Avnet (AVT) Q4 2002 earnings summary

Executive summary

• FY2002 sales fell 30.4% YoY to $8.92B amid a severe technology-market downturn; reported net loss was $664.9M, including a $580.5M goodwill impairment charge.

• Operating income was a $3.0M loss; excluding $79.6M of special charges, operating income was $76.6M, down from $581.2M in FY2001.

Financial highlights

• Gross profit was $1.223B versus $1.866B in FY2001; reported SG&A was $1.226B versus $1.612B.

• Loss from continuing operations was $84.4M, or $0.71 diluted EPS; excluding special charges, continuing-operations loss was $22.4M, or $0.19 per diluted share.

• Q4 sales were $2.145B; gross profit was $282.6M and loss from continuing operations was $61.4M, including special charges.

Outlook and guidance

• Management expected no material acquisitions in the near term and lower investing activity to continue in FY2003.

• Management viewed cost savings and expense reductions as providing operating leverage; revenue gains in a market recovery were expected to drive operating income growth faster than revenue and gross-profit-dollar growth.

• Management expected borrowing capacity after the 364-day facility expired, together with cash from normal operations, to cover projected working-capital needs.