 million, $0.5 million and $3.3 million in the fourth quarter of
fiscal 2018 for the Americas, EMEA and Asia regions, respectively
compared to sales of $61.7 million, $103.8 million and $71.5 million in
the fourth quarter of fiscal 2017 for the Americas, EMEA and Asia
regions, respectively.

Sales from suppliers lost as a result of supplier channel changes were
$36.8 million, $45.1 million and $45.8 million in fiscal 2018 for the
Americas, EMEA and Asia regions, respectively compared to sales of
$263.2 million, $388.1 million and $328.3 million in fiscal 2017 for the
Americas, EMEA and Asia regions, respectively.

Historical Segment Financial Information

    Fiscal Year 2018
Quarters Ended
  Fourth Quarter   Third Quarter   Second Quarter   First Quarter
Fiscal Year June 30, March 31, December 30, September 30,
2018* 2018   2018* 2017   2017  
(in millions)
Sales:
Electronic Components $ 17,543.6 $ 4,668.7 $ 4,404.1 $ 4,163.5 $ 4,307.2
Premier Farnell   1,493.3     390.5     391.0     358.1     353.7  
Avnet sales $ 19,036.9   $ 5,059.2   $ 4,795.1   $ 4,521.6   $ 4,660.9  
 
Operating income:
Electronic Components $ 587.3 $ 160.1 $ 157.7 $ 129.9 $ 139.6
Premier Farnell   160.8     46.0     44.4     35.6     34.8  
748.1 206.1 202.1 165.5 174.4
Corporate expenses (99.0 ) (19.7 ) (27.2 ) (19.8 ) (32.4 )
Restructuring, integration and other expenses (145.1 ) (36.8 ) (25.1 ) (36.8 ) (46.4 )
Goodwill impairment expense (181.4 ) - (181.4 ) - -
Amortization of acquired intangible assets and other   (91.9 )   (21.7 )   (22.7 )   (21.9 )   (25.6 )
Avnet operating income (loss) $ 230.5   $ 127.9   $ (54.4 ) $ 87.0   $ 70.0  
 
Sales by geographic area:
Americas $ 5,011.4 $ 1,339.2 $ 1,276.4 $ 1,210.2 $ 1,185.5
EMEA 6,790.9 1,779.6 1,812.3 1,506.0 1,693.0
Asia   7,234.6     1,940.4     1,706.3     1,805.4     1,782.4  
Avnet sales $ 19,036.9   $ 5,059.2   $ 4,795.1   $ 4,521.6   $ 4,661.0  

*

  May not foot/crossfoot due to rounding
 
 
    Fiscal Year 2017
Quarters Ended
  Fourth Quarter   Third Quarter   Second Quarter   First Quarter
Fiscal Year July 1, April 1, December 31, October 1,
2017 2017 2017 2016 2016
(in millions)
Sales:
Electronic Components $ 16,474.1 $ 4,260.7 $ 4,090.9 $ 4,004.3 $ 4,118.1
Premier Farnell (1)   965.9     345.7     351.0     269.2     -  
Avnet sales $ 17,440.0   $ 4,606.4   $ 4,441.9   $ 4,273.6   $ 4,118.1  
 
Operating income:
Electronic Components $ 661.0 $ 152.4 $ 156.8 $ 166.7 $ 185.1
Premier Farnell (1)   99.8     35.5     40.3     24.0     -  
760.8 187.9 197.1 190.7 185.1
Corporate expenses (2) (107.5 ) (32.7 ) (24.9 ) (26.3 ) (23.7 )
Restructuring, integration and other expenses (137.4 ) (42.0 ) (35.5 ) (30.4 ) (29.5 )
Amortization of acquired intangible assets and other   (54.5 )   (19.8 )   (22.5 )   (9.8 )   (2.4 )
Avnet operating income $ 461.4   $ 93.4   $ 114.3   $ 124.2   $ 129.5  
 
Sales by geographic area:
Americas $ 5,163.9 $ 1,332.2 $ 1,328.6 $ 1,252.6 $ 1,250.5
EMEA 5,912.9 1,651.0 1,615.9 1,380.7 1,265.3
Asia   6,363.2     1,623.2     1,497.4     1,640.3     1,602.3  
Avnet sales $ 17,440.0   $ 4,606.4   $ 4,441.9   $ 4,273.6   $ 4,118.1  

(1)

  Premier Farnell was acquired on October 17, 2016.

(2)

Prior to the divestiture of the Technology Solutions business in Q3
FY17, a portion of Corporate support expenses were classified within
discontinued operations.
 
 

Guidance Reconciliation

The following table presents the reconciliation of non-GAAP adjusted
diluted earnings per share guidance to the expected GAAP diluted
earnings per share guidance for the first quarter of fiscal 2019.

    Low End of     High End of
Guidance Range Guidance Range
 
Adjusted diluted earnings per share guidance $ 0.95 $ 1.05
Restructuring, integration and other expense (net of tax) (1) (0.22 ) (0.14 )
Amortization of intangibles and other (net of tax) (0.16 ) (0.15 )
Income tax expense adjustments   (0.04 )   0.04  
GAAP diluted earnings per share guidance $ 0.53   $ 0.80  

(1)

  Includes accelerated depreciation.

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