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What changed in AVNET INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AVNET INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+227 added−259 removedSource: 10-K (2024-08-14) vs 10-K (2022-08-12)

Top changes in AVNET INC's 2024 10-K

227 paragraphs added · 259 removed · 169 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWith supply chain planning tools and a variety of inventory management solutions, EC provides solutions that meet a customer’s requirements and minimize risk in a variety of scenarios, including lean manufacturing, demand flow, and outsourcing. Embedded and Integrated Solutions EC provides embedded solutions including technical design, integration and assembly of embedded products, systems, and solutions primarily for industrial applications.
Biggest changeEmbedded and Integrated Solutions EC provides embedded solutions, including technical design and integration and assembly of embedded products, systems, and solutions for a variety of end markets, including industrial and healthcare. EC also provides embedded display solutions, including touch and passive displays.
Printed versions can be obtained, free of charge, by writing to the Company at the address listed above in “Available Information.” In addition, the Company’s filings with the SEC, as well as Section 16 filings made by any of the Company’s executive officers or directors with respect to the Company’s common stock, are available on the Company’s website ( ir.avnet.com/financial-information/sec-filings ) as soon as reasonably practicable after the filing is electronically filed with, or furnished to, the SEC.
Printed versions can be obtained, free of charge, by writing to the Company at the address listed above in “Available Information.” The Company’s filings with the SEC, as well as Section 16 filings made by any of the Company’s executive officers or directors with respect to the Company’s common stock, are available on the Company’s website ( ir.avnet.com/financial-information/sec-filings ) as soon as reasonably practicable after the filing is electronically filed with, or furnished to, the SEC.
Divisions (“business units”) within each operating group serve primarily as sales and marketing units to streamline sales efforts and enhance each operating group’s ability to work with its customers and suppliers, generally along more specific geographies or product lines.
Regional divisions (“business units”) within each operating group serve primarily as sales and marketing units to streamline sales efforts and enhance each operating group’s ability to work with its customers and suppliers, generally along more specific geographies or product lines.
To minimize its exposure related to inventory on hand, the Company purchases a majority of its products pursuant to franchised distribution agreements, which typically provide certain protections for product obsolescence and price erosion. These agreements are generally cancelable upon 30 to 180 days’ notice and, in most cases, provide for or require inventory return privileges upon cancellation.
To minimize its exposure related to inventory on hand, the Company purchases most of its products pursuant to franchised distribution agreements, which typically provide certain protections for product obsolescence and price erosion. These agreements are generally cancelable upon 30 to 180 days’ notice and, in most cases, provide for or require inventory return privileges upon cancellation.
In addition, the Company enhances its competitive position by offering a variety of value-added services, which are tailored to individual customer specifications and business needs, such as point of use replenishment, testing, assembly, programming, supply chain management, and materials management. A competitive advantage is the breadth of the Company’s supplier product line card.
In addition, the Company enhances its competitive position by offering a variety of value-added services, which are tailored to individual customer specifications and business needs, such as design support, point of use replenishment, labelling, testing, assembly, programming, supply chain management, and materials management. A competitive advantage is the breadth of the Company’s supplier product line card.
Electronic Components Avnet’s EC operating group primarily supports high-volume customers. It markets, sells, and distributes electronic components from the world’s leading electronic component manufacturers, including semiconductors, IP&E components (interconnect, passive and electromechanical components), and other integrated and embedded components. EC serves a variety of markets ranging from automotive to medical to defense and aerospace.
Electronic Components Avnet’s EC operating group primarily supports high and medium-volume customers. It markets, sells, and distributes electronic components from many of the world’s leading electronic component manufacturers, including semiconductors, IP&E components (interconnect, passive and electromechanical components), and other integrated and embedded components. EC serves a variety of markets ranging from industrial to automotive to defense and aerospace.
EC’s internal competencies in global warehousing and logistics, information technology, and asset management, combined with its global footprint and extensive partner relationships, allow EC to develop supply chain solutions that provide for a deeper level of engagement with its customers.
EC’s internal competencies in supply chain, global warehousing and logistics, information technology, and asset management, combined with its global footprint and extensive supplier relationships, allows EC to develop supply chain solutions that provide for a deeper level of engagement with its customers.
Supply Chain Solutions EC’s supply chain solutions provide support and logistical services to OEMs, EMS providers, and electronic component manufacturers, enabling them to optimize supply chains on a local, regional or global basis.
Supply Chain Solutions EC’s supply chain solutions provide procurement support and warehousing and logistics services to OEMs, EMS providers, and electronic component manufacturers, enabling them to optimize supply chains on a local, regional, or global basis.
Because of the number of Avnet’s suppliers, many customers can simplify their procurement process and make all of their required purchases from Avnet, rather than purchasing from several different parties.
Because of the number of Avnet’s suppliers, many customers can simplify their procurement process and can make all or substantially all of their required electronic component purchases from Avnet, rather than purchasing from several different parties.
Pay Equity, Benefits and Wellness The Company strives to pay all its employees fairly, without regard to gender, race, or other personal characteristics, and competitively to attract, retain and incentivize talent. The Company sets pay ranges based on market data and considers factors such as an employee’s role, experience, tenure, job location, and job performance.
Compensation, Benefits and Wellness The Company strives to pay all its employees competitively and fairly, without regard to gender, race, or other personal characteristics. The Company sets pay ranges based on market data and considers an employee’s role, experience, tenure, job location, and job performance.
Additional information regarding the Company’s Human Capital programs, initiatives, and metrics can be found on its website as well as in its Sustainability Reports accessible on its website. The Sustainability Reports and other information contained on the Company’s website are neither part of nor incorporated by reference into this Annual Report.
Additional information regarding the Company’s Human Capital programs, initiatives, and metrics can be found on its website, including in its Sustainability Reports accessible on its website. The Sustainability Reports and other information contained on the Company’s website are not incorporated by reference into this Annual Report.
Diversity, Equity and Inclusion (“DEI”) The Company’s DEI Vision is to have (i) an employee population that reflects the diverse communities in which they live, work, and do business, and (ii) an organizational culture which seeks out varying perspectives that allow the best ideas to come to light and help the Company achieve and maximize business success.
Diversity, Equity, and Inclusion (“DEI”) The Company’s DEI vision is (i) an employee population that reflects the diverse communities in which they live, work, and do business, and (ii) a culture that seeks out varying perspectives, which allows the best ideas to come to light.
The Company also supports employee-led Employee Resource Groups (ERGs) that are open to all employees and provide a forum to communicate and exchange ideas, build a network of relationships across the Company, and support each other in personal and career development.
The Company’s employee-led Employee Resource Groups (ERGs) provide a forum for employees to communicate and exchange ideas, build a network of relationships across the Company, and support each other in personal and career development.
The Company reviews its compensation practices, both in terms of its overall workforce and individual employees, to help ensure that pay remains fair and equitable. The Company also offers a wide array of benefits that support employees’ physical, financial, and emotional well-being.
The Company periodically reviews its compensation practices, both in terms of its overall workforce and individual employees, to help ensure that pay remains competitive and fair. The Company offers an array of benefits that support employees’ well-being.
Each operating group also has distinct financial reporting to the executive level, which informs operating decisions and strategic planning and resource allocation for the Company as a whole.
Each operating group has its own management team, who manage various functions within each operating group. Each operating group also has distinct financial reporting to the executive level, which informs operating decisions, strategic planning, and resource allocation for the Company as a whole.
Seasonality Historically, Avnet’s business has not been materially impacted by seasonality, with the exception of an impact on consolidated results from shifts in geographic sales trends from Asia in the first half of a fiscal year to the Americas and EMEA regions in the second half of a fiscal year, which impact gross profit and operating income margins as a result of such seasonal geographic sales mix changes. 5 Human Capital The Company highly values its employees, and recognizes their significant contributions to the success of the Company.
Seasonality Historically, Avnet’s business has not been materially impacted by seasonality, except for an impact on consolidated results from shifts in geographic sales trends from Asia in the first half of a fiscal year to the Americas and EMEA regions in the second half of a fiscal year, which impact gross profit and operating income margins as a result of such seasonal geographic sales mix changes.
A copy of any of the Company’s filings with the SEC, or any of the agreements or other documents that constitute exhibits to those filings, can be obtained by request directed to the Company at the following address and telephone number: Avnet, Inc. 2211 South 47 th Street Phoenix, Arizona 85034 (480) 643-2000 Attention: Corporate Secretary The Company also makes these filings available, free of charge, through its website (see “Avnet Website” below).
A copy of any of the Company’s filings with the SEC, or any of the agreements or other documents that constitute exhibits to those filings, can be obtained by request directed to the Company at the following address and telephone number: Avnet, Inc. 2211 South 47 th Street Phoenix, Arizona 85034 (480) 643-2000 Attention: Corporate Secretary The Company also makes these filings available, free of charge, through its website (see “Avnet Website” below). 7 Table of Contents Avnet Website In addition to the information about the Company contained in this Report, extensive information about the Company can be found at http://www.avnet.com , including information about its management team, products and services, and corporate governance practices.
The Company invests in its global workforce to drive diversity and inclusion; provide fair and market-competitive pay and benefits; foster employee development for future opportunities within the company; promote employees health and safety; and obtain employees’ feedback to better understand employees’ experiences and identify opportunities.
Consequently, the Company invests in its global workforce to drive 5 Table of Contents diversity and inclusion; provide fair and competitive pay and benefits; foster employee development; promote employees health and safety; and understand employees’ experiences and identify opportunities to improve.
With access to a suite of design tools and engineering support, customers can get product specifications along with evaluation kits and reference designs that enable a broad range of applications from any point in the design cycle. EC also offers engineering and technical resources deployed globally to support product design, bill of materials development, and technical education and training.
With access to a suite of design tools and engineering support, customers can get product specifications along with evaluation kits and reference designs that 3 Table of Contents enable a broad range of applications from any point in the design cycle.
A key competitive factor in the electronic component distribution industry is the need to carry a sufficient amount and selection of inventory to meet customers’ demand and rapid delivery requirements.
As a result of these factors, Avnet’s pricing and product selection and availability must remain competitive. A key competitive factor in the electronic component distribution industry is the need to carry a sufficient amount and selection of inventory to meet customers’ demand and various delivery requirements.
Through such surveys, the Company regularly collects feedback to better understand its employees’ experiences and identify opportunities to improve the work environment, increase employee satisfaction, and strengthen its culture. In fiscal 2022, the Company conducted one global employee engagement survey and achieved completion by 56% of its employees.
Through such surveys, the Company regularly collects feedback to better understand its employees’ experiences and identify opportunities to improve the work environment, increase employee satisfaction, and strengthen its culture. In fiscal 2024, the Company conducted its regular global employee engagement survey and achieved a participation rate of 71.6%, an increase over fiscal 2023.
Item 1. Business Avnet, Inc. and its consolidated subsidiaries (collectively, the “Company” or “Avnet”), is a leading global technology distributor and solutions provider that has served customers’ evolving needs for more than a century. Avnet supports customers at each stage of a product’s lifecycle, from idea to design and from prototype to production.
Item 1. Business Avnet, Inc. and its consolidated subsidiaries (collectively, the “Company” or “Avnet”), is a leading global electronic component technology distributor and solutions provider that has served customers’ evolving needs for more than a century.
Number of Employees As of July 2, 2022, the Company’s global workforce totaled approximately 15,300 employees across 48 countries. Broken down by geographic region, approximately 4,500 employees are in the Americas, 6,600 employees in EMEA, and 4,200 employees in the Asia as of July 2, 2022.
Number of Employees As of June 29, 2024, the Company’s global workforce totaled approximately 15,462 employees across 48 countries. Broken down by geographic region, approximately 4,294 employees are in the Americas, 6,494 employees are in EMEA, and 4,674 employees are in Asia.
The Company offers all employees resources for living well through its THRIVE program, which offers resources, information, benefits and assistance to support overall well-being covering the following topics: (1) Mind & Body: physical and mental health, fitness and well-being; (2) Career: professional growth, skills, and development; (3) Money: total rewards, retirement planning and money management; and (4) Connection: community, networks, and social interests.
Through its THRIVE program, the Company offers resources covering (1) physical and mental health, fitness, and well-being; (2) professional growth, skills, and development; (3) total rewards, retirement planning and money management; and (4) community connections, networks, and social interests. Development and Training The Company provides career development training and opportunities to help employees reach their potential.
By utilizing EC’s design chain support, customers can optimize their component selection and accelerate their time to market. EC’s extensive product line card provides customers access to a diverse range of products from a complete spectrum of electronic component manufacturers.
EC also offers engineering and technical resources deployed globally to support product design, bill of materials development, and technical education and training. By utilizing EC’s design chain support, customers can optimize their component selection and accelerate their time to market. EC’s extensive electronic component offerings provides customers access to a diverse range of products from a complete spectrum of suppliers.
The Company’s major competitors include: Arrow Electronics, Inc., Future Electronics, World Peace Group, Mouser Electronics and Digi-Key Electronics. There are also certain smaller, specialized competitors who generally focus on particular sectors or on narrower geographic locations, markets, or products. As a result of these factors, Avnet’s pricing and product availability must remain competitive.
The Company’s major competitors include: Arrow Electronics, Future Electronics, World Peace Group, and WT Microelectronics for EC; Mouser Electronics, Digi-Key Electronics, and RS Components for Farnell. There are also certain smaller, specialized competitors who generally focus on particular sectors or on narrower geographic locations, markets, or products.
Major Products One of Avnet’s competitive strengths is the breadth and quality of the suppliers whose products it distributes. Products from no single supplier exceeded 10% of consolidated sales during fiscal years 2022, 2021 and 2020. Listed in the table below are the major product categories and the Company’s approximate sales of each during the past three fiscal years.
Major Products One of Avnet’s competitive strengths is the breadth and quality of the suppliers whose products it distributes. Products from one supplier were approximately 10% of consolidated sales during fiscal years 2024 and 2023, and no 4 Table of Contents single supplier exceeded 10% of consolidated sales during fiscal year 2022.
Both operating groups have operations in each of the three major economic regions of the world: (i) the Americas, (ii) Europe, Middle East, and Africa (“EMEA”) and (iii) Asia/Pacific (“Asia”). Each operating group has its own management team, who manage various functions within each operating group.
Organizational Structure Avnet has two primary operating groups — Electronic Components (“EC”) and Farnell (“Farnell”). Both operating groups have operations in each of the three major economic regions of the world: (i) the Americas, (ii) Europe, Middle East, and Africa (“EMEA”) and (iii) Asia/Pacific (“Asia”).
These customers can manage their supply chains to meet the demands of a competitive global environment without a commensurate investment in physical assets, systems, and personnel.
These customers can manage their supply chains to meet the demands of a competitive global environment without a commensurate investment in physical assets, systems, and personnel. With supply chain planning tools and a variety of electronic component management solutions, EC provides various solutions that meet a customer’s requirements and minimize supply chain risk in a variety of scenarios.
Farnell Avnet’s Farnell operating group primarily supports lower-volume customers that need electronic components quickly to develop, prototype, and test their products. It distributes a comprehensive portfolio of kits, tools, electronic components, industrial automation components, and test and measurement products to both engineers and entrepreneurs, primarily through an e-commerce channel.
It distributes a comprehensive portfolio of kits, tools, electronic components, industrial automation components, and test and measurement products to both engineers and entrepreneurs, primarily through an e-commerce channel. Farnell also distributes new product introductions for its suppliers across their various product categories.
It offers an array of customer support options throughout the entire product lifecycle, including both turnkey and customized design, supply chain, new product introduction, programming, logistics and post-sales services.
It offers an array of customer support options throughout the entire product lifecycle, including both turnkey and customized design, supply chain, programming, logistics, and post-sales services. Within the EC operating group for 2024, net sales of approximately 85% consist of semiconductor products, approximately 14% consist of interconnect, passive, and electromechanical components, and approximately 1% consist of computers.
“Other” consists primarily of test and measurement products, as well as maintenance, repair and operations (MRO) products. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ July 2, July 3, June 27, ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ ​ (Millions) ​ Semiconductors ​ $ 18,380.2 ​ $ 14,722.8 ​ $ 13,440.3 ​ Interconnect, passive & electromechanical (IP&E) ​ 4,639.1 ​ 3,649.0 ​ 3,146.0 ​ Computers ​ ​ 663.2 ​ ​ 640.6 ​ ​ 572.0 ​ Other ​ 628.2 ​ 522.3 ​ 476.0 ​ Sales ​ $ 24,310.7 ​ $ 19,534.7 ​ $ 17,634.3 ​ Competition & Markets The electronic components industry continues to be extremely competitive.
“Other” consists primarily of test and measurement and maintenance, repair, and operations (MRO) products. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ June 29, July 1, July 2, ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ (Millions) ​ Semiconductors ​ $ 19,030.3 ​ $ 21,366.5 ​ $ 18,380.2 ​ Interconnect, passive & electromechanical (IP&E) ​ 3,745.9 ​ 4,150.6 ​ 4,639.1 ​ Computers ​ ​ 382.8 ​ ​ 520.8 ​ ​ 663.2 ​ Other ​ 598.1 ​ 499.0 ​ 628.2 ​ Sales ​ $ 23,757.1 ​ $ 26,536.9 ​ $ 24,310.7 ​ Competition & Markets The electronic components industry is competitive.
Within the EC operating group for 2022, net sales of approximately 80% consist of semiconductor products, approximately 17% consist of interconnect, passive, and electromechanical components, approximately 2% consist of computers, and approximately 1% consist of other products and services. ​ 3 Design Chain Solutions EC offers design chain support that provides engineers with a host of technical design solutions, which helps EC support a broad range of customers seeking complex products and technologies.
Design Chain Solutions EC offers design chain support that provides engineers with a host of technical design solutions, which helps EC support a broad range of customers seeking complex products and technologies.
Avnet serves a wide range of customers: from startups and mid-sized businesses to enterprise-level original equipment manufacturers (“OEMs”), electronic manufacturing services (“EMS”) providers, and original design manufacturers (“ODMs”). Organizational Structure Avnet has two primary operating groups — Electronic Components (“EC”) and Farnell (“Farnell”).
Founded in 1921, the Company works with electronic component manufacturers (suppliers) in every major electronic component segment to serve customers in more than 140 countries. Avnet serves a wide range of customers: from startups and mid-sized businesses to enterprise-level original equipment manufacturers (“OEMs”), electronic manufacturing services (“EMS”) providers, and original design manufacturers (“ODMs”).
EC also provides integrated solutions for intelligent and innovative embedded display solutions, including touch and passive displays. In addition, EC develops and produces standard board and industrial subsystems and application-specific devices that enable it to produce specialized systems tailored to specific customer requirements.
In addition, EC develops and produces standard board and industrial subsystems and application-specific devices that enable it to produce specialized systems tailored to specific customer requirements. EC serves OEMs that require embedded systems and solutions, including engineering, product prototyping, integration, and other value-added services in the medical, telecommunications, industrial, and digital editing markets.
Its core values of integrity, customer focus, ownership, teamwork and inclusiveness establish the foundation on which its culture is built and are key expectations of its employees. The Company believes that its culture and commitment to its employees are vital in its ability to attract, motivate and retain exceptional talent.
Human Capital The Company values its employees and recognizes their significant contributions to the Company’s success. Its core values of integrity, customer focus, ownership, teamwork, and inclusiveness provide a foundation for its culture and are key expectations of employees. The Company’s culture and commitment to its employees are vital to attracting, motivating, and retaining exceptional talent.
In addition, amendments to these documents and waivers granted to directors and executive officers under the Code of Conduct, if any, will be posted in this area of the website. These documents can be accessed at ir.avnet.com/documents-charters .
The corporate governance information on the Company’s website includes the current version of the Company’s Corporate Governance Guidelines, the Code of Conduct, and the charters for each of the committees of its Board of Directors. Waivers granted to directors and executive officers under the Code of Conduct, if any, will be posted in this area of the website.
The council meets regularly and engages with colleagues across the Company to connect DEI initiatives to the Company’s broader business strategy. In addition, for fiscal 2022 and 2021, executive’s annual incentive compensation included an ESG non-financial performance goal to demonstrate the Company’s ESG commitment.
The council meets regularly and engages with colleagues across the Company to connect DEI initiatives to the Company’s broader business strategy. The Company’s Equal Opportunity, Diversity, and Inclusion Policy actively promotes DEI in the Company’s talent management practices.
EC serves OEMs that require embedded systems and solutions, including engineering, product prototyping, integration, and other value-added services in the medical, telecommunications, industrial, and digital editing markets. EC also provides integrated solutions and services for software companies that bring their intellectual property to market via hardware solutions, including custom-built embedded servers.
EC also provides integrated solutions and services for software companies that bring their intellectual property to market via hardware solutions, including custom-built servers. Farnell Avnet’s Farnell operating group primarily supports lower-volume customers that need electronic components quickly to develop, prototype, and test their products.
In addition, the Company offers a range of learning resources including face-to-face, virtual, and online training, as well as mentoring and coaching programs. Training programs for all employees include LinkedIn Learning and Business Book Summaries which cover a variety of technical, business, interpersonal, and leadership topics.
The performance management process provides ongoing performance, goals, and development discussions between employees and their leaders. Learning and development resources include mentoring programs and internal and external trainings, which cover a variety of technical, business, interpersonal, and leadership topics. Additionally, certain programs are available for leaders to develop skills in effective goal setting, coaching, feedback, and development.
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Avnet’s position at the center of the technology value chain enables it to accelerate the design and supply stages of product development so customers can realize revenue faster. Founded in 1921, the Company works with suppliers in every major technology segment to serve customers in more than 140 countries.
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Within the Farnell operating group for 2024, net sales of approximately 16% consists of semiconductor products, approximately 45% consists of interconnect, passive, and electromechanical components, approximately 5% consists of single-board computers, and approximately 34% consists of other products and services, including test and measurement and maintenance, repair, and operations products.
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Farnell brings the latest products, services, and development trends all together in element14, an industry-leading online community where engineers collaborate to solve one another’s design challenges. In element14, members get consolidated information on new technologies, as well as access to experts and product specifications.
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Listed in the table below are the major product categories and the Company’s approximate sales of each during the past three fiscal years.
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Members can see what other engineers are working on, learn from online training, and get the help they need to optimize their own designs. 4 Table of Contents Within the Farnell operating group for 2022, net sales of approximately 21% consist of semiconductor products, approximately 51% consist of interconnect, passive, and electromechanical components, approximately 7% consist of computers, and approximately 21% consist of other products and services.
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Talent and succession planning activities are conducted for the Company’s executive officers at least annually and periodically for other senior leaders. Health and Safety The Company strives to create workspaces and practices that foster a safe and secure work environment.
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The Company recognizes that everyone deserves respect and equal treatment, regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, veteran status, cultural background, or religious beliefs. The Company’s commitment to diversity is evidenced by the makeup of its Board of Directors and its employees.
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In fiscal 2024, continued progress was made with implementing the multi-year plan to improve alignment and consistency of management systems, policies, and procedures; provide comprehensive health and safety training to employees relevant to their specific work functions; drive continual improvement processes with a focus on identified risks; and increase ISO certifications at operational sites.
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As of July 2, 2022, the Board was 45% racially and ethnically diverse, and 27% women, and its global employees were over 45% women. To oversee inclusion efforts, the Company created the Global DEI Council, which is made up of 20 individuals who represent various business units and corporate functions.
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As of June 29, 2024, the Company has 26 operational sites, of which eight are certified to ISO 45001 and 17 are certified to ISO 14001.
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In furtherance of DEI goals, the Company conducts listen-and-learn sessions on a variety of DEI topics, which promote meaningful discussions and allow employees to better understand and support each other. These group conversations are open to the entire Company, and are regularly attended by senior leaders, including the CEO.
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The Company is committed to making employment decisions based on merit and the needs of the Company’s business, 6 Table of Contents while ensuring equal employment opportunities for all applicants and employees regardless of race, gender, national origin, or other protected characteristic. The Company’s Global DEI Council, a global cross-functional team of leaders, oversees inclusion efforts.
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During fiscal 2022, five sessions were conducted covering Black History Month, Allyship and Gender Partnership in the Workplace, Autism, Women and Bias, and Gender Inclusivity.
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The Company’s commitment to diversity is evidenced by the makeup of its Board of Directors, which as of June 29, 2024, was 30% women and 50% racially and ethnically diverse (including Middle Eastern origin). In addition, for fiscal years 2021 through 2024, executive’s annual incentive compensation included non-financial performance goals that consist in part on DEI.
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There are two ERGs for Black and women employees, and a third ERG for Hispanic and Latino employees is being formed. Additionally, the Company maintains an official culture and diversity calendar and publishes articles on its intranet to celebrate events and holidays around the world.
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The Company’s eight ERGs support the following communities: women, Asian and Pacific Islanders, Blacks, Hispanic and Latinos, U.S. veterans, LGBTQ+, later career employees; and environmental and sustainability causes. Employee Engagement The Company engages with its employees and encourages open and direct feedback through employee engagement surveys.
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In fiscal 2022, the Company’s employees celebrated International Women’s Day by holding a global event with external speakers discussing gender bias.
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These documents can be accessed at ir.avnet.com/documents-charters .
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Since 2020, Juneteenth, which 6 Table of Contents commemorates the official end of slavery in the United States and the emancipation of Black slaves, has been an official company-paid holiday for employees in the United States, a year before the federal government recognized it officially.
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The Company provided unconscious bias training to its top 500 leaders, and is developing a suitable training for all employees. DEI education topics are regularly presented at the company-wide quarterly town hall, team and leadership meetings, and through internal webinars and podcasts open to all employees.
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The Company employs diversity initiatives to ensure women and minorities are considered for its internship program and leadership roles, and attempts to utilize inclusive recruitment practices to attract and source diverse talent and mitigate potential bias.
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It has formed partnerships with ABILITYJobs, an employment website for people with disabilities, and Diversity Jobs, a recruiting and employment website with a network of niche sites for Black, Latinx, Asians, Native Americans, women, veterans, people with disabilities, people over age fifty, and LGBTQIA+ community.
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The Company has built new relationships with college career services departments and diversity-based student organizations such as YearUp, and attends multiple diversity, veteran, disability, and college job fairs. The Company further undertakes DEI initiatives to improve its supplier and vendor diversity and support businesses with a Minority, Women or Veteran Business Enterprise (MWVBE) designation.
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For example, it provides opportunities regarding underwriting and other active roles in the Company’s capital-raising activities and short-term investments. In the area of procurement, the Company is exploring the possibility of dual sourcing as a strategy to give entry to MWVBE suppliers and vendors. For fiscal 2022, the Company began capturing its procurement diversity spend in the United States.
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The Company continues to support women in the electronics industry, and has been a member of the Arizona Technology and Diversity Council since 2021. In addition, the Company’s CEO and another Company leader serve on the advisory board of Women in Electronics.
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It has participated in McKinsey’s “Women in the Workplace” study for the last six years, and has conducted for the past two years an industry-wide Women in Engineering Survey with results published annually on Farnell’s website.
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Depending on the position, the Company uses a combination of fixed and variable pay including base salary, incentive awards, commissions, and merit increases. In addition, as part of its long-term incentive plan for certain employees, the Company provides share-based compensation to align employee’s interests with shareholders.
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Benefits include health benefits for eligible full-time and part-time U.S. employees and dependents, such as medical, behavioral, dental, vision, pharmacy, fertility and transgender coverage as well as disability and life insurance coverage.
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The Company offers time-off benefits, including paid family care leave for both hourly and salaried employees; a pension plan benefit for U.S. employees after one year of service; a 401(k) plan for employees to contribute towards their retirement goals; and an employee stock purchase plan that allows employees to purchase Company shares at a discount.
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In Canada and the United States, the Company provides education financial assistance for employees who wish to pursue undergraduate or graduate education to further their career development, and a 7 scholarship program for their dependents.
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An online wellness platform offers an interactive way to accomplish personal and financial goals and rewards employees for completing well-being activities. Further, the Company’s Employee Assistance Program (EAP) offers all employees free professional and confidential counseling for personal and work-related issues, life coaching, and mindfulness coaching, and runs webinars on a variety of mental health and well-being topics.
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The Company also looks for creative benefits that provide needed support to employees. For example, in the United States, the Company covers six months rental of a SNOO Smart Sleeper Bassinet to new parents to help them rest and keep babies safe.
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In response to the COVID-19 pandemic, the Company added a short-term employee loan program to assist employees during the difficult time. Further, as employees return to work, the Company expanded its flexible, hybrid work model to allow employees in certain functions or roles to work remotely during part of the week.
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Development and Training The Company provides development opportunities and training to empower employees to grow and reach their career potential. The performance management process provides ongoing performance and development goals and discussions between employees and their leaders. Through the HR Now portal, the Company provides career development training and tools so employees can create a development plan.
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Lead2Achieve and InsideOut Coaching are available for leaders to develop skills in effective goal-setting, coaching, feedback, and development. The Company’s annual compliance training includes business ethics and anti-corruption, and the Company offers training on various other topics including life skills, health and safety, environmental awareness, discrimination, and diversity.
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Health and Safety The Company strives to create workspaces and practices that foster a safe and secure work environment. As such, it provides comprehensive health and safety training to employees relevant to their specific work functions. The training is part of a continual improvement process and focuses on identified risks.
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In fiscal 2022, the Company created the position of Global Director of Environment, Health and Safety, to improve alignment and consistency of policies and procedures globally and increase ISO certifications at operational facilities.
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During fiscal 2022, the total injuries requiring medical treatment continued to decline as noted below: ​ ​ ​ Total Injuries requiring medical treatment (1) FY2022 43 total injuries 0 fatalities FY2021 63 total injuries 0 fatalities FY2020 72 total injuries 0 fatalities FY2019 84 total injuries 0 fatalities (1) Injuries reported meeting OSHA/local industrial injuring reporting requirements at major Avnet and Farnell global facilities .
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In response to the COVID-19 pandemic, the Company formed a COVID-19 emergency response team with senior 8 Table of Contents management level representation from each region. The team leads and coordinates the Company’s overall response and communications with its global workforce.
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The Company implemented various measures that it determined were in the best interest of its employees’ health and safety, and in alignment with government legislation and guidance from key health authorities.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA major interruption or disruption in service at one or more of its distribution centers for any reason (such as information technology upgrades and operating issues, warehouse modernization and relocation efforts, natural disasters, pandemics and other public health crises, geopolitical instability, military conflicts or terrorist attacks) or significant disruptions of services from the Company’s third-party transportation providers (such as transportation constraints due to labor shortages, disruptions to ports and other shipping infrastructures, border closures, other travel or health-related restrictions, and increased transportation costs related to gas price increases and shortages) could cause a delay in expected cost savings or an increase in expenses, which may not be possible to pass on to customers.
Biggest changeA major interruption or disruption in service at one or more of its distribution centers for any reason, or significant disruptions of services from the Company’s third-party transportation providers, could cause a delay in expected cost savings or an increase in expenses, which may not be possible to pass on to customers.
Many of the Company’s suppliers offer certain protections from the loss in value of inventory (such as price protection and limited rights of return), but such policies may not fully compensate for the loss. Also, suppliers may not honor such agreements, some of which are subject to the supplier discretion.
Many of the Company’s suppliers offer certain protections from the loss in value of inventory (such as price protection and limited rights of return), but such policies may not fully compensate for the loss. Also, suppliers may not honor such agreements, some of which are subject to supplier discretion.
Also, position eliminations may negatively impact the morale of employees who are not terminated, which could result in work stoppages or slowdowns, particularly where employees are represented by unions or works councils. If these circumstances occur, the Company’s business, financial condition, and results of operations could be seriously harmed. ​ Item 1B. Unresolved Staff Comments Not applicable. 19 ​
Also, position eliminations may negatively impact the morale of employees who are not terminated, which could result in work stoppages or slowdowns, particularly where employees are represented by unions or works councils. If these circumstances occur, the Company’s business, financial condition, and results of operations could be seriously harmed. ​ Item 1B. Unresolved Staff Comments Not applicable. ​
Acquisition expected benefits shortfall The Company has made, and expects to continue to make, strategic acquisitions or investments globally to further its strategic objectives and support key business initiatives. Acquisitions and investments involve risks and uncertainties, some of which may differ from those associated with the Company’s historical operations.
Acquisition expected benefits shortfall The Company has made, and expects to make, strategic acquisitions or investments globally to further its strategic objectives and support key business initiatives. Acquisitions and investments involve risks and uncertainties, some of which may differ from those associated with the Company’s historical operations.
Financial Risks Inventory value decline The electronic components and integrated products industries are subject to rapid technological change, new and enhanced products, changes in customer needs, and changes in industry standards and regulatory requirements, which can cause the Company’s inventory to decline in value or become obsolete.
Financial Risks Inventory value decline The electronic components and integrated products industries are subject to technological change, new and enhanced products, changes in customer needs, and changes in industry standards and regulatory requirements, which can cause the Company’s inventory to decline in value or become obsolete.
These conditions make it more difficult to manage the Company’s business and predict future performance. The competitive landscape has also experienced a consolidation among suppliers and capacity constraints, which could negatively impact the Company’s profitability and customer base.
These conditions make it more difficult to manage the Company’s business and predict future performance. The competitive landscape has also experienced consolidation among suppliers and capacity constraints, which could negatively impact the Company’s profitability and customer base.
Measures taken include implementing and enhancing information security controls such as enterprise-wide firewalls, intrusion detection, endpoint protection, email security, disaster recovery, vulnerability management, and cyber security training for employees to enhance awareness of general security best practices, financial fraud, and phishing. Despite these efforts, the Company may not always be successful.
Measures taken include implementing and enhancing information security controls such as enterprise-wide firewalls, intrusion detection, endpoint protection, email security, disaster recovery, vulnerability management, and cybersecurity training for employees to enhance awareness of general security best practices, financial fraud, and phishing. Despite these efforts, the Company may not always be successful.
Such factors make the Company’s operating results for future periods difficult to predict and, therefore, prior results do not necessarily indicate results in future periods except as disclosed. Some of the risks disclosed below may have already occurred, but not to a degree that management considers material unless otherwise noted.
Such factors make the Company’s operating results for future periods difficult to predict and, therefore, prior results do not necessarily indicate results in future periods. Some of the risks disclosed below may have already occurred, but not to a degree that management considers material unless otherwise noted.
Further, if key suppliers modify the terms of their contracts (including, without limitation, terms regarding price protection, rights of return, order cancellation rights, delivery commitments, rebates, or other terms that protect or enhance the Company’s gross margins), it could negatively affect the Company’s results of operations, financial condition, or liquidity.
Further, if key suppliers modify the terms of their contracts (including terms regarding price protection, rights of return, order cancellation rights, delivery commitments, rebates, or other terms that protect or enhance the Company’s gross margins), it could negatively affect the Company’s results of operations, financial condition, or liquidity.
Furthermore, the Company may not realize all of the anticipated benefits from its acquisitions, which could adversely affect the Company’s financial performance.
Furthermore, the Company may not realize all benefits anticipated from its acquisitions, which could adversely affect the Company’s financial performance.
In cases where customers have entered into non-cancellable/ non-returnable orders, customers may not be able or willing to carry out the terms of the orders. The Company’s prices to customers depend on many factors, including product availability, supplier costs, and competitive pressures.
In cases where customers have non-cancellable/ non-returnable orders, customers may not be able or willing to carry out the terms of the orders. The Company’s prices to customers depend on many factors, including product availability, supplier costs, and competitive pressures.
The Company’s operations are subject to a variety of risks that are specific to international operations, including, but not limited to, the following: ● potential restrictions on the Company’s ability to repatriate funds from its foreign subsidiaries; ● foreign currency and interest rate fluctuations; ● non-compliance with foreign and domestic data privacy regulations, business licensing requirements, environmental regulations, and anti-corruption laws, the failure of which could result in severe penalties including monetary fines and criminal proceedings; ● non-compliance with foreign and domestic import and export regulations and adoption or expansion of trade restrictions, including technology transfer restrictions, additional license, permit or authorization requirements for shipments, specific company sanctions, new and higher duties, tariffs or surcharges, or other import/export controls; ● complex and changing tax laws and regulations; ● regulatory requirements and prohibitions that differ between jurisdictions; ● economic and political instability, terrorism, military conflicts (including the Russia-Ukraine conflict), or civilian unrest; ● fluctuations in freight costs (both inbound and outbound), limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure; ● natural disasters (including as a result of climate change), pandemics, and other public health crises; ● differing employment practices and labor issues; and ● non-compliance with local laws.
The Company’s operations are subject to a variety of risks that are specific to international operations, including, but not limited to, the following: ● potential restrictions on the Company’s ability to repatriate funds from its foreign subsidiaries; ● foreign currency and interest rate fluctuations; ● non-compliance with foreign and domestic data privacy regulations, business licensing requirements, environmental regulations, and anti-corruption laws, the failure of which could result in severe penalties, including monetary fines and criminal proceedings; ● non-compliance with foreign and domestic import and export regulations and adoption or expansion of trade restrictions, including technology transfer restrictions, additional license, permit or authorization requirements for shipments, specific company sanctions, new and higher duties, tariffs or surcharges, or other import/export controls; ● complex and changing tax laws and regulations; ● regulatory requirements and prohibitions that differ between jurisdictions; ● economic and political instability, terrorism, military conflicts, or civil unrest; ● fluctuations in freight costs (both inbound and outbound), limitations on shipping and receiving capacity, and other disruptions in the transportation and shipping infrastructure; ● natural disasters (including due to climate change), pandemics, and other public health crises; ● differing employment practices and labor issues; and ● non-compliance with local laws.
The Company may experience disruptions that could, depending on the size of the acquisition, have an adverse effect on its business, especially where an acquisition target may have pre-existing compliance issues or deficiencies, or material weaknesses in internal controls over financial reporting.
The Company may experience disruptions that could, depending on the size of the acquisition, have an adverse effect on its business, especially where an acquisition target may have pre-existing regulatory issues or deficiencies, or material weaknesses in internal controls over financial reporting.
Failure to comply with these regulations could result in substantial costs, fines, and civil or criminal sanctions, as well as third-party claims for property damage or personal injury. Future environmental laws and regulations may become more stringent over time, imposing greater compliance costs, and increasing risks, penalties and reputational harm associated with violations.
Failure to comply with these regulations could result in substantial costs, fines, and civil or criminal sanctions, as well as third-party claims for property damage or personal injury. Future environmental laws and regulations, including disclosure requirements, may become more stringent over time, imposing greater compliance costs, and increasing risks, penalties and reputational harm associated with violations.
The Company’s future income tax expense could be favorably or adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets, and liabilities and changes to its operating structure.
The Company’s future income tax expense could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets, and liabilities and changes to its operating structure.
In addition, the Company’s expanding business activities may include the assembly or manufacture of electronic component products and systems. Product defects, whether caused by a design, assembly, manufacture or component failure or error, or manufacturing processes not in compliance with applicable statutory and regulatory requirements, may result in product liability claims, product recalls, fines, and penalties.
In addition, the Company’s expanding business activities may include the assembly or manufacture of electronic component products and systems. Product defects, whether caused by a design, assembly, manufacture or component failure or error, or manufacturing processes not in compliance with applicable statutory and regulatory requirements, may result in product liability claims, 15 Table of Contents product recalls, fines, and penalties.
In fiscal 2022, pricing to customers increased due to higher costs from suppliers, as well as higher freight and other costs. However, the Company may not be able to maintain higher prices to customers in the future. As product becomes more available, customer and competitive pressures may lower prices to customers, which could reduce the Company’s margins.
In fiscal 2024 and 2023, pricing to customers increased due to higher costs from suppliers, as well as higher freight and other costs. However, the Company may not be able to maintain higher prices to customers in the future. As product becomes more available, customer and competitive pressures may lower prices to customers, which could reduce the Company’s margins.
However, if the Company fails to maintain the adequacy of its internal controls, including any failure to implement required new or improved internal controls, or if the Company experiences 16 Table of Contents difficulties in their implementation, the Company’s business and operating results could be harmed.
However, if the Company fails to maintain the adequacy of its internal controls, including any failure to implement required new or improved internal controls, or if the Company experiences difficulties in their implementation, the Company’s business and operating results could be harmed.
Threat actors frequently change their techniques and, consequently, the Company may not always promptly detect the existence or scope of a security breach. As these types of threats grow and evolve, the Company may make further investments to protect its data and information technology infrastructure, which may impact the Company’s profitability.
Threat actors frequently change their techniques and technology (such as implementing artificial intelligence) and, consequently, the Company may not always promptly detect the existence or scope of a security breach. As these types of threats grow and evolve, the Company may make further investments to protect its data and information technology infrastructure, which may impact the Company’s profitability.
Internal controls over financial reporting are intended to prevent and detect material misstatements in its financial reporting and material fraudulent activity, but are limited by human error, circumventing or overriding controls, and fraud. As a result, the Company may not identify all material activity or all immaterial activity that could aggregate into a material misstatement.
Internal controls over financial reporting are intended to prevent and detect material misstatements in its financial reporting and material fraudulent activity, but are limited by human error, circumventing or overriding controls, and fraud. As a result, 14 Table of Contents the Company may not identify all material activity or all immaterial activity that could aggregate into a material misstatement.
Risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements include the risk factors discussed below, but may also include risks and uncertainties not presently known to the Company or that management does not currently consider material.
Risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements include the risk factors discussed below as well as risks and uncertainties not presently known to the Company or that management does not currently consider material.
Threat actors have successfully breached the Company’s systems and processes in various ways, and such cyber security breaches expose the Company to significant potential liability and reputational harm.
Threat actors have successfully breached the Company’s systems and processes in various ways, and such cybersecurity breaches expose the Company to significant potential liability and reputational harm.
If entities responsible for a significant amount of accounts receivable cease doing business, direct their business elsewhere, fail to pay, or delay payment, the Company’s business, results of operations, financial condition, or liquidity could be adversely affected.
Accounts receivable defaults Accounts receivable are a significant portion of the Company’s working capital. If entities responsible for a significant amount of accounts receivable cease doing business, direct their business elsewhere, fail to pay, or delay payment, the Company’s business, results of operations, financial condition, or liquidity could be adversely affected.
A reduction in its current debt rating may also negatively impact the Company’s working capital and impair its relationship with its customers and suppliers. As of July 2, 2022, the Company had debt outstanding with financial institutions under various notes, secured borrowings, and committed and uncommitted lines of credit.
A reduction in its current debt rating may also negatively impact the Company’s working capital and impair its relationship with its customers and suppliers. As of June 29, 2024, the Company had debt outstanding with financial institutions under various notes, secured borrowings, and committed and uncommitted lines of credit.
Such risks include, but are not limited to, risks relating to expanding into emerging markets and business areas, adding additional product lines and services, impacting existing customer and supplier relationships, incurring costs or liabilities associated with the companies acquired, incurring potential impairment charges on acquired goodwill and other intangible assets, and diverting management’s attention from existing business operations.
Examples include risks relating to expanding into emerging markets and business areas, adding additional product lines and services, impacting existing customer and supplier relationships, incurring costs or liabilities associated with the companies acquired, incurring potential impairment charges on acquired goodwill and other intangible assets, and diverting management’s attention from existing operations and initiatives.
In addition, the Company may be unable to increase prices to customers to offset higher internal costs, which could also reduce margins. During fiscal 2022, 2021, and 2020, sales of semiconductors represented approximately 76%, 75%, and 76% of the Company’s consolidated sales, respectively, and the Company’s sales closely follow the strength or weakness of the semiconductor industry.
In addition, the Company may be unable to increase prices to customers to offset higher internal costs, which could also reduce margins. During fiscal 2024, 2023, and 2022, sales of semiconductors represented approximately 80%, 81%, and 76% of the Company’s consolidated sales, respectively, and the Company’s sales closely follow the strength or weakness of the semiconductor industry.
Under some of its credit facilities, the Company is required to maintain certain specified financial ratios and pass certain financial tests. If the Company increases its level of debt or its operating results deteriorate, it may fail to meet these financial ratios or pass these tests, which may result in an event of default.
Under some of its credit facilities, the Company is required to maintain a maximum leverage ratio and pass certain financial tests. If the Company increases its level of debt or its operating results deteriorate, it may fail to meet this financial ratio or pass these tests, which may result in an event of default.
Dollar and other currencies affect the Company’s reported amounts of sales, operating income, and assets and liabilities denominated in foreign currencies. In addition, unexpected and dramatic changes in foreign currency exchange rates may negatively affect the Company’s earnings from those markets.
Therefore, increases or decreases in the exchange rates between the U.S. Dollar and other currencies affect the Company’s reported amounts of sales, operating income, and assets and liabilities denominated in foreign currencies. In addition, unexpected and dramatic changes in foreign currency exchange rates may negatively affect the Company’s earnings from those markets.
Economic weakness and geopolitical uncertainty may also lead the Company to impair assets (including goodwill, intangible assets, and other long-lived assets), implement restructuring actions, and reduce expenses in response to decreased sales or margins. The Company may not be able to adequately adjust its cost structure in a timely fashion, which may adversely impact its profitability.
As a result, the Company may need to impair assets (including goodwill, intangible assets, and other long-lived assets), implement restructuring actions, and reduce expenses in response to decreased sales or margins. The Company may not be able to adequately adjust its cost structure in a timely fashion, which may adversely impact its profitability.
Also, future 10 Table of Contents downturns or supply chain challenges, including in the semiconductor and embedded solutions industries, could adversely affect the Company’s relationships with its customers, operating results, and profitability.
Also, future downturns, inflation, or supply chain challenges, including in the semiconductor, embedded solutions, maintenance, and test and measurement industries, could adversely affect the Company’s relationships with its customers, operating results, and profitability.
Such crises could also result in or heighten the risks of customer bankruptcies, customer delayed or defaulted payments, delays in product deliveries, restrictions on access to financial markets, and other risk factors described in the Company’s Annual Report.
Such crises and uncertainties could also result in, or heighten the risks of, customer bankruptcies, customer delayed or defaulted payments, delays in product deliveries, financial market disruption and volatility, and other risk factors described in the Company’s Annual Report.
The Company may need to satisfy its cash needs through external financing. However, various factors affect external financing, including general market conditions and the Company’s debt ratings and operating results, and may not be available on acceptable terms or at all.
In addition to cash on hand, the Company relies on external financing to help satisfy its cash needs. However, various factors affect external financing, including general market conditions, interest rate fluctuations, and the Company’s debt ratings and operating results. Consequently, external financing may not be available on acceptable terms or at all.
Economic weakness and geopolitical uncertainty also make it more difficult for the Company to manage inventory levels (including when customers decrease orders, cancel existing orders, or are unable to fulfill their obligations under non-cancelable/ non-return orders) and collect customer receivables, which may result in provisions to create reserves, write-offs, reduced access to liquidity, higher financing costs and increased pressure on cash flows. 18 Table of Contents Further, an increase in or prolonged period of inflation could affect the Company’s profitability and cash flows, due to higher wages, higher operating expenses, higher financing costs, and/or higher supplier prices.
Economic weakness and geopolitical uncertainty also make it more difficult for the Company to manage inventory levels (including when customers decrease orders, cancel existing orders, or are unable to fulfill their obligations under non-cancelable/ non-return orders) and collect customer receivables, which may result in provisions to create reserves, write-offs, reduced access to liquidity, higher financing costs, and increased pressure on cash flows.
Such operational challenges could have an adverse impact on the Company’s business partners, and on the Company’s business, operations, financial performance, and reputation. 13 Data security and privacy threats Threats to the Company’s data and information technology systems (including cyber security attacks such as phishing and ransomware) are becoming more frequent and sophisticated.
Such operational challenges could have an adverse impact on the Company’s business partners, and on the Company’s business, operations, financial performance, and reputation. 11 Table of Contents Data security and privacy threats Threats to the Company’s data and information technology systems (including cybersecurity attacks such as phishing and ransomware) are becoming more frequent and sophisticated, including through the use of artificial intelligence and machine learning.
These conditions make it more difficult to manage the Company’s business and predict future performance. Due to the Company’s increased online sales, system interruptions and delays that make its websites and services unavailable or slow to respond may reduce the attractiveness of its products and services to its customers.
Due to the Company’s increased online sales, system interruptions and delays that make its websites and services unavailable or slow to respond may reduce the attractiveness of its products and services to its customers.
Many countries are adopting provisions to align their international tax rules with the Base Erosion and Profit Shifting Project, led by the Organisation for Economic Co-operation and Development (“OECD”) and supported by the United States. The project aims to standardize and modernize global corporate tax policy, including with regard to tax rate increases and adopting a global minimum tax.
Many countries are adopting provisions to align their international tax rules with the Base Erosion and Profit Shifting Project, led by the Organisation for Economic Co-operation and Development (“OECD”) and supported by the United States.
Further, any litigation relating to a potential acquisition will increase expenses associated with the acquisition or cause a delay in completing the acquisition, which may impact the Company’s profitability.
Further, any litigation involving the potential acquisition or acquired entity may increase expenses associated with the acquisition, cause a delay in completing the acquisition, or impact the ability to integrate the acquired entity, all of which may impact the Company’s profitability.
Financing covenants and restrictions may limit management discretion The agreements governing the Company’s financing, including its credit facility, accounts receivable securitization program, and the indentures governing the Company’s outstanding notes, contain various covenants and restrictions that, in certain circumstances, limit the Company’s ability, and the ability of certain subsidiaries, to: ● grant liens on assets; 15 ● make restricted payments (including, under certain circumstances, paying dividends on, redeeming or repurchasing common stock); ● make certain investments; ● merge, consolidate, or transfer all, or substantially all, of the Company’s assets; ● incur additional debt; or ● engage in certain transactions with affiliates.
General economic or business conditions, both domestic and foreign, may be less favorable than management expects and could adversely impact the Company’s sales or its ability to collect receivables from its customers, which may impact access to the Company’s accounts receivable securitization program. 13 Table of Contents Financing covenants and restrictions may limit management discretion The agreements governing the Company’s financing, including its credit facility, accounts receivable securitization program, and the indentures governing the Company’s outstanding notes, contain various covenants and restrictions that, in certain circumstances, limit the Company’s ability, and the ability of certain subsidiaries, to: ● grant liens on assets; ● make restricted payments (including, under certain circumstances, paying dividends on, redeeming, or repurchasing common stock); ● make certain investments; ● merge, consolidate, or transfer all, or substantially all, of the Company’s assets; ● incur additional debt; or ● engage in certain transactions with affiliates.
In addition, as the Company expands its offerings and geographies, the Company may encounter increased competition from current or new competitors. The Company’s failure to maintain and enhance its competitive position could adversely affect its business and prospects. Furthermore, the Company’s efforts to compete in the marketplace could cause deterioration of gross profit margins and, thus, overall profitability.
The Company’s failure to maintain and enhance its competitive position could adversely affect its business and prospects. Furthermore, the Company’s efforts to compete in the marketplace could cause deterioration of gross profit margins and, thus, overall profitability.
Similarly, the price of the Company’s common stock is subject to volatility due to fluctuations in general market conditions; actual financial results that do not meet the Company’s or the investment community’s expectations; changes in the Company’s or the investment community’s expectations for the Company’s future results, dividends or share repurchases; and other factors, many of which are beyond the Company’s control.
Similarly, the price of the Company’s common stock is subject to volatility due to fluctuations in general market conditions; actual financial results that do not meet the Company’s or the investment community’s expectations; changes in the Company’s or the investment community’s expectations for the Company’s future results, dividends, or share repurchases; and other factors, many of which are beyond the Company’s control. 8 Table of Contents Business and Operations Risks Changes in customer needs and consumption models Changes in customer product demands and consumption models may cause a decline in the Company’s billings, which would have a negative impact on the Company’s financial results.
The Russia-Ukraine conflict and the COVID-19 pandemic have led, and may continue to lead, to shortages, extended lead times, and unpredictability in the supply of certain semiconductors and other electronic components. In reaction, customers may over order to ensure sufficient inventory, which, when the shortage lessens, may result in order cancellations and decreases.
Geopolitical uncertainty (including from military conflicts, health-related crises, and international trade disputes) have led, and may continue to lead, to shortages, extended lead times, and unpredictability in the supply of certain semiconductors and other electronic components. In reaction, customers may over order to ensure sufficient inventory, which, when the shortage lessens, may result in order cancellations and decreases.
Product liability risks could be particularly significant with respect to aerospace, automotive, and medical applications because of the risk of serious harm to users of such products. 17 Environmental regulations non-compliance The Company is subject to various federal, state, local, and foreign laws and regulations addressing environmental and other impacts from industrial processes, waste disposal, carbon emissions, use of hazardous materials in products and operations, recycling products, and other related matters.
Environmental regulations non-compliance The Company is subject to various federal, state, local, and foreign laws and regulations addressing environmental and other impacts from industrial processes, waste disposal, carbon emissions, use of hazardous materials in products and operations, recycling products, and other related matters.
The Company’s suppliers may terminate or significantly reduce their volume of business with the Company because of a product shortage, an unwillingness to do business with the Company, changes in strategy, or otherwise.
The Company’s contracts with its suppliers vary in duration and are generally terminable by either party at will upon notice. The Company’s suppliers may terminate or significantly reduce their volume of business with the Company because of a product shortage, an unwillingness to do business with the Company, changes in strategy, or otherwise.
Currently, the Company’s global operations are tracked with multiple information systems, including systems from acquired businesses, some of which are subject to ongoing IT projects designed to streamline or optimize the Company’s systems. These IT projects are extremely complex, in part because of wide ranging processes, use of on-premise and cloud environments, and the Company’s business operations.
Currently, the Company’s global operations are tracked with multiple information systems, including systems from acquired businesses, some of which are subject to ongoing IT projects designed to streamline or optimize the Company’s systems.
Inflation may also adversely affect foreign exchange rates. The Company may be unable to pass along such higher costs to its customers, which may result in lower gross profit margins. In addition, Inflation may adversely affect customers’ financing costs, cash flows, and profitability, which could adversely impact their operations and the Company’s ability to offer credit and collect receivables.
An increase in or prolonged period of inflation could affect the Company’s profitability and cash flows, due to higher wages, higher operating expenses, higher financing costs, and higher supplier prices. Inflation may also adversely affect foreign exchange rates. The Company may be unable to pass along such higher costs to its customers, which may result in lower gross profit margins.
While the Company has adopted measures and controls designed to ensure compliance with these laws, the Company cannot be assured that such measures will be adequate or that its business will not be materially and adversely impacted in the event of an alleged violation.
While the Company has adopted measures and controls designed to ensure compliance with these laws, these measures may not be adequate, and the Company may be materially and adversely impacted in the event of an actual or alleged violation. Tariffs, trade restrictions, sanctions, or changes in trade policies may adversely affect the Company’s sales and profitability.
Because the Company’s consolidated financial statements are presented in U.S. Dollars, the Company must translate such activities and amounts into U.S. Dollars at exchange rates in effect during each reporting period. Therefore, increases or decreases in the exchange rates between the U.S.
The Company transacts sales, pays expenses, owns assets, and incurs liabilities in countries using currencies other than the U.S. Dollar. Because the Company’s consolidated financial statements are presented in U.S. Dollars, the Company must translate such activities and amounts into U.S. Dollars at exchange rates in effect during each reporting period.
Cyber security attacks have not yet materially impacted the Company’s data (including data about customers, suppliers, and employees) or the Company’s operations, financial condition, or data security, but future attacks could have a material impact. Threat actors seek unauthorized access to intellectual property, or confidential or proprietary information regarding the Company, its customers, its business partners, or its employees.
Cybersecurity attacks have not yet materially impacted the Company’s data (including data about customers, suppliers, and employees) or the Company’s operations, financial condition, or data security, but future attacks could have a material impact.
In addition, as the Company continues to increase capacity at various distribution centers, it may experience operational challenges, increased costs, decreased efficiency, and customer delivery delays and failures.
Such disruptions could result from risks related to information technology, data security, or any of the General Risk Factors, as discussed herein. In addition, as the Company continues to increase capacity at various distribution centers, it may experience operational challenges, increased costs, decreased efficiency, and customer delivery delays and failures.
The tax laws and regulations of the various countries where the Company has operations are extremely complex and subject to varying interpretations. Although the Company believes that its historical tax positions are sound and consistent with applicable law, taxing authorities may challenge these tax positions and the Company may not be successful in defending against any such challenges.
The Company believes that its historical tax positions are sound and consistent with applicable law, and that it has adequately reserved for taxes. However, taxing authorities may challenge such positions and the Company may not be successful in defending against any such challenges.
These actions have resulted in losses; increased costs, including increased costs of procuring certain products the Company purchases from its suppliers; shortages of materials and electronic components; increased expenses such as energy, fuel, and freight costs, which may not 12 Table of Contents be possible to pass on to customers; increased cyber security attacks; credit market disruptions; and inflation, which may impact the Company’s sales, customer demand for certain products, access to certain markets, and profits.
These actions have resulted in losses; increased costs, which the Company may not be able to pass on to customers; shortages of materials and electronic components; 10 Table of Contents increased cyber security attacks; credit market disruptions; and inflation.
Due to recent global shortages of semiconductors, some suppliers have increased the amount of non-cancellable/ non-returnable orders, which may limit the Company’s ability to adjust down its inventory levels in the event of market downturns.
Due to recent global shortages of semiconductors, some suppliers have increased the amount of non-cancellable/ non-returnable 9 Table of Contents orders, which limited the Company’s ability to adjust down its inventory levels. The Company may attempt to limit associated risks by passing such terms on to its customers, but this may not be possible.
The Company may not always succeed at these efforts. Implementation or integration difficulties may adversely affect the Company’s ability to complete business transactions and ensure accurate recording and reporting of financial data. In addition, IT projects may not achieve the expected efficiencies and cost savings, which could negatively impact the Company’s financial results.
These IT projects are extremely complex, in part because of wide ranging processes, use of on-premise and cloud environments, the Company’s business operations, and changes in information technology. The Company may not always succeed at these efforts. Implementation or integration difficulties may adversely affect the Company’s ability to complete business transactions and ensure accurate recording and reporting of financial data.
In addition, in response to the Russian-Ukraine conflict, the United States, the European Union, the United Kingdom, and numerous other countries initiated a variety of sanctions, export restrictions, currency controls and other restrictions against Russia. The Chinese and Russian governments have responded in kind with restrictions, sanctions, and other measures.
For example, various governments imposed trade measures applicable to China and Hong Kong. The United States, European Union, United Kingdom, and others initiated a variety of trade measures and other restrictions against Russia in response to the Russian-Ukraine conflict. In response, the Chinese and Russian governments initiated trade measures against various countries and covering a variety of products.
In addition, most Company sales are made pursuant to individual purchase orders, rather than through long-term sales contracts. Where there are contracts, such contracts are generally terminable at will upon notice.
In addition, most Company sales are made pursuant to individual purchase orders, rather than through long-term sales contracts. Where there are contracts, such contracts are generally terminable at will upon notice. Unforeseen product developments, 12 Table of Contents inventory value declines, or customer cancellations may adversely affect the Company’s business, results of operations, financial condition, or liquidity.
Tax law changes and compliance As a multinational corporation, the Company is subject to the tax laws and regulations of the United States and many foreign jurisdictions. From time to time, governments enact or revise tax laws or regulations, including changes in the interpretation of such laws, that may adversely affect the Company’s cash flow and effective tax rate.
Tax law changes and compliance As a multinational corporation, the Company is subject to the tax laws and regulations of the United States and many foreign jurisdictions. From time to time, governments enact or revise tax laws and regulations, which are further subject to interpretations, guidance, amendments, and technical corrections from international, federal, and state tax authorities.
Furthermore, many countries are independently evaluating their corporate tax policy, which could result in tax legislation and enforcement that adversely impacts the Company’s tax provision and value of deferred assets and liabilities. These provisions, if enacted, individually or as a whole, may negatively impact taxation of international business.
Furthermore, many countries are independently evaluating their corporate tax policy, which could result in tax legislation and enforcement that adversely impacts the Company’s tax provision and value of deferred assets and liabilities. The tax laws and regulations of the various countries where the Company has operations are extremely complex and subject to varying interpretations.
The Company may attempt to limit associated risks by passing such terms on to its customers, but this may not be possible. 11 Risks related to international operations During fiscal 2022, 2021, and 2020 approximately 77%, 78% and 75%, respectively, of the Company’s sales came from its operations outside the United States.
Risks related to international operations During fiscal 2024, 2023, and 2022 approximately 77%, 76% and 77%, respectively, of the Company’s sales came from its operations outside the United States.
In addition, increased operational expenses incurred in minimizing the number of products subject to the tariffs could adversely affect the Company’s operating profits.
In addition, increased operational expenses incurred in minimizing the number of products subject to tariffs could adversely affect the Company’s operating profits. These measures have not yet had a material impact, but future actions or escalations that affect trade relations could materially affect the Company’s sales and results of operations.
Logistics disruptions The Company’s global logistics services are operated through specialized and centralized distribution centers around the globe, some of which are outsourced. The Company also depends almost entirely on third-party transportation service providers to deliver products to its customers.
The Company also depends almost entirely on third-party transportation service providers to deliver products to its customers.
If the Company is unable to continually improve the efficiency of its systems, it could cause systems interruptions or delays and adversely affect the Company’s operating results. Disruptions to key supplier and customer relationships One of the Company’s competitive strengths is the breadth and quality of the suppliers whose products the Company distributes.
If the Company is unable to continually improve the efficiency of its systems, it could cause systems interruptions or delays and adversely affect the Company’s operating results. Logistics disruptions The Company’s global logistics services are operated through specialized and centralized distribution centers around the globe, some of which are outsourced.
Economic weakness and geopolitical uncertainty (including the uncertainty caused by military conflicts; pandemics, epidemics, and other health related crises; and international trade disputes) have resulted, and may result in the future, in decreased sales, margins, and earnings.
General Risk Factors Negative impacts of economic or geopolitical uncertainty, or a health crisis, on operations and financial results Economic weakness and geopolitical uncertainty (including from military conflicts and international trade disputes), as well as health-related crises (including pandemics and epidemics), have resulted, and may result in the future, in a variety of adverse impacts on the Company and its customers and suppliers.
In October 2021, a substantial majority of the OECD’s participating countries and jurisdictions agreed to introduce a 15% global minimum corporate tax rate that would apply to companies with revenue over a set threshold.
The project aims to standardize and modernize global corporate tax policy, including tax rate increases and a 15% global minimum corporate tax rate that would apply to companies with revenue over a set threshold. The project is expected to impact the Company’s taxes in fiscal year 2025.
Competition The market for the Company’s products and services is very competitive and subject to rapid technological advances, new competitors, non-traditional competitors, changes in industry standards, and changes in customer product demands and consumption models. The Company competes with other global and regional distributors, as well as some of the Company’s own suppliers that maintain direct sales efforts.
The Company competes with other global and regional distributors, as well as some of the Company’s own suppliers that maintain direct sales efforts. In addition, as the Company expands its offerings and geographies, the Company may encounter increased competition from current or new competitors.
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Business and Operations Risks Changes in customer needs and consumption models Changes in customer product demands and consumption models may cause a decline in the Company’s billings, which would have a negative impact on the Company’s financial results.
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Changes in technology (such as artificial intelligence) could reduce the types or quantity of services that customers require from the Company.
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For fiscal 2022, there were no Company suppliers that accounted for 10% or more of the Company’s consolidated billings. The Company’s contracts with its suppliers vary in duration and are generally terminable by either party at will upon notice.
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These conditions make it more difficult to manage the Company’s business and predict future performance. Disruptions to key supplier and customer relationships One of the Company’s competitive strengths is the breadth and quality of the suppliers whose products the Company distributes. For fiscal 2024, one supplier accounted for approximately 10% of the Company’s consolidated billings.
Removed
Tariffs, trade restrictions, and sanctions resulting from international trade disputes, changes in trade policies, or military conflicts may adversely affect the Company’s sales and profitability. For example, the U.S. government imposed several trade policies, rules, and restrictions applicable to China and Hong Kong.
Added
In addition, IT projects may not achieve the expected efficiencies and cost savings, which could negatively impact the Company’s financial results.
Removed
Neither U.S. tariffs nor any retaliatory tariffs imposed by other countries on U.S. goods have yet had a material impact, but any future actions or escalations that affect trade relations could materially affect the Company’s sales and results of operations. The Company transacts sales, pays expenses, owns assets, and incurs liabilities in countries using currencies other than the U.S. Dollar.
Added
Threat actors, including sophisticated nation-state actors, seek unauthorized access to intellectual property, or confidential or proprietary information regarding the Company, its customers, its business partners, or its employees, and may target the Company’s systems for espionage, intellectual property theft, or disruption of operations.
Removed
Unforeseen product developments, inventory value declines, or customer cancellations may adversely affect the Company’s business, results of operations, financial condition, or liquidity. 14 Table of Contents Accounts receivable defaults Accounts receivable are a significant portion of the Company’s working capital.
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Such changes to tax law may adversely affect the Company’s cash flow, costs of share buybacks, and effective tax rate, including through decreases in allowable deductions and higher tax rates.
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General economic or business conditions, both domestic and foreign, may be less favorable than management expects and could adversely impact the Company’s sales or its ability to collect receivables from its customers, which may impact access to the Company’s accounts receivable securitization program.
Added
Product liability risks could be particularly significant with respect to aerospace, automotive, and medical applications because of the risk of serious harm to users of such products.
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General Risk Factors Negative impacts of a pandemic or other health crisis on economy, operations, and financial results A pandemic, epidemic or other health related crisis could negatively impact the global economy, disrupt global supply chains, increase demand uncertainty, constrain workforce participation, disrupt logistics and distribution systems, and create significant volatility and disruption of financial markets, which could negatively impact the operations of the Company and its customers and suppliers.
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Customers, suppliers, investors, and regulatory agencies in various jurisdictions globally are increasingly requesting or requiring disclosure and action regarding the Company’s supply chain due-diligence and environmental, social, and governance practices. Such increased expectations and regulations may increase compliance costs and result in reputational damage and loss of business if the Company is perceived to have not met such expectations.
Removed
Due to the COVID-19 pandemic, even though the Company has not yet experienced any material disruption to its upstream supply chain and many of its distribution centers remain operational under business continuity plans, it has experienced increased logistics costs, product demand fluctuations, product pricing challenges, longer lead times, reduction in global distribution center utilization, and shipping delays.
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Such adverse impacts include decreased sales, margins, and earnings; increased logistics costs; demand uncertainty; constrained workforce participation; global supply chain disruptions; and logistics and distribution system disruptions.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table summarizes certain of the Company’s key facilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Leased ​ ​ ​ Square ​ or ​ ​ Location ​ Footage ​ Owned ​ Primary Use Chandler, Arizona 400,000 ​ Owned EC warehousing and value-added operations ​ Tongeren, Belgium 390,000 ​ Owned EC warehousing and value-added operations ​ Leeds, United Kingdom ​ 360,000 ​ Leased ​ Farnell warehousing and value-added operations ​ Poing, Germany 300,000 ​ Owned EC warehousing and value-added operations ​ Gaffney, South Carolina ​ 220,000 ​ Owned ​ Farnell warehousing ​ Hong Kong, China 210,000 ​ Leased EC warehousing ​ Phoenix, Arizona ​ 180,000 ​ Leased ​ Corporate and EC Americas headquarters ​ Chandler, Arizona 150,000 ​ Leased EC warehousing, integration and value-added operations ​ ​ ​ See Note 5, “Property, plant and equipment, net” and Note 11, “Leases” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information on property, plant and equipment, and operating leases. ​
Biggest changeGermany ​ 680,000 ​ Owned ​ EC warehousing and value-added operations currently under construction ​ Chandler, Arizona 400,000 ​ Owned EC warehousing and value-added operations ​ Tongeren, Belgium 390,000 ​ Owned EC warehousing and value-added operations ​ Leeds, United Kingdom ​ 360,000 ​ Leased ​ Farnell warehousing and value-added operations ​ Poing, Germany 300,000 ​ Owned EC warehousing and value-added operations ​ Chandler, Arizona 230,000 ​ Leased EC warehousing, integration and value-added operations ​ Gaffney, South Carolina ​ 220,000 ​ Owned ​ Farnell warehousing ​ Hong Kong, China 210,000 ​ Leased EC warehousing ​ Phoenix, Arizona ​ 180,000 ​ Leased ​ Corporate and EC Americas headquarters ​ Taipei, Taiwan ​ 33,000 ​ Leased ​ EC warehousing ​ ​ See Note 5, “Property, plant and equipment, net” and Note 11, “Leases” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information on the Company’s properties. ​
Item 2. Properties The Company owns and leases approximately 1.8 million and 4.0 million square feet of space, respectively, of which approximately 28% is in the United States.
Item 2. Properties The Company owns and leases approximately 2.0 million and 4.0 million square feet of space, respectively, of which approximately 25% is in the United States.
Added
The following table summarizes certain of the Company’s key facilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Leased ​ ​ ​ Square ​ or ​ ​ Location ​ Footage ​ Owned ​ Primary Use Bernburg.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeBased on the information known to date, management believes that the Company has appropriately accrued in its consolidated financial statements for its share of the estimable costs of legal proceedings. The Company is also currently subject to various pending and potential legal matters and investigations relating to compliance with governmental laws and regulations.
Biggest changeBased on the information known to date, management believes that the Company has appropriately accrued in its consolidated financial statements for its share of the estimable costs of environmental and other legal proceedings.
The Company currently believes that the resolution of such matters will not have a material adverse effect on the Company’s financial position or liquidity, but could possibly be material to its results of operations in any single reporting period. ​ Item 4. Mine Safety Disclosures Not applicable. ​ 20 Table of Contents ​ PART II
The Company currently believes that the resolution of such matters will not have a material adverse effect on the Company’s financial position or liquidity, but could possibly be material to its results of operations in any single reporting period. Item 4. Mine Safety Disclosures Not applicable. ​ 19 Table of Contents PART II
Item 3. Legal Proceedings Pursuant to SEC regulations, including but not limited to Item 103 of Regulation S-K, the Company regularly assesses the status of and developments in pending legal proceedings to determine whether any such proceedings should be identified specifically in this discussion of legal proceedings, and has concluded that no particular pending legal proceeding requires public disclosure.
Legal Proceedings Pursuant to SEC regulations, including but not limited to Item 103 of Regulation S-K, the Company regularly assesses the status of and developments in pending environmental and other legal proceedings to determine whether any such proceedings should be identified specifically in this discussion of legal proceedings, and has concluded that no particular pending legal proceeding requires public disclosure.
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The Company is also currently subject to various pending and potential legal matters and investigations relating to compliance with governmental laws and regulations, including import/export and environmental matters.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph assumes that the value of the investment in Avnet’s common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on 7/1/2017 and tracks it through 7/2/2022. 21 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7/1/2017 6/30/2018 6/29/2019 6/27/2020 7/3/2021 7/2/2022 Avnet, Inc. ​ $ 100 ​ $ 112.35 ​ $ 120.76 ​ $ 71.17 ​ $ 112.17 ​ $ 121.36 ​ Nasdaq Composite ​ 100 ​ 123.60 ​ 133.22 ​ 169.11 ​ 245.60 ​ 188.07 ​ Peer Group ​ 100 ​ 98.48 ​ 98.60 ​ 91.26 ​ 186.62 ​ 165.98 ​ ​ The stock price performance included in this graph is not necessarily indicative of future stock price performance . 22 Table of Contents Issuer Purchases of Equity Securities In May 2022, the Company’s Board of Directors approved a new share repurchase plan with an authorization to repurchase up to an aggregate of $600 million of common stock.
Biggest changeThe graph assumes that the value of the investment in Avnet’s common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on 6/29/2019 and tracks it through 6/29/2024. 20 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6/29/2019 6/27/2020 7/3/2021 7/2/2022 7/1/2023 6/29/2024 Avnet, Inc. ​ $ 100 ​ $ 58.93 ​ $ 92.88 ​ $ 100.49 ​ $ 123.19 ​ $ 128.95 ​ Nasdaq Composite ​ 100 ​ 123.12 ​ 186.10 ​ 142.44 ​ 178.08 ​ 230.80 ​ Peer Group ​ 100 ​ 97.85 ​ 195.13 ​ 173.37 ​ 213.64 ​ 248.09 ​ ​ The stock price performance included in this graph is not necessarily indicative of future stock price performance .
In addition, certain of the Company’s debt facilities may restrict the declaration and payment of dividends, depending upon the Company’s then current compliance with certain covenants. Record Holders As of July 29, 2022, there were 1,464 registered holders of record of Avnet’s common stock.
In addition, certain of the Company’s debt facilities may restrict the declaration and payment of dividends, depending upon the Company’s then current compliance with certain covenants. Record Holders As of August 2, 2024, there were 1,309 registered holders of record of Avnet’s common stock.
The following table includes the Company’s monthly purchases of the Company’s common stock during the fourth quarter of fiscal 2022, under the share repurchase program, which is part of publicly announced plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ Total ​ Average ​ Shares Purchased ​ Value of Shares That ​ ​ Number ​ Price ​ as Part of Publicly ​ May Yet Be ​ ​ of Shares ​ Paid per ​ Announced Plans ​ Purchased under the Period ​ Purchased Share or Programs Plans or Programs April 3 – April 30 472,600 $ 38.63 472,600 $ 359,757,000 ​ May 1 – May 28 421,198 ​ $ 46.75 421,198 ​ $ 595,698,000 ​ May 29 – July 2 1,485,475 ​ $ 43.36 1,485,475 ​ $ 531,286,000 ​ ​ ​ ​ ​ ​ ​ Item 6. [Reserved] ​ ​
The following table includes the Company’s monthly purchases of the Company’s common stock, excluding excise tax, during the fourth quarter of fiscal 2024, under the share repurchase program, which is part of publicly announced plans. 21 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ Total ​ Average ​ Shares Purchased ​ Value of Shares That ​ ​ Number ​ Price ​ as Part of Publicly ​ May Yet Be ​ ​ of Shares ​ Paid per ​ Announced Plans ​ Purchased under the Period ​ Purchased Share or Programs Plans or Programs March 31 – April 27 — $ — — $ 232,484,000 ​ April 28 – May 25 560,000 $ 53.17 560,000 ​ $ 202,707,000 ​ May 26 – June 29 920,000 $ 53.23 920,000 ​ $ 153,734,000 ​ ​ ​ ​ ​ ​ ​ Item 6. [Reserved] ​
Removed
The authorization amount includes the amount remaining under the previous share repurchase plan approved in August 2011, as last amended in August 2019. The new plan was publicly announced on June 6, 2022.
Added
Issuer Purchases of Equity Securities The Company’s Board of Directors has approved the repurchase plan of up to an aggregate of $600 million of common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] ​ 23 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 23 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 33 ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 35 ​ ​ ​
Biggest changeItem 6. [Reserved] ​ 22 ​ ​ ​ Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 22 ​ ​ ​ Item 7A. Quantitative and Qualitative Disclosures About Market Risk ​ 31 ​ ​ ​ Item 8. Financial Statements and Supplementary Data ​ 33 ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSales taking into account these adjustments are referred to as “organic sales.” ● Operating income excluding (i) restructuring, integration and other expenses (see Restructuring, Integration 23 and Other Expenses in this MD&A), (ii) goodwill and long-lived asset impairment expense, (iii) Russian-Ukraine conflict related expenses (see Russian-Ukraine conflict related expenses in this MD&A), and (vi) amortization of acquired intangible assets is referred to as “adjusted operating income.” The reconciliation of operating income (loss) to adjusted operating income is presented in the following table: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ July 2, July 3, June 27, ​ ​ 2022 ​ 2021 ​ 2020 ​ ​ (Thousands) Operating income (loss) ​ $ 939,011 ​ $ 281,408 ​ $ (4,628) Restructuring, integration and other expenses ​ 5,272 ​ 84,391 ​ 81,870 Goodwill and intangible asset impairment expense ​ ​ — ​ ​ — ​ ​ 144,092 Russian-Ukraine conflict related expenses ​ ​ 26,261 ​ ​ — ​ ​ — Amortization of acquired intangible assets and other ​ 15,038 ​ 41,245 ​ 81,555 Adjusted operating income ​ $ 985,582 ​ $ 407,044 ​ $ 302,889 ​ Management believes that providing this additional information is useful to financial statement users to better assess and understand operating performance, especially when comparing results with prior periods or forecasting performance for future periods, primarily because management typically monitors the business both including and excluding these adjustments to GAAP results.
Biggest changeThe following table provides a reconciliation of operating income to adjusted operating income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ June 29, July 1, July 2, ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ (Thousands) Operating income ​ $ 844,367 ​ $ 1,186,800 ​ $ 939,011 Restructuring, integration and other expenses ​ 52,550 ​ 28,038 ​ 5,272 Russian-Ukraine conflict related expenses ​ ​ — ​ ​ — ​ ​ 26,261 Amortization of acquired intangible assets ​ 3,130 ​ 6,053 ​ 15,038 Adjusted operating income ​ $ 900,047 ​ $ 1,220,891 ​ $ 985,582 Management believes that providing this additional information is useful to financial statement users to better assess and understand operating performance, especially when comparing results with prior periods or forecasting performance for future periods, primarily because management typically monitors the business both including and excluding these adjustments to GAAP results.
Because of the large number of products and suppliers and the complexity of managing the process around price protections and stock rotations, estimates are made regarding the net realizable value of inventories. Additionally, assumptions about future demand and market conditions, as well as decisions to discontinue certain product lines, impact the evaluation of whether to write-down inventories.
Because of the large number of products and suppliers and the complexity of managing the process around price protections, supplier rebate programs and stock rotations, estimates are made regarding the net realizable value of inventories. Additionally, assumptions about future demand and market conditions, as well as decisions to discontinue certain product lines, impact the evaluation of whether to write-down inventories.
Write-downs are recorded so that inventories reflect the estimated net realizable value and take into account the Company’s contractual provisions with its suppliers, which may provide certain protections to the Company for product obsolescence and price erosion in the form of rights of return, stock rotation rights, obsolescence allowances, and price protections.
Write-downs are recorded so that inventories reflect the estimated net realizable value and take into account the Company’s contractual provisions with its suppliers, which may provide certain protections to the Company for product obsolescence and price erosion in the form of rights of return, stock rotation rights, obsolescence allowances, industry specific supplier rebate programs and price protections.
Circumstances that could affect the Company’s ability to meet the required covenants and conditions of the Securitization Program include the Company’s ongoing profitability and various other economic, market, and industry factors. The Company was in 29 compliance with all such covenants as of July 2, 2022.
Circumstances that could affect the Company’s ability to meet the required covenants and conditions of the Securitization Program include the Company’s ongoing profitability and various other economic, market, and industry factors. The Company was in compliance with all such covenants as of June 29, 2024.
Accounting for Income Taxes Management’s judgment is required in determining income tax expenses and unrecognized tax benefits, in measuring deferred tax assets and liabilities, and valuation allowances recorded against net deferred tax assets. Recovering net deferred tax assets depends on the Company’s ability to generate sufficient future taxable income in certain jurisdictions.
Accounting for Income Taxes Management’s judgment is required in determining income tax expense, unrecognized tax benefit liabilities, deferred tax assets and liabilities, and valuation allowances recorded against net deferred tax assets. Recovering net deferred tax assets depends on the Company’s ability to generate sufficient future taxable income in certain jurisdictions.
The Company may terminate or limit the share repurchase program at any time without prior notice. During fiscal 2022, the Company repurchased $193.3 million of common stock. The Company has historically paid quarterly cash dividends on shares of its common stock, and future dividends are subject to approval by the Board of Directors.
The Company may terminate or limit the share repurchase program at any time without prior notice. During fiscal 2024, the Company repurchased $164.8 million of common stock. The Company has historically paid quarterly cash dividends on shares of its common stock, and future dividends are subject to approval by the Board of Directors.
See Note 7, “Debt” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information on financing transactions including the Credit Facility, the Securitization Program and the outstanding Notes as of July 2, 2022.
See Note 7, “Debt” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information on financing transactions including the Credit Facility, the Securitization Program and the outstanding Notes as of June 29, 2024.
The anticipated and actual outcomes of these matters may differ, which may result in changes in estimates to such liabilities. To the extent such changes in estimates are necessary, the Company’s effective tax rate may fluctuate.
The anticipated and actual outcomes of these matters may differ, which 30 Table of Contents may result in changes in estimates to such unrecognized tax benefit liabilities. To the extent such changes in estimates are necessary, the Company’s effective tax rate may fluctuate.
The Company expects to continue to purchase sufficient inventory to meet its customers’ demands in fiscal year 2023, much of which relates to outstanding purchase orders at the end of fiscal 2022.
The Company expects to continue to purchase sufficient inventory to meet its customers’ demands in fiscal year 2025, some of which relates to outstanding purchase orders at the end of fiscal 2024.
During the fourth quarter of fiscal 2022, the Board of Directors approved a dividend of $0.26 per share, which resulted in $25.2 million of dividend payments during the quarter. The Company continually monitors and reviews its liquidity position and funding needs.
During the fourth quarter of fiscal 2024, the Board of Directors approved a dividend of $0.31 per share, which resulted in $27.8 million of dividend payments during the quarter. The Company continually monitors and reviews its liquidity position and funding needs.
Metrics that management monitors with respect to its operating expenses are SG&A expenses as a percentage of sales and as a percentage of gross profit. In fiscal 2022, SG&A expenses as a percentage of sales were 8.2% and as a percentage of gross profit were 67.3%, as compared with 9.6% and 83.7%, respectively, in fiscal 2021.
Metrics that management monitors with respect to its operating expenses are SG&A expenses as a percentage of sales and as a percentage of gross profit. In fiscal 2024, SG&A expenses as a percentage of sales were 7.9% and as a percentage of gross profit were 67.6%, as compared with 7.4% and 61.8%, respectively, in fiscal 2023.
The Company has various lines of credit, financing arrangements and other forms of bank debt in the U.S. and various foreign locations to fund working capital including purchases of inventories, foreign exchange, overdraft, and letter of credit needs of its wholly owned subsidiaries. Outstanding borrowings under such forms of debt at the end of fiscal 2022 was $174.6 million.
The Company has various lines of credit, financing arrangements, and other forms of bank debt in the U.S. and various foreign locations to fund the short-term working capital, foreign exchange, overdraft, capital expenditure, and letter of credit needs of its wholly owned subsidiaries. Outstanding borrowings under such forms of debt at the end of fiscal 2024 was $100.4 million.
Dollar weakens, the weaker exchange rates result in an increase in U.S. Dollars of reported results. In the discussion that follows, results excluding this impact, primarily for subsidiaries in EMEA and Asia, are referred to as “constant currency.” In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the U.S.
In the discussion that follows, results excluding this impact, primarily for subsidiaries in EMEA and Asia, are referred to as “constant currency.” In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the U.S.
As of July 2, 2022, the Company may repurchase up to an aggregate of $531.3 million of shares of the Company’s common stock through the share repurchase program approved by the Board of Directors. The Company may repurchase stock from time to time at the discretion of management, subject to strategic considerations, market conditions and other factors.
As of June 29, 2024, the Company may repurchase up to an aggregate of $153.7 million of shares of the Company’s common stock through the share repurchase program approved by the Board of Directors. The Company may repurchase stock from time to time at the discretion of management, subject to strategic considerations, market conditions including share price and other factors.
(2) Represents interest expense due on debt by using fixed interest rates for fixed rate debt and assuming the same interest rate at the end of fiscal 2022 for variable rate debt.
(2) Represents interest expense due on debt by using fixed interest rates for fixed rate debt and assuming the same interest rate at the end of fiscal 2024 for variable rate debt. (3) Excludes imputed interest on operating lease liabilities.
The discussion of the Company’s results of operations includes references to the impact of foreign currency translation. When the U.S. Dollar strengthens and the stronger exchange rates are used to translate the results of operations of Avnet’s subsidiaries denominated in foreign currencies, the result is a decrease in U.S. Dollars of reported results. Conversely, when the U.S.
Dollar strengthens and the stronger exchange rates are used to translate the results of operations of Avnet’s subsidiaries denominated in foreign currencies, the result is a decrease in U.S. Dollars of reported results. Conversely, when the U.S. Dollar weakens, the weaker exchange rates result in an increase in U.S. Dollars of reported results.
Covenants and Conditions The Company’s Credit Facility contains certain covenants with various limitations on debt incurrence, share repurchases, dividends, investments and capital expenditures, and also includes financial covenants requiring the Company to maintain minimum interest coverage and leverage ratios. The Company was in compliance with all such covenants as of July 2, 2022.
Covenants and Conditions The Company’s Credit Facility contains certain covenants with various limitations on debt incurrence, share repurchases, dividends, investments and capital expenditures, and also includes financial covenant requiring the Company to maintain a leverage ratio below a certain threshold. The Company was in compliance with all such covenants as of June 29, 2024.
Management believes that the Company’s ability to generate operating cash flows in the future and available borrowing capacity, including capacity for the non-recourse sale of trade accounts receivable, will be sufficient to meet its future liquidity needs. Critical Accounting Policies The Company’s consolidated financial statements have been prepared in accordance with GAAP.
Management believes that the Company’s ability to generate operating cash flows through the liquidation of working capital in the future and available borrowing capacity, including capacity for the non-recourse sale of trade accounts receivable, will be sufficient to meet its future liquidity needs.
To the extent the cash balances held in foreign locations cannot be remitted back to the U.S. in a tax efficient manner, those cash balances are generally used for ongoing working capital, including the need to purchase inventories, capital expenditures and other foreign business needs.
Cash balances held in foreign locations that cannot be remitted back to the U.S. in a tax efficient manner are generally used for ongoing working capital, including the need to purchase inventories, capital expenditures and other foreign business needs. In addition, local government regulations may restrict the Company’s ability to move funds among various locations under certain circumstances.
During periods of weakening demand in the electronic components industry, the Company typically generates cash from operating activities. Conversely, the Company is more likely to use operating cash flows for working capital requirements during periods of higher growth.
During periods of weakening demand in the electronic components industry, the Company typically generates cash from operating activities. Conversely, the Company will use cash for working capital requirements during periods of higher growth. The Company generated $690.0 million in cash flows for operating activities during the fiscal year ended June 29, 2024.
See Note 17, “Restructuring expenses” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information related to restructuring expenses. Operating Income Operating income for fiscal 2022 was $939.0 million, an increase of $657.6 million, from fiscal 2021 operating income of $281.4 million.
See Note 17, “Restructuring expenses” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for additional information related to restructuring expenses. Operating Income Operating income for fiscal 2024 was $844.4 million, a decrease of $342.4 million or 28.9%, from fiscal 2023 operating income of $1.19 billion.
As of July 2, 2022, the combined availability under the Credit Facility and the Securitization Program was $1.40 billion. Availability under the Securitization Program is subject to the Company having sufficient eligible trade accounts receivable in the United States to support desired borrowings.
Availability under the Securitization Program is subject to the Company having sufficient eligible trade accounts receivable in the United States to support desired borrowings.
The Company also uses several funding sources to avoid becoming overly dependent on one financing source, and to lower funding costs. These financing arrangements include public debt, short-term and long-term bank loans, a revolving credit facility (the “Credit Facility”), and an accounts receivable securitization program (the “Securitization Program”).
These financing arrangements include public debt (“Notes”), short-term and long-term bank loans, a revolving credit facility (the “Credit Facility”), and an accounts receivable securitization program (the “Securitization Program”).
Cash payments associated with the settlement of these liabilities that are expected to be paid within the next 12 months is $1.1 million. The settlement period for the remaining amount of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined, and therefore was not included in the table.
The settlement period for the remaining amount of the unrecognized tax benefits, including related accrued interest and penalties, cannot be determined, and therefore was not included in the table.
The Company has the following contractual obligations outstanding as of July 2, 2022 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ More than ​ Contractual Obligations ​ Total ​ 1 year ​ 1-3 years ​ 3-5 years ​ 5 years Long-term debt obligations (1) ​ $ 1,622.4 ​ $ 174.4 ​ $ 298.0 ​ $ 550.0 ​ $ 600.0 ​ Interest expense on long-term debt obligations (2) ​ ​ 364.3 ​ ​ 67.5 ​ ​ 109.4 ​ ​ 71.1 ​ ​ 116.3 ​ Operating lease obligations (3) ​ ​ 304.2 ​ ​ 61.0 ​ ​ 82.3 ​ ​ 48.9 ​ ​ 112.0 ​ ​ (1) Includes amounts due within one year and excludes unamortized discount and issuance costs on debt.
The Company has the following contractual obligations outstanding as of June 29, 2024 (in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period ​ ​ ​ ​ ​ Less than ​ ​ ​ ​ ​ More than ​ Contractual Obligations ​ Total ​ 1 year ​ 1-3 years ​ 3-5 years ​ 5 years Long-term debt obligations (1) ​ $ 2,910.9 ​ $ 492.7 ​ $ 550.0 ​ $ 1,245.5 ​ $ 622.7 ​ Interest expense on long-term debt obligations (2) ​ ​ 493.9 ​ ​ 134.9 ​ ​ 211.0 ​ ​ 78.2 ​ ​ 69.8 ​ Operating lease obligations (3) ​ ​ 266.8 ​ ​ 60.0 ​ ​ 81.0 ​ ​ 41.8 ​ ​ 84.0 ​ ​ (1) Includes amounts due within one year and excludes unamortized discount and issuance costs on debt.
Management believes the Company’s most critical accounting policies at the end of fiscal 2022 relate to: 31 Valuation of Inventories Inventories are recorded at the lower of cost or estimated net realizable value. Inventory cost includes the purchase price of finished goods and any freight cost incurred to receive the inventory into the Company’s distribution centers.
Management believes the Company’s most critical accounting policies at the end of fiscal 2024 relate to the valuation of inventories and accounting for income taxes. Valuation of Inventories Inventories are recorded at the lower of cost or estimated net realizable value.
As an alternative form of financing outside of the United States, the Company sells certain of its trade accounts receivable on a non-recourse basis to third-party financial institutions pursuant to factoring agreements. The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the consolidated statements of cash flows.
As an alternative form of liquidity outside of the United States, the Company sells certain of its trade accounts receivable on a non-recourse basis to financial institutions pursuant to factoring agreements.
Interest and Other Financing Expenses, Net and Other Expense, Net Interest and other financing expenses for fiscal 2022 was $100.4 million, an increase of $10.9 million, or 12.2%, compared with interest and other financing expenses of $89.5 million in fiscal 2021.
Interest and Other Financing Expenses, Net and Other (Expense) Income, Net Interest and other financing expenses for fiscal 2024 was $282.9 million, an increase of $32.0 million, or 12.8%, compared with interest and other financing expenses of $250.9 million in fiscal 2023.
The Company’s inventories include electronic components sold into changing, cyclical, and competitive markets, so inventories may decline in market value or become obsolete. The Company regularly evaluates inventories for expected customer demand, obsolescence, current market prices, and other factors that may render inventories less marketable.
The Company regularly evaluates inventories for expected customer demand, obsolescence, current market prices, and other factors that may render inventories less marketable.
Selling, General and Administrative Expenses Selling, general and administrative expenses (“SG&A expenses”) in fiscal 2022 were $1.99 billion, an increase of $120.0 million, or 6.4%, from fiscal 2021.
Selling, General and Administrative Expenses Selling, general and administrative expenses (“SG&A expenses”) in fiscal 2024 were $1.87 billion, a decrease of $97.8 million, or 5.0%, from fiscal 2023.
Fiscal 2021 Comparison to Fiscal 2020 For comparison of the Company’s results of operations between fiscal 2021 and fiscal 2020, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended July 3, 2021 filed with the SEC on August 13, 2021.
Discussions of fiscal 2022 items and year-to-year comparisons between fiscal years 2023 and 2022 are not included in this Form 10-K and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended July 1, 2023.
The Company used $219.3 million in cash flows for operating activities during the fiscal year ended July 2, 2022, to support the fiscal 2022 sales growth. Liquidity is subject to many factors, such as normal business operations and general economic, financial, competitive, legislative, and regulatory factors that are beyond the Company’s control.
Liquidity is subject to many factors, such as normal business operations and general economic, financial, competitive, legislative, and regulatory factors that are beyond the Company’s control.
During fiscal 2022, the Company’s cost of sales, substantially all of which related to the underlying purchase of inventories was $21.3 billion and the Company had $4.2 billion of inventories as of July 2, 2022.
The Company purchases inventories in the normal course of business throughout the year through the issuance of purchase orders to suppliers. During fiscal 2024, the Company’s cost of sales, substantially all of which related to the underlying purchase of inventories was $21.0 billion and the Company had $5.5 billion of inventories as of June 29, 2024.
Management also uses these non-GAAP measures to establish operational goals and, in many cases, for measuring performance for compensation purposes.
Management also uses these non-GAAP measures to establish operational 22 Table of Contents goals and, in many cases, for measuring performance for compensation purposes. However, any analysis of results on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP.
The decrease in SG&A expenses as a percentage of gross profit is primarily due to the operating leverage created from higher sales, increases in gross profit margin, and lower amortization expense, partially offset by increases in SG&A expenses primarily to support sales volumes.
The increases in SG&A expenses as a percentage of sales and gross profit resulted primarily from the decreases in sales and gross profit without a proportional reduction in SG&A expenses, resulting in lower operating leverage.
The year-over-year increase in SG&A expenses was primarily due to 26 Table of Contents increases in costs to support sales growth and to a lesser extent increased costs related to inflation, partially offset by lower expenses due to foreign currency translation from the strengthening of the U.S. Dollar.
The year-over-year decrease in SG&A expenses was primarily due to decreases in variable operating expenses associated with the decrease in sales volumes discussed above and to a lesser extent the impact of restructuring actions, partially offset by increases in costs due to inflation and the impact of changes in foreign currency translation rates.
During fiscal 2021, the Company used $18.4 million of cash for acquisitions, which is net of the cash acquired. Financing Transactions The Company uses a variety of financing arrangements, both short-term and long-term, to fund its operations in addition to cash generated from operating activities.
Financing Transactions The Company uses a variety of financing arrangements, both short-term and long-term, to fund its operations in addition to historical cash generated from operating activities. The Company also uses several funding sources to avoid becoming overly dependent on one financing source, and to lower overall funding costs.
The increase in interest and other financing expenses in fiscal 2022 compared to fiscal 2021 was primarily a result of higher outstanding borrowings during fiscal 2022 as compared to fiscal 2021. In fiscal 2022, the Company had $5.3 million of other expense as compared with $19.0 million of other expense in fiscal 2021.
The increase in interest and other financing expenses in fiscal 2024 compared to fiscal 2023 is a result of higher outstanding borrowings and increases in average borrowing rates. The Company had other expenses of $15.7 million in fiscal 2024, compared to other income of $9.9 million in fiscal 2023.
Liquidity The Company had cash and cash equivalents of $153.7 million as of July 2, 2022, of which $60.4 million was held outside the United States. As of July 3, 2021, the Company had cash and cash equivalents of $199.7 million, of which $150.5 million was held outside of the United States.
Liquidity The Company held cash and cash equivalents of $310.9 million as of June 29, 2024, of which $179.6 million was held outside the United States. As of July 1, 2023, the Company held cash and cash equivalents of $288.2 million, of which $194.5 million was held outside of the United States.
Operating income margin was 3.9% in fiscal 2022 compared to 1.4% in fiscal 2021. Adjusted operating income for fiscal 2022 was $985.6 million, an increase of $578.5 million or 142.1%, from fiscal 2021. Adjusted operating income margin was 4.1% in fiscal 2022 compared to 2.1% in fiscal 2021.
Operating income margin was 3.6% in fiscal 2024 compared to 4.5% in fiscal 2023. 25 Table of Contents Adjusted operating income for fiscal 2024 was $900.0 million, a decrease of $320.8 million or 26.3%, from fiscal 2023 adjusted operating income of $1.22 billion. Adjusted operating income margin was 3.8% in fiscal 2024 compared to 4.6% in fiscal 2023.
Changes to such tax regulations or disagreements with the Company’s interpretation or application by tax authorities in any of the Company’s major jurisdictions may have a significant impact on the Company’s income tax expense. 32 Table of Contents See Note 9 to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion on income tax expense, valuation allowances and unrecognized tax benefits. ​ Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU No. 2020-04”), which provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting.
See Note 9, “Income taxes” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion on income tax expense, valuation allowances and unrecognized tax benefits. ​ Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Tax Disclosures (“ASU No. 2023-09”), which updates income tax disclosures related to the effective income tax rate reconciliation and requires disclosure of income taxes paid by jurisdiction.
Net Income As a result of the factors described in the preceding sections of this MD&A, the Company’s net income in fiscal 2022 was $692.4 million, or earnings per share on a diluted basis of $6.94, compared with fiscal 2021 net income of $193.1 million, or earnings per share on a diluted basis of $1.93.
Net Income As a result of the factors described in the preceding sections of this MD&A, the Company’s net income in fiscal 2024 was $498.7 million, or earnings per share on a diluted basis of $5.43, compared with fiscal 2023 net income of $770.8 million, or earnings per share on a diluted basis of $8.26. 26 Table of Contents Liquidity and Capital Resources Cash Flows Operating Activities Net cash provided by operating activities was $690.0 million during fiscal 2024, compared to net cash used by operating activities of $713.7 million during fiscal 2023.
Factoring fees for the sales of trade accounts receivables are recorded within “Interest and other financing expenses, net” and are not material.
The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the 27 Table of Contents consolidated statements of cash flows. Factoring fees for the sales of trade accounts receivable are classified within “Interest and other financing expenses, net” of the consolidated financial statements.
As of July 2, 2022, there were no borrowings outstanding under the Credit Facility, with $1.2 million in letters of credit issued and $297.8 million outstanding under the Securitization Program. During fiscal 2022, the Company had an average daily balance outstanding under the Credit Facility of approximately $541.4 million and $241.4 million under the Securitization Program.
During fiscal 2024, 28 Table of Contents the Company had an average daily balance outstanding under the Credit Facility of approximately $1.17 billion and $596.7 million under the Securitization Program. As of June 29, 2024, the combined availability under the Credit Facility and the Securitization Program was $844.5 million.
The majority of the purchase orders related to inventories expected to be received during the first quarter of fiscal 2023, are subject to such non-cancellable terms and conditions. At July 2, 2022, the Company had an estimated liability for income tax contingencies of $134.6 million, which is not included in the above table.
At June 29, 2024, the Company had an estimated liability for income tax contingencies of $130.3 million, which is not included in the above table. No cash payments associated with the settlement of these liabilities are expected to be paid within the next 12 months.
The effective tax rate for fiscal 2021 was favorably impacted primarily by (i) a tax benefit arising from the reduction in fair value of certain businesses, resulting in losses that can be carried back under U.S. tax law and, (ii) the mix of income in lower tax jurisdictions, partially offset by (iii) increases to unrecognized tax benefit reserves.
The decrease in the effective tax rate in fiscal 2024 as compared to fiscal 2023 was primarily due to the mix of income in lower tax foreign jurisdictions, partially offset by increases to unrecognized tax benefit reserves, net of settlements.
Cash used for working capital and other to support sales growth was $1.09 billion during fiscal 2022, including increases in accounts receivable of $1.13 billion and inventories of $1.22 billion, offset by increases in accounts payable of $1.13 billion and accrued expenses and other of $134.4 million.
Cash generated by working capital and other was $11.2 million during fiscal 2024, compared to cash used for working capital of $1.68 billion during fiscal 2023, with the difference attributable primarily to cash used for inventories.
EC sales in fiscal 2022 were $22.50 billion, representing a 24.8% increase over fiscal 2021 sales. EC organic sales in constant currency increased 29.6% year over year reflecting sales growth in all three regions.
EC sales in fiscal 2024 were $22.16 billion, representing a 10.7% decrease over fiscal 2023 sales of $24.80 billion. EC sales decreased 11.0% year over year in constant currency.
This increase in adjusted operating income margin is primarily due to the increases in sales and gross profit margin, partially offset by increases in selling, general and administrative expenses to support sales growth.
The decreases in operating income and operating income margin in both operating groups are due to the decrease in gross profit primarily from lower sales and gross margin without a proportionate decrease in SG&A expenses.
Removed
The Company operates on a “52/53 week” fiscal year. Fiscal 2022 contains 52 weeks compared to 53 weeks in fiscal 2021 and 52 weeks in fiscal 2020. The extra week, which occurred in the first quarter of fiscal 2021, impacts the year-over-year analysis in this MD&A.
Added
The Company operates on a “52/53 week” fiscal year. Fiscal years 2024, 2023 and 2022 each contained 52 weeks. The discussion of the Company’s results of operations includes references to the impact of foreign currency translation. When the U.S.
Removed
(“GAAP”), the Company also discloses certain non-GAAP financial information, including: ● Sales adjusted for certain items that impact the year-over-year analysis, which includes the impact of certain acquisitions by adjusting Avnet’s prior periods to include the sales of acquired businesses, as if the acquisitions had occurred at the beginning of the earliest period presented.
Added
(“GAAP”), the Company also discloses certain non-GAAP financial information, including: ● “Adjusted operating income,” which is operating income excluding (i) restructuring, integration and other expenses, (ii) Russian-Ukraine conflict related expenses, and (iii) amortization of acquired intangible assets.
Removed
In addition, fiscal 2021 sales are adjusted for the estimated impact of the extra week of sales in fiscal 2021 due to it being a 53-week year, as discussed above. Additionally, the Company has adjusted sales for the impact of the termination of the TI distribution agreement between fiscal years.
Added
Industry outlook The global electronic components market has a history of cyclical downturns followed by periods of increased demand. Beginning in the second half of calendar year 2023, the industry began to experience a downturn marked by a decrease in sales due to a combination of elevated customer inventory levels and lower underlying demand for electronic components.
Removed
However, any analysis of results on a non-GAAP basis should be used as a complement to, and in conjunction with, results presented in accordance with GAAP. ​ Results of Operations Recent Global Events and Uncertainties In February 2022, Russian forces invaded Ukraine (“Russian-Ukraine conflict”), and in response, the member countries of NATO initiated a variety of sanctions and export controls targeting Russia and associated entities.
Added
As a result, the Company has seen elevated inventory levels and decreased sales, resulting in lower operating income. The duration of the current downturn is uncertain.
Removed
The sanctions currently in place limit the Company’s ability to provide goods to Russian customers and banking sanctions significantly negate our ability to collect outstanding receivables; as such, the Company has recorded an allowance for credit losses against those receivables that are not covered by customer credit insurance as of July 2, 2022.
Added
The Company expects sales in the first quarter of fiscal 2025 to be flat to 5% lower than fourth quarter of fiscal 2024 sales, which will negatively impact operating income and diluted earnings per share. ​ Results of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ ​ ​ June 29, 2024 ​ July 1, 2023 ​ Variance ​ Variance % ​ ​ ​ ($ in millions, unless otherwise stated) ​ ​ ​ Sales ​ $ 23,757 ​ $ 26,537 ​ $ (2,780) ​ ​ (10.5) % Gross profit ​ ​ 2,766 ​ ​ 3,182 ​ ​ (416) ​ ​ (13.1) % Selling, general and administrative expenses ​ ​ 1,870 ​ ​ 1,967 ​ ​ (98) ​ ​ (5.0) % Restructuring, integration, and other expenses ​ ​ 53 ​ ​ 28 ​ ​ 25 ​ ​ 87.4 % Operating income ​ ​ 844 ​ ​ 1,187 ​ ​ (342) ​ ​ (28.9) % Adjusted operating income ​ ​ 900 ​ ​ 1,221 ​ ​ (321) ​ ​ (26.3) % Other (expense) income, net ​ ​ (16) ​ ​ 10 ​ ​ (26) ​ ​ (258.8) % Interest and other financing expenses, net ​ ​ (283) ​ ​ (251) ​ ​ (32) ​ ​ 12.8 % Gain on legal settlements and other ​ ​ 86 ​ ​ 37 ​ ​ 49 ​ ​ 133.5 % Income tax expense ​ ​ 134 ​ ​ 212 ​ ​ (78) ​ ​ (37.0) % Net income ​ ​ 499 ​ ​ 771 ​ ​ (272) ​ ​ (35.3) % Diluted earnings per share ​ ​ 5.43 ​ ​ 8.26 ​ ​ (2.83) ​ ​ (34.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other Metrics ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross profit margin ​ ​ 11.6 % ​ 12.0 % ​ (35) bps ​ (0.4) % Operating income margin ​ ​ 3.6 % ​ 4.5 % ​ (92) bps ​ (0.9) % Adjusted operating income margin ​ ​ 3.8 % ​ 4.6 % ​ (81) bps ​ (0.8) % Effective tax rate ​ ​ 21.1 % ​ 21.6 % ​ (45) bps ​ (0.5) % 23 Table of Contents Sales Analysis of Sales: By Operating Group and Geography The table below provides sales decline rates for fiscal 2024 as compared to fiscal 2023 as reported and on a constant currency basis by geographic region and operating group. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year-Year % ​ ​ Years Ended ​ Sales ​ Change in ​ June 29, % of ​ July 1, % of ​ Year-Year % ​ Constant ​ ​ 2024 Total 2023 ​ Total Change ​ Currency ​ ​ (Dollars in millions) ​ ​ ​ ​ ​ ​ Sales by Operating Group: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EC ​ $ 22,160.0 ​ 93.3 % ​ $ 24,802.6 ​ 93.5 % ​ (10.7) % ​ (11.0) % Farnell ​ ​ 1,597.1 ​ 6.7 ​ ​ ​ 1,734.3 ​ 6.5 ​ ​ (7.9) ​ ​ (9.3) ​ Total Avnet ​ $ 23,757.1 ​ ​ ​ ​ $ 26,536.9 ​ ​ ​ ​ (10.5) ​ ​ (10.9) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales by Geographic Region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 5,919.2 24.9 % ​ $ 6,807.7 25.7 % ​ (13.1) % ​ (13.1) % EMEA ​ 8,395.0 35.3 ​ ​ 9,229.4 34.8 ​ ​ (9.0) ​ ​ (11.4) ​ Asia ​ 9,442.9 39.8 ​ ​ 10,499.8 39.5 ​ ​ (10.1) ​ ​ (9.0) ​ Total Avnet ​ $ 23,757.1 ​ ​ ​ ​ $ 26,536.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Avnet’s sales for fiscal 2024 were $23.76 billion, a decrease of $2.78 billion, or 10.5%, from fiscal 2023 sales of $26.54 billion.
Removed
Historically, the Company’s sales and gross profit generated from sales to Russian customers is less than 1% of consolidated sales and consolidated gross profit. See further discussion of the impacts of the Russian-Ukraine conflict on the Company’s results of operations in fiscal 2022 below.
Added
Sales in constant currency decreased 10.9% year over year, reflecting a reduction in sales volume primarily due to the on-going market downturn occurring across the electronic components industry and, to a lesser extent, an unfavorable product mix of lower priced electronic components.
Removed
Executive Summary Sales for fiscal 2022 were $24.31 billion, an increase of 24.5% from fiscal 2021 sales of $19.53 billion. Excluding the impact of changes in foreign currency, sales increased 27.2% as compared to sales in the prior year.
Added
The decrease in EC sales is primarily due to sales volume decreases across all three regions due to the market downturn in the electronic components industry and, to a lesser extent, an unfavorable product mix of lower-priced electronic components. Average selling prices of electronic components at EC remained relatively stable between fiscal 2024 and fiscal 2023.
Removed
This increase in sales was predominately driven by sales growth in both operating groups across all regions driven by strong demand and pricing globally for electronic components. Gross profit margin of 12.2% increased 73 basis points compared to 11.5% in fiscal 2021.
Added
Farnell sales in fiscal 2024 were $1.60 billion, a decrease of $137.2 million or 7.9%, from fiscal 2023 sales of $1.73 billion. The year-over-year decrease in sales was primarily a result of lower demand, including lower demand for on-the-board electronic components, partially offset by increases in availability and demand for single-board computers.
Removed
This increase is primarily due to strong overall demand for electronic components and improvements in pricing, product, customer mix, and geographic sales mix. 24 Table of Contents Operating income of $939.0 million was $657.6 million higher than fiscal 2021. Operating income margin was 3.9% in fiscal 2022, as compared to 1.4% in fiscal 2021.
Added
Gross Profit The Company’s gross profit is primarily affected by sales volume and geographic sales mix. Gross profit in fiscal 2024 was $2.77 billion, a decrease of $415.7 million, or 13.1%, from fiscal 2023 gross profit of $3.18 billion primarily due to lower sales volumes, as described above.
Removed
The increase in operating income margin is the result of increases in sales and in gross profit margin, partially offset by an increase in selling, general and administrative expenses to support sales growth. Adjusted operating income margin was 4.1% in fiscal 2022 as compared to 2.1% in fiscal 2021, an increase of 197 basis points.
Added
Gross profit margin decreased to 11.6% in fiscal 2024 or 35 basis points from fiscal 2023 gross profit margin of 12.0%. The decrease in gross profit margin is primarily due to an increase in product mix to lower margin electronic components.
Removed
Sales Three-Year Analysis of Sales: By Operating Group and Geography The table below provides a year-over-year summary of sales for the Company and its operating groups. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended ​ Percent Change ​ July 2, % of ​ July 3, % of ​ June 27, % of ​ 2022 to ​ 2021 to ​ ​ 2022 Total 2021 ​ Total 2020 Total 2021 2020 ​ ​ (Dollars in millions) Sales by Operating Group: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EC ​ $ 22,503.3 ​ 92.6 % ​ $ 18,030.5 ​ 92.3 % ​ $ 16,340.1 ​ 92.7 % ​ 24.8 % ​ 10.3 % Farnell ​ ​ 1,807.4 ​ 7.4 ​ ​ ​ 1,504.2 ​ 7.7 ​ ​ ​ 1,294.2 ​ 7.3 ​ ​ 20.2 ​ ​ 16.2 ​ ​ ​ $ 24,310.7 ​ ​ ​ ​ $ 19,534.7 ​ ​ ​ ​ $ 17,634.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales by Geographic Region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 5,896.0 24.3 % ​ $ 4,662.5 23.9 % ​ $ 4,755.3 27.0 % ​ 26.5 % ​ (2.0) % EMEA ​ 7,838.1 32.2 ​ ​ 6,149.9 31.5 ​ ​ 5,753.4 32.6 ​ ​ 27.5 ​ ​ 6.9 ​ Asia ​ 10,576.6 43.5 ​ ​ 8,722.3 44.6 ​ ​ 7,125.6 40.4 ​ ​ 21.3 ​ ​ 22.4 ​ Total Avnet ​ $ 24,310.7 ​ ​ ​ ​ $ 19,534.7 ​ ​ ​ ​ $ 17,634.3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reported sales were the same as organic sales in fiscal 2022.
Added
Sales in the higher margin western regions represented approximately 60% of sales in both fiscal 2024 and fiscal 2023. 24 Table of Contents EC gross profit margin decreased year over year largely due to an increase in product mix to lower margin electronic components.
Removed
The table below provides the reconciliation of reported sales to organic sales for fiscal 2021 by region and operating group. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Organic ​ ​ Sales ​ ​ ​ Organic ​ ​ ​ Sales ​ ​ as Reported ​ Estimated ​ Sales ​ TI Sales ​ Adj for TI ​ ​ Fiscal ​ Extra ​ Fiscal ​ Fiscal ​ Fiscal ​ 2021 Week (1) 2021 2021 (2) 2021 (2) ​ ​ (Dollars in millions) Avnet ​ $ 19,534.7 ​ $ 306.0 ​ $ 19,228.7 ​ $ 292.2 $ 18,936.5 Avnet by region ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ $ 4,662.5 ​ $ 77.0 ​ $ 4,585.5 ​ $ 82.9 $ 4,502.6 EMEA ​ 6,149.9 ​ 97.0 ​ 6,052.9 ​ 124.2 5,928.7 Asia ​ 8,722.3 ​ 132.0 ​ 8,590.3 ​ 85.1 8,505.2 Avnet by operating group ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EC ​ $ 18,030.5 ​ $ 284.0 ​ $ 17,746.5 ​ $ 292.2 $ 17,454.3 Farnell ​ 1,504.2 ​ 22.0 ​ 1,482.2 ​ — ​ 1,482.2 (1) The impact of the additional week of sales in the first quarter of fiscal 2021 is estimated.
Added
Average selling prices of electronic components at EC remained relatively stable between fiscal 2024 and fiscal 2023. Farnell gross profit margin decreased year over year, primarily due to lower sales of higher margin on-the-board electronic components and the unwinding of component shortage pricing premiums for on-the-board electronic components in fiscal 2024.
Removed
(2) Sales adjusted for the impact of the termination of the TI distribution agreement. 25 The table below provides reported and organic sales growth rates for fiscal 2022 as compared to fiscal 2021 by region and operating group. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Organic ​ ​ ​ ​ ​ Sales As ​ ​ ​ ​ Organic ​ Sales ​ ​ ​ ​ Reported ​ ​ ​ Sales ​ Adj for TI ​ ​ Sales As ​ Year-Year % ​ Organic ​ Year-Year % ​ Year-Year % ​ ​ Reported ​ Change in ​ Sales ​ Change in ​ Change in ​ ​ Year-Year ​ Constant ​ Year-Year ​ Constant ​ Constant ​ % Change Currency % Change Currency Currency (1) Avnet ​ 24.5 % 27.2 % ​ 26.4 % 29.2 % 31.2 % Avnet by region ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ 26.5 % 26.5 % ​ 28.6 % 28.6 % 31.0 % EMEA ​ 27.5 ​ 34.6 ​ ​ 29.5 ​ 36.8 ​ 39.6 ​ Asia ​ 21.3 ​ 22.4 ​ ​ 23.1 ​ 24.3 ​ 25.5 ​ Avnet by operating group ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EC ​ 24.8 % 27.6 % ​ 26.8 % 29.6 % 31.8 % Farnell ​ 20.2 ​ ​ 22.2 ​ ​ 21.9 ​ ​ 24.0 ​ ​ 24.0 ​ ​ ​ (1) Sales growth rates excluding the impact of the termination of the TI distribution agreement.
Added
Restructuring, Integration and Other Expenses During fiscal 2024, the Company implemented a plan to reduce SG&A expenses at Farnell and deliver approximately $60 million in annual expense reductions. Additionally, the Company began expense reduction initiatives within EC and for corporate expenses, which are expected to yield additional annual cost savings of approximately $50 million when completed.
Removed
Avnet’s sales for fiscal 2022 were $24.31 billion, an increase of $4.78 billion, or 24.5%, from fiscal 2021 sales of $19.53 billion. Organic sales in constant currency increased 29.2% year over year, reflecting sales growth in both operating groups across all regions driven by strong demand and pricing globally for electronic components.
Added
As such, the Company recorded $39.5 million for restructuring costs in fiscal 2024 primarily related to severance and other employee-related expenses associated with the reduction, or planned reduction, of approximately 600 employees across the Company. The Company also incurred integration, and other expenses of $13.1 million.
Removed
The increase in sales in the Company’s EC operating group is primarily due to overall stronger market demand and pricing for electronic components, especially in the transportation and industrial sectors. Farnell sales in fiscal 2022 were $1.81 billion, an increase of $303.2 million or 20.2% from fiscal 2021 sales of $1.50 billion.
Added
Integration expenses of $13.1 million related to the Company’s consolidation of several smaller warehouses predominantly related to Farnell, and other expenses of $5.5 million related to certain costs associated with potential M&A activity that did not lead to a transaction.
Removed
Sales in constant currency increased 22.2% year over year. These increases were primarily a result of increased market demand and pricing for the products that Farnell sells. As a result of the termination of the Company’s distribution agreement between Maxim Integrated Products, Inc.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−2 removed1 unchanged
Biggest changeThe following table sets forth the scheduled maturities of the Company’s debt outstanding at July 2, 2022 (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ 2023 2024 2025 2026 2027 Thereafter Total Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate debt (1) ​ $ 174.4 ​ $ 0.2 ​ $ — ​ $ 550.0 ​ $ — ​ $ 600.0 ​ $ 1,324.6 ​ Floating rate debt ​ $ — ​ $ 297.8 ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 297.8 ​ (1) Excludes unamortized discounts and issuance costs.
Biggest changeThe following table sets forth the scheduled maturities of the Company’s debt outstanding at June 29, 2024 (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ 2025 2026 2027 2028 2029 Thereafter Total Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate debt (1) ​ $ 2.7 ​ $ 550.0 ​ $ — ​ $ 500.0 ​ $ — ​ $ 622.7 ​ $ 1,675.4 ​ Floating rate debt ​ $ 490.0 ​ $ — ​ $ — ​ $ 745.5 ​ $ — ​ $ — ​ $ 1,235.5 ​ (1) Excludes unamortized discounts and issuance costs. 31 Table of Contents The following table sets forth the carrying value and fair value of the Company’s debt and the average interest rates at June 29, 2024, and July 1, 2023 (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Value Fair Value at ​ Carrying Value Fair Value at ​ ​ at June 29, 2024 ​ at June 29, 2024 at July 1, 2023 ​ July 1, 2023 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate debt (1) ​ $ 1,675.4 ​ ​ $ 1,621.1 ​ $ 1,650.0 ​ ​ $ 1,567.5 ​ Average interest rate ​ 5.0 % ​ ​ ​ ​ 5.0 % ​ ​ ​ ​ Floating rate debt ​ $ 1,235.5 ​ ​ $ 1,235.5 ​ $ 1,423.0 ​ ​ $ 1,423.0 ​ Average interest rate ​ 5.5 % ​ ​ ​ ​ 5.3 % ​ ​ ​ ​ (1) Excludes unamortized discounts and issuance costs.
Fair value was estimated primarily based upon quoted market prices for the Company’s public long-term notes. Many of the Company’s subsidiaries purchase and sell products in currencies other than their functional currencies, 33 which subjects the Company to the risks associated with fluctuations in currency exchange rates.
Fair value was estimated primarily based upon quoted market prices for the Company’s public long-term notes. Many of the Company’s subsidiaries purchase and sell products in currencies other than their functional currencies, which subjects the Company to the risks associated with fluctuations in currency exchange rates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company seeks to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates by entering into financial arrangements, from time to time, which are intended to provide an economic hedge against all or a portion of the risks associated with such volatility.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company seeks to reduce earnings and cash flow volatility associated with changes in interest rates and foreign currency exchange rates by entering financial arrangements, from time to time, that are intended to provide an economic hedge against all, or a portion of, the risks associated with such volatility.
See Note 2 to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion on derivative financial instruments. ​ 34 Table of Contents
See Note 2, “Derivative financial instruments” to the Company’s consolidated financial statements included in Item 8 of this Annual Report on Form 10-K for further discussion on derivative financial instruments. ​ 32 Table of Contents
The Company uses economic hedges to reduce this risk, utilizing natural hedging (i.e., offsetting receivables and payables in the same foreign currency) and creating offsetting positions through derivative financial instruments (primarily forward foreign currency exchange contracts typically with maturities of less than sixty days, but not greater than one year).
The Company uses economic hedges to reduce this risk utilizing natural hedging (i.e., offsetting receivables and payables in the same foreign currency) and creating offsetting positions through the use of derivative financial instruments (primarily forward foreign currency exchange contracts typically with maturities of less than 60 days, but no longer than one year).
A hypothetical 10% change in foreign currency exchange rates under the forward foreign currency exchange contracts outstanding at July 2, 2022, would result in an increase or decrease of approximately $50.0 million to the fair value of the forward foreign exchange contracts, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.
A hypothetical 10% change in foreign currency exchange rates under the forward foreign currency exchange contracts outstanding at June 29, 2024, would result in an increase or decrease of approximately $30.0 million to the fair value of the forward foreign exchange contracts, which would generally be offset by an opposite effect on the underlying exposure being economically hedged.
The Company adjusts any economic hedges to fair value through the consolidated statements of operations, primarily within “Other expense, net.” Therefore, the changes in valuation of the underlying items being economically hedged are offset by the changes in fair value of the forward foreign exchange contracts.
Therefore, the changes in valuation of the underlying items being economically hedged are offset by the changes in fair value of the forward foreign exchange contracts.
Removed
The following table sets forth the carrying value and fair value of the Company’s debt and the average interest rates at July 2, 2022, and July 3, 2021 (dollars in millions): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying Value Fair Value at ​ Carrying Value Fair Value at ​ ​ at July 2, 2022 ​ at July 2, 2022 at July 3, 2021 ​ July 3, 2021 Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fixed rate debt (1) ​ $ 1,324.6 ​ ​ $ 1,265.8 ​ $ 1,201.2 ​ ​ $ 1,291.4 ​ Average interest rate ​ 4.1 % ​ ​ ​ ​ 4.3 % ​ ​ ​ ​ Floating rate debt ​ $ 297.8 ​ ​ $ 297.8 ​ $ 23.1 ​ ​ $ 23.1 ​ Average interest rate ​ 2.6 % ​ ​ ​ ​ 1.2 % ​ ​ ​ ​ (1) Excludes unamortized discounts and issuance costs.
Added
The Company continues to have exposure to foreign currency risks to the extent they are not economically hedged. The Company adjusts any economic hedges to fair value within the same line item in the consolidated statements of operations as the remeasurement of the underlying assets or liabilities being economically hedged.
Removed
The Company continues to be exposed to foreign currency risks to the extent they are not hedged.

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