The total number of shares
outstanding of the registrants Common Stock (net of
treasury shares) as of April 28, 2006 146,465,633 shares.
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50 | ||||||||
Exhibit 10.1 | ||||||||
Exhibit 10.2 | ||||||||
Exhibit 10.3 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32.1 | ||||||||
Exhibit 32.2 |
1
| A technology industry down-cycle, particularly in the semiconductor sector, would adversely affect Avnets expected operating results. | |
| Competitive margin pressures among distributors of electronic components and computer products may increase significantly through increased competition for existing customers or otherwise. | |
| General economic or business conditions, domestic and foreign, may be less favorable than management expected, resulting in lower sales and profitability which can, in turn, impact the Companys credit ratings, debt covenant compliance and liquidity, as well as the Companys ability to maintain existing unsecured financing or to obtain new financing. | |
| Avnet may be adversely affected by the allocation of products by suppliers. | |
| Legislative or regulatory changes may adversely affect the businesses in which Avnet is engaged. | |
| Adverse changes may occur in the securities markets. | |
| Changes in interest rates and currency fluctuations may impact Avnets profit margins. |
2
21
30
FINANCIAL INFORMATION
Item 1.
Financial
Statements
April 1,
July 2,
2006
2005
(Thousands, except share
amounts)
$
199,846
$
637,867
2,448,664
1,888,627
1,553,903
1,224,698
58,866
31,775
4,261,279
3,782,967
163,946
157,428
1,297,831
895,300
325,715
262,520
$
6,048,771
$
5,098,215
$
278,929
$
61,298
1,542,467
1,296,713
440,721
359,507
2,262,117
1,717,518
1,022,503
1,183,195
59,837
100,469
3,344,457
3,001,182
146,380
120,771
1,001,672
569,638
1,428,728
1,283,028
127,799
123,705
(265
)
(109
)
2,704,314
2,097,033
$
6,048,771
$
5,098,215
3
Table of Contents
Third Quarters Ended
Nine Months Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
(Thousands, except per share
data)
$
3,614,642
$
2,758,259
$
10,642,020
$
8,241,415
3,142,588
2,393,691
9,284,897
7,153,357
472,054
364,568
1,357,123
1,088,058
334,645
286,037
1,014,867
852,478
10,945
33,901
4,584
20,301
121,880
78,531
288,054
235,580
(246
)
1,860
4,591
2,247
(25,162
)
(20,963
)
(72,006
)
(63,088
)
10,950
10,950
(11,665
)
107,422
59,428
219,924
174,739
36,255
18,280
74,224
53,750
$
71,167
$
41,148
$
145,700
$
120,989
$
0.49
$
0.34
$
1.00
$
1.00
$
0.48
$
0.34
$
0.99
$
1.00
146,373
120,694
145,707
120,591
147,413
121,414
147,062
121,373
4
Table of Contents
Nine Months Ended
April 1,
April 2,
2006
2005
(Thousands)
$
145,700
$
120,989
51,158
46,398
4,715
32,100
14,607
36,733
34,074
(219,211
)
(11,538
)
(89,774
)
96,691
(7,934
)
93,731
(94,725
)
(28,266
)
(158,731
)
384,179
246,483
(256,325
)
(89,589
)
50,410
(3,152
)
(583
)
(169
)
27,774
923
67,759
(91,987
)
(38,175
)
(22,257
)
2,250
7,125
(321,837
)
(1,098
)
11,190
(346,572
)
(16,230
)
(477
)
5,719
(438,021
)
281,681
637,867
312,667
$
199,846
$
594,348
5
Table of Contents
3.
Stock-based
compensation
6
Table of Contents
Third Quarters
Nine Months
Ended
Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
(Thousands, except per share
data)
$
3,748
$
3,489
$
12,176
$
11,494
$
2,483
$
2,109
$
7,815
$
6,948
$
71,167
$
41,148
$
145,700
$
120,989
(1,938
)
(6,437
)
$
71,167
$
39,210
$
145,700
$
114,552
$
0.49
$
0.34
$
1.00
$
1.00
$
0.48
$
0.34
$
0.99
$
1.00
$
0.49
$
0.32
$
1.00
$
0.95
$
0.48
$
0.32
$
0.99
$
0.94
(1)
Includes stock-based compensation expense for incentive stock,
stock options, Employee Stock Purchase Plan activity and
directors compensation for the periods presented.
Nine Months
Third Quarters Ended
Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
6.0
6.0
6.0
4.1
%
4.1
%
3.5
%
43.8
%
43.4
%
44.8
%
7
Table of Contents
Plan
1996
1997
1999
2003
100%
85%
85%
85%
December 31, 2006
November 19, 2007
November 21, 2009
September 18, 2013
181,696
9,876
112,751
2,837,636
Weighted
Weighted
Average
Average
Remaining
Exercise
Contractual
Aggregate
Shares
Price
Life
Intrinsic Value
9,955,201
$
20.28
68 months
249,000
24.77
102 months
(1,406,977
)
18.05
44 months
(376,166
)
22.51
61 months
8,421,058
20.69
63 months
$
1,133,462
6,333,159
21.58
53 months
$
1,133,462
Weighted
Average
Grant-Date
Shares
Fair Value
3,319,228
$
8.05
249,000
11.86
(1,340,384
)
7.82
(139,945
)
8.33
2,087,899
8.64
8
Table of Contents
9
Table of Contents
4.
Acquisitions,
divestitures and investments
10
Table of Contents
July 5, 2005
(Thousands)
$
701,310
18,772
26,400
398,112
94,341
1,238,935
427,245
12,700
27,343
467,288
$
771,647
(52,383
)
27,343
$
746,607
11
Table of Contents
Facility Exit
Severance
Reserves/
Reserves
Write-downs
Other
Total
(Thousands)
$
32,573
$
29,124
$
4,889
$
66,586
(29,024
)
(16,513
)
(1,544
)
(47,081
)
(58
)
39
11
(8
)
$
3,491
$
12,650
$
3,356
$
19,497
12
Table of Contents
Pro Forma Results
Pro Forma Results
Third Quarter
Nine Months
Ended
Ended
April 2, 2005
April 2, 2005
(Thousands, except per share
data)
$
3,314,538
$
9,929,010
86,232
267,233
36,149
113,230
$
0.25
$
0.78
$12,070,000 pre-tax, $7,996,000 after-tax, or $0.05 per
diluted share, and $36,056,000 pre-tax, $23,922,000 after-tax,
or $0.16 per diluted share, respectively, for the third
quarter and nine months ended April 2, 2005 for interest
expense relating to Memecs shareholder loans that were
retired at acquisition through the issuance of Avnet common
stock;
$5,531,000 pre-tax, $3,679,000 after-tax or $0.11 per
diluted share for the nine months ended April 2, 2005 for
capitalized costs written off relating to Memecs cancelled
initial public offering and restructuring charges incurred by
Memec. There were no further capitalized costs incurred in the
third quarter of fiscal 2005;
$1,444,000 pre-tax, $957,000 after-tax, or $0.01 per
diluted share, and $4,332,000 pre-tax, $2,875,000 after-tax, or
$0.03 per diluted share, respectively, for the third
quarter and nine months ended April 2, 2005 for
amortization relating to intangible assets and deferred
financing costs for the shareholder loans that were retired at
acquisition; and
the impact on pro forma diluted earnings per share of the
24.011 million shares of Avnets common stock issued
as part of the consideration.
$4,857,000 pre-tax, $3,218,000 after-tax, or $0.02 per
diluted share, and $14,585,000 pre-tax, $9,681,000 after-tax, or
$0.06 per diluted share, respectively, for the third
quarter and nine months ended April 2, 2005, for
interest expense relating to Memecs loan secured by
receivables and term loans that were paid immediately upon the
close of the acquisition; and
$2,400,000 pre-tax, $1,590,000 after-tax, or $0.01 per
diluted share, and $9,500,000 pre-tax, $6,296,000 after-tax, or
$0.04 per diluted share, respectively, for the third
quarter and nine months ended April 2, 2005, for
selling, general and administrative costs relating to
Memecs non-recurring consulting and other project costs,
annual management fee, and other severance-related costs that
are no longer incurred following the acquisition.
13
Table of Contents
5.
Goodwill
Electronics
Technology
Marketing
Solutions
Total
(Thousands)
$
637,122
$
258,178
$
895,300
402,453
795
403,248
49
(766
)
(717
)
$
1,039,624
$
258,207
$
1,297,831
6.
External
financing
April 1,
July 2,
2006
2005
(Thousands)
$
143,675
$
134,141
60,468
1,113
830
$
278,929
$
61,298
14
Table of Contents
April 1,
July 2,
2006
2005
(Thousands)
$
$
400,000
475,000
475,000
250,000
300,000
300,000
7,835
7,285
1,032,835
1,182,285
(10,332
)
910
$
1,022,503
$
1,183,195
15
Table of Contents
7.
Commitments
and contingencies
16
Table of Contents
8.
Pension
plan
Third Quarters Ended
Nine Months Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
(Thousands)
$
3,791
$
3,341
$
11,373
$
10,023
3,543
3,515
10,629
10,545
(5,144
)
(4,132
)
(15,432
)
(12,396
)
1,129
336
3,387
1,008
(80
)
(80
)
(240
)
(240
)
$
3,239
$
2,980
$
9,717
$
8,940
9.
Comprehensive
income
Third Quarters Ended
Nine Months Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
(Thousands)
$
71,167
$
41,148
$
145,700
$
120,989
25,094
(62,806
)
4,094
71,733
$
96,261
$
(21,658
)
$
149,794
$
192,722
17
Table of Contents
10.
Earnings
per share
Third Quarters Ended
Nine Months Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
(Thousands, except per share
data)
$
71,167
$
41,148
$
145,700
$
120,989
146,373
120,694
145,707
120,591
1,040
720
1,355
782
147,413
121,414
147,062
121,373
$
0.49
$
0.34
$
1.00
$
1.00
$
0.48
$
0.34
$
0.99
$
1.00
18
Table of Contents
11.
Additional
cash flow information
Nine Months Ended
April 1,
April 2,
2006
2005
(Thousands)
$
24,536
$
23,440
12,176
763
9,717
8,940
(10,950
)
1,254
931
$
36,733
$
34,074
Nine Months Ended
April 1,
April 2,
2006
2005
(Thousands)
$
78,805
$
70,781
$
23,302
$
14,586
19
Table of Contents
12.
Segment
information
Third Quarters Ended
Nine Months Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
(Thousands)
$
2,446,666
$
1,596,099
$
6,815,105
$
4,638,511
1,167,976
1,162,160
3,826,915
3,602,904
$
3,614,642
$
2,758,259
$
10,642,020
$
8,241,415
$
122,773
$
61,520
$
284,258
$
167,813
37,626
31,739
125,458
110,283
(15,018
)
(14,728
)
(44,150
)
(42,516
)
145,381
78,531
365,566
235,580
(16,969
)
(63,178
)
(6,532
)
(14,334
)
$
121,880
$
78,531
$
288,054
$
235,580
$
1,766,436
$
1,398,564
$
5,412,011
$
4,269,885
1,161,238
944,857
3,252,449
2,792,779
686,968
414,838
1,977,560
1,178,751
$
3,614,642
$
2,758,259
$
10,642,020
$
8,241,415
(1)
Included in sales for the third quarters ended April 1,
2006 and April 2, 2005 for the Americas region are
$1.55 billion and $1.25 billion, respectively, of
sales related to the United States. Included in sales for the
nine months ended April 1, 2006 and April 2, 2005 for
the Americas region are $4.77 billion and
$3.85 billion, respectively, of sales related to the United
States.
(2)
Included in sales for the third quarters ended April 1,
2006 and April 2, 2005 for the EMEA region are $432,086,000
and $376,322,000, respectively, of sales related to Germany.
Included in sales for the nine months ended April 1, 2006
and April 2, 2005 for the EMEA region are
$1.23 billion and $1.09 billion, respectively, of
sales related to Germany.
(3)
Included in sales for the third quarter and nine months ended
April 1, 2006 for the Asia/Pacific region are $185,806,000
and $608,697,000, respectively, of sales related to Hong Kong
and $212,859,000 and $547,422,000, respectively, of sales
related to Singapore. Hong Kong and Singapore sales for the
third quarter and nine months ended April 2, 2005 were not
a significant component of consolidated sales.
20
Table of Contents
April 1,
July 2,
2006
2005
(Thousands)
$
4,550,574
$
3,158,530
1,365,312
1,357,884
132,885
581,801
$
6,048,771
$
5,098,215
95,385
$
95,706
58,562
52,690
9,999
9,032
$
163,946
$
157,428
(4)
Property, plant and equipment, net, for the Americas region as
of April 1, 2006 and July 2, 2005 included $94,228,000
and $94,641,000, respectively, related to the United States.
(5)
Property, plant and equipment, net, for the EMEA region as of
April 1, 2006 and July 2, 2005 included $25,831,000
and $28,467,000, respectively, related to Germany and
$13,324,000 and $14,192,000, respectively, related to Belgium.
13.
Restructuring
and other charges and integration costs
Third Quarter
Nine Months
Ended
Ended
April 1,
April 1,
2006
2006
(Thousands)
$
5,455
(1)
$
31,887
(1)
6,930
10,991
$
12,385
$
42,878
(1)
In the third quarter and nine months ended April 1, 2006,
$1,440,000 and $8,977,000 of the Memec-related charges were
included in cost of sales in the accompanying consolidated
statements of operations.
Table of Contents
Severance
Facility
IT-Related
Costs
Exit Costs
Costs
Other
Total
(Thousands)
$
16,172
$
2,862
$
2,382
$
1,494
$
22,910
(10,611
)
(773
)
(2,382
)
(1,163
)
(14,929
)
88
35
1
124
$
5,649
$
2,124
$
$
332
$
8,105
22
Table of Contents
Severance
Facility
Costs
Exit Costs
Other
Total
(Thousands)
$
2,893
$
4,853
$
184
$
7,930
(682
)
(3,003
)
(38
)
(3,723
)
4
2
(3
)
3
$
2,215
$
1,852
$
143
$
4,210
23
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24
Table of Contents
Severance
Facility
IT-Related
Costs
Exit Costs
Costs
Other
Total
(Thousands)
$
1,419
$
10,477
$
111
$
351
$
12,358
(594
)
(3,382
)
(60
)
(4,036
)
217
(85
)
(108
)
24
4
74
(3
)
75
$
1,046
$
7,084
$
$
291
$
8,421
14.
Subsequent
event
25
Table of Contents
Item 2.
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
26
Table of Contents
EM markets and sells semiconductors and interconnect, passive
and electromechanical devices, and also offers an array of
value-added services to its customers, such as supply-chain
management, engineering design, inventory replenishment systems,
connector and cable assembly and semiconductor programming. EM
markets and sells its products and services to a diverse
customer base spread across end-markets including
communications, computer hardware and peripheral, industrial and
manufacturing, medical equipment, and military and aerospace.
The previously discussed acquisition of Memec is being fully
integrated into EM. As of April 1, 2006, the integration
efforts are nearing completion. EM has finalized the
organizational structure within each region and the Company has
also completed the integration of all key information technology
in all regions, with the exception of the Memec systems in
Japan, which will be fully converted to Avnet systems during the
fourth quarter of fiscal 2006. Substantially all facility and
personnel decisions have also been completed, with the only
remaining actions relating primarily to certain facility
consolidations to be completed during the fourth quarter of
fiscal 2006. The acquisition of Memec has provided for expansion
of EM in each of the three major economic regions as well as
allowing Avnet to gain entry into the Japanese market, the only
major semiconductor market in which Avnet did not previously
have a presence.
TS markets and sells mid- to high-end servers, data storage,
software and networking solutions, and the services required to
implement these solutions, to the VAR channel and enterprise
computing customers. TS also focuses on the worldwide OEM
market for computing technology, system integrators and non-PC
OEMs that require embedded systems and solutions including
engineering, product prototyping, integration and other
value-added services. During the third quarter of fiscal 2006,
the Company divested two TS end-user business lines in the
Americas. In January 2006, the Company sold its TS Americas
enterprise server and storage business line to a value-added
reseller. The Company concurrently executed an exclusive
distribution agreement whereby the acquiring company will
procure certain enterprise computer products under customary
terms from Avnet for a five-year contract period. In February
2006, the Company contributed cash and certain operating assets
and liabilities of its TS Americas end-user network solutions
business line into a joint venture with Calence Inc. in exchange
for an investment interest in the joint venture, called Calence
LLC. Because the joint venture investment will be accounted for
as an equity investment and not consolidated in Avnets
financial statements, the revenues and expenses associated with
the divested business line are no longer part of the TS
operating results subsequent to the close of this transaction.
The two business lines that were divested during the third
quarter of fiscal 2006 were not material to the overall sales
and profitability of Avnet on a consolidated basis.
27
Table of Contents
28
Table of Contents
Q3-Fiscal 05
Sequential
Avnet-Memec
Year Over Year Change
Q3-Fiscal 06
Q2-Fiscal 06
Change
Avnet
Pro Forma(1)
Avnet
Pro Forma
(Dollars in thousands)
$
3,614,642
$
3,759,112
(3.8
)%
$
2,758,259
$
3,314,538
31.1
%
9.1
%
2,446,666
2,257,326
8.4
1,596,099
2,152,378
53.3
13.7
1,167,976
1,501,786
(22.2
)
1,162,160
1,162,160
0.5
0.5
$
976,250
$
931,286
4.8
%
$
629,232
$
876,313
55.1
%
11.4
%
845,932
704,426
20.1
622,198
771,807
36.0
9.6
624,484
621,614
0.5
344,669
504,258
81.2
23.8
$
790,186
$
1,025,488
(22.9
)%
$
769,332
$
769,332
2.7
%
2.7
%
315,306
412,151
(23.5
)
322,659
322,659
(2.3
)
(2.3
)
62,484
64,147
(2.7
)
70,169
70,169
(11.0
)
(11.0
)
$
1,766,436
$
1,956,774
(9.2
)%
$
1,398,564
$
1,645,645
27.0
%
7.9
%
1,161,238
1,116,577
4.0
944,857
1,094,466
22.9
6.1
686,968
685,761
0.2
414,838
574,427
65.6
19.6
(1)
The Avnet-Memec pro forma results in the table above reflect the
combination of Avnets sales with Memecs sales as
provided in the table below for the third quarter of fiscal 2005:
29
Table of Contents
Q3 Fiscal 05
(Thousands)
$
247,081
149,609
159,589
$
556,279
Table of Contents
31
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32
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33
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34
Table of Contents
35
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36
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37
Table of Contents
Quarter Ended April 1,
2006
Gross
Operating
Pre-Tax
Net
Diluted
Profit
Income
Income
Income
EPS
($ in thousands, except per
share data)
$
1,440
$
10,040
$
10,040
$
6,652
$
0.05
6,930
6,930
4,591
0.03
3,412
3,412
2,260
0.02
3,120
3,120
2,067
0.01
(10,950
)
(7,254
)
(0.05
)
$
1,440
$
23,502
$
12,552
$
8,316
$
0.06
Nine Months Ended April 1,
2006
Gross
Operating
Pre-Tax
Net
Diluted
Profit
Income
Income
Income
EPS
($ in thousands, except per
share data)
$
8,977
$
52,188
$
52,188
$
35,291
$
0.24
10,991
10,991
7,317
0.05
11,214
11,214
7,195
0.05
3,120
3,120
2,067
0.01
11,665
7,052
0.05
(10,950
)
(7,254
)
(0.05
)
$
8,977
$
77,513
$
78,228
$
51,668
$
0.35
38
Table of Contents
Third Quarters Ended
Nine Months Ended
April 1,
April 2,
April 1,
April 2,
2006
2005
2006
2005
(Thousands)
$
71,167
$
41,148
$
145,700
$
120,989
25,541
22,403
107,213
112,572
(94,439
)
82,851
(411,644
)
150,618
2,269
146,402
(158,731
)
384,179
(14,108
)
(6,517
)
(38,175
)
(22,257
)
621
328
2,250
7,125
(6,625
)
7
(310,647
)
(1,098
)
2,060
(10,048
)
(477
)
5,719
4,195
739
27,774
923
(11,588
)
130,911
(478,006
)
374,591
(7,706
)
(83,586
)
39,985
(92,910
)
$
(19,294
)
$
47,325
$
(438,021
)
$
281,681
(1)
Non-cash and other reconciling items are the combination of
depreciation and amortization, deferred income taxes, non-cash
restructuring and other charges, and other, net (primarily the
provision for doubtful accounts), in cash flows from operations.
39
Table of Contents
(2)
Cash flow used for working capital is the combination of the
changes in the Companys working capital and other balance
sheet accounts in cash flows from operations (receivables,
inventories, accounts payable and accrued expenses and other,
net).
40
Table of Contents
April 1,
% of Total
July 2,
% of Total
2006
Capitalization
2005
Capitalization
(Dollars in thousands)
$
278,929
7.0
%
$
61,298
1.8
%
1,022,503
25.5
1,183,195
35.4
1,301,432
32.5
1,244,493
37.2
2,704,314
67.5
2,097,033
62.8
$
4,005,746
100.0
$
3,341,526
100.0
41
Table of Contents
42
Table of Contents
April 1,
July 2,
Percentage
2006
2005
Change
(Dollars in millions)
$
4,261.3
$
3,783.0
12.6
%
2,648.5
2,526.5
4.8
2,262.1
1,717.5
31.7
1,999.2
2,065.4
(3.2
)
1,301.4
1,244.5
4.6
4,005.7
3,341.5
19.9
1.2:1
1.5:1
1.9:1
2.2:1
32.5
%
37.2
%
43
Table of Contents
44
Table of Contents
Item 3.
Quantitative
and Qualitative Disclosures About Market Risk
45
Table of Contents
Item 4.
Controls
and Procedures
46
Table of Contents
49
Item 1.
Legal
Proceedings
47
Table of Contents
Item 2.
Unregistered
Sales of Equity Securities and Use of Proceeds
Maximum Number (or
Total Number of
Approximate Dollar
Shares Purchased as
Value) of Shares
Part of Publicly
That May Yet Be
Total Number of
Average Price Paid
Announced Plans or
Purchased Under the
Shares Purchased
per Share
Programs
Plans or Programs
20,000
$
25.46
15,000
$
25.36
3,000
$
24.24
Item 4.
Submission
of Matters to a Vote of Security Holders
For
Withheld
132,423,860
2,257,393
133,829,299
851,954
133,836,177
845,076
132,560,261
2,120,992
133,981,840
699,413
133,958,574
722,679
129,932,806
4,748,447
133,960,169
721,084
129,842,462
4,838,791
131,999,750
2,681,503
For
Against
Abstain
134,005,360
642,848
33,045
Item 6.
Exhibits
Exhibit
10
.1*
Form of Indemnity Agreement. The
Company enters into this form of agreement with each of its
directors and officers.
10
.2*
Employment Agreement dated
July 1, 2004 between the Company and Steven C. Church.
10
.3*
Change of Control Agreement dated
July 1, 2004 between the Company and Steven C. Church.
31
.1*
Certification by Roy Vallee, Chief
Executive Officer, under Section 302 of the Sarbanes-Oxley
Act of 2002.
48
Table of Contents
Exhibit
31
.2*
Certification by Raymond Sadowski,
Chief Financial Officer, under Section 302 of the
Sarbanes-Oxley Act of 2002.
32
.1**
Certification by Roy Vallee, Chief
Executive Officer, under Section 906 of the Sarbanes-Oxley
Act of 2002.
32
.2**
Certification by Raymond Sadowski,
Chief Financial Officer, under Section 906 of the
Sarbanes-Oxley Act of 2002.
*
Filed herewith.
**
Furnished herewith.
Table of Contents
By:
50
Table of Contents
Exhibit
10
.1*
Form of Indemnity Agreement. The
Company enters into this form of agreement with each of its
directors and officers.
10
.2*
Employment Agreement dated
July 1, 2004 between the Company and Steven C. Church.
10
.3*
Change of Control Agreement dated
July 1, 2004 between the Company and Steven C. Church.
31
.1*
Certification by Roy Vallee, Chief
Executive Officer, under Section 302 of the Sarbanes-Oxley
Act of 2002.
31
.2*
Certification by Raymond Sadowski,
Chief Financial Officer, under Section 302 of the
Sarbanes-Oxley Act of 2002.
32
.1**
Certification by Roy Vallee, Chief
Executive Officer, under Section 906 of the Sarbanes-Oxley
Act of 2002.
32
.2**
Certification by Raymond Sadowski,
Chief Financial Officer, under Section 906 of the
Sarbanes-Oxley Act of 2002.
*
Filed herewith.
**
Furnished herewith.
(1) | except to the extent the aggregate of losses to be indemnified exceeds the amount of such losses for which Indemnitee is actually paid pursuant to any insurance purchased and maintained by the Corporation for the benefit of Indemnitee; | ||
(2) | if judgment or other final adjudication establishes that the Indemnitees acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that Indemnitee personally gained in fact a financial profit or other advantage to which Indemnitee was not legally entitled; or | ||
(3) | if a final judgment by a court having jurisdiction in the matter shall determine that such indemnification is not lawful. |
AVNET, INC. | INDEMNITEE | |||||||
|
||||||||
|
By: | |||||||
|
|
|||||||
|
||||||||
|
David R. Birk | |||||||
|
Senior Vice President, Secretary | |||||||
|
and General Counsel | Address: | ||||||
|
||||||||
|
||||||||
|
||||||||
|
||||||||
|
6.9 | Headings. Except for the headings in Section 4, the headings of the sections and subsections are inserted for convenience only and shall not be deemed to constitute a part hereof or to affect the meaning thereof. |
AVNET, INC. | ||||||
|
||||||
|
By |
/s/ Roy Vallee
|
||||
|
||||||
|
Title | Chief Executive Officer | ||||
|
||||||
|
||||||
/s/ Steven C. Church | ||||||
STEVEN C. CHURCH |
*Age
+ Years of Service at termination X 36% of Covered
Compensation
|
|
|
80
|
Age at Commencement | % of Normal | |||
of Benefit | Retirement | |||
Payments | Benefit | |||
60
|
85.00 | % | ||
61
|
88.00 | % | ||
61 years 5 months
|
89.25 | % | ||
62
|
91.00 | % | ||
63
|
94.00 | % | ||
63 years 9 months
|
96.25 | % | ||
64
|
97.00 | % | ||
65
|
100.00 | % |
STEVEN C. CHURCH | AVNET, INC. | |||||||
|
||||||||
/s/ Steven C. Church
|
By |
/s/ Roy Vallee
|
||||||
|
||||||||
|
Its | Chief Executive Officer | ||||||
|
||||||||
|
||||||||
July 24, 2004 | July 29, 2004 | |||||||
Date | Date |
1. | Definitions . |
(a) | Change of Control means the happening of any of the following events: |
(i) | the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a Person) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that the following transactions shall not constitute a Change of Control under this subsection (i): (w) any transaction that is authorized by the Board of Directors of the Company as constituted prior to the effective date of the transaction, (x) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), (y) any acquisition by the Company, or (z) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company; or | ||
(ii) | individuals who, as of the effective date hereof, constitute the Board of Directors of the Company (the Incumbent Board) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the effective date hereof whose election, or nomination for election by the Companys stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be |
1
considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or | |||
(iii) | Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company. |
(b) | Constructive Termination means the happening of any of the following events: |
(i) | a material diminution of Officers responsibilities, including, without limitation, title and reporting relationship; | ||
(ii) | relocation of the Officers office greater than 50 miles from its location as of the effective date of this Agreement without the consent of the Officer; | ||
(iii) | a material reduction in Officers compensation and benefits. |
(c) | The Exchange Act shall mean the 1934 Securities Exchange Act, as amended. |
2. | Constructive Termination or Termination after Change of Control . If, within 24 months following a Change of Control, the Company or its successor terminates Officers employment without cause or by Constructive Termination, Officer will be paid, in lieu of any other rights under any employment agreement between the Officer and the Company, in a lump sum payment, an amount equal to 2.99 times the sum of (i) the Officers annual salary for the year in which such termination occurs and (ii) the Officers incentive compensation equal to the average of such incentive compensation for the highest two of the last five full fiscal years. All unvested stock options shall accelerate and vest in accordance with the early vesting provisions under the applicable stock option plans and all incentive stock program shares allocated but not yet delivered will be accelerated so as to be immediately deliverable. Officer shall receive his or her accrued and unpaid salary and any accrued and unpaid pro rata bonus (assuming target payout) through the date of termination, and Officer will continue to participate in the medical, dental, life, disability and automobile benefits in which Officer is then participating for a period of two years from the date of termination. |
2
3. | Excise Taxes. In the event that Officer is deemed to have received an excess parachute payment (as such term is defined in Section 280G(b) of the Internal Revenue Code of 1986, as amended (the Code)) that is subject to excise taxes (Excise Taxes) imposed by Section 4999 of the Code with respect to compensation paid to Officer pursuant to this Agreement, the Company shall make an additional payment equal to the sum of (i) all Excise Taxes payable by Officer plus (ii) any additional Excise Tax or federal or state income taxes imposed with respect to such payments. | |
4. | Miscellaneous . This Agreement replaces and supercedes in its entirety that certain Change of Control Agreement dated July 1, 2002 between Officer and Company. This Agreement modifies any employment agreement between Officer and the Company only with respect to such terms and conditions that are specifically addressed in this Agreement. All other provisions of any employment agreement between the Company and Officer shall remain in full force and effect. |
By
|
/s/ Raymond Sadowski
|
Its: Senior VP and CFO
|
||
|
||
Officer
|
||
|
||
/s/ Steve C. Church
|
3
1. | I have reviewed this quarterly report on Form 10-Q 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 registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as such term is 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. | 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; | ||
b. | 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; | ||
c. | evaluated the effectiveness of the registrants 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 | ||
d. | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing equivalent functions): |
a. | 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 registrants ability to record, process, summarize and report financial information; and | ||
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ ROY VALLEE | ||||
Roy Vallee | ||||
Chief Executive Officer | ||||
1. | I have reviewed this quarterly report on Form 10-Q 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 registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as such term is 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. | 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; | ||
b. | 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; | ||
c. | evaluated the effectiveness of the registrants 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 | ||
d. | disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing equivalent functions): |
a. | 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 registrants ability to record, process, summarize and report financial information; and | ||
b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
/s/ RAYMOND SADOWSKI | ||||
Raymond Sadowski | ||||
Chief Financial Officer | ||||
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. |
/s/ ROY VALLEE | ||||
Roy Vallee | ||||
Chief Executive Officer | ||||
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. |
/s/ RAYMOND SADOWSKI | ||||
Raymond Sadowski | ||||
Chief Financial Officer | ||||